FEDERAL NATIONAL MORTGAGE ASSOCIATION v. DAVID WARD

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

FEDERAL NATIONAL MORTGAGE

ASSOCIATION,

Plaintiff-Respondent,

v.

DAVID WARD and MARY BETH KEENAN,

Defendants-Appellants.

__________________________________

January 19, 2017

Submitted November 3, 2016 - Decided

Before Judges Lihotz and Hoffman.

On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-11082-13.

David Ward and Mary Beth Keenan, appellants pro se.

Powers Kirn, LLC, attorneys for respondent (Paige M. Bellino, on the brief).

PER CURIAM

Defendants David Ward and Mary Beth Keenan appeal from the trial court's May 15, 2014 grant of summary judgment to plaintiff Federal National Mortgage Association as well as the final judgment of foreclosure, entered on April 22, 2015. Defendants also appeal from a June 21, 2013 order denying their motion to dismiss the foreclosure complaint.

In reviewing arguments presented on appeal, generally at issue is plaintiff's standing to proceed with the foreclosure. Following our review in light of the record and applicable law, we affirm.

On December 14, 2007, Ward executed and delivered a note to SunTrust Mortgage, Inc. (SunTrust), evidencing a $417,000 loan, payable in monthly installments over a period of 360 months. Ward and Keenan also executed a mortgage on real property located in River Vale as security for repayment of the debt, which was recorded on July 16, 2008. The document designated Mortgage Electronic Registration Systems, Inc. (MERS) as nominee, for the mortgagee, SunTrust.1

Following defendants' default on or about March 1, 2009, MERS assigned the mortgage to SunTrust. The record reflects SunTrust initiated foreclosure, under Docket No. F-2371-10. A corrective assignment from MERS to SunTrust was filed on January 12, 2013.

In the prior foreclosure action, SunTrust moved for summary judgment and defendants cross-moved to dismiss the complaint. Defendants raised various challenges, including contesting SunTrust's standing because the assignment was recorded following the filing of the complaint. The order and accompanying statement of reasons dated November 2, 2010, rejected defendants' arguments; denied the cross-motion to dismiss; struck defendants' answer; granted summary judgment; and referred the matter to the Office of Foreclosure for entry of final judgment, as an uncontested matter. For reasons not stated in the record, the action was dismissed without prejudice on February 28, 2010.

Ultimately, SunTrust filed the current complaint to foreclose all interests in the realty, under Docket No. F-011082-13. Default was entered on May 21, 2013. Defendants moved to dismiss the complaint. Invoking the entire controversy doctrine, defendants argued the second foreclosure action was barred because the prior complaint was dismissed. The motion was denied. Defendants also moved to vacate default, which was granted on November 22, 2013. Thereafter, discovery was conducted.

While the matter was pending, SunTrust assigned its interest in the note and mortgage to FNMA, by assignment recorded on November 15, 2013. Plaintiff moved to be substituted as the named party in interest and to strike defendants' answer. Plaintiff's motions were granted over defendants' opposition. Summary judgment was filed and a final judgment of foreclosure was entered on April 22, 2015.

Defendants timely filed this appeal challenging the denial of their motion to dismiss, the entry of summary judgment, and the final judgment of foreclosure. We examine their challenges to these orders.

Defendants argue the court erred in permitting plaintiff to pursue foreclosure once it dismissed its original complaint. Defendants advance the claim they never consented to dismissal; the initial action "adjudicated" the parties' interests; and dismissal was with prejudice. These arguments are unfounded.

A plaintiff's voluntary dismissal of an action is permitted by Rule 4:37-1(a)

without court order . . . by filing a stipulation of dismissal specifying the claim or claims being dismissed, signed by all parties who have appeared in the action. Unless otherwise stated in the notice or stipulation, the dismissal is without prejudice.

Contrary to defendants' suggestion, final adjudication in the initial foreclosure action was not pending when dismissal was entered. The claims were not tried to judgment and nothing suggests defendants prevailed to defeat foreclosure. In fact, the record shows the opposite occurred: defendants' answer was stricken and summary judgment was entered. Defendants' consent to dismiss was not required because the procedural posture at the time of dismissal was an uncontested action. See R. 4:64-1(c) (defining uncontested foreclosure action as one where contested pleading was stricken). Although summary judgment was filed, final adjudication had not been made.2 Finally, as Rule 4:37-1(a) provides, the dismissal was without prejudice.

We also note defendants' invocation of the entire controversy doctrine, set forth in Rule 4:30A, is misplaced. Following our review, we conclude the entire controversy doctrine is inapposite to the facts at hand.

Generally, the entire controversy doctrine espouses a requirement a party present all claims arising between parties to the litigation in the same action.

[T]he entire controversy doctrine . . . is based on equitable principles intended to discourage fragmentation of litigation and to encourage the joinder of related claims in a single suit. K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002). The doctrine's guiding principle is judicial fairness, id. at 74; see also Cont'l Ins. Co. v. Honeywell Int'l, Inc., 406 N.J. Super. 156, 184 n.19 (App. Div. 2009); Jersey City Police Officers Benevolence Ass'n v. City of Jersey City, 257 N.J. Super. 6, 13 (App. Div. 1992), thereby imposing an obligation on litigants to bring additional claims and parties to the court's attention.

[Potomac Ins. Co. of Illinois ex rel. OneBeacon Ins. Co. v. Pennsylvania Mfrs. Ass'n Ins. Co., 425 N.J. Super. 305, 325-326 (App. Div. 2012).]

Consequently, omitted claims not joined in a single action, are precluded from being presenting in a subsequently filed action. R. 4:30A. Also noted, is an existing exception for joinder of non-germane claims in foreclosure actions governed by Rule 4:645.

Our determination would be different had the first matter been finalized on the merits. Certainly, a party may not re-litigate the merits of a claim, which had been finalized in another action. However, "[t]he doctrine does not apply to preclude a successive action if the first action did not result in any adjudication on the merits." Pressler & Verniero, Current N.J. Court Rules, cmt. 3.5 to R. 4:30A (2016). Here, we discern no basis for claim preclusion where the first complaint was voluntarily dismissed, without prejudice, prior to entry of final judgment of foreclosure. Czepas v. Schenk, 362 N.J. Super. 216, 228 (App. Div.) ("A dismissal without prejudice means that there has been no adjudication on the merits and that a subsequent complaint alleging the same cause of action will not be barred by reason of its prior dismissal."), certif. denied, 178 N.J. 374 (2003).

We also reject defendants' suggestion of error by permitting plaintiff to be substituted as the real party in interest, prior to final judgment. Opposing the motion to substitute, defendants maintained the deadline to add additional parties, as designated in the case management order, had passed. This argument ignores the facts.

The substitution of plaintiff for SunTrust did not add a new party to the action; it merely corrected the record to assure the real party in interest, which owned the debt, would be named in the final judgment. When a party assigns its claims to another, Rule4:34-3 allows the action to continue "unless the court on motion directs the person to whom the interest is transferred to be substituted in the action." There is no error.

Next, defendants attack plaintiff's standing. Defendants argue the judge "accepted the certification of an individual without knowledge, employed by Seterus, the servicing agent for [plaintiff]" and plaintiff failed to produce proof SunTrust held the note, which it subsequently assigned to plaintiff. We disagree.

First, SunTrust was the original mortgagor and title holder of the note. Although the mortgage was endorsed to MERS as nominee, there is no evidence SunTrust surrendered possession of the note.

Second, plaintiff as the investor acts through its agents. The responsible party for the servicing agent filed a certification, as permitted by Rule4:64-2(c), based on her personal knowledge. The certification explains the agency relationship, identified what documents were reviewed and the basis of her knowledge to state the facts included.

Third, the agent attested that all exhibits attached were true and correct copies of the original documents, which plaintiff possessed. She further confirmed plaintiff's chain of title, by identifying the recorded assignments.

We find no flaw in the trial judge's factual finding that plaintiff possessed the note. Nor was it error to conclude plaintiff established its standing to foreclose.

Also unavailing is defendant's contention the business records presented were hearsay because the employee had no knowledge of the underlying loan transaction. We conclude the argument lacks sufficient merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E). Finally, any arguments not specifically discussed in our opinion have been rejected. Ibid.

Affirmed.

1 We note

MERS is a private corporation which administers a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. When mortgage loans are initially placed, the lenders will retain the underlying notes but can arrange for MERS to be designated as the mortgagees on the mortgages which become a part of the public record. In that context, the lenders are able to transfer their interests to others, without having to record those subsequent transactions in the public record.

[Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 332 (Ch. Div. 2010).]

2 We note an apparent, though not actual, incongruity between the provisions of Rule 4:37-1, and the rules governing foreclosure actions. Rule 4:37-1 provides a plaintiff may dismiss a complaint voluntarily, without defendant's consent, up until the earlier of "service by the adverse party of an answer or of a motion for summary judgment." In the first foreclosure action, plaintiff moved for summary judgment, which the trial court granted. However, because foreclosure actions are governed by Rule 1:34-6, which provides a unique procedure for the entry of orders of judgments in foreclosure actions, we conclude plaintiff's motion for summary judgment played a different procedural role than a motion for summary judgment made in an ordinary civil case. Plaintiff's motion for summary judgment, granted by the trial court, was not an entry of final judgment. See R. 1:34-6 (permitting the Chief Justice to select a Superior Court Judge to enter "orders of judgment" in uncontested foreclosure matters). Because plaintiff's motion for summary judgment did not and could not have ended the case, it did not trigger the provisions of Rule 4:37-1 and remove the ability of plaintiff to dismiss the complaint unilaterally. Furthermore, because defendants' answer to plaintiff's motion was stricken as uncontested under Rule 4:64-1, Rule 4:37-1 was not triggered and plaintiff was still permitted to dismiss the complaint voluntarily.