WELLSFARGO BANK, N.A v. DOMENIC MAGRO a/k/a DOMENICK MAGRO; JACQUALINE MAGRO a/k/a JACQUELINE MAGRO, his wife and UNITED STATES OF AMERICA STATE OF NEW JERSEY; ST BARNABAS MEDICAL CENTER; NEW JERSEY ANESTHESIA ASSOCIATES NEW CENTURY FINANCIAL SERVICES

NOT FOR PUBLICATION WITHOUT THE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-0636-16T2

WELLS FARGO BANK, N.A.,

        Plaintiff-Respondent,

v.

DOMENIC MAGRO a/k/a DOMENICK
MAGRO; JACQUALINE MAGRO a/k/a
JACQUELINE MAGRO, his wife,

        Defendants-Appellants,

and

UNITED STATES OF AMERICA;
STATE OF NEW JERSEY; ST.
BARNABAS MEDICAL CENTER; NEW
JERSEY ANESTHESIA ASSOCIATES;
NEW CENTURY FINANCIAL SERVICES;
POST & LINTEL ARCHITECTURAL;
SLOMINS INC.; POLO FINANCIAL
CONSULTING & TA,

     Defendants.
_____________________________________

              Submitted January 17, 2018 – Decided February 23, 2018

              Before Judges Manahan and Suter.

              On appeal from Superior Court of New Jersey,
              Chancery Division, Essex County, Docket No.
              F-038765-09.
            Law Offices of Joseph A. Chang, attorneys for
            appellants (Joseph A. Chang, of counsel;
            Jeffrey Zajac, on the brief).

            Reed Smith, LLP attorneys for respondent
            (Henry F. Reichner, of counsel; Brian P.
            Matthews, on the brief).

PER CURIAM

     Defendants Domenic and Jacqueline Magro (defendants) appeal

from an October 6, 2016 final judgment of foreclosure1 and from an

April 20, 2016 order denying their motion to vacate entry of a

default.    We affirm both orders.

                                    I

     In 2006, Domenic Magro2 executed a $442,500 note to World

Savings    Bank   (World)   to   refinance   a   residential   property    in

Fairfield, New Jersey.       He and Jacqueline Magro also executed a

mortgage to World, which mortgage subsequently was recorded. World

changed its name to Wachovia Mortgage, FSB (Wachovia) in 2007 and

then, Wachovia was acquired by and merged into Wells Fargo Bank

N.A. in November 2009.       Suser v. Wachovia Mortg., FSB, 
433 N.J.

Super. 317, 321 (App. Div. 2013).




1
   Defendants refer to an August 12, 2016 final judgment, but the
record copy is dated October 6, 2016.
2
   For clarity, we use the parties' first names where necessary
because they share the same last name.


                                        2                           A-0636-16T2
     Defendants defaulted on the mortgage payments in August 2008.

They do not contest the default.

     A foreclosure complaint was filed in July 2009.3            Defendants

did not answer the complaint.        On January 20, 2010, a default was

entered under Rule 4:43-1.    Defendants attempted to file an answer

two years later, but in May 2012, the trial court deemed the answer

to be "void and of no effect pending the filing and determination

of a motion before [the] court to vacate the default entered."

That order is not challenged on appeal.            The case was returned to

the Office of Foreclosure to proceed as an uncontested matter.

The parties unsuccessfully mediated the case in June 2013.

     In May 2015, plaintiff was granted permission to file an

amended   complaint   that   added    six    new    judgment   creditors    as

defendants and a federal tax lien.             In July 2015, defendants

attempt to file an answer to the amended complaint was rejected.

In February 2016, defendants filed a motion to vacate the default

that had been entered in January 2010.

     In support of the motion, Dominic certified that he had owned

the property since December 2006.           He "was aware that [he] would

be unable to afford [the] mortgage" and tried to obtain a loan

modification but never received one.           He stated that he "assumed


3
  Wells Fargo was substituted as plaintiff by order dated May 20,
2014.

                                      3                              A-0636-16T2
and expected" the case was abandoned because it had not been

prosecuted by plaintiff since July 2015.                 Defendants' proposed

answer alleged thirteen separate affirmative defenses, including

an alleged violation of the Consumer Fraud Act (CFA), 
N.J.S.A.

56:8-1 to -20 (Fourth Affirmative Defense) and the defense of

recoupment based on an alleged violation of the Truth in Lending

Act (TILA), 15 U.S.C. § 1638 (Eighth Affirmative Defense).4

     The trial court denied defendants' motion to vacate default.

Citing to O'Connor v. Altus, 
67 N.J. 106, 129 (1975), the court

stated that in order to vacate the default, there needed to be a

"demonstration      of   absence      of     contemptuous       conduct     and    a

meritorious    defense."        The        court   did    not    find     anything

"contemptuous" about defendants' conduct.                 However, the court

found that defendants' proposed answer did not plead their consumer

fraud claim with the "specificity necessary" and was "time barred

anyway."      The   court   denied    the    motion,     finding   it     would   be

prejudicial to vacate the default based on the record and the age

of the case.



4
   We consider defendants to have waived any other claimed
affirmative defenses because they were not raised in their merits
brief. See Drinker Biddle & Reath LLC v. N.J. Dep't of Law & Pub.
Safety, Div. of Law, 
421 N.J. Super. 489, 496 n.5 (App. Div. 2011)
(noting that claims not addressed in merits brief are deemed
abandoned); see also Pressler & Verniero, Current N.J. Court Rules,
cmt. 5 on R. 2:6-2 (2018).

                                       4                                   A-0636-16T2
     A final judgment of foreclosure was entered on October 6,

2016.   Defendants did not object prior to its entry.

     Defendants contend that the note was a pick-a-payment loan

product.   Pick-a-payment loans were the subject of a federal class

action commenced in 2007, in United States District Court for the

Northern District of California.     In re Wachovia Corp. "Pick-a-

Payment Mortg. Mktg. & Sales Practices Litig., No. M:09-CV-2015-

JF, 2
010 U.S. Dist. LEXIS 139691 (N.D. Cal. Dec. 16, 2010).

Defendants are Class C members as "borrowers who still hold their

loans and are in default."   They do not allege that they opted out

of the class.

     The class action settlement was approved on May 17, 2011.

Under the settlement, class members released their claims "fully,

finally, and completely" and "forever discharge[d] the [a]lleged

[c]laims and any and every actual or potential known or unknown

claim, . . . right, demand, suit, matter, obligation, damage, loss

or cost, action or cause of action, of every kind and description."

Further, the settlement agreement defined "[a]lleged [c]laims" as

"including, but not limited to, claims that the [d]efendants

. . . violated TILA . . . and state consumer protection laws."

The federal court retained jurisdiction to interpret and enforce

the settlement agreement.



                                 5                          A-0636-16T2
     On appeal, defendants allege that the trial court erred by

denying their motion to vacate the entry of default.    They claim

the proposed answer alleged a meritorious claim of predatory

lending under the CFA because the pick-a-payment loan product was

inherently predatory.     They argue the defense of recoupment for

"counsel fees and costs" under the CFA and "unauthorized and

excessive fees" under TILA is meritorious.   Defendants contend the

court committed plain error by holding their affirmative defenses

were time barred.

                                II

     We review the denial of a motion to vacate under an abuse of

discretion standard.    US Bank Nat'l Ass'n v. Guillaume, 
209 N.J.
 449, 467 (2012).    An abuse of discretion "arises when a decision

is 'made without a rational explanation, inexplicably departed

from established policies, or rested on an impermissible basis.'"

Flagg v. Essex Cty. Prosecutor, 
171 N.J. 561, 571, (2002) (quoting

Achacoso-Sanchez v. Immigration & Naturalization Serv., 
779 F.2d 1260, 1265 (7th Cir. 1985)).

     A showing of good cause is all that is necessary to vacate

the entry of a default.   See R. 4:43-3 (providing that "[f]or good

cause shown, the court may set aside an entry of default").     Good

cause can mean "the presence of a meritorious defense . . . [and]

the absence of any contumacious conduct."    O'Connor v. Altus, 67

                                  6                         A-0636-16T
2 N.J. 106, 129 (1975).        The required showing of good cause is less

stringent than that required to set aside a default judgment. N.J.

Mfrs. Ins. Co. v. Prestige Health Grp., 
406 N.J. Super. 354, 360

(App. Div. 2009).       "[A]n application to vacate default 'should be

viewed with great liberality and every reasonable ground for

indulgence is tolerated to the end that a just result is reached.'"

N.J. Div. of Youth & Family Servs. v. P.W.R., 
410 N.J. Super. 501,

508 (App. Div. 2009) (quoting Marder v. Realty Constr. Co., 
84 N.J. Super. 313, 319 (App. Div. 1964)).

       Here, we discern no abuse of discretion by the court in

denying    defendants'       motion   to      vacate    default.        Domenic's

certification did not explain why he took no action until February

2016 regarding the default that was entered in January 2010.                    His

certification alleges he thought the foreclosure was abandoned

after July 2015, but it did not explain his lack of action for six

years before that.

       Further,   defendants    never       disputed    that    they   were   class

members   of   the    federal   class   action     or    that    the   settlement

agreement released their claims and defenses under TILA and under

the State's consumer protection law.

       We give full faith and credit to a class action judgment of

another court, where the "class members in that action . . . have

been   afforded      'the   minimum   procedural       requirements'"     of    due

                                        7                                 A-0636-16T2
process.   Simmermon v. Dryvit Sys., Inc., 
196 N.J. 316, 330 (2008)

(quoting Kremer v. Chem. Constr. Corp., 
456 U.S. 461 (1982)).

These minimum procedural requirements include:

           notice plus an opportunity to be heard and
           participate in the litigation.     The notice
           must be the best practicable, reasonably
           calculated, under all the circumstances to
           apprise [class members] of the pendency of the
           action and afford them an opportunity to
           present their objections. The notice should
           also describe the class members' rights in the
           action and provide them an opportunity to
           remove   [themselves]   from  the   class   by
           executing and returning an opt out or request
           for exclusion form to the court.

           [Ibid. (citations omitted).]

     Defendants do not allege the denial of due process.         The

settlement gave defendants ample notice and opportunity to be

heard and to opt out.     As class members under the settlement,

defendants waived all claims regarding the pick-a payment loan,

including claims under TILA and the State's consumer protection

laws.

     "[T]he 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,

cmt. on R. 4:43-3 (2018).    It would not make practical sense to

vacate a default for claims that lack merit.




                                 8                          A-0636-16T2
    We disagree with defendants' argument that their affirmative

defense of recoupment was meritorious.    Defendants do not dispute

that affirmative claims under TILA or the CFA based on the 2006

note and mortgage would be time-barred.   See Mirra v. Holland Am.

Line, 
331 N.J. Super. 86, 90 (App. Div. 2000) (applying six-year

statute of limitations to CFA claims); Zaman v. Felton, 
219 N.J.
 199 (2014) (applying one-year statute of limitations to TILA

claims).   Defendants admit that the recoupment claim is based on

the CFA and TILA.   However, they waived these claims through the

class action settlement.   Thus, even if the recoupment claim were

not time barred, see Assocs. Home Equity Servs., Inc. v. Troup,


343 N.J. Super. 254, 271-72 (App. Div. 2001) (holding the statute

of limitations on a defense of recoupment is not barred so long

as the main action itself is timely), it was rendered without

merit by defendants' waiver of the underlying claims.

    Affirmed.




                                 9                          A-0636-16T2