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Simon v. Bankers Trust Company of California, N.A.

A-2681-03T2 (N.J. Super. App. Div. 2005) (Unpublished)

TAX SALES; FORECLOSURE; JUDGMENTS—In an appropriate case, the three month statutory rule that allows a court to set aside a tax sale foreclosure judgment may be preempted by the Court Rule that permit setting aside of a judgment within the first year.

An investor purchased a tax sale certificate for unpaid sewer service charges, interest, and costs. More than two years later, the investor sought to foreclose the property owner’s equity of redemption. The property owner (actually an installment seller of the property) defaulted and an final judgment foreclosing his right of redemption was entered. Service was properly made by certified mail, but the owner’s servicing agent claimed that “through inadvertence, mistake or mishandling by [his] general mailroom [he] never received a copy of the Complaint and, therefore, was unable to act in regard thereto.” N.J.S.A. 54:5-7 only permits a default foreclosing judgment to be reopened if an application is made within three months from the date of the judgment and the grounds are either lack of jurisdiction or fraud in the conduct of the suit. The owner did not become aware of the foreclosure judgment until more than three months after it had been entered. Nonetheless, it sought to have the judgment set aside. In doing so, it relied on Court Rule 4:50-1, claiming that the Court Rule took precedence over the cited statute. The lower court disagreed.

On appeal, the Court examined the “apparent tension” between the statute that governs relief from default foreclosure judgments and the general Court Rule that permits a court to set aside a judgment within the first year after it has been entered under exceptional circumstances. It concluded that, “in the appropriate case where equitable relief is required under R. 4:50-1, the three -month limitation period in the statute is preempted by the Rule.


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