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Washington Mutual Bank v. Zipora

March 19, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-19910-06.

Per curiam.


Submitted February 24, 2009

Before Judges Graves and Grall.

Defendant Fahima Zipora appeals from orders denying her motion to vacate a default judgment of foreclosure and reconsideration. Default judgment in favor of plaintiff Washington Mutual Bank was entered on March 6, 2007, and intervenor 6045-8B Associates, L.L.C., purchased the property at a sale conducted by the Sheriff for Hudson County on April 27, 2007. Zipora moved to vacate the judgment and sheriff's sale by order to show cause filed on August 7, 2007.

The trial court conducted an evidentiary hearing at which the following facts were established. The property at issue is condominium unit 8B, 6045 Boulevard East, West New York, New Jersey. Zipora purchased the condominium on July 8, 2005. Although Zipora lives and works in Israel, she signed an affidavit of title indicating her residence in the United States and intention to reside in the unit. On her mortgage application, Zipora provided her street address and the name of her town in Israel, but she indicated that the town was located in New York State.

Zipora purchased the unit as an investment, never stayed or lived in the unit and hired Vision Group Real Estate, L.L.C., to rent and manage the property. That conduct was not consistent with the mortgage documents Zipora executed, in which she acknowledged she would occupy and use the unit as her second home, keep it available for her exclusive use and enjoyment at all times, and not "give a management firm or any other person any control over the occupancy or use of the" mortgaged property. On May 13, 2006, Samira Ali rented Zipora's unit for a term beginning on May 18, 2006 and ending on May 17, 2007.

Payments on Zipora's mortgage were made by automatic deduction from a checking account she maintained with Washington Mutual Bank. The June 2006 payment was not deducted because the funds in the account were not sufficient, and in July 2006 Zipora traveled to the United States and deposited the necessary funds in her account. Zipora acknowledged that she made no additional payments on her mortgage. According to her testimony, the statements for her checking account were sent to her at her residence in Israel, but despite the fact that her balance increased as rents were deposited she did not inquire about the account or the status of her mortgage.

Washington Mutual filed its foreclosure complaint on October 31, 2006. A notarized affidavit of service executed by a private process server on November 10, 2006, indicates personal service of the summons and complaint upon Zipora at unit 8B. The description of the woman accepting service is not consistent with Zipora's age, height, weight or hair color, and it is undisputed that Zipora was in Israel when process was accepted. Her passport and work records which were admitted into evidence, so indicate.

Default judgment was entered on March 6, 2007, and on April 27, 2007 the intervenor purchased the property at a sale conducted by the Hudson County Sheriff.

In a certification of the general manager of Vision Group submitted to the trial court by Zipora, the general manager asserted that Zipora's tenant, Ali, alerted Vision Group that she had received a notice advising her that the property had been sold at a foreclosure sale. He then notified Zipora. Zipora testified that she first learned about the foreclosure on June 1 or 2, 2007 when the general manager telephoned her.

The trial court found that Zipora's testimony "regarding her being served and what she knew about what was happening with the subject [property]" lacked credibility. Reasoning that "[r]elief under Rule 4:50-1 is to be granted sparingly," the court concluded that Zipora did not meet her burden under Rule 4:50-1 and denied her motion.

While motions for relief from judgment are generally granted sparingly, motions to vacate default judgments are an exception to that rule. A motion to vacate a default judgment is "viewed with great liberality." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318-19 (App. Div.), aff'd, 43 N.J. 508 (1964)). That indulgent approach is taken because "a default judgment deprives a party of the benefit of an adjudication on the merits." Allen v. Heritage Court Assocs., 325 N.J. Super. 112, 117 (App. Div. 1999). Because the trial court's discretionary decision was based on the wrong legal standard, it cannot be afforded the deferential review generally given decisions on motions "to open, vacate or otherwise set aside mortgage foreclosure proceedings." United States ex rel. United States Dep't of Agric. v. Scurry, 193 N.J. 492, 503 (2008); see Kavanaugh v. Quigley, 63 N.J. Super. 153, 158 (App. Div. 1960) (noting that an exercise of legal discretion based on a misconception of the law lacks foundation).

The preliminary questions presented in this case were whether Zipora was properly served and, if not, whether she had actual notice sufficient to ...

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