INDYMAC BANK, F.S.B v. ELIZABETH BURNETT

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3529-09T3

INDYMAC BANK, F.S.B.,

Plaintiff-Respondent,

v.

ELIZABETH BURNETT,

Defendant-Appellant.

_______________________________________

April 29, 2011

Argued January 26, 2011 - Decided

Before Judges Fuentes, Ashrafi and Nugent.

On appeal from Superior Court of New Jersey,

Chancery Division, Monmouth County, Docket No. F-35399-07.

James M. Cutler argued the cause for appellant.

Michael S. Hanusek argued the cause for respondent (Fein, Such, Kahn & Shepard, P.C., attorneys; Mr. Hanusek, on the brief).

PER CURIAM

Arguing that she did not receive notice of the adjourned date of the sheriff's sale of her home, defendant Elizabeth Burnett appeals from an order of the Chancery Division denying her application to set aside the sale. We affirm.

Defendant lives in Belmar, New Jersey, with her elderly and infirm mother and grandmother. In December 2006, defendant refinanced the mortgage loan on her home. She executed a mortgage for funds sufficient to pay off her existing mortgage of $378,703.57 and to leave her a cash balance of $19,346.95, which defendant used to pay off a car loan and make improvements to the property. Subsequently, defendant defaulted on the monthly payments due on the refinanced mortgage loan.

Plaintiff IndyMac Bank, F.S.B., which came to own the mortgage and note, filed a complaint in foreclosure on December 19, 2007. Defendant did not file an answer or otherwise appear in response to the foreclosure complaint and, a final judgment of foreclosure was entered on July 14, 2008, in the amount of $450,628.11. Defendant did not appeal the foreclosure judgment or otherwise move for relief at that time. According to defendant, in the summer of 2008, she began efforts to obtain modification of her loan agreement so that she might keep her home.

On September 17, 2008, the Monmouth County Sheriff sent defendant a notice by certified mail, return receipt requested, informing her that the property was scheduled for a sheriff's sale on September 29, 2008. The notice was returned as unclaimed by defendant, but defendant acknowledges she received notice of the pending sale by means of the notice posted at the property.

On September 24, 2008, defendant received a document on letterhead of IndyMac Bank Loan Modification Department indicating that plaintiff had agreed to enter into a forbearance agreement on the foreclosure. The terms included a payment schedule requiring that defendant make six payments over the next six months totaling more than $70,000, including a balloon payment of more than $50,000 due in February 2009. The proposal also stated that plaintiff might re-evaluate the payment terms if defendant were to give thirty days' notice that she could not make the balloon payment. In addition, the proposed agreement promised that "IndyMac Bank will suspend collections and/or foreclosure upon receipt of the signed agreement and the deposit," and it reserved to plaintiff the following remedies if defendant were to default on the payment schedule:

the right to terminate this agreement, to demand immediate payment of all remaining arrangement [sic] and to resume collections and/or foreclosure at the point the servicing was previously suspended without further notice. If your loan is in foreclosure and you default under any terms or conditions of this agreement IndyMac Bank reserves the right to re-commence the foreclosure actions immediately with no further notice to you, your representatives or agents.

Defendant made three timely payments under the agreement. In response, plaintiff adjourned the scheduled sheriff's sale three times first to December 8, 2008, next to December 15, 2008, and finally to March 2, 2009. Plaintiff contends it sent notices to defendant by regular mail regarding these adjournments, but defendant denies receiving the last two of the notices. The manner and sufficiency of plaintiff's notifying defendant of the adjourned dates for the sheriff's sale is at the heart of the dispute between the parties.

Defendant failed to make the fourth and any additional payments under the forbearance agreement. Instead, she retained a loan modification agency, which referred her to a law firm. An attorney from that firm contacted plaintiff on February 9, 2009, to advise that he would be representing defendant. By form letter dated February 16, 2009, plaintiff acknowledged the new modification agency's participation in the matter but otherwise made no representation as to the status of defendant's loan, the foreclosure judgment, or the sheriff's sale then scheduled for March 2, 2009.

On March 2, bad weather caused the closing of the sheriff's office, and the sale was adjourned by the sheriff's office to March 9, 2009. No further notice was sent to defendant regarding the weather-related adjournment. The sale occurred on March 9, and plaintiff purchased the property. A sheriff's deed was issued to plaintiff on March 20, 2009, and plaintiff recorded the deed on April 3, 2009.

Defendant contends that she first learned of the sale from a realtor on March 25, 2009. She retained her current attorney at that time and applied on April 6, 2009, to the Chancery Division to vacate the sale. She alleged failure of plaintiff to provide notice of the actual date of the sheriff's sale. On April 15, 2009, the Chancery Division entered an order to show cause with temporary restraints prohibiting plaintiff from selling or otherwise encumbering the property, and also prohibiting plaintiff from evicting defendant on the condition that she pay a monthly use and occupancy fee of $1,000 to plaintiff.

The court adjourned the return date of the order to show cause several times to facilitate potential modification of defendant's loan, but plaintiff and defendant could not reach an agreement. An evidentiary hearing was held in November 2009 on the question of whether proper notice had been provided to defendant of the adjournments. An attorney for plaintiff testified at the hearing regarding his firm's procedures in mailing notices of sheriff's sales and their adjournments. He testified it was standard procedure at his law firm to send the first notice of a sheriff's sale by registered mail, but regular mail was used for subsequent notices of adjournments.

The witness had no personal knowledge of the specific mailings to defendant because a large volume of such notices was routinely sent from his office, and the firm only kept a computer record of adjournment notices, not hard copies in individual case files. The attorney testified about the regular procedures used to notify the sheriff of plaintiff's agreement to adjourn a sale, and stated that a copy and properly-merged mailing labels were automatically generated for mailing to a mortgagor such as defendant.

Because the attorney had no direct knowledge of the process used in his firm's mail room, and defendant testified at the hearing that she did not receive the notices, the court insisted upon and received a supplemental certification from plaintiff to establish the mailing procedures. An employee of plaintiff's law firm provided a certification that thoroughly outlined those procedures, explaining that sealed letters were picked up from the mail bins, sent through a stamping machine, and placed in the lobby of the law firm offices for pick-up by the Postal Service. The employee further stated he had "never been advised that a particular piece of mail was not mailed" in the course of his eight years of employment.

After considering the evidence presented at the hearing, the Chancery Division placed an oral decision on the record on February 15, 2010, denying defendant's application to set aside the March 9, 2009 sale. An order to that effect was entered on February 18, 2010, thereby discharging the order to show cause and terminating the temporary restraints. This appeal followed.

Defendant's sole contention on appeal is that the sheriff's sale should be set aside because plaintiff failed to provide proper notice of the date of the adjourned sale. Defendant cites First Mutual Corporation v. Samojeden, 214 N.J. Super. 122 (App. Div. 1986), for the proposition that a foreclosing mortgagee is required to provide a defaulting party with actual notice of all adjournments of sale dates. Relying on our statement in Samojeden that interested parties are entitled to "actual knowledge" of an adjourned date of sale, id. at 123, defendant argues that plaintiff was required to prove that its notices of the adjourned dates were received by defendant. In addition, defendant contends the sale of her home must be vacated because there is no dispute that a notice was not sent for the final adjournment from March 2 to March 9, 2009.

Plaintiff responds that the New Jersey Court Rules speak only to the requirement that notices of sale be sent, and they create no burden on a mortgagee to show that such notices were in fact received by a mortgagor. According to plaintiff, we expressly stated in Samojeden that formal notice by certified mail is not required for adjourned dates of a sheriff's sale, as it is under Rule 4:65-2 for an initial notice of the sale. See Samojeden, supra, 214 N.J. Super. at 128. Finally, plaintiff argues that ample evidence showed that the adjournment notices were properly sent to defendant by regular mail.

Because defendant's argument asserts misapprehension by the trial court of the legal standard applicable to notice of adjournments, our standard of review is plenary from a question of law. See Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

Rule 4:65-2 addresses the procedure for providing initial notice of a sheriff's sale on a judgment of mortgage foreclosure:

[N]otice of the sale shall be posted in the office of the sheriff of the county or counties where the property is located, and also, in the case of real property, on the premises to be sold, but need not be posted in any other place. The party who obtained the order or writ shall, at least 10 days prior to the date set for sale, serve a notice of sale by registered or certified mail, return receipt requested, upon (1) every party who has appeared in the action giving rise to the order or writ and (2) the owner of record of the property as of the date of commencement of the action whether or not appearing in the action . . . .

In this case, there is no dispute that plaintiff complied with these formalities as to the initial September 29, 2008 date for the sheriff's sale.

Rule 4:65-4 addresses adjournments of sheriff's sales but says nothing about further notice requirements. In Samojeden, supra, 214 N.J. Super. 122, we were called upon to consider whether notice of adjourned dates is nevertheless required. In that case, property encumbered by three mortgages was foreclosed upon by the holder of the second mortgage. Id. at 124. Proper notice of the initial date of sale was provided to the mortgagors and the junior lienholder. After the mortgagors brought their payments up to date on the second mortgage, the sale was repeatedly adjourned without any further notice as the mortgagors continued making monthly payments. Id. at 124-25. About one year after the initial date set for the sheriff's sale, the second mortgagee decided not to allow any further adjournments, and the sheriff's sale occurred without any new notice of its date to the mortgagors or junior lienholder. Id. at 125. In a motion to vacate the sale, the junior lienholder argued it would have appeared at the sale and bid on the property had it been aware the sale had been rescheduled. Ibid.

On appeal, we acknowledged that the question of notice of adjournments raised a "novel issue" not addressed by Rules 4:65-2 or -4. We held "as a matter of fundamental fairness these rules must be construed as entitling interested parties to actual knowledge of the adjourned date upon which the sale actually takes place." Samojeden, supra, 214 N.J. Super. at 123. Because "[e]ffective notice is the cornerstone of procedural due process" on which "[o]ur rules of court are constructed," we concluded that "the failure of Rule 4:65-2 expressly to provide for the giving of notice of an adjourned sale does not bespeak an intention that no such notice need be given." Samojeden, supra, 214 N.J. Super. at 126.

At the same time, we denied suggesting "that notice of the adjourned sale must in all circumstances necessarily meet the formal requirements imposed by Rule 4:65-2." Instead, we suggested "some reasonable communication" would have sufficed in the case under review. Samojeden, supra, 214 N.J. Super. at 128. We did not "address the issue, not here raised, as to whether at all and, if so, under what circumstances, notice of an adjourned sale is required to be readvertised or reposted or served upon parties in a formal manner in compliance with Rule 4:65-2." Samojeden, supra, 214 N.J. Super. at 129.

We agree with the Chancery Division that the facts and circumstances of Samojeden are different from those in this case. In Samojeden, the junior lienholder had an interest similar to that of the second mortgagee and desired to purchase the property at the sale. In contrast, defendant in this case has made no argument that she had a similar interest. Although she argues she was seeking further modification of the loan terms, defendant conceded at the evidentiary hearing that she never contacted plaintiff directly to discuss her case after she received the initial notice of the sheriff's sale, and nothing in the record indicates that a further modification or forbearance agreement was a realistic possibility if defendant had attended the sheriff's sale on March 9, 2009.

Also, in Samojeden, the second mortgagee did not dispute that it had made no effort to provide notice of the adjournments to the interested parties. Here, plaintiff presented evidence that it mailed notice of all adjournments to defendant except the last weather-related adjournment imposed by the sheriff. Furthermore, the mortgagors in Samojeden continued making payments to the second mortgagee. Neither the mortgagors nor other interested parties had notice that the arrangement would not continue. In this case, defendant was aware that she had defaulted on payments required by her forbearance agreement, and she was on notice that plaintiff had the right to resume the sheriff's sale upon her default.

The Chancery Division concluded correctly that our holding in Samojeden did not control the outcome of this case.

Moreover, the Chancery Division found that plaintiff had in fact provided notice of all adjournments up to the March 2, 2009 date. Plaintiff presented ample evidence of the process by which notices of sale adjournments were generated, addressed, stamped, and mailed from its lawyer's office. There was no evidence that the notices to defendant deviated from those procedures, or that they were not delivered by the Postal Service. Although defendant had no personal memory of receiving any of the mailings, she conceded knowledge of at least one adjournment for which plaintiff sent notice by regular mail.

Our courts have long-recognized a presumption that "mail properly addressed, stamped and posted was received by the party to whom it was addressed." SSI Medical Servs., Inc. v. State of New Jersey, 146 N.J. 614, 621 (1996). We conclude that the Chancery Division correctly denied defendant's application to vacate the sheriff's sale on the ground that defendant did not actually receive notice of the adjourned dates through March 2, 2009.

Finally, we also reject defendant's argument that plaintiff had a duty to give her notice when the sheriff adjourned the sale for one week because of inclement weather. Plaintiff had no control over the decision or timing of that adjournment, and defendant would have learned about it from the sheriff's office had she intended to pursue any claims or remedies on the March 2, 2009 scheduled date and made contact with the sheriff's office. Defendant did not have a right to another written notice from plaintiff of the weather-related adjournment.

Affirmed.