Opinion
DOCKET NO. A-3733-14T2
11-02-2016
J.F., Plaintiff-Respondent, v. S.F., Defendant, and T.F., Defendant-Appellant.
David S. Rochman argued the cause for appellant. Stanley B. Cheiken argued the cause for respondent.
RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Fisher, Leone and Vernoia. On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1037-02. David S. Rochman argued the cause for appellant. Stanley B. Cheiken argued the cause for respondent. PER CURIAM
Defendant T.F. appeals a January 28, 2015 Law Division order entered after a fair market value hearing. The order granted defendant a $7474.19 credit against a $55,000 judgment that was entered in plaintiff's favor in 2004. We affirm.
Given the nature of the tort claims that provided the basis for the judgment in this matter, we employ initials to protect plaintiff's privacy.
In 2002, plaintiff filed a civil action against her step-parents, defendant and defendant's husband S.F., alleging various tort claims. Plaintiff's claims against defendant were settled and in April 2004, the court entered a $55,000 judgment in plaintiff's favor against defendant.
Plaintiff obtained a separate judgment against S.F. in February 2003. --------
In 2006, plaintiff obtained a writ of execution on the judgment against property owned by defendant in Glassboro. On August 23, 2006, the property was sold at a sheriff's sale to Greystone Real Estate Investment Trust, LLC (Greystone) for $100. Title to the property was transferred subject to two mortgages of record. The face amount of the first mortgage was $132,800 and the second mortgage was $75,000.
In 2014, defendant requested a fair market value hearing, claiming she was entitled to a credit against plaintiff's judgment for the fair market value of the property sold at the 2006 sheriff's sale. Judge David W. Morgan conducted the hearing over a period of three days.
The testimony presented addressed the condition of the property at the time of the sheriff's sale and repairs made by Greystone after its purchase of the property. Each party presented the testimony of an expert witness in the area of real estate appraisals. The experts testified concerning their analysis of sales of comparable properties, the methods they utilized to determine their valuation of defendant's property at the time of the sheriff's sale, and their opinion of the fair market value of the property at the time of the sale. The court received evidence showing there was a first mortgage on the property in the amount of $132,800, a second mortgage in the amount of $75,000, and the payoff amounts of the mortgages at the time of the sheriff's sale.
Following the presentation of the evidence, the judge permitted the parties to submit written summations. The judge subsequently issued a comprehensive oral decision summarizing the evidence presented and making detailed findings of fact and conclusions of law.
The judge observed that the condition of the property was the primary factor affecting the experts' opinions concerning its value. The judge detailed the evidence regarding the age of the home, the condition of the home as described by the witnesses, and the repairs made to the home. The judge determined the property was in fair condition, which was better than the condition as determined by plaintiff's expert and worse than the condition as determined by defendant's expert. The judge then determined the 2006 fair market value of the property in three ways. He analyzed the experts' valuations, more precisely recalculated the experts' valuations based on the actual adjusted sales prices for the comparable home sales upon which the experts relied, and utilized the amount of the mortgages on the property as a measure of value. Each of the methods yielded similar results.
The court determined the 2006 fair market value of the property in fair condition was $207,012.58. The court then deducted the $199,538.39 balance due on the outstanding mortgages existing at the time of the sheriff's sale, and concluded defendant was entitled a fair market value credit of $7474.19 against plaintiff's judgment. The court entered an order awarding the credit to defendant. This appeal followed.
We defer "to the trial court's factual findings . . . 'when [they are] supported by adequate, substantial and credible evidence.'" Zaman v. Felton, 219 N.J. 199, 215 (2014) (alteration in original) (quoting Toll Bros. v. Twp. of W. Windsor, 173 N.J. 502, 549 (2002)). We review de novo the "trial court's interpretation of the law and the legal consequences that flow from established facts." Manalapan Realty L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Defendant makes three arguments on appeal. She contends the court erred by relying upon plaintiff's expert's opinion because it constituted a net opinion, was incorrectly founded upon hearsay, and was the product of a flawed analysis. She also asserts the court erred by deducting the amount of the second mortgage from the property's value because there was evidence the second mortgage had been written off by the mortgagee. Last, defendant contends the court erred by relying upon plaintiff's counsel's written summation, which defendant contends included facts not supported by the evidence.
We have considered the record, are convinced defendant's arguments are without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), and affirm substantially for the reasons in Judge Morgan's detailed and comprehensive oral opinion. We add only the following comments.
Defendant asserts the court erred by deducting the payoff amount of the second mortgage in its determination of the fair market value credit because there was testimony the second mortgagee had not sought repayment of the underlying loan and had "charged-off" the loan during the years following the sheriff's sale. We reject the argument for the following reasons.
The court correctly determined the fair market value credit based upon the amount of defendant's existing equity in the property at the time of the sheriff's sale. In Morsemere Fed. Sav. & Loan Ass'n v. Nicolaou, 206 N.J. Super. 637, 643-44 (App. Div. 1986), we held a judgment debtor is entitled to a credit for the fair market value of property purchased by a non-mortgage judgment creditor at a foreclosure sale. We "note[d] that N.J.S.A. 2A:50-3 gives [only] a mortgagor the right to dispute a claim of deficiency and determine the fair market value of the premises," but that "[a] court of equity . . . could well apply the same deficiency rule as contained in N.J.S.A. 2A:50-3" to a situation where a judgment debtor sought credit for the fair market value of the property purchased at a foreclosure sale. Id. at 644.
Defendant relies upon Morsemere in support of her contention that she is entitled to a fair market value credit. However, the deficiency rule contained in N.J.S.A. 2A:50-3 that we applied in Morsemere requires a determination of fair market value "at the time of the sale." N.J.S.A. 2A:50-3; see, e.g., MMU of N.Y. v. Grieser, 415 N.J. Super. 37, 48 (App. Div. 2010) (determining the fair market value credit for a judgment debtor based on the debtor's equity in the property at the time of the sheriff's sale); Resolution Tr. Corp. v. Berman Ind., 271 N.J. Super. 56, 68 (App. Div. 1993) (directing that a fair market value deficiency shall be determined by deducting secured debt from the fair market value of the property "at the time of the sheriff's sale").
The evidence presented by the parties and the opinions offered by their experts solely concerned the value of defendant's property in August 2006, at the time of the sheriff's sale. The court therefore correctly determined the fair market value credit by deducting the amount owed on the notes secured by the outstanding mortgages at the time of the sheriff's sale from the value of the property. For the court to have done otherwise would have been illogical and inconsistent with the deficiency rule upon which our holding in Morsemere was based.
We also reject defendant's argument that the court erred by deducting the balance due under the second mortgage because even if the mortgagee charged-off the debt for accounting or tax purposes, the mortgage remains as a lien on the property. Greystone purchased the property at the sheriff's sale subject to the second mortgage. Although there was testimony the mortgagee has not taken action to collect the sums due under the note that is secured by the second mortgage, the mortgage has not been discharged and the property remains subject to the mortgagee's foreclosure rights.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION