NATIONSTAR MORTGAGE LLC v. SOO WON KIM

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

NATIONSTAR MORTGAGE, LLC,

Plaintiff-Respondent,

v.

SOO WON KIM and KYUNG JA KIM,

HIS WIFE; FAIRWAYS CONDOMINIUM

ASSOCIATION INC.,

Defendants-Appellants.

July 26, 2016

Submitted July 12, 2016 Decided

Before Judges Carroll and Rothstadt.

On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-001035-15.

Law Offices of Park & Kim, LLC, attorneys for appellants (Kyungjoo Park, on the briefs).

Ballard Spahr, LLP, attorneys for respondent (Martin C. Bryce, Jr. and Carol A. DiPrinzio, on the brief).

PER CURIAM

The issue in this residential mortgage foreclosure appeal is whether the trial court erred in denying defendants' motion to vacate default. Defendants Soo Won Kim and Kyung Ja Kim, husband and wife, challenge the trial court's determination that, because they were unable to show good cause or the existence of a meritorious defense, they failed to satisfy the liberal standard necessary to set aside a default under Rule 4:43-3. We have considered the applicable law and the record and affirm.

We glean the following facts from the motion record. On May 23, 2008, defendant Soo Won Kim borrowed $332,500 from Countrywide Bank, FSB (Countrywide) and executed a note evidencing the indebtedness. The same day, defendants executed a mortgage encumbering their condominium unit in Edison as security for the note. The mortgage was duly recorded on June 10, 2008, in the Office of the Clerk of Middlesex County.

The residential mortgage foreclosure complaint was filed on January 9, 2015, and served personally on defendants two days later. The complaint recited that the subject mortgage was assigned to Countrywide's successor by merger, Bank of America, N.A., on September 23, 2011, and then to plaintiff Nationstar Mortgage LLC on October 15, 2012. Both assignments were duly recorded. Plaintiff alleged that defendants defaulted on the loan by failing to make the installment payment due on May 1, 2011, and all payments due thereafter.

When no timely answer to the complaint was filed, default was entered by the court on March 2, 2015. Defendants, represented by counsel, attempted to file an answer on March 25. However, the answer was rejected because defendants were in default.

Before judgment was entered, on April 6, 2015, defendants moved to vacate the default. Defendant Soo Won Kim certified that the answer was delayed because defendants could not: (1) afford an attorney; (2) "understand English very well;" and (3) locate an address at which to serve co-defendant Fairways Condominium Association, Inc. Defendants' attorney also certified that the filing of the answer was delayed for those reasons, and that discovery was required to identify the true owner of the mortgage loan.

Judge Frank M. Ciuffani denied defendants' motion on June 12, 2015. In his written statement of reasons, Judge Ciuffani recognized that "[t]he required good cause showing for setting aside an entry of default pursuant to Rule 4:43-3 is a less stringent standard than that imposed by Rule 4:50-1 for setting aside a default judgment." Citing O'Connor v. Altus, 67 N.J. 106, 129 (1975), the judge noted that "a showing of a meritorious defense, together with a lack of contumacious behavior[,] will satisfy the good cause standard." Judge Ciuffani concluded

Defendants have failed to satisfy the standard to vacate default. Defendants do not deny knowledge of the foreclosure action, or that they were [] served with the [c]omplaint. Defendants state they were delayed in responding to the [c]omplaint because they were seeking representation. However, this excuse does not constitute good cause for failing to timely respond to [p]laintiff's [c]omplaint. Furthermore, [d]efendants have failed to set forth a meritorious defense to the foreclosure action. They have failed to challenge [p]laintiff's prima facie right to foreclose, or that [p]laintiff lacks standing. The [c]ourt finds that [p]laintiff recorded the [a]ssignment before its [c]omplaint was filed, and thus, [p]laintiff has standing to bring its foreclosure action.

On June 16, 2015, the court entered a final judgment of foreclosure. This appeal followed. On appeal, defendants raise the same arguments they raised before Judge Ciuffani. Specifically, defendants argue that they did not unreasonably delay in filing their answer; they demonstrated excusable neglect for the delay; and that "they raised several meritorious defenses as to the evidentiary proofs in relation to [p]laintiff's alleged ownership or control of the mortgage loan."

Pursuant to Rule 4:43-3, a court may vacate entry of default upon "good cause shown." As Judge Ciuffani correctly acknowledged, "the requirements for setting aside a default under Rule 4:43-3 are less stringent than [] those for setting aside an entry of default judgment under Rule 4:50-1." N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div.)(citation omitted), certif. denied, 199 N.J. 543 (2009). Trial courts should view motions to vacate "with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.)(addressing motion to vacate default judgment), aff'd, 43 N.J. 508 (1964).

"A mere showing of good cause is required for setting aside an entry of default." N.J. Mfrs. Ins. Co., supra, 406 N.J. Super. at 360. In considering whether good cause exists, courts "typically cite three factors . . . [w]hether the default was willful or culpable; [w]hether granting relief from the default would prejudice the opposing party; and [w]hether the defaulting party has a meritorious defense." James W. Moore, et al., 10 Moore's Federal Practice - Civil 55.70[2][a] (3d ed. 2013) (reviewing comparable Fed. R. Civ. P. 55(c), which states "[t]he court may set aside an entry of default for good cause").

In particular, "the showing of a meritorious defense is a traditional element necessary for setting aside both a default and a default judgment[.]" Pressler & Verniero, Current N.J. Court Rules, comment on R. 4:43-3 (2016). As with a motion to vacate a default judgment, there is no point in setting aside an entry of default if the defendant has no meritorious defense. "'The time of the courts, counsel and litigants should not be taken up by such a futile proceeding.'" US Nat. Ass'n v. Guillaume, 209 N.J. 449, 469 (2012) (quoting Schulwitz v. Shuster, 27 N.J. Super. 554, 561 (App. Div. 1953)). We have noted that

[t]his is especially so in a foreclosure case where the mere denominating of the matter as a contested case moves it from the expeditious disposition by the Office of Foreclosure in the Administrative Office of the Courts, R. 1:34-6 and R. 4:64-1(a), to a more protracted treatment by the Chancery Division providing discovery and raising other problems associated with trial calendars. If there is no bona fide contest, a secured creditor should have prompt recourse to its collateral.

[Trs. of Local 478 Trucking and Allied Indus. Pension Fund v. Baron Holding Corp., 224 N.J. Super. 485, 489 (App. Div. 1988).]

A trial court's ruling on a motion to vacate a default will not be disturbed absent an abuse of discretion. Cf. Guillaume, 209 N.J. at 467 (motion to vacate default judgment under Rule 4:50-1). In our review, we do not "decide whether the trial court took the wisest course, or even the better course, since to do so would merely be to substitute our judgment for that of the lower court. The question is only whether the trial judge pursued a manifestly unjust course." Gittleman v. Cent. Jersey Bank & Trust Co., 103 N.J. Super. 175, 179 (App. Div. 1967), rev'd on other grounds, 52 N.J. 503 (1968).

We have considered defendants' arguments in light of the record and applicable legal principles and conclude that they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We discern no abuse of discretion in this case, and affirm substantially for the reasons expressed by Judge Ciuffani. We add only the following comments.

In their certification, defendants do not deny signing the loan documents or defaulting on the payments due under the mortgage loan. Where a defendant does not challenge the execution, recording, and nonpayment of the mortgage, a prima facie right to foreclose is established. See Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37 (App. Div. 1952). See also Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994); Central Penn Nat'l Bank v. Stonebridge Ltd., 185 N.J. Super. 289, 302 (Ch. Div. 1982).

Even if defendants are deemed to have demonstrated a valid reason for failing to timely answer the foreclosure complaint, we discern no merit to their standing argument. Plaintiff presented evidence of the assignment of the mortgage along with its recording before the foreclosure complaint was filed, satisfying the requirement that "either possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." Deutsche Bank Trust Co. Ams. v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012). Although defendants vaguely challenge the validity of the mortgage assignment and the securitization of the mortgage loan, the assignment on record clearly references plaintiff as assignee. Notably, defendants did not certify that any entity other than plaintiff sought repayment of the mortgage loan during the four-year period that the loan was allegedly in default.

In summary, we conclude that defendants failed to advance a meritorious defense sufficient to negate plaintiff's prima facie right to foreclose. Accordingly, Judge Ciuffani properly exercised his discretion in denying defendants relief.

Affirmed.