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Phh Mortgage Corporation v. Deborah A. Krowicki


August 27, 2012


On appeal from the Superior Court of New Jersey, Chancery Division, Warren County, Docket No. F-20669-06.

Per curiam.


Submitted August 22, 2012 -

Before Judge J. N. Harris and Fasciale.

Defendant Deborah A. Krowicki appeals from a November 4, 2011 order denying her motion to vacate a June 4, 2007 default final judgment of foreclosure. We affirm.

In 1991, defendant and her father*fn1 executed a residential mortgage and a seven-year balloon note to secure the sum of $138,000. In 1998, they extended their loan, modified the note and mortgage, and reduced the principal to $126,238.76. In August 2006, they defaulted on the loan and plaintiff then filed its foreclosure complaint. Defendant failed to respond to the properly served complaint, and on January 22, 2007, plaintiff obtained default. Plaintiff obtained default judgment on June 4, 2007.

Defendant was able to have the sheriff's sale adjourned at least eight times and filed three bankruptcy petitions. In March 2010, after the parties mediated the case unsuccessfully, New Jersey Home Construction, Inc. (NJHC), purchased the property. From April 2010 to September 2011, defendant engaged in motion practice, which stayed the delivery of the deed and allowed another opportunity for the parties to participate in mediation sessions.*fn2 After the parties failed again to mediate the dispute successfully, the judge ordered the sheriff to deliver the deed to NJHC.

In September 2011, four years and three months after default judgment was entered, defendant filed her motion to vacate. She argued that plaintiff foreclosed on the wrong mortgage. She explained that plaintiff's complaint referenced the 1991 mortgage erroneously, rather than the 1998 mortgage, and that her 1991 mortgage should have been canceled when she and her father extended the original loan. As a result, defendant contended that the judgment is void. She requested, therefore, that the foreclosure complaint, filed five years earlier, be dismissed.

NJHC, the innocent third-party purchaser, contended that there was no basis, pursuant to any of the subsections of Rule 4:50-1, to vacate the judgment. NJHC argued that defendant failed to satisfy subsection (a) because she did not demonstrate excusable neglect and a meritorious defense; subsection (b) because she failed to uncover newly discovered evidence which, by due diligence, could not have been discovered before the court entered judgment; and subsection (c) because there was no evidence of fraud. NJHC also asserted that Rule 4:50-2 barred defendant from seeking relief under subsections (a), (b), or (c) because she filed her motion beyond the one-year timeframe. Moreover, NJHC argued that defendant failed to meet subsections (d), (e), and (f) because under subsection (d), the judgment was not void; under subsection (e), the 1991 mortgage was never satisfied and the 1998 mortgage was simply an extension of the original loan; and under subsection (f), the circumstances were not "exceptional." Plaintiff agreed with the contentions advanced by NJHC and added that the doctrines of laches and equitable estoppel barred defendant from seeking any relief.

The parties waived oral argument and, on November 4, 2011, Judge Allison E. Accurso rendered a twenty-six page oral opinion and entered an order denying defendant's motion. The judge stated:

[Defendant] contend[s] that the [f]oreclosure [j]udgment is void and must be dismissed as a matter of law pursuant to Rule 4:50-1(d)[,] which [defendant incorrectly contends] has no time limitation . . . . Even under (d) . . . [the motion] must be made within a reasonable time

[T]here is no excusable neglect, none shown, none even put forward as to why [defendant] allowed . . . the [f]oreclosure [j]udgment to enter.

It is clear . . . that the 1991 loan was extended in accordance with its terms. [Although] defendant [contends] that the loan was paid in full[,] [i]t clearly was not . . . . The loan number continued. [Defendant] exercised [her] right to extend, and . . . the parties entered into a new note . . . and mortgage in 1998 which reduced the principal balance from [$]138[,000] to $126,238.76, reduced the interest rate from 8.5 to 7.375 percent[,] and extended the term from 1998 to 2022.

The same loan number was used throughout [the extension of the 1991 loan.]

It is undisputed that . . . there was a new note and a new mortgage created. All this was [] an extension and modification of the 1991 loan. The principal was reduced basically to the principal balance left on the 1991 loan, the interest rate was reduced, and the due date extended.

On that basis . . . I conclude that the 1998 loan is an extension or modification of the 1991 loan.

I cannot find that this judgment . . . is void or even voidable, and the [d]efendant . . . is simply barred from relief under the

[d]octrine of [l]aches. She has had more than enough opportunities to try and save this house. She has been unable to do so. I do not suggest that [plaintiff], in missing the 1998 mortgage, was blameless. They clearly foreclosed the wrong mortgage.

But our [c]court [r]ules . . . [permit] the pleadings [to] be amended to conform to the evidence presented.

Laches is clearly applicable here, particularly because [defendant] was well aware, and has been well aware since she executed the note and mortgage in 1998, that there was a subsequent mortgage. . . . [Defendant] cannot wait all this time and come forward at this very late date and ask a [c]court in equity to void this judgment and make [plaintiff] start over and deprive the innocent [t]hird[-p]arty purchaser, [NJHC], of its bid . . . .*fn3

This appeal followed.

On appeal, defendant argues primarily that the judge erred by construing the 1998 mortgage and note as "a mere extension or modification of the 1991 [n]ote and [m]ortgage," and abused her discretion by applying the doctrine of laches. Alternatively, defendant contends, for the first time on appeal, that even if the judge did not abuse her discretion by applying laches, the judge erred by denying her motion to vacate because plaintiff failed to produce the 1998 note.

We have carefully considered the record and find insufficient merit in defendant's arguments to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons expressed by Judge Accurso in her November 4, 2011 oral opinion. We add only the following brief comments.

Defendant provided no credible basis to vacate the foreclosure judgment pursuant to Rule 4:50-1. Defendant is time-barred from vacating the judgment pursuant to sections (a), (b), and (c) of Rule 4:50-1 because she filed her motion more than one year after the court entered the judgment. R. 4:50-2. Moreover, even if defendant was not time-barred by Rule 4:50-2, she offered no excusable neglect or meritorious defense.

Likewise, there is no basis for relief pursuant to sections (d), (e), or (f) of Rule 4:50-1. Under subsection (d), the judgment is not void; the 1998 mortgage was an extension of the 1991 loan. Under subsection (e), the 1991 mortgage was never satisfied because the 1991 loan was extended and not paid off. Finally, courts typically apply subsection (f) "'only when truly exceptional circumstances are present.'" US Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 484 (2012) (internal quotation marks omitted) (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 286 (1994)). The facts here are not such that, "'were [subsection (f)] not applied, a grave injustice would occur.'" Ibid. (quoting Little, supra, 135 N.J. at 289).

The judge correctly determined that the doctrine of laches bars relief. Courts will apply laches when there is an "'unexplainable and inexcusable delay in enforcing a known right whereby prejudice has resulted to the other party because of such delay.'" Cnty. of Morris v. Fauver, 153 N.J. 80, 105 (1998) (quoting Dorchester Manor v. Borough of New Milford, 287 N.J. Super. 163, 171 (1994)). Here, defendant waited far too long, well after the sale of the subject property, to assert that the complaint should be dismissed and that the judgment is invalid. The doctrine of equitable estoppel bars relief for the same reasons. That doctrine "'is designed to prevent injustice by not permitting a party to repudiate a course of action on which another party has relied to his detriment.'" Lopez v. Patel, 407 N.J. Super. 79, 91 (App. Div. 2009) (quoting Knorr v. Smeal, 178 N.J. 169, 178 (2003)). "Our courts have not looked favorably upon defendants who sit on their rights and then surprise the court and the plaintiffs at the eleventh hour with an affirmative defense that disposes of plaintiffs' claims." Ibid.

Finally, defendant contends for the first time that plaintiff lacked standing because it did not possess the 1998 note when it filed the complaint.*fn4 Here, the final judgment was entered in June 2007 and the sale occurred in March 2010. The Supreme Court adopted emergency amendments to Rules 4:64-1 and 4:64-2, and in 2011, the Court adopted substantial amendments to the rules governing foreclosure actions. The judgment and sale, however, were entered and accomplished in 2007 and 2010 respectively, well before the rules changed. Therefore, defendant's standing argument is without merit.


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