February 25, 2010
HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FOR NOMURA ASSET ACCEPTANCE CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-AF2, PLAINTIFF-RESPONDENT,
MARIANNE SYLVESTER, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket No. F-12141-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 21, 2010
Before Judges Fisher and Sapp-Peterson.
In this appeal, we consider whether the trial judge erred in denying defendant's motion to vacate a default judgment in this mortgage foreclosure action. We conclude the judge correctly found the absence of excusable neglect and, therefore, affirm.
The record reveals that, in 1989, defendant Marianne Sylvester (defendant), together with her son and daughter-inlaw, Gary and Valerie Sylvester, purchased a home in Mendham. In 2002, defendant transferred her interest in the property to Gary and Valerie. Four years later, because of their poor credit, Gary and Valerie failed in their attempts to refinance the mortgage on the property. As a result, Gary and Valerie transferred the property back to defendant. Because of her good credit rating, defendant was able to obtain two loans in the total principal amount of $759,949. Defendant's loan application stated that she earned $13,000 per month as an employee of Gary's contracting business; in truth, defendant was then seventy-seven years old and living on a fixed income of approximately $2000 per month. Defendant defaulted on the mortgage payments due on February 1, 2007.
Plaintiff filed its complaint in foreclosure on May 10, 2007. Defendant was served on July 16, 2007, but did not timely answer the complaint. Instead, through her attorney, defendant entered into a forbearance agreement with plaintiff on June 2, 2007. However, defendant apparently failed to make the second payment requirement by that agreement and plaintiff resumed its pursuit of foreclosure. Defendant's default was entered on September 4, 2007. A final judgment was entered and a writ of execution issued on December 19, 2007.
On September 9, 2008, nine months after entry of the default judgment, defendant moved for relief pursuant to Rule 4:50-1. Defendant asserted that her failure to answer the complaint was due to her mistaken belief that she lacked a viable defense. In seeking relief, defendant maintained that she possessed a meritorious defense, claiming that the lenders violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184, and engaged in predatory practice by granting her a loan on terms the lenders knew she could not meet. The trial judge denied the motion.
Defendant later moved for reconsideration, arguing for the first time that her loan application, which listed an inflated income, was a forgery. In her decision, the judge held that the record demonstrated defendant was aware of the circumstances upon which this purported defense was based. As a result, the judge denied the motion for reconsideration and defendant appealed.
Rule 4:50 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." Manning Eng'g, Inc. v. Hudson County Park Comm'n, 74 N.J. 113, 120 (1977). With these principles in mind, trial courts are to "view 'the opening of default judgments . . . with great liberality,' and should tolerate 'every reasonable ground for indulgence . . . to the end that a just result is reached.'" Mancini v. EDS, 132 N.J. 330, 334 (1993) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)). A trial judge's ruling on such a motion "will be left undisturbed unless it represents a clear abuse of discretion." Morristown Hous. Auth. v. Little, 135 N.J. 274, 283 (1994).
Although motions for relief from default judgments should be treated indulgently, the moving party must nevertheless show "that the neglect to answer was excusable under the circumstances and that [the moving party] has a meritorious defense." Marder, supra, 84 N.J. Super. at 318. Excusable neglect is defined as that "which might have been the act of a reasonably prudent person under the same circumstances." Tradesmens Nat'l Bank & Trust Co. v. Cummings, 38 N.J. Super. 1, 5 (App. Div. 1955).
We agree with the trial judge that defendant failed to demonstrate that her failure to file a timely answer was the product of excusable neglect. She claimed in part that she was indigent at the time service of process was effected. The lack of resources to retain counsel, however, is not viewed as a basis upon which to excuse the neglect to file a timely answer. See In re Estate of Schifftner, 385 N.J. Super. 37, 44 (App. Div.), certif. denied, 188 N.J. 356 (2006). Moreover, as the record clearly demonstrates, defendant had the assistance of counsel when the forbearance agreement was negotiated. It was not until defendant failed to comply with the terms of that agreement that plaintiff requested default and then, two months later, secured a default judgment. Defendant certainly had the assistance of counsel well before default was entered and had the opportunity to file an answer and allege her defenses at that time. The trial judge correctly determined that defendant's inaction was not "an honest mistake that is compatible with due diligence or reasonable prudence." Mancini, supra, 132 N.J. at 335.
Finding no cause to second guess the trial judge's determination that defendant's failure to file a timely answer was not the product of excusable neglect, we need not reach the issue of whether she presented sufficient evidence of a meritorious defense either at the time of her original motion for relief or by way of her motion for reconsideration. See Marder, supra, 84 N.J. Super. at 318 (holding that a movant in this situation must demonstrate both excusable neglect and a meritorious defense).*fn1