First American Title Insurance v. Township of Rockaway

731 A.2d 572, 322 N.J. Super. 583
CourtNew Jersey Superior Court Appellate Division
DecidedJune 17, 1999
StatusPublished
Cited by3 cases

This text of 731 A.2d 572 (First American Title Insurance v. Township of Rockaway) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First American Title Insurance v. Township of Rockaway, 731 A.2d 572, 322 N.J. Super. 583 (N.J. Ct. App. 1999).

Opinion

MacKENZIE, P.J.Ch.

STATEMENT OF FACTS

Plaintiff First American Title Insurance Company (“First American”) commenced this action seeking an adjudication of title to the premises on Green Pond Road, Rockaway Township, Morris County, New Jersey, also known as Lots 29 and 29.01, Block 40701, formerly Lot 29, Block 40701, and previously Lot 73, Block 240 (“the subject premises”), and for other declaratory and equitable relief. In 1981, defendant Township of Rockaway (“Township” or “Rockaway”) was the fee owner of various lots, including the subject premises. Through the New Jersey Green Acres program, the Township accepted grant monies from the State of New Jersey in consideration for which the Township bound itself to a Green Acres Development Contract. Pursuant to the Green Acres contract, the Township designated, among other properties, the subject premises as recreation and conservation properties subject to Green Acres restriction.

Under the Green Acres Land Acquisition Act, N.J.S.A. 13:8A-1 to 8A-55,

A local unit which receives a [Green Acres] grant under this act shall not dispose of or divert to a use for other than recreation and conservation purposes any lands held by such local unit for such purposes at the time of receipt of said grant without the approval of the commissioner and the State House Commission and following a public hearing by the local unit at least 1 month prior to any such approvals.

[588]*588N.J.S.A. 13:8A-47(b). Thus, pursuant to this provision, the Township was prohibited from selling and conveying the subject premises without obtaining the requisite State approvals.

On August 6, 1985, without the requisite approvals, the Township of Rockaway Council resolved to sell the subject premises. The Township calls this “an unfortunate oversight.” The Resolution authorizing sale of the subject premises, among other properties, states:

f) All conveyances shall be by bargain and sale deed with covenants against grantor’s act. No Affidavit of Title will be provided ...
j) If the title to this property shall prove to be unmarketable, liability of the Township of Rockaway shall be limited to repayment to the purchaser of the amount of his other deposit and the balance of the purchase price (if paid) without any further cost, interest, expense, damage, or claim. Notice of the alleged defects in- title or claim of unmarketability shall be given to the Township of Rockaway in writing not later than thirty (30) days after the sale. The successful bidder agrees that the failure to give such notice shall be deemed conclusive evidence that the purchaser accepts the title in its present condition.

On September 21, 1985, an auction sale was conducted at the Township’s Municipal Building. At the auction sale, the subject premises sold for $51,000, and a deed was thereafter delivered to the purchaser, defendant Ata Jian-Zibaee (“Zibaee”). No State approval has since been obtained for either the sale or the deed, and the validity of the fee title conveyance was assured to Zibaee by Safeco Title Insurance Company (now Chicago Title Insurance Company).

On June 20, 1988, a minor subdivision of the subject premises was approved by the Planning Board of the Township of Rockaway. In order to give effect to the subdivision, Zibaee recorded a deed to himself reflecting the subdivision. On September 8, 1995, Zibaee conveyed the subject premises to defendant Donald M. Erickson (“Erickson”) for $80,000 by Bargain and Sale Deed. In connection with this conveyance, the grantee, Erickson, gave a purchase money mortgage to Zibaee in the amount of $30,000.

First American assured the conveyance to Erickson and mortgage back to Zibaee. Erickson obtained an Owner’s Policy for $80,000. Zibaee obtained a Loan Policy for $30,000. First Ameri[589]*589can asserts that, pursuant to Erickson’s Owner’s Policy, it enjoys the option to pay or otherwise settle this claim:

6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF POLICY
In case of a claim under this policy, the company shall have the following additional options:
(a) To Pay or Tender Payment of the Amount of the Insurance
To pay or tender payment of the amount of insurance under this policy together with any costs, attorneys’ fees and expenses incurred by the insured claimant, which were authorized by the Company, up to the time of payment and which the Company is obligated to pay.
Upon the exercise by the Company of this option, all liability and obligations to the insured under this policy, other than to make the payment required, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation, and the policy shall be surrendered to the Company for cancellation.

In addition, the policy contains a right to subrogation in the event First American opts to pay or settle the claim:

13. SUBROGATION UPON PAYMENT OR SETTLEMENT
(a) The Company’s Right of Subrogation.
Whenever the Company shall have settled and paid a claim under this policy, all right of subrogation shall vest in the Company unaffected by any act of the insured claimant.
The Company shall be subrogated to and be entitled to all rights and remedies which the insured claimant would have had against any person or property in respect to the claim had this policy not been issued. If requested by the Company, the insured claimant shall transfer to the Company all rights and remedies against any person or property necessary in order to perfect this right of subrogation. The insured claimant shall permit the Company to sue, compromise or settle in the name of the insured claimant and to use the name of the insured claimant in any transaction or litigation involving theses rights or remedies.

In addition, the Owner’s Policy provides for a set-off against the Owner’s Policy for all payments made under the Loan Policy:

11. LIABILITY NONCUMULATIVE
It is expressly understood that the amount of insurance under the policy shall be reduced by any amount the Company may pay under any policy insuring a mortgage to which exception is taken in Schedule B or to which the insured has agreed, assumed, or taken subject, or which is hereafter executed by an insured and which is a charge or lien on the estate or interest described or referred to in Schedule A, and the amount so paid shall be deemed a payment under this policy to the insured owner.

The mortgage made by Erickson to Zibaee is an exception to the title insurance coverage written to Erickson.

[590]*590By letter of May 21,1991, the NJDEP directed the Township to notify all persons in the subsequent chains of title as to the prohibited nature of these sales transactions and to take corrective action. Neither Zibaee then nor Erickson upon purchase was ever notified as to the prohibited nature of the sales transactions.

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Bluebook (online)
731 A.2d 572, 322 N.J. Super. 583, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-american-title-insurance-v-township-of-rockaway-njsuperctappdiv-1999.