MARATHON STRUCTURED ASSET SOLUTIONS TRUST v. KIRBY COMBS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1731-11T3

MARATHON STRUCTURED ASSET

SOLUTIONS TRUST,

Plaintiff-Respondent,

v.

KIRBY COMBS,

Defendant-Appellant.

________________________________________________________________

December 12, 2012

Argued September 20, 2012 - Decided

Before Judges Koblitz and Lisa.

On appeal from Superior Court of New Jersey, Chancery Division, Gloucester County, Docket No. F-1369-08.

Kirby Combs, appellant, argued the cause pro se.

Michael S. Hanusek argued the cause for Kondaur Capital Corporation, assignee of respondent (Fein, Such, Kahn & Shepard, P.C., attorneys; Joshua B. Sears, on the brief).

PER CURIAM

Kirby Combs appeals from an October 31, 2011 order denying his motion to restrain the Gloucester County Sheriff from releasing the deed to his former property to Kondaur Capital Corporation (Kondaur). This foreclosure case has a somewhat complicated and lengthy history. Combs maintains that because Kondaur was never the named plaintiff, it may not legally receive the deed after a final judgment of foreclosure and sheriff's sale. After reviewing the record in light of the contentions advanced on appeal, we affirm.

Combs and his wife1 executed a mortgage, dated July 20, 2007, securing the sum of $849,250, to Option One Mortgage Corporation (Option One), pledged against property located in Mullica Hill, Gloucester County. Option One sent Combs a notice of intent to foreclose dated November 5, 2007, identifying itself as the holder of the mortgage and indicating that Combs had defaulted on the mortgage. Option One then filed a foreclosure complaint against Combs on January 10, 2008.

Combs failed to file an answer and a default was entered on March 3, 2008. Nearly two months after the default, Combs filed a late, non-contesting answer.2 Combs then filed an unsuccessful motion to vacate the default, which was denied on August 13, 2008.

The mortgage was subsequently assigned on two occasions. First, Option One assigned the mortgage to plaintiff Marathon Structured Asset Solutions Trust (Marathon) on May 27, 2009.3 Next, the mortgage was assigned to Kondaur on June 2, 2010.4

On August 11, 2010, after Marathon assigned the mortgage to Kondaur, an order substituting Marathon for Option One was filed, amending the complaint and all subsequent pleadings to reflect Marathon as plaintiff. That same day, final judgment was entered in favor of Marathon in the amount of $1,057,010.30 plus interest and counsel fees of $7,500. No order substituting Kondaur for Marathon was ever sought by plaintiff's counsel, which remained the counsel of record throughout the proceedings.5

Kondaur wrote letters to Combs in August 2010 and March 2011, indicating that it was "the holder of the loan connected to the property" and offering Combs up to $20,000 "for a fresh start" if he vacated the property. Combs did not take Kondaur up on its offers. After numerous adjournments, the sheriff s foreclosure sale took place on July 27, 2011.6 Marathon successfully bid on the property for $100. Marathon then assigned its bid to Kondaur. At oral argument, the parties informed us that Combs was finally evicted from the property in August 2012, almost five years after he defaulted on the mortgage.

On appeal Combs raises the following issues:7

POINT I: THE STATE COURT DID MAKE ERR IN DENYING AN EMERGENT MOTION TO STAY DEED AND VACATE A FRAUDULENT SHERIFF SALE CONDUCTED BY A LENDER WHO HAD NO LEGAL RIGHTS TO THE PROPERTY KNOWN AS 205 SHERWIN ROAD, MULLICA HILL, NJ WHICH VIOLATES THE CONSUMER FRAUD ACT, N.J.S.A. 56:8-1 AND THE NEW JERSEY FRAUDULENT TRANSFER ACT, N.J.S.A 25:2-25, N.J.S.A 25:2- 27 AND N.J.S.A. 25:2-20.

POINT II: THE STATE COURT DID ERR IN DENYING FRAUDULENT SHERIFF ORDER TO BE VACATED AND DISMISSED PURSUANT TO THE NEW JERSEY PROVISION OF THE FAIR FORECLOSURE ACT N.J.S.A 2A:50-56 (C) (11).

POINT III: THE COURT DID ERR IN DENYING A FRAUDULENT SHERIFF ORDER TO BE BACATED AND DISSMISSED AND ALLOWING A FRAUDULENT CONVEYANCE IN TITLE PURSUANT TO THE NEW JERSEY FRAUDULENT TRANSFER ACT N.J.S.A 25:2-25, N.J.S.A. 2- 27 AND N.J.S.A 25:2-20.

I

Combs asserts that we erred in refusing to hear his emergent application to stay the transfer of the deed to Kondaur on November 1, 2011. Combs subsequently filed another emergent application on May 21, 2012, seeking a stay pending appeal, which we heard and denied on May 23, 2012. Combs appealed to the Supreme Court and on May 31, 2012, the Court denied the stay. Pursuant to Rule 2:9-8, "[w]hen necessary, temporary relief, stays, and emergency orders may be granted, with or without notice . . . ." As Combs filed another emergent application after the first was not heard, and by this opinion we decide this appeal, this issue is moot.

"When a party's rights lack concreteness from the outset or lose it by reason of developments subsequent to the filing of suit, the perceived need to test the validity of the underlying claim of right in anticipation of future situations is, by itself, no reason to continue the process." JUA Funding Corp. v. CNA Ins., 322 N.J. Super. 282, 288 (App. Div. 1999) (citing Milk Drivers & Dairy Emps. v. Cream-O-Land Dairy, 39 N.J. Super. 163, 177 (App. Div. 1956)).

II

Combs argues that the motion judge erred in denying relief because of Marathon's violation of: (a) the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195, (b) the Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-53 to -68, and (c) the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34. We disagree.

"Unquestionably, the Chancery Division has the authority to set aside a sheriff's sale and order a resale of property. However, the exercise of this power is discretionary and must be based on considerations of equity and justice." First Trust Nat'l Assoc. v. Merola, 319 N.J. Super. 44, 49 (App. Div. 1999) (citing Crane v. Bielski, 15 N.J. 342, 346, 359 (1954). The court's discretion to set aside a judicial sale should be "sparingly exercised" and "a sale so conducted shall be vacated only when necessary to correct a plain injustice." Id. at 52 (quoting Karel v. Davis, 122 N.J. Eq. 526, 529 (E. & A. 1937)). "[O]ur courts will set aside a sheriff's sale for fraud, accident, surprise, or mistake, irregularities in the conduct of the sale, or for other equitable considerations[.]" Id.at 50 (citing Karel, supra, 122 N.J. Eq. at 528).

In her October 31, 2011 order, the judge denied Combs' motion to "Prohibit Sheriff of Gloucester County to release a deed to a Pretender Lender known as Kondaur Capital Corporation." The judge denied the application because "Def[endant] defaulted on [a] $849,250 mortgage after making one payment. Judgment was entered 8/11/10. There is no evidence of fraud."

"Because foreclosure proceedings seek primary or principal relief which is equitable in nature ... [the] application to open, vacate or otherwise set aside a foreclosure judgment or proceedings subsequent thereto is subject to an abuse of discretion standard." United States v. Scurry, 193 N.J. 492, 502-03 (2008) (citing Wiktorowicz v. Stesko, 134 N.J. Eq. 383, 386 (E. & A. 1944)). In effect, a trial judge's application or denial of equitable remedies should be disturbed only if "its finding was so wide off the mark that a manifest denial of justice resulted." Green v. N.J. Mfrs. Ins. Co., 160 N.J.480, 492 (1999) (internal quotation marks and citations omitted).

Accordingly, the abuse of discretion standard should be applied to Combs' substantive complaints under: (a) the CFA, (b) the FFA, and (c) the UFTA.

A. CFA

Combs asserts that respondent violated the CFA on three grounds. First, Marathon misrepresented itself as holder of the mortgage by participating in the January 3, 2011 court-ordered mediation after it had already assigned its interest in the mortgage to Kondaur. Second, Marathon committed consumer fraud by submitting foreclosure paperwork after it had already assigned the mortgage to Kondaur. Third, Marathon committed fraud by stating that it possessed the note and owned the mortgage.

Kondaur responds that there was no knowing or intentional misrepresentation in Marathon proceeding to the sheriff s sale and the fact that the property was sold by Marathon and not Kondaur does not damage Combs, who was without a defense to the foreclosure.

The CFA limits private causes of action to instances where a plaintiff can,

allege each of three elements: (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss.

[Dabush v. Mercedes-Benz USA, LLC, 378 N.J. Super. 105, 114 (App. Div.) (quoting New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003)), certif. denied, 185 N.J. 265 (2005).]

Clearly, Kondaur, should have been substituted as plaintiff after it was assigned the mortgage. However, Combs did not suffer any ascertainable loss due to this error. Although we are concerned that the court-ordered mediation went forward to an unsuccessful conclusion with the participation of Marathon rather than Kondaur, we have no reason to believe the mediation would have been successful if the correct lender participated.

Accordingly, even if he were able to prove unlawful conduct by Marathon, Combs has no claim pursuant to the CFA.

B. FFA

Combs argues that pursuant to N.J.S.A. 2A:50-56(c)(11),8 the judgment of foreclosure should be vacated because the notice of intention to foreclose identified Option One, and therefore Marathon lacked standing to foreclose. At the time the notice of foreclosure was provided on November 5, 2007, and at the time the foreclosure complaint was filed on January 10, 2008, Option One was the holder of Combs' mortgage.

Pursuant to N.J.S.A.2A:50-56(a), if an individual defaults on a mortgage, a lender must provide at least thirty days advanced notice before accelerating the mortgage obligation or commencing foreclosure proceedings. Combsdoes not allege that Option One s procedures were inadequate. It appears that he believes the lenders who were later assigned the mortgage, after the foreclosure complaint was filed, should have had to start the foreclosure proceedings anew. The FFA does not support such an interpretation, nor do the cases relied on by Combs.

Counter to Combs' argument, Bank of New York v. Laks, 422 N.J. Super. 201 (App. Div. 2011), overruled by U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (2012), is not relevant to the matter at hand. The issue raised in that case involved the remedies available for not naming the correct lender at the time of the service of the notice of intent to foreclose. Id. at 204. At the time of service, Option One was the lender.

Combs also cites Mitchell, supra, in support of his argument that Marathon did not have standing to participate in a sheriff's sale. Mitchell found that the plaintiff lacked standing to file a foreclosure complaint because it did not possess either the note or an assignment of the mortgage. Unlike in Mitchell, however, at the time the foreclosure complaint was filed, Option One did hold the mortgage, Mitchell, supra, 422 N.J. Super. at 216, and thus had standing.

C. UFTA

Combs asserts that respondent violated the UFTA, specifically N.J.S.A. 25:2-25 and -27. Under the plain language of the statute, a creditor is defined as "a person who has a claim." N.J.S.A. 25:2-21. A debtor is defined as "a person who is liable on a claim." Ibid. Claim is defined as "a right to payment." Ibid. The UFTA's purpose is "to prevent a debtor from placing his or her property beyond a creditor's reach. Underlying the [UFTA] is the notion that a debtor cannot deliberately cheat a creditor by removing his property from 'the jaws of execution.'" Gilchinsky v. Nat l Westminster Bank N.J., 159 N.J.463, 475 (1999) (citations omitted). Combs is the debtor and thus he does not fall within the protective scope of the UFTA.

Marathon bid at the sheriff's sale, as any member of the public could have done. It then assigned its successful bid to Kondaur, the rightful owner of the mortgage. This transfer ensured that the correct owner of the mortgage obtained the property. The failure to seek substitution of plaintiff did not affect Combs' legal rights. All other arguments raised by Combs are without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).

1 Only Combs filed this appeal. We will use "Combs" to refer to defendants in this opinion.

2 Combs wrote, "I am responding [o]ut of [t]ime but ask the courts to reconsider. I was faced with financial hardship due to the recent economy shift. My field of occupation is construction/building. Recently the economy appears to be picking up but still remains rather slow. I have recently obtained several contracts which will enable me to begin paying the agreed mortgage payments on time starting July 1, 2008."

3 This assignment was filed with the court on June 10, 2009. However the date an assignment is filed does not impact its validity. See Deutsche Bank Nat l Trust Co. v. Mitchell, 422 N.J. Super. 214, 219 n.6 (App. Div. 2011) (citing EMC Mort. Corp. v. Chaudhri, 400 N.J. Super. 126 (App. Div. 2008).

4 According to a letter from Kondaur to Combs dated March 4, 2011, an assignment to the servicer, Kondaur III Capital Trust Series 2010-1, was effective on June 16, 2010. The assignment to Kondaur was recorded on May 18, 2011.

5 Counsel represents that it submitted the request for final judgment to the Foreclosure Unit on September 30, 2009, when Marathon was the owner of the mortgage and therefore the proper plaintiff.

6 After the foreclosure sale, Combs filed a Chapter 13 bankruptcy petition. The automatic stay was vacated on October 18, 2011.

7 We reproduce the point headings as written by Combs. We discuss his three points in the following two sections.

8 This provision reads in part,

c. The written notice shall clearly and conspicuously state in a manner calculated to make the debtor aware of the situation:
 

...

 
(11) the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact if the debtor disagrees with the lender's assertion that a default has occurred or the correctness of the mortgage lender's calculation of the amount required to cure the default.

[N.J.S.A. 2A:50-56(c)(11).]