Opinion
DOCKET NO. A-2392-14T2
07-05-2016
ROCK OIL COMPANY, LLC, Plaintiff-Respondent, v. ASHRAF SHAKER, Defendant-Appellant.
Ronald T. Nagle argued the cause for appellant. Eric B. Levine argued the cause for respondent (Lindabury, McCormick, Estabrook & Cooper, P.C., attorneys; Mr. Levine, of counsel; Mr. Levine and Sergio B Simões, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fuentes, Koblitz, and Kennedy. On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-041224-13. Ronald T. Nagle argued the cause for appellant. Eric B. Levine argued the cause for respondent (Lindabury, McCormick, Estabrook & Cooper, P.C., attorneys; Mr. Levine, of counsel; Mr. Levine and Sergio B Simões, on the brief). PER CURIAM
Defendant Ashraf Shaker appeals from a January 15, 2015 final judgment of foreclosure, arguing that his defenses to the tax certificate foreclosure complaint should not have been struck on April 25, 2014, nor his motion for reconsideration denied on June 25, 2014. We disagree and affirm.
In September 1994 plaintiff Rock Oil Company, LLC, the gas station business tenant, and defendant's deceased uncle, the property owner Antoine Kouyoumdjian, entered into a commercial lease with an initial five-year term and an option to renew for three additional five-year periods. According to defendant, the two parties at some unspecified time entered into an oral modification requiring plaintiff to pay the property taxes. The property taxes were not paid and plaintiff purchased the tax sale certificate at a public sale on October 21, 2002. Plaintiff continued to pay the taxes due on the property for more than ten years, through April 2013.
According to defendant, at some point plaintiff stopped paying rent, which caused his uncle to stop paying the mortgage on his home. Defendant alleges plaintiff then obtained and foreclosed on the mortgage, gaining ownership of the home and using "surplus funds" to pay the taxes on the gas station property. Defendant claims the parties engaged in unsuccessful negotiations regarding plaintiff's purchase of the property in 2012. In November 2013, plaintiff filed a complaint to foreclose on the tax sale certificate, with a balance of $614,275.26 due on the certificate.
During the course of these foreclosure proceedings defendant also filed two landlord-tenant complaints. According to plaintiff, the issues relating to the first eviction complaint were informally resolved following a conference before the motion court and defendant withdrew the second complaint. --------
The following month defendant filed his answer and defenses. Defendant's answer did not contest the validity of the taxes on which the certificate was issued, the tax certificate sale proceedings, or the sale. Defendant stated he had no "knowledge or information to form a belief as to the truth of the allegations" that plaintiff purchased the certificate at a tax sale. See R. 4:64-1(c) (stating that an answer that the defendant "is without knowledge or information sufficient to form a belief as to the truth of an allegation in the complaint" is non-contesting). Further, defendant failed to plead fraud with specificity. See R. 4:5-8 (requiring allegations of fraud to "insofar as practicable" state "the particulars of the wrong"). He also pled many other defenses without any elaboration, including laches, unclean hands, lack of consideration, estoppel, waiver, breach of contract, and the expiration of the statute of limitations.
After plaintiff moved to strike defendant's answer and defenses as non-contesting, in March 2014 defendant filed an amended answer attempting to remedy the deficiencies in his first answer. Defendant modified the answer to state that "he denies that the Plaintiff validly purchased the referenced Tax Sale Certificate." Defendant included a certification relating a history of the relationship between his uncle and plaintiff.
On April 25, 2014, the motion court issued an order granting the motion to strike defendant's answer and defenses. The attached reasons, stated in their entirety, read:
The disputed fact is the amount due, which does not relate to plaintiff's right to foreclose. Defendant can object to the amount sought in the judgment and if he does so, showing a different calculation, or showing that certain credits ought to be applied, the Office of Foreclosure will send the matter back to this vicinage for a hearing to determine the amount due. In the meanwhile, the scheduled deposition, uncompleted discovery, etc., will be pursued.A June 25, 2014 order, stating "Plaintiff's right to foreclose was demonstrated in the original motion order," denied defendant's motion for reconsideration.
On October 28, 2014, defendant objected to the entry of final judgment with the Office of Foreclosure (Office), challenging the amount due on the tax certificate in an attached certification. The Office refused to transfer the case to court, stating:
Pursuant to [Rule] 4:64-1(d), only objections that dispute the correctness of Plaintiff's Certification Amount Due and that state "...with specificity the basis of the dispute," and that "...ask the Court to fix the amount due," [do we] transfer to the Chancery Judge for the county of venue. Your objection either relates to other issues, does not give a specific reason why the Certification of Amount Due is incorrect, or otherwise does not state a sufficient dispute upon which relief can be granted. Therefore, the application for Final Judgment, along with the objection in this case, will not be transferred to the county of venue for disposition at this time.
I
Defendant alleges that his defenses were well pled and should not have been struck because he contested both the validity of the tax sale certificate and plaintiff's right to purchase it as a tenant. Defendant also argues he should be allowed to contest the amount due on the certificate.
Our Supreme Court recently discussed tax certificate foreclosures:
Municipal governments depend on real estate taxes and other property-related assessments as their primary sources of revenue. When those taxes or assessments remain unpaid for a period of time, the municipality is granted "a continuous lien on the land" for the delinquent amount as well as for "all subsequent taxes, interest, penalties and costs of collection." N.J.S.A. 54:5-6; see also N.J.S.A. 54:5-7 to -8. The Tax Sale Law[, N.J.S.A. 54:5-1 to -137,] converts that lien into a stream of revenue
by encouraging the purchase of tax certificates on tax-dormant properties. See N.J.S.A. 54:5-19, -31 to -32; Varsolona v. Breen Capital [Servs. Corp.], 180 N.J. 605, 620 (2004) ("The Legislature created the [Tax Sale Law] as a framework to facilitate the collection of property taxes."). A tax sale certificate validates the amount of unpaid taxes and assessments on the property described in the certificate. N.J.S.A. 54:5-11 to -13. The sale of a tax certificate is a conditional conveyance of the property to the purchaser, subject to a person with an interest in the property having the right to redeem the certificate, as prescribed by statute. See N.J.S.A. 54:5-31 to -32, -46. Unless redemption occurs, however, a purchaser who forecloses on the tax certificate becomes the owner of the property in fee simple. N.J.S.A. 54:5-87.
[Simon v. Cronecker, 189 N.J. 304, 318 (2007) (third alteration in original).]
The trial court's interpretation of whether defendant's answers and defenses can be struck as non-contesting, pursuant to Rule 4:64-1 and N.J.S.A. 54:5-100, is a question of law, requiring our de novo review. "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Defendant argues his amended answer and defenses properly contested the validity of the tax sale certificate and the plaintiff's ability to buy it. He alleges plaintiff, as a tenant, was prohibited from purchasing the certificate, plaintiff obtained the tax certificate fraudulently and equity requires providing the defendant with an opportunity to present his defenses.
Pursuant to N.J.S.A. 54:5-52:
The certificate of sale shall be presumptive evidence in all courts in all proceedings by and against the purchaser, his representatives, heirs, and assigns, of the truth of the statements therein, of the title of the purchaser to the land therein described, and the regularity and validity of all proceedings had in reference to the sale. After two years from the record of the certificate of sale, no evidence shall be admitted in any court to rebut the presumption, unless the holder thereof shall have procured it by fraud, or had previous knowledge that it was fraudulently made or procured.After the two-year statutory bar, we may only consider evidence concerning allegations of fraud or an allegation the tax certificate is void ab initio. See Hudson Cty. Park Comm'n v. Jacobson, 132 N.J.L. 287, 288 (1944).
Defendant has not claimed that the tax assessment or procedure was invalid, but rather that the certificate was acquired through fraud. "The elements of common-law fraud are '(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages.'" Allstate N.J. Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015) (quoting Banco Popular N. Am. v. Gandi, 184 N.J. 161, 172-73, (2005)).
Defendant failed to plead fraud with specificity as required by Rule 4:5-8 and, reading defendant's pleadings liberally, he has failed to plead the necessary elements of fraud. See State, Dep't of Treasury, Div. of Inv. v. Qwest Commc'ns Int'l, Inc., 387 N.J. Super. 469, 484 (App. Div. 2006) (stating Rule 4:5-8(a) requires a statement of "the 'particulars of the wrong, with dates and items if necessary'" (quoting R. 4:5-8(a))). Defendant has alleged, seemingly based on his deceased uncle's hearsay, that plaintiff (1) agreed to pay the property taxes; (2) did not intend to pay; (3) intended for defendant to rely on his promise to pay; and therefore defendant suffered damages by way of the tax foreclosure. Defendant, however, cannot allege reasonable reliance on plaintiff's assertion that it would pay the taxes. Such an oral contract would be unenforceable. See N.J.S.A. 25:1-12 (stating that transactions "intended to create a lease of real estate for more than three years shall not be enforceable" without a signed writing or proof "by clear and convincing evidence"); Willow Brook Recreation Ctr., Inc. v. Selle, 96 N.J. Super. 358, 364 (App. Div. 1967) ("[A] contract which the statute of frauds requires to be in writing may not be modified by a subsequent oral agreement."), certif. denied, 51 N.J. 187 (1968). The property owner would have been noticed that taxes were not paid as required under N.J.S.A. 54:5-26 and N.J.S.A. 54:5-27. In re Princeton Office Park L.P. v. Plymouth Park Tax Servs., LLC, 218 N.J. 52, 62 (2014). Because of the notice afforded to the property owner of the unpaid taxes on the property and the tax sale, and the unenforceability of an oral promise to pay taxes, claiming reliance on plaintiff's assertion that it was paying the property taxes is unsustainable.
II
Relying on the alleged oral arrangement between defendant's deceased uncle and plaintiff, defendant argues "[i]t is settled law that the party [responsible for paying] the property taxes cannot take an assignment of a tax lien certificate." Defendant relies on an 1899 Court of Chancery case, Smith v. Specht, 58 N.J. Eq. 47 (1899), for the proposition that a tenant who promises to pay the taxes cannot purchase a tax certificate. More than one hundred years ago when the case was decided, the Tax Sale Law did not resemble what it is today. In Specht, the tenant who originally acquired the tax certificate and subsequently assigned it to Specht had a statutory obligation to pay the taxes and failed to do so. Id. at 51-52. Because of the tenant's statutory obligation, the tenant was barred from acquiring title to the property by his failure to pay taxes. See id. at 55. Here, plaintiff had no statutory obligation to pay the taxes. At worst, plaintiff may have breached an unenforceable oral contract.
III
Defendant also argues that the motion court failed to issue sufficient findings of fact or conclusions of law pursuant to Rule 1:7-4. Defendant does not complain that he sought oral argument and it was refused. R. 1:6-2(d) (stating that requests for oral argument generally "shall be granted as of right"). The only issue presented to the Chancery court was whether defendant pled specific allegations of fraud or support for the claim that the tax certificate was void ab initio requiring resolution by the court. See N.J.S.A. 54:5-52, :5-100; Hudson Cty. Park Comm'n, supra, 132 N.J.L. at 288. Because our review is de novo and the issues are clear, the brief paragraph provided by the motion court is sufficient.
IV
Defendant's final point disputes the amount of the lien, without citing any case, court rule or statute in support. Pursuant to Rule 4:64-1(d)(3):
Any party having the right of redemption who disputes the correctness of the affidavit of amount due may file with the Office of Foreclosure an objection stating with specificity the basis of the dispute and asking the court to fix the amount due. On receipt of a specific objection to the calculation of the amount due, the Office of Foreclosure shall refer the matter to the judge in the county of venue, who shall schedule such further proceedings and notify the parties or their attorneys of the time and place thereof.
Defendant filed an objection to the amount due but the Office deemed defendant's objection insufficient. The Office told defendant he could still proceed, stating:
However, if you decide to proceed, you should submit a motion for the specific relief you are seeking to the General Equity Judge of venue.The Office informed defendant that it would not proceed for ten days to allow defendant time to file a motion. Defendant did not file a motion contesting the amount due with the General Equity Judge as directed by the Office. Defendant also failed to provide us with the objection he submitted to the Office to enable review of whether the Office erred in determining that defendant's objection was insufficient. See R. 2:6-1(a)(1)(I) (stating the appendix shall contain "such other parts of the record . . . as are essential to the proper consideration of the issues"); State v. Cordero, 438 N.J. Super. 472, 489 (App. Div. 2014) (stating that we are not "obliged to attempt review of an issue when the relevant portions of the record are not included" (quoting Cmty. Hosp. Grp., Inc. v. Blume Goldfaden Berkowitz Donnelly Fried & Forte, P.C., 381 N.J. Super. 119, 127 (App. Div. 2005))), certif. denied, 221 N.J. 287 (2015).
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION