DEUTSCHE BANK NATIONAL TRUST COMPANY v. LISA CALLAHAN-HOFFMAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4168-11T4

DEUTSCHE BANK NATIONAL TRUST

COMPANY, AS TRUSTEE FOR

SOUNDVIEW HOME LOAN TRUST

ASSET-BACKED CERTIFICATES, SERIES

2006-6,

Plaintiff-Respondent,

v.

LISA CALLAHAN-HOFFMAN and

STEVEN HOFFMAN, HIS/HER HEIRS,

DEVISEES, PERSONAL REPRESENTATIVES

and HIS/HER, THEIR, or ANY OF THEIR

SUCCESSORS IN RIGHT TITLE AND INTEREST,

MR. and MRS. STEVEN HOFFMAN,

Defendants-Appellants.

_______________________________________________

April 22, 2013

 

Submitted April 8, 2013 Decided

 
Before Judges Fasciale and Maven.

 

On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-30252-08.

 

Lisa Callahan-Hoffman and Steven Hoffman, appellants pro se.

 

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

PER CURIAM

In this mortgage foreclosure case, Lisa Callahan-Hoffman and Steven Hoffman (defendants) appeal from an October 6, 2011 order denying their motion to vacate default judgment.1 We affirm.

In November 2005, defendants executed a mortgage and note to Centex Home Equity Company, LLC (Centex) regarding the property. That month, Centex assigned the mortgage to plaintiff. In March 2006, plaintiff entered into a pooling and servicing agreement as trustee with Wells Fargo Bank, N.A., as servicer. In June 2007, plaintiff recorded the assignment. In April 2008, defendants defaulted on their mortgage payments.

In August 2008, plaintiff filed the present foreclosure complaint.2 The complaint named as defendants: (1) Steven Hoffman; (2) Mrs. Steven Hoffman, his wife; (3) Lisa Hoffman; and (4) Mr. Hoffman, husband of Lisa Hoffman. On August 14, 2008, plaintiff served Steven Hoffman and Lisa Hoffman with a copy of the summons and complaint, which they ignored. In September 2008, plaintiff dismissed the suit against the improperly named parties listed in numbers (2) and (4), proceeded against defendants, and obtained default. The court entered final judgment in April 2009.

Defendants then delayed the sale repeatedly. In August 2009, the judge stayed the sale and referred the parties to mediation, which was unsuccessful. In September 2010, the judge stayed the sale again to allow for an attempt to modify the loan, which was also unsuccessful.

In September 2011, defendants moved to vacate the judgment. In October 2011, the judge denied the motion and defendants moved for reconsideration. In November 2011, the judge conducted oral argument and stated:

[COURT]: What I'm trying to figure out is why you waited so long to file a motion [to vacate] before me to satisfy the final judgment because the rules give you a year to do it.

 

[DEFENDANT]: I was unaware of that . . . .

 

[COURT]: [E]ven though you're unaware of it . . ., the rules say you've got a year to move to set it aside. And this was done two years after it, so it's even further out than I would normally consider permitting you to do.

 

. . . .

 

[COURT]: The judge [who entered final judgment] had all of [the documents and] information [plaintiff submitted] when she signed the [final judgment] order. She accepted the documents they submitted as being satisfactory to her at that time, and it was in 2009. And[,] if there's a problem with that, under Rule 4:5[0-]1 . . . you can come back before me within a year of that final judgment, not within two years. Because . . . we're not opening up judgments that are five years old

 

. . . .

 

[COURT]: -- or two years old or three years old. So[,] it's the timing of this that also is against you . . . .

 

The judge continued:

 

[COURT]: The issue then becomes[,] can this plaintiff sue you in this court and get a final judgment. And you raise issues . . . that were never raised in the original litigation. . . . [N]one of these issues were raised.[3]

 

So, the cases that you cite to that [plaintiff] ha[s] to do A, B[,] or C didn't come down from the Appellate Division until very recently. And it's very clear in their decisions that they say you don't get to raise them now unless you raised them in the past. So[,] because the way they conducted this complaint, the way they filed the complaint[,] and their answer and their assignments, that was the permitted course of action at that point.

 

It has changed since that time, but at the time they were doing it, they did it exactly the way they were supposed to be doing it.

 

Last, the judge stated:

 

I'm going to adjourn [the December 13, 2011 sheriff's sale], but here's what I want to try to do . . . . Counsel, . . . there's no legal basis for me to set aside the final judgment. I cannot do that.

 

. . . .

 

The law is very clear, and you're way out of time to [vacate the judgment]. [Plaintiff] did exactly what the rules required that [it] do at the time [it] did it. [It is] entitled to [its] final judgment. I'm not setting it aside. The only concern I have is just trying to give you one last bite of the apple to try to see if the bank will take a look at your current income if maybe you're in a little better position. I can't force them to modify the agreement. If you don't fit under the [Home Affordable Modification (HAMP)] standards,[4] there's nothing I can do. . . .

 

. . . .

 

I'm just trying to get somebody to take an extra look at this before . . . they ask for [a] sheriff's sale. I want them to give [defendants] one more opportunity to be able to try to mediate this if at all possible.

 

. . . .

 

So[,] I'm going to adjourn [the sheriff's sale] until the 31st of January. . . .

 

. . . .

 

[Mediation is set for] February 16, 2012[,] at 10:00 a.m. . . .

 

The mediation failed. In April 2012, the judge denied

defendants' motion for reconsideration. This appeal followed.5

On appeal, defendants argue primarily that the foreclosure judgment must be vacated because plaintiff misled them, the assignment is defective, and plaintiff lacked standing to file the complaint. They also argue that the judge erred by failing to comply with amendments to Rules 1:5-6, 4:64-1, and 4:64-2.

Our standard of review is well-settled. As Justice Patterson recently reiterated in US Bank National Association v. Guillaume, 209 N.J. 449, 467 (2012), a "party seeking to vacate [a default] judgment" in a foreclosure action must satisfy Rule 4:50-1, which states in pertinent part that

[o]n motion, with briefs and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . . (d) the judgment or order is void; . . . 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." Ibid. (internal quotation marks omitted).

We afford "substantial deference" to the trial judge and reverse only if the judge's determination amounts to a clear abuse of discretion. Ibid. An abuse of discretion is when a decision is "made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Ibid. (internal quotation marks omitted).

In support of their motion to vacate, defendants relied on subsections (a), (d), and (f) of Rule 4:50-1. We conclude that defendants have not demonstrated that they are entitled to relief under any of these sections. As such, the judge did not abuse his discretion.

Regarding their Rule 4:50-1(a) contention, defendants filed their motion to vacate beyond the one-year limitation that Rule 4:50-2 imposes. As a result, they are not entitled to relief under subsection (a). Furthermore, defendants have not demonstrated excusable neglect and a meritorious defense as required under this section of the rule and case law. See Guillaume, supra, 209 N.J. at 469.

"Excusable neglect" may be found when the default was "'attributable to an honest mistake that is compatible with due diligence or reasonable prudence.'" Guillaume, supra, 209 N.J. at 468 (quoting Mancini v. EDS, 132 N.J. 330, 335 (1993)). Here, plaintiff properly served defendants, and they ignored service of process. We reject defendants' contention that plaintiff somehow misled them by dismissing part of the lawsuit. Defendants participated in the lawsuit after the dismissal of the improperly pled parties, obtained court-authorized stays of the sale, and did not file their motion until after their attempts at mediation were unsuccessful.

We reject defendants' reliance on subsection (d) because they filed their motion untimely approximately twenty-nine months after final judgment had been entered and they are unable to show, on the merits, that they are entitled to a vacation of the judgment. "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." Deutsche Bank Nat'l Trust Co. v. Russo, 429 N.J. Super. 91, 98 (App. Div. 2012) (citing R. 4:50-2). Under certain circumstances, "equitable considerations may justify a court in rejecting a foreclosure defendant's belated attempt to raise as a defense the plaintiff's lack of standing." Id. at 99-100. Such is the case here.

We stated in Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012), 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.

 

Like Angeles, defendants failed to deny responsibility for their debt, waited to file their motion to vacate until numerous attempts to mediate failed, and provided no reasonable explanation for their delay.

Moreover, defendants are unable to show, on the merits,

that they are entitled to vacate the judgment pursuant to subsection (a) or (d). "'As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt.'" Deutsche Bank Nat'l Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)). Plaintiff met this requirement.

Plaintiff submitted to the trial court Centex's assignment of mortgage, "certified to be a true and correct copy" to plaintiff on November 14, 2005, which plaintiff recorded on June 18, 2007, prior to filing its complaint in August 2008. See R. 4:64-2(a). On November 7, 2005, an allonge to the note was endorsed in blank, thereby granting plaintiff "holder" status, N.J.S.A. 12A:3-201(b); Russo, supra, 429 N.J. Super. at 97, and providing it with standing to foreclose on the debt, Ford, supra, 418 N.J. Super. at 597-98. Moreover, in accordance with Rule 4:64-1(b)(10), plaintiff's complaint indicated that Centex was the original mortgagee and thereafter assigned the mortgage to plaintiff.

Next, defendants argue that plaintiff failed to comply with amended foreclosure Rules 4:64-1 and 4:64-2. On June 9, 2011, the Supreme Court adopted substantial amendments to the rules governing mortgage foreclosure actions. The Court adopted the amendments "in response to so-called 'robo-signing' in foreclosure and bankruptcy filings in which employees of [the plaintiff or its] mortgage lenders or servicers allegedly submit affidavits without personal knowledge of the information contained in such documents." Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:64-1 (2013). The rules were effective immediately.

In an order accompanying the newly adopted rules, the Chief Justice addressed cases in which judgment was entered but no sale of the property has occurred. The order provides in pertinent part that

in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit, . . . (a) stating that the attorney has communicated with an employee or employees of the plaintiff or the plaintiff's mortgage loan servicer (1) who personally reviewed the affidavit of amount due and the original or true copy of the note, mortgage, and recorded assignments, if any, submitted to the court, and (2) confirmed their accuracy; (b) setting out the date and mode of communication employed; (c) setting out the name(s), title(s)[,] and responsibilities in those titles of the plaintiff's employee(s) or the employee(s) of the plaintiff's mortgage loan servicer with whom the attorney communicated; and (d) attesting that the complaint and all subsequent documents filed with the court comport with the requirements of Rule 1:4-8(a).[6]

Here, plaintiff obtained its judgment in April 2009, before the effective date of these rules. Thus, the requirements of Rules 4:64-1(a)(2) and 4:64(d) did not require plaintiff to attach a certification to its complaint.

The order that the Chief Justice entered, however, states that "in all residential mortgage foreclosure actions in which judgment has been entered but no sale of the property has occurred as of [June 9, 2011], plaintiff's counsel before the sale of the property shall be required to file an affidavit" providing certain information. It is unclear whether the property has been sold; however, no such affidavit was produced on appeal. Therefore, our affirmance is without prejudice for defendants to file promptly with the trial court a Rule 4:50-1 motion on that discrete issue if warranted.

Finally, we disagree that Rule 4:50-1(f) justifies vacation of the judgment. Subsection (f) permits a judge to vacate a default judgment for "any other reason justifying relief from the operation of the judgment or order," and "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks omitted). The applicability of this subsection is limited to "situations in which, were it not applied, a grave injustice would occur." Ibid. (internal quotation marks omitted). On this record, defendants have not shown any such "exceptional circumstances."

After a thorough review of the record and consideration of the controlling legal principles, we conclude that defendants' remaining arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 Defendants also appeal from an April 23, 2009 order entering final judgment against them, and an April 11, 2012 order denying their motion for reconsideration.

2 In May 2007, plaintiff filed a previous foreclosure complaint against defendants; they cured their initial default, and in October 2007, the court dismissed that action.

3 Defendants argued that the note was not properly endorsed, and that plaintiff lacked standing to foreclose on the note.

4 HAMP permits unemployed homeowners experiencing difficulties paying their mortgage to "lower [their] monthly mortgage payments in order to make them more affordable and sustainable for the long-term." Home Affordable Modification Program, MakingHomesAffordable.gov, http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx (last visited Apr. 11, 2013).

5 In December 2012, we denied defendants' motion to stay the sale pending appeal. The record does not reflect whether the sale has occurred.

6 See N.J. Judiciary, Residential Mortgage Foreclosure Rules: Amendments to Rules 4:64-1 and 4:64-2; Revised Form Certifications/Affidavits (June 9, 2011), available at http://www.judiciary.state.nj.us/notices/2011/n110610f.pdf.