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Veltre v. Alfieri

A-4322-98T5 (N.J. Super. App. Div. 2000) (Unpublished)

FORECLOSURE—A second mortgagee and its attorney are not liable to a successful bidder at a foreclosure sale whose purchase is subsequently frustrated even if the sale would have been completed had the second mortgagee shown up to bid at the sale.

Property was purchased at a sheriff’s foreclosure sale. A second mortgagee retained an attorney to attend the sale and bid on its behalf. Due to a clerical oversight, that attorney never attended the sale, and the buyer was the successful bidder. The attorney then filed a successful motion to set aside the sheriff’s sale. Following the setting aside of the sheriff’s sale, the property owners filed for bankruptcy, which precluded further sale of the property. The original buyer, possibly ignorant of the bankruptcy filing, appealed the lower court’s decision to set aside the sale, and the Appellate Division reversed the decision, thinking that the original sheriff’s sale had become effective. In fact, the original sheriff’s sale was not effective because of the bankruptcy filing. The successful bidder then sued the second mortgagee and its attorney, alleging that because the second mortgagee did not appear at the sheriff’s sale, it, the successful bidder, reasonably could believe that the sale was final. Further, the buyer alleged that in reliance on that reasonable belief, it sold another piece of property and took steps to obtain the needed financing. Under this theory, the attorney of the second mortgagee should have known that it was “clearly foreseeable that the failure to properly diary the date of the foreclosure sale would have adverse consequences,” and the consequences of the attorney’s failure would apply not only to the second mortgagee, but to “third parties who show up, bid, and purchase the property but then has (sic) the property taken away.” The Court found this argument to be without merit. It held that the successful bidder could not claim that he was “closely related to the services of [the attorney] when [the successful bidder] never spoke to him, had dealings with him, or used any information provided by him.” Further, the Court rejected the successful bidder’s claim that the second mortgagee was unjustly enriched by its negligence because that argument was never raised before the lower court and the Appellate Division did not find it to be “of special significance to the litigant, the public or to the achieving of substantial justice.”

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