In this tax sale foreclosure appeal, the court addressed whether the United States Supreme Court's recent decision in Tyler v. Hennepin County, 598 U.S. 631 (2023), which declared a taxing authority's confiscation of a property owner's equity violated the Fifth Amendment Takings Clause, bars a third-party tax sale certificate holder's foreclosure of a property owner's equity under the New Jersey Tax Sale Law (TSL), N.J.S.A. 54:5-1 to -137, and if barred, whether pipeline retroactivity is afforded. The court also addressed whether the motion judge's decision to vacate final judgment under Rule 4:50-1(f), based primarily on defendant having redemption funds and significant property equity, was an abuse of discretion.
Defendant Alessandro Roberto[1] owned a mixed residential and commercial use property located in Paterson. In 2010 and 2016, defendant failed to pay his municipal sewer tax bills resulting in plaintiff's $606 purchase of three property tax sale certificates. Almost eleven years after the last tax sale certificate was purchased, plaintiff commenced a tax sale foreclosure. As the matter was uncontested, plaintiff obtained final judgment for $32,973.15. Defendant moved to vacate final judgment pursuant to Rules 4:50-1(e) and (f), arguing entitlement to equitable relief because he had redemption funding, would lose significant equity, and suffered COVID-19 related financial difficulties. The Chancery Division judge vacated final judgment pursuant to Rule 4:50-1(f).
Plaintiff 257-261 20th Avenue Realty, LLC appealed from the Chancery Division orders, which conditionally vacated final judgment and permitted redemption, vacated final judgment upon satisfaction of the conditions, and dismissed the action with prejudice. Plaintiff argued the judge erred in finding exceptional circumstances existed to vacate final judgment. Defendant argued the totality of facts weighed in favor of exceptional circumstances to vacate final judgment and the judge did not abuse his discretion. After the judge's decision and the submission of merits briefs on appeal, the United States Supreme Court decided Tyler.
The court affirmed the decision to vacate final judgment, based on the judge's detailed findings of exceptional circumstances under Rule 4:50-1(f), discerning no abuse of discretion. The court also concluded cause existed to vacate judgment as the application of Tyler to New Jersey's similar TSL framework established that the confiscation of a New Jersey property owner's equity, through a tax sale foreclosure, violates the Fifth Amendment Takings Clause. As Tyler established a new principle of law, pipeline retroactivity is afforded.
[1] Defendant's first name was incorrectly pleaded as Alesandro.