LYNN BRANCATO VS. ROBERT A. MARTIN AUSTIN TAPIA VS. FIRST AMERICAN FINANCIAL CORPORATION(L-3322-14, HUDSON COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2323-15T1

LYNN BRANCATO,

Plaintiff-Appellant/
Cross-Respondent,

v.

ROBERT A. MARTIN, COUNTRY WIDE
HOME LOANS, INC. and ADRIA VAZQUEZ,

Defendants,

and

AUSTIN TAPIA and
DANIELLE B. TAPIA,

Defendants-Respondents/
Cross-Appellants,

and

AUSTIN TAPIA and DANIELLE B. TAPIA,

Third-Party Plaintiffs-
Cross-Appellants,

v.

FIRST AMERICAN FINANCIAL CORPORATION,

Third-Party Defendant.
_______________________________
 Argued November 8, 2017 – Decided November 28, 2017

Before Judges Fisher and Fasciale.

On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket No.
L-3322-14.

Joseph W. Denneler argued the cause for
appellant/cross-respondent (Salmon,
Ricchezza, Singer & Turchi LLP, attorneys;
Mr. Denneler, of counsel and on the brief).

Kevin G. Roe argued the cause for
respondents/cross-appellants.

PER CURIAM

Plaintiff Lynn Brancato appeals from a September 22, 2015

order entered after a bench trial adjudicating disputed issues

related to real estate property owned by the parties. Austin

Tapia and Danielle B. Tapia (defendants) cross-appeal from a

January 22, 2016 order denying their motion to amend the September

22, 2015 order. We affirm, but remand and direct the judge to

amend the judgment to require recordation of defendants' deed,

which conforms to her rulings reflecting plaintiff is a tenant in

common with defendants and that defendants are solely responsible

for a Countrywide Home Loans mortgage.

The parties tried this matter before the judge over four days

in August 2015. The parties, along with Denise Lofrano, defendant

Danielle B. Tapia's aunt and trustee for Robert A. Martin,

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testified. At the conclusion of the trial, the judge entered the

orders under review and rendered a written opinion.

In 1986, plaintiff and Martin, who is now deceased, purchased

a condominium for investment purposes and recorded a deed.

Plaintiff then allowed Martin to collect rental income from the

property. In April 2003, Martin sold the property to defendants

and recorded a signed deed. The deed reflected $60,000 in

consideration, although defendants paid Martin only $7500.

Defendants did not perform a title search of the property before

purchasing it. Beginning in 2003, defendants collected rent from

the property, and in 2006, defendants encumbered the property with

a $65,000 mortgage from Countrywide Home Loans. In August 2012,

plaintiff learned of defendants' ownership interest after

conducting a tax record search on the property.

On appeal, plaintiff argues the judge erred by deeming

defendants' deed valid; concluding plaintiff and defendants are

equal tenants in common; denying her request to eject the occupants

of the property; entering a limited counsel fee award; and by

denying her request to suppress defendants' pleadings.

Our standard of review requires deference to a judge's

findings "unless they are so wholly unsupportable as to result in

a denial of justice." Greenfield v. Dusseault, 60 N.J. Super.

436, 444 (App. Div.), aff'd o.b., 33 N.J. 78 (1960); see also Rova

3 A-2323-15T1
Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84

(1974). We conclude there exists sufficient credible evidence in

the record to support the judge's findings, and that she correctly

applied the law.

Plaintiff argues defendants' deed was invalid from inception

as a matter of law because defendants only paid $7500. In support

of that argument, plaintiff erroneously relies on the requirements

for recording a deed evidencing transfer of title, N.J.S.A. 46:15-

6(a), which states:

In addition to other prerequisites for
recording, no deed evidencing transfer of
title to real property shall be recorded in
the office of any county recording officer
unless it satisfies the following
requirements:

a. If the transfer is subject to any
fee established under [N.J.S.A. 46:15-7] or
[N.J.S.A. 46:15-7.1], a statement of the true
consideration for the transfer shall be
contained in the deed, the acknowledgment, the
proof of the execution, or an appended
affidavit by one of the parties to the deed
or that party’s legal representative.

This statute explicitly applies to N.J.S.A. 46:15-7 and

N.J.S.A. 46:15-7.1, neither of which apply here. N.J.S.A. 46:15-

7 and N.J.S.A. 46:15-7.1 concern the proper tax calculation when

property is transferred or conveyed. The statute does not consider

the validity of a deed with a false statement of consideration.

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 We conclude that plaintiff's ejectment argument is without

merit. The validity of the deed deems the parties to be tenants

in common and provides defendants with "an undivided interest in

the whole, that is, an interest that encompasses the entire

property." Burbach v. Sussex Cty. Mun. Utils. Auth., 318 N.J.

Super. 228, 233 (App. Div. 1999). Plaintiff has no basis under

N.J.S.A. 2A:35-1 to eject defendants from the property in which

they have a legal right.

Plaintiff contends the judge improperly applied the doctrine

of laches limiting her recovery on her claims for conversion and

unjust enrichment. She maintains that the judge erroneously

reinstated defendants' suppressed answer and affirmative defenses,

which allowed them to amend their pleadings to include the defense

of laches. Plaintiff contends that as an original tenant in common

with Martin, she was entitled to rent payments from 2003.

We review a trial judge's decision to reinstate pleadings for

an abuse of discretion. Abtrax Pharms., Inc. v. Elkins-Sinn,

Inc., 139 N.J. 499, 517 (1995). We apply the same standard when

reviewing an order applying the doctrine of laches. Mancini v.

Twp. of Teaneck, 179 N.J. 425, 436 (2004) (citation omitted). We

see no such abuse here.

"If the discovery rules are to be effective, courts must be

prepared to impose appropriate sanctions for violations of the

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rules." Abtrax Pharms., Inc., supra, 139 N.J. at 512. However,

"[t]he discovery rules are not to be used . . . to preclude a

party from presenting its case when the evidence neither surprises,

misleads [nor] prejudices the opposing party." Plaza 12 Assocs.

v. Carteret Borough, 280 N.J. Super. 471, 477 (App. Div. 1995).

Our Supreme Court has held that "drastic sanctions should be

imposed only sparingly" and "dismissal with prejudice is the

ultimate sanction, [which] will normally be ordered only when no

lesser sanction will suffice to erase the prejudice suffered by

the non-delinquent party." Zaccardi v. Becker, 88 N.J. 245, 253

(1982).

Before trial, and at two separate motion hearings,

defendants' answer and affirmative defenses were suppressed

without prejudice for failing to provide discovery responses in

accordance with Rule 4:23-5(a)(1). The judge, on defendants'

second motion for reconsideration, reinstated their answer and

affirmative defenses finding suppression to be too severe of a

sanction. The judge imposed a less severe sanction of disallowing

any testimony regarding the expenses that defendants produced

during the trial. Following our Supreme Court's direction to

impose suppression with prejudice sparingly, the judge was within

her discretion to reinstate the pleadings and impose a lesser

sanction. Furthermore, there is substantial credible evidence

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supporting the judge's finding that defendants' failure to produce

some discovery was not "deliberate and contumacious."

Plaintiff contends that because the judge reinstated

defendants' pleadings, defendants were permitted to assert the

affirmative defense of laches, which reduced her rent claim.

"Laches is an equitable doctrine, operating as an affirmative

defense that precludes relief when there is an 'unexplainable and

inexcusable delay' in exercising a right, which results in

prejudice to another party." Fox v. Millman, 210 N.J. 401, 417-

18 (2012) (quoting Cty. of Morris v. Fauver, 153 N.J. 80, 105

(1998)). "Laches may only be enforced when the delaying party had

sufficient opportunity to assert the right in the proper forum and

the prejudiced party acted in good faith believing that the right

had been abandoned." Knorr v. Smeal, 178 N.J. 169, 181 (2003).

Plaintiff knew of her right to rent payments when she signed

the deed with Martin, however, she testified that she did not

expect to collect rent from approximately 1993, when she permitted

Martin to retain all rent, to 2012. The judge explained that

although she did not expect to collect rent, plaintiff had

knowledge of her right, and had sufficient opportunity to assert

it, but failed to do so. In her discretion, the judge applied the

doctrine of laches and found plaintiff was entitled to one-half

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of rent, minus applicable expenses, from 2012, when plaintiff

found the deed and asserted her right.

Plaintiff next contends the judge erred by not finding

defendants negligent for failing to conduct a title search. There

are three elements to a cause of action for negligence: "(1) a

duty of care owed by defendant to plaintiff; (2) a breach of that

duty by defendant; and (3) an injury to plaintiff proximately

caused by defendant's breach." Endre v. Arnold, 300 N.J. Super.

136, 142 (App. Div.), certif. denied, 150 N.J. 27 (1997). As a

question of law, the court must determine whether a duty of care

exists. Ibid. Plaintiff argues defendants had a duty to make a

diligent inquiry as to confirming Martin's ownership.

In New Jersey, "parties are generally charged with

constructive notice of instruments that are properly recorded."

Cox v. RKA Corp., 164 N.J. 487, 496 (2000). "[C]onstructive notice

arises from the obligation of a claimant of a property interest

to make reasonable and diligent inquiry as to existing claims or

rights in and to real estate." Friendship Manor, Inc. v. Greiman,

244 N.J. Super. 104, 108 (App. Div. 1990), certif. denied, 126

N.J. 321 (1991). "[T]he claimant will be charged with knowledge

of whatever such an inquiry would uncover where facts are brought

to his attention, 'sufficient to apprise him of the existence of

an outstanding title or claim, or the surrounding circumstances

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are suspicious and the party purposefully or knowingly avoids

further inquiry.'" Ibid. (quoting Scult v. Bergen Valley Builders,

Inc., 76 N.J. Super. 124, 135 (Ch. Div. 1962)).

Defendants were unaware of plaintiff's existence and had no

reason to question Martin's ownership of the property. Martin was

a family friend of defendants who voiced his financial struggles

and defendants relied upon Martin's representation that he owned

the property in fee simple. Having entered the transaction with

a family friend, defendants were not provided with "sufficient

[knowledge] to apprise [them] of the existence of an outstanding

title or claim." Ibid. (emphasis omitted). There is no evidence

suggesting that defendants purposefully and knowingly avoided

further inquiry.

Plaintiff contends the judge erred by failing to award her

attorney's fees. Our review of a trial judge's fee determinations

is for an abuse of discretion. Packard-Bamberger & Co. v. Collier,

167 N.J. 427, 444 (2001) (citation omitted). Generally, under the

American Rule, parties pay their own legal fees based on the

normative belief that "our judicial system is best served if

parties are responsible for bearing their own counsel fees."

DiMisa v. Acquaviva, 198 N.J. 547, 553 (2009).

Plaintiff argues the judge failed to apply the third-party

exception to the rule, which states "if the commission of a tort

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proximately causes litigation with parties other than the

tortfeasor, the plaintiff is entitled to recover damages measured

by the expense of that litigation with third parties." Jugan v.

Friedman, 275 N.J. Super. 556, 573 (App. Div.), certif. denied,

138 N.J. 271 (1994). Such a plaintiff "may recover from the

tortfeasor the expenses of that litigation, including counsel

fees, as damages flowing from the tort." Dept. of Envtl. Prot.

v. Ventron Corp., 94 N.J. 473, 505 (1983) (emphasis added) (quoting

Dorofee v. Plan. Bd. of Pennsauken Twp., 187 N.J. Super. 141, 144

(App. Div. 1982)). The judge denied plaintiff attorney's fees

based on her finding that Martin, not defendants, committed a tort

when he purportedly transferred the property to defendants. In

accordance with the exception, plaintiff may recover from Martin

as the tortfeasor, not defendants.

Plaintiff further contends she should have been awarded

attorney's fees because the judge found defendants and Martin

converted plaintiff's share of rent from August 2012 to present,

and yet failed to consider attorney's fees based on conversion.

Although the judge erred, this error was harmless. Plaintiff has

no basis for an award of attorney's fees and must bear her own

costs. Id. at 504 (limiting an attorney's fees award to "express

authorization by statute, court rule or contract").

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 On the cross-appeal, defendants argue the judge abused her

discretion by awarding plaintiff attorney's fees for the June 9,

2015 trial call. We disagree. The parties appeared for a trial

call with a different judge, who presided over the case at the

time, and defendants advised they were unprepared to proceed with

trial. That judge sanctioned defendants for their inexcusable

failure to appear ready to proceed with trial pursuant to Rule

4:36-3(a), and awarded plaintiff $2040 for attorney's fees and

costs incurred for her appearance at the trial call. At the end

of trial, defendants had not yet paid, and the trial judge ordered

the same sanction. Defendants contend that the trial judge

misunderstood the prior judge's oral decision for sanctions. In

the trial judge's January 22, 2016 order, she noted "[t]he order

for sanctions on June 9 was made on the record by [the prior judge]

and was never challenged by [d]efendants at that time or since,

besides [after trial]." In following our review of a trial judge's

imposition of sanctions, we find no injustice to warrant

interference. Cavallaro v. Jamco Prop. Mgmt., 334 N.J. Super.

557, 571 (App. Div. 2000).

Defendants contend the judge erroneously found Rule 4:49-2

inapplicable and should have included a setoff for the condominium

association fees paid by defendants in the final judgment.

Reviewing the judge's interpretation of Rule 4:49-2 de novo,

11 A-2323-15T1
Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995), we agree that the judge erroneously found Rule 4:49-2

inapplicable; however, the mistake was harmless and the judge

correctly denied defendants a setoff from the condominium

association fees.

Rule 4:49-2 provides "a motion for rehearing or

reconsideration seeking to alter or amend a judgment or order

shall be served not later than [twenty] days after service of the

judgment or order upon all parties by the party obtaining it." If

the twenty-day limitation runs, a "court may relieve a party or

the party's legal representative from a final judgment or order"

under Rule 4:50-1. Following trial, the judge found that

defendants filed their motion outside of the twenty-day

limitation, requiring Rule 4:50-1 to be applied.

The judge erroneously found Rule 4:49-2 inapplicable.

Defendants had twenty days from September 23, 2015 to file a notice

of motion, specifically, by October 12, 2015. However, October

12, 2015 was Columbus Day, a legal holiday, and according to Rule

1:3-1, defendants had until October 13, 2015 to file their notice

of motion, which they did. Nevertheless, the judge's mistake was

harmless.

Defendants were not permitted to present any documentation

as to the specific payments of condominium association fees.

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Defendants did not provide these documents until trial, and as a

lesser sanction of suppressing defendants' pleadings, the judge

denied presentation of documents not previously submitted.

Although Austin Tapia testified as to the fees, the judge did not

err by excluding a setoff for the fees paid by defendants in the

final judgment.

We affirm but remand for modification of the judgment

consistent with this opinion. We do not retain jurisdiction.

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