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50 By 50 Reo, LLC, Plaintiff-Respondent v. Robert C. Wallerius


August 9, 2012


On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-6001-09.

Per curiam.


Argued March 27, 2012

Before Judges Yannotti and Kennedy.

Defendant Robert Charles Wallerius appeals from an April 1, 2012 order of the Chancery Division denying his motion to vacate a final judgment of foreclosure and to set aside a subsequent Sheriff's sale of property in Washington Township. We affirm.

On March 17, 2005, defendant was seriously injured in a motor vehicle accident and for years afterward underwent a series of operations and medical procedures for his injuries. Defendant claims that his injuries and subsequent medical treatment caused him financial hardship and disabled him to a point where he was not "functioning fully." Defendant owned a home in Washington Township at the time and defaulted on the mortgage.

On July 14, 2006, defendant and his then wife closed on a refinance of the mortgage debt with a new mortgage lender, but by November 2006 defendant had defaulted on that obligation, as well. Defendant then relocated to Florida and on April 26, 2007, filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the Northern District of Florida. He was represented during the proceedings by counsel in New Jersey and Florida.

On September 5, 2008, the mortgage holder, or its servicing agent, obtained an order in the United States Bankruptcy Court lifting the automatic stay and allowing a foreclosure action to proceed against the property in Washington Township.*fn1 A "demand letter-notice of default" issued on September 17, 2008, revealed that defendant owed more than $82,000 on the mortgage note and had not made a payment since November 1, 2006.

A complaint in foreclosure was filed in January 2009 and defendant was served with process on March 6, 2009. Defendant did not answer and final judgment by default was entered on March 10, 2010. Defendant, acting without counsel, on April 27, 2010, re-filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Florida, but on August 4, 2010, the Bankruptcy Court entered an order lifting the stay to allow the foreclosure to proceed. The property was thereafter sold to plaintiff at a Sheriff's sale on August 27, 2010.

Defendant claims that in September 2010 he underwent a "miraculous surgery" which enabled him to stop using "morphine-based medication and [get] back to work." Although defendant claims he had no notice of the Sheriff's sale of the property, defendant wrote a letter on September 13, 2010, protesting the sale, in which he asked that the sale be "revoked." Further, in an October 15, 2010 filing in the United States Bankruptcy Court defendant listed the Sheriff's sale of the property.

Upon receiving an eviction notice from plaintiff in February 2011, defendant hired counsel and moved to stay eviction and vacate the foreclosure judgment and sale. Defendant claimed that his medical condition constituted "excusable neglect" under Rule 4:50-1(a) and that the foreclosure judgment was "void" under Rule 4:50-1(d) because, among other things, the fees and points charged by the mortgage lender in July 2006 exceeded by $195 the maximum allowed under the New Jersey Home Ownership Security Act of 2002, N.J.S.A. 46:10B-22 to -35.

The Chancery Division judge denied the motion on April 1, 2011, and, in an opinion from the bench, noted that defendant had known of the August 2010 Sheriff's sale at least as of September 13, 2010, and "took no further steps to do anything" until hiring counsel who filed the motion to vacate "three days before the eviction date." He added,

I decline to accept the proposition that he's been incapacitated since the accident to the present time given the very sophisticated invocation of remedies, very time sensitively invoked, over a period of many years and very effectively. So the court declines to accept the proposition of disability. Mental disability.

There has to be excusable neglect, and while there was a failure to alert the defendant ahead of time to the . . . adjourned sale date. . . . the indisputable fact is that he'[d] known acutely about it . . . within two weeks . . . of when it happened, and fails to come to court to challenge it.

It's not as if the bank did anything to lull the homeowner into a false sense of security . . . .

He wasn't misled about it. He was acutely aware about it.

There has been chronic neglect of this matter, including informed, acutely informed neglect with respect to the sale of the property, the loss of title to the property, the extinguishment of the debt, . . . and that neglect is not excusable under all the circumstances of the case. For that reason, I decline to vacate the judgment of foreclosure. I decline to re-open the case. I decline to stay the eviction on the grounds that were advanced in the paperwork that I have.

This appeal followed.

Defendant contends that the motion judge erred because the foreclosure judgment was "void", asserting that plaintiff failed to "counter [defendant's] arguments" by establishing that it "had ownership and control of the [mortgage] [n]ote when it filed the complaint" or "counter[ing]" defendant's claims that he was "incompetent" when he refinanced the mortgage obligation in 2006. Defendant adds that the evidence also supported his claim of excusable neglect.

Having considered these arguments in light of the record and the applicable law, we affirm essentially for the reasons expressed by the motion judge. The arguments raised by defendant are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only the following comments.

A party must move to set aside an allegedly void judgment within a reasonable time. R. 4:50-2. What is a reasonable time depends on the circumstances of a given case. See, e.g., Orner v. Liu, 419 N.J. Super. 431 (App.Div. 2011). Notably, when a party seeks to set aside a judgment and the relief would interfere with rights acquired by third parties in the interim, relief will be denied. Friedman v. Monaco & Brown Corp., 258 N.J. Super. 539, 543 (App. Div. 1992); City of Newark v. (497) Block 1854, 244 N.J. Super. 402, 408 (App. Div. 1990).

In City of Newark, a property owner sought to vacate a judgment entered in an in rem foreclosure proceeding. Id. at 404. The property owner argued that it had never been served with the tax foreclosure complaint. Ibid. It waited three years after it learned the property had been sold for unpaid taxes to file its motion to vacate the judgment. Id. at 405.

When it filed its motion, a third party was on the verge of acquiring the property. Id. at 406. We held that the property owner was not entitled to relief "where [it] waited almost three years after learning that its properties had been acquired by the City, acted in a manner that appeared to concede the validity of the judgment which had divested it of its property, and attacked the judgment only when the property was about to be conveyed to a contract purchaser." Id. at 408. See also, Friedman, supra, 258 N.J. Super. at 545 (motion to vacate a judgment denied to the sole heir of a woman who had owned waterfront property but lost it due to unpaid taxes when relief sought years later).

Here, defendant acted at all times in a manner that recognized not only the validity of the note and mortgage but also the mortgage lender's right to collect the funds owed to it and to foreclose on default. In the bankruptcy proceedings, defendant listed the debt and referenced it in his proposed Chapter 11 plan. Following entry of final judgment in March 2010, defendant did not contest the lender's standing and right to pursue the matter. Rather, defendant acted at all times as if the judgment was valid. Under these circumstances, the delay in questioning the standing and right of the mortgage lender to file its complaint in foreclosure until five months after the Sheriff's Sale, almost a year after the foreclosure judgment, and almost two years after being served with the foreclosure complaint, is simply too late.

Moreover, it is defendant's burden to support its claims for relief under the rule; plaintiff has no obligation to adduce proofs supporting the foreclosure judgment just because defendant raises a bare assertion about their adequacy. In U.S. Bank National Ass'n v. Guillaume, 209 N.J. 449, 467-68 (2012) the Court recently reiterated the standard of review of a trial court's determinations on a motion to vacate a default judgment under Rule 4:50-l as follows:

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)).

We discern no abuse of discretion here.


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