Opinion
DOCKET NO. A-3875-14T2
09-22-2016
U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR CREDIT SUISSE FIRST BOSTON MBS ARMT 2005-8, Plaintiff-Respondent, v. AJAY KAJLA, Defendant-Appellant, and PAMELA KAJLA and WELLS FARGO, N.A., Defendants.
Ajay Kajla, appellant pro se. Reed Smith, L.L.P., attorneys for respondent (Henry F. Reichner and Siobhan A. Nolan, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is only binding on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Fasciale and Kennedy. On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-34025-07. Ajay Kajla, appellant pro se. Reed Smith, L.L.P., attorneys for respondent (Henry F. Reichner and Siobhan A. Nolan, on the brief). PER CURIAM
Defendant appeals from an April 9, 2015 order denying his motion to vacate a March 6, 2015 second-amended final judgment of foreclosure entered in plaintiff's favor. We affirm.
Defendant obtained a loan from Metrocities Mortgage L.L.C. (Metrocities) in the amount of $1,400,000.00 in 2005, as evidenced by a note. As security for the loan, defendant encumbered real property in Colts Neck. Defendant defaulted in 2007. Plaintiff filed a foreclosure complaint in December 2007, an amended complaint in July 2008, and a second-amended complaint in October 2008 against defendant, his wife, and Wells Fargo, N.A. Default was entered against defendant on all three complaints. The judge entered a second-amended final judgment of foreclosure in March 2015. Defendant then filed a motion to vacate default judgment in April 2015, which the judge denied.
On appeal, defendant argues that plaintiff lacked standing to foreclose because it was a debt collector and not the owner of the note and mortgage; plaintiff committed fraud; the recorded assignment to plaintiff is "an illegal document" that violates state and federal law; plaintiff violated the New York Trust Law; the certifications provided by plaintiff are false and invalid; there exists genuine issues of material fact as to the consummation of the loan and illegality of the mortgage contract; the Mortgage Electronic Registration Systems (MERS) acted illegally and violated state and federal law; plaintiff misunderstood the Pooling and Servicing Agreement (PSA); and the judge generally failed to understand the issues.
Where, as here, "the court has entered a default judgment pursuant to Rule 4:43-2, the party seeking to vacate the judgment must meet the standard of Rule 4:50-1." US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). Under Rule 4:50-1,
the court may relieve a party or the party's legal representative 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.] 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.
"The trial court's determination under the rule warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion[,]" namely where the "decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Guillaume, supra, 209 N.J. at 467 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).
Most relevant to defendant's contentions is either Rule 4:50-1(a) or (f). Under Rule 4:50-1(a), defendant must show excusable neglect and a meritorious defense. Id. at 468. Rule 4:50-1(f) is reserved for "exceptional situations" where "truly exceptional circumstances are present." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 286 (1994). Defendant has failed to satisfy either criteria, or any other section of the rule.
"The only material issues in a foreclosure proceeding are the validity of the mortgage, the amount of the indebtedness, and the right of the mortgagee to resort to the mortgaged premises." Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994).
The judge did not err in concluding defendant is foreclosed from raising a standing argument for the first time after entry of final judgment. In Deutsche Bank National Trust Company v. Russo, 429 N.J. Super. 91, 99-100 (App. Div. 2012), we explained that equitable considerations may bar a defendant from raising a standing argument after final judgment. "In foreclosure matters, equity must be applied to plaintiffs as well as defendants." Deutsche Bank Tr. Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012). Where a defendant does not "raise the issue of standing until he had the advantage of many years of delay," the judge need not entertain the claim. Ibid. Here, defendant waited approximately seven years to assert the standing issue, and did so after default judgment had been entered. Thus, the judge properly barred defendant's standing arguments.
Moreover, we have held that "either possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." Id. at 318. Here, plaintiff was in possession of the note before filing the initial complaint. Thus, defendant's standing argument is meritless.
We conclude that defendant's remaining arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following brief remarks.
Defendant argues that he never entered into a contract with MERS and that MERS did not have any authority to act in any capacity as to the loan. MERS is not a lender and does not make mortgage loans; rather, it operates as a tracking system for mortgages belonging to other entities, which allows the other entities to transfer interests without having to record each transfer. See Bank of N.Y. v. Laks, 422 N.J. Super. 201, 203 n.1 (App. Div. 2011). Here, the mortgage expressly stated that "MERS is a separate corporation that is acting solely as a nominee for [Metrocities]." (Emphasis added). MERS, as nominee for Metrocities, then assigned the mortgage to plaintiff in January 2008.
As to defendant's challenges to the PSA, he is not a party to or a beneficiary of the PSA, and therefore lacks standing to assert violations of the PSA trust, and even if he did, his assertions would be an insufficient defense to the foreclosure claim. See, e.g., Reinagel v. Deutsche Bank Nat'l Tr. Co., 735 F.3d 220, 228 (5th Cir. 2013) (explaining that even though the PSA was violated, the debtor could not enforce the terms of the PSA unless the debtor is a third-party beneficiary, and even then, such an argument does not render the assignment void; it would just allow the debtor to sue for breach of the PSA).
Defendant also argues plaintiff is a "debt collector" under the Fair Debt Collection Practices Act (FDCPA), and committed violations under the statute. 15 U.S.C.A. § 1692e. Courts confronting this issue have uniformly concluded that pooling and trust arrangements do not fall under the purview of the FDCPA.
Foreclosing on a trust deed is distinct from the collection of the obligation to pay
money. The FDCPA is intended to curtail objectionable acts occurring in the process of collecting funds from a debtor. But, foreclosing on a trust deed is an entirely different path. Payment of funds is not the object of the foreclosure action. Rather, the lender is foreclosing its interest in the property.Because plaintiff falls outside of the definition of a "debt collector," it does not matter that it acquired the debt after the default. See Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1316 (11th Cir. 2015) (concluding that "a person who does not otherwise meet the requirements of § 1692a(6) is not a 'debt collector' under the FDCPA, even where the consumer's debt was in default at the time the person acquired it").
[Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002).]
In sum, defendant has not provided any convincing arguments to support a meritorious defense or excusable neglect, nor has he demonstrated exceptional circumstances. We therefore conclude there is no valid basis to vacate the judge's entry of default judgment under Rule 4:50-1.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION