Opinion
DOCKET NO. A-3110-13T2
04-08-2015
PETER WEISS, Plaintiff-Respondent, v. NICOLA PORCHETTA CO. OF NEW JERSEY, INC.; NICOLA PORCHETTA; CHRISTINA PORCHETTA a/k/a CHRISTINE M. McKOWEN PORCHETTA, Defendants-Appellants, and STATE OF NEW JERSEY; UNITED STATES OF AMERICA, DESIGNER SOURCE, INC.; BCP HOLDINGS, INC.; TILCON NEW YORK, INC. and PSE&G, Defendants.
Ralph P. Ferrara argued the cause for appellants (Ferrara Law Group, P.C., attorneys; Mr. Ferrara and Aaron L. Peskin, on the briefs). Janet L. Gold argued the cause for respondent Peter Weiss (Eisenberg, Gold, Cettei & Agrawal, P.C., attorneys; Ms. Gold and Douglas J. Ferguson, on the brief). Scott T. McCleary argued the cause for respondent Brookside Drive, LLC (Meyner and Landis LLP, attorneys; Mr. McCleary, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano and Ostrer. On appeal from the Superior Court of New Jersey, Chancery Division, Somerset County, Docket No. F-22809-12. Ralph P. Ferrara argued the cause for appellants (Ferrara Law Group, P.C., attorneys; Mr. Ferrara and Aaron L. Peskin, on the briefs). Janet L. Gold argued the cause for respondent Peter Weiss (Eisenberg, Gold, Cettei & Agrawal, P.C., attorneys; Ms. Gold and Douglas J. Ferguson, on the brief). Scott T. McCleary argued the cause for respondent Brookside Drive, LLC (Meyner and Landis LLP, attorneys; Mr. McCleary, on the brief). PER CURIAM
Defendants Nicola Porchetta Co. of New Jersey, Inc. (Porchetta Inc.), Nicola Porchetta, and Christina Porchetta appeal from the Chancery Division order of February 28, 2014, denying their motion to set aside a sheriff's sale because of inclement weather. The sale by the Somerset County Sheriff involved Nicola and Christina Porchetta's residential property in Bridgewater Township. Defendants contended that a major snowfall, which began on January 21, 2014, deterred a bidder in Ocean County from attending the sale. Both the mortgagee, plaintiff Peter Weiss, and the successful bidder, Brookside Drive LLC (Brookside), opposed defendants' effort to disturb the sale. Having considered defendants' arguments in light of the record and applicable principles of law, we discern no basis to disturb the trial court's discretionary decision.
Weiss obtained a foreclosure judgment after the Porchettas defaulted on a $1.5 million loan, secured by a mortgage on the property. After two statutory adjournments and a bankruptcy stay, the sale was scheduled for January 21, 2014. The sale occurred at 2:05 p.m. Brookside's winning bid was $1.35 million.
The details of the loan, mortgage and foreclosure are not entirely clear from the record, which does not contain the mortgage note, mortgage, or foreclosure judgment. However, the record reflects that Porchetta Inc. obtained title to the property in 1999. Porchetta Inc. executed a mortgage on the property to Weiss in August 2007. Less than a year later, Porchetta Inc. transferred title to Nicola and Christine Porchetta for $1.
It is undisputed that a major snowfall began on January 21, 2014. However, the extent of the snowfall and its impact on travel at the time of the sale was not clearly established.
Christina Porchetta called the Sheriff's Office hours before the sale and ultimately confirmed that the sale would proceed. She asserted that prior to the sale "several schools" had already announced early dismissal. Some businesses closed early that day. She asserted that an investment group led by a resident of Lakewood Township had intended to bid at the sale. She contended that the group "was working with [her] in an attempt for [her] to stay in [her] home," although no written agreement was produced.
The investor, Brian Kleiman, stated that the weather conditions made it too dangerous for him to travel to Somerville for the sale. Kleiman presented a New York Times article issued at 12:54 p.m. on the day of the sale, to support his claim about the storm's severity during the afternoon. However, the article included no specifics regarding Somerset County, and appeared to indicate that the brunt of the storm, which was expected to drop eight to fourteen inches of snow in New York City, would be felt overnight. The article stated that four inches of snow were predicted to fall by the evening rush hour, implying that much less had already fallen. Although it stated that many suburban school districts were closing early, "[m]ost schools are open."
Brookside's sole member, Amit Raut, as well as his broker, and a lender, certified that the snow did not impede their attendance at the sale. None of the three traveled more than twenty miles to the sale, and they contended the weather had not yet had a major impact on travel. Raut was the only outside bidder on the Porchettas' property.
Brookside's attorney noted that the weather also did not deter a sheriff's sale in Monmouth County. Counsel presented public records confirming that the Monmouth County Sheriff sold five properties on that date.
Defendants place substantial weight on the fact that the Governor issued an executive order at 2:31 p.m. on January 21, 2014, declaring that a state of emergency existed. However, the order does not illuminate the nature of travel conditions when the sale occurred.
The recitals of the executive order referred to "impending weather conditions," and stated that New Jersey was "expected to experience a severe winter storm." The Governor did not impose any travel bans, nor did he order the closing of State or other governmental offices. He generally authorized emergency management and public safety officials to utilize emergency powers to respond to the snowstorm as needed. Those powers included the closing of roads.
We may take judicial notice of the fact that the Chief Justice ordered the closing of the State's courts on January 22, 2014. See N.J.R.E. 201(b)(4); N.J.R.E. 202(b). However, no order suspended the conduct of judicial business on the preceding day, when the sale occurred.
Judge Edward M. Coleman cogently set forth the governing principles of law, and found that defendants failed to meet their burden to establish grounds to set aside the sale. We quote at length from Judge Coleman's written opinion:
It is settled in New Jersey that "[t]he power of the court to set aside a sale of mortgaged premises is unquestionable, but its exercise, like all other judicial action, must always rest upon some consideration of justice." Crane v. Bielski, 15 N.J. 342, 346 (N.J. 1954). Judicial interference has been ruled as
appropriate where independent grounds exist, such as "fraud, accident, surprise, irregularity in the sale, and the like, making confirmation inequitable and unjust to one or more of the parties." Karel v. Davis, 122 N.J. Eq. 526 (E&A 1937). However, "the power to set aside a foreclosure sale is to be exercised with great care and only when necessary for compelling reasons." E. Jersey Sav. & Loan Ass'n v. Shatto, 226 N.J. Super. 473, 476 (Ch. Div. 1987).
. . . .
Defendants have failed to demonstrate reasonable grounds to set aside the sheriff sale under New Jersey Court Rule 4:65-5. Public policy dictates that the power to set aside a foreclosure sale should be exercised sparingly and only when it is necessary for cogent reasons to correct a plain injustice or injury. 30A Weinstein, New Jersey Practice, Sec. 35.17 (2000); see also East Jersey Savings and Loan Association v. Shatto, 226 N.J. Super. 473 (Ch. Div. 1987); Karel v. Davis, 122 N.J. Eq. 526 (E&A 1937). A duly held sheriff[']s sale will not be set aside absent a showing of valid grounds. "Examples of valid grounds for objection include fraud, accident, surprise, irregularity or impropriety in the sheriff[']s sale." Brookshire Equities v. Montaquiza, 346 N.J. Super. 310, 317 (App. Div.), cert[if]. denied, 172 N.J. 179 (2002) (citing Orange Land Co. v. Bender, 96 N.J. Super. 158, 164 (App. Div. 1967)). . . . The burden of proof rests with the objector. East Jersey Savings and Loan Association v. Shatto, 226 N.J. Super. 473, 476 (Ch. Div. 1987). . . .
In this case, Defendants and Mr. Kleiman knew the sheriff sale was not going to be adjourned. The sheriff sale was scheduled for 2:00 pm. The State of
Emergency did not occur until 2:31 pm. Defendants argue the timing of the State of Emergency is irrelevant because it had been snowing all day. However, the timing is crucial because conditions were clear enough where a State of Emergency was not issued until at least thirty minutes after the scheduled sale. The representatives for Brookside Dr. LLC wanted to purchase the Property and legally purchased the Property at the sheriff sale. The Defendants and Mr. Kleiman should have been present at the sheriff sale if they wanted to purchase the Property. The Sheriff's Office has discretion to determine if the sale should occur and they felt the travel conditions would not present a problem. Mr. Kleiman makes the argument that he lives sixty (60) miles away and he made the right decision by staying home because he would have been driving back during the State of Emergency. However, Mr. Kleiman cannot use the benefit of hindsight to declare he made the correct decision. The State could have just as easily not ordered a State of Emergency and Defendants and Mr. Kleiman would lack the benefit of the State of Emergency argument.
All parties had the opportunity to be present at the sheriff sale. The weather forecasts were available to all parties and Mr. Kleiman could have arranged travel arrangements and lodging, but failed to do so. If the Property is as important as the Defendants and Mr. Kleiman present the Property to be th[e]n the parties should have been at the sheriff sale to bid on the Property.
We affirm, substantially for the reasons set forth in Judge Coleman's written opinion. We add the following comments.
As Judge Coleman recognized, a court of equity has the inherent power, "sparingly exercised," to set aside a sale "when there is an independent ground for equitable relief, such as fraud, accident, surprise, irregularity in the sale, and the like, making confirmation inequitable and unjust to one or more of the parties." Crane v. Bielski, 15 N.J. 342, 346, 349 (1954) (internal quotation marks and citation omitted). We review a trial court's exercise of this power as we generally review an application to set aside mortgage foreclosure proceedings, for an abuse of discretion. See United States v. Scurry, 193 N.J. 492, 503 (2008).
Proof of an inadequate price is a factor, but not an essential one, in the court's determination whether to set aside a sheriff's sale. Crane, supra, 15 N.J. at 348; see also Sovereign Bank v. Kuelzow, 297 N.J. Super. 187, 194 (App. Div. 1997). "[A] judicial sale should not be set aside merely because someone is willing to pay more than was bid at such sale . . . ." W. Ridgelawn Cemetery v. Jacobs, 108 N.J. Eq. 513, 516 (Ch. 1931). Our Court has recognized the reality that, for a variety of reasons we need not address here, foreclosure sales are generally sparsely attended. Carteret Sav. & Loan Ass'n v. Davis, 105 N.J. 344, 352-53 (1987).
Defendants essentially argue that the weather conditions constituted an "irregularity" that made confirmation of the sale unjust. We have found no case in which a court of our State has set aside a sale because of weather. The argument was unsuccessfully made in Del., Lackawanna & W. R.R. v. Scranton, 34 N.J. Eq. 429 (Ch. 1881). The petitioner asked the court to set aside a sale based in part on the claim that various persons did not attend because "the weather was almost, if not quite, the hottest of the season." Id. at 430. The court noted that the sale was conducted fairly, there was "no lack of bidders," the objector did not request a postponement, and "the property was sold for the best and highest price it would bring." Id. at 431-32.
Courts of other jurisdictions have accepted the proposition that a court of equity may set aside a sheriff's sale if the objector establishes (1) the property has not sold for a fair price and (2) extremely inclement weather renders confirmation of the sale inequitable. See, e.g., State ex rel. Commissioners of the Land Office v. Harrower, 29 P.2d 123, 127 (Okla. 1934) (stating "'A party may have a sale set aside whenever the property has not sold for a fair price, and . . . (6) the weather was so exceedingly inclement, or the waters so high, or in some other way bidders were prevented, or deterred, from attending the sale'") (quoting Gibson's Suits in Chancery, § 631). The Restatement of Property: Mortgages (Third) adopts a standard for setting aside a sale that conceivably may be satisfied by proof of extremely inclement weather. Restatement of Property: Mortgages (Third) § 8.3, comment c (1997) (stating that a court may invalidate a sale, even if the price is below market value but not "grossly inadequate," if coupled with other irregularities, such as "chilled bidding, [or] an improper time or place of sale").
We are aware of no authority in our State expressly adopting this principle. In any event, defendants presented no competent evidence as to the fairness of the price. They presented no expert opinion of the property's fair market value, let alone what would be considered a fair price under the conditions of a sale at auction. Although Kleiman asserted he would have attended the sale but for the weather, he did not certify what price he was prepared to bid except to say the amount would have exceeded Brookside's bid, nor did he present competent proof of his financial capacity to purchase.
The record evidence was insufficient to establish that the weather was so inclement as to constitute an "irregularity" in the sale, compelling the court to set it aside. Defendants presented no specific information as to the weather and road conditions in the immediate area of the sale, when it was conducted. The record includes no competent evidence regarding the snowfall at that point, or the road conditions that would rebut the certifications of Raut and his cohorts that travel was not a problem, and bidders were capable of reaching the site of the sale in Somerville. There is no evidence the Somerset County courts were closed. The Governor had not banned travel, or closed State offices. According to the newspaper report defendants submitted, the snowfall was predicted to reach four inches by rush hour, implying that significantly less snow would have fallen when the sale occurred.
In short, defendants failed to establish that the weather at the time of the sale was so severe, and traveling conditions so treacherous, as to demonstrate that the trial court mistakenly exercised its discretion in declining to disturb the sale.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION