                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-2003-18T2

SF1 REAL ESTATE 1, LLC,

          Plaintiff-Respondent,

v.

MARKO MELNITSCHENKO
and LJUBOW MELNITSCHENKO,
his wife,

          Defendants-Appellants,

and

DEUTSCHE BANK, f/k/a BANKERS
TRUST COMPANY AS TRUSTEE
UNDER THAT POOLING & SERVICING
AGREEMENT DATED AUGUST 1, 1992
FOR RTC MORTGAGE PASSTHROUGH
CERTIFICATES SERIES 1992-10, CAROLD
CORPORATION, and STATE OF NEW
JERSEY,

     Defendants.
_____________________________________

                    Argued December 16, 2019 – Decided May 12, 2020

                    Before Judges Rothstadt and Moynihan.
            On appeal from the Superior Court of New Jersey,
            Chancery Division, Bergen County, Docket No. F-
            014704-16.

            Thomas J.T.J. Legg argued the cause for appellants
            (Legg
            Law Firm LLC, attorneys; Thomas J.T.J. Legg, on the
            brief).

            Adam D. Greenberg argued the cause for respondent
            (Honig & Greenberg, LLC, attorneys; Adam D.
            Greenberg, on the brief).

PER CURIAM

      Defendants Marko Melnitschenko and Ljubow Melnitschenko appeal

from the Chancery Division's December 7, 2018 order denying their Rule 4:50-

1 motion to vacate a May 22, 2018 "Final Judgment of Tax Sale Certificate

Foreclosure" entered in favor of plaintiff S1 Real Estate 1, LLC. Plaintiff's

predecessor in interest, Stonefield Investment Fund III (Stonefield), purchased

a tax sale certificate in 2013 relating to one of defendants' investment properties

after defendants did not pay real estate taxes owed for 2012. It then pursued

foreclosure, and after defendants failed to respond to service of a second

amended complaint, failed to respond to other notices about the foreclosure, and

failed to exercise their right of redemption, the Chancery Division entered a

default judgment in favor of plaintiff's predecessor.        Thereafter, plaintiff

substituted in for its predecessor and defendants filed a motion to vacate under

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                                        2
Rule 4:50-1. On appeal, defendants contend that the Chancery judge abused her

discretion by refusing to vacate the judgment under Rule 4:50-1. We disagree

and affirm.

      It was undisputed that in 2012, defendants, who are both octogenarians,

failed to pay real estate taxes owed for a residential property they owned in Fort

Lee, which was not their residence. A tax sale was held on December 4, 2013,

at which the certificate was sold to Stonefield for $12,636.77 at zero percent

interest plus a $39,300.00 premium to be paid by the purchaser.

      On January 12, 2016, Stonefield sent a pre-foreclosure notice to

defendants by certified and regular mail addressed to a Guttenberg address, in

accordance with N.J.S.A. 54:5-97.1,1 indicating that it owned the tax lien on

defendants' property, which would cost $53,977.59 to redeem. That address was

defendants' last known address on file with the Fort Lee tax collector and tax

assessor where tax bills were sent for the subject property. Marko2 signed for

the certified mail on January 2016.



1
  The service of this notice is not a condition to a tax sale foreclosure. Service
of a notice is only required for a plaintiff to obtain a "search fee, counsel fee or
other fee related to certified mailings." N.J.S.A. 54:5-97.1.
2
  We refer to the individual defendants by their first name for clarity and to
avoid any confusion caused by their common last name.
                                                                            A-2003-18T2
                                         3
      As no redemption was made, on May 25, 2016, Stonefield filed an "In

Personam Complaint in Foreclosure" against defendants. On September 9,

2016, defendants' then-attorney, Benjamin De Sena, wrote to Stonefield's

attorney requesting proof of service and a copy of the complaint. The letter

made reference to the complaint's docket number.

      Defendants did not respond to the complaint. According to Ljubow, in a

certification she filed in support of her motion to vacate, that attorney was hired

only "to verify the sums alleged were still owed," which she thought would have

been paid from funds owed to defendants "from the unclaimed property section

of New Jersey."      Moreover, she acknowledged that she owned multiple

properties, had "been the subject of other tax sales, however in each and every

time [she] . . . had an opportunity to pay them prior to [her] property being

taken," and for that reason "thought [she] had more time and never believed that

[her] property could be taken from [her] in such a short period of time. "

      The other ten properties owned by defendants included their home in

Englewood Cliffs that was assessed at more than one million dollars, and

properties in Fairview, North Bergen, Guttenberg and Wantage. The other tax

sales impacted five preparties in North Bergen, one in Wantage, and one in




                                                                           A-2003-18T2
                                        4
Fairview, all relating to taxes that remained unpaid during the years from 2010

to 2013.

      On September 23, 2016, Stonefield filed a second amended complaint to

add the assignee of a mortgage encumbering defendants' property. At that time,

Stonefield's attorney replied to De Sena's September 9, 2016 letter, enclosing

the second amended complaint and summons and requesting that defendants

"execute the [a]cknowledgment of [s]ervice." Defendants did not respond.

Stonefield then personally served defendants with the second amended

complaint on April 26, 2017. The affidavit of service indicated that Marko was

the individual served and described him as between fifty-one and sixty-five

years old, between 5'4" and 5'8" in height, weighed over 200 pounds, had white

skin, gray hair, and a beard. Defendants did not respond to the second amended

complaint.

      After Stonefield requested that a default be entered against defendants on

June 14, 2017, a default was entered by the court, and plaintiff served defendants

with the filed default by regular mail. On October 4, 2017, Stonefield "filed a

motion for an order fixing the amount, time and place [of] redemption," which

was served on defendants by certified and regular mail at their Englewood Cliffs




                                                                          A-2003-18T2
                                        5
home, with Marko having signed for the certified mail on October 7, 2017.

Defendants did not respond to the motion.

      The Chancery judge entered an order on October 30, 2017, fixing the

redemption price at $80,103.65, and set the date and place of redemption as

December 14, 2017, at the office of the tax collector in Fort Lee. This order was

served on defendants by certified and regular mail at their Englewood Cliffs

residence on November 16, 2017 and November 17, 2017. Defendants did not

seek to make redemption, and on May 22, 2018 final judgment was entered,

foreclosing defendants' right of redemption as to the property. 3

      On August 8, 2018, plaintiff's counsel received a telephone call from

defendants' new attorney, who advised him that defendants "were never served

with a summons and complaint." According to plaintiff's attorney, defendant's

attorney "seemed quite surprised when [he learned] . . . that [defendants] had

been personally served and . . . even retained an attorney" who contacted

plaintiff's attorney earlier.




3
   Before the entry of the default judgment, in March 2018, Stonefield assigned
the tax sale certificate to plaintiff, which later obtained a court order permitting
it to substitute for Stonefield. A copy of the motion and the order were served
on defendants by regular mail.
                                                                            A-2003-18T2
                                         6
      On November 2, 2018, defendants filed a motion to vacate final judgment.

Defendants argued that they were not aware of the default judgment against them

until after it had been entered. In Ljubow's supporting certification, she stated

that she and her husband were "at times very confused as to whether or not th[e]

taxes [they had failed to pay] were in fact still owed as [they] had believed that

they may have been satisfied by funds . . . being held in the New Jersey

[u]nclaimed [p]roperty [f]und." She acknowledged that they "were at times

irresponsible for not timely paying [their] taxes," but contended that they "were

unsure what taxes were in fact due." She denied that she or Marko were ever

aware of the notices and complaints allegedly sent by certified mail and

indicated that the signature on the January 12, 2016 pre-foreclosure notice was

not Marko's.

      Ljubow also explained that she and Marko suffered from multiple

hardships, including Marko being ill, the demise of their family business and

subsequent financial struggles, and that the Fort Lee property was occupied by

defendants' unemployed adult daughter who did not have anywhere else to live.

Ljubow did not state that the description of the individual in the affidavit of

service was not Marko nor did she supply any confirmation from a health care

provider about Marko's medical condition, especially during the years


                                                                          A-2003-18T2
                                        7
immediately preceding when the foreclosure complaint was filed. Notably,

during that time period, defendants had filed an answer and defended another

action affecting a different property located in North Bergen, in which they

signed a stipulation of settlement resolving the matter on March 30, 2017, one

month before being served in this matter.

      On December 7, 2018, the parties appeared for oral argument. At oral

argument, Ljubow stated under oath that she handled all of the family's business

interests. In her oral decision supporting the denial of defendants' motion, the

Chancery judge first addressed the service issue and found that service was made

at defendants' residence on a competent adult, and was therefore proper. Next,

the judge addressed Marko's mental incapacity and rejected defendants' attempt

to compare the instant case to Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42

(App. Div. 1981), finding that the situation in that case was not analogous to the

situation here. Despite Marko's illness and the fact that he had been recently

hospitalized for several months, the judge stated the "matter goes back to 2012,"

and in that time, Ljubow stated that she handled all of the family's business

interests, and "reasonably could be expected to contact the local [taxing]

authority" regarding the money they owed. Although the judge agreed with




                                                                          A-2003-18T2
                                        8
defendants that "[i]t [did] seem harsh that an individual would lose half a million

dollar property for . . . $100,000 in debt," she concluded "that [was] the law."

      The judge found no exceptional circumstances existed, that defendants

"had years to make this right," and although defendants' daughter resided at the

property, it was "not a residence," but an investment property, and "the bottom

line is that . . . [defendants were] not losing their home." The judge concluded

that there was no excusable neglect, and defendants' contention that Ljubow was

confused as to whether the money owed to her "in the State fund would" be

applied as a credit was unpersuasive. The judge noted that defendants were

represented by counsel throughout the proceeding and their prior attorney "was

well aware that this matter was pending," negating any argument that they were

unaware of the taxes owed.       Additionally, nothing in the record described

Marko's physical or mental state throughout the action. This appeal followed.

      On appeal, defendants argue that they were entitled to relief because they

established excusable neglect and a meritorious defense under Rule 4:50-1(a);

they "presented evidence that the foreclosure [judgment] was void justifying

relief under R[ule] 4:50-1(d) . . . or R[ule] 4:50-1(e) due to insufficiency of

careful security of . . . plaintiff's affidavit of inquiry and the windfall between

the tax sale certificate purchase and [the] property's value"; and they


                                                                           A-2003-18T2
                                        9
demonstrated exceptional circumstances under Rule 4:50-1(f). We find no merit

to these contentions.

      We review a decision on a motion to vacate a default judgment under Rule

4:50-1 for "a clear abuse of discretion." US Bank Nat'l Ass'n v. Guillaume, 209

N.J. 449, 467 (2012). To warrant reversal, the movant must demonstrate that

the motion judge's "decision [was] 'made without a rational explanation,

inexplicably departed from established policies, or rested on an impermissible

basis.'" Id. at 467-68 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123

(2007) (Rivera-Soto, J., dissenting)).

      In determining whether a party should be relieved from a judgment under

the Rule, courts must balance "the strong interests in finality of judgments and

judicial efficiency with the equitable notion that courts should have authority to

avoid an unjust result in any given case." Id. at 467 (quoting Mancini v. EDS

ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993)). When

a trial court considers a motion to vacate a default judgment, the motion must

be viewed "with great liberality," and "every reasonable ground for indulgence"

is tolerated "to the end that a just result is reached." Mancini, 132 N.J. at 334

(quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.),

aff'd, 43 N.J. 508 (1964)).


                                                                          A-2003-18T2
                                         10
      Where a procedural violation is involved, additional considerations are

implicated, namely, "[t]he defendant's right to have the plaintiff comply with

procedural rules[, which] conflicts with the plaintiff's right to an adjudication of

the controversy on the merits." Abtrax Pharms., Inc. v. Elkins-Sinn, Inc., 139

N.J. 499, 513 (1995) (quoting Zaccardi v. Becker, 88 N.J. 245, 252 (1982)). In

all cases, however, "justice is the polestar and our procedures must ever be

moulded and applied with that in mind." Jansson v. Fairleigh Dickinson Univ.,

198 N.J. Super. 190, 195 (App. Div. 1985) (quoting N.J. Highway Auth. v.

Renner, 18 N.J. 485, 495 (1955)).

      At the outset, and contrary to plaintiff's contention on appeal, we conclude

the Chancery judge correctly considered defendants' application under Rule

4:50-1. While the Tax Sale Law, N.J.S.A. 54:5-1 to -137, states that a tax sale

"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 t he

suit," N.J.S.A. 54:5-87, Rule 4:50-1 governs a motion for relief from a tax sale

foreclosure judgment, notwithstanding N.J.S.A. 54:5-87. See M & D Assocs. v.

Mandara, 366 N.J. Super. 341, 351 (App. Div. 2004) (holding that Rule 4:50-1

is paramount); see also Town of Phillipsburg v. Block 1508, Lot 12, 380 N.J.


                                                                            A-2003-18T2
                                        11
Super. 159, 166 (App. Div. 2005) (interpreting the three-month deadline). The

guiding principles are that the statutory limitation and the underlying policy to

grant stability of foreclosure judgments informs a court's exercise of its

discretion under the Rule. Phillipsburg, 380 N.J. Super. at 166-67; Koss, 178

N.J. Super. at 44-45.

      Rule 4:50-1 permits a court to "relieve a party . . . from a final judgment"

under certain circumstances. Implicated here are those described in subsections

(a), (d), (e) and (f) of the Rule.

      Relying upon subsection (a), defendants contend that they demonstrated

"excusable neglect and a meritorious defense justifying relief" from the

judgment. Relying on Koss, defendants argue that their age, the insufficient

service of foreclosure notices, and Marko's poor health entitles them to relief.

They explain that Ljubow hired their prior attorney "only to determine whether

[tax lien] monies were owed on the property and not as to the foreclosure itself

since . . . she was never personally served." Additionally, they argue that the

initial pre-foreclosure notice was "sent to a visibly abandoned property" that was

not their place of residence and that other issues with service were present,

including whether Marko actually received the notices in light of the estimated

age and height on the affidavit of service. Defendants also argue that failure to


                                                                          A-2003-18T2
                                       12
follow the court rules regarding notice is also enough, on its own, to warrant

vacating the default judgment.      Finally, defendants contend that plaintiff

"circumvent[ed]" their rights to due process.

      Under subsection (a), relief may be afforded upon a showing of "mistake,

inadvertence, surprise, or excusable neglect." R. 4:50-1(a). Relief under section

(a) "requir[es] a showing of excusable neglect and a meritorious defense."

Guillaume, 209 N.J. at 468. "'Excusable neglect' may be found when the default

was 'attributable to an honest mistake that is compatible with due diligence or

reasonable prudence.'" Ibid. (quoting Mancini, 132 N.J. at 335).

      Here, defendants have not demonstrated excusable neglect. Defendants

were served the second amended complaint properly under Rule 4:4-4(a)(1), as

it was delivered to defendants "dwelling place or usual place of abode with a

competent member of the household of the age of [fourteen] or over then

residing therein" accepting service.       Nothing stated by Ljubow in her

certification undermined the validity of the service of process.

      Additionally, defendants' reliance on Koss to argue that they demonstrated

excusable neglect is inapposite. In Koss, the defendant was an elderly woman

who had "a history of continuing, serious psychiatric problems with several

hospitalizations for mental illness" and "knew about the foreclosure action [but]


                                                                         A-2003-18T2
                                      13
did not understand its import." Koss, 178 N.J. Super. at 45-46. Here, although

both defendants are elderly and Marko appears to experience health issues

related to forgetfulness, Ljubow stated that she historically controlled the

business and financial aspects of the couple's numerous real estate properties.

In any event, unlike the Koss defendant, Ljubow provided no medical evidence

relating to Marko's alleged conditions.

      Here, defendants confirmed that they are real estate investors who were

familiar with the need to pay taxes and with the Tax Sale Law's foreclosure

provisions. Despite Ljubow's claims of Marko's incapacity, they both defended

and resolved another litigation right before being served personally in this

matter. Under these circumstances, defendants' failure to respond was not an

"honest mistake" consistent with "due diligence," especially in light of their

receiving notices regarding the taxes owed and a pending foreclosure action over

a period of nearly six years.    See Guillaume, 209 N.J. at 468-69 (quoting

Mancini, 132 N.J. at 335) ("Notwithstanding the repeated notices, the

[defendants] took no action to respond to the foreclosure complaint, and the

record reflects no excuse for their inaction."). Rule 4:50-1 "requires that courts

be indulgent of litigants who deserve such indulgences." Fineberg v. Fineberg,

309 N.J. Super. 205, 217 (App. Div. 1998) (rejecting a defendant's reliance on


                                                                          A-2003-18T2
                                       14
Koss after finding him to be "a sophisticated businessman who [was] involved

in multi-million dollar transactions, who, according to the record, [was]

maintaining or defending at least fifteen active lawsuits (some of which

involve[d] defendant acting pro se)"). Defendants did not establish themselves

worthy of that indulgence.

      Even if defendants were able to demonstrate excusable neglect, they have

not demonstrated a meritorious defense. "Everybody knows that taxes must be

paid." Bron v. Weintraub, 42 N.J. 87, 91 (1964). Defendants admit to not

paying the taxes, that the taxes were owed, and that they retained an attorney

once the complaint was filed, albeit only to determine what was owed.

Afterward, and inexplicably, they took no action. Their assertion for the next

two years, that the taxes would have been paid from another source, is

unavailing. The record supported the Chancery judge's conclusion that there

was no basis to grant them relief from the judgment under subsection (a).

      Defendants also contend that the trial court abused its discretion in not

granting relief under Rule 4:50-1(d), as the "insufficient notice and improper

service of process render[ed] the [judgment] . . . void." Additionally, because

of the windfall that plaintiff would realize due to the difference between the tax

sale certificate purchase and the property's value, "careful scrutiny of the


                                                                          A-2003-18T2
                                       15
affidavit of inquiry for service upon the [d]efendants is required."         Here,

defendants argue it "pales in demonstrating due diligence to locate and properly

notice and serve" them.

      Rule 4:50-1(d) provides relief from judgment when "the judgment or order

is void" and subsection (e) applies where "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."

      We conclude, as did the Chancery judge, defendants were not entitled to

relief under section (d) because service of process was valid. As to defendants'

argument that the judgment is not equitable because there is a difference

between the tax sale and the property's value, we disagree. A property owner

who fails to pay taxes for several years and ignores multiple notices about his

or her failure is not entitled to equity. "A property owner knows that he[ or she]

must pay taxes on his[ or her] property, and that if he[ or she] fails to do so the

municipality will sell the property (or the tax sale certificate) for the price of

taxes due and owing." Township of Long Beach v. Lot No. 3, Block No. 9, 189

N.J. Super. 116, 125 (Ch. Div. 1983). "[E]quity aids the vigilant, not those who

sleep on their rights. . . ." Brunswick Hills Racquet Club, Inc. v. Route 18


                                                                           A-2003-18T2
                                       16
Shopping Ctr. Assocs., 182 N.J. 210, 228 (2005) (quoting Brick Plaza, Inc. v.

Humble Oil & Ref. Co., 218 N.J. Super. 101, 104 (App. Div. 1987)).

      Defendants final argument is that "the totality of facts presented" justify

exceptional circumstances to grant relief under Rule 4:50-1(f) for the reasons

expressed in support of their arguments under subsection (a) and because they

offered to pay the full amount owed to plaintiff. We find no merit to their

contention.

      The Rule permits a default judgment to be vacated for "any other reason

justifying relief from the operation of the judgment," R. 4:50-1(f), and "affords

relief only when 'truly exceptional circumstances are present,'" Guillaume, 209

N.J. at 468 (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 286

(1994)). In such circumstances, the rule is "'as expansive as the need to achieve

equity and justice' [but] . . . is limited to 'situations in which, were it not applied,

a grave injustice would occur.'" Id. at 484 (citations omitted). "The movant

must demonstrate the circumstances are exceptional and enforcement of the

judgment or order would be unjust, oppressive or inequitable." Johnson v.

Johnson, 320 N.J. Super. 371, 378 (App. Div. 1999); see also Badalamenti v.

Simpkiss, 422 N.J. Super. 86, 103 (App. Div. 2011).




                                                                                A-2003-18T2
                                         17
      Considering that subsection (f) contemplates exceptional circumstances,

"each case must be resolved on its own particular facts." Baumann v. Marinaro,

95 N.J. 380, 395 (1984). "Among the factors to be taken into account . . . are

the 'extent of the delay in making the application for relief, the underlying reason

or cause, fault or blamelessness of the litigant, and any prejudice that would

accrue to the other party.'" In re Guardianship of J.N.H., 172 N.J. 440, 474

(2002) (quoting C.R. v. J.G., 306 N.J. Super. 214, 241 (Ch. Div. 1997)).

      Here, defendants present no circumstances that were exceptional. The

subject property is not defendants' home. The loss of an investment property

does not weigh heavily in favor of them, as would the loss of their home,

especially in the context of the Tax Sale Law's goal of finality. See In re

Princeton Office Park LP v. Plymouth Park Tax Servs., LLC, 218 N.J. 52, 66

(2014) ("The legislative purpose is to 'aid municipalities in raising revenue,' by

attracting 'third parties to the opportunity to acquire . . . property.'" (Alteration

in original) (quoting Bron, 42 N.J. at 91-92)); see also Malone v. Midlantic

Bank, N.A., 334 N.J. Super. 238, 250 (Ch. Div. 1999) (citing N.J.S.A. 54:5-85)

("[T]he express policy of the Tax Sale [Law] is that it be liberally constructed

so as to bar the right of redemption, not preserve it, the goal being that

marketable titles to property be secured."), aff'd o.b., 334 N.J. Super. 236 (App.


                                                                             A-2003-18T2
                                        18
Div. 2000). The fact that they are permitting their daughter to live there without

paying rent does not change the nature of the premises.

      Moreover, although defendants claim they offered to pay plaintiff for the

amount of taxes they undisputedly owed, they never tendered any amount that

was undisputedly owed at any point since 2012. The record therefore again

supports the Chancery judge's conclusion that "exceptional circumstances" were

not established.

      Affirmed.




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                                       19
