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Bank of America, N.A v. Melissa Limato


July 2, 2012


On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-61880-09.

Per curiam.


Argued March 21, 2012 -

Before Judges Cuff, Lihotz and St. John.

Plaintiff Bank of America, N.A., appeals from the dismissal, without prejudice, of this foreclosure action against defendant Melissa Limato. The Chancery judge concluded plaintiff had not only failed to comply with the notice provision of the Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-56, but more importantly, lacked standing to pursue foreclosure as it could not demonstrate its status as the holder of the note, a non-holder with possession of the note, or that the original note was lost, as required under the Uniform Commercial Code (UCC), N.J.S.A. 12A:3-301. We affirm.

The following facts are taken from the record submitted by the parties in support of their respective motions for summary judgment, which we view in a light most favorable to plaintiff as the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995).

On July 1, 2004, defendant and her late husband John executed a thirty-year promissory note as the "Borrowers" to America's Mortgage Outsource Program (AMOP), which was designated as the "Lender." According to the terms of the promissory note, Borrowers agreed to repay the principal amount of $532,000, along with interest, fixed at 5.625% per annum rate for the initial ten years and at an adjustable interest rate thereafter. Simultaneously, defendant and John executed a purchase money mortgage securing the debt through an interest in the purchased realty. The mortgage was recorded in the Bergen County Clerk's Office.

Sometime after defendant executed the documents,*fn1 two endorsements were added to the last page of the promissory note. The first appeared below the substantive note terms, but above the Borrowers' signatures, and was blank:




The second was placed in the same section as the Borrowers' signatures:


Joan M. Mills, Vice President The Mortgage stated it should be returned to "Wells Fargo Bank, N.A." (Wells Fargo).

Plaintiff maintains it purchased defendant's loan obligation. Thereafter, Wells Fargo continued to act as its servicing agent, monitoring defendant's loan, purportedly pursuant to an August 23, 2004 Servicing Agreement.

Following defendant's loan default, Wells Fargo issued a Notice of Intention to Foreclose (NOI) on February 15, 2009. Subsequently, NOIs were sent on August 30 and September 14, 2009. The amounts due varied on each of these NOIs, presumably as a result of payments defendant made. Nevertheless, as of September 14, 2009, defendant was three months behind in her loan obligation.

On November 18, 2009, AMOP executed a written assignment of the mortgage to plaintiff and this foreclosure proceeding was initiated on November 24, 2009. The written assignment was recorded on December 18, 2009 in the Bergen County Clerk's Office.

Defendant filed a contesting answer in which she asserted separate defenses. Defendant did not dispute she executed the note and mortgage or that she defaulted on the obligation. However, she challenged plaintiff's standing and compliance with the Truth in Lending Act (TILA) and FFA. Similar affirmative claims were raised in defendant's counterclaim.

Plaintiff moved for summary judgment or, alternatively, to strike the contesting answer and counterclaim. In support of its request for summary judgment, plaintiff submitted a certification by Anne E. Walters, its counsel, which, in addition to the pleading filed by each party, attached the promissory note without endorsements, the mortgage, the mortgage assignment, NOIs, the cover page to the servicing agreement between plaintiff and Wells Fargo, and the TILA disclosure statement. Walters certified plaintiff was the "present holder of the Note and Mortgage" and defendant "defaulted under the terms and conditions of the . . . Note by not making the monthly installment payments as required." Walters did not specify the date of default or how plaintiff became the holder of defendant's note and mortgage.

Defendant opposed plaintiff's motion and filed a cross-motion for summary judgment dismissal of plaintiff's complaint. Defendant contended no competent evidence showed the promissory note was physically transferred to plaintiff prior to the filing of the foreclosure complaint. In addition, defendant argued plaintiff violated the FFA and TILA's notice provisions because the NOIs were not issued by or referred to the lender, plaintiff. Defendant also moved to strike Walters' certification, asserting she lacked the requisite knowledge to identify the documents attached to her certification.

Plaintiff replied and filed a certification by Yolanda T. Williams, an employee of Wells Fargo Home Mortgage, supporting its position as holder on the promissory note. Williams asserted she had "personal knowledge" regarding the promissory note and mortgage at the time the foreclosure complaint was initiated and was "very familiar and personally knowledgeable regarding the documents that [were] kept in connection with [defendant's] residential mortgages." Williams additionally asserted Wells Fargo issued the three NOIs as the servicer of the loan for plaintiff.

During oral argument, in response to defendant's challenge, plaintiff stated "Wells Fargo does" have actual possession of the note. However, finding plaintiff provided no evidence of possession of the promissory note or legal authority supporting its assertion actual possession was not necessary, Judge Doyne relisted the matter to permit plaintiff the opportunity to supplement its proofs.

Plaintiff filed a supplemental brief addressing the issue of possession of the promissory note, accompanied by the certification of Kyle N. Campbell, a default litigation specialist for Wells Fargo. Campbell certified he was "very familiar and personally knowledgeable regarding the documents that are kept in connection with residential mortgages" and averred plaintiff "had actual physical possession of the [n]ote on the date that the [f]oreclosure [c]omplaint was [f]iled, April 21, 2010."

Defendant replied, arguing Walters, Williams, and Campbell failed to establish they held sufficient knowledge to support the facts alleged and authenticate the evidentiary submissions. Defendant argued any information Walters repeated was gleaned from statements by her client. Williams, as an employee of Wells Fargo, could not speak for plaintiff and failed to explain the added endorsements made to the promissory note, which differed from defendant's copy as well as the copy attached to Walters' certification. Similar challenges were lodged against Campbell's certification. Campbell, as an employee for Wells Fargo, did not explain the basis for his assertion that plaintiff had actual possession of the promissory note on April 21, 2010, which he incorrectly certified as the date of the foreclosure complaint. No party explained the relationship of the servicing agreement between Wells Fargo and plaintiff, which predated the defendant's assignment of the promissory note and mortgage by five years.

When the proceedings resumed, plaintiff maintained it had possession of the promissory note relying on Campbell's "unequivocal assertion of possession[,]" which was premised upon the documents previously submitted to the Court. Defendant reasserted her challenges, attacking Campbell's claimed personal knowledge of the facts, which were unaccompanied by a basis supporting such an assertion.

Following argument, Judge Doyne issued an order on April 25, 2011, which was accompanied by a twenty-four page rider detailing the factual findings and legal conclusions supporting the denial of plaintiff's motion for summary judgment and the summary judgment dismissal of plaintiff's complaint, without prejudice.

Judge Doyne found "Wells Fargo's role as a servicer remain[ed] unproven" as "[t]he servicing agreement defined mortgage loans as a 'Mortgage Loan . . . identified on the Mortgage Loan Schedule,' but the mortgage loan schedule was blank." Further, no explanation was offered to clarify why the servicing agreement was blank or how the 2004 document encompassed an assignment made in 2009.

Even accepting for the sake of argument that Wells Fargo was plaintiff's servicer of defendant's loan, the judge concluded the omission of the owner-lender's disclosure in the NOIs sent by Wells Fargo deviated from the FFA's requirement that the residential mortgage lender notified the borrower in the NOI of its status as the lender. See N.J.S.A. 2A:50-56(c)(11). In fact, when the NOIs were issued, the owner was AMOP, as it had not assigned its interest in the promissory note and mortgage to plaintiff until immediately prior to the initiation of the foreclosure action.

In addition to the deficiencies in complying with the FFA's notice requirements, Judge Doyne concluded plaintiff did not have standing to initiate the action. Examining the certifications of Campbell, Williams, and Wilson, which alleged plaintiff was in actual possession of the promissory note, the judge found the documents amounted to nothing more than a "naked assertion" as there was "no information . . . provided as to the basis of this assertion." Walters was an incompetent witness "as she lacked personal knowledge of the assertions set forth in her certification[.]" Further, although Williams and Campbell may be competent witnesses, their certifications contain "no competent admissible proofs of execution of the note, execution and recordation of the mortgage, and nonpayment" and were rife with hearsay. The judge ordered the dismissal of plaintiff's complaint without prejudice. This appeal ensued.

In conformity with well-established principles, we review the motion court's conclusions de novo because plaintiff's challenge on appeal strikes at the grant of summary judgment. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382-83 (2010). We view the established facts in a light most favorable to plaintiff, as the non-moving party, Estate of Komninos v. Bancroft Neurohealth, Inc., 417 N.J. Super. 309, 313 (App. Div. 2010), and afford no deference to the legal conclusions reached by the trial judge, which are the subject of our review, City of Atl. City v. Trupos, 201 N.J. 447, 463 (2010). Guided by Rule 4:46-2, we review the pleadings, depositions, answers to interrogatories and affidavits on file to discern whether there is a genuine issue of any material fact in dispute, and, if not, whether defendant, as the moving party, is entitled to judgment as a matter of law. Henry v. Dept. of Human Servs., 204 N.J. 320, 330 (2010).

On appeal, plaintiff argues its proofs sufficiently show it had standing to initiate the foreclosure action as the holder of the note and mortgage or, alternatively, as a "nonholder in possession." We disagree.

"'As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt.'" Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011) (quoting Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010)). Absent "a showing of such ownership or control, the plaintiff lacks standing to proceed with the foreclosure action and the complaint must be dismissed." Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011) (internal citation and quotations omitted).

Judge Doyne's opinion thoroughly examined the facts of this matter to determine whether plaintiff satisfactorily complied with the provisions of N.J.S.A. 12A:3-301 and the related defined terms used in Article III of the UCC, N.J.S.A. 12A:3-101 to -606, which governs the rights of parties to enforce a negotiable instrument.*fn2 The facts in this record support the judge's findings that despite an assertion plaintiff held the original promissory note and was the assignee of the mortgage when the foreclosure action was filed, no evidence explains how plaintiff acquired ownership from AMOP. Even assuming Wells Fargo was plaintiff's servicing agent and somehow the 2004 servicing agreement governed a service relationship in 2009, no fact speaks to the basis of the Wells Fargo employees' claimed personal knowledge regarding plaintiff's entitlement to enforce the instrument as a holder under N.J.S.A. 12A:1-201,*fn3 or a "nonholder in possession of the instrument who has the rights of a holder[.]" N.J.S.A. 12A:3-301. Certifications from Wells Fargo employees can attest only to facts occurring during the servicing relationship, but not to plaintiff's ownership status.*fn4

Neither Campbell nor Williams held personal knowledge that plaintiff could file a foreclosure action as the assignee of the mortgage or holder of the negotiable promissory note because their assertions or facts were based on assumptions or inferences gleaned from the servicing file, which represents inadmissible hearsay. N.J.R.E. 802.*fn5

Finally, the bald assertion that Wells Fargo had possession of the original note is fundamentally different from proof of plaintiff's status as holder of the negotiable promissory note. Judge Doyne correctly found the record contained no authentication of the requisite documents by an individual having personal knowledge of the requisite facts. See Ford, supra, 418 N.J. Super. at 599-600 (holding a mortgagee's request for summary judgment to establish itself as a holder of a negotiable instrument must be based on properly authenticated documents, which must be based on personal knowledge).

Lastly, plaintiff's reliance on the broad terms of the servicing agreement fails for the reasons identified in Judge Doyne's opinion. The servicing agreement predated the assignment of the promissory note and contained no listing of loans and instruments covered by its terms.

Plaintiff next asserts the NOIs, issued by its servicing agent Wells Fargo, satisfactorily complied with the FFA. This argument lacks merit as our Supreme Court specifically addressed this question, rejecting an argument that the notice of intention, listing the name of the loan servicer rather than the lender, substantially complied with N.J.S.A. 2A:50-56(c)(11). We hold that N.J.S.A. 2A:50-56(c)(11) requires that foreclosure plaintiffs list on the notice of intention the name and address of the actual lender, in addition to contact information for any loan servicer involved in the mortgage. [US Bank N.A. v. Guillaume, 209 N.J. 449, 457-58 (2012).]

Plaintiff's failure to notify the mortgagor of its status as the lender is a deficiency, which when coupled with the insufficient proofs regarding its claimed status as holder, warranted dismissal of the foreclosure complaint without prejudice. Judge Doyne's reasoned exercise of discretion in this regard will not be disturbed.


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