BANK OF AMERICA NATIONAL ASSOCIATION v. JULMAR SANTOS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5375-13T4

BANK OF AMERICA NATIONAL

ASSOCIATION,

Plaintiff-Respondent,

v.

JULMAR SANTOS,

Defendant-Appellant,

and

MRS. JULMAR SANTOS and MORTGAGE

ELECTRONIC REGISTRATION SYSTEMS, INC.,

as nominee for CREDIT SUISSE FIRST

BOSTON FINANCIAL CORPORATION, it's

Successors and Assigns,

Defendants.

____________________________________

September 21, 2015

Submitted August 18, 2015 Decided

Before Judges O'Connor and Rothstadt.

On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-49062-09.

Tomas Espinosa, attorney for appellants.

Reed Smith, L.L.P., attorneys for respondent (Henry F. Reichner, of counsel; Alex G. Gross, on the brief).

PER CURIAM

Defendant Julmar Santos appeals the July 15, 2014 order denying his motion to set aside a default judgment in foreclosure.1 Before the trial court defendant argued, among other things, that the judgment was void pursuant to Rule 4:50-1(d) because he had not been served with the summons and complaint.

After reviewing the record and applicable legal principles, we reverse.

I

On June 30, 2005, defendant executed a promissory note in the amount of $304,000 in favor of Credit Suisse First Boston Financial Corporation (Suisse). The note was secured by a mortgage naming Mortgage Electronic Registration Systems, Inc. as nominee for Suisse. The mortgage encumbered residential property, located at 119 Burnham Drive in Woodbridge Township (119 Burnham Drive), that defendant had purchased at that time. At the time he purchased 119 Burnham Drive, he also purchased residential property located at 116 Burnham Drive in Woodbridge Township (116 Burnham Drive). The latter property is not the subject of the mortgage.

Although in the loan application defendant stated he intended to use the loan proceeds for the purchase of his primary residence, it is undisputed defendant never lived at 119 Burnham Drive.2

On November 26, 2008, Mortgage Electronic Registration Systems, Inc., as nominee for Suisse, assigned the note and mortgage to plaintiff.

The last mortgage payment was made in May 2009. On July 19, 2009, plaintiff mailed a notice of intention to foreclose to defendant at 119 Burnham Drive. Aware defendant also owned property at 116 Burnham Drive, plaintiff mailed defendant a copy of the notice of intention to foreclose to this location as well. Defendant did not respond to the notice and on September 14, 2009, plaintiff filed a complaint in foreclosure.

On October 29, 2009, a process server went to 119 Burnham Drive and left a copy of the summons and complaint with Edineia Santos. Although the affidavit of service executed by the process server states Edineia Santos is defendant's wife, it is undisputed she was the wife of defendant's brother, Jorlinar Santos.

During an evidentiary hearing held on defendant's motion to vacate the default judgment in foreclosure, defendant explained that when he purchased these two properties, his intention was to live in 116 Burnham Drive and to let his brother and his brother's family live at 119 Burnham Drive. Although his brother was to be responsible for making the mortgage payments on 119 Burnham Drive, defendant would continue to own the property. Defendant's brother did not move into 119 Burnham Drive until 2012; nevertheless, he assumed the mortgage payments in 2007.

Because the house required renovations, defendant did move not into 116 Burnham Drive until 2011 or 2012. Defendant, who is in the construction business, was unable to complete the renovations until 2011. Until he moved into 116 Burnham Drive, he lived at 215 Main Street in Woodbridge.

On February 4, 2010, plaintiff sent to defendant a copy of a request for and a certification in support of the entry of default that was filed on January 4, 2010; this document was mailed to 119 Burnham Drive by regular mail. On February 4, 2010, plaintiff also mailed to defendant and Edineia Santos at 119 Burnham Drive a notice stating, among other things, that plaintiff intended to submit its proofs to the Foreclosure Unit for the entry of a final judgment of foreclosure. This notice was sent by regular and certified mail; Edineia Santos signed the "green card" receipt for the certified mail.

Approximately three and a half years later, the foreclosure action was dismissed on August 9, 2013 for lack of prosecution. The record does not reveal how or when the matter was reinstated, but on August 22, 2013, plaintiff sent a copy of a motion for entry of final judgment to defendant and Edineia Santos to 119 Burnham Drive. On January 10, 2014, final judgment was entered in favor of plaintiff in the amount of $431,737.64, together with interest and costs of suit.

On February 5, 2014, plaintiff sent a copy of the final judgment to defendant by regular and certified mail to 116 and 119 Burnham Drive. On April 3, 2014, defendant filed a motion to vacate the final judgment. Following the evidentiary hearing, the court entered an order on July 15, 2014 denying defendant's motion.

During the hearing, defendant claimed he first learned of the foreclosure action when he received a notice of a sheriff's sale from plaintiff in February 2014. Defendant denied that his brother or Edineia, who frequented 119 Burnham Drive before she and her family moved to this address in 2012, told him about the documents that had been mailed to this location. Defendant also testified he did not receive any documents concerning the mortgage or the foreclosure action at 116 Burnham Drive or 215 Main Street, Woodbridge. He did admit that in 2011, his divorce attorney helped him fill out a form to modify the mortgage, but contends he was never informed the bank had commenced foreclosure proceedings.

At the conclusion of the hearing the court made the following findings

Let's forget about whether or not notices were sent to 116. Notices were sent to 119. And an adult was served at 119, that foreclosure proceeding proceeded. . . .

Moreover, I find factually based upon your testimony you made your brother your agent. . . . He was your agent and so your agent was served and so I find that there is proper service. . . .

Now, he says his brother didn't tell him. I don t find that to be credible. I quite frankly don't find your testimony to be credible. . . Not at all credible.

And for you to tell me that your brother never told you what was going on I don't believe. . . .

So even if even if there was some problem with this service, I find that you had notice from your brother. You certainly had notice going back to October 2011 where your [divorce attorney] on your behalf is seeking a modification of a mortgage that was in default since 2009 and it was a foreclosure complaint that was filed.

So you had notice, actual notice from your brother who I find kept you informed as to everything. His [failure to testify at the hearing] to verify that what you were telling me under oath is significant.

So you had notice and you failed to move to vacate default. You failed to do anything other than attempt in 2011 to modify this mortgage. So I am not vacating the judgment.

II

"The decision granting or denying an application to open a judgment [pursuant to Rule 4:50-1] will be left undisturbed unless it represents a clear abuse of discretion." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994) (citing Mancini v. EDS, 132 N.J. 330, 334 (1993)). However, "if a judgment is void and, therefore, unenforceable, it is a particularly worthy candidate for relief, provided that the time lapse between the entry of the judgment and the motion to vacate the judgment has not been unreasonable and an innocent third party's rights have not intervened." Coryell, L.L.C. v. Curry, 391 N.J. Super. 72, 80 (App. Div. 2006).

Rule 4:50-1(d) states: "On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: . . . (d) the judgment or order is void . . . ." R. 4:50-1(d). Service of a foreclosure complaint is governed by Rule 4:4-4.

Only subparagraphs (a)(1) and (a)(4) of Rule 4:4-4 are implicated in this matter. These subparagraphs state as follows

(a) Primary Method of Obtaining In Personam Jurisdiction. The primary method of obtaining in personam jurisdiction over a defendant in this State is by causing the summons and complaint to be personally served within this State pursuant to R. 4:4-3, as follows

(1) Upon a competent individual of the age of 14 or over, by delivering a copy of the summons and complaint to the individual personally, or by leaving a copy thereof at the individual's dwelling place or usual place of abode with a competent member of the household of the age of 14 or over then residing therein, or by delivering a copy thereof to a person authorized by appointment or by law to receive service of process on the individual's behalf;

. . . .

(4) Upon individual proprietors and real property owners, provided the action arises out of a business in which the individual is engaged within this State or out of any real property or interest in real property in this State owned by the individual, by delivering a copy of the summons and complaint to the individual if competent, or, whether or not the individual proprietor or property owner is competent, to a managing or general agent employed by the individual in such business or for the management of such real property, or if service cannot be made in that manner, then by delivering a copy of the summons and complaint to any employee or agent of the individual within this State acting in the discharge of his or her duties in connection with the business or the management of the real property;

We first address Rule 4:4-4(a)(1). Here, there was no evidence that a copy of the summons and complaint was delivered to defendant personally or was left at his dwelling place or usual place of abode. The process server delivered a copy of the summons and complaint to Edineia Santos, not to defendant. There was no finding defendant lived at 119 Burnham Drive; rather, the court implicitly found that defendant's brother lived at 119 Burnham Drive at the time of service. In addition, although the court determined defendant's brother was his agent, there was no evidence defendant's brother was authorized by appointment or by law to receive service of process on defendant's behalf. More important, a copy of the summons and complaint was not delivered to defendant's brother but to his brother's wife.

As for Rule 4:4-4(a)(4), a copy of the summons and complaint was not delivered to defendant. Defendant did not employ his brother to manage the property or be a general agent for any business conducted at 119 Burnham Drive, not to mention that a copy of the summons and complaint was not delivered to his brother.

Clearly defendant was not served with the summons and complaint in accordance with the Rules. "'The requirements of the rules with respect to service of process go to the jurisdiction of the court and must be strictly complied with.'" Berger v. Paterson Veterans Taxi Serv., 244 N.J. Super. 200, 204 (App. Div. 1990) (quoting Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 493, cert. denied, 344 U.S. 838, 73 S. Ct 25, 97 L. Ed. 652 (1952)). A court lacks jurisdiction over and does not have the authority to enter judgment against a party who has not been properly served with process. City of Passaic v. Shennett, 390 N.J. Super. 475, 483 (App. Div. 2007). Moreover, "[g]enerally, where a default judgment is taken in the face of defective personal service, the judgment is void." Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993).

We recognize that not every defect in the service of process constitutes a denial of due process that qualifies a defendant for relief from a default judgment. Id. at 462-63. A minor defect in service, along with proof of a defendant's actual knowledge of the cause of action, does not offend due process. Id. at 463. Here, the court's finding that defendant was aware of the foreclosure action is supported by ample, credible evidence - a finding we are bound to accept - see Cesare v. Cesare, 154 N.J.394, 411-12 (1998). Nevertheless, there was a substantial deviation from the service of process rules. In fact, defendant was not served at all. Defendant's knowledge of the foreclosure action does not rescue plaintiff from its failure to serve defendant in accordance with the Rules of Court. Therefore, relief from the default judgment is required. See Pressler and Verniero, Current N.J. Court Rules, comment 5.4.2 on R. 4:50-1 (2015) (citing Sobel v. Long Island Entertainment, 329 N.J. Super. 285, 293-94 (App. Div. 2000)).

To the extent any arguments raised by plaintiff have not been explicitly addressed in this opinion, it is because we were satisfied the arguments lacked sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

1 We refer to Julmar Santos as defendant in this opinion even though there are other defendants. We refer to the other defendants by their specific name.

2 In its brief, plaintiff argues the loan application compelled defendant to advise the lender or its assignee if there was any change in the information provided by the applicant in the loan application. Plaintiff contends defendant failed to advise the lender that 119 Burnham Drive never became his primary residence. However, the loan application in fact states that the applicant need only alert the lender of any change in the information provided in the application before the loan is closed. Further, the mortgage document states that the mortgagor is required to use the premises as his principal residence for only a year following the date of occupancy, unless the lender agrees otherwise or there existed extenuating circumstances to preclude living in the home as a primary residence during that period. According to the mortgage document, the "date of occupancy" commenced within sixty days of executing the mortgage.