WELLS FARGO BANK, N.A. v. JOHN M. PERSEO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

WELLS FARGO BANK, N.A.,

Plaintiff-Respondent,

v.

JOHN M. PERSEO

Defendant-Appellant,

and

MRS. JOHN PERSEO, his wife,

Defendant.

_______________________________

February 18, 2015

Submitted December 1, 2014 - Decided

Before Judges Lihotz and St. John.

On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. F-5835-10.

John M. Perseo, appellant pro se.

Reed Smith LLP, attorneys for respondent (Henry F. Reichner, of counsel and on the brief; Benjamin R. Kurtis, on the brief).

PER CURIAM

Defendant John M. Perseo appeals from an order granting summary judgment to plaintiff Wells Fargo Bank, N.A., and an August 21, 2013 final judgment foreclosing his interest in residential real estate. Defendant argues the court erred in dismissing his challenge to plaintiff's standing to commence foreclosure. We affirm.

On February 23, 2007, defendant borrowed $169,900 from Ohio Savings Bank (OSB) to purchase a home located on Hunter Street in Gloucester City (the subject property). At closing, defendant executed and delivered a note to OSB. To secure payment of the debt, defendant simultaneously executed a mortgage encumbering the subject property in favor of Mortgage Electronic Registration Systems, Inc. (MERS),1 as nominee for OSB, its successors and assigns. The mortgage was recorded with the Camden County Clerk's Office in Mortgage Book 8617, page 773, on July 26, 2007.

The mortgage stated

(C) "MERS" is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the mortgagee under this Security Instrument. . . .

(D) "Lender" is [OSB]. . . . Lender is the beneficiary under this Security Instrument.

. . . .

This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For these purposes, Borrower does hereby mortgage, grant and convey to MERS (solely as nominee for Lender and Lender's successors and assigns) and to the successors and assigns of MERS [the subject property.]

. . . .

Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

. . . .

22. Acceleration; Remedies. . . . If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Instrument by judicial proceeding.

Defendant commenced payment of the loan to OSB. The debt was sold and the mortgage was pooled, securitized and deposited into Fannie Mae REMIC Trust 2007-36, in which Fannie Mae was the investor.

On October 1, 2009, defendant stopped paying the mortgage loan and default was declared. The following month, plaintiff, as assignee of the note and mortgage, sent a notice of intent to foreclose, identifying the mortgagor, mortgaged property, principle amount of the loan and date of default, although it listed an incorrect loan number. In response to the notice, defendant sent a "Notice of Conditional Acceptance" to plaintiff requiring proof of its claim of ownership of the mortgage. Defendant's letter included fourteen "conditions" to his "acceptance" of the debt as outlined in plaintiff's notice of intent, as well as a request for an extensive number of documents. The letter also stated "any further action without providing the herein PROOF OF CLAIM will be seen as 'Criminal Trespass' and will be dealt with accordingly."

On January 21, 2010, MERS, as nominee for OSB, assigned the note and mortgage to plaintiff by way of a written agreement, which was later recorded in the Camden County Clerk's Office Mortgage Assignment Book 9198, at Page 169, on March 25, 2010. The document was signed by Judith T. Romano, Assistant Secretary and Vice President of MERS.

On January 22, 2010, plaintiff filed this action to foreclose all claims to the subject property. Defendant filed an answer. Plaintiff's motion for summary judgment was granted as unopposed on May 28, 2010. Defendant filed a motion to vacate the summary judgment, which was granted, and discovery ensued. Included among defendant's challenges to plaintiff's foreclosure action were allegations of fraud in the loan origination, assertions the assignment was invalid and unenforceable, and the claim plaintiff lacked standing because it was not the owner of the note.

Following discovery, plaintiff filed a second motion for summary judgment and moved to strike defendant's amended answer. A hearing was held wherein defendant disputed the authenticity of the documents attached to plaintiff's pleadings, rejected the authority of the signatories on the assignment, and argued plaintiff was not the legal party-in-interest. The Chancery judge rejected each argument as unsupported and found plaintiff supported its claims. Summary judgment in favor of plaintiff was granted on May 13, 2011. The order struck defendant's amended answer, dismissed defendant's counterclaims with prejudice, and transferred the matter to the Office of Foreclosure to proceed on an uncontested basis. R. 1:34-6. Final judgment of foreclosure was filed on August 21, 2013. Defendant filed this appeal.

On appeal, defendant asserts the trial court erred in concluding plaintiff had standing to foreclose and argues disputed material facts obviated entry of summary judgment. We consider these claims.

The scope of appellate review of a trial court's summary judgment is well settled.

In our de novo review of a trial court's grant or denial of a request for summary judgment, we employ the same standards used by the motion judge under Rule 4:46-2(c). [Davis v. Brickman Landscaping, 219 N.J. 395, 405 (2014)]. First, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we view the evidence in the light most favorable to the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). Factual disputes that are merely "'immaterial or of an insubstantial nature'" do not preclude the entry of summary judgment. Ibid. (quoting Judson v. Peoples Bank & Trust Co., 17 N.J. 67, 75 (1954)). Also, we accord no deference to the motion judge's conclusions on issues of law. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382-83 (2010).

[Manhattan Trailer Park Homeowners Ass'n v. Manhattan Trailer Court & Trailer Sales, Inc., 438 N.J. Super. 185, 193 (App. Div. 2014).]

When reviewing foreclosure judgments, as a general proposition the law requires the party initiating foreclosure must "own or control" the underlying debt obligation at the time an action is initiated to demonstrate 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)).

Since plaintiff was not the original lender, in order to foreclose it must present adequate evidence it was a "'person entitled to enforce' an instrument under N.J.S.A. 12A:3-301; that is, 'a nonholder in possession of the instrument who has the rights of a holder.'" Ford, supra, 418 N.J. Super. at 598 (quoting N.J.S.A. 12A:3-301). Specifically, satisfactory proof required by N.J.S.A. 12A:3-301 includes properly authenticated evidence showing plaintiff is in possession of defendant's original note and mortgage, and acquired ownership through a valid assignment of the mortgage, together with the note described in the mortgage, "with all interest, all liens, and any rights due or to become due thereon." Ford, supra, 418 N.J. Super. at 598-99, see also Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012) ("[E]ither possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." (citing Mitchell, supra, 422 N.J. Super. at 216, 255). Authentication requires personal knowledge of the facts. Ford, supra, 481 N.J. Super. 599 (citing Claypotch v. Heller, Inc., 360 N.J. Super. 472, 489 (App. Div. 2003); R. 1:6-6)).

Defendant was given the opportunity to pursue discovery of these facts. Thereafter, plaintiff moved for summary judgment. Plaintiff's summary judgment pleadings attached documents to counsel's certification; however, this certification lacked the requisite personal knowledge. Therefore, prior to the motion's return date, plaintiff filed a supplemental certification by Wells Fargo Bank employee Mary Ellen Brust, a default litigation specialist. Brust averred on the date it filed the foreclosure complaint plaintiff was in possession of the original note and mortgage, which were executed by defendant. Further, she identified the written assignment held by plaintiff, which was executed one day prior to initiating foreclosure, and attached a true and correct copy along with records substantiating defendant's default and continued non-payment.

On appeal, defendant contends Brust's certification is insufficient to support entry of judgment because she lacked the requisite personal knowledge of the facts and failed to explain the foundation of her assertions. See R. 1:6-6. He further challenges the trial judge's application of the business record exception to the hearsay rule when examining Brust's averments. See N.J.R.E. 803(c)(6).

Following our review, we find no flaw in the Chancery judge's conclusion that assignment of defendant's note and mortgage to plaintiff was valid and executed prior to filing the complaint establishing plaintiff's standing to pursue the foreclosure action. See Angeles, supra, 428 N.J. Super. at 318. First, the assignment was executed in recordable form, before the litigation commenced. Its recordation two months later does not affect its validity, because an assignment is effective on the date of execution. EMC Mortg. Corp. v. Chaudhri, 400 N.J. Super. 126, 141 (App. Div. 2008). ("[T]hat assignments of mortgages may be recorded does not affect the validity of an assignment of a mortgage which has not been recorded." (citation and internal quotation marks omitted)).

Second, the assignment identified the property and described the nature of the interest, a mortgage, by specifying the date the mortgage was recorded, the original mortgagee and its servicer, the mortgagor, the loan amount and where the mortgage was recorded. Its language identified the transferor and transferee and clearly set forth the proposed transfer, stating

[MERS] as a nominee for [OSB], its successors and assigns, the undersigned, as beneficiary or successor thereto . . . hereby grants, conveys, assigns and transfers unto [plaintiff] . . . its successors and assigns, all beneficial interest under that certain Mortgage dated February 23, 2007.

Finally, the document was signed by an Assistant Secretary and Vice President of MERS "as a nominee for [OSB]." Contrary to defendant's insistence, the document, which includes notarization of the signatory, making it recordable, sufficiently proves its authenticity. See Citicorp Mortg., Inc. v. Pessin, 238 N.J. Super. 606, 608 n.2 (App. Div.) (allowing judicial notice of recorded documents referenced in certifications, but not in the record), certif. denied, 122 N.J. 141 (1990). Defendant's attack on whether the signatory was actually a vice president of MERS is mere unsubstantiated conjecture.

Nothing supports defendant's attack that Brust's certification was "untrustworthy" and lacked personal knowledge. The plain language of Brust's certification states she reviewed the documents held by plaintiff, and plaintiff possessed the original note and mortgage when the complaint was filed. Further, during the summary judgment hearing plaintiff's counsel actually produced the original note and mortgage for defendant's inspection. Rather than examine the documents, defendant suggested they were not originals and because "no supporting documentation as to [their] authenticity or validity" was produced and maintained, "I'm not even going to look at [them] and I'm going to object to [them]." He then proposed the documents were "forgeries" and refused to even check his signature.

We are hard pressed to understand defendant's improvised contentions of mischief in this process, which we reject as meritless. R. 2:11-3(e)(1)(E). Nor can we abide defendant's quip that plaintiff and the trial court gave "cursory treatment" to the standing question. To the contrary, we determine plaintiff supplied all requisite documentation from its loan file, held as business records; Brust's employment gave her access to the records; and in fact the original note and mortgage were produced for defendant's review. Brust also presented the loan file supporting defendant's default.

"There is no requirement that the foundation witness [certifying that a record is a business record must] possess any personal knowledge of the act or event recorded." New Century Fin. Servs. v. Oughla, 437 N.J. Super. 299, 326 (App. Div.), certif. denied sub nom., 218 N.J. 531 (2014). We have further held sufficient under the business records exception "certifications by [a plaintiff's] employees having personal knowledge of the books and records of plaintiff[] and the transactions whereby plaintiff[] acquired the . . . debts on which [it] sued." Id. at 327.

Brust's certification complies with both Rule 1:6-6 and N.J.R.E. 803(c)(6). Even more importantly, plaintiff produced the original note and mortgage it held to allow defendant's inspection, which he declined. Further, the judge gave defendant ample opportunity to explain how outstanding discovery affected his position, and to offer extensive written and oral argument. We conclude defendant's arguments based on his unsupported insinuations the documents were forgeries or plaintiff did not own the note are neither factually supported nor legally sustainable.

Any further arguments not specifically addressed were found meritless. R. 2:11-3(e)(1)(E).

Affirmed.

1 As the name suggests, MERS is meant only as a tracking system for mortgages; in essence, it is a private recording system designed to simplify transfers of assets between lenders. Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 332-33 (Ch. Div. 2010). For a more detailed description of how MERS functions, see Mortg. Elec. Reg. Sys., Inc. v. Neb. Dep't of Banking & Fin., 704 N.W.2d 784 (Neb. 2005).