72 OAK STREET HOLDINGS, LLC VS. FRANK LEYRER (F-015048-13 AND F-015049-13, BERGEN COUNTY AND STATEWIDE) (CONSOLIDATED) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-2996-16T1
A-2997-16T1
72 OAK STREET HOLDINGS, LLC,
Plaintiff-Appellant,
v.
FRANK LEYRER and ANNA O. LEYRER,
his wife, their or either of
their heirs, devisees and
personal representatives, and
their or any of their successors
in right, title and interest,
and the STATE OF NEW JERSEY,
Defendants,
and
NANCY LEYRER,
Defendant-Respondent,
and
THOMAS STANOWSKI,
Defendant/Intervenor-
Respondent.
____________________________________
Argued May 24, 2018 – Decided June 22, 2018
Before Judges Reisner, Gilson, and Mitterhoff.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket Nos.
F-015048-13 and F-015049-13.
Keith A. Bonchi argued the cause for appellant
(Goldenberg, Mackler, Sayegh, Mintz, Pfeffer,
Bonchi & Gill, attorneys; Keith A. Bonchi, of
counsel and on the briefs; Elliott J. Almanza,
on the briefs).
John R. Edwards, Jr., argued the cause for
respondent (Price, Meese, Shulman & D'Arminio,
PC, attorneys; John R. Edwards, Jr., on the
brief).
Plaintiff 72 Oak Street Holdings, LLC appeals from an October
6, 2016 order, granting defendant Nancy Leyrer's1 motion to vacate
a final judgment of foreclosure on her home; a November 4, 2016
order, denying plaintiff's motion for reconsideration; a February
16, 2017 order, requiring Nancy to reimburse plaintiff for counsel
fees, insurance premiums, and the title insurance fee, as a
condition of redemption; and a February 16, 2017 order permitting
Nancy's fiancé, Thomas Stanowski, to intervene in the matter on
her behalf to redeem the property.2 Finding no abuse of discretion
in any of the orders, we affirm.
1
Because the Leyrer defendants all have the same last name, we
will refer to them by their first names, for clarity and intending
no disrespect.
2
Nancy filed a motion to supplement the record with a
certification attesting that Stanowski used her funds to redeem
the property. In response, plaintiff clarified that it was not
challenging the merits of the February 16, 2017 redemption order,
2 A-2996-16T1
Plaintiff did not obtain a stay of the orders, and it is
undisputed that the property has since been redeemed. Thus,
plaintiff has been repaid for its investment in the tax sale
certificates, with eighteen percent interest, plus reimbursement
of insurance premiums, title insurance fees, and over $5000 in
counsel fees. Nonetheless, plaintiff has pursued this appeal,
seeking to divest Nancy of her home, or in the alternative, seeking
an additional counsel fee award.
Nancy's parents, Anna and Frank Leyrer, had owned their family
home on Chestnut Street in Washington Township for about seventy
years. They also owned an adjoining wooded lot. Plaintiff
purchased tax sale certificates on the properties, filed
foreclosure complaints on May 3, 2013, filed amended complaints
on November 13, 2014, and obtained default judgments on August 6,
2015. When the foreclosure complaints were filed in 2013, Anna
and Frank were deceased. Nancy was living in the Chestnut Street
house and received her mail there. Nonetheless, the original
foreclosure complaints did not name Nancy as a defendant, instead
referring in generic fashion to the unknown "heirs, devisees and
personal representatives" of Frank and Anna.
but rather was appealing only to obtain relief from the order in
the event we reverse the order vacating the default judgment.
Nonetheless, we have granted Nancy's motion to ensure a complete
record.
3 A-2996-16T1
Plaintiff claimed that attempts at personal service on Nancy
failed because she evaded service and refused to answer the door
when the process server knocked. Plaintiff therefore contended
that mailed service of the complaints, naming unknown parties, was
sufficient. Nancy denied evading service and attested that the
process server's affidavit was false.3
The trial court vacated the final judgments because
plaintiff's initial foreclosure complaints failed to include Nancy
as a named defendant, and plaintiff failed to attempt personal
service on Nancy after amending the complaints to include her as
a named defendant. In so ruling, the court considered plaintiff
counsel's admission, at oral argument, that when plaintiff
initially attempted personal service on Nancy, it was in her
capacity "as a representative of the estate." The judge concluded
that, when the complaint was amended to include Nancy, by name,
in her personal capacity, rather than as an unnamed fiduciary,
plaintiff was obligated to serve her personally with the amended
complaint. The judge also found insufficient evidence that Nancy
3
Nancy's brief asserts that the affidavits of service, used to
support the entry of default, were invalid because they were not
actually signed by the process server. Instead, they were signed
by someone else, under a power of attorney purporting to generally
authorize the process server's employer to sign his name to
affidavits of service. We will not address the propriety of this
procedure, because the issue was noted in the statement of facts
but not included in the argument section of the brief.
4 A-2996-16T1
evaded personal service of the original complaint. He therefore
rejected plaintiff's argument that an attempt to personally serve
her with the amended complaint would have been futile.
Our review of a trial court's decision to vacate a final
judgment pursuant to Rule 4:50-1 is limited. We will affirm the
trial court's decision, absent "a clear abuse of discretion." US
Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 467 (2012); see also
M & D Assocs. v. Mandara, 366 N.J. Super. 341, 350 (App. Div.
2004). We review for abuse of discretion a judge's decision
whether to assess counsel fees or other conditions when vacating
a judgment under Rule 4:50-1. ATFH Real Prop., LLC v. Winberry
Realty P'ship, 417 N.J. Super. 518, 528 (App. Div. 2010). We will
not second-guess a trial court's decision as to the amount of a
fee award, except in the rarest case and only where there is a
clear abuse of discretion. See Rendine v. Pantzer, 141 N.J. 292,
317 (1995). We review the trial court's denial of a
reconsideration motion for abuse of discretion. See Cummings v.
Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996).
We must consider these principles in reviewing the trial
court's decision of a motion to vacate a tax sale foreclosure:
An application to vacate a judgment based on
R. 4:50-1 is within the sound discretion of
the trial court and "should be guided by
equitable principles in determining whether
relief should be granted or denied." The
5 A-2996-16T1
application is "viewed with great liberality,
and every reasonable ground for indulgence is
tolerated to the end that a just result is
reached." In the tax sale certificate
foreclosure context considerations of public
policy and equity are also taken into account.
[M & D Assocs., 366 N.J. Super. at 350(citations omitted).]
Moreover, in cases involving tax sale foreclosures, where a
plaintiff may obtain a huge windfall at a defendant's expense, the
court should hold the plaintiff to strict compliance with
procedural rules. To that end, the court should closely scrutinize
the plaintiff's affidavit of diligent inquiry.
[W]here there is substituted service, as well
as a tremendous disparity between the amount
due on the tax certificates and the value of
the property subject to foreclosure (here
approximately $4,500 versus potentially
$100,000 to $200,000 for the property),
careful scrutiny of the affidavit of inquiry
requires the Chancery Judge to demand more
than cursory inquiries or recitals not only
as a matter of due process, but also of
fundamental fairness. The Chancery Judge in
such foreclosure cases should be alerted when
the face of the documentation indicates that
a significant windfall might result if
adequate scrutiny of the affidavit of inquiry
is not undertaken.
[Id. at 354 (citation omitted).]
Rule 4:26-5(b), permitting a foreclosure plaintiff to name unknown
heirs and representatives, requires the same proof of diligent
inquiry that Rule 4:4-5(a)(3) requires for substituted service.
6 A-2996-16T1
After reviewing the record, we find no abuse of the trial
court's discretion in granting the motion to vacate the foreclosure
judgments.4 There was at least prima facie evidence before the
trial court that foreclosure would result in both an enormous
windfall for plaintiff and a draconian loss for Nancy of her house,
which had been her family's home for seventy years. On the record
in the trial court, plaintiff admitted it did not name Nancy as a
defendant in her personal capacity until it filed the amended
complaint. Nor did the original complaint include her name at
all. And plaintiff made no effort to personally serve Nancy with
the amended complaint pursuant to Rule 4:4-4(a), although she was
being added as a party.
We also agree with Nancy's argument that plaintiff did not
make a diligent inquiry before naming fictitious parties in the
original complaint. See R. 4:26-5(b) (permitting plaintiff to
name "unknown heirs, devisees or personal representatives" if
4
We agree with the trial judge that Nancy's motion was properly
deemed as filed within the one-year time limit set forth in Rule
4:50-2. Within one year of the foreclosure judgments, Nancy filed
a complaint in General Equity seeking to undo the foreclosure
judgments and redeem the property. The General Equity judge
dismissed that complaint without prejudice, reasoning that the
proper procedure was to file a motion in the foreclosure case
rather than filing a new complaint. We find no abuse of discretion
in the judge's equitable decision to treat Nancy's subsequent
foreclosure motion as relating back to the filing date of her
complaint.
7 A-2996-16T1
their names and addresses cannot be determined after diligent
inquiry). Therefore, plaintiff's reliance on Rule 4:26-5, raised
for the first time in its reconsideration motion, was unavailing.
Even if the original complaint were deemed to name Nancy as an
unknown heir, it did not comply with the Rule.
The generalities in the motion certification of plaintiff's
former counsel do not satisfactorily explain why the complaint did
not list Frank and Anna's known relatives, and specifically Nancy,
by name. See M & D Assocs., 366 N.J. Super. at 353-55. A
comprehensive internet report, obtained before the complaint was
filed, revealed that "Nancy Leyrer" was living at the Chestnut
Street house, the same address associated with "Frank Leyrer." A
later internet search revealed that Nancy was a "first degree"
relative of Frank and Anna and was about thirty years younger than
Anna. On the reconsideration motion, plaintiff's manager, Howard
Rothschild, certified that plaintiff "came to believe" that Nancy
was an heir, but did not explain how or when plaintiff arrived at
that belief and why it was not capable of obtaining that
information before the complaint was filed.
Plaintiff argues that once a defendant, designated only as
an unknown heir, has been personally served, or served by mail if
personal service cannot be made, Rule 4:26-5(e) permits subsequent
amended complaints to be served on that defendant by mail only.
8 A-2996-16T1
That argument is unavailing here. If a defendant is not properly
designated as an unknown heir under Rule 4:26-5(b), then Rule
4:26-5(e) does not excuse the failure to personally serve that
defendant when the complaint is later amended to list her by name.
Plaintiff's reliance on Farrell v. Votator Division of Chemetron
Corporation, 62 N.J. 111 (1973), is misplaced, because in that
case the plaintiff properly employed fictitious pleading. Id. at
120.
Additionally, Nancy's certification in support of the motion
to vacate the judgments provided evidence of excusable neglect for
her failure to open mailed notices from plaintiff. That evidence
included her physical and mental health issues, and her efforts
to care for her dying brother and other ailing relatives. See R.
4:50-1(a); Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42, 45-
46 (App. Div. 1981). Further, Nancy had the ability to redeem the
property with her own funds, and did so when given the opportunity.
Id. at 46.
For all of the above reasons, we find no abuse of the trial
judge's discretion in granting Nancy's motion to vacate the final
9 A-2996-16T1
foreclosure judgments.5 See M & D Assocs., 366 N.J. Super. at
350.
Finally, Nancy agreed to pay plaintiff more than $12,000 in
counsel fees, insurance premiums and other costs, as a condition
of vacating the default. We find no abuse of the trial court's
discretion in denying plaintiff's application for thousands of
dollars in additional counsel fees.
Affirmed.
5
Any arguments not specifically addressed are without sufficient
merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
10 A-2996-16T1