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Manufacturers & Traders Trust Co. v. Green

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 4, 2008

MANUFACTURERS & TRADERS TRUST COMPANY, TRUSTEE FOR SECURITIZATION SERIES 1997-3, AGREEMENT DATED JUNE 12, 1997, PLAINTIFF-RESPONDENT,
v.
AUDRY E. GREEN AND SHIRLEY GREEN, HIS WIFE, DEFENDANTS-APPELLANTS.

On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Cape May County, Docket Nos. F-7783-02.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 3, 2007

Before Judges S. L. Reisner and Gilroy.

This is the first of four real property foreclosure appeals filed by defendant-mortgagors Audry E. Green and Shirley Green, husband and wife. The four appeals filed under Docket Nos. A-7120-03T5, A-1124-04T2, A-1556-06T2, and A-2349-06T2 were submitted back to back for our consideration. In this matter, defendants appeal from the July 14, 2004, judgment of foreclosure entered in the Chancery Division, General Equity Part, Cape May County, under Docket No. F-7783-02. We affirm.

I.

On April 17, 1997, defendants executed a $45,000 promissory note and mortgage in favor of Parkway Mortgage, Inc. The note was for a term of twenty years and required defendants to repay the principal, together with interest at the rate of 10.99% per annum, by making monthly payments of $414.18 on the twenty-second day of each month, commencing on May 22, 1997. Both the note and mortgage contained a provision that permitted the note holder, on default, to accelerate the entire balance of principal and interest due under the note on a thirty-day written notice to defendants. The mortgage encumbered property at 303 East Wildwood Avenue, Middle Township. On May 6, 1997, the mortgage was recorded in the Office of the Cape May County Clerk in Book 2607 of Mortgages, Page 210.

On the same day that defendants executed the note and mortgage, Parkway assigned the note and mortgage to ContiMortgage Corporation. The assignment was recorded on April 30, 1998, in Book 265 of Assignments, Page 542. The assignment disclosed that Parkway had assigned the mortgage recorded in Book 2607 of Mortgages, Page 210, to ContiMortgage on April 17, 1997. That assignment, however, contained a different loan number (3970393) from that which appeared on the mortgage document (3970375), and a different loan amount ($42,000) from that recited in the mortgage ($45,000). Loan No. 3970393, in the amount of $42,000, referenced a different mortgage executed by defendants in favor of Parkway on April 17, 1997, encumbering property at 64 Tuckahoe Road, Woodbine. On June 12, 1997, ContiMortgage assigned the mortgage to plaintiff, Manufacturers & Traders Trust Company, Trustee for Securitization Series 1997-3, Agreement dated June 12, 1997. The assignment was recorded on April 30, 1998, in Book 265 of Assignments, Page 544. On August 1, 2000, Fairbanks Capital Corporation commenced servicing the loan for plaintiff.

Defendants defaulted on the loan when they failed to make payments on December 22, 2001, and January 22, 2002. On February 27, 2002, Fairbanks notified defendants that they were in default in the amount of $2,001.93, representing two months non-payment as well as other incurred charges. The letter advised defendants that they could reinstate the mortgage by paying all amounts due on or before March 29, 2002. In the interim, defendants paid the December 2001, payment in early February, 2002. On April 8, 2002, defendants tendered a check covering the January 2002 payment, which was cashed and placed into a "suspense activity" account. On April 23, 2002, defendants tendered a second check to cover the February 22, 2002, payment. The second check was returned to defendants because the account was in default status, and the amount of the check was less than the full amount due.

On April 12, 2002, plaintiff filed its complaint in foreclosure. Defendants denied that they had defaulted on the note and mortgage. Although a formal order was not entered, Judge Seltzer consolidated this matter with two other actions for purposes of discovery and trial. On May 27, 2003, plaintiff moved for summary judgment. On July 18, 2003, the court granted summary judgment, stating in relevant part:

[I]t's clear from the papers here that there is no dispute with respect to that mortgage. There was a default that was declared. There were checks that were required to be paid for 2000, 2001 and January and February of 2002. There were 26 checks which were required to be paid. In fact, there were only 25, one of which was paid in April [of 2002], some two months after the default was declared. Clearly the bank had, and there's no dispute with respect to the facts here, that the bank had the right to declare that default in February of 2002. As I say, it should have had 26 checks for January 2000 through February of 2002. In fact, there were only 24 [excepting] the check . . . that was written in April of 2002. And the balance is entitled to be accelerated. Notwithstanding his determination that defendants had defaulted on the note and mortgage, Judge Seltzer exercised his discretion and granted defendants additional time to reinstate the loan by paying all amounts due from the date of default through November 22, 2003, in a single payment:

Under the circumstances here it seems to me that given the confusion of these three accounts,*fn1 the application of at least three checks as we've seen during this period, that went from one account and one mortgage to another, I am not prepared to permit the plaintiff to obtain a judgment of foreclosure without giving Ms. Green an opportunity to redeem or to cure the default. I understand that this is a non-residential mortgage. But as I say, under my equitable powers, I think that it is appropriate to do that.

I will require Ms. Green to make the payments which were due from February 2002 to the date of payment, which I will calculate simply, without late fees, by multiplying the princip[al] and interest times the number of checks, number of months which will have elapsed. And I will permit her to make that payment no later than November 23rd 2003. If she makes that payment by November 23, 2003 this matter will be dismissed. If she fails to do so then the plaintiff may make application for the entry of judgment.

A confirming order was entered on August 18, 2003, granting plaintiff's motion for summary judgment, striking defendants' answer and defenses, and declaring defendants in default. Under the terms of the order, the matter was referred to the Foreclosure Unit of the Superior Court to proceed as an "uncontested foreclosure action." The order provided that defendants could reinstate the loan and mortgage by tendering a certified or bank cashier's check to plaintiff in the sum of: $8,819.42 if paid by August 22, 2003; $9,283.60 if paid by September 22, 2003; $9,747.78 if paid by October 22, 2003; or $10,211.96 if paid by November 22, 2003. Lastly, the order provided that if defendants failed to pay the amount due on or before November 22, 2003, that plaintiff could proceed to judgment. Because defendants failed to pay the amount necessary to reinstate the mortgage, a final judgment in foreclosure was entered on July 14, 2004. Defendants appealed.

On September 27, 2004, we entered an order staying the sheriff's sale, pending appeal, conditioned upon: 1) defendants posting $10,000 with the clerk of this court; 2) keeping the taxes and insurance payments reasonably current; and 3) paying the monthly payments of $464.18 to plaintiff's attorneys, to be held in the attorneys' trust account, pending further order of this court. On September 28, 2004, defendants posted $10,000 with the clerk of this court.

II.

On appeal, defendants argue:

POINT I.

THE TRIAL JUDGE ERRED IN GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, STRIKING DEFENDANTS' ANSWER AND DEFENSES, DETERMINING THEM TO BE IN DEFAULT ON THE NOTE AND MORTGAGE, AND DIRECTING THE ACTION TO PROCEED AS AN UNCONTESTED MATTER.

A. THE TRIAL JUDGE ERRED IN DETERMINING THAT PLAINTIFF WAS THE PROPER ASSIGNEE OF THE MORTGAGE.

B. THE TRIAL JUDGE ERRED IN DETERMINING THAT DEFENDANTS HAD DEFAULTED IN MAKING PAYMENTS ON THE PROMISSORY NOTE, JUSTIFYING THE ACCELERATION OF THE AMOUNT OF PRINCIPAL AND INTEREST DUE ON THE NOTE AND MORTGAGE.

C. DEFENDANTS HAD RAISED MATERIAL QUESTIONS OF FACT REQUIRING A TRIAL ON THE MERITS CONCERNING UNSCRUPULOUS LENDING PRACTICES OF PLAINTIFF.

POINT II.

THE TRIAL JUDGE ABUSED HIS DISCRETION IN CONSOLIDATING THIS FORECLOSURE ACTION WITH TWO OTHER FORECLOSURE MATTERS.*fn2

A trial court will grant summary judgment to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).

On appeal, "the propriety of the trial court's order is a legal, not a factual, question." Pressler, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2008). "We employ the same standard that governs trial courts in reviewing summary judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

We have considered the arguments advanced by defendants, in light of the record and applicable law. We find the arguments meritless. We affirm substantially for the reasons stated by Judge Seltzer in his well-reasoned, comprehensive, oral decision of July 18, 2003. R. 2:11-3(e)(1)(A) and (E). Nevertheless, we add the following comments.

Defendants argue that the April 17, 1997, $45,000 mortgage, for the 303 East Wildwood Avenue property, was not properly assigned to plaintiff. Defendants contend that the mortgage assignment from Parkway to ContiMortgage contained a loan number assigned to a $42,000 mortgage that affected premises at 64 Tuckahoe Road, Woodbine, a different mortgage executed by them on the same day as the East Wildwood Avenue mortgage. We disagree with defendants' argument that plaintiff was not the proper mortgagee to prosecute the action.

Although an assignment of a mortgage should be in writing, N.J.S.A. 46:9-9; N.J.S.A. 25:1-13(a), it need not be recorded to be effective. 29 New Jersey Practice, Law of Mortgages, § 11.3 (Myron C. Weinstein) (2d ed. 2001); In re Kennedy Mortg., 17 B.R. 957, 964 (Bankr. D.N.J. 1982). For an assignment to be effective, all that is required is for the assignment to identify the assignee, the assignor, and the property. N.J.S.A. 25:1-13(a).

Here, the assignment of mortgage from Parkway to ContiMortgage, recorded in the office of the Cape May County Clerk on April 30, 1998, references a mortgage dated April 17, 1997, containing a loan number (3970393) and amount ($42,000), matching the 64 Tuckahoe Road loan. That same assignment, however, specifically identifies the 303 Wildwood Avenue mortgage by its proper recording book and page number (Book 2607 of Mortgages, Page 210). The references to the Tuckahoe Road loan number and the mortgagee amount evidence nothing more than clerical error. The subsequent assignment from ContiMortgage to plaintiff refers to the 303 Wildwood Avenue mortgage by the same book and page numbers. Accordingly, there is no infirmity with respect to the assignment of the 303 East Wildwood Avenue mortgage.

Defendants argue next that summary judgment was improperly granted and that this case should have proceeded to trial. Defendants contend that the judge incorrectly determined that February 22, 2002, was the default date. We are satisfied that defendants had defaulted under the terms of the note and mortgage, entitling plaintiff to summary judgment.

The records before the trial court disclosed that as of late February 2002, defendants were in default of the January 22, 2002, payment, having only paid the December 2001, payment in early February 2002, shortly before Fairbanks issued its thirty-day default notice. Defendants admitted that a check they had tendered on April 8, 2002, was to cover only the January 2002 payment. Fairbanks' February 27, 2002, notice to defendants properly declared them in default, and when defendants failed to cure the default by March 29, 2002, plaintiff was entitled to not only accelerate the entire balance of principal and interest due, but also file the foreclosure complaint. The trial judge correctly granted plaintiff's motion for summary judgment.

Defendants also argue that this foreclosure action should not have been consolidated with two other foreclosure cases. We disagree. Judge Seltzer did not enter a formal order of consolidation but wrote in a November 1, 2002, that he intended "to try these three mortgage cases at one time since . . . [he understood] some of the allegations may be that payments intended for one account were applied to another account."

Rule 4:38-1 provides that "[w]hen actions involving a common question of law or fact arising out of the same transaction or series of transactions are pending in the Superior Court, the court on a party's or its own motion may order the actions consolidated." The decision to consolidate actions lies within the discretion of the trial court. Union County Improvement Auth. v. Artaki, LLC, 392 N.J. Super. 141, 149 (App. Div. 2007).

Here, on April 17, 1997, defendants executed three mortgages and notes with respect to three properties in favor of Parkway. Fairbanks eventually became the servicer of each mortgage. Defendants had claimed that payments for one loan had been misapplied to another. They also attacked the assignment of each mortgage. Because common questions of law and fact arose out of this series of transactions, consolidation was warranted.

Although not raised as a legal argument, defendants conclude their brief with a request, that this court direct plaintiff and Fairbanks to turn over to defendants a check that Fairbanks had previously received in the amount of $8,313.32 from defendants' homeowner insurance carrier, for a fire loss that occurred at the mortgaged property. Defendants contend that the insurance check was a three-party check, payable to them; their adjuster, Metro Public Adjustment, Inc.,; and to Fairbanks. Defendants assert that they endorsed the check at the request of Metro, and that Metro forwarded the check to Fairbanks for endorsement, but Fairbanks retained the check.

Although there appear to be one or two passing references to the check in correspondence, which defendants had sent to the judge prior to the filing of plaintiff's motion for summary judgment, defendants never raised the issue of Fairbanks's failure to return the check in opposition to the motion for summary judgment. On August 18, 2003, in response to defendants' letter, objecting to the form of order confirming the grant of summary judgment, in which letter defendants referenced their prior correspondence concerning the check, Judge Seltzer stated "I simply do not know what this check represents and can form no opinion as to the situation."

Because the issue was not properly presented to the trial court in opposition to plaintiff's motion for summary judgment and does not go to the jurisdiction of the trial court or concern matters of great public importance, we decline to consider defendants' request concerning the insurance check. Triffin v. Am. Int'l Group, Inc., 372 N.J. Super. 517, 520 (App. Div. 2004). In addition, the inclusion of copies of the check and defendants' prior correspondence mentioning the check should not have been included in defendants' appendix because the documents were not part of the summary judgment record. Middle Dep't Inspec. Agency v. Home Ins. Co., 154 N.J. Super. 49, 56 (App. Div. 1977), certif. denied, 76 N.J. 234 (1978). Moreover, it appears that the check was issued in December 2002, long after defendants had defaulted under the terms of the note and mortgage. Accordingly, it would not have raised a material question of fact in defense to the foreclosure action. We do not pass on defendants' contention that they are entitled to all or part of the proceeds of the insurance check, and because the issue was not germane to the foreclosure action, defendants may pursue their claim to the insurance proceeds by way of a separate action.

Lastly, we address the disposition of the $10,000 that defendants deposited into court pursuant to this court's order of September 27, 2004, and any monies paid by defendants to plaintiff's attorneys' trust account under the same order. Because neither party addressed the disposition of those funds in their briefs and the order of September 27, 2004, does not provide for the disposition of the funds upon conclusion of the appeal, we find it necessary to remand that issue to the trial court. Accordingly, we remand the matter to the trial court for the limited purposes of: 1) addressing any further stay of the sheriff's sale; and 2) allocating and distributing between the parties any funds paid by defendants into court or to plaintiff's attorneys' trust account under this court's order of September 27, 2004. We do not retain jurisdiction.

Affirmed and remanded to the trial court.


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