HSBC BANK USA v. DAVID GONZALEZ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

HSBC BANK USA, NATIONAL

ASSOCIATION as Trustee on

behalf of the holders of the

OPTEMAC ASSET-BACKED PASS-

THROUGH CERTIFICATES, SERIES

2006-2,

Plaintiff-Respondent,

v.

DAVID GONZALEZ, his heirs,

devisees, and personal

representatives, and his,

her, their or any of their

successors in right, title

and interest; MORTGAGE

ELECTRONIC SYSTEMS, INC., as

nominee for OPTEUM FINANCIAL

SERVICES, LLC; MORTGAGE

ELECTRONIC REGISTRATION

SYSTEMS, INC., as nominee for

SELECT PORTFOLIO SERVICING,

INC.; HUDSON COUNTY BOARD OF

SOCIAL SERVICES; FAST TRANSACT,

Defendants,

and

AMELSY GONZALEZ, her heirs,

devisees, and personal

representatives, and his,

her, their or any of their

successors in right, title

and interest,

Defendant-Appellant.

__________________________________

March 27, 2015

Submitted September 9, 2014 Decided

Before Judges Ostrer and Hayden.

On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-55576-09.

Tomas Espinosa, attorney for appellant.

Zucker, Goldberg & Ackerman, LLC, attorneys for respondent (Jaime R. Ackerman, of counsel and on the brief).

PER CURIAM

Defendant Amelsy Gonzalez (Amelsy)1 appeals from the Chancery Division's August 23, 2013, order denying her motion to vacate a final judgment of foreclosure entered October 6, 2011. This was defendant's third motion to vacate the foreclosure judgment. Having considered defendant's arguments in light of the record and applicable principles of law, we affirm.

In May 2006, David, then Amelsy's husband,2 borrowed $392,000 from Opteum Financial Services. Only David signed the note, but Amelsy and David signed a contemporaneous rider. The note was secured by a mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for the lender, which was executed by both David and Amelsy, on their home in Maywood. In December 2008, David and Amelsy entered into a loan modification agreement that restated the principal due as $408,657.80, which included over $12,000 in unpaid interest. Amelsy and David ceased payments on the note in July 2009 and remained in default thereafter.

In October 2009, plaintiff HSBC Bank USA (HSBC), as trustee on behalf of holders of OPTEMAC asset-backed pass-through certificates, filed a foreclosure complaint. Plaintiff served the complaint upon Amelsy and David.3 Neither defendant filed an answer or otherwise appeared. Default was entered in June 2010 and, after appropriate notice, plaintiff obtained the final judgment of foreclosure in October 2011. The property was listed to be sold at a sheriff's sale on various dates, beginning in November 2012. The record indicates that Amelsy requested at least two adjournments. The sheriff's sale ultimately occurred on March 8, 2013.

The day before the March 8 sale, David and Amelsy filed the first of three challenges to the final judgment. Although denominated a "motion for reconsideration," their pro se application sought an order vacating the default judgment on the grounds that HSBC lacked standing, and dismissing the foreclosure complaint for failure to state a claim under Rule 4:6-2(e).

Judge Menelaos W. Toskos denied the motion by an order entered April 19, 2013. In a succinct written opinion, Judge Toskos held that reconsideration was not warranted under Rule 4:49-2 and the standards set in Cummings v. Bahr, 295 N.J. Super. 374 (App Div. 1996), and D'Atria v. D'Atria, 242 N.J. Super. 392 (Ch. Div. 1990).

Judge Toskos also found that defendants did not satisfy the prerequisites for relief under Rule 4:50-1. Judge Toskos held the "defendants made no argument that would excuse their neglect in not filing an answer or participating in this matter for three and a half years." Judge Toskos also concluded that defendants' standing arguments failed to constitute a meritorious defense. The record evidence demonstrated that the note was in plaintiff's possession prior to the filing of the complaint. In addition, the assignment of the mortgage was executed and filed before the complaint was filed. Citing N.J.S.A. 12A:3-301 and Deutsche Bank Nat. Trust Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011), Judge Toskos also found no merit to defendants' motion to dismiss for failure to state a claim.

Defendants did not appeal the court's order. Instead, on June 13, 2013, Amelsy alone filed a pro se motion to "set aside judgment." She alleged that she and David had experienced marital problems since April 2008. She alleged that they lived in separate quarters in their Maywood home, and David was living separately in Ridgefield. She did not attach dates to the statement or otherwise explain the inconsistency. In support of a claim of excusable neglect, she contended she was unaware of the complaint and default. She claimed she first learned of the foreclosure action when a notice was placed on the home in April 2012. She presented no coherent argument regarding defenses to the foreclosure complaint.4

Judge Toskos denied the second motion in an order entered July 12, 2013. Neither party provided us a transcript of the judge's oral opinion.

On or about July 27, 2013, Amelsy filed the third motion seeking an order vacating the foreclosure judgment. Represented by counsel, she stated in a certification, "[T]he basis for my seeking the vacating [of] the judgment of foreclosure is that I was never served summons and complaint." She alleged that she was not personally served, and the certification of service was false. Her position was supported by a third party who alleged that Amelsy was at another location caring for the party's son, when the process server claimed to have served Amelsy. Aside from the lack of service, she asserted she was "kept blind . . . to every aspect of the foreclosure" by her husband. She added that David obtained an ex parte divorce and left her without any equitable distribution, alimony or child support, despite a fourteen-year marriage.

In the hearing on the motion, counsel argued that the court should grant relief based on Rule 4:50-1(f). Although he did not expressly cite Rule 4:50-1(d), counsel contended that the court lacked personal jurisdiction over Amelsy because of lack of service. Counsel also argued that the assignment of the note to HSBC was invalid under the terms of the Pooling and Service Agreement (PSA) governing the asset-backed pass-through certificates Series 2006-2, which related to the conveyance of defendants' mortgage loan. The parties to the PSA were: OPTEUM Mortgage Acceptance Corporation, as depositor; Wells Fargo Bank, N.A., as master servicer and securities administrator; and HSBC, as trustee.

Judge Toskos denied the motion in an oral opinion. He relied in part on our opinion in Deutsche Bank National Trust Co. v. Russo, 429 N.J. Super. 91 (App. Div. 2012), quoting the following language

[E]ven if plaintiff did not have the note or a valid assignment when it filed the complaint, but obtained either or both before entry of judgment, dismissal of the complaint would not have been an appropriate remedy here because of defendants' unexcused, years-long delay in asserting that defense. Therefore, in this post-judgment context, lack of standing would not constitute a meritorious defense to the foreclosure complaint.

[C]ontrary to defendants' contention, 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).

[Id. at 101.]5

The court further held that Amelsy's motion lacked merit if viewed as either a motion for reconsideration, or a motion to overturn a sheriff's sale. Reconsideration was unwarranted because defendant raised, or could have raised, all the issues in her previous applications. Citing First Trust National Association v. Merola, 319 N.J. Super. 44 (App. Div. 1999), Judge Toskos held that Amelsy also failed to present "clear evidence of fraud, accident, surprise, mistake or irregularities in the conduct of the sale" to warrant setting it aside.

On appeal, Amelsy raises the following points for our consideration

POINT I

THE APPELLEE WAS NOT THE NOTE HOLDER AT THE TIME THE FORECLOSURE ACTION WAS FILED AND COULD NOT ENFORCE THE NOTE.

POINT II

THE PROCESS AND THE EFFECT OF SECURITIZATION.

PLAYERS.

THE ACTUAL ASSIGNMENT OF MORTGAGE.

APPLICABLE LAW.

POINT III

APPELLANTS ARE NOT PRECLUDED BY THE CASE LAW THAT DENY STANDING TO BRING THE PSA PROVISIONS AS A DEFENSE TO FORECLOSURE ACTION.

POINT IV

THE ASSIGNMENT FROM MERS TO TRUSTEE IS INVALID.

POINT V

ALTHOUGH APPELLANT MAIN TRUST IS THAT THE VIOLATION OF THE PSA IS NOT A MATTER OF CONTRACT LAW BUT EPTL LAW AND FRAUD THROUGH THE INSTRUMENTALITY OF THE SECURITIZATION PROCESS, APPELLANT ASSERTS ALSO THAT SHE HAD PRIVITY OF CONTRACT OR IS AN INTENDED THIRD PARTY BENEFICIARY TO THE PSA.6

The decision whether to grant a motion to vacate a judgment "is left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion." Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993). See also US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (stating decision on motion to vacate default judgment "should not be reversed unless it results in a clear abuse of discretion"). We affirm, substantially for the reasons set forth in Judge Toskos's oral opinion.

We add the following brief remarks. Amelsy was obliged to seek relief from the judgment within a reasonable time, and, in the case of relief under Rule 4:50-1(c), not more than one year after entry of the judgment. R. 4:50-2. Unquestionably, any request for relief under subsection (c) was time-barred. Any relief under Rule 4:50-1(f) was likewise untimely, as Amelsy failed to justify waiting almost two years after entry of judgment, and over a year after she was first notified of an impending sheriff's sale, to seek relief.

A plaintiff suffers prejudice from delay. Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 320 (App. Div. 2012) (stating that "equity must be applied to plaintiffs as well as defendants"). Amelsy and David defaulted on their note in 2009. There is no evidence of any effort by defendants to cure the default or seek a loan modification.

There is no compelling basis to view this case differently from those in which we have declined to disturb foreclosure judgments based on standing challenges brought long after entry of judgment. Russo, supra, 429 N.J. Super. at 101; Angeles, supra, 428 N.J. Super. at 316, 320. A technical objection to standing, even if well-founded, may be futile, because it is curable; however, it does result in delay to the prejudice of the mortgagee. Cf. Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 356 (Ch. Div. 2010).

We shall not address in any detail Amelsy's argument that plaintiff obtained possession of the note contrary to the terms of the PSA. It is untimely. In any event, we are unpersuaded that Amelsy has standing to assert a breach of the PSA, an agreement to which she was not a party, and to which she is not a third-party beneficiary. See Correia v. Deutsche Bank Nat'l Trust Co., 452 B.R. 319, 324-25 (B.A.P. 1st Cir. 2011) (stating that debtors lacked standing to object to breaches of PSA because they were neither parties nor third-party beneficiaries); Rajamin v. Deutsche Bank Nat'l Trust Co., 757 F.3d 79, 88-90 (2d Cir. 2014) (holding that mortgagors lacked standing to complain of violation of the securitization trust agreement, and concluding that under 7-2.4 of New York's Estates, Powers and Trusts Law (EPTL),7 a trustee's unauthorized acts are not void, but voidable only at the instance of trust beneficiaries, which are the certificate-holders, not the mortgagors); Flores v. EMC Mortg. Co., 997 F. Supp. 2d 1088, 1104-05 (E.D. Cal. 2014) (stating that borrowers lacked standing to pursue claims arising from securitization agreement); Jenkins v. JP Morgan Chase Bank, NA, 156 Cal. Rptr. 3d 912, 927 (Ct. App. 2013) (stating that borrower "lacks standing to enforce . . . the investment trust's pooling and servicing agreement").8

Amelsy's remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 For convenience of the reader, we refer to defendants Amelsy Gonzalez and David Gonzalez by their first names. We mean no disrespect in doing so.

2 Amelsy asserts that David obtained a judgment of divorce against her ex parte, but does not state the date of the judgment or when she learned it existed. But it is apparent that defendants were husband and wife when the loan originated.

3 As discussed below, Amelsy challenged service, but does not do so before us.

4 Amelsy included an unsigned document entitled "Defendants [sic] Affidavit in Support of Defendants [sic] Motion to Set Aside Default Judgment" which included unintelligible argument, for example

TAKE NOTICE that Defendant, Amelsey objects to and opposes the entry of default judgment against the writing or statements of that of Counsel in its entirety regarding defendants "motion to set aside", insomuch as, Amelsey Gonzalez has proprietary rights in AMELSEY GONZALEZ, and David Gonzalez having proprietary rights in DAVID GONZALEZ, and the named defendant in the caption of this action, is a sole proprietorship on the grounds that, "AMELSEY GONZALEZ" and "DAVID GONZALEZ" are sole proprietorships and "not separate legal entities, but instead merely alter egos, and therefore, an entry of default judgment against "DAVID GONZALEZ" and/or "AMELSEY GONZALEZ" would be improper and void on its face."

5 The transcript of Judge Toskos's opinion reflects minor deviations from the text of Russo, which we do not reproduce here.

6 In the "preliminary remarks" section of her brief, Amelsy asserts that the trial court never obtained personal jurisdiction over her. In the "preface" of her reply brief, Amelsy argues that the case should be remanded for a hearing on whether she was properly served. She also argues in the "preface" that relief should be granted under Rule 4:50-1(f) because she was unaware of the foreclosure action until she received notice of the sheriff's sale, and the invalidity of service. We shall not address arguments raised only in this manner. See Borough of Berlin v. Remington & Vernick Eng'rs, 337 N.J. Super. 590, 596 (App. Div.) ("Raising an issue for the first time in a reply brief is improper."), certif. denied, 168 N.J. 294 (2001). See also Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011) ("An issue not briefed on appeal is deemed waived.").

7 EPTL 7-2.4 states: "If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void."

8 Amelsy relies on Glaski v. Bank of America, N.A., 160 Cal. Rptr 3d (Ct. App. 2013), which expresses a minority rule at odds with Jenkins and other courts. See Flores, supra, 997 F. Supp. 2d at 1104 (stating that Glaski is in a clear minority on the issue of borrower's standing to ground claims in a breach of a pooling and servicing agreement).