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Wells Fargo Bank, N.A. v. Garner

Superior Court of New Jersey, Appellate Division

October 31, 2013

WELLS FARGO BANK, N.A., Plaintiff-Respondent,
JAYNE A. GARNER, Defendant-Appellant.


Submitted October 2, 2013.

On appeal from the Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. F-35296-08.

David J. Khawam, attorney for appellant.

Zucker, Goldberg & Ackerman, LLC, attorneys for respondent (Robert D. Bailey, of counsel and on the brief).

Before Judges Lihotz and Hoffman.


Homeowners facing the loss of their residence to foreclosure have challenged the increasing use of centralized servicing agencies and the post-execution assignment of mortgage obligations to allow securitization of bundled mortgage investments. In recent court actions, mortgagors have attacked the standing of the named plaintiff, which was not the original mortgagee, to pursue foreclosure. In reviewing these matters, courts have clarified the proof requirements of an assignee when pursuing foreclosure. Other recent decisions have considered the timeliness of a homeowner's claim that an assignee lacked standing to pursue foreclosure in circumstances where the foreclosure complaint was unchallenged, yet the homeowner raised a standing argument as a last-minute effort to delay or prevent a sheriff's sale of the realty. See generally Bank of N.Y. v. Raftogianis, 418 N.J.Super. 323, 332-34 (Ch. Div. 2010). The matter on appeal involves these issues.

Defendant Jayne A. Garner appeals from the denial of her post-judgment, pre-sheriff's sale motions to vacate the judgment of foreclosure and dismiss the complaint. The court found defendant was not entitled to relief under any subsection of Rule 4:50-1.

Defendant argues plaintiff Wells Fargo Bank, N.A. lacked standing to file the foreclosure action claiming it did not own the note and mortgage on the date it filed the complaint. For the same reason, she maintains the notice of intent to foreclose was improperly issued by plaintiff.

We have considered these arguments in light of the record and applicable law. We affirm.

Defendant purchased the subject realty located on Wilbert Street in Pemberton on April 30, 2004. At closing, defendant executed and delivered a note to Aurora Financial Group, Inc. (Aurora) evincing her borrowing $152, 278. To secure payment of the debt, defendant executed a mortgage encumbering the subject property in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Aurora. The mortgage was recorded in the Burlington County Clerk's Office in Mortgage Book 09801, page 570, on May 26, 2004.[1]

Defendant defaulted on her monthly note payment on May 1, 2008, and failed to remit any payments thereafter. Plaintiff sent defendant a notice of intention to foreclose, identifying the months of non-payment and reciting the amount necessary to bring the loan current. The notice further warned continued non-payment would result in the commencement of foreclosure proceedings.

On September 5, 2008, MERS, as a nominee for Aurora, executed an assignment of the mortgage to plaintiff. The assignment was recorded in the Burlington County Clerk's Office on November 10, 2008.

Plaintiff filed a complaint for foreclosure on September 8, 2008. Defendant contested the foreclosure action by filing an answer containing nineteen affirmative defenses, none of which challenged plaintiff's standing to foreclose. The trial court granted plaintiff's motions to strike defendant's answer and for summary judgment. The matter was returned to the Office of Foreclosure to proceed on an uncontested basis. R. 1:34-6. Defendant's motion for reconsideration was denied and she appealed from summary judgment. This court dismissed the appeal as interlocutory. Wells Fargo Bank, NA v. Garner, No. A-4250-08 (App. Div. Oct. 27, 2010) slip op. 14-15. Final judgment of foreclosure was entered a few days following the filing of defendant's appeal. Defendant submitted an emergent request to stay sheriff's sale pending appeal, which was granted by the trial court.

Once the appeal was dismissed, defendant moved to vacate final judgment. Pending the court's consideration of this motion, sheriff's sale of the residence, then scheduled for April 1, 2010, was cancelled. Following argument, Judge Karen L. Suter considered the application and concluded defendant had not demonstrated excusable neglect or a meritorious defense explaining the delay in presenting her application. Further, the judge determined plaintiff owned the note and the mortgage, which conferred standing to foreclose. This appeal ensued.

We consider defendant's arguments in light of Rule 4:50-1, which provides, in pertinent part:

On motion, with briefs, and upon such terms as are just, the court may relieve a party . . . from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R[ule] 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; 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 Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (quoting Mancini v. EDS, 132 N.J. 330, 334 (1993)).

Relief from a final judgment under Rule 4:50-1 is not granted lightly. Granting a request to vacate a judgment constitutes extraordinary relief and, absent exceptional and compelling circumstances, may not be invoked in lieu of filing an appeal. Baumann v. Marinaro, 95 N.J. 380, 393 (1984) (citations omitted).

We afford substantial deference to a trial judge's determination of a motion filed under Rule 4:50-1, and will not disturb the result unless it represents "a clear abuse of discretion." Guillaume, supra, 209 N.J. at 467 (citations omitted). See also Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J.Super. 315, 318 (App. Div. 2012). A trial judge's exercised discretion may be found to have been unreasonable when the judge's decision "is made without a rational explanation, inexplicably depart[s] from established policies, or rest[s] on an impermissible basis." Angeles, supra, 428 N.J.Super. at 319 (internal quotation marks and citations omitted).

Guided by that standard, we conclude Judge Suter did not abuse her discretion by denying defendant's motion.

In her reply brief, defendant argues for the first time that the final judgment of foreclosure should be vacated because "she was pro se and unaware of her rights until retaining [current counsel]." We reject this premise.

Initially we note, "[r]aising an issue for the first time in a reply brief is improper" because the trial court has not considered it and the parties have not "properly addressed" it. Borough of Berlin v. Remington & Vernick Eng'rs, 337 N.J.Super. 590, 596 (App. Div.), certif. denied, 168 N.J. 294 (2001). See also Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) ("It is a well-settled principle that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available . . . ."). More important, defendant offers no support to justify the almost two-year delay in advancing her challenge to plaintiff's standing to foreclose.

Defendant does not specify the subsection of Rule 4:50-1 on which she relies. After our review of those subsections that could apply, we concur with Judge Suter that defendant has failed to demonstrate she is entitled to relief.

To obtain relief pursuant to Rule 4:50-1(a), a defendant must demonstrate her neglect was excusable under the circumstances and she has a meritorious defense. Dynasty Bldg. Corp. v. Ackerman, 376 N.J.Super. 280, 285 (App. Div. 2005) (quoting Marder v. Realty Const. Co., 84 N.J.Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964)). Here, defendant has not addressed either of these requirements, other than to assert plaintiff lacks standing.

Alternatively, considering defendant's motion under Rule 4:50-1(d), the law is clear, "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)." Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J.Super. 91, 101 (App. Div. 2012). "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." Id . at 98 (citing R. 4:50-2).

Under any applicable subsection, motions seeking to set aside a judgment "must be filed within a reasonable time[.]" Orner v. Liu, 419 N.J.Super. 431, 437 (App. Div.), certif. denied, 208 N.J. 369 (2011). Further, Rule 4:50-2, requires motions based on Rule 4:50-1(a) or (d) must be filed no more than one year after the judgment, order, or proceeding was entered from which relief is sought. Angeles, supra, 428 N.J.Super. at 319. Defendant has not timely filed her application.

We also consider whether defendant's motion meets the permissible reach of subsection (f)'s catch-all provision, which defies simple categorization. Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966). As the Supreme Court explained, "the very essence of (f) is its capacity for relief in exceptional situations." Ibid. "'[T]o establish the right to such relief, it must be shown that enforcement of the order or judgment would be unjust, oppressive or inequitable.'" Eaton v. Grau, 368 N.J.Super. 215, 222 (App. Div. 2004) (citation omitted) (quoting Harrington v. Harrington, 281 N.J.Super. 39, 48 (App. Div.), certif. denied, 142 N.J. 455 (1995)). When a court is presented with "such exceptional cases" the boundaries of subsection (f) are as expansive as the need to achieve equity and justice." Ibid. See also Baumann, supra, 95 N.J. at 395 ("[E]ach case must be resolved on its own particular facts.").

Defendant offers no support to show enforcement of the judgment would be unjust, oppressive, or inequitable. Lawson v. Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 404-07 (1999). In the context of foreclosure, the interests of both parties must be borne in mind, and the defendant's failure to deny the essential facts entitling the plaintiff to judgment will weigh against relief. As the court wrote in Angeles, supra, 428 N.J.Super. at 320:

In 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. . . . Defendant at no time denied his responsibility for the debt incurred nor can he reasonably argue that [plaintiff] 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.

In this matter, defendant did not challenge plaintiff's standing when opposing summary judgment or raise the issue prior to appeal. Under these circumstances, the untimely application was inexcusable and therefore, time barred. R. 4:50-2. For completeness, we nevertheless briefly address the question of whether plaintiff properly had standing to foreclose.

A party must "own or control" the underlying debt obligation to have standing to foreclose a mortgage. Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J.Super. 214, 222 (App. Div. 2011). Absent a showing of such ownership or control, a plaintiff "'lacks standing to proceed with the foreclosure action and the complaint must be dismissed.'" Ibid. (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J.Super. 592, 597 (App. Div. 2011)). An assignee can establish standing to foreclose by presenting a properly "authenticated assignment indicating that it was assigned the note before it filed the original complaint." Id . at 225.

Here, the assignment was executed three days prior to the filing of the foreclosure complaint. That the assignment of mortgage and underlying debt was not recorded until the following month does not affect the validity of the assignment itself, which is effective on the date executed. EMC Mortg. Corp. v. Chaudhri, 400 N.J.Super. 126, 141 (App. Div. 2008).

Defendant's next challenge suggests she failed to receive requisite notice mandated by the New Jersey Fair Foreclosure Act (Act), N.J.S.A. 2A:50-53 to -68. The Act "establishes the basis for foreclosure of mortgages[, ]" Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 106 n.2 (2006), embodying the public policy to afford homeowners "every opportunity to pay their home mortgages, and thus keep their homes[, ]" while also benefiting lenders when "residential mortgage debtors cure their defaults and return defaulted residential mortgage loans to performing status." N.J.S.A. 2A:50-54. See also Gonzalez v. Wilshire Credit Corp., 411 N.J.Super. 582, 589 (App. Div. 2010).

The Act "was designed to make clear the rights and remedies of both borrowers and lenders prior to and throughout the foreclosure process." Wells Fargo Home Mort., Inc. v. Stull, 378 N.J.Super. 449, 456 (App. Div. 2005). N.J.S.A. 2A:50-56(c)(11) requires "foreclosure plaintiffs list on the notice of intention the name and address of the actual lender, in addition to contact information for any loan servicer involved in the mortgage." Guillaume, supra, 209 N.J. at 458. The "residential mortgage lender" to be named is defined as "any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or entity to which such residential mortgaged is assigned." N.J.S.A. 2A:50-55. A "residential mortgage" includes a "mortgage, security interest or the like, in which the security is a residential property such as a house[.]" Ibid. Further, the Act specifically obligates lenders to provide notice to borrowers at least thirty day prior to filing a foreclosure complaint setting forth the amount due and available opportunities to satisfy accumulated arrearages and bring their loan current. N.J.S.A. 2A:50-56(a). See Chaudhri, supra, 400 N.J.Super. at 137-38. We have concluded the statute demands strict compliance with these requirements. Id . at 138.

Although defendant acknowledges she received a notice of intent to foreclose on July 20, 2008, she maintains MERS, not plaintiff, was the holder of the mortgage on that date, and, therefore, MERS should have been listed as the lender, rather than plaintiff. We disagree.

Defendant's original note to Aurora includes endorsements transferring the interest to Washington Mutual Bank F.A., which in turn endorsed it to plaintiff. The mortgage, which was endorsed in blank and held by MERS, was formally assigned by MERS to plaintiff no later than three days prior to the filing of the foreclosure complaint. Plaintiff suggests its ownership of the debt was secured earlier, but proof of that fact is not verified by a document in the record. This is shown by defendant's inquiry made to plaintiff regarding the status of her mortgage account, dated one month prior to the issued notice of intent. Thus, we are satisfied the record contains sufficient support for plaintiff's assertion that it, not MERS, owned the debt and properly issued the notice of intent to foreclose.

A similar question was settled by the Court in Guillaume, supra, where MERS held the mortgage as nominee for the lender and issued the notice of intent to foreclose to the borrower. 209 N.J. at 458. The Court determined MERS was not the owner of the note making the notice of intention defective because it failed to inform the borrower of the name of the lender. Id . at 472-75.

Here, the notice of intent clearly identified plaintiff as the party in interest and instructed defendant to provide arrearage payments to plaintiff's address. Moreover, defendant's suggested confusion regarding the actual lender is undercut by her inquiry before she received the notice of intent. We have no hesitancy in concluding the intended purpose requiring statutory notice of intent was fulfilled. See Id . at 480 (stating given defendant's "thorough familiarity" with the mortgage status, the court's refusal to dismiss the foreclosure complaint for violation of N.J.S.A. 2A:50-56(c)(11) was appropriate).


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