Opinion
DOCKET NO. A-2399-11T4
03-28-2013
WELLS FARGO BANK, N.A. AS TRUSTEE FOR MORGAN STANLEY DEAN WITTER CAPITAL 1 INC. TRUST 2002-OP1 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2022-OP1, Plaintiff-Respondent, v. YOLANDA LOPEZ AND VICTOR LOPEZ, Defendants-Appellants, and JOEL OLMO and UNITED STATES OF AMERICA, Defendants.
Yolanda Lopez and Victor Lopez, appellants pro se. Fein, Such, Kahn & Shepard, P.C., attorneys for respondent (Joshua B. Sears, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino and Fasciale.
On appeal from the Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-6218-07.
Yolanda Lopez and Victor Lopez, appellants pro se.
Fein, Such, Kahn & Shepard, P.C., attorneys for respondent (Joshua B. Sears, on the brief). PER CURIAM
In this mortgage foreclosure case, defendants Yolanda Lopez and Victor Lopez appeal from a January 20, 2012 order denying their motion to vacate default judgment. They contend that plaintiff lacked standing to file its complaint. We affirm.
In May 2002, defendants executed a note and mortgage to Option One Mortgage Corporation (Option One) regarding their investment property. In or around May 2006, defendants defaulted on their mortgage payments. In March 2007, plaintiff filed a complaint seeking to foreclose on defendants' property. Plaintiff alleged in its complaint that Option One assigned to it the mortgage and note. Plaintiff properly served the complaint on defendants, which they ignored. In May 2007, the court entered default, and in August 2007, it entered default judgment.
Defendants then delayed the sale repeatedly. They filed four Chapter 13 bankruptcy petitions, each time acknowledging their mortgage obligation. And, in addition to delaying the sheriff's sale by filing these petitions, in September 2009, defendants obtained a court order staying the sale to allow for a "short-sale" attempt to obtain a buyer for the property.
Defendants filed their bankruptcy petitions in March 2008, October 2009, February 2010, and June 2011.
In November 2011, four years and three months after the entry of judgment, defendants filed a motion to vacate the judgment, relying on Rule 4:50-1(d) and (f), and argued for the first time that plaintiff lacked standing. They contended that plaintiff failed to obtain an assignment of their mortgage and did not hold the note and mortgage at the time plaintiff filed its complaint. Plaintiff responded by arguing that defendants filed an untimely motion. Plaintiff also asserted that it had standing to enforce the note. In opposition to the motion, plaintiff submitted (1) a certification from an officer of Option One stating that plaintiff is the holder of the "obligation and mortgage"; (2) an Allonge to the original note from Option One; and (3) Option One's assignment of the note and mortgage executed on June 26, 2007. As a result, plaintiff asserted that defendants failed to satisfy Rule 4:50-1(d) or (f).
The parties waived oral argument and the judge denied the motion on the papers. The judge hand wrote his reasons on the January 20, 2012 order. He concluded that defendants acknowledged their debt for years, ignored the complaint, and failed to timely raise a lack of standing objection. In denying the motion, the judge relied on Rule 4:50-2 (indicating that a motion to vacate "shall be made within a reasonable time"). We denied defendants' application to stay the sale pending appeal, and in March 2012, the property was sold to a third party. This appeal followed.
On appeal, defendants argue that the judgment of foreclosure must be vacated because plaintiff did not have standing as an assignee at the time plaintiff filed its complaint. They maintain that plaintiff is unable to enforce the note because it obtained the assignment between the filing of the complaint and the entry of judgment. Defendants also contend that plaintiff failed to attach a certification of diligent inquiry to the complaint and an affidavit of diligent inquiry to plaintiff's motion for default judgment, pursuant to Rules 4:64-1(a)(2) and 4:64-2(d).
Our standard of review is well settled. As Justice Patterson recently reiterated in US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012), a "party seeking to vacate [a default] judgment" in a foreclosure action must satisfy Rule 4:50-1, which states in pertinent part that
the court may relieve a party . . . from a final judgment or order for the following reasons: . . . (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 authority to avoid an unjust result in any given case." Ibid. (internal quotation marks omitted).
We afford "substantial deference" to the trial judge and reverse only if the judge's determination amounts to a clear abuse of discretion. Ibid. An abuse of discretion is when a decision is "'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Ibid. (internal quotation marks omitted).
Defendants provide no reason for the four-year and three-month delay between the entry of default judgment in August 2007 and the filing of their motion to vacate in November 2011. Defendants rely on Rule 4:50-1(d) and argue that the judgment is void for lack of standing. "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); see also R. 4:50-2. Under certain circumstances, "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." Russo, supra, 429 N.J. Super. at 100. Such is the case here.
We stated in Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012), that
[i]n 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 nor can he reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of further delay expired, after his home was sold and he was evicted, 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.Like Angeles, defendants failed to deny responsibility for their debt, contributed to the substantial delay by filing numerous bankruptcy petitions, waited to file their motion to vacate until their unsuccessful short sale attempt, and provided no explanation for their delay. Thus, we conclude there was no abuse of discretion in determining that defendants' motion was untimely.
Moreover, defendants are unable to show, on the merits, that they are entitled to vacate the judgment pursuant to subsection (d). "'As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt.'" Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)); accord Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010). Plaintiff produced proof that it acquired the loan in 2002 and obtained the assignment prior to obtaining judgment.
In Russo, supra, 429 N.J. Super. at 101, we held based on Guillaume and Angeles, that "even if [the] plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy . . . because of [the] defendants' unexcused, years-long delay in asserting that defense." In Russo, defendants challenged plaintiff's standing to file the foreclosure complaint because it did not take an assignment of the mortgage until after the complaint was filed. Id. at 96. We concluded, "in this post-judgment context, that lack of standing would not constitute a meritorious defense to the foreclosure complaint." Id. at 101. "[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)." Ibid. The same rationale applies here. Hence, standing issues aside, plaintiff had a legal right to enforce the note, pursuant to the Uniform Commercial Code, at the time it obtained the judgment. See Ford, supra, 418 N.J. Super. at 597.
Next, defendants argue that plaintiff failed to attach a certification of diligent inquiry to the complaint and an affidavit of diligent inquiry to plaintiff's motion for default judgment, pursuant to Rules 4:64-1(a)(2) and 4:64-2(d). On June 9, 2011, the Supreme Court adopted substantial amendments to the rules governing mortgage foreclosure actions. The Court adopted the amendments "in response to so-called 'robo-signing' in foreclosure and bankruptcy filings in which employees of [the plaintiff or its] mortgage lenders or servicers allegedly submit affidavits without personal knowledge of the information contained in such documents." Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:64-1 (2013). The rules were effective immediately.
In an order accompanying the newly adopted rules, the Chief Justice addressed cases in which judgment was entered but no sale of the property has occurred, as in this case. The order provides in pertinent part that
in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit, . . . (a) stating that the attorney has communicated with an employee or employees of the plaintiff or the plaintiff's mortgage loan servicer (1) who personally reviewed the affidavit of amount due and the original or true copy of the note, mortgage, and recorded assignments, if any, submitted to the court, and (2) confirmed their accuracy; (b) setting out the date and mode of communication employed; (c) setting out the name(s), title(s)[,] and responsibilities in those titles of the plaintiff's employee(s) or the employee(s) of the plaintiff's mortgage loan servicer with whom the attorney communicated; and (d) attesting that the complaint and all subsequent documents filed with the court comport with the requirements of Rule 1:4-8(a).
See N.J. Judiciary, Residential Mortgage Foreclosure Rules: Amendments to Rules 4:64-1 and 4:64-2; Revised Form Certifications/Affidavits (June 9, 2011), available at http://www.judiciary.state.nj.us/notices/2011/n110610f.pdf.
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Here, plaintiff obtained its judgment three years and four months before the effective date of these rules. Thus, the certification requirements of Rules 4:64-1(a)(2) and 4:64(d) did not require plaintiff to attach a certification to its complaint. However, pursuant to the order entered by the Chief Justice, "in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit" providing certain information. No such affidavit was included on appeal. Therefore, our affirmance is without prejudice for defendants to file promptly with the trial court a Rule 4:50-1 motion on that discrete issue if warranted.
Finally, we disagree that subsection (f) justifies vacation of the judgment. Rule 4:50-1(f) permits a judge to vacate a default judgment for "any other reason justifying relief from the operation of the judgment or order," and "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks omitted). The applicability of this subsection is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (internal quotation marks omitted). On this record, defendants have not shown any such "exceptional circumstances."
After a thorough review of the record and consideration of the controlling legal principles, we conclude that the defendants' remaining arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E).
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION