HSBC BANK U.S.A NATIONAL ASSOCIATION v. CAROL L. SHEPPARD

NOT FOR PUBLICATION WITHOUT THE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-3729-18T3

HSBC BANK U.S.A.,
NATIONAL ASSOCIATION,
as trustee for NOMURA HOME
EQUITY LOANS, INC., HOME
EQUITY LOANS TRUST,
Series 2005-HE1,

          Plaintiff-Respondents,

v.

CAROL L. SHEPPARD and
WILLIAM W. SHEPPARD,

     Defendant-Appellants.
____________________________

                   Submitted November 17, 2020 – Decided January 15, 2021

                   Before Judges Moynihan and Gummer.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Union County, Docket No. F-
                   004425-18.

                   Joshua L. Thomas, attorney for appellant.

                   Stradley, Ronon, Stevens & Young, LLP, attorneys for
                   respondents (Christopher A. Reese, on the brief).
PER CURIAM

       In December 2007, defendants Carol and William Sheppard defaulted on

their payment obligations under a $155,000 note and mortgage on their Fanwood

property. Plaintiff HSBC Bank, U.S.A., National Association, as Trustee for

Nomura Home Equity Loans, Inc., Home Equity Trust, Series 2005-HE1, to

which the mortgage was assigned in March 2015, filed a foreclosure complaint

in February 2018 leading to the entry of default, entry of final judgment and a

March 2019 sheriff's sale. Defendants appeal from Judge Joseph P. Perfilio's

orders denying their motion to vacate the final judgment and their motion to set

aside the sheriff's sale. Reviewing the judge's decisions for abuse of discretion

on both the motion to vacate the judgment, U.S. Bank Nat'l Ass'n v. Guillaume,

 209 N.J. 449, 466-67 (2012), and the motion to set aside the sheriff's sale, U.S.

ex rel. U.S. Dep't of Agric. v. Scurry,  193 N.J. 492, 502-03 (2008), we affirm.

       Contrary to defendants' contention that the judge incorrectly decided their

motion to vacate the judgment using the standard for a motion to dismiss under

Rule 4:6-2(e), in his oral decision Judge Perfilio specifically recognized that

Rule 4:50-1 applied.     That Rule, applicable to motions to vacate default

judgments, see R. 4:43-3, permits the court to relieve a party from final judgment

for:

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            (a) mistake, 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; . . . [or]
            (f)   any other reason justifying relief from the
            operation of the judgment or order.

            [R. 4:50-1.]

      Judge Perfilio acknowledged "[t]he power to vacate a default judgment

should be freely exercised where enforcement of the judgment would be unjust,"

but properly considered that a default judgment will not be disturbed unless the

defendant has a meritorious defense. See also Guillaume,  209 N.J. at 467-69.

      In the preliminary statement of their merits brief, defendants contend they

based their motion on subsections (a) through (d) of Rule 4:50-1, but mention

only subsection (f) in the brief's argument section: "Subsection (f) of the Rule

is proper in situations where, if it is not applied, a grave injustice would occur."

If defendants did not argue to the Chancery judge that they were entitled to relief

under subsection (f), they cannot raise that argument on appeal. Neider v. Royal

Indem. Ins. Co.,  62 N.J. 229, 234 (1973).


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      Nevertheless, Judge Perfilio reviewed the various defenses that are

germane in a foreclosure action and correctly determined defendants had failed

to present any meritorious defense.      Indeed, they did not file an answer.

Although they claim they "submitted" an answer and separate defenses, there is

no evidence same was filed. Nor is there any support for their argument that the

clerk failed to file it, an argument we need not consider because it, too, was not

presented to the Chancery judge. See ibid.

      The only defense previously raised was plaintiff's lack of standing, an

argument defendants also advance in support of their contention the judge erred

in denying their motion to set aside the sheriff's sale. As Judge Perfilio found,

harkening to a finding he had also made in deciding defendant's previous motion

to dismiss, the assignment of mortgage to plaintiff on March 19, 2015 predated

the filing of its foreclosure complaint on February 28, 2018, thus establishing

standing. See Deutsche Bank Nat'l Tr. Co. v. Mitchell,  422 N.J. Super. 214,

222-25 (App. Div. 2011). The judge also noted our ruling that in a "post-

judgment context, lack of standing would not constitute a meritorious defense

to the foreclosure complaint." Deutsche Bank Nat'l Tr. Co. v. Russo,  429 N.J.

Super. 91, 101 (App. Div. 2012).




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      Defendants have not specified any other defense, much less one that

would justify the "extraordinary relief" of relieving a party from final judgment

that should be reserved for only "exceptional circumstances."        Baumann v.

Marinaro,  95 N.J. 380, 393 (1984); see also Ross v. Rupert,  384 N.J. Super. 1,

8 (App. Div. 2006). Judge Perfilio did not abuse his discretion in denying the

motion to vacate the judgment against defendants; this was not a case where the

entry of the judgment was "an unjust result." Guillaume,  209 N.J. at 467.

      We also reject defendants' contention that the judge denied them due

process by refusing to vacate the default. Again, the clerk's alleged failure to

file defendants' answer was not raised to the Chancery judge, and there is no

evidence to support that contention.        Defendants were not precluded from

presenting defenses. They never did so.

      As in a motion to vacate a final judgment, in deciding a motion to set

aside a sheriff's sale, a trial court is called upon to exercise its discretionary

equitable powers to prevent an unjust result. See First Tr. Nat'l Ass'n v. Merola,

 319 N.J. Super. 44, 49 (App. Div. 1999). A judge typically exercises such

powers in the event of "fraud, accident, surprise, irregularity, or impropriety in

the sheriff's sale." Brookshire Equities, LLC v. Montaquiza,  346 N.J. Super.
 310, 317 (App. Div. 2002). As we have observed, such is not the case here.


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      We determine defendants' remaining arguments, including that the denial

of the motion to dismiss did not set a time for filing an answer, to be without

sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E). The time limit is set

by Rule 4:6-1(b)(1). Moreover, an answer was never filed.

      Affirmed.




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