CITIMORTGAGE, INC v. JOSE M. ROSADO

N

OT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1369-11T1

CITIMORTGAGE, INC.,

Plaintiff-Respondent,

v.

JOSE M. ROSADO and ERICK

LUIS ROSADO,

Defendants/Third-Party

Plaintiffs-Appellants,

v.

ANGELA MORRIS and SHEPARD

TITLE AGENCY,

Third-Party Defendants-Respondents.

__________________________________________

March 28, 2013

 

Argued December 4, 2012 - Decided

 

Before Judges Alvarez, Waugh, and St. John.

 

On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. C-161-10.

 

Tamara L. Loatman-Clark argued the cause for appellants (The Clark Law Group, L.L.C., attorneys; Ms. Loatman-Clark, on the briefs).

 

Robert L. Grundlock, Jr., argued the cause for respondents (Rubin, Ehrlich & Buckley, P.C., attorneys; Mr. Grundlock and William McConnell, on the brief).

 

PER CURIAM

Defendants Jose M. Rosado and Erick Luis Rosado1 appeal the Chancery Division's October 5, 2011 final judgment setting aside the transfer of real property owned by Jose and his wife Gladys Rosado. We affirm.

I.

We discern the following facts and procedural history from the record on appeal.

Jose and Gladys Rosado are married and have owned and lived in their home in South Brunswick since 1993. On July 25, 2008, they obtained a $403,970 loan from Somerset Investors Corp. (Somerset) in order to refinance their home. They secured the loan by executing a note and mortgage in favor of Somerset. On the same day, Jose and Gladys signed a "notice of assignment, sale or transfer of servicing rights," which stated that "the right to collect payments" from them was transferred from Somerset to plaintiff CitiMortgage, Inc. (CitiMortgage), effective September 1, 2008. Jose acknowledged that he thereafter received mortgage statements from, and made payments to, CitiMortgage.

Jose applied to CitiMortgage for a loan modification in January 2010. For approximately five to six months thereafter, Jose repeatedly contacted CitiMortgage to determine the status of his application. Each time, a CitiMortgage representative told Jose that the company had not received the documents he was required to submit with his application, although Jose asserted that he had repeatedly sent CitiMortgage those documents.

Jose eventually spoke with a manager in CitiMortgage's loan modification department, who told him to send the application documents to her. Jose subsequently called the manager to check the status of his application, at which point the manager informed him that CitiMortgage could not process his application because it could not locate Jose's mortgage.

Jose contacted Charles Shelton for help in obtaining the loan modification. According to Shelton, who worked for a loan modification company, after he had contacted the manager at CitiMortgage and conducted his own search, he determined that Jose did not have a mortgage. According to Jose, based on Shelton's information, he believed that he had no mortgage. He decided to transfer the home to his son Erick as an "inheritance." However, he wanted Erick to pay for the home so Erick would "earn it." In June 2010 he executed a deed transferring the home to Erick, and Erick signed a mortgage reciting indebtedness of $387,100 to Jose.

In August 2010, after learning about the transfer between Jose and Erick, CitiMortgage filed suit against them, alleging that it owned the Somerset mortgage "by virtue of being the successor in interest [of] Somerset." CitiMortgage claimed that Jose violated the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34, and requested, in part, that the deed to Erick be declared void and that CitiMortgage be allowed to record a copy of the Somerset mortgage in place of the original.

In October 2010, CitiMortgage instituted a separate foreclosure action. In its foreclosure complaint, CitiMortgage stated that a nominee for Somerset had assigned the mortgage to it earlier that month. On October 27, in the UFTA suit, the judge entered a consent order providing that "a copy of the mortgage given by Jose and Gladys . . . to Somerset . . . , to which CitiMortgage is a successor in interest, may be recorded in place of the original."

CitiMortgage filed a motion for summary judgment, which was denied. In a cross-motion, Jose and Erick argued that CitiMortgage did not have standing to enforce the Somerset note and mortgage because it was not a creditor under the UFTA. The judge also denied the cross-motion, holding that there remained "unresolved issues of material fact in dispute."

A bench trial was held on August 29, 30, and 31, 2011. Jose and Erick raised the standing issue before opening arguments. The judge declined to consider it because they had not filed a motion for reconsideration after their cross-motion was denied. They raised the issue again during trial, arguing that CitiMortgage needed to establish that it was a creditor entitled to enforce the mortgage and note in order to bring a claim under UFTA. The judge interpreted their application as a motion to dismiss made prior to the close of plaintiff's case, and denied the motion as premature because CitiMortgage had not yet completed its case.

Nevertheless, the judge observed that the notice of assignment, as well as the copy of the note that was stamped and signed as being "Pa[id] To The Order Of: CitiMortgage, Inc.," were prima facie evidence that CitiMortgage was a creditor, and therefore had standing. However, he told counsel that he would consider the testimony to be offered by a CitiMortgage business operations analyst, Luke Robert Kramme. He observed that he had

an offer of proof as to what [the witness] is going to testify to. If that [witness] testifies consistent with the offer of proof, when plaintiff rests, the Court is going to find that a prima facie case has been established.

 

I've already indicated to you I think that even without . . . that witness, a prima facie case has been established as to the standing of this plaintiff. . . .

 

If this witness doesn't appear or if this witness doesn't testify or testifies inconsistent[ly], that's a different story and I'll deal with your motion to dismiss after that witness testifies.

 

Kramme subsequently testified as follows:

Q: Are you familiar with the note and mortgage for the Rosado obligation?

 

A: Yes.

 

Q: I'm going to show you what's previously been marked P-4D. Can you tell the Court what that is?

 

A: This is the note.

 

Q: Is it the original?

 

A: Yes.

 

Q: How did CitiMortgage get that note?

 

A: It was endorsed from [Somerset] to CitiMortgage.

 

Q: Is that endorsement on the original note?

 

A: Yes.

 

. . . .

 

Q: Is there any other endorsement on [the note]?

 

A: Yes.

 

Q: What is that endorsement?

 

A: It is an endorsement in blank by CitiMortgage.

 

Q: . . . [W]hat is the purpose of the endorsement in blank?

 

A: This endorsement by CitiMortgage is put on the note when it is referred to foreclosure.

 

Q: Is it fair to say that the endorsement in blank would have been put on relatively recently?

 

A: Yes.

 

Q: Do you know when CitiMortgage got [the note]?

 

A: It was in August of 2008.

 

Q: And how do you know?

 

A: It was evidenced by the [b]ailee letter as well as our internal tracking system.

 

Q: I'm going to show you P-4C. Can you tell the Court what P-4C is?

 

A: This is the [b]ailee letter.

 

Q: Who is it to?

 

A: CitiMortgage, Inc.

 

Q: And how does it identify CitiMortgage?

 

A: . . . [I]n the header it says to CitiMortgage.

 

Q: Does it identify CitiMortgage in its text . . . as having any particular name or stat[u]s? How does it refer to CitiMortgage?

 

A: It does.

 

Q: If I could just direct your attention to the [RE:] line.

 

A: . . . [I]t refers to CitiMortgage as the take-out investor.

 

. . . .

 

Q: . . . [D]oes it also refer to CitiMortgage as the bailee?

 

A: Yes . . . .

 

Q: And why is that?

 

A: Because this is the transfer of the note to the bailee, CitiMortgage.

 

Q: . . . [D]oes [the bailee letter] tell you when CitiMortgage actually got possession of the note?

 

A: Yes. On the fourth page there is a shipping date of August 1st, 2008 via FedEx.

 

Q: To CitiMortgage[?]

 

A: Correct.

 

Q: Is this obligation secure?

 

A: Yes.

 

Q: I'm going to show you what's been marked P-5B. Is that the recorded mortgage that secures [the note]?

 

A: Yes.

 

Q: Does CitiMortgage have an assignment of mortgage?

 

A: Yes.

 

Q: I'm going to show you the original of what's been marked P-12. Can you tell the Court what that is?

 

A: This is the assignment of mortgage.

 

Q: Who is it from?

 

A: [Mortgage] Electronic Registration Systems.

 

Q: And what as --

 

A: As nominee for [Somerset].

 

Q: And who is it to?

 

A: CitiMortgage, Inc.

During cross-examination and redirect-examination, Kramme reiterated that his testimony was based on what was written on the notice of assignment, the bailee letter, and the note, as well as CitiMortgage's "internal business records." Although Kramme did not appear to have personal knowledge of the circumstances surrounding the execution of the documents, the judge found that the documents were appropriately authenticated by Kramme.2

The judge issued a letter opinion on September 20. In relevant part, the judge found the following:

From the outset of the trial the Defendants repeatedly tried to raise a "standing" issue. Citi[Mortgage] proved that it had physical possession of the original note since August 2008, assigned directly from Somerset to Citi[Mortgage], and so endorsed. The note has not been assigned out, although it has been endorsed (in blank) so that it may be assigned as part of the foreclosure process. Citi[Mortgage] also established that the Mortgage had been assigned to it as part of its purchase of the Somerset loan, and that an assignment has been recorded. Jose made payments to Citi[Mortgage] beginning in August 2008.

 

Citi[Mortgage] has established its position as a creditor under the UFTA.

 

The judge found that Jose transferred the home to Erick in June 2010 for $387,100 and recorded a take-back mortgage. However, Erick did not sign a note for that amount. The judge also found that Erick does not reside in the home, that Jose and Gladys reside there and do not pay Erick rent, and that "Erick made only four cash payments of $2,200.00 to [Jose] in the months of September, October, November, and December 2010."

Because the judge concluded that Jose and Erick engaged in a fraudulent transfer, he set the deed to Erick aside and dismissed the Rosados' counterclaims. This appeal followed.

II.

On appeal, Jose and Erick argue that the trial judge erred in finding that CitiMortgage had standing under the UFTA and the legal right to enforce the note and mortgage, and that the judge erred in relying on unauthenticated documents.

Having reviewed the arguments raised on appeal in light of the record and applicable law, we find them to be without merit and not warranting extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm essentially for the reasons set forth by Judge Frank Ciuffani, adding only the following.

The judge's factual findings were well supported by the record. Our "general rule is that [factual] findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). We do not disturb the factual findings of the trial judge unless we are "convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Id. at 412 (quoting Rova Farms, supra, 65 N.J. at 484) (internal quotation mark omitted); see also Beck v. Beck, 86 N.J. 480, 496 (1981).

We also grant substantial deference to the judge's exercise of discretion in ruling on evidence. DeVito v. Sheeran, 165 N.J. 167, 198 (2000). Rulings on evidence will not provide a basis for reversal unless they reflect an abuse of discretion. Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999), certif. denied, 163 N.J. 79 (2000). Reversal is not warranted unless the trial judge's ruling was "so wide of the mark that a manifest denial of justice resulted." State v. Carter, 91 N.J. 86, 106 (1982). We find no such abuse of that discretion with respect to the judge's reliance on Kramme's testimony based upon his review of the trial exhibits and other business records.3

Under the plain language of the UFTA, 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." Gilchinsky v. Nat'l Westminster Bank N.J., 159 N.J.463, 475 (1999). It reflects "the notion that a debtor cannot deliberately cheat a creditor by removing his [or her] property from 'the jaws of execution.'" Ibid.

Jose received paid mortgage statements from and made payments to CitiMortgage. He and Erick consented to the recordation of "a copy of the mortgage given by Jose and Gladys . . . to Somerset . . . , to which CitiMortgage is a successor in interest, . . . in place of the original." The trial judge correctly concluded that CitiMortgage had standing under the UFTA to challenge the transfer of title.

Jose transferred the property to Erick with knowledge that he and Gladys had signed a note and mortgage that had not been satisfied. He clearly understood that CitiMortgage had succeeded to Somerset's interest in the note and mortgage. The judge's decision in favor of CitiMortgage was amply supported by the facts in the record.

Affirmed.

 

1 Because parties share the same last name, we refer to them by their first names for the sake of convenience.

2 See N.J.R.E. 803(c)(6) ("Records of Regularly Conducted Activity"); N.J.R.E. 803(c)(7) ("Absence of an Entry in Records of Regularly Conducted Activity"); N.J.R.E. 803(c)(14) ("Records of Documents Affecting an Interest in Property"); N.J.R.E. 803(c)(15) ("Statements in Documents Affecting an Interest in Property"); N.J.R.E. 805 ("Hearsay Within Hearsay").

3 Jose and Erick's attempt to rely on records that were not before the trial judge is patently improper. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 452 (2007) (citing R. 2:5-5(b), 2:9-1(a)).