HABITATE, LLC. VS. CITY OF BRIDGETON RENEWABLE JERSEY,LLC(L-517-13, CUMBERLAND 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NOT FOR PUBLICATION WITHOUT THE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-2296-15T2
HABITATE, LLC and THOMAS MARTIN,
individually,
Plaintiffs-Appellants,
v.
CITY OF BRIDGETON; RENEWABLE
JERSEY, LLC,
Defendants-Respondents,
and
ROBERT REYERS and
CLAUS AND REYERS COMPANY,
a Delaware Corporation,
Defendants.
Argued May 17, 2017 – Decided July 21, 2017
Before Judges Alvarez, Accurso, and Lisa.
On appeal from the Superior Court of New
Jersey, Law Division, Cumberland County,
Docket No. L-517-13.
Keith A. Bonchi argued the cause for
appellants (Goldenberg, Mackler, Sayegh,
Mintz, Pfeffer, Bonchi & Gill, attorneys; Mr.
Bonchi, of counsel and on the briefs; Elliott
J. Almanza, on the briefs).
Jack Plackter argued the cause for respondent
Renewable Jersey, LLC (Fox Rothschild LLP,
attorneys; Mr. Plackter, of counsel and on the
brief; Bridget A. Sykes, on the brief).
Matthew Toto argued the cause for respondent
City of Bridgeton (Traub Lieberman Straus &
Shrewsberry LLP, attorneys; Mr. Toto, on the
brief).
PER CURIAM
On May 11, 2016, a Chancery Division judge granted defendants,
the City of Bridgeton, Renewable Jersey LLC (Renewable), Robert
Reyers, and Claus and Reyers Company (CAR), summary judgment
dismissing a five-count amended complaint in lieu of prerogative
writs. The judge also denied plaintiffs, Habitate LLC and Thomas
Martin's, demand for discovery. We now reverse in part and affirm
in part.
The complaint sought damages for Bridgeton's alleged illegal
manipulation of land titles; alleged a conspiracy by Bridgeton,
Renewable, Reyers, and CAR; sought to quiet title in plaintiffs
of Bridgeton Block 132, Lot 1.02; alleged defendants engaged in
fraud; and sought a declaration that a judgment against Reyers
totaling $7975.55 was a valid lien against the land.
The initial complaint had been stayed while the related tax
sale foreclosure appeal was completed. That matter can be found
at Habitate, LLC v. R&R Holdings, LLC, No. A-4262-12 (App. Div.
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Feb. 6, 2015). The petition for certification was denied by the
Supreme Court on June 19, 2015. 222 N.J. 15 (2015).
We very briefly summarize the necessary facts. On July 12,
2012, Habitate obtained a default judgment in a foreclosure action
on a tax sale certificate against Block 132, Lot 1.02's record
owner, R&R Holdings, LLC (R&R). R&R had acquired the property
from Bridgeton in 2004 upon its promise to create forty full-time
jobs at the subject property. Reyers was the owner of R&R.
Thereafter, defendant Renewable, Bridgeton's redeveloper, was
granted leave to intervene in the proceeding, and redeemed the
property for $80,320, the amount due to Habitate with interest on
the tax sale certificate plus an additional $5000 payment to the
record owner. At the time Bridgeton conveyed ownership of the
land to R&R, the company had not yet been incorporated and Reyers
had nearly $194,263 in personal judgments against him.
While the first appeal involving the tax sale certificate was
pending, the defendants apparently discovered that the 2004
conveyance to R&R had been made to a non-existent corporation. As
a result on May 7, 2013, at an open council meeting, Bridgeton
adopted a resolution authorizing a corrective deed, and reissued
the deed to the property to CAR. Reyers had revived CAR, a
previously defunct corporation, in preparation to take title when
the second deed issued. Corporate paperwork was completed so that
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R&R quitclaimed any interest it had into CAR, and the land then
transferred from CAR to Renewable. The purpose of Bridgeton's
ordinance, the new deeds, and corporate resolutions was to ensure
that Renewable obtained clear title. Renewable is a redeveloper
whose acquisition of the property is important to a renewal project
in Bridgeton. Renewable promptly encumbered the land with a
$100,000 mortgage.
Habitate had filed the first appeal in order to challenge the
judgment allowing Renewable to intervene and redeem in the action
to foreclose on the tax sale certificate. In the earlier matter,
Habitate had suggested that the lot was valuable because, as of
2015, it had a deep water well allegedly worth $30,000, and a
sewer connection worth $500,000.
In the tax foreclosure appeal, like the Chancery judge, we
were aware of Habitate's parallel complaint in this case. We
said: "This is not to express any opinion on Habitate's pending
litigation for the harm it alleges as a result of Bridgeton's
second deed to CAR to effectuate its conveyance to Renewable."
Habitate , LLC, supra, slip op. at 18-19. In the tax sale
foreclosure matter, the Chancery judge had stated in her decision
regarding Habitate's complaint, "Fraud and other claims are best
handled in that action and not as part of the tax sale certificate
foreclosure/redemption."
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Applying the doctrine of res judicata, the Chancery judge
dismissed the complaint in this case before discovery. She
concluded that since Renewable's intervention in the tax
foreclosure, and redemption of the tax sale certificate, had been
found to be lawful, and upheld on appeal, nothing further could
be adjudicated.
As to Martin's purchase of a judgment lien against Reyers,
the judge held that since the assignment to Martin was made six
months after the redemption order in the tax sale foreclosure, the
judgment did not follow the land and did not constitute a valid
lien on the property. Martin further argued that he had standing
in this case by virtue of being a citizen taxpayer of Bridgeton.
Since he offered no law in support of the proposition, the claim
was rejected.
Finally, with regard to Bridgeton, the court found that the
claims were barred by the New Jersey Tort Claims Act (TCA),
N.J.S.A. 59:1-1 to -12-3. Since the complaint was dismissed,
naturally the motion to commence discovery was denied as moot.
The Chancery judge said "[i]n taking no position [in the tax
foreclosure,] this court reserved its discretion to grant or deny
summary judgment." Now on appeal, plaintiffs raise the following
points of error:
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POINT ONE
RES JUDICATA DOES NOT BAR THIS ACTION
POINT TWO
HABITATE AND THOMAS MARTIN HAVE STANDING
POINT THREE
THE CLAIMS AGAINST BRIDGETON ARE NOT BARRED
BY ANY PROVISION OF THE TORT CLAIMS ACT
A: N.J.S.A. 59:2-10 DOES NOT APPLY TO THIS
ACTION
B: N.J.S.A. 59:2-4 DOES NOT APPLY TO THIS
ACTION
C: N.J.S.A. 59:2-9 DOES NOT APPLY TO THIS
ACTION.
I.
"A ruling on summary judgment is reviewed de novo." Davis
v. Brickman Landscaping, LTD., 219 N.J. 395, 405 (2014) (citing
Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 115 (2014)).
Thus, our review requires application of the same standard which
governs the trial court. Ibid. (citing Murray v. Plainfield Rescue
Squad, 210 N.J. 581, 584 (2012)).
A motion for summary judgment should be granted when there
are no genuine issues of material fact in dispute and the moving
party is entitled to judgment as a matter of law. Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); R. 4:46-
2. Facts are to be viewed in a light most favorable to the non-
moving party. Brill, supra, 142 N.J. at 540.
6 A-2296-15T2
II.
A.
Plaintiffs contend that no preclusionary doctrine bars them
from pursuing the causes of action alleged in their complaint.
But for the cause of action set forth in the fifth count by Thomas
Martin, we agree that dismissal at this stage was improper. Thus
we first address the Chancery judge's decision that the doctrine
of res judicata was dispositive. We also address her determination
that collateral estoppel and the entire controversy doctrine are
additional bars to plaintiffs' ability to pursue the matter.
Res judicata is an ancient judicial doctrine which
"contemplates that when a controversy between parties is once
fairly litigated and determined it is no longer open to
relitigation." Selective Ins. Co. v. McAllister, 327 N.J. Super.
168, 172 (App. Div.) (quoting Lubliner v. Bd. of Alcoholic Beverage
Control for City of Paterson, 33 N.J. 428, 435 (1960)), certif.
denied, 164 N.J. 188 (2000). In order for res judicata to apply,
the party asserting the doctrine must show: "(1) a final judgment
by a court of competent jurisdiction, (2) identity of issues, (3)
identity of parties, and (4) identity of the cause of
action." Brookshire Equities, LLC v. Montaquiza, 346 N.J. Super.
310, 318-319 (App. Div.) (citation omitted), certif. denied, 172
N.J. 179 (2002).
7 A-2296-15T2
The parties in this case are essentially the same as in the
tax sale foreclosure proceeding. And the factual circumstances
that led to that lawsuit and appeal, explain this one. In our
opinion, however, there is a significant dissimilarity between the
issues raised in the two lawsuits.
Plaintiffs' action in lieu of prerogative writs alleges that
Bridgeton, conspiring with Reyers to the benefit of Renewable,
engaged in the illegal manipulation of land titles. That issue
is clearly not one encompassed by the tax sale certificate
foreclosure action. In the tax sale action, the question for
decision was whether Renewable had the right to intervene and
discharge the certificate. Although those circumstances are an
essential part of this case, they do not resolve the matter.
Plaintiffs also seek to quiet title to Block 132, Lot 1.02
in Habitate. In a manner of speaking they sought the same relief
in the tax foreclosure – but for different reasons.
The claim of fraud, although raised in the tax foreclosure
action, was found to be without merit. Obviously, that is an
issue which, although it was raised to stop Renewable's
intervention, will be resolved separately from, and on different
proofs than, the tax sale foreclosure matter. When we examine the
elements of res judicata here, there appear to be different claims
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in this lawsuit than those raised in the tax foreclosure matter.
Thus res judicata does not apply.
B.
"The doctrine of collateral estoppel is a branch of the
broader law of res judicata which bars relitigation of any issue
actually determined in a prior action generally between the same
parties and their privies involving a different claim or cause of
action." Selective Ins. Co., supra, 327 N.J. Super. at 173(citation omitted). For the doctrine of collateral estoppel to
apply, the party asserting the bar must show that: "(1) the issue
to be precluded is identical to the issue decided in the prior
proceeding; (2) the issue was actually litigated in the prior
proceeding; (3) the court in the prior proceeding issued
a final judgment on the merits; (4) the determination of the issue
was essential to the prior judgment; and (5) the party against
whom the doctrine is asserted was a party to or in privity with a
party to the earlier proceeding." Olivieri v. Y.M.F. Carpet,
Inc., 186 N.J. 511, 521-522 (2006)(quoting In re Estate of Dawson,
136 N.J. 1, 20 (1994)).
The distinguishing feature of collateral estoppel is "that
it alone bars relitigation of issues in suits that arise from
different causes of action." Selective Ins. Co., supra, 327 N.J.
Super. at 173. Thus, "[r]es judicata applies when either party
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attempts to relitigate the same cause of action. Collateral
estoppel applies when either party attempts to relitigate facts
necessary to a prior judgment." T.W. v. A.W., 224 N.J. Super.
675, 682 (App. Div. 1988), certif. denied, 117 N.J. 44 (1989).
Since collateral estoppel is an equitable doctrine, "it should
only be applied when fairness requires." Pivnick v. Beck, 326
N.J. Super. 474, 486 (App. Div. 1999), aff'd, 165 N.J. 670 (2000).
In determining whether to apply collateral estoppel, courts should
consider the following factors:
Some of the factors favoring application of
issue preclusion are: conservation of
judicial resources; avoidance of repetitious
litigation; and prevention of waste,
harassment, uncertainty and inconsistency. In
contrast, factors disfavoring application of
collateral estoppel include: the party against
whom preclusion was sought could not have
obtained review of the judgment in the initial
action; the quality or extensiveness of the
procedures in the two actions were different;
it was not foreseeable at the time of the
initial action that the issue would arise in
subsequent litigation; and the party sought
to be precluded did not have an adequate
opportunity to obtain a full and fair
adjudication in the first action.
[Ibid. (internal citations omitted).]
The question whether collateral estoppel justifies dismissal
is more difficult than the decision regarding res judicata. The
facts are to some extent the same. But it seems unfair to find
plaintiffs are collaterally estopped from pursuing this case when,
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at least in part, the outcome in the that first matter is itself
the event plaintiffs claim inflicted harm upon them. We therefore
conclude that at least at this stage there is sufficient
distinction between the two causes of action to warrant
reinstatement of the complaint.
The Chancery judge's determination that the corrective deed
Bridgeton issued was valid was made within the context of a tax
sale foreclosure and for the purpose of adjudicating a dispute
limited by the statutes and rules that define the litigation. This
case includes facts and circumstances outside that narrow
corridor. Therefore at this juncture, before discovery,
collateral estoppel does not compel the dismissal of plaintiffs'
complaint.
C.
Finally, Renewable argues that summary judgment should be
affirmed because the complaint is barred by the entire controversy
doctrine. "The entire controversy doctrine bars a subsequent
action only when a prior action based on the same transactional
facts has been tried to judgment or settled." Arena v. Borough
of Jamesburg, 309 N.J. Super. 106, 111 (App. Div. 1998). However,
"[o]nly a judgment 'on the merits' will preclude a later action
on the same claim." Watkins v. Resorts Int'l Hotel & Casino, 124
N.J. 398, 415 (1991) (citation omitted).
11 A-2296-15T2
The trial court explicitly stated that plaintiffs' fraud
claims were best dealt with in a separate proceeding. Our decision
was not meant to "express any opinion on Habitate's pending
litigation for the harm it alleges as a result of Bridgeton's
second deed to CAR to effectuate its conveyance to renewable."
Habitate, LLC, supra, slip op. at 18-19. As we have said, the
same transactional facts apply to both actions – except that in
this case the facts necessary to the tax sale foreclosure are only
part of the story. Plaintiffs here have never been afforded the
opportunity to explore conduct they allege was unlawful. Since
these issues have never been decided, and no judgment on the merits
ever issued, the doctrine does not bar the case at this stage.
III.
We agree that Habitate has standing to pursue this case as a
former tax certificate holder since Habitate contends it lost the
opportunity to acquire title to Block 132, Lot 1.02. Martin,
however, is another issue.
"Standing has been broadly construed in New Jersey as 'our
courts have considered the threshold for standing to be fairly
low.'" Triffin v. Somerset Valley Bank, 343 N.J. Super. 73, 81
(App. Div. 2001) (quoting Reaves v. Egg Harbor Twp., 277 N.J.
Super. 360, 366 (Ch. Div. 1994)). In order to obtain standing,
"a party must have a sufficient stake and real adverseness with
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respect to the subject matter of the litigation." Lopresti v.
Wells Fargo Bank, N.A., 435 N.J. Super. 311, 318 (App. Div.)
(internal quotation marks and citation omitted), certif. denied,
219 N.J. 629 (2014). However, courts have held that "[a] financial
interest in the outcome ordinarily is sufficient to confer
standing." Ibid. (quoting Strulowitz v. Provident Life & Cas.
Ins. Co., 357 N.J. Super. 454, 459 (App. Div.), certif. denied, 177
N.J. 220 (2003)).
Martin's interest was acquired October 25, 2013, months after
the redemption order in the tax sale foreclosure matter and the
filing of the prerogative writs action. The purchase was clearly
intended to provide Martin with standing and an interest even
after the tax sale certificate foreclosure.
Habitate alleges it suffered an ascertainable loss in being
prevented from exercising its right to foreclose on its tax sale
certificate by a scheme it claims was fraudulent. In purchasing
the tax sale certificate, it acquired the following rights:
(1) the right to receive the sum paid for the
certificate with interest at the redemption
rate for which the property was sold, up to a
maximum of 18%, N.J.S.A. 54:5-32, -58; (2)
the right to redeem from any other holder a
subsequently issued tax sale
certificate, Realty Sales Corp. v. Payne, 76
N.J. Super. 59, 61-62 (Ch. Div. 1962), aff'd
o.b., 78 N.J. Super. 504 (App. Div.), certif.
denied, 41 N.J. 162 (1963); and, most
importantly, (3) the right to acquire title
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by foreclosing the equity of redemption of all
outstanding interests, including the
owner's, N.J.S.A. 54:5-86. Township of
Jefferson v. Block 447A, Lot 10, 228 N.J.
Super. 1, 4-5 (App. Div. 1988).
[Caput Mortuum, L.L.C. v. S&S Crown Servs.,
Ltd., 366 N.J. Super. 323, 336 (App. Div.
2004).]
Thus Habitate, as original holder of the certificate, had at least
the potential ability to acquire title to the property. Therefore,
it arguably has an interest in the events leading up to the
issuance of the corrective deed.
Habitate also has standing to challenge municipal action.
"New Jersey has a broad definition of standing when it comes to
challenging governmental actions[.]" Loigman v. Twp. Comm. of
Middletown, 297 N.J. Super. 287, 294 (App. Div. 1997). Moreover,
"taxpayer intervention is appropriate where there are claims of
fraud or corruption." Id. at 295. As Habitate challenges
Bridgeton's resolution authorizing the corrective deed based on
allegations of a fraudulent scheme, Habitate has standing to bring
the prerogative writs action.
Martin has standing only as to the judgment against Reyers
personally, not incidental to the events leading to the eventual
acquisition of clear title to Block 132, Lot 1.02, or in this
lawsuit. The dismissal of the fifth count is therefore affirmed.
14 A-2296-15T2
IV.
The trial court concluded that the TCA barred any cause of
action against Bridgeton. We do not agree.
The Chancery Division judge relied on portions of the TCA
that provide that a public entity is not liable for the conduct
of its employees even if fraudulent, liable for injuries caused
by adopting a law or failing to enforce a law, or acts or omissions
resulting in a slander on the title of property. See N.J.S.A.
59:2-10; 59:2-4; 59:2-9. None of these provisions are relevant
to Habitate's claims against Bridgeton. Habitate seeks an order
voiding the resolution authorizing the issuance of a new deed to
CAR, which it alleges resulted in the "illegal manipulation of
land titles." None of those provisions in the TCA bar plaintiff's
claim. Municipal action can be vacated when it amounts to a fraud.
See Zakutansky v. Bayonne, 88 N.J. Super. 516, 526 (App. Div.
1965). "Judicial review of an ordinance is limited to the
motivation of those enacting it. So long as it is motivated by
public welfare, and is not tainted with fraud or some clear
perversion of power, there is no occasion for judicial
intervention." Ibid. But the question Habitate poses is whether
the ordinance and deed were so "tainted."
In Simon v. Deptford Twp., 272 N.J. Super. 21, 24-25 (App.
Div.), certif. denied, 137 N.J. 310 (1994), the plaintiffs brought
15 A-2296-15T2
an action in lieu of prerogative writs against the city seeking
to nullify their purchase of tax sale certificates based on mutual
mistake and fraud. Although we affirmed the dismissal of
plaintiffs' fraud claim, we noted that while the facts in that
case did not support a claim for fraud, the decision was not meant
to "undercut[] the potential viability of a documented fraud claim"
in a tax sale matter. Id. at 30. Plaintiffs have not alleged
that any specific employee engaged in fraud, and a claim for fraud
can be brought against a municipal entity seeking to vacate a
municipal action, therefore N.J.S.A. 59:2-10 also does not bar
plaintiffs' claims against Bridgeton.1
Bridgeton further asserts that N.J.S.A. 59:2-5 applies. That
section of the TCA grants immunity against injuries caused by the
enumerated actions found in the statute including "denial,
suspension, or revocation of, or by the failure or refusal to
issue, deny, suspend or revoke" permits, licenses, and similar
documents. This provision does not apply. Plaintiffs' allegations
are focused on the resolution Bridgeton adopted in order to
reconvey ownership of the land to CAR. But for that action, there
1
Bridgeton points out that N.J.S.A. 59:9-2 bars punitive damages
claim against a municipality. We agree. In their reply brief,
plaintiffs acknowledge this.
16 A-2296-15T2
would be no lawsuit. It does not fall within any of the categories
mentioned in the TCA.
To reiterate, although we affirm the dismissal of the fifth
count, in which Martin individually sought by the purchase of a
judgment to intervene, we otherwise reverse. The first four counts
of the complaint are reinstated and the matter can proceed to
discovery. Nothing in this opinion is to be construed as
indicating, one way or another, any opinion with regard to any
future motions for summary judgment or the ultimate outcome of the
case, should it be tried.
Reversed in part, but the summary dismissal of count five is
affirmed.
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