U.S. BANK v. DONNA MARIE FRASSETTO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0348-14T1

U.S. BANK, NATIONAL ASSOCIATION

NOT IN ITS INDIVIDUAL CAPACITY,

BUT SOLELY AS TRUSTEE FOR THE

RMAC TRUST, SERIES 2013-1T,

Plaintiff-Respondent,

v.

DONNA MARIE FRASSETTO,

Defendant-Appellant.

__________________________________

October 23, 2015

Submitted September 28, 2015 Decided

Before Judges Fasciale and Nugent.

On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. F-7792-12.

Donna Marie Frassetto, appellant pro se.

Pluese, Becker, & Saltzman, L.L.C., attorneys for respondent (Stuart H. West, on the brief).

PER CURIAM

In this residential-foreclosure case, defendant Donna Marie Frassetto appeals from a January 11, 2013 order granting summary judgment on liability to plaintiff U.S. Bank, National Association, not in its individual capacity, but solely as trustee for the RMAC Trust, Series 2013-1T, denying defendant's motion to dismiss the complaint, and transferring the case to the Foreclosure Unit as an uncontested matter; and an August 8, 2014 order denying defendant's motion to vacate summary judgment, dismiss the complaint, and alter the amount of the final judgment. We affirm.

On July 20, 2007, defendant executed a note, borrowing $303,000 from Accredited Home Lenders, Inc. (AHL). She secured payment of the note by executing a mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for AHL. Defendant received a notice of cancelation (NOC) indicating that if she desired to cancel the transaction, she was required to notify AHL in writing at an address in Woodcliff Lake, New Jersey. On July 21, 2007, defendant ignored the NOC instructions and faxed a NOC to an unknown number in Central Islip, New York. As a result, AHL never received the NOC. Despite defendant's assertion that she canceled the transaction, she began making her mortgage payments.

In October 2008, defendant applied for and executed a modification agreement with HomEq, the mortgagee's servicing agent at that time. The agreement stated that "[defendant] agrees to pay the [n]ew [b]alance to HomEq and has no defenses, claims or offsets with respect thereto." Consequently, defendant waived any defenses and she remained obligated to repay the debt. Defendant continued making her mortgage payments for another six months.

In September 2009, MERS assigned the mortgage to Arch Bay Holdings, L.L.C., Series 2009B (Arch Bay).1 In May 2009, defendant defaulted on the note and mortgage. In approximately December 2011, Quantum Servicing Corporation (QSC), AHL's then servicing agent, provided defendant with a notice of intent (NOI) to foreclose on the property.

In April 2012, Arch Bay filed this foreclosure complaint. Defendant filed a contested answer in June 2012, without alleging violations under the Truth in Lending Act (TILA), 15 U.S.C.A. 1601 to -1667f. In September 2012, defendant filed her own complaint in the Law Division against the current servicer of the loan, Rushmore Loan Management Services, L.L.C. (Rushmore).2 The court dismissed defendant's complaint for failure to state a cause of action upon which relief can be granted pursuant to Rule 4:6-2(e).

In December 2012, Arch Bay moved for summary judgment, arguing that there were no disputed facts and it was entitled to summary judgment as a matter of law. Arch Bay's counsel acknowledged that QSC lost the note, but submitted lost-note certifications explaining that Arch Bay had possession of the note at the time it filed the complaint.3 He also explained that Arch Bay received an assignment of the mortgage before Arch Bay filed the complaint.

Defendant moved to dismiss the foreclosure complaint, contending Arch Bay lacked standing to file the complaint. In support of her motion, defendant admitted signing the note for $303,000 and executing a mortgage on the property to secure the note. Defendant maintained, however, that she had rescinded the loan in July 2007.

The court conducted oral argument on Arch Bay's summary judgment motion and defendant's motion to dismiss the complaint, and rendered an oral opinion. The judge concluded that Arch Bay had standing to file the complaint and the mortgage was valid. The judge rejected defendant's contention that she had properly rescinded the original note and mortgage. He also emphasized that defendant had entered into a modification agreement waiving any defenses that she may have had.

On January 11, 2013, the court granted summary judgment on liability to Arch Bay, struck defendant's answer, entered default against defendant, and transferred the case to the Foreclosure Unit as an uncontested matter. The judge explained to defendant that Arch Bay would be filing an application for final judgment fixing the amount due and owing. Thereafter, the matter would proceed to a sheriff sale.

In June 2014, plaintiff filed a motion for the entry of final judgment. One week later, defendant filed a motion to fix the amount due on the mortgage.4 The court then scheduled oral argument on July 25, 2014.

On July 23, 2014, two days before the return date on the motion for final judgment, and eighteen months after the court awarded summary judgment on liability to plaintiff, defendant filed a motion to vacate summary judgment and dismiss the complaint. The court treated defendant's motion as one seeking reconsideration of the January 11, 2013 order and scheduled oral argument.

In August 2014, the judge conducted oral argument on defendant's motion to vacate summary judgement and dismiss the complaint. Defendant repeated her contention that the mortgage was void because she had rescinded the loan. On August 8, 2014, the judge rejected defendant's argument and entered the order denying defendant's motion.

On September 1, 2014, the court awarded final judgment in the amount of $456,774.48. The matter proceeded to a sheriff sale, which defendant had successfully adjourned. Defendant then attempted to stay the adjourned sheriff sale pending mediation. In February 2015, the judge adjourned the sheriff sale to April 2015, but denied defendant's motion to stay. In April 2015, we denied defendant's emergent application to stay the sheriff sale.

On appeal, defendant argues that the judge erroneously granted summary judgment to plaintiff because she had rescinded the transaction in July 2007. Defendant also contends that Arch Bay lacked standing to institute this foreclosure action, and therefore, the final judgment of foreclosure is void. As a result, defendant urges us to set aside the final foreclosure judgment and vacate summary judgment on liability entered in plaintiff's favor.

I.

We begin by addressing defendant's argument that the judge erred by entering summary judgment in favor of plaintiff. Defendant's contention is premised on her assertion that the judge "abused [his] discretion by determining there is no issue as to [d]efendant [r]escinding the loan."

Summary judgment may be granted when, considering the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). When reviewing an order granting summary judgment, we apply the same standards that the trial court applies when ruling on the motion. Oyola v. Xing Lan Liu, 431 N.J. Super. 493, 497 (App. Div.), certif. denied, 216 N.J. 86 (2013).

Here, the record demonstrates that defendant failed to properly rescind the loan. Rather than following AHL's cancelation instructions by mailing AHL a written NOC at the designated New Jersey address, defendant admitted that she faxed her NOC to an unknown telephone number in Central Islip, New York. There is no evidence in this record that AHL received defendant's NOC.

Instead of taking action to follow up on her failed attempt to rescind the loan, defendant began making her mortgage payments. More than a year later, defendant applied for and received a loan modification agreement, thereby implicitly acknowledging the validity of the note and mortgage. Furthermore, defendant agreed to pay HomEq the balance due on the loan, stating in the modification agreement that she had no defenses, claims, or offsets.

Moreover, defendant did not timely raise the subject of rescission of the loan in her answer to the foreclosure complaint or her Law Division complaint. In other words, she did not make a TILA claim. Defendant raised for the first time in her opposition to Arch Bay's motion for summary judgment, approximately five and one-half years after she executed the note and mortgage, that she had rescinded the loan.5

II.

We reject defendant's contention that AHL lacked standing to file the foreclosure complaint.

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.

Arch Bay's counsel provided lost-note certifications to the judge. These certifications adhered to the requirements set forth in N.J.S.A. 12A:3-309, which provides that

a. A person not in possession of an instrument is entitled to enforce the instrument if the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, the loss of possession was not the result of a transfer by the person or a lawful seizure, and the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

b. A person seeking enforcement of an instrument under subsection a. of this section must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, 12A:3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

A vice-president of DBNTC certified that in July 2007, DBNTC received possession of the original note that defendant signed, placed the note in its custodian file, and forwarded that file to QSC. The original note, which included an allonge with an endorsement to plaintiff, remained with DBNTC. Arch Bay, the mortgagee of record, was the holder of the note in 2009, before it filed the mortgage complaint. The vice-president further certified that in October 2012, QSC returned to DBNTC the custodian file with a copy of the note.6 Therefore, based on the lost-note certifications that Arch Bay provided to the judge, Arch Bay possessed the note when it filed the complaint in April 2012.

III.

We conclude there was no error in denying defendant's motion to vacate summary judgment on liability. The judge treated defendant's motion to vacate the issuance of summary judgment in Arch Bay's favor as a reconsideration motion.

As an appellate court, we review the denial of a motion for reconsideration to determine whether the trial court abused its discretionary authority. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). Reconsideration should only be used "for those cases which fall into that narrow corridor in which either 1) the [c]ourt 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 . . . ." Id. at 384 (quoting D Atria v. D Atria, 242 N.J. Super. 392, 401-02 (Ch. Div. 1990)). Additionally, the decision to deny a motion for reconsideration falls "'within the sound discretion of the [trial court], to be exercised in the interest of justice.'" Ibid. (quoting D Atria, supra, 242 N.J. Super. at 401).

Applying this standard, we conclude that the judge did not abuse his discretion. In support of her motion to vacate summary judgment, defendant raised the same contentions that she had made in opposition to Arch Bay's summary judgment motion. The judge's decision to grant summary judgement was not palpably incorrect, and the judge did not fail to "appreciate the significance of probative, competent evidence." Ibid.

We have also considered defendant's argument regarding the judge's denial of her motion to vacate summary judgment 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[n] order for the following reasons: . . . (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.'" 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)).

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." Id. 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 (citation and internal quotation marks omitted).

To obtain relief pursuant to 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). Thus, we reject defendant's assertion that the summary judgement order on liability was void.

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) (alteration in original) (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." Perillo, supra, 48 N.J. at 341. See also Baumann v. Marinaro, 95 N.J. 380, 395 (1984) (indicating that "each case must be resolved on its own particular facts"). This is not one of those cases. Defendant executed a valid note and mortgage, modified the transaction by waiving any purported defenses, defaulted on her mortgage payments, and was unable to effectuate any further loan modifications.

Affirmed.

1 Arch Bay was the original plaintiff in this action. In December 2013, the court amended the caption of the foreclosure complaint, without objection, by substituting plaintiff's name for that of Arch Bay.

2 Defendant sought money damages for alleged violations of the Home Ownership Security Act, N.J.S.A. 46:10B-22 to -68; and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20.

3 Arch Bay relied on detailed lost-note certifications from a vice-president of Rushmore, a vice-president from Arch Bay's custodian, Deutsche Bank National Trust Company (DBNTC), as well as an attorney from a prior foreclosure firm.

4 It is evident from oral argument that defendant had no valid objection to the amount due on the mortgage, but rather, that she objected to the foreclosure proceedings.

5 Defendant's belated TILA contentions are time-barred by 15 U.S.C.A. section 1640(e).

6 Relying on the DBNTC certification, Arch Bay's counsel represented to the judge that QSC's foreclosure department had been terminated and there were no QSC individuals available with relevant knowledge regarding this transaction.