TAX LIEN FORECLSURE

VACATING FINAL JUDGMENT

New Jersey Court Rule 4:50-1 provides:

“On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons:

  1. (a) mistake, inadvertence, surprise, or excusable neglect;
  2. (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49;
  3. (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;
  4. (d) the judgment or order is void;
  5. (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or
  6. (f) any other reason justifying relief from the operation of the judgment or order.”

The Time Limitation

Rule 4:50-2

R. 4:50-2 provides that motion to vacate “shall be made within a reasonable time, and for reasons (a), (b) and (c) of R. 4:50-1 not more than one year after the judgment, order or proceeding was entered or taken.”

The Court Rules contradict the Statute.

N.J.S.A. 54:5-87

N.J.S.A. 54:5-87 provides that: “The judgment shall be final upon the defendants . . . and no application shall be entertained to reopen the judgment after three months from the date thereof, and then only upon the grounds of lack of jurisdiction or fraud in the conduct of the suit.”

The Rules allow one year but the statute requires the defendant to file a motion to vacate within three months of final judgment.

Winberry v. Salisbury

In the seminal case of Winberry v. Salisbury, 5 N.J. 240 (N.J., 1950), Chief Justice Vanderbilt ruled that under the Constitution of 1948, “the rule-making power of the Supreme Court is not subject to overriding legislation.” Id. at 255. The Court rules prevail. A motion to vacate final judgment of tax foreclosure is an “application to reopen a judgment[, which] is a matter of practice and procedure subject to the rule-making power of the Supreme Court.” Bergen-Eastern Corp. v. Koss, 178 N.J.Super. 42, 44 (N.J. Super. A.D., 1981). See also M & D Associates v. Mandara, 841 A.2d 441 (N.J. Super. 2004)([T]he standards in the court rules govern the motion to vacate a default judgment of foreclosure. While the tax sale law states in N.J.S.A. 54:5-87 . . . ‘three months from the date thereof,’ the rules allow a period of one year to bring the motion based on R. 4:50-1(a), (b), or (c).” Id. at 447.

Nonetheless, a property owner should make every effort to file a motion to vacate within three months as judges refer to the three month limitation of N.J.S.A. 54:5-87 as a matter of course.

R. 4:50-1(a) mistake, inadvertence, surprise, or excusable neglect.

The most common ground for vacating judgment is for R. 4:50-1(a) mistake, inadvertence, surprise, or excusable neglect.

“Carelessness may be excusable when attributable to an honest mistake that is compatible with due diligence and reasonable prudence.” Housing Authority of Town of Morristown v. Little, 135 N.J. 274, 284 (N.J., 1994).

“The motion to vacate a judgment under either R. 4:50-1(a) or (f) ‘should be granted sparingly, and is addressed to the sound discretion of the trial court, whose determination will be left undisturbed unless it results from a clear abuse of discretion.’” Fineberg v. Fineberg, 309 N.J. Super. 205, 215 (N.J. Super., 1998). The Appellate division will usually not overturn the determination of a trial court that a mistake is not excusable.

R. 4:50-1(f) Any other reason justifying relief from the operation of the judgment or order.

Vacating judgment under Rule 4:50-1(f) does not have a one-year limitation. Rule 4:50-2 provides that a motion to vacate judgment under Rule 4:50-1(f) “be made within a reasonable time.”

“Determination of whether the application is made within a reasonable time, within the intendment of the present rule of court, rests in the sound discretion of the trial court, equitable principles constituting the guide.” Garza v. Paone, 44 N.J.Super. 553, 558 (N.J. Super. A.D., 1957.

To vacate under Rule 4:50-1(f) for “‘any other reason justifying relief from the operation of the judgment or order,’ the motion must be supported by ‘truly exceptional circumstances’ in the interests of finality of judgments.” M & D Associates v. Mandara, 841 A.2d 441, 366 N.J. Super. 341 (N.J. Super. 2004, citations omitted).

R. 4:50-1(d) The Judgment is Void

If property owner was not served with notice, the judgment is void. See Rosa v. Araujo, 260 N.J.Super. 458 (N.J. Super. A.D., 1992) (“Generally, where a default judgment is taken in the face of defective personal service, the judgment is void.”) Id.at 462. Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004). (“A judgment entered based upon defective service is void or voidable.) Id. at 425. Foster v. New Albany Mach. & Tool Co., 164 A.2d 492, 63 N.J.Super. 262 (N.J. Super. A.D., 1960). (“Our courts have held that a motion to vacate a judgment obtained without notice should be granted.”) Id. at 269. order.”

Rule 4:50-1 (c) fraud.

R. 4:50-2 provides a one year limitation for motions to vacate due to fraud.

In Palko v. Palko, 73 N.J. 395 (N.J., 1977), a wife who was misled in a divorce settlement vacated it twenty-two months later when she discovered that husband had significant wealth that he concealed throughout their marriage. The Supreme Court reopened the case under Rule 4:50-1(f) despite Justice Schreiber’s dissent that the one-year time limitation for fraud under Rule 4:50-1(c) had expired.

A distinction between the application of the one year limitation accompanying Rule 4:50-1(c) for fraud and the longer “reasonable time” limitation allowed under Rule 4:50-1(f) is found in the majority opinion. The Court noted that the “significant element in the timeliness of plaintiff's motion, noting the strictures of the rule, would consist of the date when plaintiff first discovered the facts underlying her application.” Id at 398.

Hence, if the fraud was not discovered until after a year, the limitation of Rule 4:50-1(c), the motion might still be brought under R. 4:50-1(f).