On appeal from Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1037-06.
The opinion of the court was delivered by: Chambers, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Coburn, Grall and Chambers.
Defendants face ejectment from the house that has been the family home for forty-three years. They lost title to the house through a series of lending transactions that form the basis of this case. They appeal from the denial of their motion to set aside the default judgment awarding possession of the home to plaintiff, who now holds title to the property. Since the loss of the home may have resulted from predatory lending practices, in the interests of justice and due to these extraordinary circumstances, the default judgment should be set aside under Rule 4:50-1(f), so that the dispute can be resolved on the merits, and, if necessary, appropriate legal and equitable adjustments be made.
Defendant Marjorie Steele, eighty-three years old, has lived at 103 Spring Street, Somerville for the past forty-three years. It was her marital abode, and thereafter, ownership of the premises was shared with her daughter, defendant Wanda Dorsey, and son-in-law, defendant Douglas Dorsey. In June 2003, defendants obtained a loan of $95,000, representing monies for repairs and improvements to the premises and the consolidation of bills. The loan was secured by a mortgage. Defendants contend that they defaulted on the mortgage payments due to certain health-related issues that resulted in a loss of income. A judgment of foreclosure was obtained against them, and a sheriff's sale was scheduled for February 7, 2006.
The sheriff's sale was averted when defendants obtained a loan from Property Vestors for the amount of the mortgage delinquency. The promissory note that defendants executed with Property Vestors required them to pay back the principal amount plus interest within thirty days (by February 28, 2006). Apparently, defendants anticipated that they would be able to obtain sufficient monies from their 401(k) accounts to do so. Defendants maintain that they were told that if the monies were not paid, then Property Vestors would foreclose on the property. However, as part of the transaction, they had signed a Deed in Lieu of Foreclosure to Property Vestors as security for the loan. The promissory note provided that if the monies were not paid by February 28, 2006, Property Vestors would pay defendants $20,000 and, upon payment of an outstanding mortgage, would have all rights to the property.
To avert losing the property to Property Vestors, defendants obtained financing through Lenny Hernandez and Michael Figler of Equity Solutions, L.L.C. In the resulting transaction that took place on February 24, 2006, Figler took title to the property. He paid off the mortgage and liens and judgments on the property, which totaled approximately $145,000, plus title and closing costs of approximately $10,000. In addition, Figler included as part of his "purchase price" for the property the sum of $50,000 representing a fee to his company, Equity Solutions. Defendants signed a use and occupancy agreement that allowed them to remain on the premises for one year provided they made payments to Figler of $2,200 a month, and they had an option to buy back the property for $202,400 within one year (before February 24, 2007).
Defendants maintain that Figler represented that the monthly payments would be only slightly higher than their current $1,200 mortgage payment and that a portion of their home equity would be used to make these payments. They contend that they signed the documents understanding that they were obtaining a loan and that only later did they discover that they had signed a deed transferring title to the house to Figler. Figler arranged for an attorney to represent defendants for the transaction and maintains that defendants understood the nature of the transaction and agreed to it.
On April 24, 2006, after defendants defaulted on the payments, Figler transferred title to the property to plaintiff Ewelina Nowosleska for $260,000. Defendants assert that plaintiff is connected with Figler's business.*fn1 The papers indicate that the property was again transferred to Jean Sidibe for $405,000, and a mortgage has been recorded against the premises for that sum. Defendants maintain that Sidibe is also associated with Figler. Assuming that $405,000 represents the value of the property, defendants were thus induced to part with title to property valued at $405,000 in order to pay off debts totaling $145,000.
Since defendants made no payments under the use and occupancy agreement, plaintiff commenced this ejectment action. Defendants were served on August 24, 2006, but failed to file an answer. As a result, default was entered, and plaintiff's unopposed motion for a default judgment was granted. The default judgment entered on January 9, 2007, gave plaintiff possession of the premises.
Almost four months later, on April 25, 2007, defendant filed an emergency application to vacate the default judgment. That application was denied on May 11, 2007. Defendants' motion for reconsideration was also denied. This appeal ...