Opinion
DOCKET NO. A-4120-12T2
04-30-2014
MARK PROPERTIES, LLC, Plaintiff-Respondent, v. DAVID WILSCHANSKI, Defendant-Appellant, and MANCHESTER TOWNSHIP, JJW GROUP, KARKA ASSOCIATES and STATE OF NEW JERSEY, Defendants.
Arthur H. Lang argued the cause for appellant. Lawrence D. Mandel argued the cause for respondent (Gertner Mandel & Peslak, LLC, attorneys; Mr. Mandel, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Ostrer and Carroll.
On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-44226-10.
Arthur H. Lang argued the cause for appellant.
Lawrence D. Mandel argued the cause for respondent (Gertner Mandel & Peslak, LLC, attorneys; Mr. Mandel, on the brief). PER CURIAM
Defendant David Wilschanski appeals from the General Equity Part's orders denying his motion to vacate a final default judgment of foreclosure on a tax sale certificate, and denying a subsequent motion for reconsideration. Having reviewed defendant's arguments in light of the record and applicable principles of law, we affirm.
I.
Plaintiff was the holder of tax sale certificates on two apparently undeveloped properties in Manchester Township: (1) certificate number 200716 for block 1.291, lot 42 on Lawrence Avenue, which plaintiff acquired in 2007; and (2) certificate number 200834 for block 51.07, lot 144 on Tobias Avenue, acquired in 2008. Karka Associates (Karka), of which defendant was a partner, held title to the Tobias Avenue property since 1979. Defendant personally held title to the Lawrence Avenue property, by conveyance from Karka, in 2005.
Although Karka was named as a defendant in plaintiff's foreclosure action, only Wilschanski appeals. Therefore, we use "defendant" to refer only to Wilschanski.
After providing advance notice to defendant that it intended to commence foreclosure proceedings, plaintiff filed a two-count foreclosure complaint on November 24, 2010. Count one pertained to the Lawrence Avenue property, and count two pertained to the Tobias Avenue property. Defendant was duly served on December 29, 2010. After defendant did not file an answer, default was entered. There is no evidence that plaintiff served defendant with proof of entry of default.
Plaintiff then filed with the court a proposed order setting time, place and amount of redemption. The court revised and entered the order on September 20, 2011. The order set November 4, 2011 as the deadline for redemption, but added that redemption would be permitted until the "whole of the last day upon which judgment is entered." The order set $180.37 as the redemption amount for the Lawrence Avenue property, and $2040.52 for the Tobias Avenue property. The court struck sentences providing for taxed costs for the respective properties, instead inserting, "Whereas the costs of the said Plaintiff have been duly taxed at the following sum of $$1,692.32 [sic]." Plaintiff claims it served the order on defendant.
Although no proof of service is in the record before us, defendant apparently does not dispute receipt. He certified that "[i]n response to the said [o]rder" he contacted the tax collector. However, in the same certification, defendant vaguely asserted, "I do not believe that required correspondence from plaintiff ten days or less prior to the redemption date required by the [o]rder setting Time and Place, occurred."
What happened next provides the basis for defendant's argument for relief from the judgment. Defendant stated that he intended to redeem the Tobias Avenue property, and allow foreclosure to proceed against the Lawrence Avenue property. However, the opposite occurred, and defendant did not discover until months later that judgment on the Tobias Avenue property was entered.
In defendant's view, the Tobias Avenue property was worth retaining, and the Lawrence Avenue property was not. The Tobias Avenue property had an assessed value of $84,800 at the time, although plaintiff obtained a reduction to $36,700 after obtaining title. Defendant had himself acquired property through a tax sale that was contiguous to the Tobias Avenue property.
The record includes three separate letters from the Manchester tax collector dated November 16, 2011, providing redemption figures for the Lawrence Avenue property. Each letter was addressed to defendant and expressly referred to the Lawrence Avenue property's block and lot number, the tax sale date, and tax sale certificate number. One letter covered plaintiff's tax sale certificate, and the two others addressed tax sale certificates from 2006 and 2008. The total due on plaintiff's certificate was $2035.96, including $1742.97 in costs, $80.37 for the amount of sale, and $212.62 in "subsequents." The totals due on the other certificates were $135.98 and $375.71. The grand total of the amounts was $2547.65. Defendant's attorney argued that defendant never received those letters, although defendant did not provide competent evidence of non-receipt.
The record also contains a "request for payment" form from Manchester Township stating the amount due for "redemption of BLOCK 1.291 LOT 42" — the Lawrence Avenue property — and referring to certificate 200716, which plaintiff possessed. The amount requested was $2135.96 — $100 more than reflected in the November 16, 2011 letter.
Defendant asserted that he told the tax collector he wanted to redeem the Tobias Avenue property. The tax collector advised him that $2547.65 was needed. Defendant obtained a certified check in the amount of $2250 on November 14, 2011. He paid the balance of $297.65 in cash. Defendant claimed that the amount was consistent with his understanding of what would be required to redeem the Tobias Avenue property. Absent allocation of costs, the order setting time, place and amount of redemption stated that $2040.52 was due on the Tobias Avenue property, and only $180.37 was due on the Lawrence Avenue property. Defendant asserted that plaintiff was at fault for the inflated amount, because plaintiff had provided to the tax collector a schedule of costs dated September 20, 2011, which included $1000 as a counsel fee. The maximum counsel fee allowed for the single property was $500. The total of costs reflected was $1692.32 — the same amount included in the court's September 20, 2011 order setting time, place and amount of redemption for both properties.
Defendant was uncertain about when he was told $2547.65 was needed. He surmises that it was November 14, 2011, because he obtained the bank check on that date. But, the tax collector's letters were dated November 16, 2011, and the bank check was for less than the amount required.
The tax collector provided defendant with a receipt of payment that did not identify the property redeemed. Defendant asserted he was unaware that his $2547.65 payment was applied against the Lawrence Avenue property.
On December 2, 2011, the court entered a default judgment of foreclosure on both certificates, vesting title to both properties in plaintiff. Plaintiff utilized a servicer for the filings. After defendant failed to redeem by the November 4, 2011 deadline, the request for entry of default judgment was submitted to the court. When plaintiff received confirmation that defendant had redeemed one of the properties, plaintiff attempted to amend the judgment before entry. The foreclosure unit advised plaintiff that it was too late to do so, and plaintiff would need to submit a proposed modified judgment and supporting certification.
Plaintiff complied on December 15, 2011. It filed an affidavit of redemption and in support of order vacating judgment as to the first count of the foreclosure complaint, which pertained to the Lawrence Avenue property. The court entered the order vacating judgment as to count one on February 9, 2012. Although plaintiff concededly did not serve the December 2, 2011 default judgment, plaintiff served the amended judgment on defendant and the tax collector on February 23, 2012.
The order was entitled "Order Vacating Judgment as to Count I Only" and expressly referred to the Lawrence Avenue property by its block and lot number and tax sale certificate number. It recited that final judgment was vacated "as to Count I only, with respect to property known as Block 1.291 lot 42 . . . for the reason that the taxpayer has redeemed in full Tax Sale Certificate No. 200716."
On January 22, 2013, defendant filed his motion seeking an order granting relief from the December 2, 2011 default judgment and the February 9, 2012 order partially vacating judgment. Defendant asked that the court apply his payment toward redemption of the Tobias Avenue property. In support of his motion, defendant asserted that he did not learn he had redeemed the Lawrence Avenue property, and not the Tobias Avenue property, until November 29, 2012 "upon review of holdings in Manchester Township" and discussion with the tax collector regarding another matter. Defendant blamed plaintiff, for inflating the calculation of the redemption amount due; for continuing to seek final judgment after he redeemed; and for failing to serve the December 2, 2011 final judgment, or the application to modify the final judgment. He asserted he "would have detected the switch" earlier if service had been made.
However, defendant conceded that only the initial December 2, 2011 final judgment was filed in the public record. As a result, plaintiff forwarded the tax bills of the property defendant redeemed. Defendant admitted he overlooked those bills.
The trial court denied defendant's motion after oral argument on March 8, 2013, and denied a motion for reconsideration on April 5, 2013. In his initial decision, the trial judge held that defendant's request for relief was time-barred under N.J.S.A. 54:5-87, which sets a three-month limit for motions to vacate, and Rule 4:50-2, which requires motions within a reasonable time, but in no event more than one year after entry of judgment. The court held that plaintiff was not obliged to serve either order of judgment because defendant had failed to appear in the foreclosure action. The court reasoned that the one-year period ran from defendant's actual notice of judgment. The court mistakenly found that the amended judgment was served on December 15, 2011 — thirteen months before defendant's motion. As noted, the amended judgment was actually entered on February 9, 2012, and served two weeks later — eleven months before the motion. However, the court added that apart from the timeliness of defendant's motion, he had failed to meet his burden under Rule 4:50-1 for relief. In denying the reconsideration motion, the court specifically rejected defendant's argument that the error was attributable to plaintiff's intentional misconduct.
Although we have the transcript of both hearings, defendant has not provided us with his motion for reconsideration to enable us to determine what errors of law or fact he alleged the court committed in its initial decision. The oral argument supporting reconsideration appears simply to renew points made in the initial hearing.
The transcript of the judge's decision refers to "Rule 4:51" — which we assume was an error in transcription.
On appeal, defendant presents the following points for our consideration:
I. Who bears the burden of a defective redemption when a property owner is misled into redeeming the wrong property because the holder of the tax certificate charged excessive fees?
II. Does the holder of a tax certificate forfeit it when he collects excessive fees in violation of the court rules?
III. When the holder of a tax certificate knowingly submits defective papers supported
by a false affidavit, do the time limitations for vacating final judgment run from the date of its execution or do they run from the time the defect is corrected?
IV. Do statute of limitations run against a property owner who answers summons and tenders an inadvertently defective redemption?
V. Can the Defendant be Imputed Knowledge that he did not Redeem Count II because Plaintiff Sent Notice of the Order Vacating Judgment as to Count I?
VI. Is a defendant who appeared at the office of tax collector to tender redemption in conformity with the order Setting Time Place and Amount of Redemption entitled to notice of final judgment if the redemption fails?
VII. Does Rule 4:50-1(f) contemplate a tax lien defendant who did not realize that the foreclosure against his property was not dismissed when he tendered redemption?
II.
A.
Our decision is guided by well-established principles. The determination whether to grant a motion to vacate a default judgment is "left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion." Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993). See also US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (stating decision on motion to vacate default judgment "should not be reversed unless it results in a clear abuse of discretion"). A motion to vacate a default judgment implicates two often competing goals: the desire to resolve disputes on the merits, and the need to efficiently resolve cases and provide finality and stability to judgments. "The rule is designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case." Manning Eng'g, Inc. v. Hudson Cnty. Park Comm'n, 74 N.J. 113, 120 (1977).
The movant bears the burden of demonstrating its entitlement to relief. Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425-26 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004). At bottom, the decision whether to grant or deny a motion to vacate a default judgment must be guided by equitable considerations. Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App. Div. 2009) (noting that "Rule 4:50 is instinct with equitable considerations").
A motion to vacate on the basis of "mistake, inadvertence, surprise, or excusable neglect" under Rule 4:50-1(a) must be brought "within a reasonable time" but not later than one year after judgment. R. 4:50-2. See also Orner v. Liu, 419 N.J. Super. 431, 436-37 (App. Div.) (explaining that "reasonable time" may be less than the outside limit of one year), certif. denied, 2 08 N.J. 369 (2011). The time period is measured from the date of actual notice, if the judgment is not served. Farrell v. TCI of N. N.J., 378 N.J. Super. 341, 354 (App. Div. 2005).
The Court Rule governs a motion for relief from a tax sale foreclosure judgment, notwithstanding that N.J.S.A. 54:5-87 bars relief after three months from the date of judgment, except for grounds of lack of jurisdiction, or fraud in the conduct of the suit. See M & D Assocs. v. Mandara, 366 N.J. Super. 341, 351 (App. Div.) (stating Court Rule is paramount), certif. denied, 180 N.J. 151 (2004); Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J. Super. 159, 166 & n.8 (App. Div. 2005) (interpreting three-month deadline). Nonetheless, the statutory limitation, and the underlying policy to grant stability of foreclosure judgments, informs a court's exercise of its discretion under the Rule. Id. at 166-67; Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42, 44-45 (App. Div.), appeal dismissed, 88 N.J. 499 (1981).
A defendant claiming excusable neglect must also demonstrate that he or she has a meritorious defense. Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964).
B.
Applying these principles, we observe at the outset that the trial court erred in concluding that defendant filed his motion beyond the one-year limitation period. Defendant was not served with the modified judgment until February 23, 2012, eleven months before he filed his motion. The court mistakenly found that service occurred on December 15, 2011, the date the court received plaintiff's application to vacate the judgment in part.
Plaintiff did not serve the initial December 2, 2011 judgment at all. The trial court also erred in concluding that plaintiff was not obliged to serve the December 2, 2011 default judgment because defendant failed to appear. Although a plaintiff is generally not required to serve papers on a non-answering party under Rule 1:5-1(a), a party who obtains a default judgment "shall serve a copy thereof on the defaulting defendant as required by R. 1:5-2 except that service may be made by ordinary mail." R. 4:43-2(c). Plaintiff apparently also failed to serve entry of default upon defendant, as required by Rule 4:43-1, which states, "If defendant was originally served with process either personally or by certified or ordinary mail, the attorney obtaining the entry of the default shall send a copy thereof to the defaulting defendant by ordinary mail addressed to the same address at which defendant was served with process."
Inasmuch as plaintiff was required to serve the default judgment regardless of whether defendant appeared, we do not reach defendant's argument that redemption under Rule 4:64-6 constitutes an appearance under Rule 1:5-1. We also need not address defendant's argument that he was not bound by the three-month limitation period under N.J.S.A. 54:5-87 because plaintiff committed a "fraud in the conduct of the suit," by seeking to collect excessive charges and fees under N.J.S.A. 54:5-63.1. As we have noted, the time-limitation under Rule 4:50-2 governs.
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As the trial court mistakenly concluded that plaintiff's application was barred by the one-year limitation, it did not address whether plaintiff filed within a reasonable time. Under other circumstances, the failure to serve entry of default, or a default judgment, may be significant in determining whether a defendant has sought relief within a reasonable time. See Dynasty Bldg. Corp. v. Ackerman, 376 N.J. Super. 280, 285 (App. Div. 2005) (stating that failure to provide notice of entry of default "raises an issue that requires examination" regarding "whether sufficient excusable neglect was established" but noting lack of prejudice suffered in that case); Rosenberg v. Bunce, 214 N.J. Super. 300, 306 (App. Div. 1986) (stating that the "plaintiff's failure to comply with the applicable notice requirements [governing entry of default judgment] provides further support for our conclusion that the default and default judgment should be set aside").
However, in this case, although defendant did not receive notice of entry of default, defendant did receive the order setting time, place and amount of redemption, which placed him on notice that he was in default sometime after September 20, 2011. Also, although defendant was not served with the December 2, 2011 default judgment, he received the February 9, 2012 order vacating the default judgment as to count one.
Regardless of the timeliness of defendant's application, the court found that defendant had failed to satisfy the requirements of Rule 4:50-1. We discern no basis to disturb that conclusion.
A court must read together the four grounds for relief under Rule 4:50-1(a) — mistake, inadvertence, surprise, or excusable neglect. DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 262 (2009). "[W]hen read together . . . [they] reveal an intent by the drafters to encompass situations in which a party, through no fault of its own, has engaged in erroneous conduct or reached a mistaken judgment on a material point at issue in the litigation." Ibid. "'Excusable neglect' may be found when the default was 'attributable to an honest mistake that is compatible with due diligence or reasonable prudence.'" US Bank Nat'l Ass'n, supra, 209 N.J. at 468 (quoting Mancini, supra, 132 N.J. at 335). "Mistakes" under Rule 4:50-1(a) are "litigation errors that a party could not have protected against." DEG, LLC, supra, 198 N.J. at 263 (internal quotation marks and citation omitted). There was ample evidence in the record to support the conclusion that defendant's oversight resulted from a combination of his willful failure to participate in the litigation at the outset, and his subsequent failure to read, or carelessness in reading, the orders and other documents served upon him.
Defendant was properly served with the foreclosure complaint in December 2010. Apparently, defendant intentionally declined to answer. Defendant also failed to redeem by the court imposed deadline. Defendant's willfulness disfavors relief. "Obviously the greater the negligence involved, or the more willful the conduct, the less 'excusable' it is . . . ." Manning Eng'g, Inc., supra, 74 N.J. at 125 n.5 (internal quotation marks and citation omitted).
Also disfavoring relief is the prejudice to plaintiff. See In re Guardianship of J.N.H., 172 N.J. 440, 474 (2002) (identifying potential prejudice to nonmoving party as one of several factors to be considered on Rule 4:50 motion). The record reflects that plaintiff relied on the judgment. In particular, plaintiff expended time and funds to secure an adjustment of the tax assessment on the Tobias Avenue property. The assessment was reduced from $84,800 to $36,700. Thus, plaintiff would suffer prejudice consisting of more than just delay or the cost of prosecuting a suit.
Defendant's failure to recognize that he had redeemed the Lawrence Avenue property, and not the Tobias Avenue property, was a consequence of his simple failure to read the multiple documents that were apparently served upon him. The three November 16, 2011 letters from the tax collector — which together yielded the $2547.65 amount due — expressly referred to the block and lot number of the Lawrence Avenue property, and the tax sale certificates pertaining to it. The November 18, 2011 "request for payment" also referred to the Lawrence Avenue property's block, lot, and tax sale certificate numbers. The February 9, 2012 order vacating the default judgment as to count one placed defendant on notice that he had redeemed the Lawrence Avenue property. The court vacated the foreclosure judgment only as to that property. The clear implication was that a default judgment as to the Tobias Avenue property, named in count two, remained. Finally, plaintiff forwarded tax bills to defendant on the property he redeemed, which defendant admits he "overlook[ed]."
Defendant apparently held these undeveloped properties for investment. He previously had acquired an adjoining property himself through the tax sale process. There is no reason to believe he was unsophisticated. His failure to read these multiple documents under the circumstances provides an uncompelling case for relief. See Mancini, supra, 132 N.J. at 334-36 (finding defendant's failure to respond to "various claims, notices, and complaints" due to its own apparent "neglect and carelessness" not grounds to vacate default judgment); Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 77-78 (App. Div. 1997) (refusing to vacate default judgment when party "simply chose not to defend an action it was well aware of"), appeal dismissed, 157 N.J. 537 (1998). Defendant's arguments that he intended to redeem the Tobias Avenue property, he so informed the tax collector, and was misled by the redemption amount, pale in the face of defendant's failure to read the documents presented to him.
Finally, defendant has provided no independent basis for the court to grant relief under Rule 4:50-1(f). In seeking relief under subsection (f), a party must demonstrate "truly exceptional circumstances," and then relief may be granted "only when the court is presented with a reason not included among any of the reasons" subject to the one-year bar. Baumann v. Marinaro, 95 N.J. 380, 395 (1984). However, defendant relies upon the same claims of mistake and excusable neglect proffered under subsection (a).
Defendant's remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION