Opinion
DOCKET NO. A-4569-11T3
06-06-2013
DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee for Morgan Stanley ABS Capital I Inc., Trust 2006-HE6, Mortgage Pass-Through Certificates, Series 2006-HE6, Plaintiff-Respondent, v. MICHAEL HOCHMEYER, Defendant-Appellant, and BANK OF AMERICA, N.A., U.S.A. and EMMA HOCHMEYER, Defendants.
Adam Deutsch argued the cause for appellant (Denbeaux & Denbeaux, attorneys; Mr. Deutsch, on the briefs). Warren S. Wolf argued the cause for respondent (Goldberg & Wolf, attorneys; Edward W. Kirn, III, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Lihotz, Kennedy, and Mantineo.
On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-21509-07.
Adam Deutsch argued the cause for appellant (Denbeaux & Denbeaux, attorneys; Mr. Deutsch, on the briefs).
Warren S. Wolf argued the cause for respondent (Goldberg & Wolf, attorneys; Edward W. Kirn, III, on the brief). PER CURIAM
Homeowners facing the loss of their residence to foreclosure have challenged various processes and procedures employed by mortgage companies. These challenges follow the increasing use of centralized servicing agencies and the post-execution assignment of mortgage obligations to allow securitization of bundled mortgage investments. In recent court actions, mortgagors have attacked the standing of the named plaintiffs, which were not the original mortgagees. In reviewing these matters, the courts have clarified the proof requirements an assignee must satisfy when pursuing foreclosure. At the same time, other recent decisions have considered the timeliness of a homeowner's claim that an assignee lacks standing to pursue foreclosure in circumstances where the foreclosure complaint was unchallenged, and a belated standing argument was raised as a last-minute effort to delay or prevent a sheriff's sale of the realty. See generally Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 332-34 (Ch. Div. 2010).
This matter combines these two issues, as defendant answer challenged plaintiff's right to file a foreclosure complaint, a defense rejected at summary judgment, and reasserted the claim in a post-judgment, pre-sheriff's sale application to vacate final judgment. Defendant Michael Hochmeyer appeals from the denial of his motion to vacate the October 2009 final judgment of foreclosure, claiming plaintiff Deutsche Bank National Trust Company as Trustee for Morgan Stanley ABS Capital I Inc., Trust 2006-HE6, Mortgage Pass-Through Certificates, Series 2006-HE6, lacked standing to foreclose. The court found defendant was not entitled to relief under any subsection of Rule 4:50-1, primarily because defendant unreasonably delayed his request for relief for almost three years. On appeal, defendant argues, as he did before the trial court, that plaintiff's alleged lack of standing must not be ignored and the judgment must be set aside. We affirm.
On May 18, 2006, defendant executed and delivered an adjustable rate note (the note) to Decision One Mortgage Company, LLC (Decision One), evincing his debt of $560,000. To secure payment of the note, defendant executed a mortgage on Harrington Avenue, Westwood realty, in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Decision One. The mortgage was recorded in the Bergen County Clerk's Office in Mortgage Book 16013, page 85, on June 13, 2006.
Banks often sell mortgages to one another and, rather than publicly recording the transfers at the county recorder of deeds, they self-track the mortgage assignments through MERS. "MERS is a private corporation which administers a national electronic registry which tracks the transfer of ownership interests and servicing rights in mortgage loans." Bank of N.Y. v. Laks, 422 N.J. Super. 201, 203 n.1 (App. Div. 2011) (internal quotation marks and citations omitted), overruled in part by US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (2012). "A lender participating in MERS will retain the underlying note, but have the mortgage executed and recorded in favor of MERS as nominee for the lender." Ibid. (citations omitted).
Defendant defaulted on the mortgage note on December 1, 2006, and failed to remit any payments thereafter. MERS, as nominee for Decision One, filed a complaint on August 23, 2007, seeking to foreclose defendant's interest in the mortgaged realty.
On September 14, 2007, after the complaint was filed, but before defendant filed his answer, MERS assigned the mortgage to plaintiff. Plaintiff asserts the assignment was "duly recorded in the Bergen County Clerk's Office on October 25, 2007 in Book 1417 at Page 54[;]" however, there is no evidence of the recordation of the assignment in the record before us.
Defendant contested the foreclosure action by filing an answer. He denied a default occurred, and challenged MERS's standing to file foreclosure on behalf of and as nominee for Decision One. As the trial court noted, although defendant's pleading was styled as if he were self-represented, it was prepared with the assistance of New York counsel, who was not licensed in New Jersey.
Purportedly, a formal substitution of plaintiff for MERS was filed on September 14, 2007, yet the record before us does not contain the substitution. Nevertheless, all subsequent pleadings were filed in plaintiff's name and an order formally addressing substitution was filed on February 3, 2009, the date default was entered.
Plaintiff moved to strike defendant's answer and enter summary judgment. Defendant failed to respond. Plaintiff's motion was supported by a certification from Dionne Stevenson, setting forth the amount due and stating:
I am [a] litigation liaison of Countrywide Home Loans, Inc., servicing agent for Deutsche Bank National Trust Company as Trustee for Morgan Stanley ABS Capital I Inc., Trust 2006-HE6, Mortgage Pass-Through Certificates, Series 2006-HE6[,] in the above entitled cause, and I have personal knowledge of the facts contained herein.Appended to the certification were the note and the mortgage, both of which were certified as true copies. The note was endorsed in blank by "Joel Mularski, Asst. Secretary," "Decision One Mortgage Company, LLC." The copy of the mortgage does not contain the recording information. Finally, although notarized, the assignment is neither marked nor identified as a certified, true copy of the original.
Finding plaintiff's motion unopposed, on March 14, 2008, the Chancery Division judge granted summary judgment, struck defendant's answer, and ordered the clerk to enter the default. The matter was referred to the Office of Foreclosure to proceed on an uncontested basis. Final judgment of foreclosure was entered on October 28, 2009, and a writ of execution was issued thereafter directing the sheriff to sell the property. Defendant did not appeal or otherwise oppose entry of final judgment.
On March 12, 2012, four years after entry of summary judgment, defendant moved to vacate final judgment. The motion was supported by a brief and a certification of newly retained counsel. Pending the court's consideration of the motion, a sheriff's sale of the residence, scheduled for April 6, 2012, was cancelled. Following argument, the Chancery judge reserved decision. In an April 20, 2012 written opinion, the judge denied defendant's motion, concluding that the standing argument was raised too late following entry of the judgment. This appeal ensued.
The sheriff's sale of defendant's home was first listed on February 24, 2012.
We consider defendant's arguments in light of Rule 4:50-1, which 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,"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 (quoting Mancini v. EDS, 132 N.J. 330, 334 (1993)). Granting a request to vacate a judgment 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).
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 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.
We afford substantial deference to a trial judge's determinations on 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 when the judge's decision "is made without a rational explanation, inexplicably depart[s] from established policies, or rest[s] on an impermissible basis." Angeles, supra, 428 N.J. Super. at 319 (internal quotation marks and citations omitted). On this record, we find no abuse of discretion in denying defendant's motion.
Defendant concedes the timing of his application is the central issue in his request for relief. Motions seeking to set aside a judgment "'must be filed within a reasonable time.'" Ibid. (quoting Orner v. Liu, 419 N.J. Super. 431, 437 (App. Div.), certif. denied, 208 N.J. 369 (2011)). See also R. 4:50-2 (requiring a motion for relief from a judgment or order to "be made within a reasonable time"). Specifically, claims based on subsections (a), (b), and (c) of Rule 4:50-1, are time-barred if filed "more than one year after the judgment, order[,] or proceeding was entered or taken." R. 4:50-2.
On appeal, defendant argues plaintiff has suffered no prejudice, and, therefore, the timing of defendant's application is reasonable, particularly in light of his claims that plaintiff lacked standing to file a complaint and receive a judgment in its favor. We find this argument unpersuasive.
Defendant's long delay in advancing these issues, his failure to offer evidence challenging plaintiff's assertion of default, and his failure to interpose opposition to summary judgment or raise the issues on direct appeal of the final judgment are, under the circumstances, inexcusable and preclude the relief sought.
Reviewing the specific bases asserted to vacate the order, we note any allegations of conduct characterized as fraud or misrepresentation fall within Rule 4:50-1(c), and are time-barred. R. 4:50-2. Moreover, the motion is unsupported by any legally competent evidence showing plaintiff's factual assertions were false, let alone "clear and convincing evidence" necessary to set aside a judgment on the basis of fraud. See Linden v. Benedict Motel Corp., 37 0 N.J. Super. 372, 396 (App. Div.), certif. denied, 180 N.J. 356 (2004). In fact, the only support offered in defendant's motion is the conclusory certification of counsel, which is non-evidential. See Wang v. Allstate Ins. Co., 125 N.J 2, 16 (1991) (stating counsel's certification reiterating hearsay statements provided no evidence to support allegations). See also R. 1:6-6 (requiring supporting affidavits must be "made on personal knowledge setting forth facts [that] are admissible in evidence to which the affiant is competent to testify").
On the other hand, plaintiff's proofs showed it obtained a valid assignment of the mortgage from MERS as nominee for Decision One, dated in the month following the filing of the complaint, thus giving it the legal right to enforce the note at the time judgment was entered. See N.J.S.A. 12A:3-301. Contrary to defendant's argument on appeal, we cannot conclude the judgment was obtained by fraud.
We turn to defendant's principal assertion that the judgment is "void," R. 4:50-1(d), because plaintiff lacked standing. Defendant lists perceived evidentiary inadequacies with respect to the Stevenson certification, filed in support of plaintiff's motion for summary judgment; suggests neither MERS nor plaintiff established physical possession of the note; and contends plaintiff did not establish it complied with N.J.S.A. 2A:50-56 of the Fair Foreclosure Act (FFA), requiring a Notice of Intent to foreclose be filed before initiating the action. As the trial judge correctly determined, if these claims had been timely presented and were proved to be true, they would render the judgment voidable, but not void per Rule 4:50-1(d). "[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)." Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J. Super. 91, 101 (App. Div. 2012).
A foreclosing plaintiff must have physical possession of the note. Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011); Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011).
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As this court held in Angeles, supra, equitable considerations justify rejection of a foreclosure defendant's belated attack on a plaintiff's lack of standing to file suit. 428 N.J. Super. at 320. We stated:
In 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 . . . . Rather, when all hope of further delay expired, . . . 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.See also Russo, supra, 429 N.J. Super. at 99-100.
[Ibid.]
We conclude defendant's motion to vacate, submitted four years following entry of summary judgment and over two and one-half years following entry of final judgment, was not filed within a reasonable time as required by Rule 4:50-2. The motion 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