Opinion
DOCKET NO. A-0881-13T4
09-30-2015
WELLS FARGO BANK, N.A., Plaintiff-Respondent, v. MARK C. AMICO and KELLY A. AMICO, Defendants-Appellants.
Nicholas A. Stratton argued the cause for appellant (Denbeaux & Denbeaux, attorneys; Joshua W. Denbeaux, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith, LLP, attorneys; Joseph J. Mahady, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges St. John and Rothstadt. On appeal from Superior Court of New Jersey, Chancery Division, Morris County, Docket No. F-2290-10. Nicholas A. Stratton argued the cause for appellant (Denbeaux & Denbeaux, attorneys; Joshua W. Denbeaux, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith, LLP, attorneys; Joseph J. Mahady, on the brief). The opinion of the court was delivered by ROTHSTADT, J.A.D.
Defendants Mark C. Amico and Kelley A. Amico appeal from the Chancery Division's September 20, 2013 order denying their motion to vacate a previously entered default judgment of foreclosure and for a stay of a scheduled sheriff's sale of their home. In support of their motion, they argued that they were never properly served with the foreclosure complaint and various required notices, that they established excusable neglect for not responding to the complaint because of the lack of service, and that plaintiff, Wells Fargo Bank, N.A., made numerous misrepresentations in its application and violated federal law because, among other reasons, plaintiff never owned the subject note. In a written statement of reasons filed with the order, Judge Stephan Hansbury explained that the court denied defendants' motion because they "took no action to defend against this foreclosure" for an extended period of time and did not establish excusable neglect for their failure to respond. The court also found plaintiff established proper service of the complaint and subsequent applications, standing to bring the action, and entitlement to the relief demanded.
Throughout this opinion we refer to them collectively as defendants, but when we refer to one individually we do so by their first name for purposes of clarity. No disrespect is intended.
On appeal, defendants contend the judge erred by not finding plaintiff's "various frauds" barred it from relief, by "conflating the issue of standing" with whether plaintiff was entitled to equitable relief of foreclosure, by finding plaintiff "established ownership of defendants' loan," and by not determining that plaintiff failed to "appropriately and accurately establish the chain of title to defendants' loan." Plaintiff disagrees and argues the court properly exercised its discretion in denying defendants relief because they did not establish any meritorious grounds for relief under Rule 4:50-1.
We have considered the parties' arguments in light of our review of the record and applicable legal principles. We affirm.
We discern the facts from the motion record. On January 4, 2010, plaintiff filed a complaint in foreclosure against defendants, alleging their August 2009 default in the payment of a note they gave to plaintiff's predecessor, NJ Lenders Corporation (NJLC) on April 13, 2006, in exchange for a loan in the amount of $343,900, which they used to purchase their home in Little Falls. To secure payment of the note, defendants simultaneously executed and delivered a purchase money mortgage to Mortgage Electronic Registration Systems, Inc. (MERS) "as a nominee for [NJLC] and [NJLC's] successors and assigns." The mortgage was recorded on May 26, 2006, as a lien against the title to defendants' home.
The complaint and amended complaint, filed on December 8, 2010, included additional defendants alleged to be subordinate lien holders. They are not party to the present appeal.
MERS, as nominee for NJLC, assigned the note and mortgage to plaintiff on December 30, 2009. Plaintiff recorded the assignment on March 22, 2010. At the time, the Federal National Mortgage Association ("Fannie Mae") was an investor in plaintiff's acquisition of the loan. In subsequent filings with the court, plaintiff confirmed it was the owner of the note and mortgage, and provided copies of both, as well as the recorded assignment. The note was conspicuously endorsed payable to plaintiff.
Fannie Mae is "the largest single issuer of single-family mortgage-related securities in the secondary market" and "[f]unded the mortgage market with approximately $144 billion in liquidity in Q2 2015." Fannie Mae, Q2 2015 Progress Snapshot 2 (2015), available at http://www.fanniemae.com/resources/file/aboutus/pdf/q22015_progressreport.pdf.
According to affidavits of service dated November 1, 2010, copies of the complaint, summons, and "Notices and Instructions for Mediation Program" were served on defendants by Thomas Merwin of Full Spectrum Services, Inc. The affidavits stated service was made by leaving copies of the documents with Kelley A. Amico at defendants' home on October 29, 2010, at 4:15 p.m., and included a description of the individual served. Defendants never filed an answer to the original complaint or plaintiff's amended complaint, which was served on December 23, 2010 by regular mail and by certified mail, return receipt requested.
As a result of defendants' failure to join the action, on April 18, 2011, plaintiff filed a request for the entry of default against defendants, which the court entered on April 25, 2011. On November 28, 2011, plaintiff served defendant with a copy of its filed request for entry of default. It also served them with a "Notice Pursuant to Section 6 of the Fair Foreclosure Act," N.J.S.A. 2A:50-58, advising them of plaintiff's intention to seek a "Final Judgment of Foreclosure." Again, defendants did not respond.
Service by regular mail was confirmed in a proof of mailing dated the same day.
Receiving no response from defendants, plaintiff served defendants on April 20, 2012, with a copy of its "Notice of Motion for Entry of Default Judgement" by regular mail. The motion was supported by the certification of plaintiff's employee, Tanya Goings, who confirmed that "plaintiff is the holder of the note," and by counsel's certification, filed in accordance with Rule 4:64-2(d), attesting that he confirmed with Goings the accuracy of the statements contained in her certification. The court entered final judgment on October 22, 2012, which, upon receipt, plaintiff mailed to defendants by regular mail on October 24, 2012.
Service was confirmed by a "Certification in Support of Service Pursuant to R. 4:64-1(D)" dated April 20, 2012.
Service was confirmed by a "Proof of Mailing of Final Judgment" dated October 24, 2012.
Defendants never took any action to challenge the entry of final judgment, even though they were aware the complaint had been filed as of December 2010. According to Kelley, she and Mark knew about the pending foreclosure action since "[s]ometime toward the end of 2010, . . . when [they] received in the mail an Amended Complaint in Foreclosure." When they "became aware of [the] foreclosure action pending against [their] home [they began] working towards a modification constantly since that time." As a result of defendants allegedly not receiving any further notice about the foreclosure action, they "figured the[ir] loan modification application was still pending and that the foreclosure was not being processed." However, defendants never stated that anyone, from plaintiff's office or otherwise, told them the pending modification application relieved them of their obligation to respond to the complaint.
Defendants indicated to the court there are "two similarly situated addresses" in Little Falls and suggested the possibility that the items mailed by plaintiff were received at the other address. However there is no evidence in the record to support this suggestion.
Defendants alleged the only other notice they received was a Writ of Execution, which the court issued on October 22, 2012, after entering an uncontested default judgment against them. After the writ was served, the Passaic County Sheriff scheduled a sale for July 30, 2013, but, after defendants exercised their statutory right to postpone the sale, it was adjourned first to August 27, 2013, and later to September 17, 2013.
Prior to the scheduled August 27 sheriff's sale, defendants applied to the court for entry of restraints, preventing the sale from going forward. In their moving papers, defendants argued they were entitled to relief under Rule 4:50-1(a), (c), and (f), and contended that final judgment should not have been entered because plaintiff neither had the note nor owned the mortgage. The court entered an order to show cause on September 4, 2013, required responsive papers to be filed by September 12 and considered counsels' oral arguments four days later. After listening to counsels' presentations, the court entered an order temporarily staying the sale until September 24 to allow counsel to make further submissions. After the court considered the submissions, it denied defendants' request for relief without a further hearing. This appeal followed.
On appeal, defendants argue the trial court erred by not vacating the default final judgment of foreclosure as required by Rule 4:50-1 (c) and (e). Also, though defendants do not expressly argue they are also entitled to relief under Rule 4:50-1(d), they do so implicitly by arguing the judgment is void because they were never properly served with process or other required notices, and plaintiff obtained its judgment based on misrepresentations as to its ownership of the defendants' note and mortgage. We find these arguments to be without factual support and contrary to established legal principles.
Defendants argue the default judgment against them should be vacated pursuant to Rule 4:50-1(e). We will not consider this argument, made for the first time on appeal. N.J. Div. of Youth & Fam. Servs. v. M.C. III, 201 N.J. 328, 339 (2010). Conversely, defendants also have not addressed on appeal their original arguments based on Rule 4:50-1(a) and (f). These arguments are therefore deemed waived. Soc'y Hill Condo. Ass'n, Inc. v. Soc'y Hill Assocs., 347 N.J. Super. 163, 176 (App. Div. 2002).
We review this appeal under the standards applicable to Rule 4:50-1. See U.S. Bank Nat'l Ass'n. v. Guillaume, 209 N.J. 449, 466-67 (2012). Our standard of review warrants substantial deference to the trial court's determination, which "should not be reversed unless it results in a clear abuse of discretion." Id. at 467 (citation omitted). An abuse of discretion occurs when a decision "is made without a rational explanation, inexplicably depart[s] from established policies, or rest[s] on an impermissible basis." Ibid. (citation and internal quotation marks omitted).
Rule 4:50-1 provides various avenues for relief from a judgment or order. In relevant part, it reads:
On motion, with briefs, and upon such terms as are just, the court may relieve a party . . . from a final judgment or order for the following reasons: (c) fraud . . . , misrepresentation, or other misconduct . . . ; (d) the judgment or order is void . . . ."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." Guillaume, supra, 209 N.J. at 467 (citation and internal quotation marks omitted).
[R. 4:50-1]
A motion to vacate a default judgment for lack of service is governed by Rule 4:50-1(d), which authorizes a court to relieve a party from a final judgment if "the judgment or order is void." "A default judgment will be considered void when a substantial deviation from service of process rules has occurred, casting reasonable doubt on proper notice." Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004). Even if there is actual notice of the suit comporting with due process, the default judgment must be set aside if there is a substantial deviation from rules. Sobel v. Long Island Entm't Prods., Inc., 329 N.J. Super. 285, 292-94 (App. Div. 2000).
Generally, a motion to vacate judgment must be filed within one year of the entry of judgment. R. 4:50-2. However, a motion under Rule 4:50-1(d) "must [only] be filed within a reasonable time after entry of the judgment," and need not demonstrate a meritorious defense. Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J. Super. 91, 98 (App. Div. 2012) (citing R. 4:50-2); M & D Assocs. v. Mandara, 366 N.J. Super. 341, 351-52 (App. Div.), certif. denied, 180 N.J. 151 (2004)). What constitutes a "reasonable time," however, depends upon on the totality of the circumstances in a given case. Pressler & Verniero, Current N.J. Court Rules, comment 3 on R. 4:50-2 (2015).
We turn first to defendants' argument regarding plaintiff's failure to serve them with process and the required notices, premised on Kelley's statement that she and her husband were never served. We conclude that Kelley's statement, however, is insufficient to contradict the filed affidavits and certifications confirming service in this matter.
"[T]he court rules which describe the manner in which process is to be served must be read in the context of effecting due process." Rosa v. Araujo, 2 60 N.J. Super. 458, 463 (App. Div. 1992). "'An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" Ibid. (quoting O'Connor v. Abraham Altus, 67 N.J. 106, 126 (1975)(citation and internal quotation marks omitted)). "Where due process has been afforded a litigant, technical violations of the rule [as compared to substantial violations] concerning service of process do not defeat the court's jurisdiction." Ibid. (citation omitted).
Whether a party has been served is a question of proof. A sheriff's return of service is presumed correct, and may be rebutted only by clear and convincing evidence. Jameson, supra, 363 N.J. Super. at 426. "[U]ncorroborated testimony of the defendant alone is not sufficient to impeach the return." Goldfarb v. Roeger, 54 N.J. Super. 85, 90 (App. Div. 1959). Thus, a defendant's bald assertion that the sheriff's return is false does not overcome the presumption. Resolution Trust Corp. v. Associated Gulf Contractors, Inc., 263 N.J. Super. 332, 344 (App. Div.), certif. denied, 134 N.J. 480 (1993). Rule 4:4-3 was amended in 2000 to permit service by private process servers who do not have an interest in the litigation. See Pressler & Verniero, supra, cmt. on R. 4:4-3. Consistent with this policy decision to entrust disinterested persons with the responsibility to serve process, we find the presumption of correctness extends to their affidavits of service as well.
There is no evidence offered by defendants to substantiate their assertion they were never served. Their bald allegation does not rebut the presumption arising from the affidavits and certifications of service filed in this matter regarding the serving of process and additional notices on defendants. Buttressing this conclusion is the fact that defendants admitted they knew of the pending foreclosure action in late 2010. That they took no action until 2013 because they were allegedly negotiating a modification is of no significance here. Under these circumstances, Judge Hansbury correctly rejected defendants' motion to vacate the default judgment based on their claim they were never properly served.
We reach the same conclusion with respect to the court's decision regarding defendants' claim that plaintiff fraudulently or otherwise misrepresented its ownership of the subject note and mortgage. Essentially, defendants argue that, at the time the complaint was filed, plaintiff did not own or possesses the note and mortgage because the debt was owned by Fannie Mae. We find no merit to defendants' argument.
Assuming defendants could maintain a viable defense regarding plaintiff's standing to sue, they waited three years from the time they were admittedly aware of the pending foreclosure action to raise this argument. As we have recently explained under similar circumstance, they waited too long. See Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, (App. Div. 2012). In fact, we have declined to disturb default judgments of foreclosure based on standing challenges where defendants waited for a scheduled sheriff's sale before presenting a timely defense. See Russo, supra, 429 N.J. Super. at 101-02 (affirming order denying untimely motion for relief from judgment after approximately two years); Angeles, supra, 428 N.J. Super. at 316, 320. Delays resulting from pending loan modification discussions do not provide any justification for such delays. See Guillaume, supra, 209 N.J. at 468-69; Russo, supra, 229 N.J. Super. at 98-99.
In any event, we discern no merit to defendants' standing argument. Plaintiff presented evidence of the assignment of the mortgage in December 2009, before the complaint was filed, satisfying the requirement that "either possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." Angeles, supra, 428 N.J. Super. at 318; see also Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011) ("'[A] party seeking to foreclose a mortgage must own or control the underlying debt'" at the time the forfeiture complaint was filed (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010))); Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011).
"If a debt is evidenced by a negotiable instrument, such as the note executed by defendant," the question of whether plaintiff established ownership or control over the note "is governed by Article III of the Uniform Commercial Code (UCC), N.J.S.A. 12A:3-101 to -605, in particular N.J.S.A. 12A:3-301." Ford, supra, 418 N.J. Super. at 597. A plaintiff must show it fell within one of the "three categories of persons entitled to enforce negotiable instruments," as described in N.J.S.A. 12A:3-301. Mitchell, supra, 422 N.J. Super. at 222-23. N.J.S.A. 12A:3-301 provides:
"Person entitled to enforce" an instrument means the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to [N.J.S.A.] 12A:3-309 or . . . -418[(d)]. A person may be a person entitled to enforce
the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
In order for a person "other than the one to whom a negotiable instrument is made payable to become the 'holder,' there must be a 'negotiation.'" Ford, supra, 418 N.J. Super. at 598. "'Negotiation' means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder." N.J.S.A. 12A:3-201(a). "[I]f an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder." N.J.S.A. 12A:3-201(b).
Since plaintiff was not the original lender, in order to foreclose it must present adequate evidence it was a "person entitled to enforce an instrument under N.J.S.A. 12A:3-301; that is, a nonholder in possession of the instrument who has the rights of a holder." Ford, supra, 418 N.J. Super. at 598 (quoting N.J.S.A. 12A:3-301) (internal quotations marks omitted). The proof required by N.J.S.A. 12A:3-301 is satisfied by properly authenticated evidence showing plaintiff is in possession of defendants' original note and mortgage, and acquired ownership through a valid assignment of the mortgage and related note, "with all interest, all liens, and any rights due or to become due thereon." Ford, supra, 418 N.J. Super. at 598-99; see also Mitchell, supra, 422 N.J. Super. at 216, 225.
Following our review, we concur with the Chancery judge's conclusion that assignment of defendants' note and mortgage to plaintiff was valid and executed prior to the filing of the complaint, establishing plaintiff's standing to pursue the foreclosure action. See Angeles, supra, 428 N.J. Super. at 318. The assignment was executed in recordable form, before the litigation commenced. Its recordation four months later does not affect its validity, because an assignment is effective on the date of execution. EMC Mortg. Corp. v. Chaudhri, 400 N.J. Super. 126, 141 (App. Div. 2008) ("[T]hat assignments of mortgages may be recorded does not affect the validity of an assignment of a mortgage which has not been recorded." (citation and internal quotation marks omitted)). The assignment identified the property and described the nature of the interest - a mortgage - by specifying the date the mortgage was recorded, the original mortgagee, the mortgagor, the loan amount, and where the mortgage was recorded. Its language identified the transferor and transferee and clearly set forth the proposed transfer, stating:
[MERS] as a nominee for [NJLC], its successors and assigns, the undersigned, as beneficiary or successor thereto . . . hereby grants, conveys, assigns and
transfers unto [plaintiff] . . . its successors and assigns, all beneficial interest under that certain Mortgage dated April 13, 2006.
Finally, the document was signed by an Assistant Secretary and Vice President of MERS "as a nominee for [NJLC]." The document, which includes notarization of the signatory, making it recordable, sufficiently proves its authenticity. See Citicorp Mortg., Inc. v. Pessin, 238 N.J. Super. 606, 608 n.2, (App. Div.) (allowing judicial notice of recorded documents referenced in certifications, but not in the record), certif. denied, 122 N.J. 141 (1990).
The evidence plaintiff provided demonstrated it was the holder of the note and thus fell within the first category of a person entitled to enforce a negotiable instrument under N.J.S.A. 12A:3-301. See Ford, supra, 418 N.J. Super. at 598. Because plaintiff established it possessed the note at the time the foreclosure complaint was filed, the trial court was correct in concluding plaintiff had standing to pursue the action against defendants.
Defendants' argument regarding Fannie Mae's participation does not alter the result and is without sufficient merit to warrant extensive discussion in a written opinion. R. 2:11- 3(e)(1)(E). Suffice it to say, the complexities caused by Fannie Mae's involvement in the loan do not undermine plaintiff's ability to seek and obtain relief in a foreclosure action.
See Raftogianis, supra, 418 N.J. Super. at 333-34.
We conclude Judge Hansbury properly exercised his discretion by denying defendants relief.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION