ASTER HOLDINGS, LLC VS. RICHARD HEUBEL (F-013237-18, OCEAN 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NOT FOR PUBLICATION WITHOUT THE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-3182-18T1

ASTER HOLDINGS, LLC,

Plaintiff-Appellant,

v.

RICHARD HEUBEL, FIOR
HEUBEL, US BK CUST/CRESTAR
CAPITAL, LLC, SABA PROPERTIES,
LLC, WELLS FARGO BANK, NA,
SUBROGEE FIRST AMERICAN
TITLE INSURANCE, RALPH
CALABRESE, and THE STATE
OF NEW JERSEY,

Defendants-Respondents.
_________________________________

Argued telephonically December 17, 2019 –
Decided January 14, 2020

Before Judges Yannotti, Currier and Firko.

On appeal from the Superior Court of New Jersey,
Chancery Division, Ocean County, Docket No. F-
013237-18.

Anthony Louis Velasquez argued the cause for
appellant.
 Patrick O. Lacsina argued the cause for respondent
SABA Properties, LLC.

PER CURIAM

Plaintiff Aster Holdings, LLC, appeals from an order of the Law Division

dated February 15, 2019, which granted defendant SABA Properties, LLC's

(SABA) motion to vacate a tax foreclosure final judgment based upon excusable

neglect under Rule 4:50-1. We reverse.

We briefly summarize the relevant facts and procedural history. In 2012,

defendant Richard Heubel became the owner of a property located in Little Egg

Harbor. Taxes were assessed against the premises in 2014 in the amount of

$2,363.56. Heubel was delinquent in paying his taxes and the tax collector sold,

at a public sale, tax certificate number 14-300 to N. or D. Resnick. It was duly

recorded. Thereafter, the tax sale certificate was assigned to Trystone Capital

Assets, LLC (Trystone) and recorded.

Trystone conducted a title search pursuant to Rule 4:64-1 and obtained a

title report on May 16, 2018, which included all parties having an interest in the

property. On May 22, 2018, Trystone served a Notice of Intent to file a

complaint in accordance with N.J.S.A. 54:5-97.1 and 54:5-54. A run-down title

search performed on July 20, 2018 revealed that on April 25, 2018, SABA

entered into a mortgage with Heubel in the amount of $144,000. SABA's

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mortgage was recorded on June 1, 2018. Upon learning this, Trystone amended

its complaint to add SABA as a defendant on July 23, 2018. The record shows

that when SABA entered into a mortgage agreement with Heubel, the amount

due on the tax certificate was $29,219.16 plus fees and costs.

SABA did not redeem the certificate or otherwise participate in the tax

foreclosure proceedings. On November 26, 2018, Trystone filed a notice of

motion to substitute Aster Holdings, LLC as plaintiff. The trial court granted

the motion on December 10, 2018. On January 9, 2019, the court entered final

judgment.

On January 19, 2019, SABA filed a motion to vacate final judgment. Scott

W. Bazzini, a managing member of SABA and an attorney, submitted a

certification, stating, "[p]rior to executing the [m]ortgage, . . . Heubel made

representations to [me], which [SABA] reasonably relied on when extending

. . . Heubel the loan, that he would redeem the subject [certificate] and bring all

municipality taxes current."

Bazzini further certified that the balance of the equities weighed in favor

of SABA because SABA was prepared to redeem the tax certificate, would lose

its $144,000.00 mortgage, and Aster would not be prejudiced since it would

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receive all owed amounts. SABA never argued it lacked knowledge of the

foreclosure matter.

The judge conducted oral argument and rendered an oral decision. In

granting the motion, he concluded that SABA established excusable neglect

under Rule 4:50-1 because SABA was in contact with Heubel, was aware of the

tax foreclosure, and was assured by the owner that the tax lien would be paid in

full. The judge concluded that SABA moved promptly to vacate the final

judgment upon learning that the tax lien had not been paid. The judge also found

that SABA had presented a meritorious defense and had the ability to satisfy the

outstanding judgment.

On appeal, plaintiff argues that the judge erred in concluding SABA's

inaction constitutes excusable neglect; no facts in the record supported the

judge's finding that SABA consulted with Heubel; and the judge's decision

violates the public policy and legislative intent set forth in N.J.S.A. 54:5 -52.

The decision on whether to grant a motion to vacate a default judgment is

"left to the sound discretion of the trial court, and will not be disturbed absent

an abuse of discretion." Mancini v. EDS ex rel. N.J. Auto. Full Ins.

Underwriting Ass'n, 132 N.J. 330, 334 (1993); see also U.S. Bank Nat'l Ass'n v.

Guillaume, 209 N.J. 449, 467 (2012) (stating that a decision on an option to

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vacate default judgment "should not be reversed unless it results in a clear abuse

of discretion"). A motion to vacate a default judgment involves balancing a

"strong interest[] 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." Manning Eng'g Inc. v. Hudson Cty. Park Comm'n, 74 N.J. 113,

120 (1977). Accordingly, the decision whether to grant or deny a motion to

vacate a default judgment must be guided by equitable considerations. Prof'l

Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J. Super. 64, 68 (App.

Div. 2009) (noting that "Rule 4:50 is instinct with equitable considerations").

We note initially that a trial court's determination granting or denying

relief under Rule 4:50-1 is entitled to substantial deference and will not be

reversed in the absence of a clear abuse of discretion. Guillaume, 209 N.J. at

467. To warrant reversal of the court's Rule 4:50-1 order, a party must show

that the decision was "made without a rational explanation, inexplicably

departed from established policies, or rested on an impermissible basis." Id. at

467-68 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).

We recognize that Rule 4:50-1 governs a motion for relief from a tax sale

foreclosure judgment, notwithstanding N.J.S.A. 54:5-87. See M & D Assocs. v.

Mandara, 366 N.J. Super. 341, 351 (App. Div. 2004) (finding that, in a

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foreclosure action, Rule 4:50-1 is paramount to statutes governing practice and

procedure). The guiding principles are that the statutory limitation, and the

underlying policy to grant stability of a foreclosure judgment, allows a court's

exercise of its discretion under the rule. Town of Phillipsburg v. Block 1508,

Lot 12, 380 N.J. Super. 159, 166-67 (App. Div. 2005). Rule 4:50-1 authorizes

a court to:

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 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.'" Guillaume, 209 N.J.

at 467 (quoting Mancini, 132 N.J. at 334).

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 As noted, plaintiff argues that the judge erred by relying upon the lone

statement by Bazzani as to why SABA failed to redeem, prevent foreclosure,

join issue, or participate in the proceedings—a handshake agreement with

Heubel that he would pay the taxes.

It is well-established that a default judgment will not be set aside unless

the defendant's failure to answer or appear was excusable under the

circumstances, and the defendant has shown a meritorious defense. Guillaume,

209 N.J. at 468; Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App.

Div. 1964). A court may find "excusable neglect" if the "default was

'attributable to an honest mistake that is compatible with due diligence or

reasonable prudence.'" Guillaume, 209 N.J. at 468 (quoting Mancini, 132 N.J.

at 335).

Here, the trial court mistakenly exercised its discretion by granting

SABA's motion to vacate final judgment. SABA failed to show excusable

neglect for its failure to respond to a plethora of notices in the face of its

knowledge of the outstanding tax lien. Our careful review of the record shows

SABA failed to communicate with Heubel to ascertain if he paid the taxes, and

SABA did not undertake any effort to protect its interests.

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 We are convinced, under the circumstances, SABA's failure to redeem the

tax sale certificate and participate in the foreclosure matter was inexcusable.

SABA was properly served with all pleadings and motions, including the order

setting the time, place, and amount of redemption, and the motion to substitute

plaintiff. Moreover, SABA did not oppose plaintiff's motion for final judgment.

Saliently, SABA has failed to establish a meritorious defense. Here,

SABA chose not to timely redeem the certificate and therefore, foreclosure is

warranted. There is no proof that SABA was in actual contact with Heubel, and

no assurance or agreement that he would pay the taxes owed. The only mention

of SABA receiving such a representation from Heubel was in April 2018 when

the loan originated.

Furthermore, SABA is in the business of lending. And, SABA was

represented by counsel at the time the mortgage was entered with Heubel. It is

also significant that SABA referenced the outstanding obligation in its mortgage

agreement with Heubel, confirming its knowledge of the obligation.

In view of our decision, we need not address the other issues raised by

plaintiff.

Reversed. We do not retain jurisdiction.

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