LSF8MASTER PARTICIPATION TRUST v. SIMON ZAROUR and MRS. ZAROUR, wife of SIMON ZAROUR, LYNX ASSET, and FRANKS GMC TRUCK CENTER

NOT FOR PUBLICATION WITHOUT THE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-4361-16T4

LSF8 MASTER PARTICIPATION
TRUST,

        Plaintiff-Respondent,

v.

SIMON ZAROUR,

        Defendant-Appellant,

and

MRS. ZAROUR, wife of SIMON
ZAROUR, LYNX ASSET, and FRANKS
GMC TRUCK CENTER,

     Defendants.
_____________________________

              Submitted May 30, 2018 – Decided June 21, 2018

              Before Judges Hoffman and Gilson.

              On appeal from Superior Court of New Jersey,
              Chancery Division, Bergen County, Docket No.
              F-011927-14.

              Simon Zarour, appellant pro se.

              Fein Such Kahn & Shepard, PC, attorneys for
              respondent (Ashleigh Levy Marin, of counsel
              and on the brief).
PER CURIAM

     In this mortgage foreclosure matter, defendant Simon Zarour

appeals from a February 3, 2017 order denying his motion to vacate

the final judgment entered on September 28, 2016.                 Defendant also

appeals from an April 28, 2017 order denying his motion for

reconsideration.     We affirm.

                                        I.

     On   August    10,     2007,    defendant   borrowed    $1,000,000       from

Washington Mutual Bank, F.A. (WAMU).              In connection with that

loan, defendant signed an adjustable rate note (Note) and gave a

mortgage on property located in Paramus (Mortgage).

     Defendant stopped making payments on the Note in August 2008.

Thereafter, he defaulted on both the Note and Mortgage.               Defendant

has not cured the defaults and he has not made any payments on the

Note or Mortgage since August 2008.

     In   2008,     WAMU,    which     was   a   federal    bank,    went     into

receivership with the Federal Deposit Insurance Company (FDIC)

acting as receiver.       In September 2008, JP Morgan Chase, National

Association (Chase Bank), acquired all of WAMU's assets, which

included all WAMU loans.

     On March 28, 2014, Chase Bank filed a complaint against

defendant seeking to foreclose on the mortgaged property.                       In

preparation   for    filing    that    action,    Chase    Bank    reviewed   its

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business records and confirmed that as of March 13, 2014, it was

the owner of the Note and Mortgage.

     On March 27, 2014, however, Chase Bank sold the Note and

Mortgage to LSF8 Master Participation Trust (LSF8 Trust).                    The

Note was not physically delivered to LSF
8 Trust until April 30,

2014.

     The FDIC formally assigned defendant's Mortgage to Chase Bank

on May 13, 2014.    That same day, Chase Bank assigned the Mortgage

to US Bank Trust, N.A., as Trustee for LSF8 Trust (US Bank).                Both

assignments were recorded in June 2014.                On August 5, 2014, US

Bank further assigned defendant's Mortgage to LSF8 Trust.                   That

assignment was recorded in September 2014.

     In   May   2014,   in   response       to   the   foreclosure   complaint,

defendant filed a contesting answer.               Thereafter, in September

2014, Chase Bank filed motions for summary judgment and to strike

defendant's answer.      In support of its motions, Chase Bank filed

a certification stating that it had assigned the Mortgage to US

Bank in May 2014, and US Bank had assigned the Mortgage to LSF
8 Trust in August 2014.        The Chancery court denied the motion for

summary judgment, but granted the motion to strike defendant's

answer in an order entered on December 5, 2014.               The December 5,

2014 order also substituted LSF8 Trust as the named plaintiff.



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     On September 28, 2016, the final judgment in foreclosure was

entered against defendant.        Three months later, defendant moved

to vacate the final judgment, contending that the judgment should

be voided because Chase Bank was assigned the Mortgage after it

filed     its   foreclosure       complaint   and    had       fraudulently

misrepresented facts in its certification of diligent inquiry.

     The Chancery court heard oral argument on defendant's motion

on February 3, 2017.         That same day, the court entered an order

denying defendant's motion to vacate the final judgment and issued

a written opinion.      The court found that defendant had not shown

excusable neglect or a meritorious defense.         The court also found

that when Chase Bank filed the foreclosure complaint, it physically

possessed the Note and, thus, had standing to bring the foreclosure

action.

     On    February    27,    2017,   defendant   filed    a   motion    for

reconsideration.      The Chancery court issued an order and written

opinion denying that motion on April 28, 2017.

                                      II.

     As already noted, defendant appeals from the February 3, 2017

order denying his motion to vacate the final judgment, and the

April 28, 2017 order denying his motion for reconsideration.               He

argues that the final judgment should be vacated under                  Rule

4:50-1(c) and (f).      In that regard, he contends that Chase Bank

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fraudulently represented that it was the holder of the Note and

Mortgage when it filed the foreclosure complaint on March 28,

2014.   He also contends that representation was fraudulent because

Chase Bank had sold the Note and Mortgage on March 27, 2014, and

Chase Bank was only assigned the Mortgage on May 13, 2014.         We are

not persuaded by these arguments and affirm because we discern no

abuse of discretion in the Chancery court's denial of the motion

to vacate the final judgment.

      To vacate a judgment, a defendant must establish one of the

six grounds identified in Rule 4:50-1.       See US Bank Nat'l Ass'n

v. Guillaume, 
209 N.J. 449, 466 (2012).        Here, defendant relies

on subsections (c) and (f) of Rule 4:50-1.           Those subsections

provide that a party may vacate a judgment if he or she can

establish: "(c) fraud (whether heretofore denominated intrinsic

or   extrinsic),   misrepresentation,   or   other   misconduct    of    an

adverse party; . . . or (f) any other reason justifying relief

from the operation of the judgment or order."        R. 4:50-1(c), (f).

      We review a Chancery court's order on a motion to vacate for

abuse of discretion.     Guillaume, 
209 N.J. at 467.        "The trial

court's determination under [Rule 4:50-1] warrants substantial

deference," and the abuse of discretion must be clear to warrant

reversal.   Ibid. (citing DEG, LLC v. Twp. of Fairfield, 
198 N.J.
 242, 261 (2009)).

                                  5                               A-4361-16T4
     Defendant's contention is that the final judgment is void

because Chase Bank misrepresented that it was the holder of the

Note and Mortgage when it filed its foreclosure complaint.       That

argument, however, is really an argument about standing.    In other

words, defendant argues that Chase Bank lacked standing to bring

the foreclosure action because it was not the owner of the Note

when it filed the foreclosure action.

     Under the circumstances of this case, Chase Bank had standing.

On March 28, 2014, when it filed the complaint, Chase Bank was the

holder of the Note.   A representative of Chase Bank certified that

the bank physically possessed the Note on March 28, 2014.   Indeed,

although Chase Bank sold the Note to LSF
8 Trust on March 27, 2014,

the Note was not physically delivered until April 30, 2014, well

after the foreclosure complaint was filed.   Possession of the note

prior to the filing of the complaint establishes standing in a

foreclosure action.   See Deutsche Bank Nat'l Tr. Co. v. Mitchell,


422 N.J. Super. 214, 225 (App. Div. 2011).       Moreover, we have

clarified that the lack of standing is not a meritorious defense

to a foreclosure complaint.   Deutsche Bank Nat'l Tr. Co. v. Russo,


429 N.J. Super. 91, 101 (App. Div. 2012).     In addition, even if

there were filing deficiencies, dismissal of the complaint is not

necessarily the appropriate remedy.     Guillaume, 
209 N.J. at 475.

In short, Chase Bank had standing to file the foreclosure action

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and defendant's contentions about the lack of standing do not

constitute a meritorious defense to the foreclosure action.

     Just as importantly, we cannot lose sight of the commercial

reality of the situation.      There is no dispute that defendant

defaulted on a $1,000,000 loan in 2008, and has not made any

payments since that default.    There is also no dispute that the

current plaintiff – LSF8 Trust – owns and holds the Note and

Mortgage.   At the time the final judgment was entered, LSF8 Trust

was the named plaintiff in the action and had the right to pursue

the action.   Thus, the equitable considerations presented in this

matter supported entry of the final judgment in favor of plaintiff.

See Deutsche Bank Tr. Co. Ams. v. Angeles, 
428 N.J. Super. 315,

320 (App. Div. 2012) ("In foreclosure matters, equity must be

applied to plaintiffs as well as defendants.").

     While proper procedures are important in foreclosure actions,

here the record does not disclose any fraud or misrepresentation.

Chase Bank did its due diligence before filing its complaint.      As

of March 13, 2014, Chase Bank was the owner of the Note and

Mortgage and was the holder of the Note.       That the Note and

Mortgage were sold the day before the complaint was filed does

not, on this record, show either fraud or misrepresentation.

Moreover, there is no dispute that Chase Bank purchased the loan

in 2008 and, therefore, was the rightful owner of the Note and

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4 Mortgage in March 2014.    That the FDIC only assigned the Mortgage

in   May   2014,   does   not,   on       this   record,   show   fraud    or

misrepresentation.

     Affirmed.




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