Opinion
DOCKET NO. A-0797-15T4
12-22-2016
US BANK NATIONAL ASSOCIATION, as Trustee for WFASC 2005-03, Plaintiff-Respondent, v. STUART R. LEDERER and JENNIFER LEDERER, his wife and each of their heirs, devisees, and personal representatives, and his, her, their or any of their successors in right, title and interest, Defendants-Appellants, and WELLS FARGO BANK, NA, Defendant.
Richard Jared Stepp argued the cause for appellants (Denbeaux & Denbeaux, attorneys; Nicholas A. Stratton, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith LLP, attorneys; Mr. Reichner, 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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Sabatino and Nugent. On appeal from Superior Court of New Jersey, Chancery Division, General Equity, Bergen County, Docket No. F-031034-10. Richard Jared Stepp argued the cause for appellants (Denbeaux & Denbeaux, attorneys; Nicholas A. Stratton, on the brief). Henry F. Reichner argued the cause for respondent (Reed Smith LLP, attorneys; Mr. Reichner, on the brief). PER CURIAM
In this residential mortgage foreclosure action, defendants/counterclaimants Stuart Lederer and his wife Jennifer Lederer appeal the Chancery Division's March 18, 2011 order granting summary judgment to plaintiff, US Bank National Association, as trustee for WFASC 2005-03. We conclude that the trial court correctly rejected defendants' arguments that plaintiff inadequately documented its standing to bring this foreclosure action. We therefore affirm the order granting summary judgment and the ultimate final judgment of foreclosure entered against defendants.
For ease of expression, we hereafter refer to the Lederers as "defendants" without reference to their counterclaim.
We derive the following pertinent facts and procedural history from the record. On January 28, 2005, defendants executed a mortgage and promissory note with their lender, Wells Fargo Bank, N.A. ("Wells Fargo"). The bank executed a fixed-rate mortgage loan with defendants for $451,200 to purchase a residence in Mahwah. The Note was for a thirty-year mortgage, financed at a 5.750% interest rate.
On April 28, 2005, Wells Fargo entered into a "Pooling and Servicing Agreement" (the "PSA") with Wells Fargo Asset Securities Corporation to sell the loan to Wachovia Bank, National Association ("Wachovia") in its capacity as trustee for Mortgage Pass-Through Certificates Series 2005-03. The loan became part of the Wachovia trust, and Wells Fargo agreed to, and did continue to, act as the loan servicer and custodian of the Note. On November 29, 2005, plaintiff acquired most of Wachovia's corporate assets, and thereby became the successor trustee of the trust that contained defendants' mortgage.
On December 13, 2009, Wells Fargo notified defendants of its intention to foreclose on their property for failure to make their required mortgage payments. According to plaintiff, Wells Fargo assigned the mortgage to plaintiff on June 7, 2010. Plaintiff recorded that mortgage assignment with the Bergen County Clerk on June 11, 2010, and the recording specifically reflected the June 7 assignment.
Plaintiff filed a complaint for foreclosure against defendants in the Chancery Division on June 9, 2010, two days after the assignment. The complaint alleged that defendants had been in default since March 1, 2010. Due to that default, plaintiff invoked the loan's acceleration clause and sought repayment in full. In defendants' answer, they denied all claims, and asserted a defense under the Fair Foreclosure Act, N.J.S.A. 2A:50-53 to -73. They also alleged plaintiff had failed to provide defendant with "the appropriate number of Notice of Right to Cancel" as required by the Truth in Lending Act ("TILA"), 15 U.S.C.A. §§ 1635, 1639 & 1640.
Following discovery, both parties moved for summary judgment on December 30, 2010. Attached to plaintiff's motion was a certification from its attorney Kevin Golden, which attempted to substantiate plaintiff's standing to bring this action. Defendants, in their cross-motion, argued plaintiff did not have standing to pursue foreclosure, as it had not presented competent evidence as to whether it actually held the Note. Defendants also moved to strike the Golden certification.
Two days prior to the oral argument on the summary judgment motions, plaintiff supplemented its motion with a certification from a Wells Fargo litigation specialist, Kyle N. Campbell. Campbell certified that, as an employee of the loan originator and servicer Wells Fargo, he had reviewed the loan documents, certified the validity of the Note and the mortgage, and "[b]ased on arrangements which I personally made, the original Note is now in the possession of counsel for [p]laintiff." Campbell also certified that the plaintiff had assumed the mortgage prior to this litigation, and as of the date the complaint was filed, plaintiff, as trustee, "was in possession of the Note through its Custodian, Wells Fargo."
In his certification, Campbell further explained the relationship between Wells Fargo, Wachovia, and plaintiff following the PSA. Campbell certified that defendants' Note was initially placed in Wells Fargo's custody as custodian of the trust based on the PSA between Wells Fargo and Wachovia. He attached a portion of the PSA and a redacted list of the loans included in the PSA as support of these facts.
Further, Campbell explained that plaintiff had acquired substantially all of Wachovia's assets in 2005, including the PSA which contained defendants' loan. To support that contention, he attached an affidavit signed by officials of Wachovia and plaintiff, certifying plaintiff's acquisition of Wachovia's mortgage-backed transactions, including specifically defendants' loan.
The trial court initially heard oral argument on the summary judgment motion on February 18, 2011. At that hearing, the court resolved several of the issues presented. First, the court dismissed defendants' counterclaim, ruling that plaintiff had, in fact, supplied defendants with the notice required under the Fair Foreclosure Act. Second, the court granted defendants' motion to strike the Golden certification because it was based upon extrinsic facts as to which he lacked personal knowledge, in non-compliance with Rule 1:6-6.
Defendants previously had withdrawn the portion of their counterclaim alleging a violation of the TILA. They have not raised arguments in their brief on appeal contesting the dismissal of the counterclaim on the Fair Foreclosure Act allegation, and thus have waived that issue. Telebright Corp., Inc. v. Dir., N.J. Div. of Taxation, 424 N.J. Super. 384, 393 (App. Div. 2012).
The trial court did agree to consider the additional supporting certification that plaintiff obtained from Campbell. However, recognizing the short period of notice in which the Campbell certification had been served, the court adjourned further consideration to the remaining summary judgment issues, including the contested issue of plaintiff's standing. The court allowed defendants an opportunity in the interim to conduct further discovery and respond to the Campbell certification.
Defendants did not thereafter take Campbell's deposition or conduct other discovery, but they did present more detailed points in opposition to his certification when the motion was reargued on March 18, 2011. Defendants maintained that Campbell's certification was inadequate to support plaintiff's standing. In addition, they argued that plaintiff had failed to establish that it had been assigned their mortgage loan and were in possession of the Note before filing suit in June 2010.
Having considered the parties' further arguments and the Campbell certification, the trial court granted plaintiff's motion for summary judgment and denied defendants' reciprocal motion seeking dismissal. The court first determined that Campbell had "established a sufficient foundation to authenticate the various documents annexed to his certification," including the mortgage, Note, and the PSA. The court based that conclusion on a finding that Campbell had certified that he was "very familiar with and personally knowledgeable" of the documents, and that he personally reviewed them.
The judge next concluded that plaintiff had standing. As substantiated by Campbell's certification, the court found the original Note was currently in plaintiff's possession. To further evidence plaintiff's standing, the judge cited the PSA between Wells Fargo and Wachovia (later plaintiff) as proof that the Note was always in the possession of the trust's custodian, Wells Fargo. As an alternative method to establish standing, the judge also found that the assignment of defendants' mortgage from Wells Fargo to plaintiff occurred before the foreclosure complaint was filed.
Given the court's finding of standing, it ruled that, without contradictory proof offered by defendants or denials of the loan documentation, there was no genuine dispute of material fact. The court therefore granted summary judgment for plaintiff.
A final judgment was ultimately entered in favor of plaintiff on April 24, 2015, in the sum of $588,912.35. A sheriff's sale was ordered on the mortgaged residence. There are no issues before us concerning the sheriff's sale itself.
On appeal, defendants essentially argue that (1) the Campbell certification and supporting documents were inadequate to establish plaintiff's standing; and (2) case law requires plaintiff to establish both possession of the Note and assignment of the mortgage before the foreclosure complaint is filed. We consider those arguments from the summary judgment record in a light most favorable to defendants as the non-moving and non-prevailing party. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Having done so, we affirm the trial court's decision, substantially for the sound reasons expressed by Judge Harry G. Carroll in his March 18, 2011 oral opinion. We add several observations.
A lender's right to foreclose is an equitable right inherent in a mortgage, triggered by a borrower's failure to comply with the terms and conditions of the associated loan. S.D. Walker, Inc. v. Brigantine Beach Hotel Corp., 44 N.J. Super. 193, 202 (Ch. Div. 1957). To obtain relief in a mortgage foreclosure action, the mortgagee (or its successor in interest) must establish that (1) the mortgage and loan documents are valid; (2) the mortgage loan is in default; and (3) it has a contractual right to foreclose in light of the default. See, e.g., Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994); Somerset Trust Co. v. Sternberg, 238 N.J. Super. 279, 283-84 (Ch. Div. 1989). The mortgagee has the right to insist upon strict observance of the obligations that are contractually owed to it, including timely payment. Kaminski v. London Pub, Inc., 123 N.J. Super. 112, 116 (App. Div. 1973).
Often, as here, a disputed issue in mortgage foreclosure actions is whether the plaintiff has established standing to bring the complaint. In general, the Uniform Commercial Code establishes three alternative categories of parties who have standing to enforce negotiable instruments, including mortgages and promissory notes: (1) "the holder of the instrument"; (2) "a nonholder in possession of the instrument who has the rights of the holder"; and (3) "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 subsection d. of 12A:3-418." See N.J.S.A. 12A:3-301.
In Deutsche Bank Trust Co. v. Angeles, 428 N.J. Super. 315 (App. Div. 2012), we construed these principles to confer standing on a mortgage foreclosure plaintiff who establishes "either possession of the note or an assignment of the mortgage that predated the original complaint." Id. at 318. Judge Carroll fairly and reasonably determined that the record here sufficed to meet either of these two predicates for standing.
Angeles expands the grounds for standing that were previously noted in Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 216 (App. Div. 2011). Mitchell only recognized standing where the plaintiff proved possession of the note at the time of filing. We choose to follow the approach in Angeles, the more recent of these two published opinions, in this appeal.
First, the unrefuted record reflects that plaintiff was assigned defendants' mortgage loan before the foreclosure complaint was filed in the Chancery Division. The Campbell certification provides a sufficient evidentiary basis to establish the authenticity of the business records that reflect the transfer of defendants' loan from the original lender, Wells Fargo, to the present trustee.
We reject plaintiff's contention that Campbell's certification failed to establish the necessary foundation. Indeed, the mortgage assignment was recorded and endorsed by the Bergen County Clerk. See N.J.R.E. 901 (noting that authentication is governed by a flexible standard that only requires "evidence sufficient to support a finding that the matter is what its proponent claims"). Moreover, the trustworthiness of the assignment documentation is buttressed by the fact that Wells Fargo indisputably has been the servicer of defendants' loan from the very beginning of the transaction.
The trial court did act prudently in its initial decision in February 2011 by rejecting Golden's attorney certification as support for the foundational documents. See Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 599 (App. Div. 2011) (disallowing an attorney for a foreclosure plaintiff who lacked personal knowledge of the authenticity of the underlying documents to establish their genuine nature). However, plaintiff cured that shortcoming by providing the Campbell certification. The trial court reasonably afforded defendants more than a month to take additional discovery or marshal competing evidence to respond to that certification. We also discern no genuine question of non-authenticity raised by the acronym "WFASC" used in plaintiff's business name, which has been explained to be a unit of Wells Fargo.
We need not consider the amendment to Rule 4:64-2(c) that became effective on June 9, 2011, which specifically authorizes "an employee of the plaintiff's loan servicer" to establish the authenticity of the underlying business records. --------
Second, as an alternative basis for standing, we agree with the trial court that there is ample proof in the record to establish that plaintiff was in possession of the Note as of the time the lawsuit was filed. As Campbell attests, the Note was provided to plaintiff's counsel for purposes of this litigation. Although Campbell did not specify the exact date on which the Note was provided to counsel, there is more than a reasonable basis to support an inference that the Note was held by plaintiff or Wells Fargo as its servicer at the time the lawsuit was filed. Moreover, at the oral argument before the trial court on March 18, 2011, defendants' counsel conceded that his clients did not dispute "plaintiff has possession [of the Note]."
The balance of defendants' arguments lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION