NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 Eric Moore appeals from a February 5, 2015 Chancery
Division order denying his motion to vacate the final judgment in this mortgageforeclosure action. For the reasons that follow, we affirm.
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On August 22, 2003, defendant borrowed $173,000 from Fleet National Bank ("Fleet"). Defendant delivered a note to Fleet in that amount and secured the debt by executing a mortgage encumbering property he owned in Irvington. Defendant executed the mortgage in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for Fleet. The mortgage was duly recorded in the Office of Essex County Register on August 28, 2003. Thereafter, Fleet endorsed the note without recourse to Cendant Mortgage Corporation ("Cendant").[1] Cendant endorsed the note in blank.
Six years later, on October 26, 2009, MERS assigned the mortgage to PHH Mortgage Corporation ("PHH"). The assignment was duly recorded on December 21, 2009.
According to the foreclosure complaint that PHH filed on January 10, 2013, defendant defaulted by failing to make an installment payment due June 1, 2012, and has since failed to make any payments.
On February 4, 2014, defendant filed a motion to set aside a default that had been entered pursuant to Rule 4:43-3.[2] Thereafter, plaintiff filed a notice of motion for entry of judgment. Defendant opposed the motion and filed a cross motion to dismiss the complaint. The court denied defendant's cross motion and entered final judgment on November 21, 2014.
Defendant moved to vacate the final judgment. The court denied the motion on February 5, 2015. This appeal followed.
On appeal, defendant argues "[t]he Appellate Division must decide whether the defendant [is] entitled to relief as a matter of law." Defendant also argues plaintiff produced no competent admissible evidence that it owned an interest in the note secured by defendant'smortgage. Defendant contends the "Certification of Proof of Amount Due" signed by plaintiff's assistant vice-president, attesting "[p]laintiff is the holder of the . . . note," is not based on personal knowledge. Defendant further argues the vice-president did not address the note's endorsement in blank. In short, defendant contends plaintiff failed to demonstrate it was entitled to judgment as a matter of law.
Defendant seeks relief under Rule 4:50-1, which states:
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.
The rule "governs an applicant's motion for relief from default when the case has proceeded to judgment" pursuant to Rule 4:43-2. US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-67 (2012). "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.'" Id. at 467 (citing Mancini v. EDS, 132 N.J. 330, 334 (1993)).
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Relief from judgment under Rule 4:50-1 "is not to be granted lightly." Bank v. Kim, 361 N.J. Super. 331, 336 (App. Div. 2003). Moreover, "the showing of a meritorious defense is a traditional element necessary for setting aside both a default and a default judgment. . . ." Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:43-3 (2017). That is so because when a party has no meritorious defense, "[t]he time of the courts, counsel and litigants should not be taken up by such a futile proceeding." Guillaume, supra, 209 N.J. at 469 (quoting Schulwitz v. Shuster, 27 N.J. Super. 554, 561 (App. Div. 1953)).
An appellatecourt reviews a trial court's order denying a Rule 4:50-1 motion for relief under an abuse of discretion standard, giving the trial court's ruling substantial deference. Id. at 467 (citations omitted). An appellatecourt "finds an abuse of discretion when a decision is `made without rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Id. at 467-68 (citing Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).
Here, defendant did not demonstrate he had a meritorious defense to the foreclosure action. His primary contention on appeal is PHH did not have standing when it filed the foreclosure complaint. The argument is unavailing. A mortgage assignment that predates the original complaint confers standing on a plaintiff. Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012) (citing Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 216 (App. Div. 2011)). Here, it is undisputed that MERS, as nominee for Fleet, assigned the mortgage to PHH on October 26, 2009, and that the mortgage was duly recorded on December 21, 2009, more than three years before PHH filed the complaint on January 10, 2013.
Defendant has no other defenses. We have considered his remaining arguments and found them to be without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).
GOSHEN MORTGAGE, LLC, Plaintiff-Respondent, v. DANIEL WILLIAMS, Defendant-Appellant, and ROSA WILLIAMS, NEW CENTURY FINANCIAL SERVICES, CHILTON MEMORIAL HOSPITAL and MIDLAND FUNDING, LLC, Defendants.
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 Daniel Williams appeals from a final judgment of foreclosure contending plaintiff Goshen Mortgage, LLC failed to establish its predecessor in this action, Bayview Loan Servicing, LLC, possessed the note and mortgage when it filed its foreclosure complaint. Because the record reveals plaintiff's predecessor established its standing by actual possession of the note and mortgage and a duly recorded assignment of mortgage pre-dating its complaint, we affirm.
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Defendant borrowed $345,100 from Nationwide Equities Corporation in March 2008, executing a thirty-year note and a non-purchase money mortgage on his home. The loan went into default eight months later after defendant and his wife suffered serious health issues. As reflected in the 2014 foreclosure complaint and in counsel for Bayview's certification of diligent inquiry pursuant to R. 4:64-1(a)(2), the note and mortgage were assigned first to Bank of America, N.A., then to the Secretary of Housing and Urban Development and then to the original plaintiff, Bayview. While the matter was pending in the Chancery court, Bayview transferred physical possession of the note and mortgage to Goshen and recorded an assignment of mortgage documenting the transfer. The Chancery judge amended the caption accordingly.
Following discovery, Goshen moved for summary judgment. Defendant opposed, arguing that certain signatures on the assignments of mortgage were forged. He submitted two almost identical reports from a purported handwriting expert, each concluding, without explanation, that the signatures were forged.
After hearing oral argument, Judge McVeigh entered summary judgment for plaintiff, addressing and rejecting each of defendant's arguments in opposition to the motion in a comprehensive written opinion. After a detailed review of the documents in the record, she found Goshen established its own and its predecessor Bayview's standing by virtue of a certification by its servicer's employee made on personal knowledge in accordance with R. 1:6-6. See Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597-600 (App. Div. 2011).
Based on a review of Goshen's records, the employee was able to attest to Bayview's acquisition of the original note and mortgage six months before the filing of the complaint and its transfer of those original documents to Goshen during the pendency of the litigation, which continued to hold them at the time of the motion. As actual holders of the mortgage, plaintiff and its predecessor easily established standing to pursue its foreclosure. See Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 330-31 (Ch. Div. 2010).
Judge McVeigh was also satisfied that Goshen established it and its predecessor's standing through the chain of recorded assignments. Because Bayview had a recorded assignment of mortgage predating the complaint, it had standing to initiate the foreclosure. See Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012). Goshen's physical possession of the note and a recorded assignment of mortgage likewise provided it standing to pursue the complaint to judgment. See Ibid. Judge McVeigh rejected the proffered expert reports as net opinions and questioned whether even a forgery in the recorded assignments would affect plaintiff's standing in light of its possession of the original note and mortgage.
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Defendant appeals, reprising the standing arguments he made to the trial court. Having considered defendant's arguments and reviewed the record on the motion, we affirm, substantially for the reasons expressed by Judge McVeigh in her opinion of December 4, 2015. Because we agree defendant presented no competent proof of forgery, we need not consider whether summary judgment could have been entered had defendant raised a genuine issue as to the authenticity of the signatures on the assignments.
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.
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 appellatecourts 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.
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 bankruptdebtor 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.
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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 BankruptcyCourt 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 BankruptcyCourt, 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 BankruptcyCourt. 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).
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.
Plaintiff appeals from a March 22, 2016 Family Part order denying his motion for reconsideration. We affirm for the reasons that follow.
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Plaintiff and defendant were married on June 21, 1987, and had one child. The couple divorced March 8, 2011, entering into a property settlement and support agreement (the agreement). The agreement obligates plaintiff to pay defendant $42,500 per year in permanent alimony in equal installments of $817.31 per week. The agreement states plaintiff was fifty-two years of age at the time of the divorce and worked as an executive chef in New York City, making a salary of $180,400 per year. He also had a 401K savings plan through his employer and an Individual Retirement Agreement (IRA). Defendant had worked as a secretary, earning $20,800 annually, but was unemployed at the time of the divorce. She also had an IRA. The parties agreed to an equal equitable division of the marital portions of the various retirement and other accounts.
In March 2015, plaintiff lost his job. In June 2015, he stopped paying his alimony obligation. Defendant moved to enforce litigant's rights in July 2015. Plaintiff cross-moved seeking to terminate his alimony obligation, revisit his alimony obligation upon obtaining employment, and emancipate the parties' child.
On September 30, 2015, the Family Part judge found plaintiff's unemployment to be temporary in nature, denied modification, and issued an order requiring plaintiff to pay defendant $11,442.34 in alimony arrears and $2100 in child support arrears within fourteen days and to resume regular payments. The Family Part judge also denied emancipation of the parties' child.
On October 9, 2015, plaintiff moved for reconsideration of the September 30, 2015 order. In October 2015, plaintiff secured a new position earning $114,000 per year. On December 2, 2015, the Family Part judge entered an order granting plaintiff's motion for reconsideration in part, granting plaintiff's request for emancipation of the parties' child, denying plaintiff's request for modification of alimony, and denying both parties' requests for counsel fees. The Family Part judge discredited the discrepancy in income between plaintiff's former position and his new position, noting the cost of living in Florida, where plaintiff resides, is lower than in New Jersey/New York, and plaintiff's $114,000 per year salary was not in and of itself prima facie evidence he was unable to earn what he previously earned to establish changed circumstances.
Defendant received no alimony payments from plaintiff and filed another motion on December 8, 2015, seeking wage garnishment and probation monitoring. Plaintiff again moved for modification of alimony. On March 22, 2016, the Family Part judge granted defendant's request for wage garnishment and probation monitoring and ordered plaintiff to make a lump sum payment of $11,442.34 within thirty days. Plaintiff appealed from the March 22, 2016 order. On appeal, plaintiff argues the court erred by denying modification of alimony and requests the matter be remanded to a different judge; plaintiff also contends he should be awarded counsel fees. We disagree and affirm.
Appellate review is particularly deferential to family courts' findings of fact because of their unique expertise. Cesare v. Cesare, 154 N.J. 394, 413 (1998). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citing State v. Brown, 118 N.J. 595, 604 (1990); Dolson v. Anastasia, 55 N.J. 2, 7 (1969); Pearl Assurance Co. Ltd. v. Watts, 69 N.J. Super. 198, 205 (App. Div. 1961)).
Plaintiff asserts the record does not support the judge's determination and factual findings because the judge took no testimony and overlooked the parties' agreement, the applicable statutory factors, case law, and the substantial change in plaintiff's circumstances. He asserts he is entitled to a plenary hearing.
As noted above, plaintiff appeals only the motion for reconsideration and not the original order. See Fusco v. Bd. of Educ., 349 N.J. Super. 455, 461-62 (App. Div.) (citing Pressler, Current N.J. Court Rules, cmt. 6 on R. 2:5-1(f)(3)(i) (2002)) (explaining this court only considers judgments and orders listed in a notice of appeal), certif. denied, 174 N.J. 544 (2002). Accordingly, we review for an abuse of discretion. Ibid. We also note "[m]otions for reconsideration are granted under very narrow circumstances." Ibid.
Reconsideration should be used only for those cases which fall into that narrow corridor in which either (1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or (2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence.
[Ibid. (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990); R. 4:49-2).]
We discern no abuse of discretion on the part of the Family Part judge. As the judge correctly explained, when a party seeks to modify any support obligation under an agreement, the party must demonstrate "changed circumstances" supporting such a modification. See J.B. v. W.B., 215 N.J. 305, 327 (citing Lepis v. Lepis, 83 N.J. 139, 146-48 (1980)). A reduced income may qualify as "changed circumstances." Ibid. Family Part judges, however, have considerable discretion in determining whether a changed circumstance warrants an alimony modification. Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006). This discretion turns on a Family Part judge's "experience as applied to all the relevant circumstances presented." Ibid. We further note the party seeking modification has the burden of demonstrating such changed circumstances as would warrant relief from his or her obligation. Lepis, supra, 83 N.J. at 157. When a supporting spouse brings an application for a downward modification, the central focus is on "the supporting spouse's ability to pay." Miller v. Miller, 160 N.J. 408, 420 (1999).
Although the judge noted plaintiff's reduced income, he also noted the reduced reported income did not appear to be a permanent circumstance. In order to prove changed circumstances, the change must be permanent. Lepis, supra, 83 N.J. at 151. Accordingly, we conclude the Family Part judge's decision was not based on a palpably incorrect basis.
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Plaintiff's income at the time of the agreement was $180,000. Plaintiff asserts his current income from his new job is thirty-seven percent lower, but plaintiff has not demonstrated he cannot earn more. "Courts have consistently rejected requests for modification based on circumstances which are only temporary." Ibid. The issue is whether changed circumstances are enduring enough to warrant a modification. In other words, plaintiff must demonstrate his decline in income and his ability to earn are permanent. The motion judge correctly concluded plaintiff's evidence did not evince a showing of permanent changed circumstances. Accordingly, there was no basis upon which the Family Part was required to conduct a plenary hearing. See id. at 157 (explaining a court should hold a plenary hearing if "a party clearly demonstrate[s] the existence of a genuine issue as to a material fact").
We also conclude the court appropriately considered all of the relevant probative and competent evidence. See D'Atria, supra, 242 N.J. Super. at 401. The trial court reviewed plaintiff's submissions and found plaintiff did not demonstrate his earning capacity had substantially changed since the time the parties' executed agreement. We find no error on the judge's part in this regard.
Plaintiff's argument the Family Part judge disregarded the provision in the agreement permitting an application to modify it is unpersuasive. Plaintiff was permitted to, and did, make such an application, but he fell short of the proofs required to establish changed circumstances. Moreover, we reject the argument plaintiff is entitled to a modification merely based on defendant's employment status.
In light of our decision, we need not address plaintiff's argument for a new judge to hear this matter. Plaintiff's remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(11)(E).
