DITECH FINANCIAL LLC v. FRANK MENDEZ

NOT FOR PUBLICATION WITHOUT THE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-4586-15T2

DITECH FINANCIAL LLC,

        Plaintiff-Respondent,

v.

FRANK MENDEZ and KATHIE MENDEZ,

        Defendants-Appellants,

and

593 AVENUE E CONDOMINIUM
ASSOCIATION, FORD MOTOR CREDIT
COMPANY, OLYMPIA INTERNATIONAL,
INC., F.A. SAAVEDRA, M.D., P.A.,
DISCOVER BANK, and STATE OF NEW
JERSEY,

     Defendants.
________________________________

              Submitted September 14, 2017 – Decided February 5, 2018

              Before Judges Simonelli and Gooden Brown.

              On appeal from Superior Court of New Jersey,
              Chancery Division, Hudson County, Docket No.
              F-033843-10.

              Howard A. Miller, attorney for appellants.

              Ras Citron LLC, attorneys for respondent (John
              Habermann and Monika S. Pundalik, on the
              brief).
PER CURIAM

     In this residential mortgage foreclosure action, defendants

Frank and Kathie Mendez1 (collectively defendants) appeal from a

May 23, 2016 final judgment in favor of plaintiff Ditech Financial

LLC (Ditech).     We affirm.

     We derive the following facts from the record.         On March 27,

2006, Frank2 executed a thirty-year fixed-rate promissory note for

$228,000 to America's Wholesale Lender (America's).         The note was

secured by a purchase money mortgage on his residential property.

On the same date, the mortgage was jointly executed by both

defendants   to   Mortgage     Electronic   Registration   Systems,   Inc.

(MERS), as nominee for America's, and recorded with the Hudson

County Clerk on April 27, 2006.       Defendants defaulted on March 1,

2010 and have not made any mortgage payments since that date.

     On June 21, 2010, the note and mortgage were assigned to BAC

Home Loans Servicing, LP (BAC), f/k/a Countrywide Home Loans

Servicing LP, and the assignment was recorded on July 19, 2010.



1
  The remaining defendants did not participate in this appeal but
were named in the foreclosure complaint to reflect any interest
or lien they may have in the mortgaged premises by virtue of any
unpaid assessments on the property or unsatisfied judgments
entered against Frank Mendez.
2
 We refer to defendants by their first names to avoid any confusion
caused by their common surname. We intend no disrespect.

                                     2                            A-4586-15T2
BAC filed a foreclosure complaint against defendants on June 30,

2010, after complying with the notice requirements of the Fair

Foreclosure Act, 
N.J.S.A. 2A:50-56.            On July 25 and July 18, 2010,

respectively, Frank and Kathie were personally served with the

complaint, but failed to file an answer.                 On November 16, 2010,

default was entered.           On May 15, 2013, Bank of America, N.A.,

successor by merger to BAC, assigned the mortgage to Green Tree

Servicing LLC (Green Tree), and the assignment was recorded on

July   17,    2013.      Green    Tree    provided   a   corrective    notice    of

intention to foreclose as authorized by a March 12, 2014 order,

permitting Green Tree to resume the foreclosure action.3

       On    September   15,     2014,4   defendants     moved   to   vacate    the

default.      Judge Marybeth Rogers entered an order on October 10,

2014, denying the motion, reasoning as follows:

              Under [Rule] 4:43-3, an entry of default may
              be vacated for good cause shown. Meaning, a
              party   seeking   to  vacate   default   must
              demonstrate good cause for failure to answer.
              Eileen T. Quigley, Inc. v. Miller Family
              Farms, Inc., 
266 N.J. Super. 283, 293 (App.
              Div.   1993).      In   addition   to   first
              demonstrating good cause for failure to
              answer, the moving party must show the
              presence of a meritorious defense worthy of


3 In a November 6, 2014 order, the trial court granted Green Tree's
motion to replace BAC as plaintiff on all pleadings.

4 On July 17, 2014, following Frank's filing of a Chapter 7
Bankruptcy Petition, a Discharge of Debtor and Order of Final
Decree was entered, permitting the foreclosure action to continue.

                                          3                               A-4586-15T2
            judicial determination.    Trs. of Local 478
            [Trucking & Allied Indus. Pension Fund] v.
            Baron Holding Corp., 
224 N.J. Super. 485, 489
            (App. Div. [1988]). Here, [d]efendants have
            failed to demonstrate good cause for failure
            to answer.    In fact, [d]efendants did not
            raise any reason for why they did not answer,
            over a four[-]year period, a complaint that
            was personally served upon them.         Since
            [d]efendants did not demonstrate good cause
            for failure to answer, it is of no consequence
            whether [d]efendants have a meritorious
            defense.

         Judge Rogers entered an order on December 1, 2014, denying

defendants' motion for reconsideration, noting as follows:

            Defendants' Motion for Reconsideration does
            not   provide     any   additional   facts    that
            demonstrate      good    cause.        In    fact,
            [d]efendants' [m]otion does not provide a
            certification from the [d]efendants as to why
            they did not answer [p]laintiff's complaint
            for over three years. Moreover, [d]efendants'
            proposed [a]nswer does not raise a meritorious
            defense[,]     as    it   solely   states    legal
            conclusions without any factual support
            contrary    to     [Rule]    4:5-4.        Lastly,
            [d]efendants' [a]nswer merely states that the
            [d]efendants      are   without    knowledge    or
            information sufficient to form a belief as to
            the   truth     of   the   allegations    in   the
                         5
            [c]omplaint.       Thus, [d]efendants have not
            demonstrated a meritorious defense.


5 Pursuant to Rule 4:64-1(c):

                 An allegation in an answer that a party
            is without knowledge or information sufficient
            to form a belief as to the truth of an
            allegation in the complaint shall not have the
            effect of a denial but rather of leaving the
            plaintiff to its proofs, and such an


                                    4                            A-4586-15T2
       After Ditech Mortgage Corp. merged into Green Tree on August

31, 2015, and changed its name to Ditech Financial LLC (Ditech),

the court granted Ditech's motion to be substituted as plaintiff

pursuant to Rule 1:34-6(4) on December 28, 2015.               On March 29,

2016, Ditech moved for final judgment and served defendants with

its    moving   papers   accompanied   by   a   supporting    affidavit   and

certification.        See R. 4:64-1(d)(1); R. 4:64-2.        Defendants did

not object to the motion as permitted under Rule 4:64-1(d)(3).              On

May 23, 2016, Judge Paul Innes entered final judgment in the amount

of $345,371.64 in accordance with Rule 1:34-6 and 4:64-1(d)(4).

This appeal followed.

       On appeal, defendants contend the trial judge "erred as a

matter of law" in denying their "motion to vacate the default

judgment and [not] allow[ing] them to file a contesting answer

when    there   was    still   a   motion   pending   to     substitute   the

[p]laintiff[,] and the [p]laintiff had not even filed for [f]inal

[j]udgment."      Defendants explain that "[they] were divorced on

April 2, 2013."          However, "the parties' [d]ual [j]udgment of

[d]ivorce set forth . . . that only Frank Mendez was on the deed

and mortgage to the marital residence and that 'the mortgage [was]


            allegation in an answer shall be deemed
            noncontesting to the allegation of the
            complaint to which it is responsive.

                                       5                             A-4586-15T2
in pre-foreclosure.'"   According to defendants, "these errors were

corrected by way of a . . . post[-]judgment order dated August 29,

2014[,]" and "virtually immediately after the correction[,] the

motion to vacate was filed."

     As a result, defendants contend that the trial judge erred

by not considering "the motion [to vacate the default] timely" and

by concluding that there was "no need to determine whether the

[d]efendants had a meritorious defense[,]" particularly since

under Bank of N.Y. v. Raftoqianis, 
418 N.J. Super. 323 (Ch. Div.

2010), the "'MERS' assignment . . . was inherently suspect."

Defendants request that we overturn the trial judge's decision and

vacate the final judgment under Rule 4:43-3.

     However, defendants filed a Notice of Appeal identifying only

the May 23, 2016 final judgment as the order being appealed.       It

is well-settled that we review "only the judgment or orders

designated in the notice of appeal."   1266 Apartment Corp. v. New

Horizon Deli, Inc., 
368 N.J. Super. 456, 459 (App. Div. 2004)

(citing Sikes v. Twp. of Rockaway, 
269 N.J. Super. 463, 465-66

(App. Div. 1994)); see also R. 2:5-1(f)(3)(A). Stated differently,

any arguments defendants raise that fall outside the four corners

of the Notice of Appeal likewise fall outside the scope of our

appellate jurisdiction, and are therefore not reviewable as a

matter of law.   As a result, defendants' arguments challenging the

                                 6                          A-4586-15T2
trial judge's October 10, 2014 and December 1, 2014 orders are not

reviewable as a matter of law.

     Moreover, defendants did not move before the trial court

under Rule 4:50-1 to vacate the final judgment, or oppose the

motion that allowed the foreclosure case to proceed as uncontested.

We "will decline to consider questions or issues not properly

presented to the trial court when an opportunity for such a

presentation is available unless the questions so raised on appeal

go to the jurisdiction of the trial court or concern matters of

great public interest."      Zaman v. Felton, 
219 N.J. 199, 226-27

(2014)   (quoting   State   v.   Robinson,   
200 N.J.   1,   20   (2009)).

Defendants did not properly present these issues to the trial

court, and the issues are not jurisdictional in nature nor do they

substantially implicate the public interest.

     Nevertheless, because plaintiff did not object to our review

of the trial judge's October 10, 2014 and December 1, 2014 orders,

we may address the merits, W.H. Indus., Inc. v. Fundicao Balancins,

Ltda, 
397 N.J. Super. 455, 459 (App. Div. 2008), and affirm

substantially for the reasons set forth in Judge Rogers' orders.

We also choose to exercise our original jurisdiction under Rule

2:10-5 to affirm the final judgment.         Our review is governed by

Rule 4:50-1, which permits a court, at its discretion, to relieve

a party from a final judgment for the following reasons:

                                    7                                A-4586-15T2
          (a) [M]istake, 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 [Rule] 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.

      Rule 4:50-1 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."     US Bank Nat'l Ass'n v. Guillaume, 
209 N.J.
 449, 467 (2012) (quoting Mancini v. EDS, 
132 N.J. 330, 334 (1993)).

However, relief from judgment under Rule 4:50-1 "is not to be

granted lightly."    Cho Hung Bank v. Kim, 
361 N.J. Super. 331, 336

(App. Div. 2003).    Rather, Rule 4:50-1 "provides for extraordinary

relief and may be invoked only upon a showing of exceptional

circumstances."     Ross v. Rupert, 
384 N.J. Super. 1, 8 (App. Div.

2006) (quoting Baumann v. Marinaro, 
95 N.J. 380, 393 (1984)).

     "It is generally recognized that the requirements for setting

aside a default judgment under [Rule] 4:50-1 are more stringent


                                  8                          A-4586-15T2
than the 'good cause' standard for setting aside an entry of

default under [Rule] 4:43-3."       Bernhardt v. Alden Cafe, 
374 N.J.

Super. 271, 277 (App. Div. 2005).          Moreover, "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, cmt. on R. 4:43-3 (2018); see also Marder

v. Realty Constr. Co., 
84 N.J. Super. 313, 318 (App. Div. 1964).

That is so because when a party has no meritorious defense, "[t]he

time of the courts, counsel and litigants should not be taken up

by such a futile proceeding."      Guillaume, 
209 N.J. at 469 (quoting

Schulwitz v. Shuster, 
27 N.J. Super. 554, 561 (App. Div. 1953)).

     Here, defendants have made no showing to justify vacating the

final judgment under any provision of Rule 4:50-1.                 Likewise,

defendants   have   made   no    showing   of    a   meritorious    defense.

Throughout the proceedings, defendants did 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).                Moreover, Ditech

presented undisputed evidence of the note and mortgage assignment

to BAC before BAC filed the foreclosure complaint, satisfying the

                                     9                               A-4586-15T2
requirement that "either possession of the note or an assignment

of the mortgage that predated the original complaint confer[s]

standing."   Deutsche Bank Tr. Co. Ams. v. Angeles, 
428 N.J. Super.
 315, 318 (App. Div. 2012).

     Indeed,   even   if    Ditech    lacked   standing   to   foreclose,

"standing is not a jurisdictional issue in our State court system

and, therefore, a foreclosure judgment obtained by a party that

lacked standing is not 'void' within the meaning of Rule 4:50-

1(d)."   Deutsche Bank Nat'l Tr. Co. v. Russo, 
429 N.J. Super. 91,

101 (App. Div. 2012).      Notably, defendants did not assert that any

other entity sought repayment of the mortgage loan during the

four-year period the loan was allegedly in default.

     The final judgment is affirmed.




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