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Washington Mutual Bank F/K/A v. Vincent Roggio


August 23, 2012


On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-10401-06.

Per curiam.


Argued December 21, 2011

Before Judges Fuentes, Graves and J. N. Harris.

This foreclosure action concerns a $3,000,000 loan extended to defendant Vincent Roggio on December 16, 2005, by Washington Mutual Bank, N.A. (Washington Mutual), a now defunct financial institution. Defendant argued before the trial court that JPMorgan Chase, N.A. (Chase) did not properly acquire this loan from the Federal Insurance Deposit Corporation (FDIC), and therefore did not have standing to prosecute this action against him. Defendant now appeals from the order entered by the trial court on January 18, 2011, denying his motion to dismiss this action for lack of standing. We affirm.


On December 16, 2005, defendant executed a promissory note in favor of Washington Mutual to document the terms of repayment of a $3,000,000 loan defendant received from the bank. To secure the loan, defendant executed a companion mortgage on real property he owned in Red Bank. Defendant defaulted on the loan almost immediately, however, causing Washington Mutual to file a foreclosure complaint against him on June 14, 2006. According to defendant, he withheld payments due on the loan pursuant to an agreement reached with Washington Mutual because the bank had damaged his credit rating by filing an excessive number of credit inquiries.

Defendant filed a pro se answer to the foreclosure action on September 25, 2006, causing the case to be listed as a contested matter in the Monmouth County vicinage. The parties thereafter reached an agreement and the case was marked settled. The terms of the settlement were placed on the record before the Chancery Division, General Equity Part in Monmouth County on January 25, 2007.

PLAINTIFF'S COUNSEL: [T]he settlement provides that Washington Mutual will take steps to correct any incorrect reporting on Mr. Roggio's credit, and also take all steps possible to remove multiple inquiries off the report, as multiple inquiries brings the credit score down.

In exchange, Mr. Roggio has agreed that his contesting answer, separate defenses are withdrawn. And the file can be moved off Your Honor's docket back to the Foreclosure Unit in Trenton to proceed as uncontested. But it will be stayed in Trenton for a period of 90 days from when plaintiff sends out the credit reporting correction.

THE COURT: How is Trenton going to figure that one out?

PLAINTIFF'S COUNSEL: I just won't proceed with the foreclosure . . . .

PLAINTIFF'S COUNSEL: So there won't be any problems then. If the loan is not reinstated or paid off or the default otherwise cured within 90 days, then plaintiff may proceed with the foreclosure as uncontested.

THE COURT: What I take the real issue here is [] that once the credit score is brought up to speed, that Mr. Roggio feels that he can refinance and take you out, and that's what the plan is, right?

MR. ROGGIO: Judge, my concern, the caveat, with this is that in fact the inquiry side and what, even with Washington Mutual's best intentions, the credit bureaus are not respondents [sic]. That's why as I said to this gentleman, that it has to be from the time they actually clear it up. In other words, I need 60 days from that day so the bank -- the bank will not take a letter. The bank's already said, we'll do it.

PLAINTIFF'S COUNSEL: There was one more term I didn't get to, Your Honor, and that's Mr. Roggio has agreed, he'll run a credit report in 45 days and provide a copy to me so that we can see if -- we have no control once we send it to the credit agencies what they do with it. So he's going to run a report, send it to me.

THE COURT: Sure. Well, you do have some control because if the credit report after 45 days doesn't reflect what you've said to them, then you can get on them and do that. PLAINTIFF'S COUNSEL: Well, and that was my point for asking --THE COURT: That's the whole point.

PLAINTIFF'S COUNSEL: -- for the report in the 45 days, is that then we can follow-up.

But absent that, we have no control of what they do.

On February 20, 2007, plaintiff's counsel forwarded to the court a proposed order outlining the terms of the settlement agreement. Plaintiff's counsel followed up on this effort in a letter sent to defendant two days later in which he confirmed "that a credit correction has been sent to the credit agencies to correct the reporting of your 02/06 through 01/07 monthly home loan payment(s)."

Defendant wrote to the court on March 2, 2007, objecting to the proposed settlement order. Defendant informed the court that he expected "a commitment" from Washington Mutual "to the successful removal of their [sic] negative reporting." Defendant concluded the letter by emphasizing that "as to the proposed timing, it has always been my position that it requires sixty days from the removal of the negative reporting in order to refinance the properties.*fn1 This is based on acquiring new appraisals and completing the loan process."

In a letter to the court dated March 29, 2007, plaintiff's counsel asserted that defendant's position was not consistent with the terms of the settlement placed on the record on January 25, 2007. Counsel argued that under the settlement agreement Washington Mutual was only obligated to "take all reasonable steps to correct [defendant's] credit reporting." Counsel concluded the letter by emphasizing that because the bank "cannot control what those agencies ultimately do with the information," no other "specific guarantees could be made"

Defendant's position remained unchanged. According to his certification, on April 22, 2007, he hand-delivered to the court a purported copy of his credit report showing that Washington Mutual had not corrected the alleged credit errors. The trial court eventually rejected defendant's position and entered an order adopting plaintiff's position. Defendant's subsequent attempts to change plaintiff's position on this issue were all rebuffed by Washington Mutual's counsel.

On February 13, 2008, defendant moved to place the case on the inactive list, vacate the April 30, 2007 settlement order, and have the court enter a new order reflecting defendant's understanding of the terms of the settlement. The court heard oral argument on the motion on February 29, 2008,*fn2 and denied the relief requested in an order dated March 5, 2008. The court entered Final Judgment of Foreclosure on March 4, 2008, adjudicating the amount due from defendant at that time as $3,558,044.73, together with interest accruing, and awarding plaintiff $7,500 in counsel fees pursuant to Rule 4:42-9(a)(4).

On March 31, 2008, defendant, through counsel, filed a motion for reconsideration of the March 5, 2008 order. In the certifications presented in support of the motion, defendant continued to maintain that his credit history had not been corrected. By this time a new judge had been assigned to the case. The new judge heard extensive oral argument on the motion on June 17, 2008. At the conclusion of this hearing, the judge directed plaintiff's counsel to provide defendant with documentary evidence that Washington Mutual had contacted the credit agencies as required by the settlement agreement.

Plaintiff's counsel objected to what he perceived was a mere delay tactic by defendant. Counsel's colloquy with the court bears stating verbatim here, because it captured the frustration experienced by all of the participants by the extensive motion practice generated by an ostensibly settled dispute.

PLAINTIFF'S COUNSEL: I never received a motion to enforce the settlement.

THE COURT: - how would I know -

PLAINTIFF'S COUNSEL: Your Honor invited that motion. We never got it. This motion has always been framed as to vacate the settlement, not to enforce. And that's what I responded to. Your Honor invited that more than once and we've now got three motions, the original one, the second one and now the reconsideration one. And they all say the same thing and none of them seek to enforce the settlement. And I responded to the motion that was filed.

THE COURT: If the bank didn't do what it agreed to do, then where would that leave us?

PLAINTIFF'S COUNSEL: If the bank didn't do what it - -THE COURT: Again, assumption. I have no idea that they didn't do what they agreed to do.

PLAINTIFF'S COUNSEL: If the bank didn't do what it agreed to do, then arguably Your Honor, in an order to enforce the settlement, would tell me to go back and have my client do what it needed to do. And then I guess the clock would start running again . . . .

THE COURT: How could I make that finding based on this record? The result is that Mr. Roggio has sort of a net opinion analysis. My credit didn't get cleared up. They obviously didn't do what they were supposed to do.

Now he could be right that they didn't do what they were supposed to do, but I don't think I can take the result and then factor backwards and say because there's still a problem, they didn't do what they were supposed to do. Maybe they didn't. So the only way I could figure this out is if I have somebody here from [Washington Mutual] who understood the little boxes in the electronic mail and I could say to them, what did you do? Other than that cover letter which doesn't tell me anything.

PLAINTIFF'S COUNSEL: I guess, Your Honor, the problem I have with that, and not to belabor the point of the timing, is how long does Mr. Roggio get to have two*fn3 three plus million dollar[] mortgages and make no payments?

THE COURT: Well, here would be my answer.

If you agree to settle the case on the basis that you would do whatever and he would do whatever and he did whatever by giving up whatever rights he had, then the point becomes, okay, did you do what you were supposed to do?

In response to the court's directive, plaintiff's counsel submitted a certification dated December 1, 2008, from Jamie Turnbow, who identified himself as a "Senior Asset Recovery Specialist of JPMorgan Chase Bank, National Association, as successor in interest to Washington Mutual Bank. . . ." Turnbow certified that his knowledge of the information in the certification was derived from his "custody and review of our computerized business records maintained in the ordinary course."

Turnbow certified that on February 22, 2007, he sent defendant a letter advising him "that credit corrections had been sent out on his behalf." From that date until the recent motion practice a year later, Turnbow did not receive any objections or other communications from defendant expressing any dissatisfaction with this approach. Turnbow also noted that, prior to this motion, defendant had not submitted a recent credit report for review by Washington Mutual, as he had agreed to do under the settlement.

Defendant submitted a copy of his credit report in support of his latest motion for reconsideration. The report included specific references identifying the information defendant believed was incorrect. Upon reviewing the marked report from defendant, Turnbow conceded that "we did not do all which we were supposed to." Specifically, Washington Mutual "simply removed all of the negative reporting on the two loans in question," but did not address the "older paid off loans" or "the inquiries." It also appeared, according to Turnbow, that the bank "began reporting the two subject loans delinquent again the following month." Turnbow concluded the certification by noting that all of the required corrections had since been made, and that Chase had "confirmed with a credit report that all negative references have now been removed from Mr. Roggio's credit."

In light of this information, defendant filed a motion on December 9, 2008, seeking a judicial declaration that plaintiff had violated the settlement agreement. Defendant also sought the restoration of his previously dismissed pleadings and defenses. Before this matter was decided, defendant filed a motion on January 21, 2009, seeking to disqualify the judge who had been presiding over the case. Defendant alleged that the judge's recent law clerk had been hired by the firm representing plaintiff's interest in this case. According to defendant, the former law clerk had been permitted to participate in off-the-record discussions with the judge and the attorneys in the case. On these same grounds defendant also sought the disqualification of the firm representing plaintiff.

After considering the evidence presented and the arguments of counsel, the judge denied the motion to disqualify himself, but voluntarily agreed to recuse himself from further participation in the case. The pending motions - (1) to disqualify the law firm representing plaintiff, (2) to declare plaintiff in breach of the settlement agreement, (3) to restore defendant's pleading and defenses, and (4) to reconsider the March 5, 2008 order - were transferred to another judge.

On June 2, 2010, the court denied defendant's motion for reconsideration of the March 5, 2008 order. The court found, however, that both parties had breached the settlement agreement. Plaintiff breached by failing to remove all the negative reporting and inquiries and by submitting negative reports of late payments on the two outstanding loans. Defendant breached by failing to provide his credit report to plaintiff in March 2007.

On June 22, 2010, defendant moved for the court to: (1) find plaintiff's breach to have been a material departure from the requirements of the settlement agreement, vitiating the entire settlement; (2) find defendant's breach was not material; and (3) declare the March 4, 2008 Final Judgment vacated and unenforceable. Defendant also sought an order compelling plaintiff to respond to discovery demands.

The trial court held a hearing on defendant's motions on October 1, 2010. Six days later, the court entered an order vacating the stay of the sheriff's sale. The court also ordered that the case involving the Rumson property proceed as an uncontested foreclosure. The court issued a comprehensive memorandum of opinion explaining the bases of its rulings.

On October 15, 2010, defendant moved to dismiss plaintiff's foreclosure action for lack of standing, and to require Chase to be substituted as plaintiff. In support of the motion, defendant submitted the certification of his attorney Harold Goldman who averred that on November 9, 2010, his office had sent the following email to a woman named Christina Sarahan, at the Security and Exchange Commission (SEC):

This firm represents Vincent Roggio in two New Jersey foreclosure actions instituted by Washington Mutual Bank (WaMu). The two residential mortgage transactions were:

1. April 25, 2005 in the sum of $3,300,000.00. Loan Number . . . .

2. December 16, 2005 in the sum of $3,000,000.00. Loan Number . . . .

Can you please advise us as to whether these loans were ever securitized and, if so, the details of same?

In response, Goldman certified that he received a list of securitized transactions in which none of the "agreement dates" listed matched the dates of the Roggio loans. According to Goldman, based on this omission there can be no certainty that Chase actually acquired the loan at issue. The trial court denied defendant's motion to dismiss for lack of standing. As it had previously done, the court explained its ruling in a comprehensive memorandum of opinion.


Before we address the merits of defendant's arguments, we will first identify and explain the scope of our review in this appeal. In a civil action, we look to the notice of appeal to ascertain the orders or judgments appellant has designated for appellate review. W.H. Indus., Inc. v. Fundicao Balancins, Ltda, 397 N.J. Super. 455, 458 (App. Div. 2008) (citing Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66 (App. Div.), aff'd o.b., 138 N.J. 41 (1994)); R. 2:5-1(f)(3)(A). We will not review interlocutory orders that are not contained in the notice of appeal, including the issues related thereto. Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 461 (App. Div.), certif. denied, 174 N.J. 544 (2002).

Here, defendant's notice of appeal listed only the trial court's January 18, 2011 order. In a "Continuation of Notice of Appeal" defendant again asserted "[i]t is from this final ruling by the court on January 18, 2011 that this appeal is being initiated with regard to the foreclosure on the [Red Bank] Property." Finally, defendant identified the same January 18, 2011 order as the basis for this appeal in his Civil Case Information Statement.

Thus, despite this case's long tortured history at the trial level, our scope of review on appeal will be limited to the issue of standing adjudicated by the trial court in its January 18, 2011 order and as explained in its companion memorandum of opinion. Because this question pertains only to a legal interpretation, our scope of review is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

It is well-settled and long recognized that "[t]he note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity." Carpenter v. Longan, 83 U.S. 271, 274, 21 L. Ed 313, 315 (1873). Ordinarily, only a party who "own[s] or control[s] the underlying debt" may foreclose a mortgage. 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)). Without an affirmative "showing of such ownership or control, the plaintiff lacks standing to proceed with the foreclosure action and the complaint must be dismissed." Ibid. (citing Raftogianis, supra, 418 N.J. Super. at 357-59).

The Uniform Commercial Code (UCC), N.J.S.A. 12A:3-101 to -605, governs negotiable instruments, including those secured by mortgages. N.J.S.A. 12A:3-301, governing the enforceability of negotiable instruments, identifies three types of individuals entitled to enforce a negotiable instrument: (1) "the holder of the instrument," (2) "a nonholder in possession of the instrument who has the rights of a holder," or (3) "a person not in possession of the instrument who is entitled to enforce the instrument" pursuant to N.J.S.A. 12A:3-309 or N.J.S.A. 12A:3-418(d). An individual does not have to own the instrument to enforce it. N.J.S.A. 12A:3-301. In fact, even one who may be in wrongful possession of a negotiable instrument may enforce it, as long as the individual falls within one of the three classes of holders listed in N.J.S.A. 12A:3-301.

Under N.J.S.A. 12A:3-301, a "holder" may enforce a negotiable instrument. Under N.J.S.A. 12A:1-201(20), a "holder" may be "the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession." The UCC allows someone other than the original holder to become a subsequent holder, but only through negotiation. See Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 223 (App. Div. 2011).

The UCC defines "negotiation" as "a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes a holder."

N.J.S.A. 12A:3-201(a). Negotiation depends on whether the note is made payable to order or bearer.

An instrument is payable to bearer when it:

(1) states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;

(2) does not state a payee; or

(3) states that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person. [N.J.S.A. 12A:3-109(a).]

An instrument is made payable to order when "it is payable to the order of an identified person or to an identified person or order." N.J.S.A. 12A:3-109(b). An instrument that is originally made payable to order can, however, become payable to bearer. This occurs when the instrument is "indorsed in blank." N.J.S.A. 12A:3-109(c). A blank endorsement is any endorsement made by the holder that is not a "special endorsement."*fn4

N.J.S.A. 12A:3-205(b).

Negotiation, whether the instrument is payable to bearer or order, "always requires a change in possession of the instrument because nobody can be a holder without possessing the instrument, either directly or through an agent." N.J.S.A. 12A:3-201 Uniform Commercial Code Comment 1. In order to bring a foreclosure action, the plaintiff must have possession of the note at the time the plaintiff files the complaint. Deutsche Bank, supra, 422 N.J. Super. at 224; Raftogianis, supra, 418 N.J. Super. at 356.

N.J.S.A. 12A:3-301 also provides enforcement rights to nonholders in possession of the instruments, so long as they have the rights of a holder. As an example of a nonholder with holder status, N.J.S.A. 12A:3-203(b) explains that "[t]ransfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument . . . ." Pursuant to the UCC "[a]n instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument." N.J.S.A. 12A:3-203(a).

With these principles as backdrop, we will now address defendant's challenge to this foreclosure action. Here, the record supports characterizing Chase as a holder of defendant's promissory note. Although the note was originally made payable to Washington Mutual Bank, at some point thereafter the note was endorsed in blank,*fn5 which converted the instrument to an instrument payable to bearer. As such, the instrument can be negotiated by delivery alone. Chase was in possession of the note when the complaint was filed. Even if Washington Mutual no longer owned the notes, because of the alleged securitization, Chase is still able to enforce the instrument because it has actual possession of it.

UCC Comment 1 to N.J.S.A. 12A:3-203 explains the difference between enforceability of an instrument and ownership of an instrument.

The right to enforce an instrument and ownership of the instrument are two different concepts. A thief who steals a check payable to bearer becomes the holder of the check and a person entitled to enforce it, but does not become the owner of the check . . . . Moreover, a person who has an ownership right in an instrument might not be a person entitled to enforce the instrument. For example, suppose X is the owner and holder of an instrument payable to X. X sells the instrument to Y but is unable to deliver immediate possession to Y. Instead, X signs a document conveying all of X's right, title, and interest in the instrument to Y. Although the document may be effective to give Y a claim to ownership of the instrument, Y is not a person entitled to enforce the instrument until Y obtains possession of the instrument.

Citing Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 598 (App. Div. 2010), defendant argues that possession of a note is insufficient to establish standing. The plaintiff in Wells Fargo filed a certification in support of its motion for summary judgment that alleged that it was the holder and owner of the note and mortgage at issue. Id. at 594-95. Although the certification included exhibits of the mortgage and note, it did not include the assignment of the mortgage. Id. at 595. In this light, the court took issue with the sufficiency of this evidence.

Baxley's certification [did] not allege that he ha[d] personal knowledge that Wells Fargo [was] the holder and owner of the note. In fact, the certification [did] not give any indication how Baxley obtained this alleged knowledge. The certification also [did] not indicate the source of Baxley's alleged knowledge that the attached mortgage and note [were] "true copies." [Id. at 599-600.]

In so doing, however, we noted that "[i]f properly authenticated, these documents could [have been] found sufficient to establish that Wells Fargo was a 'nonholder in possession of the [note] who has the rights of a holder.'" Id. at 599 (third alteration in original).

Here, the note and mortgage were provided to the trial court as an exhibit to the certification of Richard P. Haber, attorney for Chase. As Mr. Haber explained:

Attached hereto an incorporated herein as "Exhibit A" is a true copy of the original note dated December 16, 2005, executed by Vincent Roggio, with an original principal balance of $3,000,000.00, in the form it was delivered to me by Chase Home Finance, servicing agent for the plaintiff. The original was personally photocopied by me today, and therefore the document attached hereto as Exhibit A is a true and accurate representation of how the document was delivered to me and how it appears today.

Eric Waller, a Home Lending Senior Research Specialist at Chase Home Finance LLC, also certified that "the original notes and mortgages were forwarded to Chase by the document custodian, and thereafter from Chase to Richard P. Haber . . . ." Waller explained that the Roggio loans were never securitized or transferred and that they were held as a "WaMu bank-owned asset from its date of origination until the events of September 25, 2008 . . . ." This record supports the trial court's finding that plaintiff was in possession of the loans at the time it filed the complaint.

Defendant does not allege, and actually concedes, that plaintiff has been in possession of the original note for the entirety of these proceedings. This concession clearly bolsters the factual finding of the trial court that plaintiff had possession of the note.


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