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Mortgage Electronic Registration Systems, Inc. v. Ronghi


September 5, 2008


On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-13808-03.

Per curiam.


Argued April 14, 2008

Before Judges Graves and Sabatino.

Defendants Giovanni and Miriam Ronghi*fn1 appeal from orders entered March 15, 2005, and March 19, 2007, denying their motion to vacate a default judgment and sheriff's sale. On appeal, defendants present the following arguments:





After reviewing these arguments in light of the record and the applicable law, we conclude they do not warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons stated by Judge Olivieri in his oral decisions on March 1, 2005, and February 22, 2007, with only the following comments.

In December 2002, defendants purchased a house located at 2813 Central Avenue in Union City (the property, or the subject property) for $225,000. Defendants financed the purchase of the property by entering into a loan agreement with plaintiff Countrywide Home Loans (Countrywide)*fn2 on December 2, 2002. The amount of the loan was $189,000, and it was secured by a mortgage on the property. Countrywide also insured the property.

On March 1, 2003, a fire caused $180,236.27 in damage to the property. Following the fire, defendants rented a house at 504 28th Street in Union City, and, at an evidentiary hearing preceding the trial court's order dated March 17, 2007, defendant testified all mail was forwarded to that address.

Although defendant made two mortgage payments to Countrywide in February and March 2003, he admittedly ceased making payments after the fire in March 2003. According to defendant's testimony, he stopped making payments on the mortgage because he believed "the insurance would be paying for the mortgage payments."

On July 31, 2003, plaintiff filed a complaint for foreclosure. On August 29, 2003, Miguel Niubo, defendant's brother-in-law who resided with defendants, was personally served with the summons and complaint at 504 28th Street in Union City, however, defendants never filed an answered. On October 7, 2003, plaintiff requested default be entered against defendants, and on October 30, 2003, plaintiff's law firm filed a certification stating: "On October 13, 2003, this firm did mail by certified mail, return receipt requested, with required postage thereon, a Notice to Cure in accordance with Section 6 of the New Jersey Fair Foreclosure Act" to defendant at both 504 28th Street and 2813 Central Avenue in Union City. On October 30, 2003, the trial court entered a final judgment finding defendants in default and awarding plaintiff "the sum of $203,669.63 together with lawful interest thereon to be computed from October 1, 2003 together with costs of this suit to be taxed, including a counsel fee of $2186.20 raised and paid in the first place out of the mortgaged premises." The court also ordered "that the mortgaged premises be sold to raise and satisfy the several sums of money due."

In a letter dated November 10, 2003, sent to 504 28th Street in Union City, plaintiff informed defendants of the final judgment entered on October 30, 2003. Defendant testified, however, that he never received plaintiff's letter dated November 10, 2003. Furthermore, in a letter dated January 30, 2004, plaintiff notified defendants "that a Sheriff's Foreclosure Sale has been scheduled for February 19, 2004." Although defendant admitted he received the letter dated January 30, 2004, he claimed it was not faxed to him until February 18, 2004, the day before the scheduled Sheriff's sale. Defendant testified he immediately contacted Christina Hogue, a loan modification technician employed by Countrywide, and Hogue told him "the foreclosure had been put off, and not to worry."

Although he knew he was $30,000 in arrears on his mortgage, defendant testified he had negotiated a loan modification agreement with Countrywide employees whereby the arrearage "would be put at the end of the mortgage." Defendant admitted, however, he never possessed any documentation regarding the alleged loan modification agreement.

After two adjournments, a Sheriff's sale was held on April 1, 2004, and Jose Acosta successfully purchased the property for $197,000. After acquiring title to the property, Acosta filed an application with Union City to convert the property from a one-family house to a three-family house. The application was approved in September or October of 2004, and Acosta expended between $120,000 and $125,000 to "fix up the property due to fire damage," to hire a contractor and architect to convert the property to a three-family house, and for counsel fees.

On April 19, 2004, defendants became aware the Sheriff's sale was final, but they did not file a motion to vacate the default judgment entered on October 30, 2003, until August 13, 2004. In a certification in support of defendants' motion, their counsel stated "[defendants have] demonstrated a meritorious defense and excusable neglect in connection with [their] application to vacate the underlying [j]udgment." An amended motion to vacate the final judgment was filed on September 21, 2004, to notify Acosta of defendants' application. The court bifurcated the motion into two parts: first, to determine whether plaintiff's complied with the notice requirements of Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-53 to -68, and, second, to consider defendants' claim that the default judgment should be vacated because of material misrepresentations by the plaintiff and defendants excusable neglect for failing to answer the foreclosure complaint.

On March 1, 2005, the trial court held a hearing to determine whether plaintiff provided defendants with notice to cure as required under the FFA, N.J.S.A. 2A:50-58(a)(1). The court's findings and conclusions included the following:

I don't know whether or not Mr. Ronghi received the notice to cure [as required under the FFA], because there is no green card that he signed for, the Post Office said they have no history or any documents that would say that these two particular pieces of mail to the two specific addresses were sent. But I do know that not every defect in service qualifies a defendant for relief from a default judgment. The requirements of due process will be considered as satisfied when a defendant has actual notice of an action, even though the service may have violated some technical aspect of the Court Rules. That's [Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993)].

In this case, although Mr. Ronghi may not have received the notice to cure, there's been nothing brought before me that he did not receive the summons and complaint, that he did not receive the default judgment, that he did not receive any of the other notices that were required to be sent to him under our Court Rules and the Fair Foreclosure Act. So, although Mr. Ronghi may not have received the notice to cure, as the [Araujo] case says, not every defect qualifies a defendant for relief from a default judgment. You still have to be concerned with due process.

I have to infer that Mr. Ronghi received the summons and complaint that was filed in this matter, there's been nothing presented to me that he didn't. I will also infer that Mr. Ronghi received the default judgment. There's been nothing brought to me that he didn't. . . . Mr. Ronghi knew of this foreclosure action even if he were not provided with the notice to cure, once the summons and complaint were filed, he could have . . . taken appropriate action to attack the fact that he had not received the notice to cure, that wasn't done, no action was taken until he received the default judgment in this matter . . . .

The court chooses to look at this as a due process analysis. . . . [B]ecause I don't honestly know whether or not Mr.

Ronghi received the notice to cure, and I will infer he didn't for the purpose of this decision . . . but even if he did not, I do not find that the failure to serve the notice to cure, given the [undisputed] fact that he received . . . the other filings in this matter, requires this court . . . [to grant] the remedy that he seeks, now that this matter has gone to . . . Sheriff's sale and beyond . . . .

The trial court's decision was memorialized in an order dated March 15, 2005, which (1) stated "the [c]court is satisfied that [d]efendants were fully aware that a foreclosure was in process and . . . complete and due process was satisfied given the facts presented," and (2) scheduled a case management conference regarding "issues and discovery concerning the remaining unresolved issues in [d]efendants' Motion to Vacate Order of Final Judgment."

On March 16, 2005, defendants filed a motion for reconsideration of the order dated March 15, 2005. Following a hearing on April 1, 2005, defendants' motion was denied.

Next, the court held an evidentiary hearing on July 19, July 25, August 17, and September 6, 2006, for the purpose of considering the remaining contentions raised by defendants in their motion to vacate the final judgment of default. On February 22, 2007, the trial court issued an oral decision denying defendants' motion. The court's decision included the following:

One of the allegations of the defendant is that the plaintiff entered into a modification agreement with him and that the plaintiff reneged or breached the agreement by selling the property at Sheriff's sale without giving him proper notice . . . .

I think the more troubling aspect for Mr. Ronghi is the fact that he claimed that he had a loan modification agreement with the plaintiff, yet no document ever existed. And certainly, even though no loan modification agreement may exist, if I'm convinced by clear and convincing evidence that a loan modification agreement did exist of some kind . . . I would hold the plaintiff to this modification agreement that Mr. Ronghi claimed existed, that would have had the arrearages put on the back end of the mortgage.

The problem with that, as with any oral agreement between the parties, is that to determine whether or not it exists, it really does come back to credibility, as to whether or not Mr. Ronghi . . . had this agreement with the plaintiff . . . and I don't find that . . . because again, I have a problem . . . with Mr. Ronghi's credibility, his evasiveness, his vagueness, the inconsistencies.

Certainly, since no [loan modification] document exists, I have to look at the testimony of Mr. Ronghi, with which I have a problem. Since the court finds that there was no loan modification agreement that exists, because of Mr. Ronghi's credibility, the court finds there was not an agreement orally between the plaintiff and the defendant for this loan modification agreement[.] . . . [I]nferentially . . . the notices that were sent regarding the Sheriff's sale, they were eventually faxed to him in Mexico by a relative . . . the logical inference is that these documents and all of the documents were sent properly by this plaintiff to the subject property, forwarded to the apartment where Mr. Ronghi was living, and then to Mr. Ronghi, wherever he was, in Mexico at [times], Panama, wherever he was.

. . . I am not convinced, under the Court Rules and the case law as I understand [it] to be, that the judgment should be vacated. So for all of those reasons, then, the motion to vacate the judgment is denied.

The court's oral decision was memorialized in an order dated March 19, 2007.

On appeal, defendants first contend the trial court erred in denying their motion to vacate the default judgment because of plaintiff's alleged failure to comply with the notice requirement under N.J.S.A. 2A:50-58(a)(1), which states:

If a plaintiff's action to foreclose a residential mortgage is uncontested . . . a lender shall apply for entry of final judgment and provide the debtor with a notice, mailed at least 14 calendar days prior to the submission of proper proofs for entry of a foreclosure judgment, providing the debtor with the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact to obtain the amount required to cure the default . . . .

Assuming, as did the trial court, that defendants did not receive notice of their right to cure as required under N.J.S.A. 2A:50-58(a)(1),*fn3 we nevertheless conclude defendants' motion to vacate default judgment was correctly denied. Defendants were properly served with the summons and complaint, as well as the final judgment of default dated October 30, 2003. Moreover, defendant admitted he stopped making payments on the mortgage in March 2003, and he acknowledged being $30,000 in arrears by January 2004. Defendant also testified that on April 19, 2004, he was aware the Sheriff's sale of the property had been completed. Nonetheless, defendants did not file their motion to vacate the default judgment until August 15, 2004--after Acosta purchased the property and began investing substantial sums of money and time into its renovation.

The trial court found defendants were well apprised of the foreclosure proceedings, including the amount of their monthly mortgage payments and arrears, yet they waited approximately ten months to move to vacate the default judgment. Therefore, any alleged deficiencies in the notice of right to cure requirements under N.J.S.A. 2A:50-58(a)(1) do not warrant the relief defendants now request. See Berger v. Paterson Veterans Taxi Serv., 244 N.J. Super. 200, 203 (App. Div. 1990) (holding that movant who knew of judgment, but did not move to vacate it for two years, was barred from relief); Garza v. Paone, 44 N.J. Super. 553, 557 (App. Div. 1957) (noting that even a void judgment may not be vacated unless the motion to vacate is made within a reasonable time after defendant learns of the judgment).

Similarly, defendants' motion to vacate the default judgment based upon an alleged loan modification agreement and/or plaintiff's alleged misrepresentations is without merit. Rule 4:50-1 provides that "[o]n motion, with briefs, and upon such terms as are just, the court may relieve a party . . . from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . . (f) any other reason justifying relief from the operation of the judgment or order." Regarding motions to vacate default judgments, a "defendant seeking to reopen a default judgment must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964) (emphasis added). Moreover, it is also "well established that the decision granting or denying an application to open a judgment rests within the sound discretion of the trial court, exercised with equitable principles in mind, and will not be overturned in the absence of an abuse of that discretion." Ibid.; see also Reg'l Const. Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div. 2003) ("[T]rial courts are to exercise their sound discretion and their decisions [not to vacate default judgments] will not be disturbed absent an abuse of discretion.").

In the present appeal, it is not disputed that service of plaintiff's summons and complaint was properly made upon defendant's brother-in-law at defendants' principal dwelling place. See R. 4:4-4(a)(1) (Proper service is effectuated "by delivering a copy of the summons and complaint to the individual personally, or by leaving a copy thereof at the individual's dwelling place or usual place of abode with a competent member of the household of the age of 14 or over then residing therein."). Moreover, the court determined defendant's testimony was evasive, vague, and inconsistent, and it concluded "no loan modification agreement . . . exist[ed]." Given the trial court's credibility assessment and factual findings, which are fully supported by the record, we find no abuse of discretion or reversible error.


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