WELLS FARGO BANK, N.A v. BARBARA POST GAMBUTI

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-03641-13T3

WELLS FARGO BANK, N.A.,

Plaintiff-Respondent,

v.

BARBARA POST GAMBUTI and

STEPHEN J. GAMBUTI,

Defendants-Appellants.

___________________________

August 15, 2016

Argued August 2, 2016 Decided

Before Judges Sabatino and Gilson.

On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-024642-10.

David M. Schlachter argued the cause for appellants.

Siobhan A. Nolan argued the cause for respondent (Reed Smith, LLP, attorneys; Henry F. Reichner, on the brief).

PER CURIAM

Defendants appeal from a January 10, 2014 order denying their motion to vacate a default and final judgment in a mortgage foreclosure action and granting plaintiff's cross-motion to uphold a settlement. We affirm.

In 2004, defendants Barbara Post Gambuti and Stephen J. Gambuti borrowed $215,000 from World Savings Bank, FSB (WSB), and executed and secured a note by a mortgage on their residence.1 Thereafter, WSB changed its name to Wachovia Mortgage, FSB, which was then acquired by and merged into Wells Fargo Bank, N.A. (the Bank).

In 2009, defendants ceased paying the note, and in April 2010 the Bank filed a foreclosure complaint. Although defendants were served with the complaint and related notices, they failed to appear or otherwise respond to the complaint. Default was entered against defendants in January 2011. The Bank sent defendants two successive Notices to Residential Mortgage Debtors required by N.J.S.A. 2A:50-58 in January 2011 and March 2013.

In May 2013, the Bank moved for entry of a final judgment and provided notice to defendants. Again, defendants did not respond. Thus, on July 19, 2013, the Chancery Division entered a final judgment against defendants in the amount of $324,087.13 and ordered the property to be sold to satisfy the amount due.

Several months after the entry of the final judgment, and just before the sheriff's sale of the property, defendants moved to vacate the default and final judgment. In support of that motion, defendants' counsel filed a certification, which defendant Barbara Post Gambuti verified, contending that defendants tried to resolve the foreclosure in 2013 by hiring a company through "makinghomesaffordable.com." Defendants' counsel also asserted that defendants paid that company $8000 to "correct the default, defend the lawsuit[,] and modify the mortgage." Defendants' counsel acknowledged, however, that thereafter nothing was done by the company. Defendants' counsel further asserted a number of procedural and substantive defenses to the foreclosure action.

On January 10, 2014, the Chancery Division entered an order denying defendants' motion to vacate the default and final judgment. In an accompanying written opinion, the judge explained that defendants' motion failed to comply with Rule 4:43-3, because defendants had not submitted a proposed answer and failed to file the appropriate fee. The judge also held that defendants had failed to show excusable neglect or a meritorious defense. With regard to the lack of a meritorious defense, the judge found the Bank had established that defendants had been part of a settled class action. That class action had resolved and released certain of defendants' substantive defenses to the note and mortgage. Thus, the judge also granted the Bank's cross-motion to uphold the settlement in that class action.

Defendants now appeal and argue that the judge (1) abused his discretion in failing to vacate the default and final judgment, and (2) wrongfully accepted the Bank's untimely cross-motion. Defendants also contend (3) the Bank failed to properly review them for a loan modification and that failure "detract[ed]" from their ability to redeem the property. Given the record and applicable law, we reject these arguments.

We primarily focus on whether the judge erred in denying defendants' motion to vacate the default and final judgment because without such a vacation, defendants' other arguments have no case within which they can be considered. When a final judgment of default is entered, a party seeking to vacate the judgment must meet the standards of Rule 4:50-1. See US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). Rule 4:50-1 provides six grounds for relief

(a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.

"The rule is 'designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case.'" Guillaume, supra, 209 N.J. at 467 (quoting Mancini v. EDS, 132 N.J. 330, 334 (1993)).

We afford "substantial deference" to a trial court's determination to grant relief under Rule 4:50-1, and reverse only if the judge's determination amounts to a clear abuse of discretion. Ibid. An abuse of discretion is when a decision is "made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Id. at 467-68 (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).

Here, defendants do not explicitly identify what subsection of Rule 4:50-1 they rely on in seeking to vacate the default and final judgment. Instead, defendants argue that they are entitled to vacate the judgment under Rule 4:6-2 because the Bank failed to state a claim for relief and "R. 4:6-2 states that such a motion is treated like summary judgment and can be brought at any time." We reject this unprecedented misreading of Rule 4:6-2.

At best, defendants can rely only on subsections (a) and (f) of Rule 4:50-1. To prevail under Rule 4:50-1(a), defendants must show "excusable neglect and a meritorious defense." Guillaume, supra, 209 N.J. at 468. Rule 4:50-1(f) permits relief for "any other reason justifying relief from the operation of the judgment or order," and "is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (quoting Hous. Auth. of Morristown v. Little, 135 N.J. 274, 286 (1994)). Neither of those grounds are present here.

The judge here acted within his discretion in denying defendants' motion to vacate. The judge considered defendants' proffered excusable neglect and rejected the excuses finding that the foreclosure complaint had been served on defendants in 2010, defendants had received several notices advising them of the entry of the default, but defendants inexcusably failed to respond to the foreclosure action for several years. The judge also found that defendants did not set forth any meritorious defenses to the foreclosure action. The record and controlling law supports the judge's findings, and we discern no abuse of discretion. On this record, defendants have also not shown any "exceptional circumstances" to warrant relief under Rule 4:50-1(f).

We also reject defendants' arguments concerning the cross-motion and the Bank's alleged failure to appropriately consider a loan modification. Indeed, these arguments are without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add a few brief comments.

With regard to the cross-motion, defendants complain the Bank only filed this motion on the Monday before the return date. Defendants fail to identify any prejudice from the late filing of that notice. In that regard, they have not offered any proof that they opted out of the class action. In contrast, the Bank submitted proof that defendants had not opted out of the class action and, thus, were members of the class. Defendants also did not object to the timing of the Bank's cross-motion until the judge announced his decision. Such a belated, "wait-and-see" objection is inappropriate. While the better practice is to file cross-motions on time, the party opposing such a cross-motion needs to raise a timely objection to preserve that position.

Defendants have also failed to submit any substantive proof that the Bank did not properly review their loan modification request. The record here does not contain any evidence that the Bank acted improperly in not working out a loan modification agreement with defendants.

Affirmed.

1 Defendants assert that Barbara Post Gambuti and one of her relatives owns the property and Stephen Gambuti has no ownership in the property.