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Onewest Bank, Fsb v. Mindy Follman


April 3, 2012


On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-22355-09.

Per curiam.


Submitted: February 1, 2012

Before Judges Axelrad and Ostrer.

In this mortgage foreclosure case, defendant Mindy Follman appeals from an order of February 18, 2011, which denied her second motion to vacate a default judgment entered against her in August 2009. She challenges the trial court's finding of standing and asserts a newly-minted claim of excusable neglect. We affirm.

On August 31, 2006, defendant borrowed $149,000 from IndyMac Bank, FSB (IndyMac) to purchase an investment property located in Lakewood, secured by a note endorsed in blank by IndyMac and mortgage executed to Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for IndyMac. The mortgage was recorded with the Ocean County Clerk on September 7, 2006. IndyMac was closed by the Office of Thrift Supervision on July 11, 2008, and its assets were transferred to IndyMac Federal Bank, FSB (IndyMac Federal) at that time. On November 1, 2008, defendant defaulted on the loan.

On April 28, 2009, the mortgage, together with the underlying obligation, was assigned by MERS as nominee for IndyMac to IndyMac Federal. The assignment was recorded by the Ocean County Clerk on May 7, 2009.

On April 30, 2009, IndyMac Federal filed a foreclosure complaint against defendant. The complaint expressly recited the assignment information and that the mortgage was to be recorded. Defendant was personally served with process on June 24, 2009. She did not file an answer or respond to the complaint.

Default was entered by the court on August 18, 2009. On September 11, 2009, the mortgage, together with the underlying obligation, was assigned by IndyMac Federal to plaintiff OneWest Bank, FSB. The assignment was recorded by the Ocean County Clerk on September 23, 2009. On July 27, 2010, an order was entered substituting OneWest Bank, FSB as plaintiff. On the same date, plaintiff obtained a final judgment of foreclosure by default and a writ of execution.

Defendant obtained two statutory adjournments of a sheriff's sale. See N.J.S.A. 2A:17-36. On October 18, 2010, defense counsel filed a motion to stay the sheriff's sale and vacate default judgment, based on claimed lack of service of process. The motion was denied by order of December 3, 2010, and was not appealed.

On or about January 11, 2011, defense counsel refiled the same motion based on December 2010 administrative orders pertaining to "robo-signing" practices in residential foreclosures. Defendant certified that she never saw, nor was she advised of, the assignment of mortgage to plaintiff, that plaintiff never proved it owned or held the note, and claimed she was "losing [her] property without due process." Following oral argument on February 18, 2011, the court denied the motion, memorialized in an order of the same date. The judge recited the procedural history, noting the assignment was submitted for final judgment and defendant did not dispute the amount due, and found defendant presented no grounds to vacate the final judgment under Rule 4:50-l. This appeal ensued.

On appeal, defendant asserts error by the court in concluding plaintiff had standing to foreclose and provided sufficient documentation to prove standing. Plaintiff also argues that in addition to her meritorious defense of standing, see Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App. Div), aff'd, 43 N.J. 508 (l964), she demonstrated excusable neglect under Rule 4:50-l(a), consisting of "personal issues such as the death of her father and medical issues of her newborn child." We disagree.

In U.S. Bank, N.A. v. Guillaume, ___ N.J. ___ (2012) (slip op. at 18-19), a mortgage foreclosure case, our Supreme Court recently reiterated the purpose and application of Rule 4:50-l, the standard for a party seeking to vacate a default judgment. The Court stated:

The rule 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.'" Mancini v. EDS, 132 N.J. 330, 334 (1993) (quoting Baumann v. Marinaro, 95 N.J. 380, 392 (1984)).

The trial court's determination under the rule warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion. See DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009); Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). The Court finds an abuse of discretion when a decision is "'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)). [Id. at 19.]

Defendant's standing arguments fail both factually and as a matter of law. "Standing refers to the plaintiff's ability or entitlement to maintain an action before the court." N.J. Citizen Action v. Riviera Motel Corp., 296 N.J. Super. 402, 409 (App. Div.), certif. granted, 152 N.J. 13 (1997), appeal dismissed as moot, 152 N.J. 361 (1998). Entitlement to sue requires a "sufficient stake in and real adverseness with respect to the subject matter," and a substantial likelihood of harm to the plaintiff by an unfavorable decision. Stubaus v. Whitman, 339 N.J. Super. 38, 47 (App. Div. 2001) (internal quotation marks and citation omitted), certif. denied, 171 N.J. 442 (2002). "A lack of standing by a plaintiff precludes a court from entertaining any of the substantive issues presented for determination." In re Adoption of Baby T., 160 N.J. 332, 340 (l999). See also Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 424 (1991).

Mortgages "provide security for the debtor's obligation to pay an underlying obligation, ultimately permitting the mortgagee to force the sale of the property to satisfy that obligation." Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327 (Ch. Div. 2010). To have standing to foreclose a mortgage, a party generally must "own or control the underlying debt." Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011) (quoting Raftogianis, supra, 418 N.J. Super. at 327-28).

It is undisputed defendant defaulted on the underlying loan. The record clearly reflects that plaintiff's assignor, IndyMac Federal, had standing to foreclose the mortgage on defendant's property by virtue of the assignment, which predated the foreclosure complaint. IndyMac Federal presented sufficient evidence that it had the right to enforce the mortgage and had the authority to proceed at the time of the filing of suit. See Raftogianis, supra, 418 N.J. Super. at 351-52. The contents of the mortgage foreclosure complaint complied with the requirements of Rule 4:64-1(b) in effect at the time, which required a recitation of the specifics of the mortgage and debt instrument but not their attachment.*fn1 Defendant did not file an answer to the complaint, and upon the entry of default judgment, she was no longer entitled to pretrial discovery. R. 4:10-1.

The assignment of judgment to plaintiff was made and recorded in September 2009, a month after default was entered against defendant. Defendant was not entitled to prior notice of the assignment of mortgage to plaintiff. As we stated in EMC Mortgage Corp. v. Chaudhri, 400 N.J. Super. 126, 142 (App. Div. 2008), "[t]he suggestion that New Jersey law places a requirement of notice of the assignment to the obligor, is incorrect as a matter of law. When an assignment is duly recorded, it shall be notice to all persons concerned that the mortgage is so assigned." (Internal quotation marks and citation omitted).

As recited in the July 27, 2010 final judgment, plaintiff produced the supporting instruments required by Rule 4:64-1(d) and Rule 4:64-2, namely, the obligation, mortgage, assignments of mortgage, and an affidavit of amount due, which were satisfactory to the court for the entry of judgment.

As defendant has failed to establish a meritorious defense to the foreclosure, she has no basis to challenge denial of her motion to vacate. See Marder, supra, 84 N.J. Super. at 318-19. We further note that defendant's newly-minted claim of excusable neglect, R. 4:50-l(a), was raised for the first time on appeal, in an unsupported allegation in the brief. Defendant made no claim or showing of excusable neglect before the trial court and can neither raise nor substantiate such a claim before us. See R. 2:5-4(a) (limiting appellate review to the record before the trial court); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (holding that appellate courts generally will decline to consider questions or issues not properly presented to the trial court). See also Petersen v. Twp. of Raritan, 418 N.J. Super. 125, 132 (App. Div. 2011) (holding that unsubstantiated statements, without factual support in tendered affidavits, will not defeat a meritorious application for summary judgment); State v. Culley, 250 N.J. Super. 558, 561 (App. Div.) (noting that a statement in a brief is not evidence), certif. denied, 126 N.J. 387 (1991).


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