Opinion
DOCKET NO. A-2565-11T2
04-24-2013
DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee, in Trust for the Registered Holders of AMERIQUEST MORTGAGE SECURITIES, INC., ASSET-BACKED PASS-THROUGH CERTIFICATES, SERIES 2005-R6, Plaintiff-Respondent, v. GEORGE LANDI and KIMBERLY LANDI, husband and wife, Defendants-Appellants, and COMMERCE BANK, N.A., TD BANK NA, SUCCESSOR BY MERGER TO COMMERCE BANK NA, COMMISSION EXPRESS, GELT FINANCIAL CORPORATION, Defendants.
Michelle Joy Munsat argued the cause for appellants. Kristina G. Murtha (Kivitz McKeever Lee, P.C.) argued the cause for respondent.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher and St. John.
On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-47112-08.
Michelle Joy Munsat argued the cause for appellants.
Kristina G. Murtha (Kivitz McKeever Lee, P.C.) argued the cause for respondent. PER CURIAM
In this foreclosure action, defendants George Landi and Kimberly Landi appeal from a December 16, 2011 order of the Chancery Division denying their request to vacate the final judgment and file an answer out of time. Defendants argue that plaintiff lacked standing to file the complaint and therefore the judgment is void. Defendants further contend that the trial court erred in not relieving them from the final judgment pursuant to Rule 4:50-1(d). We disagree and affirm.
Because defendants, husband and wife, have the same last name we refer to them by their first names.
I.
The following pertinent facts and procedural history emerge from the record.
On May 11, 2005, Kimberly borrowed $434,000 from Ameriquest Mortgage Company, executing a note secured by a mortgage on property in Barnegat Township. George was not personally obligated to pay the debt, but executed the mortgage in order to encumber his interest in the property. The mortgage was recorded on June 13, 2005, in the office of the Clerk of Ocean County. Thereafter, the mortgage was assigned to plaintiff by assignment of mortgage dated November 18, 2008, and recorded November 24, 2008, in the office of the Clerk of Ocean County. The assignment also assigned the note to plaintiff.
Kimberly failed to make the payment due on August 1, 2008, and all payments due thereafter. On August 25, 2008, a notice of intention to foreclose was sent to defendants with no response. Plaintiff filed a complaint in foreclosure on December 1, 2008, and an amended complaint on February 27, 2009. Defendants did not file an answer to the original complaint or the amended complaint. A default judgment was entered on April 17, 2009. Defendants filed for bankruptcy on August 31, 2009, and plaintiff was subsequently granted relief from the automatic stay on October 26, 2009.
On February 3, 2010, plaintiff obtained a final judgment in the amount of $492,339.28. A sheriff's sale of the property was scheduled for August 31, 2010, but defendants were granted an emergency stay in order to engage in mediation. However, defendants failed to submit the required financial documents and mediation was subsequently cancelled. On October 18, 2011, the property was sold at sheriff's sale to plaintiff, as the successful bidder. On October 28, 2011, George filed a pro se motion to vacate the judgment alleging that it was void because plaintiff did not own or control the note and therefore lacked standing.
On December 16, 2011, the trial court denied George's motion, finding that (i) the assignment of mortgage from Ameriquest to plaintiff was "properly executed and recorded[;]" and (ii) the note was endorsed in blank by Ameriquest and plaintiff was in possession of the note. The trial judge further determined that the motion was made by George and not Kimberly, the actual debtor on the note. Finally, the judge denied the requested relief from the final judgment of February 3, 2010, determining that a standing claim should have been raised prior to the final judgment and that George failed to make a showing of excusable neglect and meritorious defense. It is from that order that defendants appeal.
A certification of plaintiff's counsel dated May 1, 2012, in the record before us purported to attach a copy of the note, with endorsement. Counsel inadvertently failed to attach the note. At our request, a copy was provided to this court.
Thereafter by orders of this court, George's motions for temporary remand to the trial court, and stay of eviction pending appeal or, in the alternative, permitting monthly payment into court in lieu of a supersedeas bond were denied.
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Defendants contend that the motion judge erred in finding that plaintiff had standing to bring a foreclosure action and that the judge improperly applied the excusable neglect standard.
II.
Our standard of review is well settled. As recently reiterated in US Bank National Association v. Guillaume, 209 N.J. 449, 467 (2012), a "party seeking to vacate [a default] judgment" in a foreclosure action must satisfy Rule 4:50-1, which states in pertinent part that
the court may relieve a party . . . from a final judgment or order for the following reasons: . . . (d) the judgment or order is void; . . . or (f) any other reason justifying relief from the operation of the judgment or order.
The rule is "designed to reconcile 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." Ibid. (internal quotation marks omitted).
We afford "substantial deference" to the trial judge and reverse only if the judge's determination amounts to a clear abuse of discretion. Ibid. An abuse of discretion occurs when a decision is "'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Ibid. (internal quotation marks omitted).
Defendants provide no reason for the one-year and nine-month delay between the entry of default judgment in February 2010, and the filing of George's motion to vacate in October 2011. Defendants rely on Rule 4:50-1(d) and argue that the judgment is void for lack of standing. "A Rule 4:50-1(d) motion, based on a claim that the judgment is void, does not require a showing of excusable neglect but must be filed within a reasonable time after entry of the judgment." Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J. Super. 91, 98 (App. Div. 2012); see also R. 4:50-2. Under certain circumstances, "equitable considerations may justify a court in rejecting a foreclosure defendant's belated attempt to raise as a defense the plaintiff's lack of standing." Russo, supra, 429 N.J. Super. at 100. Such is the case here.
We stated in Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012), that
[i]n foreclosure matters, equity must be applied to plaintiffs as well as defendants. Defendant did not raise the issue of standing until he had the advantage of many years of delay. Some delay stemmed from the New Jersey foreclosure system, other delay was afforded him through the equitable powers of the court, and additional delay resulted from plaintiff's attempt to amicably resolve the matter. Defendant at no time denied his responsibility for the debt incurred nor can he reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of further delay expired, after his home was sold and he was evicted, he made a last-ditch effort to relitigate the case. The trial court did not abuse its discretion
in determining that defendant was not equitably entitled to vacate the judgment.
Like Angeles, defendants failed to deny responsibility for their debt, contributed to the substantial delay by filing their bankruptcy petition, waited to file George's motion to vacate, and provided no explanation for their delay. Thus, we conclude there was no abuse of discretion in determining that George's motion was untimely.
Moreover, defendants are unable to show, on the merits, that they are entitled to vacate the judgment pursuant to subsection (d). "As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt." Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011); accord Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011); Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010). Plaintiff produced proof that it acquired the loan in November 2008 and obtained the assignment prior to obtaining judgment.
In Russo, supra, 429 N.J. Super. at 101, we held based on Guillaume and Angeles, that
even if [the] plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy . . . because of [the] defendants'In Russo, the defendants challenged the plaintiff's standing to file the foreclosure complaint because it did not take an assignment of the mortgage until after the complaint was filed. Id. at 96. We concluded, "in this post-judgment context, that lack of standing would not constitute a meritorious defense to the foreclosure complaint." Id. at 101. "[S]tanding is not a jurisdictional issue in our State court system and, therefore, a foreclosure judgment obtained by a party that lacked standing is not 'void' within the meaning of Rule 4:50-1(d)." Ibid. The same rationale applies here. The judge found that plaintiff possessed the note, endorsed in blank. Plaintiff had a legal right to enforce the note, pursuant to the Uniform Commercial Code, at the time it obtained the judgment. See Ford, supra, 418 N.J. Super. at 597.
unexcused, years-long delay in asserting that defense.
Finally, we disagree that subsection (f) justifies vacation of the judgment. Rule 4:50-1(f) permits a judge to vacate a default judgment for "any other reason justifying relief from the operation of the judgment or order," but "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks omitted). The applicability of this subsection is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (internal quotation marks omitted). On this record, defendants have not shown any such "exceptional circumstances."
After a thorough review of the record and consideration of the controlling legal principles, we conclude that the defendants' remaining arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION