MORTGAGE LAW - ATTORNEY IN BERGEN COUNTY NEW JERSEY (201) 646-3333

 

WELLS FARGO BANK, N.A., AS TRUSTEE, ON BEHALF OF THE HOLDERS OF THE HARBORVIEW MORTGAGE LOAN TRUST MORTGAGE LOAN PASS-THROUGH CERTIFICATES, SERIES 2006-12, Plaintiff-Respondent,
v.
MARY YACCARINO, Defendant, and
WALTER A. WALKER, SR., Defendant-Appellant.

No. A-4580-17T3.
Superior Court of New Jersey, Appellate Division.

Submitted May 22, 2019.Decided June 6, 2019

On appeal from Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. F-001493-16.

Walter A. Walker, Sr., appellant pro se.

Parker Ibrahim & Berg, LLP, attorneys for respondent (Charles W. Miller, III, Ben Zev Raindorf and Nathania Reyes, on the brief).

Before Judges Accurso and Vernoia.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

PER CURIAM.

In this residential mortgage foreclosure action, defendant Walter A. Walker, Sr., appeals from a September 22, 2017 order granting plaintiff Wells Fargo Bank, N.A.^[1] summary judgment and striking defendant's answer, an April 27, 2018 order denying defendant's motion to fix the amount due, and an April 30, 2018 order granting final judgment to plaintiff. Finding no merit to defendant's arguments, we affirm.

In October 2006, Mary Yaccarino^[2] borrowed $247,500 from Countrywide Bank, N.A. Yaccarino signed a promissory note in that amount in Countrywide's favor. To secure the loan, Yaccarino and defendant executed an October 16, 2006 mortgage on property in Mays Landing to Mortgage Electronic Registration Systems, Inc. (MERS), acting as Countrywide's nominee.

The note went into default in May 2011 for non-payment and remained in default thereafter. In October 2011, MERS assigned the mortgage to Bank of America, N.A.^[3] In 2015, Bank of America assigned the mortgage to plaintiff.

In January 2016, plaintiff filed a foreclosure complaint. Defendant filed an answer. Plaintiff subsequently filed a summary judgment motion and, in response, defendant filed a cross-motion to dismiss the complaint and to amend the answer to include a counterclaim.

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After hearing argument on the motions, the court issued a detailed opinion from the bench. The court found there was no dispute there was a default under the note, and determined plaintiff had standing to foreclose because it is the assignee of the mortgage and possessed the note. The court rejected defendant's claim plaintiff violated the New Jersey Home Ownership Security Act of 2002 (HOSA), N.J.S.A. 46:10B-22 to-35, finding the statute inapplicable because defendant did not present any evidence that the mortgage loan satisfied either the statute's interest rate or total points and fees thresholds, N.J.S.A. 46:10B-24. The court also rejected defendant's assertion that plaintiff violated the Truth in Lending Act, 15 U.S.C. §§ 1601 to 1667f, because the competent evidence in the summary judgment record established that defendant was properly served with a notice of intent to foreclose and notice of the assignment of the mortgage to plaintiff. The court entered a September 22, 2017 order granting plaintiff summary judgment and striking defendant's answer.

Plaintiff filed a motion for entry of final judgment, to which defendant did not file a response. Defendant filed a motion to set the amount due. Defendant challenged the accuracy of plaintiff's business records and argued plaintiff's calculation of the amount due under the note included incorrect late payment charges and failed to credit defendant for mortgage payments made from 2012 to 2014 during his personal bankruptcy proceeding. The court rejected defendant's contentions and found the certification of plaintiff's loan servicing officer and plaintiff's business records established that the amount plaintiff claimed was due under the note accurately credited defendant with the mortgage payments made during the bankruptcy proceeding.

The court entered an April 27, 2018 order denying defendant's motion to set the amount due and directed the Office of Foreclosure to process plaintiff's motion for entry of a final judgment. On April 30, 2018, the court entered a final judgment of foreclosure finding $344,747.89 was the amount due, plus interest from November 20, 2017, costs and counsel fees. This appeal followed.

On appeal, defendant first argues the court erred by granting summary judgment because there was a fact issue as to whether "Yaccarino alone executed [the] [n]ote." Defendant asserts that plaintiff alleged Yaccarino executed the note, but that there was an issue of fact as to that assertion because he and Yaccarino executed the note and were designated as the "borrowers" in the mortgage.

Summary judgment should be granted if the court determines "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). We review the motion court's decision de novo and afford its ruling no special deference. Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 224 N.J. 189, 199 (2016). We "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party" in consideration of the applicable evidentiary standard, "are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

In a mortgage foreclosure proceeding, the court must determine three issues: "the validity of the mortgage, the amount of the indebtedness" and default, and the right of the plaintiff to foreclose on the mortgaged property. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994). On appeal, defendant does not contest the validity of the mortgage, that the note is in default or plaintiff's right to foreclose. Instead, he argues only that there are fact issues precluding summary judgment, the court erred in rejecting his claim plaintiff violated HOSA and plaintiff failed to present competent evidence supporting its calculation of the amount due. For the reasons that follow, we reject defendant's contentions.

A motion for summary judgment must be denied where there is a genuine issue of fact that is material to the determination of whether the moving party is entitled to judgment as a matter of law, Brill, 142 N.J. at 540, but that is not the case here. As a matter of undisputed fact, Yaccarino alone signed the note, but defendant correctly notes that he and Yaccarino executed an addendum to the note that allowed for the imposition of a prepayment penalty, and in the mortgage he was referred to as a borrower. Those designations, and any purported factual dispute over whether defendant was a party to the note, are immaterial to a resolution of plaintiff's foreclosure action. Whether defendant is a borrower or not, there is no dispute that the mortgage secured the payment of the note, he and Yaccarino received plaintiff's notices of intent to foreclose and there is a default under the note entitling plaintiff to foreclose under the mortgage. See Pardo, 263 N.J. Super. at 394.

We also reject defendant's claim that the court erred by granting summary judgment because plaintiff violated HOSA. As noted, the court found the statute inapplicable because defendant failed to present any evidence that the mortgage loan constituted a "high-cost home loan" to which the statute is applicable where there has been an assignment of the loan. N.J.S.A. 46:10B-27. The court explained that plaintiff did not demonstrate the loan satisfied either the statute's interest rate or total points and fees thresholds to qualify as a high-cost home loan subject to the statute. N.J.S.A. 46:10B-24. The record supports the court's finding. There is no competent evidence supporting the statute's application, and defendant points to none in support of his contention on appeal.

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Defendant last argues the court erred by relying on plaintiff's business records to calculate the amount due. Defendant contends the proffered business records are inadmissible under Rule 803(c)(6) and that plaintiff's representative, Brandi Davis, who submitted a certification concerning the records, did not possess sufficient personal knowledge to support the court's acceptance of the records as competent evidence of the sums due under the note. We are not persuaded.

The Davis certification expressly states that her knowledge was obtained by her personal review of records made in the regular course of her employer's business, at or near the time of the events, and recorded by persons with knowledge of the activity and transactions memorialized in the records. Thus, the documents upon which Davis's certification is based are admissible as business records under Rule 803(c)(6). State v. Sweet, 195 N.J. 357, 370 (2008). There is no requirement that Davis possess personal knowledge of the events reflected in the records. New Century Fin. Servs., Inc. v. Oughla, 437 N.J. Super. 299, 326 (App. Div. 2014); cf., Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 599-600 (App. Div. 2011) (finding a certification supporting a summary judgment motion inadequate because it did not indicate it was based upon personal knowledge and did not reflect the source of the affiant's knowledge of the facts stated).

To the extent we have not addressed any arguments asserted in defendant's pro se brief, they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

[1] Plaintiff filed the foreclosure complaint "as trustee, on behalf of the holders of HarborView Mortgage Loan Trust Mortgage Loan Pass-Through Certificates, Series 2006-12."

[2] Yaccarino is a defendant in the foreclosure, but has neither appealed the court's orders nor participated in the appeal.

[3] Bank of America, N.A, is the successor by merger to BAC Home Loans Servicing, LP, which was formally known as Countrywide Home Loans Servicing, LP.

BANKRUPTCY ATTORNEY LOCATED IN HACKENSACK - NEW JERSEY | BANKRUPTCY ARTICLE (201) 646-3333

 

sTANYA L. KAUFFMAN, Plaintiff-Respondent,
v.
JALAL M. SHABAZZ, Defendant-Appellant.

No. A-2114-18T1.
Superior Court of New Jersey, Appellate Division.

Argued December 10, 2019.Decided January 3, 2020.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-1428-12.

Louis Gerard Guzzo argued the cause for appellant.

Luretha M. Stribling argued the cause for respondent.

Before Judges Accurso and Gilson.

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.

PER CURIAM.

Defendant Jalal Shabazz appeals from a post-judgment order enforcing a provision of the parties' marital settlement agreement in which they agreed to be "equally responsible" for an American Express account having an approximate balance of $7400 at the time of their divorce in 2012. The December 14, 2018 order directed defendant to pay plaintiff Tanya Kauffman $10,123.36 for his fifty-percent share of the balance as of the time of the order and awarded her $3000 in attorney's fees.

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Defendant contends the amount awarded exceeded what plaintiff requested in her notice of motion; the order was based on the court's mistaken belief that plaintiff filed an objection to the discharge of the debt in his Chapter 7 bankruptcy; that enforcement of the marital settlement agreement was barred by laches; and that the trial court did not have adequate information "to calculate that plaintiff/respondent actually paid $10,126.36." Our review of the record convinces us that none of those arguments, only the last of which he raised to the trial court, is of sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only the following.

Although defendant contends the amount awarded exceeded what plaintiff "requested in her notice of motion," the notice of motion included in his appendix mentions no amount but asks only that defendant be compelled "to immediately make payments as required by the Property Settlement Agreement attached to the Judgment of Divorce." We thus reject his first argument as baseless.

His second argument, that the trial court based its decision on the mistaken belief that plaintiff filed an objection to the discharge of this claim, is equally unavailing. Because 11 U.S.C. § 523(a)(15) provides that a Chapter 7 discharge under 11 U.S.C. § 727, does not discharge an individual debtor from any debt to a former spouse incurred in the course of a divorce or in connection with a separation agreement or divorce decree, whether the judge was mistaken as to whether plaintiff filed an objection to the discharge is of no moment. Defendant's obligation to pay half the American Express bill was not discharged in his Chapter 7 bankruptcy as a matter of law, with no action necessary by plaintiff to protect the claim.

The only argument defendant offers in support of his claim of laches is an old case in which the chancellor determined he could infer from the wife's failure to have pursued support arrearages for six years, making the application only after her ex-husband's death, that the two had "made some arrangement between themselves with respect to support." Duffy v. Duffy, 19 N.J. Misc. 332, 340 (Ch. 1941). Here, however, defendant claims no such arrangement, and the record reflects that plaintiff pursued defendant for contribution to the American Express bill for some time before filing her motion to enforce the agreement. There is, accordingly, no support for defendant's third argument that enforcement of the marital settlement agreement is barred by laches.

Finally, we reject defendant's fourth argument that plaintiff "failed to provide any documentation evidencing that she actually paid any interest" for the period between entry of the divorce judgment in 2012 and the American Express statement from 2018, which the trial court rejected.

Defendant has included in his appendix a copy of a certification plaintiff submitted in support of her motion in which plaintiff averred that her "attorney provided all of the outstanding AMEX bills" in her pre-hearing exchange pursuant to the court's discovery order. That certification references several exhibits, none of which were attached to the document.

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Plaintiff has included in her own appendix certain American Express statements defendant did not provide us. She further asserts in her brief that the court calculated the amount owed "by reviewing American Express bills which were noted in [plaintiff's] certification to be exhibits G, H, I, J, K, L, M, N, and O." Those exhibits are not included in defendant's appendix and he did not file a reply brief challenging the accuracy of plaintiff's representations regarding the state of the record before the trial court.

Defendant's failure to supply us with all the documents on which the trial court relied to calculate his share of the American Express account, including interest and fees imposed after entry of the divorce judgment, leaves us unable to agree with his argument that those documents were inadequate to support the court's conclusion. See Soc'y Hill Condo. Ass'n v. Soc'y Hill Assocs., 347 N.J. Super. 163, 177 (App. Div. 2002); R. 2:6-1(a)(1)(I).

Affirmed.

FORECLOSURE ATTORNEY IN HACKENSACK NJ - FORECLOSURE ARTICLE (201)646-3333

 

BANK OF AMERICA, N.A., Plaintiff-Respondent,
v.
WADELL P. SMITH, Defendant-Appellant.

No. A-0912-18T1.
Superior Court of New Jersey, Appellate Division.

Submitted May 29, 2019.Decided June 19, 2019.

On appeal from Superior Court of New Jersey, Chancery Division, Union County, Docket No. F-007676-16.

Wadell P. Smith, appellant pro se.

Parker McCay, PA, attorneys for respondent (Eugene R. Mariano, of counsel; Stacy L. Moore, Jr., on the brief).

Before Judges Hoffman and Suter.

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.

PER CURIAM.

Defendant Wadell Smith appeals from the August 17, 2018 trial court order denying his motion to set aside the sheriff's sale and allow redemption on a foreclosed property due to plaintiff's alleged failure to file proper proofs. For the reasons that follow, we affirm.

I.

In December 2008, defendant executed a note to Allied Mortgage Group, Inc. (Allied) for the sum of $403,987. On the same day, defendant executed a mortgage to Mortgage Electronic Registration Systems, Inc. as nominee for Allied. Plaintiff came into possession of the debt as successor to an assignee of the mortgage.

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In August 2010, defendant defaulted. Plaintiff filed a foreclosure complaint in March 2016. In December 2016, the trial court granted plaintiff's motion for summary judgment. In December 2017, plaintiff submitted an application for final judgment, which the court granted in January 2018.

In April 2018, defendant filed a motion to vacate final judgment. The court denied the motion the following month. In June 2018, defendant filed a motion to dismiss, which the court denied. The same month, a sheriff's sale was held and plaintiff purchased the property. Subsequently, in July 2018, defendant filed a motion to set aside the sheriff's sale. The trial court denied this motion in August 2018. This appeal followed, based only on the motion to set aside the sheriff's sale.

II.

To succeed in a foreclosure action, a plaintiff need merely prove: (1) the validity of the note and mortgage; (2) the defendant defaulted on the loan; and (3) plaintiff has the right to resort to the mortgaged property in satisfaction of the loan. Great Falls Bank v. Pardo, 263 N.J. Super. 388 (Ch. Div. 1993). Defendant does not contest any of these material elements. Rather, defendant argues plaintiff failed to comply with amended foreclosure Rules 4:64-1 and 4:64-2. Essentially, defendant argues plaintiff erred by filing certifications rather than affidavits.

We review motions to set aside a sheriff's sale for abuse of discretion. United States v. Scurry, 193 N.J. 492, 502-03 (2008). To set aside, we require a showing of fraud, accident, surprise or mistake, irregularities in the sale, or other similar circumstances. See R. 4:50-1; Karel v. Davis, 122 N.J. Eq. 526, 528 (E & A 1937).

Here, even assuming the bank's attorneys made mistakes, we find no circumstances to justify an order under Rule 4:50-1 vacating the judgment. Indeed, after reviewing the record, we find insufficient merit in defendant's arguments to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following brief comments.

On June 9, 2011, our Supreme Court adopted amendments to the rules governing foreclosure actions. See N.J. Judiciary, Residential Mortgage Foreclosure Rules: Amendments to Rules 4:64-1 and 4:64-2; Revised Form Certifications/Affidavits (June 9, 2011).

The amendments require an attorney for a foreclosure plaintiff to execute a Certification of Diligent Inquiry confirming the attorney has communicated with an employee of the plaintiff or its loan servicer and confirmed the accuracy of the Note and other foreclosure documents. Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on R. 4:64-1 and cmt. 1 on R. 4:64-2 (2019). Likewise, the plaintiff must file an affidavit of amount due. R. 4:64-2.

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However, despite defendant's argument to the contrary, the rule "permits proof of the amount due to be submitted by certification...." See Pressler & Verniero, cmt. 1 on R. 4:64-2 (2019). Likewise, the rule explicitly allows for a certification for the diligent inquiry. See R. 4:64-1.

Additionally, defendant only appealed the denial of his motion to set aside the sheriff's sale. He did not appeal the orders denying his motion to vacate final judgment or his motion to dismiss. Thus, we are unable to set aside the final judgment as defendant requests. See Pressler & Verniero, cmt. 6.1 on R. 2:5-1(f)(1) (2017) (citing Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66 (App. Div. 1994)) (rejecting review of the trial court's denial of a request for special interrogatories because the issue was not listed in the notice of appeal).

Affirmed.

BANKRUPTCY ATTORNEY IN HUDSON COUNTY NJ - (201) 646-3333

 

FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff-Respondent,
v.
JOHN J. TOMASELLO and LINDA B. TOMASELLO, his wife, Defendants-Appellants, and
UNITED STATES OF AMERICA, AMERICAN EXPRESS TRAVEL RELATED SERVICES, PRECAST MANAUFACTURING COMPANY, SHERMAN CLAY AND CO., AMERICAN FIRE AND CASUALTY COMPANY, and STATE OF NEW JERSEY, Defendants.

No. A-2436-17T3.

Superior court of New Jersey, Appellate Division.

Submitted February 13, 2019.Decided March 8, 2019.

On appeal from Superior Court of New Jersey, Chancery Division, Camden County, Docket No. F-029506-15.

Weisberg Law, PC, attorneys for appellants (Matthew B. Weisberg, on the brief).

Stern, Lavinthal & Frankenberg, LLC, attorneys for respondent (Mark S. Winter, of counsel and on the brief).

Before Judges Accurso and Vernoia.

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.

PER CURIAM.

Defendants John J. Tomasello and Linda B. Tomasello appeal from a Chancery Division order denying their motion to vacate a March 2017 sheriff's sale of property following entry of a final judgment of foreclosure. We affirm.

Plaintiff Federal National Mortgage Association filed a foreclosure complaint alleging that on July 1, 2010, defendants defaulted on a note and residential mortgage on property owned by defendants in Sicklerville. Defendants did not respond to the complaint and on March 3, 2016, the court entered a final judgment of foreclosure and a writ of execution authorizing the sale of the property.

On May 24, 2016, plaintiff mailed a notice of a June 22, 2016 sheriff's sale of the property. The notice was sent to defendants at their Sicklerville address. Defendants obtained two statutory stays of the sheriff's sale, but on July 20, 2016, the property was sold at the sale. It was later discovered that moments before the July 20, 2016 sale, defendants filed a bankruptcy petition that was subsequently dismissed.

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Four months later, plaintiff moved to vacate the sheriff's sale because it took place during the pendency of defendants' bankruptcy proceeding. On December 16, 2016, the court entered an order granting the motion, vacating the July 20, 2016 sheriff's sale and allowing a second sale without any further advertisement.

On February 8, 2017, plaintiff's counsel sent notice to defendants that the sheriff's sale was scheduled for March 1. The notice was sent to defendants at their address in Sicklerville. Plaintiff subsequently purchased the property at the sheriff's sale.

Defendants later moved to vacate the sheriff's sale, claiming plaintiff failed to mail notice of the sale to their Sicklerville address. Defendants' counsel submitted a certification supporting the motion that in pertinent part asserted plaintiff failed to serve notice of the sheriff's sale "to the subject New Jersey property via certified mail as required." Similarly, in defendant John Tomasello's supporting affidavit, he complained the original complaint was served at defendants' Florida residence "but not at the subject New Jersey property," and that plaintiff had not produced proof of delivery of the notice of the sheriff's sale to defendants' Sicklerville property address. Neither counsel's certification nor John Tomasello's affidavit asserted that the sheriff's sale should be vacated because notice of the sale was not sent to defendants at an address in Key West, Florida. Plaintiff filed opposition to the motion demonstrating that notice of the March 1, 2017 sheriff's sale was properly mailed to defendants at their Sicklerville address.

After hearing argument, the court denied defendants' motion finding defendants' requests for the two statutory stays established they were aware of the sheriff's sale. The court further found defendants filed the bankruptcy petition at the "eleventh hour" and "manage[d] to stay [the sheriff's sale] again." The court also implicitly rejected defendants' claim that notice of the sale was not properly sent to defendants at their Sicklerville address, and entered an order denying defendants' request to vacate the sale. This appeal followed.

We review a court's order denying a motion to vacate a sheriff's sale for an abuse of discretion. U.S. ex. rel. U.S. Dept. of Agric. v. Scurry, 193 N.J. 492, 502-03 (2008). An abuse of discretion occurs "when a decision is `made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467-68 (2012) (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).

On appeal, defendants abandon their claim the sheriff's sale should be vacated because notice of the sale was not properly sent to them at their Sicklerville address. See Jefferson Loan Co. v. Session, 397 N.J. Super. 520, 525 n.4 (App. Div. 2008) (finding that an issue not briefed on appeal is deemed waived). Instead, defendants rely on a single argument, asserted for the first time on appeal, that the court erred by failing to find the sale should be vacated because plaintiff did not serve them with notice of the sale at their address in

Florida.

"Appellate review is not limitless. The jurisdiction of appellate courts rightly is bounded by the proofs and objections critically explored on the record before the trial court by the parties themselves." State v. Robinson, 200 N.J. 1, 19 (2009). Defendants' singular contention on appeal was never asserted before the motion court. We reject the argument because it was not "properly presented to" the motion court and does not "go to the jurisdiction of the . . . court or concern matters of great public interest." Id. at 20 (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).

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Moreover, we discern no abuse of discretion in the court's decision denying the motion to vacate the sheriff's sale. As noted, defendants do not dispute that plaintiff properly served them with notice of the sale at their Sicklerville address. Thus, plaintiff provided notice of the sale to "the owner of record of the property as of the date of commencement of the action" in accordance with Rule 4:65-2. That defendants may have also had an address in Florida at the same time does not render the notice invalid. Indeed, in their motion to vacate the sheriff's sale, defendants complained that service of the complaint was invalid because it was sent to their Florida address instead of their Sicklerville address. In other words, defendants argued before the motion court that the sale should be set aside because it was not sent to their New Jersey address.

As we explained in Assoulin v. Sugarman, "noncompliance [with Rule 4:65-2] warrants setting [a] sale aside, `provided the party entitled thereto has no knowledge of the pendency of the sale, seeks relief promptly upon learning thereof, and no intervening equities in favor of innocent parties have been created in the interim.'" 159 N.J. Super. 393, 398 (App. Div. 1978) (citation omitted). As the motion court aptly found here, defendants were aware of the pendency of the sale, sought two statutory stays and filed a bankruptcy petition to delay the sale and were served with notice of the adjourned sale at their Sicklerville address. Under such circumstances, we discern no basis to conclude the court abused its discretion by denying defendants' motion to vacate the sheriff's sale.

Affirmed.

BANKRUPTCY LAWYER HACKENSACK NJ (201) 646-3333 - BANKRUPTCY ARTICLE

 

975 HOLDINGS, LLC, Plaintiff,
v.
CITY OF EGG HARBOR, Defendant.

Docket No. 010346-2016.

Tax Court of New Jersey.

Decided: June 20, 2017.Released for publication: August 4, 2017^[1]

Salvatore Perillo for plaintiff (Perskie, Nehmad & Perillo, attorneys).

James J. Carroll, III for defendant.

CIMINO, J.T.C.

Plaintiff taxpayer, 975 Holdings, LLC is the current owner of an improved parcel in Egg Harbor City. The taxpayer purchased the property in a bankruptcy asset sale allowed pursuant to 11 U.S.C. § 363(f). Prior to the sale, the bankrupt debtor acting as a debtor-in-possession failed to respond to a Chapter 91 request. N.J.S.A. 54:4-34. Taxpayer argues that both the fact that the prior owner was in a bankruptcy proceeding and that the property was purchased through a section 363(f) sale somehow excuses noncompliance with Chapter 91. For the reasons set forth in greater detail in this opinion, the court rejects both of these arguments.

The parcel in question is eight acres and is improved with a hotel with restaurant and catering facilities and is part of what is known as the Renault Winery. The parcel is designated on the tax maps of Egg Harbor City as the entirety of Block 73.07 which consists of Lots 1 through 16. The parcel fronts onto Bremen Avenue. The other winery facilities include a winery, restaurant, golf course, and vineyards which are located across Bremen Avenue in Galloway Township and are not the subject of this appeal.

(201)646-3333| BANKRUPCY LAW OFFICE NEW JERSEY | BILLS - DENTS - CREDIT DEBT - STUDENT LOAN | (2021) - YouTube

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On November 13, 2014, Renault Winery, Inc. filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and was designated as the debtor-in-possession of the parcel with powers and duties pursuant to 11 U.S.C. § 1107.

On April 16, 2015 defendant municipality mailed by United States Postal Service certified mail, return receipt requested, a request in accordance with N.J.S.A. 54:4-34, otherwise known as a Chapter 91 request. The certified mail was signed for by the debtor-in-possession on April 18, 2015. The debtor-in-possession did not respond to the request.

On September 22, 2015, 975 Holdings entered into a contract to purchase the parcel and on October 1, 2015 the Bankruptcy Court approved the sale pursuant to 11 U.S.C. § 363(f). Thereafter, the parties closed on the sale on November 16, 2015.

On July 13, 2016, 975 Holdings filed a complaint with this Court challenging the 2016 assessment on the parcel. On December 15, 2016, a motion was filed by the municipality to dismiss the complaint in accordance with Chapter 91 for failure to provide a response to the April 16, 2015 request.

The current owner, taxpayer 975 Holdings, argues that the provisions of Chapter 91 do not apply to it since the Chapter 91 notice was sent to the debtor-in-possession. In the alternative, the taxpayer alleges that the sale of the property to taxpayer pursuant to 11 U.S.C. § 363(f) somehow abrogates the municipality's Chapter 91 defense.

As to the first argument, taxpayer argues that since the notice was sent to the debtor-in-possession while the prior owner was under the supervision of the Bankruptcy Court, the failure to comply with Chapter 91 is excused.

Since 1918, taxpayers have been required to provide certain requested information to the assessor. L. 1918, c. 236, § 403. While the law was amended a number of times through the years, it was not until 1979, with the adoption of Chapter 91, that the failure to respond to a request could result in the municipality moving to dismiss the complaint. Chapter 91 amended N.J.S.A. 54:4-34 in pertinent part by adding the following sentence:

No appeal shall be heard from the assessor's valuation and assessment with respect to income-producing property where the owner has failed or refused to respond to such written request for information within 45 days of such request or to testify on oath when required, or shall have rendered a false or fraudulent account.

[L. 1979, c. 91, § 1]

As indicated by the Senate Revenue, Finance and Appropriations Committee's statement as to the bill which would become Chapter 91, the "problem addressed" was that "the property owner is not subject to any penalty for not disclosing property income information. The property owner is free to appeal the assessment, notwithstanding his refusal to provide information which would have affected the valuation, and, perhaps, avoided the appeal from the assessment." Senate Revenue, Finance and Appropriations Comm., Statement to S., No. 309, at 1 (Jan. 26, 1978). The other "problem addressed" was when "an appeal has been filed, the assessor currently has no access to information on which the appellant is basing his appeal and thus the assessor is unprepared to testify in argument to the appellant's representations." Id.

As explained by the New Jersey Supreme Court, if a taxpayer could withhold the information until the time of appeal, "the assessor would then be required either to prepare a second valuation of the property — a tremendous waste of valuable time and resources — or to defend the original valuation on the taxpayer's appeal." Ocean Pines Ltd. v. Borough of Point Pleasant, 112 N.J. 1, 7 (1988). Either result runs contrary to the purpose of the statute as set forth by the Senate committee. See Id.

The prior owner, Renault Winery, Inc., filed a petition pursuant to Chapter 11 of the Bankruptcy Code. 11 U.S.C. § 1101-1175. The primary purpose of Chapter 11, which is entitled "reorganization," is the rehabilitation of financially troubled businesses. Kernan v. One Washington Park, 154 N.J. 437, 446 (1998). Upon the filing of the bankruptcy petition, the assets of the debtor become part of what is termed the bankruptcy estate of the debtor. 11 U.S.C. § 541. Broadly overseeing the process is the United States Trustee. 28 U.S.C. § 586, 11 U.S.C. § 307. Shortly after the filing of a bankruptcy petition, the United States Trustee conducts a section 341 meeting of creditors in which the debtor is required to appear and answer questions of the United States Trustee and creditors. 11 U.S.C. §§ 341, 343.

In most Chapter 11 bankruptcy cases, the United States Trustee does not seek the appointment of a case trustee. Rather, the debtor remains as a "debtor-in-possession." Kernan, supra, 154 N.J. at 446-447, 11 U.S.C. § 1101(1). With certain limited exceptions, a debtor-in-possession has all the rights and powers, and shall perform all the functions and duties of a case trustee. 11 U.S.C. § 1107(a). Even though a debtor-in-possession, there is a duty of loyalty to creditors. Wolf v. Weinstein, 372 U.S. 633, 642, 83 S. Ct. 969, 975-76, 10 L. Ed. 2d 33, 42 (1963). The debtor-in-possession is a fiduciary for the bankruptcy estate and creditors. In re United Healthcare Sys. Inc., 200 F.3d 170, 177 n. 9 (3rd Cir. 1999), cert. denied, 530 U.S. 1204, 120 S. Ct. 2199, 147 L. Ed. 2d 234 (2000). The United States Trustee broadly oversees the process through the promulgation of operating guidelines and reporting requirement to be followed by debtors-in-possession. U.S. Dept. of Justice, United States Trustee Program Policy and Practices Manual, Vol. 3 (July 2016).

The taxpayer initially argued that the obligation to file a response to a Chapter 91 request belongs with whomever is the trustee. However, there was not a trustee specifically appointed to the bankruptcy case. Instead, the day-to-day operations of the debtor and the assets of the bankruptcy estate were handled by the debtor-in-possession, Renault Winery, Inc.

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In Kernan, the New Jersey Supreme Court had to confront this issue in a slightly different context. Kernan slipped and fell on property owned by One Washington Park. Kernan, supra, 154 N.J. at 442. At the time of the fall, One Washington Park was in reorganization pursuant to Chapter 11 of the Bankruptcy Code. Id. The debtor was not permitted to remain in possession and a case trustee was appointed by the Bankruptcy Court. Id. The Court noted that upon appointment, not only would the case trustee operate the business, the case trustee is automatically substituted for the debtor-in-possession in any pending action, proceeding or matter. Id. at 449. The case trustee was vested with title to all the debtor's property. Id. at 450 (citing Hanover Insurance Company v. Tyco Industries, Inc., 500 F.2d 654, 656 (3rd Cir. 1974)). See also Kernan, supra, 154 N.J. at 450. As a result, One Washington Park argued that it did not have a duty to third persons such as Kernan. Id. The Court determined that upon being ousted from control as debtor-in-possession by the appointment of a case trustee, One Washington Park had no duty to maintain the property. Id. at 452. However, the Court noted that the outcome would have been different had One Washington Park remained as the debtor-in-possession. Id. at 453.

In this case, taxpayer's predecessor, Renault Winery, Inc., was a debtor-in-possession. Notably, the obligation to file a response to the Chapter 91 request did not fall upon a case trustee. There is not any dispute the debtor-in-possession received the Chapter 91 notice and did not respond. This failure to respond is not excused by the taxpayer's predecessor being a debtor-in-possession.^[2] "The Chapter 91 defect runs with the land. . ." ADP of New Jersey v. Parsippany Troy Hills, 14 N.J. Tax 372, 378 (Tax 1994); Carriage Four Associates v. Teaneck, 13 N.J. Tax 172, 180 (Tax 1993). A subsequent owner is "saddled with that failure to comply with the statute." Id. at 180. Thus, the taxpayer here is saddled with the failure of Renault Winery, Inc., the debtor-in-possession, to file a Chapter 91 response.

Taxpayer's remaining argument is that upon the sale of the property pursuant to 11 U.S.C. § 363(f), any impediment resulting from the failure to file a Chapter 91 response would be extinguished. The debtor-in-possession can exercise the power of a trustee to sell property of the estate "free and clear" of "any interest" that any entity has in such property. 11 U.S.C. § 363(f).^[3] The term "any interest" is not defined anywhere in the bankruptcy code. The trend seems to be towards a broad interpretation that includes obligations beyond in rem interests that may flow from the ownership of property. Folger Adam Security, Inc. v. Dematteis/MacGregor, JV, 209 F.3d 252, 258 (3rd Cir. 2000). "Any interest" is intended to refer to obligations that are connected to, or arise from, the property being sold. Id. at 259.

In the case at hand, the taxpayer took title to the property by virtue of a sale conducted pursuant to 11 U.S.C. § 363(f). The taxpayer now argues that the sale was free and clear of any interest which the municipality had in filing a Chapter 91 defense. A defense under Chapter 91 must be raised affirmatively by the municipality within 180 days after the filing of the complaint or 30 days before the first trial date. R. 8:6(e).^[4] If not affirmatively raised by the municipality, the defense is considered waived and the case moves forward.

The taxpayer filed a complaint on July 13, 2016. Thereafter, the municipality timely filed a motion to dismiss the complaint on the basis of Chapter 91 on December 15, 2016. The taxpayer now argues that despite the municipality having timely filed a motion to dismiss alleging a Chapter 91 defense, such defense has been extinguished by the section 363(f) sale since the Chapter 91 defense consists of an "interest" in the property. Despite the broad reading of "any interest" in section 363(f), the Third Circuit has indicated that affirmative defenses are not interests and therefore are not extinguished by a section 363(f) sale. Folger Adam, supra, 209 F.3d at 261.

In Folger Adam, the Third Circuit considered whether the affirmative defense of recoupment could be raised despite a section 363(f) sale. The section 363(f) purchaser brought suit to recover accounts receivable which were acquired as part of the assets in the section 363(f) sale. In turn, the defendants raised the defense of recoupment to diminish the claim or defeat the recovery. Id. at 260. The Third Circuit determined that this defense was not an interest. Id. at 261. By its nature, the defense of recoupment only arose after the section 363(f) purchaser asserted its claim.

The taxpayer, as a section 363(f) purchaser, took the parcel and either knew, or should have known, the status of the property taxes including the amount of taxes and Chapter 91 compliance status. "It is the obligation of a purchaser to ascertain the facts concerning the property tax and the property tax assessment and to protect itself in its agreement with the seller as to any rights that it may wish to assert with respect to the property tax." ADP of New Jersey, Inc., supra, 14 N.J. Tax, at 378-379.

Setting aside the Chapter 91 issue, the taxpayer had to or should have realized that even if the tax appeal goes forward, there is not any guarantee that there would be any adjustment of the assessment. The sale documents are not conditioned upon any reduction in the assessment resulting from a tax appeal. In other words, the taxpayer willingly purchased the property prior to and regardless of the outcome of the tax appeal.

In summary, the municipality is not asserting an "interest" under section 363(f). Rather, the municipality is affirmatively asserting a defense under Chapter 91. This defense is not an interest of the municipality, but is a defense waivable by the municipality through inaction or indifference. But for the tax appeal of taxpayer, the Chapter 91 defense would have never arisen. The essence of a defense is something affirmatively raised in response to a claim. Only interests can be extinguished in a section 363(f) sale. Since defenses are not interests under section 363(f), a Chapter 91 defense is not abrogated. The municipality's motion to dismiss the complaint is granted in part subject to a reasonableness hearing under Ocean Pines, supra.

[1] This opinion was originally issued in unpublished form on June 20, 2017.

[2] To be clear, in bankruptcy cases, there is an automatic stay of all actions pursuant to 11 U.S.C. § 362(a). However, the automatic stay does not apply to post-petition claims. Kernan, supra, 154 N.J. at 454. Rather the stay applies solely to claims against the debtor that arose prior to the bankruptcy petition. Id.

[3] The proceeds of the sale are then utilized to reorganize the debtor, including the satisfaction of creditors. 11 U.S.C. § 1123.

[4] The rule, adopted by the Supreme Court, serves as the mechanism through which the municipality raises the defense. Lucent Technologies, Inc. v. Township of Berkeley Hts., 201 N.J. 237, 247-248 (2010).