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Deutsche Bank National Trust v. Eddings

Superior Court of New Jersey, Appellate Division

June 27, 2013

DEUTSCHE BANK NATIONAL TRUST, as Trustee Under Pooling and Servicing Agreement Dated June 1, 2007 - Equifirst Loan Securitization Trust 2007-1 - Mortgage Pass-Through Certificates Series 2007-1, Plaintiff-Respondent,
JANET EDDINGS and EDWARD EDDINGS, Defendants-Appellants.


Submitted April 24, 2013

On appeal from Superior Court of New Jersey, Chancery Division, Union County, Docket No. F-3950-07.

Tomas Espinosa, attorney for appellants.

Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Alex G. Gross, on the brief).

Before Judges Koblitz and Accurso.


In this mortgage foreclosure action, defendants Janet and Edward Eddings (the Eddings) appeal from the denial of their motion to stay eviction and vacate a final judgment of foreclosure entered four and one-half years earlier. Judge Malone denied the motion deeming it time-barred. We affirm, substantially for the reasons expressed by Judge Malone in his written opinion of March 20, 2012.

Defendants borrowed $430, 000 from Franklin First Financial Ltd. (Franklin) in a refinance transaction on December 2, 2005, subject to a thirty-year note and mortgage on their home. The mortgage was made to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Franklin. The Eddings made the first nine payments due on their note but failed to make the November 1, 2006 payment. They have made no subsequent payments.

On February 9, 2007, plaintiff, Deutsche Bank National Trust (Deutsche Bank), as trustee for Morgan Stanley Loan Trust 2006-HE2, filed a foreclosure complaint alleging that it had been assigned the Eddings' mortgage by MERS in a written assignment "about to be recorded." Defendants were personally served and filed an answer through counsel, asserting among other defenses, lack of privity between them and plaintiff.

Plaintiff's subsequent summary judgment motion went unopposed, and an order striking the Eddings' answer was entered on May 11, 2007. Plaintiff served them with a notice of intent to enter final judgment by regular and certified mail, and a final judgment of foreclosure was entered on July 31, 2007.

A sheriff's sale was scheduled for October 10, 2007, but adjourned numerous times to allow the Eddings to pursue other alternatives including a loan modification and a short sale. After proper notice to the Eddings, the sheriff's sale finally went forward on July 14, 2010, almost three years after it was first scheduled. There was no buyer, and plaintiff took back the property on its bid. No objection to the sale was filed, and the sheriff delivered the deed to Deutsche Bank which recorded it on August 27, 2010.

Defendants were scheduled to be evicted on March 31, 2011, when they filed for bankruptcy under Chapter 7. The bankruptcy proceeding was finally concluded on September 28, 2011. Deutsche Bank thereafter rescheduled the eviction for January 18, 2012. On January 17, 2012, defendants filed an emergent application to stay eviction which Judge Malone granted, rescheduling the eviction for February 15, 2012. The date was further extended to February 23, 2012.

On February 22, 2012, four and one-half years after final judgment was entered, the Eddings filed an order to show cause to stay eviction and vacate final judgment under Rule 4:50-1(c), (e), and (f) on the ground that Deutsche Bank lacked standing to bring the foreclosure. The Eddings claimed there was no valid assignment of the mortgage to Deutsche Bank and no clear evidence of how Deutsche Bank came to possess the note. Judge Malone heard argument and denied the motion in a written opinion and order on March 20, 2012.

The judge found defendants' motion under Rule 4:50-1(c) time-barred because it was filed more than one year after the judgment. R. 4:50-2. Noting that motions under Rule 4:50-1(d) and (f) must be made within a reasonable time, Rogan Equities, Inc. v. Santini, 289 N.J.Super. 95, 113-15 (App. Div.), certif. denied, 145 N.J. 375 (1996), Judge Malone found that the Eddings had actual notice of the action and retained counsel to file an answer on their behalf. They were represented by the same counsel when that answer was stricken on plaintiff's motion. He noted that defendants had participated in efforts to resolve the foreclosure through short sale and loan modification. When those efforts proved unsuccessful, defendants filed for bankruptcy and thereby stayed the action for six months. Judge Malone concluded by underscoring that the case did not involve a default judgment. The Eddings

were aware of this action and participated in it. Notwithstanding their knowledge and involvement they chose to wait more than 4 years after the entry of judgment and more than 18 months after the sale of the property to seek relief from the judgment. After taking every opportunity to delay the final disposition of this case, the defendants only now seek to vacate the judgment. This is a calculated attempt to cause further delay. At this late date, defendants are barred by equitable estoppel and laches from seeking to vacate the judgment and sale. Furthermore, the motion is barred under R. 4:50-2 since it was not made within a reasonable time.

On appeal, defendants argue that the judgment of foreclosure must be vacated under Rule 4:50-1(d) and (f), and Rule 4:50-3, [1] because plaintiff did not have standing as an assignee at the time plaintiff filed its complaint. Defendants assert that plaintiff lacked standing because it never established that it was the holder of the note when the complaint was filed, the loan did not become part of the plaintiff's trust because plaintiff did not receive it in accord with the Pooling and Service Agreement's closing date, and the assignment from MERS is invalid.

We review the Chancery Judge's denial of a motion to vacate final judgment of foreclosure for abuse of discretion. US Bank Nat'l Assoc. v. Guillaume, 209 N.J. 449, 467 (2012); United States v. Scurry, 193 N.J. 492, 503 (2008). The judge's determination deserves substantial deference, and the abuse of discretion must be clear to warrant reversal. Guillaume, supra, 209 N.J. at 467. We find no abuse of discretion in Judge Malone's decision on this record.

Defendants in a foreclosure seeking to vacate final judgment must satisfy the standard of Rule 4:50-1. Ibid. The Rule in pertinent part provides:

[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.
[R. 4:50-1.]

"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.'" Guillaume, supra, 209 N.J. at 467 (quoting Mancini v. EDS, 132 N.J. 330, 334 (1993)). Motions made under Rule 4:50-1(c) must be made no more than one year after the judgment was entered, R. 4:50-2, and regardless of the subsection to which recourse is made, must be filed within a reasonable time. Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J.Super. 91, 99 (App. Div. 2012); Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J.Super. 315, 319 (App. Div. 2012). Further, the Court has cautioned that relief under Rule 4:50-1(f) is limited to "truly exceptional circumstances" and "situations in which, were it not applied, a grave injustice would occur." Guillaume, supra, 209 N.J. at 484 (citations and internal quotation marks omitted).

Some months after Judge Malone issued his decision in this matter, we considered similar claims in Angeles. There, we affirmed the Chancery Court's denial of a motion to vacate a final default judgment of foreclosure under Rule 4:50-1(d), where the plaintiff, as in this matter, filed its complaint before obtaining a written assignment of the mortgage. Angeles, supra, 428 N.J.Super. at 319-20. The defendant did not assert a standing issue until two years after default judgment was entered. Id. at 316. The Chancery Court held that equitable considerations justified its rejection of the defendant's belated attempt to raise standing as a defense to the foreclosure. We agreed emphasizing that

[i]n foreclosure matters, equity must be applied to plaintiffs as well as defendants. 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 plaintiff's attempt to amicably resolve the matter. Defendant at no time denied his responsibility for the debt incurred nor can he reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of further delay expired, after his home was sold and he was evicted, he made a last-ditch effort to relitigate the case. The trial court did not abuse its discretion in determining that defendant was not equitably entitled to vacate the judgment.
[Id. At 320.]

Here, Deutsche Bank filed a foreclosure complaint a month before MERS assigned it the mortgage. Defendants have acknowledged that Deutsche Bank presented certified copies of the note, mortgage, and assignment of mortgage in its application for final judgment. At no point have the Eddings denied responsibility for the mortgage debt. As Judge Malone noted, defendants were represented by counsel, contested the foreclosure by filing an answer, and opted not to oppose summary judgment. They participated in the action and actively engaged in efforts to resolve it through attempts at modifying their loan and discharging their mortgage through a short sale Having exhausted every possible avenue of delay defendants sought to begin again by reopening the judgment to litigate standing issues they had every opportunity to litigate before judgment was entered Judge Malone was correct that equity barred that course and defendants' motion to reopen the judgment was filed beyond any reasonable time permitted by Rule 4:50-2


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