On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-46495-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 1, 2012 -
Before Judges Fuentes, Graves, and Harris.
This is an appeal arising from the foreclosure of a residential mortgage. Defendants Robert Bagley and Marsha Bagley seek review of the Chancery Division's denial of their motion to vacate the default judgment entered against them. They assert, among other things, that if permitted to interpose an answer they would defend the action on the ground of plaintiff Sutton Funding, LLC's (Sutton) alleged lack of standing. Defendants also assert that they "were the clear victims of common law predatory lending" practices and Sutton is subject to several statutory defenses. Without deciding the ultimate outcome of defendants' claims, we nevertheless determine that they possess meritorious defenses that deserve adjudication by either motion practice or trial. We are satisfied that their failure to timely answer the complaint was the product of excusable neglect. Accordingly, we reverse and remand for further proceedings.
In November 2006, defendants borrowed $337,250 from New Century Mortgage Corporation (New Century). The indebtedness was secured by a first mortgage on defendants' dwelling in Neptune. The mortgage was given in the name of Mortgage Electronic Registration Systems, Inc. (MERS), as a nominee for New Century and its successors and assigns.
According to Jill Orrison's certification,*fn1 a "Litigation Management Associate for HomEq Servicing, the mortgage servicer . . . and authorized representative of [Sutton]," defendants' loan was "purchased by [Sutton] from the originating lender, [New Century] . . . [on] March 16, 2007 and the purchase price for this specific loan was $323,483.89."
The documentary evidence supporting Orrison's declaration included a few pages from a spreadsheet of unknown origin, which included one row devoted to defendants' loan and eight untitled columns containing dates and numbers. The spreadsheet was accompanied by a page of data suggesting that defendants' loan was part of a much larger transaction that involved the sale of over six thousand loans with an aggregate original balance of over $900,000,000.
In Orrison's second certification, she averred that she contacted her "document team (LDDM)" to make inquiries of "the custodian of the documents for [defendants'] loan." Orrison was advised by the LDDM that it "contacted Hong Dang, who is a file clerk with The Bank of New York Mellon Trust Company N.A., the Custodian for [Sutton]" and received a letter (called a "certification"), dated on September 11, 2009, from a "Senior Associate" at the custodian outlining the nature of the sale of defendants' loan. Orrison added, without indicating a source, that the custodian "was responsible for sending Counsel the original Note, which is now in the possession of [Sutton's attorneys]." No date was given for when Sutton's counsel came into possession of the Note.
Defendants stopped paying their loan in May 2008. On November 20, 2008, MERS assigned defendants' mortgage to Sutton. One day later, Sutton filed its complaint in foreclosure against defendants.*fn2 Defendants were served with the pleadings in December 2008, but took no formal action for several months.
In the interim, Sutton applied for the entry of default. A default judgment was finally entered against defendants on December 17, 2009. The lag between the filing of the complaint in November 2008 and the entry of final judgment in December 2009 was not caused by defendants' action or inaction.
Less than two months later, in February 2010, defendants moved to set aside the default judgment. Marsha Bagley submitted a certification indicating that she and her husband "filed for bankruptcy" in June 2008, after stopping mortgage payments one month earlier. They sought to re-finance the mortgage and also met with an attorney "in late October or early November, 2008." After being served with the foreclosure complaint, defendants forwarded the papers to the attorney, who they thought "was going to file papers for [them]."
Thereafter, defendants received "some more papers about a default and that [j]udgment would be entered against [them]." They were receiving correspondence "from a company called HomEq Servicing, which said that it wanted to work out a settlement of the foreclosure." All of this correspondence was sent to their attorney, but nothing was done. They ...