NOT FOR PUBLICATION WITHOUT THE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-4809-17T2
FARGIL REALTY, LLC,
Plaintiff-Respondent,
v.
BROADWAY AUTO PARTS,
FIRST NATIONAL BANK, n/k/a
WELLS FARGO BANK, NA,
PNC BANK, and STATE OF
NEW JERSEY,
Defendants.
______________________________
450 BROADWAY, LLC,
Appellant.
______________________________
Argued March 18, 2019 – Decided May 9, 2019
Before Judges Fasciale and Gooden Brown.
On appeal from Superior Court of New Jersey,
Chancery Division, Passaic County, Docket No. F-
018831-17.
Clark L. Cornwell, III, argued the cause for appellant.
Susan B. Fagan-Rodriguez argued the cause for
respondent.
PER CURIAM
450 Broadway, LLC (Broadway), the proposed intervenor in a tax sale
foreclosure action instituted by plaintiff Fargil Realty, LLC (Fargil), against
defendant property owner Broadway Auto Parts (Auto), appeals from a May 21,
2018 Chancery Division order, denying its motion to intervene in order to
redeem the tax sale certificate and vacate the final judgment of foreclosure
entered in favor of Fargil. Having considered the arguments and applicable law,
we affirm.
We glean the following facts from the record. Auto owned 450-458
Broadway in Paterson (the property), but failed to pay taxes. As a result, on
June 25, 2015, the Paterson Tax Collector sold tax sale certificate number 2016-
1748, secured by the property, to SLS I, LLC (SLS), for $17,822.55, which was
recorded in the County Clerk's Office on November 2, 2015. 1 On March 16,
1
The Tax Sale Law (the Act), N.J.S.A. 54:5-1 to -137, provides a mechanism
for individuals or entities to purchase tax liens from municipalities and initiate
foreclosure actions against property owners who are delinquent in paying their
property taxes. The foreclosure process begins when a property owner fails to
pay the property taxes, as the unpaid balance becomes a municipal lien on the
property. N.J.S.A. 54:5-6. "When unpaid taxes or any municipal lien . . .
remains in arrears on the [eleventh] day of the eleventh month in the fiscal year
A-4809-17T2
2
2016, SLS assigned the tax sale certificate to Fargil, which assignment was
recorded on April 21, 2016.
After the statutorily-required two-year redemption period expired, on
August 9, 2017, Fargil filed a foreclosure complaint, naming Auto as a
defendant, as well as other entities with an interest in the property (collectively
defendants).2 A copy of the summons and complaint was served upon Auto's
registered agent on August 10, 2017, along with all other defendants.3 On
August 15, 2017, Fargil filed a lis pendens with the County Clerk's Office, which
was recorded on August 23, 2017, providing notice of the foreclosure action.
Based on defendants' failure to file an answer, on Fargil's motion, default was
entered and an order setting amount, time, and place of redemption (OST) was
when the taxes or lien became in arrears, the collector . . . shall enforce the lien
by selling the property . . . ." N.J.S.A. 54:5-19. Upon completion of the sale, a
certificate of tax sale is issued to the purchaser. N.J.S.A. 54:5-46.
2
A tax foreclosure sale is subject to redemption. N.J.S.A. 54:5-32. If the
certificate is not redeemed within two years from the date of the tax sale, the
certificate holder can file an in personam foreclosure action to bar th e right of
redemption. N.J.S.A. 54:5-86(a). Prior thereto, the certificate holder must,
through a "title search of the public record," identify "any lienholder or other
persons and entities with an interest in the property that is subject to
foreclosure," who then must be named as defendants in the action and served
with the foreclosure complaint. R. 4:64-1(a).
3
One defendant was served on August 15, 2017. The remaining defendants
were served on August 10, 2017, along with Auto.
A-4809-17T2
3
entered on November 9, 2017. The OST fixed the redemption amount at
$98,888.78, the Paterson Tax Collector's Office as the place for redemption, and
December 26, 2017, as the last day to redeem. The OST also specified that
"[a]nything to the contrary notwithstanding, redemption shall be permitted up
until the entry of final judgment."
Once the deadline passed, on January 3, 2018, Fargil moved for entry of
final judgment. In support, Fargil submitted an affidavit of non-redemption by
Sonia Schulman, Paterson's Tax Collector, who averred that "neither the
defendants nor any . . . persons acting on their behalf appeared before [her]" by
the December 26, 2017 deadline to pay the redemption amount as required by
the OST. On February 7, 2018, final judgment was entered on Fargil's behalf.
However, while the foreclosure action had been pending, Auto sold the
property to Broadway for $455,000. The contract of sale was entered on
November 27, 2017, and the deed was executed on December 21, 2017. The
closing took place on January 8, 2018, as a result of which the title company
sent the Paterson Tax Collector a certified check in the amount of $119,749.68
to redeem the tax sale certificate, and requested a conforming certificate of
redemption. The Paterson Tax Collector received the request on January 12,
2018, and forwarded the certificate to Fargil, requesting its endorsement.
A-4809-17T2
4
However, Fargil refused, and, instead, attempted to obtain a copy of the
sale contract between Broadway and Auto. When those efforts failed, on March
28, 2018, Fargil moved to bar redemption, impose a constructive trust, and
permit Fargil to purchase the property for the sale price of $455,000. In support,
Fargil submitted certifications from David Farber, a member of Fargil, Fargil's
foreclosure counsel, and Fargil's litigation counsel.
Farber certified that he had been interested in acquiring the property for
some time and had previously purchased tax sale certificates that "were
redeemed by the owner prior to [f]inal [j]udgment." He asserted that before
Fargil acquired the tax sale certificate from SLS, the property had been listed
"for sale at the asking price of [$750,000,]" and his "offer" of $500,000 had been
"accepted." However, when "[he] requested an adjustment of the purchase
price" due to concerns about "an environmental issue" on the property, "the
contract was cancelled." Thereafter, he "continued to pursue the tax
foreclosure."
According to Farber, "[a]fter the foreclosure complaint was filed and
Fargil's foreclosure counsel was applying for final judgment, [he] received a
telephone call from another investor" inquiring about "the 'investment -
worthiness' of the . . . property." He later learned that the "investor" was "the
A-4809-17T2
5
principal of . . . Broadway" who "had already purchased the property from
Auto." As a result, he "asked foreclosure counsel to investigate" the sale and
attempted redemption because "[he] was suspicious about the transaction as well
as the relationship of the purchase price to the fair market value of the property."
Deborah Feldstein, Fargil's foreclosure counsel, certified that "[w]hile
[she] was investigating the attempted redemption, the Foreclosure Unit entered
. . . [f]inal [j]udgment on February 7, 2018." During her investigation, she
"review[ed] the closing documents" and "requested from the title company a
copy of the contract of sale between Auto and [Broadway]." However, "[her]
request . . . was refused." She also "reviewed the [e]Courts docket" and
confirmed that "a motion to intervene had [not] been filed by [Broadway]."
Susan Fagan-Rodriguez, Fargil's litigation counsel, confirmed that "[b]oth
the contract of sale," which she eventually obtained "[o]n or about March 5,
2018," and "the closing took place after the filing of the tax foreclosure
complaint[.]" She also confirmed that "no motion to intervene was filed prior
to the contract, the closing[,] or the attempted redemption."
A-4809-17T2
6
On April 2, 2018, Broadway moved to intervene and cross-moved to
vacate the final judgment under Rule 4:50-1(a), (e), and (f).4 In support, Howard
Berman, Broadway's counsel, certified that "[t]he transaction was an arm's
length transaction that involved [r]eal [e]state [b]rokers and [c]ounsel." To
address "adequacy of [c]onsideration[,]" Berman pointed out that Broadway
"matched" Fargil's $500,000 offer, "but then received a [$45,000] credit based
on environmental issues that were discovered during [Broadway's] due diligence
period." He also noted that despite receiving notice from the City of Paterson
on January 12, 2018, "that redemption had been tendered[,] [Fargil] allowed the
[c]ourt to enter final judgment on February 7, 2018."
On April 30, 2018, the motion judge granted Fargil's motion as an
unopposed motion. The memorializing order barred Broadway's "attempt to
redeem," as violating the Act. Further, the order imposed "a [c]onstructive trust
on the real estate transaction between [Auto] and [Broadway], thereby allowing
Fargil . . . to purchase the property . . . under the same terms and conditions of
4
Under Rule 4:50-1, "the court may relieve a party or the party's legal
representative from a final judgment" for "mistake, inadvertence, surprise, or
excusable neglect[,]" Rule 4:50-1(a); if "the judgment . . . has been satisfied,
released[,] or discharged . . . or it is no longer equitable that the judgment . . .
should have prospective application[,]" Rule 4:50-1(e); or "any other reason
justifying relief[,]" Rule 4:50-1(f).
A-4809-17T2
7
the [November 27, 2017] real estate contract." Upon later discovering that
Broadway's motion was not considered prior to the entry of the April 30, 2018
order,5 the judge found "good reason to consider" Broadway's motion as a
motion for reconsideration under Rule 4:49-2, but, on May 21, 2018, denied the
motion in an oral decision.
In his decision, initially, the judge recited the rules governing
intervention. See R. 4:33-1 (allowing intervention as of right "[u]pon timely
application . . . if the applicant claims an interest relating to the property" and
"the disposition of the action may as a practical matter impair or impede the
ability to protect that interest"); R. 4:33-2 (allowing permissive intervention by
anyone "[u]pon timely application . . . if the claim or defense and the main action
have a question of law or fact in common[,]" but "[i]n exercising its discretion [,]
the court shall consider whether the intervention will unduly delay or prejudice
the adjudication of the rights of the original parties").
Next, relying on N.J.S.A. 54:5-89.1, Simon v. Cronecker, 189 N.J. 304
(2007), and Simon v. Rando, 189 N.J. 339 (2007), the judge stated that "any
5
Because Broadway did not specify its opposition to Fargil's motion, eCourts
scheduled the motions for different return dates.
A-4809-17T2
8
party claiming an interest in the property must intervene in the [tax sale
foreclosure] action prior to final judgment being entered." The judge explained:
The Court has held in [Cronecker] as well as
[Rando] that a third-party seeking to redeem a tax sale[]
certificate that is currently subject to a foreclosure
action must intervene in the action prior to the entrance
of final judgment.
That has not . . . been done in this case. And the
intervener's motion to intervene at this point is not
timely. And no reason exists to vacate the final
judgment in this matter. So the [c]ourt has considered
. . . the arguments of [Broadway] and has decided that
the motion to vacate the final judgment will not . . . be
granted.
The judge entered a memorializing order and this appeal followed.
Broadway's "right to intervene, in an attempt to vacate a final judgment
and exercise a right of redemption, was not absolute, but discretionary[,]" and
thus subject to the trial court determining whether the application was timely
and "whether the intervention [would] unduly delay or prejudice the
adjudication of the rights of the original parties." Town of Phillipsburg v. Block
1508, Lot 12, 380 N.J. Super. 159, 172 (App. Div. 2005) (quoting R. 4:33-2).
See Twp. of Hanover v. Town of Morristown, 118 N.J. Super. 136, 143 (Ch.
Div.), aff'd, 121 N.J. Super. 536 (App. Div. 1972) ("An essential prerequisite to
A-4809-17T2
9
intervention is timeliness, which should be equated with diligence and
promptness.").
Likewise, Broadway's "motion for vacation of the judgment [pursuant to
Rule 4:50-1] should be granted sparingly, and is addressed to the sound
discretion of the trial court, whose determination will be left undisturbed unless
it results from a clear abuse of discretion." Town of Phillipsburg, 380 N.J.
Super. at 173 (alteration in original) (quoting Pressler, Current N.J. Court Rules,
cmt. 1.1 on R. 4:50-1 (2005)). An abuse of discretion "arises when a decision
is 'made without a rational explanation, inexplicably departed from established
policies, or rested on an impermissible basis.'" Flagg v. Essex Cty. Prosecutor,
171 N.J. 561, 571 (2002) (quoting Achacoso-Sanchez v. Immigration &
Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)).
Here, we discern no abuse of discretion, clear or otherwise, and are
satisfied that "there are good reasons . . . to defer to the particular decision at
issue." Ibid. The judge determined that Broadway's application to intervene
was untimely, which it was, and that Broadway failed to demonstrate
meritorious grounds justifying relief under Rule 4:50-1, which it failed to do.
Broadway's reliance on the fact that Fargil was aware of the attempted
A-4809-17T2
10
redemption and still allowed final judgment to be entered was insufficient to
justify relief under Rule 4:50-1.
Broadway argues the judge erred in its "tortured application" of Cronecker
to the facts of this case because Broadway entered into "an arm's length , bona
fide real estate transaction" that was not designed to improperly impede or
frustrate Fargil's tax foreclosure action, and "there [was] no suggestion that the
purchase price paid by . . . Broadway was nominal." In Cronecker, our Supreme
Court addressed the Act and instituted protections for distressed property
owners. 189 N.J. at 319. The Court noted that the Act "places no restrictions
on how a third-party investor arranges for the purchase of property and the
redemption of a tax certificate" prior to the filing of a foreclosure complaint. Id.
at 320. However, once a foreclosure complaint is filed, a third-party investor
purchasing the property may not redeem the tax certificate without first
complying with the Act, "which delineates the competing rights of tax certificate
holders and property owners." Id. at 318.
"In the post-foreclosure complaint period," N.J.S.A. 54:5-89.1 and 54:5-
98 "mandate intervention by a third-party investor before seeking redemption of
a tax certificate." Id. at 320. "After the filing of the foreclosure complaint, . . .
both the property's sale and the redemption procedure are subject to court
A-4809-17T2
11
supervision, primarily to protect property owners from exploitation by third -
party investors." Ibid. Thus, "[t]o facilitate judicial review of the adequacy of
the consideration offered to the owner, the Act requires that third-party investors
who seek either directly or indirectly to acquire the property and redeem the tax
sale certificate intervene in the foreclosure action." Ibid.; accord Rando, 189
N.J. at 342-43.
In Cronecker, the Court voided the third-party investor's contracts and
"impose[d] constructive trusts in favor of defendant property owners, granting
[the tax certificate holders] the opportunity to assume [the third-party investor's]
contractual rights" because the third-party investor "did not seek to become a
party to the actions before arranging for the redemption of the tax certificates"
in violation of the Act. Id. at 338. See also Rando, 189 N.J. at 342 ("one who
redeems an interest acquired post-complaint, without first applying for
admission to the action, has not made a valid redemption in the cause" (quoting
Simon v. Rando, 374 N.J. Super. 147, 158 (App. Div. 2005))).
Thus, Broadway's failure to timely intervene in the foreclosure action is
fatal to its position. Broadway moved to intervene in the foreclosure action
nearly two months after entry of final judgment and nearly three months after it
closed on the property and attempted to redeem. Like the third-party investor
A-4809-17T2
12
in Cronecker, "before redeeming or causing to be redeemed the tax certificate,"
Broadway "had the duty to apply for admission to the foreclosure action[]" and
"did not have a right to tender funds to the tax collector without prior judicial
authorization." 189 N.J. at 337. We also conclude that a constructive trust was
properly imposed as a safeguard to Fargil's property rights. Id. at 338.
Affirmed.
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