Opinion
DOCKET NO. A-1729-14T1
04-18-2016
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR SG MORTGAGE SECURITIES ASSET BACKED CERTIFICATES, SERIES 2006-FRE2, Plaintiff-Respondent, v. DONALD S. MURRAY; MRS. DONALD S. MURRAY, his wife; MR. MURRAY, husband of ANNA J. MURRAY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC. AS NOMINEE FOR FGC COMMERCIAL MORTGAGE FINANCE, DBA FREMONT MORTGAGE ITS SUCCESSORS AND/OR ASSIGNS; and PAWEL KOZIOL, Defendants, and ANNA J. MURRAY, Defendant-Appellant.
Joseph A. Chang argued the cause for appellant (Joseph A. Chang & Associates, LLC, attorney; Mr. Chang, of counsel; Jeffrey Zajac, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith, LLP, attorneys; Mr. Reichner, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Ostrer, Haas and Manahan. On appeal from Superior Court of New Jersey, Chancery Division, Somerset County, Docket No. F-30331-09. Joseph A. Chang argued the cause for appellant (Joseph A. Chang & Associates, LLC, attorney; Mr. Chang, of counsel; Jeffrey Zajac, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith, LLP, attorneys; Mr. Reichner, of counsel and on the brief). PER CURIAM
In this mortgage foreclosure matter, defendant Anna Murray appeals from the March 28, 2014 order granting summary judgment to plaintiff U.S. Bank National Association, as legal title trustee for SG Mortgage Securities Asset-Backed Certificates, Series 2006-FRE2, and from the October 30, 2014 final judgment of foreclosure. We affirm.
The certificates were issued pursuant to a July 1, 2006 Pooling and Servicing Agreement (PSA) between SG Mortgage Securities, LLC, as depositor; Wells Fargo Bank, National Association (Wells Fargo) as servicer, master servicer, securities administrator, and custodian; plaintiff, as trustee; and Clayton Fixed Income Services, Inc., as credit risk manager.
I.
On April 1, 2006, defendant and her husband executed and delivered a note to FGC Commercial Mortgage Finance, d/b/a Fremont Mortgage (Fremont), in the amount of $675,000. To secure payment, defendant and her husband executed a mortgage encumbering their residence in favor of Mortgage Electronic Registration Systems (MERS), as nominee for Fremont. The mortgage was recorded with the Somerset County Clerk on April 21, 2006. The loan was subsequently deposited with the SG Mortgage Securities Trust, and plaintiff served as the trustee. The trust was governed by the July 1, 2006 PSA.
Defendant and her husband separated in August 2008. On October 1, 2008, they defaulted on the loan. Defendant and her husband divorced in February 2009. Defendant received title to the residence as part of her property settlement agreement with her husband.
On January 18, 2009, the loan's servicer, Wells Fargo, served defendant with a notice of intent to foreclose. On March 19, 2009, Judith Romano, Assistant Secretary and Vice President of MERS, as nominee for Fremont, assigned the mortgage to plaintiff. On April 30, 2009 the assignment was recorded with the Somerset County Clerk. The note was also endorsed to plaintiff by a vice president at Fremont.
On June 8, 2009, plaintiff filed its foreclosure complaint. Defendant obtained a six month forbearance, staying the action until February 5, 2010. In the fall of 2009, defendant certified that she applied for a loan modification under the federal Home Affordable Modification Program (HAMP) and, in October 2009, she was offered a Trial Period Plan (TPP).
"Under HAMP, mortgage loan servicers enter into an agreement with the Secretary of Treasury to perform loan modification and foreclosure prevention services in exchange for financial incentives. . . . The loan servicer evaluates the borrower's application, as defined by guidelines and procedures issued by the Department of Treasury. Pending review of eligibility, a Trial Period Plan [TPP] . . . is struck between the borrower and lender." Miller v. Bank of America Home Loan Servicing, L.P., 439 N.J. Super. 540, 544 (App. Div.), certif. denied, 221 N.J. 567 (2015) (citations omitted). --------
Defendant alleged that she made twelve monthly payments under the TPP. These payments were less than her required monthly payments under the mortgage. After making these payments, defendant stated that she was told that her request for a loan modification had been denied after the second payment because there were other liens on the residence and her indebtedness exceeded the value of the home. Defendant did not produce any documentation before the trial court, such as her loan modification application and any correspondence concerning it, in support of her claim. Defendant acknowledged that she stopped making partial payments on the loan in October 2010.
Defendant did not file an answer to the complaint, and default was entered against her on July 25, 2011. On August 15, 2012, Wells Fargo sent defendant a corrective notice of intention to foreclose. Defendant then filed a motion to vacate default, which the court granted on April 19, 2013.
Defendant filed her answer to the complaint on April 22, 2013. In her answer, she asserted various counterclaims, including allegations that plaintiff violated the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195, when its predecessor, Fremont, entered into the loan with her. Defendant did not raise any specific allegations under the CFA concerning the HAMP application or the TPP agreement.
In June 2013, defendant certified that she entered into a second TPP agreement and made five reduced mortgage payments. However, she was again advised that her application for a loan modification was denied because of the outstanding liens on her home. Once again, defendant did not supply any documentation concerning the TPP agreement or her payments with her certification.
On January 8, 2014, plaintiff filed a motion for summary judgment. In support of its motion, plaintiff submitted the certification of Alissa Doepp, a Vice President of Loan Documentation for the loan's servicer, Wells Fargo. Doepp certified that she was "familiar with the type of records maintained by Wells Fargo in connection with the loan" and had "personal knowledge of Wells Fargo's procedures for creating and maintaining these records." Based upon her personal review of the loan records, including the note, mortgage, and assignment, Doepp certified that plaintiff was "the current holder of the subject [n]ote and [m]ortgage" and that plaintiff "directly or through an agent, was in possession of the original [n]ote and [m]ortgage both on the day and prior to the day the [c]omplaint was filed in this matter." Doepp attached copies of the note, mortgage, and assignment to her certification.
Defendant opposed the motion. She challenged plaintiff's standing to file the foreclosure complaint, whether the terms of the PSA were satisfied when the mortgage was deposited into the trust, whether the Doepp certification could be considered by the court, and whether plaintiff had demonstrated that Romano had authority to execute the assignment on behalf of MERS.
Following oral argument, Judge Edward M. Coleman granted plaintiff's motion for summary judgment. In a thorough written decision, the judge found plaintiff's proofs sufficient to establish its possession of the note and mortgage prior to the filing of the foreclosure complaint. He also found that plaintiff validly possessed these documents pursuant to the assignment. The judge stated:
the [c]omplaint explains how [p]laintiff came to possess the mortgage through its [a]ssignment. Plaintiff had attached a copy of the . . . assignment under which [p]laintiff took possession of the [m]ortgage and the [n]ote. As stated within the assignment itself, [p]laintiff took possession of all obligations under the [n]ote. . . . In [Deutsche Bank Trust Company Americas v. Angeles, 428 N.J. Super. 315 (App. Div. 2012)], the [c]ourt echoed [Deutsche Bank National Trust Company v. Mitchell, 422 N.J. Super. 214 (App. Div. 2011)] and stated that "either possession of
the note or an assignment of the mortgage that predated the original complaint conferred standing." [Angeles, supra, 428 N.J. Super. at 318.] In this case, both of those situations are present.
The judge concluded that he could consider and rely upon Doepp's certification in rendering his decision. The judge found that Doepp complied with Rule 1:6-6 because she obtained "personal knowledge" of the facts set forth in her certification "after personally reviewing the relevant business records in addition to personally reviewing the documents attached to the certification[]." Thus, Doepp's certification was an admissible business record under N.J.R.E. 803(c)(6), and the judge "accepted [it] as evidentiary[.]"
Judge Coleman further found that plaintiff had established a prima facie case in support of its request for foreclosure. The judge explained:
Plaintiff has produced proof that the mortgage was recorded. Defendant[] neither admits[s] nor den[ies] in [her] [a]nswer to executing a [n]ote and [m]ortgage. The [n]ote and [m]ortgage appear to be validly executed, . . .[d]efendant has defaulted on those obligations, and the [n]ote explicitly asserts [p]laintiff's right to the mortgaged premises. Plaintiff[] ha[s] provided proof of execution by way of a signed [n]ote and [m]ortgage. [Plaintiff has] also shown proper recording through a copy of the recording from the Somerset County Clerk's office. Lastly [plaintiff has] shown indebtedness by providing the [n]ote and all relevant documents evidencing the validity of
the subject [n]ote and [m]ortgage. Plaintiff has fulfilled the three required elements: the execution of a mortgage, the proper recording of said mortgage, and indebtedness. Defendant[] ha[s] not raised any genuine issue of material facts concerning the three required elements.Therefore, the judge granted plaintiff's motion for summary judgment.
In so ruling, the judge rejected defendant's attempt to challenge whether the terms of the PSA were satisfied. Citing well-established precedents, the judge found that defendant lacked standing to raise this issue because "she was not a party to the trust or the PSA agreement. Defendant is a third-party and cannot attempt to enforce the conditions of the [t]rust."
Turning to defendant's affirmative defenses, Judge Coleman found that, because plaintiff had standing to pursue foreclosure, defendant's unclean hands argument lacked merit. He also found that the notice of intention to foreclose sent to defendant, and a subsequent corrective notice, fully satisfied all of the requirements of the Fair Foreclosure Act, N.J.S.A. 2A:50-53 to -68.
The judge dismissed defendant's CFA contentions regarding the original loan because the six-year statute of limitations for such claims had expired by the time defendant filed her counterclaim. See Mirra v. Holland America Line, 331 N.J. Super. 86, 90 (App. Div. 2000) (holding that the statute of limitations for CFA claims is six years). The judge determined that defendant entered into the loan on April 1, 2006 and the six-year statute of limitations expired on April 1, 2012, well before defendant filed her counterclaim on April 22, 2013. Thus, the judge found that defendant's CFA claims were barred. In addition, the judge noted that defendant's counterclaim failed to state her contentions "with particularity" or explain "the nature of [plaintiff's] . . . alleged participation in the fraud." Instead, the judge found that defendant's "allegations [were] simply conclusory and devoid of any details, let alone 'clear and convincing proof' of the alleged fraud." For similar reasons, the judge rejected defendant's common law fraud claims.
Finally, Judge Coleman noted that defendant "raise[d] twenty affirmative defenses in her [a]nswer, along with [c]ounterclaims but fail[ed] to provide statements or evidence for the remaining seventeen defenses not addressed" in his written opinion. Finding that "[m]ere allegations without evidence are not adequate affirmative defenses or claims," the judge dismissed them with prejudice. This appeal followed.
II.
On appeal, defendant again challenges plaintiff's standing, and the sufficiency of the proofs plaintiff presented to establish that it owned or held both the note and a valid assignment of mortgage. Defendant asserts that the judge also erred by considering Doepp's certification in support of plaintiff's claim that it had standing. In addition, defendant alleges that she should have been permitted to assert that plaintiff failed to comply with the terms of the PSA. Finally, defendant contends that plaintiff violated the CFA in regard to its handling of defendant's TPP payments.
Our review of a ruling on summary judgment is de novo, applying the same legal standard as the trial court. Townsend v. Pierre, 221 N.J. 36, 59 (2015). "Summary judgment must be granted if 'the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show . . . there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment . . . as a matter of law.'" Town of Kearny v. Brandt, 214 N.J. 76, 91 (2013) (quoting R. 4:46-2(c)).
Thus, we consider, as the trial judge did, "whether 'the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.'" Ibid. (quoting Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540 (1995)). If there is no genuine issue of material fact, we must then "decide whether the trial court correctly interpreted the law." Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007), certif. denied, 195 N.J. 419 (2008). We accord no deference to the trial judge's conclusions on issues of law and review issues of law de novo. Nicholas v. Mynster, 213 N.J. 463, 478 (2013).
We have considered defendant's contentions in light of the record and applicable legal principles. We are satisfied that Judge Coleman properly granted summary judgment to plaintiff and affirm substantially for the reasons expressed in his comprehensive and thoughtful written opinion. However, we make the following brief comments.
The "right to foreclose is an equitable right inherent in the mortgage." Chase Manhattan Mortg. Corp. v. Spina, 325 N.J. Super. 42, 50 (Ch. Div. 1998), aff'd, 325 N.J. Super. 1 (App. Div. 1999). The mortgagee has the right to insist upon strict observance of the obligations that are contractually owed to it, including timely payment. Kaminski v. London Pub, Inc., 123 N.J. Super. 112, 116 (App. Div. 1973). When there is proof of execution, recording, and non-payment of the note and mortgage, a mortgagee has established a prima facie right to foreclose. Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37 (App. Div. 1952).
There are limited defenses to foreclosure actions. A mortgagor opposing summary judgment has a duty to present facts that controvert the mortgagee's prima facie case. Spiotta v. William H. Wilson, Inc., 72 N.J. Super. 572, 581 (App. Div.), certif. denied, 37 N.J. 229 (1962). Here, defendant does not contest her execution of the loan documents or her subsequent default. Instead, she contends that there was a genuine issue of fact regarding plaintiff's ownership of the note and mortgage. We disagree.
Plaintiff's status as holder of the note was established by Doepp's certification. Judge Coleman properly found that Doepp's knowledge of the transaction was sufficient. Our foreclosure rules require that
[t]he affidavit shall be made either by an employee of the plaintiff, if the plaintiff services the mortgage, on the affiant's knowledge of the plaintiff's business records kept in the regular course of business, or by an employee of the plaintiff's mortgage loan servicer, on the affiant's knowledge of the mortgage loan servicer's business records kept in the regular course of business.See also Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 599 (App. Div. 2011) (noting that the relevant facts showing holder status may be established by a certification if based on "personal knowledge" as required by Rule 1:6-6).
[R. 4:64-2(c).]
Where, as here, the mortgage was serviced not by plaintiff but by its mortgage loan servicer, Wells Fargo, it was sufficient that Doepp, a Wells Fargo's Vice President of Loan Documentation, attested to her "knowledge of the mortgage loan servicer's business records kept in the regular course of business." R. 4:64-2(c). Those are the records Doepp reviewed, as explicitly stated in her certification. She certified that she had personal knowledge of the facts pertaining to plaintiff's status as the holder of the note. She further averred that MERS, as nominee for Fremont, assigned the mortgage to plaintiff on March 19, 2009, and that the assignment was properly recorded with the county clerk on April 30, 2009. Importantly, defendant failed to produce any affidavit or certification contradicting the assignment of the loan documented in the properly admitted loan documents and affirmed in Doepp's certification. "[C]onclusory claims" without explanation and "[b]ald assertions are not capable of . . . defeating summary judgment." Ridge at Back Brook, LLC v. Klenert, 437 N.J. Super. 90, 97-98 (App. Div. 2014).
In sum, the competent proofs in the summary judgment record establish that, as Doepp certified, plaintiff had physical possession of the note and mortgage before the foreclosure complaint was filed. Thus, plaintiff had standing at the time it filed the complaint. See Angeles, supra, 428 N.J. Super. at 318 (stating that standing is conferred by "either possession of the note or an assignment of the mortgage that predate[s] the original complaint") (citing Mitchell, supra, 422 N.J. Super. at 216).
Judge Coleman also properly concluded that defendant lacked standing to question whether plaintiff complied with the terms of the PSA. As the judge correctly noted, defendant was not a party or third-party beneficiary to the PSA. See Rajamin v. Deutsche Bank Nat'l Trust Co., 757 F.3d 79, 87-90 (2d Cir. 2014) (holding that mortgagors lacked standing to complain of violation of the securitization trust agreement); Correia v. Deutsche Bank Nat'l Trust Co., 452 B.R. 319, 324-25 (B.A.P. 1st Cir. 2011) (stating that debtors lacked standing to object to breaches of a PSA because they were neither parties nor third-party beneficiaries); Flores v. EMC Mortg. Co., 997 F. Supp. 2d_1088, 1104-05 (E.D. Cal. 2014) (stating that borrowers lacked standing to pursue claims arising from securitization agreement).
Finally, although defendant asserted at oral argument on the summary judgment motion that plaintiff violated the CFA in its handling of the two TPP agreements, defendant presented no documentation concerning these agreements to substantiate her claim. In addition, defendant's counterclaim contained no allegations concerning this contention.
These were fatal flaws because CFA claims require compliance with Rule 4:5-8(a). Hoffman v. Hampshire Labs Inc., 405 N.J. Super. 105, 112 (App. Div. 2009). Rule 4:5-8(a) provides that "[i]n all allegations of misrepresentation of fraud, mistake, breach of trust, willful default or undue influence, particulars of the wrong, with dates and items if necessary, shall be stated insofar as practicable." Accordingly, to establish an act or omission a plaintiff "must show that a defendant . . . knowingly . . . concealed a material fact . . . with the intention that plaintiff rely upon the concealment." Judge v. Blackfin Yacht Corp., 357 N.J. Super. 418, 425 (App. Div.), certif. denied, 176 N.J. 428 (2003).
As noted above, defendant's counterclaim contained no specific allegations concerning the TPP agreements. Because she failed to provide Judge Coleman with copies of these agreements, the judge was also unable to review the terms and conditions of the agreements to assess the merits of defendant's contention. Thus, defendant's CFA counterclaim concerning the agreements was properly dismissed by the judge.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION