Opinion
DOCKET NO. A-1483-13T4
04-15-2015
CITY NATIONAL BANK OF NEW JERSEY, Plaintiff-Respondent, v. MINERVA J. HODGE, a/k/a MINERVA HODGE DAVIS, Defendant-Appellant, and EUGENE ROLANDELLI and STATE OF NEW JERSEY, Defendants.
CLA Law International, P.C., attorneys for appellant (Chioma L. Anopueme, on the briefs). Law Offices of Romano & Romano, attorneys for respondent (Janet B. Romano, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fasciale, Hoffman and Whipple. On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-6095-12. CLA Law International, P.C., attorneys for appellant (Chioma L. Anopueme, on the briefs). Law Offices of Romano & Romano, attorneys for respondent (Janet B. Romano, on the brief). PER CURIAM
Minerva J. Hodge ("defendant") appeals from an October 17, 2013 order denying her motion to vacate the entry of a judgment in foreclosure and to consolidate the foreclosure action with an action on the note in the Law Division. We reverse and remand the portion of the order denying her motion to vacate the judgment of foreclosure, and affirm the portion of the order denying consolidation.
I.
We discern the following facts from the record. Defendant owned commercial property at 17 Lombardy Street, Newark (the "Lombardy property") and residential property where she lived with her family at 567 Lake Street, Newark (the "Lake property"). In June 2007, defendant entered into a refinance agreement with plaintiff for the Lombardy property and executed a mortgage for $500,000. A few months later, defendant purchased a third property, 205 Ballantine Parkway, Newark (the "Ballantine property"), where she planned to move with her daughter. In order to finance the purchase of the Ballantine property, defendant entered into an agreement to borrow $425,000 from plaintiff and executed a promissory note and a second mortgage lien on the Lombardy property, and first mortgages on the Lake and Ballantine properties. After settlement, defendant moved from the Lake property to the Ballantine property, and her son remained living at the Lake property.
Defendant defaulted on loan payments and, in July 2009, plaintiff filed a commercial mortgage foreclosure action in the Chancery Division regarding the Lombardy property, seeking to foreclose on the first and second mortgages. After defendant failed to file an answer, a default judgment was entered. Plaintiff received a final judgment in foreclosure in August 2012. Plaintiff also filed a complaint in the Law Division for money damages based on the $425,000 promissory note, and judgment was entered for plaintiff in January 2014. Both judgments were transferred to an assignee.
In April 2012, plaintiff filed a complaint to foreclose the first mortgage on the Lake property, and a default judgment was entered on July 1, 2013. Plaintiff asserted that the Lake Property was intended for commercial purposes and was not planned to be a residence for the Hodge family. Plaintiff therefore did not comply with N.J.S.A. 2A:50-53 to -68, the Fair Foreclosure Act (FFA). On July 31, 2013, defendant filed a motion to vacate the default judgment of foreclosure on the Lake property and for other relief. The motion judge denied defendant's motion.
II.
On appeal, defendant contends that the judgment is void because the Lake property is residential and therefore subject to the notice requirements of the FFA, and that the trial court erred by refusing to vacate under Rule 4:50-1(a), (c), (d), and (f). Defendant also maintains that it was error to deny her motion to consolidate the action on the note with the foreclosure action due to a potential for double recovery.
Generally, a court's determination under Rule 4:50-1 warrants substantial deference and should not be reversed unless it results in a clear abuse of discretion. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). An abuse of discretion occurs when a decision is made without a rational explanation, inexplicably departs from established policies, or rests on an impermissible basis. U.S. Nat'l Bank Ass'n v. Guillaume, 209 N.J. 449, 467-68 (2012).
Rule 4:50-1 provides various avenues for relief from a judgment or order and, in relevant part, 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: (a) mistake, inadvertence, surprise, or excusable neglect; . . . (c) fraud[,] . . . misrepresentation, or other misconduct . . .; (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 the authority to avoid an unjust result in any given case." Guillaume, supra, 209 N.J. at 467 (citation and internal quotation marks omitted).
Invoking Rule 4:50-1(d), defendant asserts that the Lake property is subject to the FFA, because when she moved from the Lake property to the Ballantine property, her son remained at the Lake property and paid no rent to her. Plaintiff does not dispute that defendant's son resides at the Lake property, but argues that because defendant intended to move to the Ballantine property and make it her primary residence, the Lake property became commercial property upon closing and was not subject to the FFA.
In denying defendant's motion, the court determined that the mortgage on the Lake property was not residential because "the whole purpose of this second loan . . . was so [defendant] could have [the Ballantine property] as her residence, not Lake Street anymore . . . [The Ballantine property] was her intended residence." The judge also ruled that just because defendant "let her family live [at the Lake property] doesn't change the situation."
The FFA defines a residential mortgage as a "mortgage . . . in which the security is a residential property such as a house . . . which is occupied, or is to be occupied, by the debtor . . . or a member of the debtor's immediate family, as that person's residence." N.J.S.A. 2A:50-55 (emphasis added). Immediate family includes the "child" of the debtor. Ibid. Moreover, the FFA applies "to all residential mortgages . . . provided that the real property which is the subject of the mortgage shall not have more than four dwelling units, one of which shall be, or is planned to be, occupied by the debtor or a member of the debtor's immediate family as the debtor's or member's residence at the time the loan is originated." Ibid. (emphasis added).
In Bank v. Kim, 361 N.J. Super. 331, 343 (App. Div. 2003), we rejected the suggestion that the underlying business purposes of a loan secured by a mortgage on a residence occupied by the mortgagor frees the mortgagee from the obligation to comply with the FFA. We found the legislative language of the FFA protects the interest of the homeowner, without reference to his or her reason for the mortgage. Ibid.
Moreover, we emphasized that waiver of FFA rights by debtors is void as against public policy and indicated "we would hesitate to endorse [the] judicial waiver or modification [of such rights] in any case[.]" Id. at 346.
As there is no dispute that either plaintiff or her son resided at the Lake property at the time of the loan origination, the requirements under the FFA are compulsory. One such requirement is service of a written notice of intention (NOI) to foreclose, N.J.S.A. 2A:50-56, which was not provided here. As such, the judgment entered rests upon an impermissible basis and is therefore void under Rule 4:50-1(d).
The FFA does not address what remedy is appropriate when there is a violation of its requirements. A court adjudicating a foreclosure action in which the requirements of N.J.S.A. 2A:50-56 are violated may dismiss the action without prejudice, permit a cure by service of required notice, or impose such other remedies as may be appropriate to the specific case. Guillaume, supra, 209 N.J. at 476. "In determining the appropriate remedy for a violation of [N. J.S.A. 2A:50-56], trial courts should consider the express purpose of [its] provision[s]: to provide notice that makes 'the debtor aware of the situation,' and to enable the homeowner to attempt to cure the default." Id. at 479 (quoting N.J.S.A. 2A:50-56). "In fashioning relief, the Chancery judge has broad discretionary power to adapt equitable remedies to the particular circumstances of a given case." Marioni v. Roxy Garments Delivery Co., 417 N.J. Super. 269, 275 (App. Div. 2010).
We do not need to reach defendant's arguments pursuant to Rule 4:50-1 (a), (c), or (f). Defendant's additional arguments regarding the legality of a separate action on the note lack legal authority and merit, and do not require a written opinion. R. 2:11-3(e)(1)(E). There is no risk of plaintiff obtaining a double recovery or windfall, despite defendant's contention, because "an equity court, whether in the Law or Chancery Divisions, ha[s] inherent power to prevent a potential double recovery or windfall to a judgment creditor[.]" Borden v. Cadles of Grassy Meadows II, L.L.C., 412 N.J. Super. 567, 589 (App. Div. 2010) (citation and internal quotation marks omitted). We therefore affirm the denial of the motion to consolidate the Chancery and Law Division actions.
The judgment in foreclosure is vacated and the matter remanded in order that the matter may proceed in the ordinary course under the FFA as determined by the trial judge.
Reversed and remanded for proceedings consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION