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Emigrant Mortgage Co., Inc. v. Lawrence

Superior Court of New Jersey, Appellate Division

September 3, 2013

MERLA LAWRENCE, Defendant-Appellant, and STATE OF NEW JERSEY, Defendant.


Submitted March 5, 2013

On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Essex County, F-1808-08.

Merla Lawrence, appellant pro se.

Richard A. Epstein, attorney for respondent.

Before Judges Lihotz and Ostrer.


Defendant Merla Lawrence appeals from the denial of her second motion to vacate the default judgment entered in a foreclosure proceeding relating to her property in South Orange. We affirm.

In 2005, defendant refinanced the mortgage on her home with the assistance of a mortgage broker, Darnell Davis, of Prime Time Mortgage. Through Davis, she was able to secure a loan from Emigrant Mortgage Company, Inc. (Emigrant).

At the closing on December 27, 2005, defendant executed a promissory note to Emigrant in the amount of $250, 000. It was an adjustable rate note, with the initial interest rate set at 10.875%, and the maximum interest rate not to exceed 16.875%. The loan was secured by a mortgage of the same date, in favor of Emigrant, on the property.

In September 2007, defendant defaulted on the terms of her promissory note. She sought assistance from a mortgage broker, Marilyn English, who in January 2008, corresponded with Emigrant's counsel on her behalf, requesting reinstatement and payoff figures for the mortgage, which Emigrant's counsel duly provided.

Meanwhile, in January 2008, Emigrant filed a foreclosure complaint, which was served on defendant on February 9, 2008. Defendant retained counsel, Jeffrey Dollinger, who communicated with Emigrant's counsel, requesting payoff and reinstatement figures, which Emigrant's counsel again provided.

Default was entered on April 15, 2008, as defendant had filed no response to the complaint. Emigrant's counsel mailed a copy of the request to enter default to defendant, and also forwarded a notice of intention to enter judgment, as to which defendant acknowledged receipt.

By letter dated July 23, 2008, defendant's new counsel, Lawrence Kalish, wrote to Emigrant's counsel and advised that he represented defendant in connection with the foreclosure proceeding. He requested "a copy of the latest payoff statement" as well as "a copy of the Complaint and all other pleadings and other correspondence relating to this matter, except the Request to Enter Default and Certification entered April 15, 2008, " which defendant already had provided to him. Emigrant's counsel responded by providing the requested documents.

Final judgment was entered on September 22, 2008. Thereafter, a sheriff's sale was scheduled for March 10, 2009. The sale was adjourned to March 24, 2009, after defendant requested foreclosure mediation. That mediation occurred on March 18, 2009, but it was unsuccessful in resolving the litigation.

After mediation, defendant filed for bankruptcy, which resulted in the sheriff's sale again being postponed. Emigrant participated in the bankruptcy proceedings, submitting a proof of claim which included copies of the note and mortgage signed by defendant, and those documents also were served on defendant. Defendant's bankruptcy petition was dismissed in June 2009, after which the sheriff's sale was rescheduled, with Emigrant purchasing the property on July 14, 2009.

Meanwhile, defendant had filed a pro se motion to vacate the final judgment, to set aside the sheriff's sale, and to require Emigrant to prove its claim through the production of loan and closing documents. Emigrant opposed the motion, and the court denied it on August 20, 2009.

In October 2009, defendant filed another pro se motion, this time for an order vacating the sheriff's sale "for lack of Service of the Actual Sheriff Sale Notice." Emigrant opposed the motion, and the court heard argument on January 29, and March 19, 2010, at which defendant was represented by new counsel, Paul DiGiacomo.

The court denied defendant's request to vacate the sheriff's sale. However, by order dated April 12, 2010, the court extended defendant's right of redemption for a period of time, in light of its finding that defendant had not had actual knowledge of the adjourned sale date. The court scheduled a hearing for May 14, 2010, at which defendant would be permitted to present proof of her ability to redeem the property.

Thereafter, Emigrant's counsel provided defendant's counsel with copies of the closing documents he had requested at oral argument. Ultimately, the redemption hearing was cancelled at defense counsel's request, because defendant conceded she would be unable to meet her burden of proof.

On April 29, 2010, despite being represented by counsel, defendant filed another pro se motion seeking an order vacating the final judgment and the sheriff's sale. DiGiacomo was granted leave to write a letter to the court, in order to clarify defendant's arguments.

In her motion papers, as supplemented by DiGiacomo, defendant asserted that the loan documents recently produced to her gave rise to valid defenses and possible counterclaims to the foreclosure suit, and she requested vacation of the default judgment under Rule 4:50-1(f). Specifically, she alleged that Davis had fraudulently induced her to refinance the mortgage on her home, that Emigrant had violated federal law by failing to advise her of her right of rescission, and that she had been the victim of predatory lending, with numerous irregularities in the closing documents and closing procedure. Emigrant opposed the motion, including in its papers a copy of the "Notice of Right to Cancel" form, signed by defendant and dated December 27, 2005.

On March 15, 2011, the court entered two orders, one denying defendant's motion to vacate the final judgment of foreclosure and sheriff's sale, and a second terminating the redemption period. The court also issued a written opinion, explaining its rulings.

On April 27, 2011, defendant filed a notice of appeal from the March 15, 2011 orders. Thereafter, both the trial court and Appellate Division granted stays of eviction pending resolution of the appeal.

On appeal, defendant contends the court erred in denying her second motion to vacate the default judgment, filed on April 29, 2010. She claims she was entitled to vacation of the judgment under Rule 4:50-1(b) because newly discovered evidence, the loan documents, provided her with a valid defense to the foreclosure litigation in that they demonstrated a failure to provide her with notice of her right of rescission. She further claims she was entitled to vacation of the judgment under Rule 4:50-1(c), based upon Emigrant's fraud. She claims the court erred in considering her motion under Rule 4:50-1(f). Finally, she argues for the first time on appeal that she is entitled to vacation of the judgment because Emigrant never established that it had standing to pursue foreclosure.

We affirm largely for the reasons given by the trial court. Since defendant's April 2010 motion was her second motion to vacate the default judgment, the judge properly viewed it as one for reconsideration under Rule 4:49-2, rather than one to vacate under Rule 4:50-1. We review the denial of reconsideration deferentially, for an abuse of discretion. Hinton v. Meyers, 416 N.J.Super. 141, 148 (App. Div. 2010); D'Atria v. D'Atria, 242 N.J.Super. 392, 401 (Ch. Div. 1990).

Rule 4:49-2 provides:

Except as otherwise provided by R. 1:13-1 (clerical errors) a motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it. The motion shall state with specificity the basis on which it is made, including a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred, and shall have annexed thereto a copy of the judgment or order sought to be reconsidered and a copy of the court's corresponding written opinion, if any.

"A litigant should not seek reconsideration merely because of dissatisfaction with a decision of the Court." D'Atria, supra, 242 N.J.Super. at 401. Instead:

Reconsideration should be utilized only for those cases which fall into that narrow corridor in which either 1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence. . . .
Alternatively, if a litigant wishes to bring new or additional information to the Court's attention which it could not have provided on the first application, the Court should, in the interest of justice (and in the exercise of sound discretion), consider the evidence. Nevertheless, motion practice must come to an end at some point. . . . Thus, the Court must be sensitive and scrupulous in its analysis of the issues in a motion for reconsideration.
[Id. at 401-02.]

Defendant did not meet the standard necessary to receive reconsideration. First, her motion was filed out of time. It was filed on April 29, 2010, which was more than one year after entry of final judgment dated September 22, 2008, and more than eight months after entry of the order denying her first Rule 4:50 motion dated August 20, 2009.

Also, defendant did not meet the substantive requirements of a reconsideration motion. She did not show that the court's decision on her first Rule 4:50 motion was "based upon a palpably incorrect or irrational basis, " nor that the court "either did not consider, or failed to appreciate the significance of probative, competent evidence." Moreover, the loan documents she presented as "new evidence" were not new. The note and mortgage were served on defendant in her bankruptcy proceeding, and additional closing documents could have been made available had defendant requested them. The record reflects no requests from defendant or her representatives for same — only requests for payoff and reinstatement figures, and for pleadings and correspondence related to the foreclosure litigation.

Finally, the documents do not support defendant's claim of a meritorious defense against foreclosure. Defendant complains that she was not provided with the three-day rescission letter as required under the Truth in Lending Act ("TILA"), 15 U.S.C.A. § 1635(a). However, the record includes a Notice of Right to Cancel form signed by defendant and dated December 27, 2005, the date of the closing. No evidence supports defendant's claim that the document is fraudulent.

Furthermore, even if defendant did not receive a copy of the form on the date of the closing, the time to sue under the TILA has long since expired and is not subject to equitable tolling, as defendant argues. Specifically, under 15 U.S.C.A. § 1635(f):

An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this chapter . . . have not been delivered to the obligor. . . .

The United States Supreme Court has held that "§ 1635(f) completely extinguishes the right of rescission at the end of the 3-year period" such that a borrower may not assert the right of rescission as an affirmative defense to a collection action brought by the lender more than three years after the transaction was consummated. Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412, 419, 118 S.Ct. 1408, 1409, 1413, 140 L.Ed.2d 566, 569, 574 (1998); see also Drennan v. PNC Bank Nat'l Ass'n, 622 F.3d 275, 301 n.18 (3d Cir. 2010) (three-year limitations period for pursuing rescission under TILA is not a statute of limitation). To the extent defendant seeks a rescission remedy under the TILA, she would be required to tender the money received from Emigrant. 15 U.S.C.A. § 1635(b); U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 481-83 (2012). She has not indicated any intention or ability to do so.

Defendant's remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).


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