Opinion
DOCKET NO. A-0677-12T1
02-19-2014
WELLS FARGO BANK, N.A., Plaintiff-Respondent, v. MICHAEL L. BAPTISTE; MRS. MICHAEL L. BAPTISTE, HIS WIFE; SANYETTA M. BAPTISTE; MR. BAPTISTE, HUSBAND OF SANYETTA M. BAPTISTE; MR. BAPTISTE, HUSBAND OF PATRICIA V. BAPTISTE, Defendants, and PATRICIA V. BAPTISTE, Defendant-Appellant.
Patricia V. Baptiste, appellant pro se. Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel and on the brief; Kevin L. Jayne, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Lihotz and Hoffman.
On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. F-56724-10.
Patricia V. Baptiste, appellant pro se.
Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel and on the brief; Kevin L. Jayne, on the brief). PER CURIAM
Defendant Patricia V. Baptiste appeals from a September 14, 2012 order denying her post-judgment, pre-sheriff's sale motion to vacate the final judgment of foreclosure and dismiss the complaint filed by plaintiff Wells Fargo Bank, N.A. Defendant's motion challenged plaintiff's standing to pursue foreclosure claiming defendant did not own the note and mortgage on the date it filed the action. In his review, the judge found defendant was not entitled to relief under any subsection of Rule 4:50-1. On appeal, defendant reasserts these arguments. We affirm.
On February 10, 2006, defendant's husband and daughter (borrowers) purchased the subject realty located on Stuben Street in Union. At closing, borrowers executed and delivered a note to Residential Home Mortgage Corporation (RHMC) evincing the loan amount of $417,000. To secure payment of the debt, borrowers executed a mortgage encumbering the subject property in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for RHMC, its successors and assigns. The mortgage was recorded with the Union County Clerk's Office in Mortgage Book 11570, page 944, on February 15, 2006.
As the name suggests, MERS is meant only as a tracking system for mortgages; in essence, it is a private recording system designed to simplify transfers of assets between lenders. For a more detailed description of how MERS functions, see Mortg. Elec. Reg. Sys., Inc. v. Neb. Dep't Banking, 270 Neb. 529, 704 N.W. 2d 784 (2005).
The same day, RHMC endorsed an allonge to the note, transferring its interest in the debt to Ohio Savings Bank. On December 31, 2007, borrowers filed a deed adding defendant as an owner of the realty, which was recorded on January 10, 2008. There is no evidence notice of this transfer was provided to the mortgagee.
Borrowers defaulted on the monthly note payments on August 1, 2010, and, thereafter, failed to remit further payment. Plaintiff sent borrowers a notice of intention to foreclose on September 5, 2010, which identified the months of non-payment and recited the amount necessary to bring the loan current. The notice further warned that continued non-payment would result in the commencement of foreclosure proceedings. The notice did not contain defendant's name, but was mailed to the property address. Sometime thereafter, communication with plaintiff commenced in an effort to negotiate a modification of the mortgage terms.
On November 15, 2010, an assignment of the note and mortgage from MERS to plaintiff was executed. The assignment was recorded on December 22, 2010.
Plaintiff filed a complaint for foreclosure which named defendant as a party on November 18, 2010. Neither borrowers nor defendant responded to the complaint or contested the foreclosure action. The record contains correspondence regarding defendant's request for a mortgage modification, which she exchanged with plaintiff subsequent to the initiation of the legal action.
After entry of default, the matter was processed by the Office of Foreclosure on an uncontested basis. R. 1:34-6. Final judgment of foreclosure was entered on June 21, 2012. On August 2, 2012, defendant moved to vacate the entry of final judgment, challenging plaintiff's standing to foreclose by claiming it was not the original mortgagee and its assignment from MERS did not occur until after plaintiff issued the notice of intent to foreclose.
Following argument, Judge Frederic S. Kessler considered defendant's claims and concluded she failed to demonstrate a basis to vacate the judgment under Rule 4:50-1. Further, the judge determined plaintiff owned the note and the mortgage when the proceedings commenced, which conferred standing to foreclose.
On appeal, defendant cites subsection (d) of Rule 4:50-1, arguing the court erred as the final judgment was "void because . . . plaintiff lack[ed] standing to foreclose." Included in this argument is a claim that plaintiff failed to prove its possession of the original note, which defendant contends renders plaintiff's action a nullity.
"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) (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)). While defendant's motion was timely filed, it was denied as legally unfounded.
Rule 4:50-1 defines the circumstances permitting a party to seek relief from a final judgment. "The decision on whether to vacate a judgment under the terms of this rule is left to the sound discretion of the trial court and will not be overturned on appeal absent a mistaken exercise of that discretion." Nowosleska v. Steele, 400 N.J. Super. 297, 302 (App. Div. 2008) (citing Mancini v. EDS, 132 N.J. 330, 334 (1993)). The rule provides, in pertinent part:
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: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R[ule] 4:49; (c) fraud (whether"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.'" U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (quoting Mancini, supra, 132 N.J. at 334).
heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) 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; or (f) any other reason justifying relief from the operation of the judgment or order.
Relief from a final judgment under Rule 4:50-1 is not granted lightly, as it constitutes extraordinary relief and, absent exceptional and compelling circumstances, may not be invoked in lieu of filing an appeal. Baumann v. Marinaro, 95 N.J. 380, 393 (1984) (citations omitted).
Another important principle guiding in our review requires that we afford substantial deference to a trial judge's determination regarding a motion filed under Rule 4:50-1, and will not disturb the result unless it represents "a clear abuse of discretion." Guillaume, supra, 209 N.J. at 467 (citations omitted). See also Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012). A trial judge's exercised discretion may be found to have been unreasonable only when "made without a rational explanation, inexplicably depart[ing] from established policies, or rest[s] on an impermissible basis." Angeles, supra, 428 N.J. Super. at 319 (internal citations and quotation marks omitted).
Specific to foreclosure actions, a party must "own or control" the underlying debt obligation to have standing to foreclose a mortgage. Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011). Absent a showing of such ownership or control, a plaintiff "'lacks standing to proceed with the foreclosure action and the complaint must be dismissed.'" Ibid. (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)).
Nevertheless, "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." Id. at 99-100. "In foreclosure matters, equity must be applied to plaintiffs as well as defendants[,]" which includes the timeliness of the claim raised. Angeles, supra, 428 N.J. Super. at 320. Moreover, as a matter of law, "standing is not a jurisdictional issue in our State court system[.] Russo, supra, 429 N.J. Super. at 101. "[T]herefore, a foreclosure judgment obtained by a party that lacked standing is not 'void' within the meaning of Rule 4:50-1(d)." Ibid. In this light, a court is not required to dismiss the action for a technical standing challenge made after entry of the final judgment. Guillaume, supra, 209 N.J. at 475-76.
Here, significant time elapsed during the pendency of this action before defendant alleged a defect in defendant's standing to foreclose. Defendant moved for relief almost two years after service of the complaint. She argues only that she was attempting to negotiate a modification of the repayment terms of the debt. Such an assertion is insufficient in light of the record, which unequivocally reflects she was on notice the pending foreclosure action would continue, notwithstanding her request to modify the debt's repayment terms.
More important, the record establishes plaintiff had standing to foreclose. Plaintiff presented a notarized document assigning the note, executed three days prior to the filing of the foreclosure complaint. That the assignment of mortgage and underlying debt was not recorded until the following month does not affect the validity of the assignment itself, because the assignment becomes effective on the date it is executed. EMC Mortg. Corp. v. Chaudhri, 400 N.J. Super. 126, 141 (App. Div. 2008). ("[T]he fact that assignments of mortgages may be recorded does not affect the validity of an assignment of a mortgage which has not been recorded." (citations and internal quotation marks omitted)).
For completeness, we also consider whether defendant's motion satisfies the permissible reach of the rule's catch-all provision, subsection (f), which defies simple categorization. Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966). As the Supreme Court explained, "the very essence of (f) is its capacity for relief in exceptional situations." Ibid. "'[T]o establish the right to such relief, it must be shown that enforcement of the order or judgment would be unjust, oppressive or inequitable.'" Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004) (citation omitted) (quoting Harrington v. Harrington, 281 N.J. Super. 39, 48 (App. Div.), certif. denied, 142 N.J. 455 (1995)). When a court is presented with "such exceptional cases" the boundaries of subsection (f) are "as expansive as the need to achieve equity and justice." Perillo, supra, 48 N.J. at 31. See also Baumann, supra, 95 N.J. at 395 ("[E]ach case must be resolved on its own particular facts.").
Defendant offers no support to show enforcement of the judgment would be unjust, oppressive, or inequitable. Lawson v. Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 404-07 (1999). She at no time challenged the validity of the note, denied borrowers had responsibility for the debt, disputed a default had occurred, or otherwise raised a meritorious defense to the enforcement of the contractual mortgage terms. Accordingly, even if the notice of intent was technically incorrect, "dismissal of the complaint is not necessarily the appropriate remedy for a filing defect in a foreclosure complaint." Russo, supra, 429 N.J. Super. at 100 (citing Guillaume, supra, 209 N.J. at 475-76). The interests of both parties must be considered and defendant's failure to deny the essential facts entitling plaintiff to judgment weighs heavily against her claims for relief. Ibid.
Defendant next suggests she failed to receive the proper notice mandated by the New Jersey Fair Foreclosure Act (Act), N.J.S.A. 2A:50-53 to -68. Although defendant does not dispute a notice of intent to foreclose was sent to the borrowers at the property address, she argues the notice was defective because it was sent only to the borrowers and not to her. We reject this claim.
The Act "was designed to make clear the rights and remedies of both borrowers and lenders prior to and throughout the foreclosure process." Wells Fargo Home Mort., Inc. v. Stull, 378 N.J. Super. 449, 456 (App. Div. 2005) (footnote omitted). The Act "establishes the basis for foreclosure of mortgages[,]" Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 106 n.2 (2006), embodying the public policy to afford homeowners "every opportunity to pay their home mortgages, and thus keep their homes[,]" while also benefiting lenders when "residential mortgage debtors cure their defaults and return defaulted residential mortgage loans to performing status." N.J.S.A. 2A:50-54. See also Gonzalez v. Wilshire Credit Corp., 411 N.J. Super. 582, 589 (App. Div. 2010). The Act specifically obligates "the residential mortgage lender' to "give the residential mortgage debtor" thirty-days notice of an intention to foreclose. N.J.S.A. 2A:50-56(a). See Chaudhri, supra, 400 N.J. Super. at 137-38. "Residential mortgage debtor" or "debtor" is defined as "any person shown on the record of the residential mortgage lender as being obligated to pay the obligation secured by the residential mortgage." N.J.S.A. 2A:50-55.
It is unclear when defendant informed the mortgagee she was a title holder. Presumably, plaintiff learned of the deed transfer when it searched the title for potentially interested parties and subordinate lien holders, prior to commencing this action. Given defendant's "thorough familiarity" with the mortgage status, the court appropriately refused to vacate the final judgment and dismiss the foreclosure complaint for violation of N.J.S.A. 2A:50-56(c)(11). Guillaume, supra, 209 N.J. at 480.
Also noteworthy is defendant never assumed the debt obligation after the borrowers transferred title. Accordingly, defendant was not a person shown on plaintiff's records as obligated to pay the debt. We determine plaintiff strictly complied with the statute's requirements by properly serving the persons obligated on the note.
Based upon our review, we conclude Judge Kessler fully considered the issues raised and properly applied the law. Defendant failed to support her claim that the final judgment of foreclosure was void. Therefore, the motion to vacate the final judgment of foreclosure was properly denied.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION