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Hsbc Bank Usa, National Association As Trustee For Wfmbs 2007-Ar7 v. Amy Anna Gomez and Alex Owimrin


January 10, 2013


On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-30625-08.

Per curiam.


Argued: December 19, 2012 -

Before Judges Axelrad and Sapp-Peterson.

In this mortgage foreclosure case, defendants Amy Anna Gomez and Alex Owimrin, husband and wife, appeal from an order of April 18, 2012, denying their motion to vacate a default judgment against them, which they filed sixteen months after the judgment was entered and the day before the sheriff's sale. The judge was not persuaded defendants had demonstrated the judgment was void, R. 4:50-1(d), and found the motion to be untimely. We affirm.


The facts are straightforward and undisputed. On August 27, 2007, defendants borrowed $377,100 from Wells Fargo Bank, N.A. (Wells Fargo), and executed a note and purchase money mortgage securing their residence in Hillsdale. The mortgage was duly recorded on August 29, 2007, in the Office of the Clerk of Bergen County. Defendants failed to make the installment payment due in May 2008, and all payments thereafter, and the loan went into default.

On August 8, 2008, Wells Fargo assigned the mortgage and note to plaintiff HSBC Bank as Trustee for WFMBS. On October 31, 2008, the assignment was duly recorded.

On August 11, 2008, plaintiff filed a foreclosure complaint against defendants.*fn1 An amended complaint was filed on January 21, 2009. The pleadings recited the aforementioned history. It is undisputed that defendants were personally served with the complaint, did not file an answer or respond to the complaint, and default was entered against them. It is also undisputed that defendants participated in court-sponsored mediation and no resolution was reached. Between 2008 and March 15, 2012, that was the full extent of defendants' involvement in the court proceedings.

Plaintiff submitted its proofs to the Administrative Office of Foreclosure, including the mortgage, note, and assignment of mortgage and note, all stamped as "certif[ied] . . . to be a true copy of the original" and signed by a person identified as "an attorney at law of N.J." (presumably plaintiff's foreclosure counsel), and affidavit of amount due. On November 8, 2010, the court entered a final judgment of foreclosure and defendants were advised of same. Defendants did not complain about the proofs, either before or at the time of the final judgment, and did nothing at all after the final judgment was entered.

Sheriff sales were repeatedly adjourned throughout 2011. The sale was ultimately scheduled for March 16, 2012. The day before the sale, present counsel, on defendants' behalf, filed an order to show cause seeking to stay the sale, vacate the final judgment, and dismiss the action. Defense counsel cited Rule 4:50-l(c) "fraud, misrepresentation, or other misconduct of an adverse party"; (d) "the judgment or order is void"; and (f) "any other reason justifying relief from the operation of the judgment or order. Defendants further argued that plaintiff's failure to comply with Rule 4:64-1(b)(10) constituted grounds to vacate judgment, claiming plaintiff did not have standing to foreclose because the complaint "relies upon a fraudulent assignment of mortgage" and "fails to state all assignments in the chain of title." Defendants also challenged plaintiff's standing to sue in foreclosure, asserting it did not have physical possession of the note when the complaint was filed and, if it did, the Trust did not take ownership of the loan under its Trust's charter, the Pooling and Servicing Agreement (Prospectus).

Plaintiff voluntarily adjourned the sale, and Judge Robert

P. Contillo converted the order to show cause into a motion to vacate the final judgment of foreclosure. Following oral argument on April 13, 2012, Judge Contillo denied defendants' motion for the reasons stated orally on the record. He rejected defendants' argument that the judgment was void because the assignment of the mortgage to plaintiff was improperly executed. Regardless, the judge found defendants had failed to file the motion within a reasonable time. The judge concluded it was unreasonable for defendants not to participate in a litigation for years and then to come in literally the day before the property is going to be sold at Sheriff's sale to talk about whether or not there has been documentation that would authorize Mr. Ackerman to have implemented the assignment, and I'm satisfied there is no fraud involved, at the very least, in that transaction.

An amended order was entered on April 18, 2012, because the April 13, 2012 order failed to accurately reflect the court's rulings. This appeal ensued.


On appeal, defendants argue: (1) the Administrative Office of Foreclosure erred by entering final judgment without sufficient proofs; (2) the court erred by misapplying the law of the Uniform Commercial Code (UCC), N.J.S.A. 12A:3-301, and Deutsche Bank National Trust v. Mitchell, 422 N.J. Super. 214 (App. Div. 2011); (3) the court erred by failing to consider that the Prospectus governing plaintiff precluded the Trust from taking ownership and rights of enforceability as to the subject promissory note and mortgage because the Prospectus makes clear that plaintiff has not acquired the note and mortgage; and (4) plaintiff's failure to comply with Rule 4:64-1(b)(10) should have caused the trial court to vacate judgment. Based on our review of the record and applicable law, we are not persuaded by any of these arguments.

Rule 4:50-1, Grounds of Motion, Relief from Judgment or Order, provides, in pertinent part:

[T]he Court may relieve a party . . . from a final judgment or order for the following reasons: . . . (c) fraud . . ., misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; . . . or (f) any other reason justifying relief from the operation of the judgment or order.

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." U.S. Bank National Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (internal quotation marks and citation omitted). Furthermore, this Rule "provides for extraordinary relief and may be invoked only upon a showing of exceptional circumstances." Baumann v. Marinaro, 95 N.J. 380, 393 (1984).

A Rule 4:50-1(d) motion, based on a claim that the judgment is void, does not require a showing of excusable neglect, but must be filed within a reasonable time after entry of the judgment. See 4:50-2; Deutsche Bank National Trust Co., v. Russo, ___ N.J. Super. ___, ___ (App. Div. 2012) (slip op. at 5); M&D Assocs. v. Mandara, 366 N.J. Super. 341, 351-52 (App. Div.), certif. denied, 180 N.J. 151 (2004). See also Orner v. Liu, 419 N.J. Super. 431, 437 (App. Div.) (holding that motions made under any Rule 4:50-1 "must be filed within a reasonable time"), certif. denied, 208 N.J. 369 (2011).

We review the trial court's denial of defendants' motion to vacate the final judgment of foreclosure under an abuse of discretion standard. Guillaume, supra, 209 N.J. at 467; United States v. Scurry, 193 N.J. 492, 503 (2008). In Guillaume, supra, our Supreme 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)). [209 N.J. at 467-68.]

On this record, we find no abuse of discretion in Judge Contillo's decision.

The crux of defendants' arguments are that plaintiff's judgment is "void" under Rule 4:50-1(d). Defendants contend plaintiff's application for final judgment was deficient because it failed to submit any certification stating that the mortgage, assignment of mortgage, and promissory note submitted to the Foreclosure Unit were true copies of the originals. Defendants emphasize that these three documents "were merely appended to [p]laintiff's submission without any accompanying R. 1:6-6 and N.J.R.E. 602 Certification," and thus should have been rejected. Defendants further note that plaintiff made no assertion to the Foreclosure Unit that "it obtained possession of the promissory note it sought to enforce," which defendants deemed to be a problematic and potentially fatal oversight. We reject these arguments as without merit.

Pursuant to Rule 4:64-1(d)(2), "[t]he application for entry of judgment shall be accompanied by proofs as required by R. 4:64-2 and in lieu of the filing otherwise required by R. 1:6-4 shall be only filed with the Office of Foreclosure . . . . The Office of Foreclosure may recommend entry of final judgment pursuant to R. 1:34-6." Rule 4:64-2(a) provides that "[p]roof required by R. 4:64-1 may be submitted by affidavit, unless the court otherwise requires. The moving party shall produce the original mortgage, evidence of indebtedness, assignments, claim of lien . . ., and any other original document upon which the claim is based." (Emphasis added).

However, instead of producing the original document, "the moving party may produce a legible copy of a recorded or filed document, certified as a true copy by the recording or filing officer or by a New Jersey attorney, or a copy of an original document, if unfiled or unrecorded, certified as a true copy by a New Jersey attorney." R. 4:64-2(a).

Rule 1:6-6 states:

If a motion is based on facts not appearing of record or not judicially noticeable, the court may hear it on affidavits made on personal knowledge, setting forth only facts which are admissible in evidence to which the affiant is competent to testify and which may have annexed thereto certified copies of all papers or parts thereof referred to therein.

N.J.R.E. 602 asserts that "[e]xcept as otherwise provided by Rule 703 (bases of opinion testimony by experts), a witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter."

Rule 1:6-6 and N.J.R.E. 602 are inapplicable because Rule 4:64-2 did not impose any additional requirements for presenting proofs in foreclosure actions at the time default judgment was entered in this case. Rule 4:64-2 deals specifically with the required proofs in foreclosure actions and thus it is controlling. See, e.g. City of E. Orange v. Essex Cnty., 362 N.J. Super. 440, 444 (App. Div. 2003) ("Where one statute deals specifically with a subject and another statute deals with that subject only generally or inferentially, the specific statute is controlling.") (citing Wilson v. Unsatisfied Claim & Judgment Fund Bd., 109 N.J. 271, 278 (1988)).

Plaintiff complied with the Rules in effect at the time of the filing of its complaint and entry of default judgment. Its amended complaint contained the statements required by Rule 4:54-1(b), and an appropriate certification by counsel "pursuant to Rule 4:64-1(a) and Rule 1:5-6(c)(1)(E)" that "a title search of the public record has been received and reviewed prior to the filing of this action." Plaintiff's supporting documents submitted to the Foreclosure Unit contained the stamp by a New Jersey attorney certifying the documents were a true and accurate copy of the originals, and were signed as such, in compliance with Rule 4:64-2(a).

We are not persuaded by defendants' argument that because the certifying attorney's signature was illegible, the certification was deficient. It would have been preferable for the identity of the certifying attorney to be ascertainable, but the Rule does not require the name of the signer to be printed. Had defendants filed an answer to the complaint, they could have requested this information in discovery. These documents, however, were in conformity with the foreclosure court rules and were satisfactory to the court for the entry of foreclosure judgment.

The Supreme Court adopted emergency amendments to Rule 4:64-1 and Rule 4:64-2, effective December 20, 2010, a month after default judgment was entered, revised on June 11, 2011. The amendments required certifications by attorneys representing foreclosing plaintiffs to be annexed both to the complaint and to motions to enter default judgment, including a certification of diligent inquiry and personal knowledge regarding the loan transaction and attesting that the complaint and all supporting documents comport with the requirements of Rule 1:4-8(a). R. 4:64-1(a)(2)(A), (B), (3); R. 4:64-2(c), (d). The amendment is not retroactive and was "in response to so-called 'robo-signing' in foreclosure and bankruptcy filings in which employees of mortgage lenders or servicers allegedly submit affidavits without personal knowledge of the information contained in such documents." Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:64-1 (2013).

We summarily dispose of defendants' argument in Point IV, namely that plaintiff failed to comply with Rule 4:64-1(b)(10) because it did not demonstrate the existence and validity of its ownership of the mortgage by way of assignment before it was granted a judgment of foreclosure. Plaintiff fully complied with Rule 4:64-1(b)(10), which provides, "if the plaintiff is not the original mortgagee or original nominee mortgagee," the complaint must state "the names of the original mortgagee and a recital of all assignments in the chain of title."

Paragraph two of the amended complaint listed Wells Fargo as the mortgagee and recited the specifics of the mortgage. Paragraph four acknowledged there had been an assignment to plaintiff, and recited the terms of the assignment.

Defendants next argue that plaintiff did not demonstrate it had standing to enforce the promissory note because it did not demonstrate it took possession of the instrument on or before the date the complaint was filed. They rely on N.J.S.A. 12A:3-301, Mitchell, supra, and Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592 (App. Div. 2011). We are not persuaded by this argument.

In Ford, supra, we reversed the grant of summary judgment to the plaintiff mortgagee because it did not establish its standing to pursue its foreclosure action by competent evidence, including that the documents it relied upon to establish its status as a holder were not properly authenticated, and remanded the matter to the trial court. 418 N.J. Super. at 599-600.

In Mitchell, supra, we held the plaintiff must have either possession of the promissory note or an assignment of the mortgage that predated the original complaint to have standing. 422 N.J. Super. at 216. We reversed the grant of summary judgment and remanded for a hearing to determine whether or not, before filing the original complaint, the plaintiff was in possession of the note or had another basis to achieve standing to foreclose pursuant to N.J.S.A. 12A:3-301. Id. at 225.

As distinguished from the present case, however, in both Ford and Mitchell, the defendants timely filed answers and counterclaims in the foreclosure litigation, questioning the validity of the assignment, Ford, supra, 418 N.J. Super. at 594, and contesting the plaintiff's standing to file the foreclosure complaint, Mitchell, supra, 422 N.J. Super. at 220-21, and our reversals were of the trial courts' grant of summary judgment. In other words, the defendants in the other cases actively defended the foreclosure litigation from the outset and did not sit on their rights.

In Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 316 (App. Div. 2012), we affirmed the Chancery Division's dismissal of a motion to vacate a final default judgment of foreclosure under Rule 4:50-1(d) because the defendant did not defend the action or assert a standing issue until two years after default judgment was entered and three-and-one-half years after the complaint was filed. We acknowledged that the defendant raised a valid concern under Mitchell because the complaint was filed prior to the assignment of the mortgage, but concluded he failed to definitively demonstrate a lack of standing. Id. at 319. We held that equitable considerations may justify a court in rejecting a foreclosure defendant's belated attempt to raise as a defense the plaintiff's lack of standing:

In foreclosure matters, equity must be applied to [the] plaintiffs as well as [the] defendants. [The] Defendant did not raise the issue of standing until he had the advantage of many years of delay. Some delay stemmed from the New Jersey foreclosure system, other delay was afforded him through the equitable powers of the court, and additional delay resulted from [the] plaintiff's attempt to amicably resolve the matter. [The] [d]efendant at no time denied his responsibility for the debt incurred . . . . Rather, when all hope of further delay expired . . . he made a last-ditch effort to relitigate the case. The trial court did not abuse its discretion in determining that [the] defendant was not equitably entitled to vacate the judgment.

[Id. at 320.]

In Russo, supra, the plaintiff obtained a final judgment of foreclosure by default in March 2009, and after the defendants filed for bankruptcy and the sheriff's sale was adjourned numerous times, in July 2011, the defendants filed their first pleading in the foreclosure action, an order to show cause seeking to stay the sheriff's sale and vacate the final judgment of foreclosure pursuant to Rule 4:50-1(d) and (f). (slip op. at 3). The defendants challenged plaintiff's standing to file the foreclosure complaint because it did not take an assignment of the mortgage until after the complaint was filed. Ibid.

We held that based on Guillaume and Angeles, "even if [the] plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy here because of [the] defendants' unexcused, years-long delay in asserting that defense." Id. at 8. We concluded, "in this post-judgment context, lack of standing would not constitute a meritorious defense to the foreclosure complaint . . . standing is not a jurisdictional issue in our State court system and, therefore, a foreclosure judgment obtained by a party that lacked standing is not "void" within the meaning of Rule 4:50-1(d)." Id. at 8-9.

To the extent that defendants are relying on Rule 4:50-1(f), the "catchall rule," the Court has limited this rule to "exceptional circumstances" and "situations in which, were it not applied, a grave injustice would occur." Guillaume, supra, 209 N.J. at 484 (quoting Little, supra, 135 N.J. at 289). In Guillaume the Court found the defendants' argument "predicated on allegedly incompetent proof presented by [the foreclosing mortgagee] to the trial court, before which the [defendants] declined to appear or to be represented prior to the entry of default judgment" and presented "no such circumstances" to justify an order under Rule 4:50-1(f) vacating default judgment. Supra, 209 N.J. at 484. The Court agreed with our conclusion that the mortgagee's "submission of a copy of the original Note, supported by a certification of its counsel, complied with the governing rule then in effect, Rule 4:64-2, before it was amended on June 9, 2011." Ibid.

Here, plaintiff filed the complaint on August 11, 2008, and three days prior had the note and mortgage assigned to it by Wells Fargo. Final judgment was entered on November 8, 2010. It was not until March 15, 2012, sixteen months later and on the eve of the sheriff's sale, that defendants filed an order to show cause seeking to stay the sheriff's sale and to vacate the final judgment.

During oral argument, Judge Contillo stated he had no evidence before him that there was even a claim by plaintiff that it possessed the note. However, this was only because the judge was not provided a copy of the final judgment, which could not have been entered without plaintiff providing the proper proofs to the Foreclosure Unit. As previously discussed, plaintiff's submission of a copy of the note, mortgage, and assignment, containing the requisite certification, and affidavit of amount due, complied with the governing rule then in effect for entry of the final judgment of foreclosure.

We have no doubt that defendants' delay in asserting their standing defenses are unreasonable under the rationale and policy considerations of Guillaume, Angeles, and Russo. It is undisputed defendants provided "security for [their] 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). Defendants defaulted on the loan and failed to timely assert a timely defense to the foreclosure action.

Moreover, defendants have never certified that the loan was "predatory" or in any way unfair, that they were told they need not defend the case or that they were lulled into inaction by Wells Fargo or plaintiff, or that the default was anything other than their fault. Furthermore, similar to the defendant in Angeles, supra, defendants at no time denied their responsibility for the debt incurred. 428 N.J. Super. at 320. Defendants did not have to be sophisticated to realize that after their mediation was unsuccessful, there were consequences for ignoring the foreclosure litigation.

Furthermore, defendants have not demonstrated a valid defense of plaintiff's lack of standing to foreclose on the mortgage. Id. at 319. They have never asserted that Wells Fargo or any entity other than plaintiff has made demand upon them for payment following the assignment. We are satisfied defendants have failed to demonstrate at this juncture that plaintiff did not "own or control the underlying debt" entitling it to foreclose. See Ford, supra, 418 N.J. Super. at 597 (quoting Raftogianis, supra, 418 N.J. Super. at 327-28).

Finally, defendants argue the court erred because it failed to recognize that New York trust law and the prospectus govern the acquisition of mortgage loans. They further assert the evidence presented by plaintiff demonstrates that the loan in question was not incorporated into the trust, and thus did not properly become property of the trust. Specifically, they contend the prospectus "requires a series of three transactions to occur in order for the Trust to take ownership of a given loan" and argue "in order for the Trust to have possession of this loan, it must show evidence that the loan moved through the proper channels and was incorporated into the Trust by the terms of the PROSPECTUS, or else the Trust never possessed the loan." This argument is without legal merit.

"[L]itigants generally have no standing to assert the rights of third parties." Raftogianis, supra, 418 N.J. Super. at 350. See also Jersey Shore Med. Ctr.-Fitkin Hosp. v. Estate of Baum, 84 N.J. 137, 144 (1980). In a federal case, the debtors "asked the bankruptcy court to declare the mortgage assignment invalid based upon non-compliance with the provisions of the PSA -- a contract to which they were not a party -- and to declare the state court foreclosure invalid on that basis." Correia v. Deutsche Bank Nat'l Trust Co. (In re Correia), 452 B.R. 319, 324 (1st Cir. B.A.P. 2011). The United States Bankruptcy Appellate Panel for the First Circuit concluded the debtors lacked standing because they were "not parties [to the PSA], nor have they demonstrated that they were third-party beneficiaries of the PSA's terms. Ibid.

The court found the debtor lacked standing: to object to any breaches of the terms of the PSA. It would appear to this Court that the investor who bought securities based upon the pooled mortgages would be the parties with standing to object to any defects . . . from any failure to abide by the express provisions of the PSA. [Ibid. (quoting In re Almeida, 417 B.R. 140, 149 n.4 (Bankr. D. Mass. 2009).]

For similar reasons, we are convinced defendants lack standing to challenge a violation of the prospectus because as debtors they were not parties to plaintiff's trust. See Raftogianis, supra, 418 N.J. Super. at 350. Wells Fargo Asset Securities Corporation was the depositor, Wells Fargo Bank, N.A. was the sponsor and master servicer, and Wells Fargo Mortgage Backed Securities 2007-AR7 Trust was the issuing entity. Moreover, defendants were not third-party beneficiaries to the trust. In re Correia, supra, 452 B.R. at 324.


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