MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC v. SUZANNE K. ESCHENBACH

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.,

AS NOMINEE FOR CHEVY CHASE

BANK, FSB,

Plaintiff-Respondent,

v.

SUZANNE K. ESCHENBACH,

Defendant,

and

STEPHEN ESCHENBACH,

Defendant-Appellant.

__________________________________

CCM FUND I LLC,

Intervenor-Respondent.

__________________________________

June 25, 2014

Submitted April 7, 2014 Decided

Before Judges Harris and Kennedy.

On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-1708-08.

Stephen Eschenbach, appellant pro se.

McCarter & English, attorneys for respondent Mortgage Electronic Registration Systems, Inc. (Joseph Lubertazzi, Jr., on the brief).

Hack, Piro, O'Day, Merklinger, Wallace & McKenna, P.A., attorneys for respondent CCM Fund I LLC (John M. McKenna, on the brief).

PER CURIAM

Defendant, Stephen Eschenbach, appeals a November 4, 2011 order of the Chancery Division denying his motion to vacate a sheriff's sale of property on which he had executed a mortgage to secure a loan that went into default. Defendant argues that he did not receive notice of the sale in strict compliance with Rule 4:65-2. We affirm essentially for the reasons stated by Judge Kenneth S. Levy in his opinion from the bench on October 28, 2011.

We briefly set forth the facts. Plaintiff commenced this foreclosure action against defendant and his wife, and served the foreclosure complaint and summons upon them in January 2008. They filed an answer to the complaint and opposed plaintiff's motion for summary judgment. The motion was granted on June 27, 2008, and the answer was stricken and a "default" was entered.

On October 25, 2010, the Chancery Division entered final judgment of foreclosure for $205,920.90, plus interest and costs. The judgment further directed the Sheriff to conduct a sale, and the court issued a writ of execution the same day.

Employees of the Sheriff's Office claimed that notice was posted at the property on February 11, 2011, which stated that a sheriff's sale would be conducted on February 22, 2011. Defendant asserted that no such notice was posted at the property.1 In any event, the scheduled sheriff's sale was adjourned for several months thereafter.

The sale was re-scheduled for May 17, 2011, and plaintiff provided mailed notice of the sale to defendant and his wife on May 5, 2011. The sale was held on May 17, 2011, and the purchaser was a third party, CCM Fund I, LLC (CCM), which paid $313,000. A sheriff's deed was transferred to CCM on May 29, 2011, and recorded on June 6, 2011.

Defendant and his wife filed a motion on June 15, 2011, to vacate the sheriff's sale, claiming lack of notice. On October 28, 2011, Judge Levy, issued his opinion from the bench denying the motion. He explained that the mailed notice of May 5, 2011, did not strictly comply with the requirements of Rule 4:65-2, and that such noncompliance would compel vacating the sale if defendant and his wife had no actual knowledge of the sale. However, when balancing the equities of the situation, Judge Levy observed that "notably absent from defendants' application is whether they have the ability to redeem the foreclosed property[,]" but that defendant and his wife, through counsel, represented that they "will be able to redeem" within sixty days.

Judge Levy thereafter analyzed United States v. Scurry, 193 N.J. 492 (2008), in which the Court approved extension of the redemption period as a remedy for a failure of notice. The court concluded that it did not need to resolve the factual issue of notice because even if defendants failed to receive notice, extension of the redemption period was an appropriate remedy. Judge Levy stated:

[U]nique circumstances exist in this case.

. . . .

Rather than order a factual hearing, to determine whether defendant received actual notice of the Sheriff's sale or whether the defendant has the ability to redeem, which has been represented by counsel, to - - to exist. Defendants will have 60 days to redeem the property. It would make little sense to conduct a hearing or vacate the sale, if defendants will - - will not be able to redeem in 60 days . . . . the law does not compel one to do a useless act and that equity follows the law.

Judge Levy thereafter entered an order denying the motion to vacate, but extending the redemption period to December 27, 2011 "to allow defendants to payoff the total foreclosure judgment[.]" The order further provided that if they do not redeem within that period, CCM's title to the property "shall remain undisturbed."

Neither defendant nor his wife redeemed the property and defendant has appealed.

We review the trial court's denial of defendants' motion to vacate the sheriff's sale under an abuse of discretion standard. U.S. Bank Nat'l. Ass'n v. Guillaume, 209 N.J. 449, 467 (2011); Scurry, supra, 193 N.J. at 503. In Guillaume, supra, our Supreme Court recently reiterated the standard of review of a trial court's determinations on a motion to vacate a default judgment under Rule 4:50-1 as follows:

The trial court's determination under the rule warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion. See DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009); Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). The Court finds an abuse of discretion when a decision is "'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).

[209 N.J. at 467-68.]

On this record, we find no abuse of discretion in Judge Levy's decision.

In Scurry, supra, our Supreme Court explained that "unique circumstances" may warrant a departure from procedural technisms in foreclosure actions. 193 N.J. at 506. It explained that when such circumstances obtain,

it makes little sense to return the parties to the procedural juncture where the error first occurred: plaintiff's failure to provide defendant proper notice of the sheriff's sale.

Instead, on remand, the trial court should determine first whether, within a reasonable period of time, defendant is able to redeem the property from plaintiff; the amount necessary for redemption should include all principal and interest due on the mortgage, plus any out-of-pocket costs for maintenance, repair, upkeep and insurance incurred by plaintiff in the period between the issuance of the sheriff's deed and the date of the remand hearing, but should not include the sums expended by plaintiff to dispossess defendant. If defendant cannot redeem the property within a reasonable period of time, as determined by the trial court, then there is no need to vacate the sheriff's sale and title will remain with plaintiff. If, however, defendant is able to redeem the property, she is to be afforded the opportunity she would have had if she properly had been noticed of the sheriff's sale of the property: the opportunity to purchase her property free and clear of all existing liens.

[Id. at 506-07.]

Here, Judge Levy crafted a ruling in equity designed to accommodate the interests of all the parties. Defendant had notice of the foreclosure action and the striking of his answer since 2008, and thereafter did nothing to protect his interests. He was nonetheless given an opportunity to redeem the mortgage and retain title to the property. He has not availed himself of that opportunity.

We have held that Rule 4:65-2, regarding notice of sale, and Rule 4:65-4, regarding the sheriff's power to adjourn, do not expressly require notice by certified or registered mail of an adjourned date. First Mut. Corp. v. Samojeden, 214 N.J. Super. 122, 126-27 (App. Div. 1986). Yet, actual notice is required. "[A]s a matter of fundamental fairness[,] these rules [Rules 4:65-2 and -4] must be construed as entitling interested parties to actual knowledge of the adjourned date upon which the sale actually takes place." Id. at 123.

Here, defendant denied actual notice. The mere denial of receipt has been deemed insufficient to rebut a presumption of receipt. See SSI Med. Servs., Inc. v. State of New Jersey, 146 N.J. 614, 621 (1996) (recognizing presumption); United Pacific Ins. Co. v. Estate of Lamanna, 181 N.J. Super. 149, 169 (Law Div. 1981) (mere denial insufficient to overcome presumption).

However, defendant asserts that he was unaware of the sale. Even assuming that actual notice was not achieved, we find no error in the court's decision to avoid resolving the disputed factual issue. Nor do we find error in Judge Levy's determination to extend the redemption period as a remedy under the circumstances.

We recognize that a court of equity may set aside a sale and provide defendant with notice of another sheriff's sale. First Trust Nat'l Ass'n v. Merola, 319 N.J. Super. 44, 49 (App. Div. 1999). "The general rule is that when insufficient notice of a sheriff's sale is given, the preferred remedy is that which restores the status quo ante to the greatest extent possible." New Brunswick Sav. Bank v. Markouski, 123 N.J. 402, 425 (1991). The court may void the sale if the party seeks relief promptly, was unaware of the pending sale, and no innocent third parties would be prejudiced. Ibid.

However, the remedy to void the sale is based on "some evidence of actual prejudice to an interested party." G.E. Capital Mortg. Servs., Inc. v. Marilao, 352 N.J. Super. 274, 283 (App. Div. 2002). The power to void the sale is "discretionary and must be based on considerations of equity and justice." First Trust Nat'l Ass'n, supra, 319 N.J. Super. at 49. We defer to that exercise of discretion, absent a mistake of law or an abuse of discretion. Ibid. See also Scurry, supra, 193 N.J. at 502-03.

As we have noted, the Supreme Court recognized in Scurry, supra, 193 N.J. at 506, that extension of the redemption period may be an appropriate alternative remedy for a lack of notice. We perceive no error in the application of the principles of Scurry in the case at bar.

Affirmed.

1 Even if the notice had been posted on February 11, 2011, for a sale to occur eleven days later, such notice would not have provided the three weeks' posted notice required by N.J.S.A. 2A:61-1.