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N.J. Supreme Court REAL PROPERTY – Sheriff’s Sale – Insufficient Notice – Laches U.S. v. Scurry, A-14 September Term 2007; Supreme Court; opinion by Rivera-Soto , J., decided February 21, 2008. On certification to the Appellate Division, [Sat below: Judges Lisa and Holston in the Appellate Division.] DDS No. 34-1-9719 [21 pp.] Defendant was the owner of property located in Fairfield Township that was encumbered by a mortgage held by plaintiff. Defendant fell behind in her mortgage payments and plaintiff foreclosed on its mortgage; a final judgment of foreclosure was entered on Aug. 11, 2003. On April 1, 2004, defendant sought protection from her creditors in bankruptcy. While the automatic stay was in place, defendant again fell behind on her mortgage payments, this time on payments that were due after the bankruptcy filing. Plaintiff was granted relief from the automatic stay and thereafter proceeded to secure title to and possession of the property. The property was scheduled for a sheriff’s sale on April 19, 2005. Plaintiff was required to provide defendant at least 10 days’ prior notice of the sheriff’s sale, to be made by registered or certified mail, return receipt requested, under Rule 4:65-2. Plaintiff failed to demonstrate that its notice letter had been mailed in the manner required and could not produce any return receipt. Nonetheless, the sheriff’s sale was held on April 19, 2005. Plaintiff was the successful bidder and a sheriff’s deed was issued vesting title to the property in plaintiff. On July 25, 2005, the sheriff’s department served the writ of possession on defendant. Defendant immediately contacted her bankruptcy attorney and deposited $10,000 with her lawyer to bring her mortgage arrears up to date. Eleven days later, defendant’s counsel wrote to plaintiff’s counsel addressing the lack of notice of the sheriff’s sale, the $10,000 he was holding on behalf of his client, and a desire to resolve all outstanding issues. Plaintiff’s counsel never responded. Instead, on Sept. 8, 2005, defendant and her possessions were removed from the property (the lockout). Three months later, defendant moved before the Chancery Division for an order vacating the sheriff’s sale of the property on the basis of lack of proper notice. Plaintiff opposed that request, claiming that it had spent about $3,000 to evict defendant and that those sums, together with the delay between the lockout and the date of defendant’s motion, had prejudiced plaintiff. The court denied the motion, concluding that while notice of the sheriff’s sale was deficient, defendant’s failure to act in a timely manner once evicted from the property prejudiced the plaintiff. Defendant moved for reconsideration, arguing that the trial court had denied relief based on the doctrine of laches, which requires the court to find an unreasonable delay and significant prejudice to the party opposing the relief and asserting neither factor was present. The trial court denied the reconsideration motion. Defendant appealed to the Appellate Division, which affirmed, finding that, although plaintiff failed to properly notify defendant of the sheriff’s sale, there was no abuse of judicial discretion in the trial court’s denial of the motion to vacate the sheriff’s sale in light of the delays caused by defendant’s bankruptcy proceeding, the delay after defendant became aware of the sheriff’s sale, and the absence of any evidence of defendant’s financial ability to rectify the situation. The Supreme Court granted certification. Held:Where the plaintiff in foreclosure failed to satisfy procedural notice requirements and the property is sold at a sheriff’s sale, the doctrine of laches cannot serve to bar relief to the property owner. The Court noted that a homeowner facing foreclosure and dispossession is entitled to procedural protection. Here, both the trial court and the Appellate Division agreed that the mortgagee had failed to comply with the notice requirements of Rule 4:65-2 but found that the homeowner’s actions were barred by the application of the doctrine of laches and denied relief. The Court noted that the doctrine of laches “is invoked to deny a party enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party.” Knorr v. Smeal, 178 N.J. 169 (2003). The key factors to be considered in whether to apply the doctrine of laches are the length of the delay, the reasons for the delay, and the changing conditions of either or both parties during the delay. The core concern is whether a party has been harmed by the delay. Defendant alleged the trial court erred in denying her application to vacate the sheriff’s sale, asserting that the doctrine of laches is inapplicable here because the delay asserted was not unreasonable and plaintiff did not suffer irreparable prejudice. She claimed that she took action as promptly as circumstances allowed, and that the filing of her motion four months post-sale was reasonable. She had moved to vacate the sheriff’s sale three months after she was locked out. During that period she was in communication with her attorney, who in turn, was in communication with counsel for plaintiff; and because the property is vacant and plaintiff has no definite plans for it, the only prejudice suffered by plaintiff by reason of the delay is monetary, which can be remedied at law. Plaintiff argued that defendant’s failure to act promptly should be fatal to defendant’s claim. Plaintiff contended further that the doctrine of laches applied because defendant’s unreasonable delay in seeking relief resulted in prejudice to plaintiff because, believing the matter to be concluded, it maintained the property, and paid taxes and insurance premiums. Plaintiff dismissed defendant’s assertion that it had an adequate remedy at law by noting defendant’s poor payment history. The Court found, in balancing the equities, the prejudice alleged by plaintiff did not match up to defendant having been dispossessed from her home without plaintiff’s compliance with procedural notice requirements. The Court concluded that the trial court’s application of the doctrine of laches to bar defendant from relief from the sheriff’s sale constituted an abuse of discretion. Therefore, the Court reversed the judgment of the Appellate Division and remanded. – By Debra McLoughlin For appellant – Adam D. Greenberg (Honig & Greenberg; Greenberg and Sven E. Pfahlert on the briefs). For respondent – Michael D. Bonfrisco (Simeone & Bonfrisco; Bonfrisco and Kimberly A. Ruggieri on the brief).

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