NOT TO BE PUBLISHED WITHOUT THE APPROVAL OF THE

NOT TO BE PUBLISHED WITHOUT THE APPROVAL OF
THE COMMITTEE ON OPINIONS
SUPERIOR COURT OF NEW JERSEY
KEARNY FEDERAL SAVINGS
BANK,
Plaintiff
v.
CHANCERY DIVISION
BERGEN COUNTY
DOCKET No. BER-F-9564-14
CHITA ALIPERIO & EMILE
HERIVEAUX,
Defendants.
CIVIL ACTION
OPINION
Argued: December 18, 2014
Decided: December 22, 2014
Honorable Peter E. Doyne, A.J.S.C.
Javier M. Lopez, Esq., on behalf of the plaintiff and counterclaim defendant,
Kearny Federal Savings Bank (Phelan Hallinan & Diamond, PC).
Chita Aliperio and Emile Heriveaux, the defendants and counterclaim plaintiffs,
appearing pro se.
Introduction
This foreclosure matter, as well as many others arising from our most recent
mortgage crisis, was complicated by several invalid assignments of the mortgage. Although
the invalid assignments may have been attributable to a lack of attention to detail and not
an industry wide epidemic, it is nevertheless another stain on mortgagees. The plaintiff and
counterclaim defendant, Kearny Federal Savings Bank (the “Bank” or the “Plaintiff”) had
this motion for summary judgment filed on their behalf against the defendants’ and
counterclaim plaintiffs’, Chita Aliperio (“Chita”) and Emile Heriveaux’s (“Emile” when
referenced individually and the “defendants” when referenced collectively). Defendants
have appeared pro se, but nevertheless mounted a vigorous defense, even filing a second
cross-motion for summary judgment. Yet, as if the bar did not want to be outdone by the
mortgagee’s errata, it plainly appears defendants’ submissions are of a quality far
exceeding that of the ordinary pro se defendant in a foreclosure or, albeit, any matter.
Raising the question, which is left unanswered, if someone else authored defendants
submissions they had certified were their own.
Trial was scheduled for December 22, 2014.
Plaintiff’s motion is granted, defendants’ cross-motion is denied.
Facts and Procedural Posture
A. The Note and the Mortgage
On March 17, 2007, Chita executed a note (the “note”) in the sum of $650,000 to
Fairmont Funding, LTD (“Fairmont”). The note obligated defendants to make initial
monthly installment payments of $4,108.44 on the first of each month commencing in May
2007. The initial interest charged on unpaid principal was 6.500% per annum. Any unpaid
amounts would be due in full on April 1, 2037. The note provided for a late charge of
5.000% for any payment not received within fifteen (15) days from the due date. The note
also provided if the borrower defaulted by failing to pay a monthly payment in full, the
lender may require payment in full of the principal balance remaining due.
To secure payment on the note, defendants executed simultaneously with the note,
a mortgage (the “mortgage”) on property located at 259 Forest Avenue, Paramus, New
Jersey (the “property”). The mortgage was recorded on March 22, 2007, in the Office of
2
the Clerk of Bergen County, Book 16639 on Page 722. The mortgage was executed in
favor of Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for
Fairmont.
B. The Assignments
On or about July 25, 2007, MERS, purporting to act as nominee for Countrywide
Home Loans, Inc. (“Countrywide”) assigned the mortgage to Kearny (the “first invalid
assignment”). No nominee relationship existed at the time between Countrywide and
MERS as it relates to the note and mortgage in question. On October 7, 2014, Shauna Marie
Smith (“Ms. Smith”), the Assistant Vice President of BOA, certified the Bank took
possession of the original note on May 1, 2007 and continues to remain in possession of
the note to this day. Several years passed until the first invalid assignment was recorded on
October 30, 2009, in the Office of the Clerk of Bergen County, Book 280 on Page 914.
On or about October 25, 2011, MERS executed an assignment of the mortgage to
Bank of America, N.A. (“BOA”), the successor by merger to BAC Home Loans Servicing
F/K/A/ Countrywide (the “second invalid assignment”). The second invalid assignment did
not identify MERS as nominee for Fairmont and was recorded on November 28, 2011, in
the Office of the Clerk of Bergen County, Book 883 on Page 2042. On or about February
28, 2013, BOA attempted to transfer the mortgage they had received from second invalid
assignments to the Bank and executed an assignment in their favor (the “third invalid
assignment”). The third invalid assignment was recorded on March 28, 2013, in the Office
of the Clerk of Bergen County, Book 1337 on Page 988.
Following the discovery of the invalid assignments, on or about March 19, 2013,
MERS executed a “corrective assignment” to BOA which identified MERS as the nominee
3
for Fairmont, correcting the second invalid assignment (the “first valid assignment”). The
first valid assignment was recorded on April 12, 2013, in the Office of the Clerk of Bergen
County, Book 1354 on Page 1044. On or about July 19, 2013, BOA assigned the mortgage
to Kearny (the “second valid assignment”). The second valid assignment was recorded on
August 13, 2013, in the Office of the Clerk of Bergen County, Book 1484 on Page 2183.
C. The Default and Notice(s) of Intent to Foreclose
The Bank alleges defendants defaulted on the terms of the note on July 1, 2011, which
installment and every installment thereafter, remains due. AS such, defendants have not
made any mortgage payment for more than three years. At least four notices of intent to
foreclose (“NOI”) were transmitted to defendants by way of letters addressed to Chita
Aliperio, 259 Forest Avenue, Paramus, NJ 07652-5345. The first NOI was from BOA by
way of a letter dated July 12, 2011. On March 27, 2012, BOA mailed a second NOI. On or
about June 13, 2012, BOA sent a third NOI by certified mail, return receipt requested, and
regular mail. The same was thereafter followed by BOA mailing a fourth NOI on June 3,
2013, which advised BOA services the loan on the property and the lender was the Bank.
On or about December 18, 2013, counsel for the Bank sent a fifth notice and advised the
Bank was the creditor on the BOA account and may commence a foreclosure action.
D. Pleadings
On March 14, 2014, the Bank caused a complaint to be filed against defendants and
sought to foreclose on the property. On April 21, 2014, defendants, proceeding pro se, filed
an answer and a counterclaim alleging theft and perjury.
E. Summary Judgment Motions
4
On May 22, 2014, the Bank’s counsel filed a motion to dismiss the counterclaims
in lieu of an answer, in effect, a motion for partial summary judgment. 1 The same was
followed by defendants filing an opposition and a cross-motion for summary judgment on
June 11, 2014. Oral argument was entertained on July 18, 2014 and in a written opinion
dated July 21, 2014, the court granted the Bank’s motion to dismiss defendants’
counterclaims and denied defendants’ cross-motion for partial summary judgment.
On August 13, 2014, defendants filed a motion for reconsideration of the July 21,
2014 order dismissing their counterclaims. On or about September 30, 2014, the Bank’s
counsel filed opposition to defendants’ reconsideration motion. Defendants filed a reply
brief in further support of the motion on October 6, 2014. On October 10, 2014, the court
executed an order denying the requested relief and detailed its reasoning in an attached
rider. On November 10, 2014, defendants filed a motion for leave to appeal the denial,
which was denied on December 5, 2014, by the Honorable Ellen L. Koblitz, J.A.D..
On October 23, 2014, the Bank’s counsel filed a motion for summary judgment
returnable on December 5, 2014. In support of this motion, the Bank included a statement
of facts and a memorandum of law.2 On November 25, defendants’ filed a cross-motion for
summary judgment along with separate opposition to the Bank’s motion for summary
judgment. Included in defendants’ submission was a response to the statement of material
facts and a brief in opposition to the Bank’s motion and in support of defendants’
crossmotion. Following the holiday weekend, the Bank’s counsel requested an extension
1
In foreclosure, it is disfavored to bifurcate the litigation by first moving for partial summary judgment on
the counterclaims and then bringing a second motion for summary judgment as this does not serve judicial
economy.
2
The memorandum of law was not paginated.
5
of time to respond to the cross-motion and opposition, and an adjournment was granted.
On December 10, 2014, the Bank had opposition to defendants’ cross-motion and a reply
to defendants’ opposition filed on their behalf. Included in its submission was an
unpaginated letter memorandum and a counter-statement of material facts. By way of letter
dated December 11, 2014, defendants requested permission to file a response to the Bank’s
opposition to the cross-motion, which was granted. Defendants’ authorized surreply was
received on December 12, 2014 and included a counter statement to the Bank’s statement
of undisputed facts.
Oral argument was requested and entertained on December 18, 2014. At oral
argument, and for the first time, the Bank’s counsel requested the complaint be dismissed
without prejudice. As the defendants continued their vigilant defense, it was not a surprise
they refused to consent to anything less than a dismissal with prejudice. Counsel declined
the defendants’ counteroffer, as one may have expected, however, counsel again advised
his client had instructed him to withdraw their summary judgment motion. 3 The court
denied the Bank’s application to withdraw and indicated its considerable chagrin on
December 18, 2014, when trial was then scheduled for December 22, 2014.
Law
A. Foreclosure
A plaintiff need only present three elements to establish a prima facie right to
foreclose: “the execution, recording, and non-payment of the mortgage.” Thorpe v.
Floremoore Corp., 20 N.J. Super. 34, 37 (App. Div. 1952). The defenses to a foreclosure
3
Because counsel was directed to not to affirmatively urge the relief requested, only on the basis of
surmise, it would appear the original of the note is now lost or unavailable, but with no finding by this
court, that matter is left for the Office of Foreclosure.
6
action are narrow and limited. The only material issues in a foreclosure proceeding are the
validity of the mortgage, the amount of indebtedness, and the right of the mortgagee to
foreclose on the mortgaged property. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394
(Ch. Div. 1993). If the defendant’s answer fails to challenge the essential elements of the
foreclosure action, the plaintiff is entitled to strike defendant’s answer as a noncontesting
answer and the matter is remanded to the Foreclosure Unit. Old Republic Ins. Co. v. Currie,
284 N.J. Super. 571, 574 (Ch. Div. 1995); Somerset Trust Co. v. Sternberg, 238 N.J. Super.
279, 283 (Ch. Div. 1989).
When a party alleges he/she is without knowledge or information sufficient to form
a belief as to the truth of an aspect of the complaint, the specific answer shall be deemed
noncontesting to the allegation of the complaint to which it responds. R. 4:64-1(a)(3).
Pursuant to R. 4:64-1(c)(2) an answer to a foreclosure complaint is deemed to be
noncontesting if none of the pleadings responsive to the complaint either contest the
validity or priority of the mortgage [] being foreclosed, or create an issue with respect to
plaintiff’s right to foreclose. Consequently, a plaintiff may move to strike such an answer
pursuant to R. 4:6-5 on the grounds it presents “no question of fact or law which should be
heard by a plenary trial.” Old Republic Ins. Co., supra, 284 N.J. at 574-75.
B. Summary Judgment Motions
Motions for summary judgment are governed by R. 4:46-2, which provides in
pertinent part:
The judgment or order sought shall be rendered forthwith if
the pleadings, depositions, answers to interrogatories and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact
challenged and that the moving party is entitled to a
judgment or order as a matter of law. An issue of fact is
7
genuine only if, considering the burden of persuasion at trial,
the evidence submitted by the parties on the motion, together
with all legitimate inferences therefrom favoring the
nonmoving party, would require submission of the issue to
the trier of fact.
[R. 4:46-2(c).]
To satisfy its burden of proof on a summary judgment motion, the moving party
must show that no genuine issue of material fact exist. Brill v. Guardian Life Ins. Co. of
Am., 142 N.J. 520, 528-29 (1995). If the moving party satisfies its burden, the burden shifts
to the non-moving party to present evidence there is a genuine issue for trial. Ibid. The
non-moving party may not rest upon mere allegations or denials in its pleading, but must
produce sufficient evidence to reasonably support a verdict in its favor. Triffin v. Am. Int’l
Group, Inc., 372 N.J. Super. 517, 523 (App. Div. 2004); R. 4:46-5(a). Moreover, R. 4:5-4
requires all affirmative defenses be supported by specific facts. Parties must respond with
affidavits meeting the requirements of R. 1:6-6 as otherwise provided in this rule and by
R. 4:46-2(b), setting forth specific facts showing that there is a genuine issue for trial. An
“issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence
submitted by the parties on the motion, together with all legitimate inferences therefrom
favoring the non-moving party, would require submission of the issue to the trier of fact.”
R. 4:46-2(c); see also Brill, 142 N.J. at 535.
This version of the summary judgment rule follows the New Jersey Supreme Court’s
reformulated standard for summary judgment that comports with the federal analog.
Pressler, Current N.J. Court Rules, comment 2 on R. 4:46-2 (2014). In that case, the Court
held a non-moving party must come forward with evidence that creates a genuine issue of
8
material fact to defeat summary judgment. Brill, supra, 142 N.J. at 529. The Court
explained “material” means the disputed issues of fact must not be “insubstantial.” Ibid.
The Court also held a disputed issue of fact is “genuine” when “the competent evidential
materials presented . . . viewed in the light most favorable to the non-moving party, are
sufficient to permit a rational fact-finder to resolve the alleged disputed issue in favor of
the non-moving party.” Id. at 541.
The Court also instructed trial courts to bear in mind that summary judgment should
be applied so as to serve two competing policies:
On the one hand is the desire to afford every litigant who
has a bona fide cause of action or defense the opportunity
to fully expose his [or her] case. . . . On the other hand,
protection is to be afforded against groundless claims and
frivolous defenses, not only to save antagonists the expense
of protracted litigation but also to reserve judicial
manpower and facilities to cases which meritoriously
command attention.
[Id. at 541–42.]
As such, a court must first interpret the facts in the light most favorable to the defendant,
the non-moving party, and should material facts come into question, the motion must be
denied.
When a foreclosure action is deemed uncontested, the procedure is dictated by R.
4:64-1(d). At the conclusion of a successful motion for summary judgment or to strike the
defendant’s answer, the matter shall be referred to the Office of Foreclosure to proceed as
uncontested. R. 1:34-6 further provides the Office of Foreclosure is responsible for
recommending entry of default in uncontested foreclosure matters pursuant to R. 4:64-1
and R. 4:64-7.
9
C. Enforcement of the Note
A creditor holding a commercial paper as collateral security, such as a note, may,
upon default, bring an action to collect the debt. Polhemus v. Prudential Realty Corp., 74
N.J.L. 570, 577 (E. & A. 1907). To establish a prima facie case on a note, a plaintiff need
only provide the note at issue and establish a default. Trustees System Co. v. Lisena, 106
N.J.L. 549 (E. & A. 1930); Lodi Trust Co. v. Himadi, 13 N.J. Misc. 169, 170 (Sup. Ct.
1935).
Where a mortgage is given as a guaranty or security for a commercial loan, which
is evidenced by a note, an action on the note may occur before or after the related
foreclosure action, or the lender can bring an action on the note alone. First Union Nat.
Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 350 (2007); Summit Trust Co. v. Willow
Business Park, L.P., 269 N.J. Super. 439, 446 (App. Div. 1994) (“where mortgage loans
involve the financing of business or commercial properties, the lenders are not required to
foreclose on the mortgage before seeking entry of judgment on the notes or on a guaranty”);
see also N.J.S.A. 2A:50-2.3(a).
D. Standing
Generally, “a party seeking to foreclose a mortgage must own or control the
underlying debt.” Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div.
2011) (citing Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327 (Super. Ct. 2010)).
Under certain circumstances, “[a] person may be a person entitled to enforce the instrument
even though the person is not the owner of the instrument or is in wrongful possession of
the instrument.” N.J.S.A 12A:3-301.
10
For instance, when a debt is evidenced by a negotiable instrument, such as a note
for a home loan can be, they are governed by Article III of the Uniform Commercial Code
(UCC), N.J.S.A. 12A:3-101 to 605. Negotiability characterizes an instrument only when
the instrument contains an unconditional promise to pay a certain and definite sum of
money, either at a specific time or on demand, and is “payable to bearer or to order at the
time it is issued or first comes into possession of a holder.” N.J.S.A 12A:3-104. If a
negotiable instrument is “indorsed in blank, [it] becomes payable to bearer and may be
negotiated by transfer of possession alone until specially indorsed.” N.J.S.A. 12A:3205(b).
In other words, the right to enforce the obligation is passed to the person/entity in physical
possession of the instrument. Ibid; see N.J.S.A. 12A:3-203(b) (allowing the mere transfer
of possession of the note to vest the transferee with the transferor’s right to enforce
the instrument).
“Negotiation,” or transfer of the instrument, occurs when a person other than the
issuer transfers possession of the instrument, voluntary or otherwise, to another person who
becomes its holder. N.J.S.A 12A:3-201. Negotiable instruments may be enforced by either
“[1] the holder of the instrument, [2] a nonholder in possession of the instrument who has
the rights of a holder, or [3] a person not in possession of the instrument who is entitled to
enforce the instrument pursuant to [N.J.S.A.] 12A:3-309 or subsection d. of [N.J.S.A.]
12A:3-418.” N.J.S.A. 12A:3-301.
Under the first circumstance provided by N.J.S.A. 12A:3-301, a person who
qualifies as “the holder of the instrument” is entitled to foreclose on a negotiated debt. A
holder is defined as “the person in possession if the instrument is payable to bearer or, in
the case of an instrument payable to an identified person, if the identified person is in
11
possession.” N.J.S.A. 12A:1-201; see also N.J.S.A. 12A:3-201(a) (defining a “holder” as a
person with physical possession of the negotiated instrument). In order to transfer “holder”
status to a third party, a negotiation must take place whereby the transferring holder
indorses the instrument and then physically transfers possession of the instrument to the
transferee. N.J.S.A. 12A:3-201(b). Only after the negotiation has occurred, will the third
party become the new “holder” and be entitled to foreclose upon the debt. Ibid.
Second, a person has standing to foreclose on a negotiated debt when they are “a
nonholder in possession of the instrument who has the rights of a holder.” N.J.S.A.
12A:3301. This typically occurs when an instrument is physically transferred without the
indorsement of the issuer. See N.J.S.A. 12A:3-203(c). While the lack of the indorsement
prevents the person with possession of the instrument from becoming a holder, the transfer
“vests in the transferee any right of the transferor to enforce the instrument, including any
right as a holder in due course.”4 N.J.S.A. 12A:3-203(b). Under N.J.S.A. 12:A3-301,:
A nonholder in possession of an instrument includes a
person that acquired rights of a holder by subrogation or
under Section 3-203(a). It also includes both a remitter that
has received an instrument from the issuer but has not yet
transferred or negotiated the instrument to another person
and also any other person under the applicable law is a
successor to the holder or otherwise acquires the holder’s
rights.
4
Under N.J.S.A. 12A:3-302, "holder in due course" means the holder of an instrument if:
(1) the instrument when issued or negotiated to the holder does not bear
such apparent evidence of forgery or alteration or is not otherwise so
irregular or incomplete as to call into question its authenticity; and (2)
12
the holder took the instrument for value, in good faith, without notice
that the instrument is overdue or has been dishonored or that there is an
uncured default with respect to payment of another instrument issued as
part of the same series, without notice that the instrument contains an
unauthorized signature or has been altered, without notice of any claim
to the instrument . . . and without notice that any party has a defense or
claim in recoupment.
In essence, to be a holder in due course, one must take a negotiable instrument for value, in good faith, and
without notice of any default or defect. Ibid.
Once the instrument’s transfer has been completed, the ability to enforce the unendorsed
instrument may be denied only “if the transferee engaged in fraud or illegality affecting the
instrument.” N.J.S.A. 12A:3-203(b).
Third, standing to foreclose on a debt is obtained when a holder entitled to enforce the
instrument, subsequently loses physical possession of the instrument “because the
instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be found or is not amendable to
service of process.” N.J.S.A. 12A:3-309(a). Notably, “the loss of possession [must] not
[be] the result of a transfer by the person or a lawful seizure.” N.J.S.A. 12A:3-309(a). Aside
from physical loss, if the instrument was paid for “or accepted by mistake and the payor or
acceptor recovers payment or revokes acceptance . . . [the instrument] is treated as
dishonored, and the person from whom payment is recovered has rights as a person entitled
to enforce the dishonored instrument.” N.J.S.A. 12A:3-418(d).
Finally, courts have found either possession of the note or an assignment of the mortgage,
confers standing. Deutsche Bank v. Angeles, 428 N.J. Super. 315, 318 (App.
Div. 2012).4
4
Parenthetically, a string of recent unpublished appellate division cases have cited Deutsche Bank v.
Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012), for this proposition.
13
E. The NOI
A notice of intent to foreclose is statutorily mandated procedural safeguard installed
to protect homeowners prior to foreclosure proceedings. Foreclosure complaints are a rigid
pleading and have many required elements. Rule 4:64-1(b) (enumerating the requirements
of valid foreclosure complaint). In particular, Rule 4:64-1(b)(13) requires that “in all
residential foreclosure actions plaintiff's attorney shall annex to the complaint a
certification of diligent inquiry if applicable, whether the plaintiff has complied with the
pre-filing notice requirements of the Fair Foreclosure Act or other notices required by law.”
In relevant part, the Fair Foreclosure Act requires a mortgagee to notify a residential
mortgagor of an intention to accelerate a mortgage loan and to commence a mortgage
foreclosure action at least 30 days before doing so. See N.J.S.A. 2A:50-56(a). In addition,
the Fair Foreclosure Act requires a NOI be sent by the party seeking foreclosure prior to
filing the foreclosure complaint. N.J.S.A. 2A:50-56(b). In all, the act enumerates eleven
facts to be included in the NOI, so the debtor may be informed of the situation. N.J.S.A.
2A:50-56(c).
The purpose of a Notice of Intent to Foreclose is to protect homeowners at risk of
foreclosure by providing them with “timely and clear notice . . . that immediate action is
necessary to forestall foreclosure.” US Bank National Association v. Guillaume 209 N.J.
449, 469 (2012). The Fair Foreclosure Act does not address what remedy is appropriate
when there is a violation of the notice of intent requirement. However, the New Jersey
Supreme Court has addressed the issue and held that when a lender fails to comply with
the Fair Foreclosure Act’s requirement of a Notice of Intent to Foreclose, the court may
exercise its discretion in determining the appropriate remedy and whether to dismiss the
14
foreclosure action. Guillaume, supra, 209 N.J. at 449. In Guillaume, the issue was whether
a defective notice of intent may be remedied by a revised notice. The Court found that
when a defective notice has been sent the lower court may “dismiss the action without
prejudice, permit a cure or impose such other remedy as may be appropriate to the specific
case.” Id. at 458.
Analysis
A. Prima Facie Foreclosure
The Bank has established a prima facie case for foreclosure having provided
evidence of the execution of both the note and mortgage, the recordation of the mortgage,
its assignment to the Bank and a default by defendants. The Bank certified it had physical
possession of the note since 2007 and while the second valid assignment is dated July 19,
2013, which was years after the physical transfer of the note, it nevertheless predates the
filing of the foreclosure complaint on March 14, 2014.
Therefore, the Bank has established it is the holder of a valid mortgage and an
indebtedness has been shown. Accordingly, defendants must present evidence there is a
genuine issue of material fact to defeat the motion and allow the matter to proceed to trial.
A. Standing
In their opposition to summary judgment, defendants admit to the execution of both
the note and the mortgage and that they have defaulted. Despite Ms. Smith certifying the
Bank has had possession of the note since 2007 and the production of copies of the second
valid assignment, defendants repeatedly assert, as their primary basis for opposing
summary judgment, that the Bank never possessed the note. Consequently, defendants
15
assert the Bank lacks standing and does not have any rights to collect upon or otherwise
enforce the Note and Mortgage.5
Defendants’ assertion, if true, would present an issue for trial. However, a challenge
to standing on the basis of a plaintiff not being in possession of the note at the time of the
commencement of the suit is not effective, inasmuch as either possession of the note or
assignment of the mortgage predating the complaint confers standing. Angeles, supra, 428
N.J. Super. at 318. In other words, “either possession of the note or an assignment of the
mortgage that predated the original [foreclosure] complaint conferred standing.” Ibid.
(citing Deutsche Bank National Trust Co. v. Mitchell, 422 N.J. Super. 214, 216, 225 (App.
Div. 2011). Proof of possession of the note is only required to be provided to the Office of
Foreclosure at the time of application for final judgment.
Ms. Smith’s certified the Bank’s possessed the note since 2007, which is sufficient
proof to establish it had been in timely possession of the note. As such, the Bank is
established as the holder of the instrument and possesses the standing to enforce the note.
Even if the court was compelled to consider the assignments, such consideration
still fails to invalidate the Bank’s standing in this case and to the contrary, it establishes the
Bank’s standing. The second valid assignment was valid prior to this action being
commenced and established the Bank’s standing. See Angeles, supra, 428 N.J. Super. at
318 (finding either possession of the note or a valid assignment of the mortgage prior to
Tangentially, defendants allege the Bank lacks standing as the court’s October 10, 2014 order denying
reconsideration and its attached rider must be void and vacated because it was falsified where the “filed”
stamp date originally read “Oct 7 2014” and was changed to “Oct 10 2014” prior to transmission to the
parties. Clerical errors, however, do not invalidate a court order. The order was executed on October 10, 2014
and valid upon execution. Likewise, the order’s validity does not, and could not, affect the Bank’s standing
to foreclose, and the argument is another unjustified attempt to prolong the litigation.
5
16
filing the complaint conferred standing). In addition, assignments are presumed valid, a
presumption that may be rebutted if two or more entities are claiming ownership of the
Note and Mortgage. Here, defendants have not asserted an entity other than the Bank has
made demand upon them for payment following the second valid assignment. See, e.g.,
HSBC Bank USA v. Gomez, 2013 N.J. Super. Unpub. LEXIS 62 (App. Div. Jan. 10, 2013);
but see R. 1:36-3. Similarly, defendants have not asserted some entity other than the Bank
has sought to prosecute this foreclosure.
Instead, defendants repeatedly assert the three invalid assignments prior to the first
and second valid assignments caused the Bank to lose its standing to foreclose, and further
assert the invalid assignments are tantamount to theft and forgery. 6 The Bank does not
dispute the invalidity of the first three assignments and asserts two subsequent corrective
assignments were executed and are valid. As defendants failed to present a published New
Jersey appellate or Supreme Court case finding an invalid assignment cannot later be
corrected by a corrective assignment or that an invalid assignment destroys the chain of
title to remove standing from a subsequent assignee, the court is unpersuaded by this
position.
Additionally, defendants and their unnamed ghostwriter proceeded to go line by
line through the court’s rider to its October 10, 2014 order granting the Bank’s motion to
dismiss defendants counterclaims, and allege every sentence of the rider to the order that
did not specifically apply to defendants was perjury in violation of N.J.S.A. 2C:2-1 and
misconduct in violation of the New Jersey Code of Professional Conduct pursuant to RPC
8.4(c). Although it is not entirely clear, defendants seem to allege the court permitted the
6
See the courts prior written decision dated July 21, 2014, rejecting this contention.
17
Bank’s counsel to author the rider and attributed the inclusion of background and
explanatory language to be perjury and misconduct by plaintiff’s counsel. As a result of
the Bank’s counsel’s mistake in the submission, defendants asserted the Bank conceded to
some point that is contradictory to the Bank’s position in this matter.
Certain assertions made by defendants may be correct, such as defendants not
having alleged “he/she is without knowledge or information sufficient to form a belief as
to the truth of an aspect of the complaint, the answer shall be deemed noncontesting to the
allegation of the complaint to which it responds. R. 4:64-1(a)(3).” But this was language in
the law section of a rider to an order. The attached rider did not find defendants had actually
submitted an answer of the sort, and was simply a recital of the law that may be applicable.
Notably, defendants’ own submissions are structured in a similar manner and lay out the
law in a general fashion.
Defendants would then posit as a result of the baseless argument, the Bank were
compelled to concede some point wholly contrary to their actual position. For instance,
defendants asserted they did not file an answer stating they were “without knowledge or
information sufficient to form a belief . . . therefore [the Bank] conced[ed]” that [it] did
not have defendants’ original [n]ote prior to filing the Foreclosure Complaint.” In a similar
fashion, defendants found a number of errors by the Bank’s counsel in the Bank’s
submissions, made allegations of fraud and misconduct, which compelled some concession
the Bank would otherwise oppose. Defendants’ assertions of this type have failed to
persuade the court there is a material issue with regard to the facts at stake in a motion for
summary judgment in a foreclosure matter, namely, the validity of the mortgage, the
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amount of indebtedness and the right of the mortgagee to foreclose on the mortgaged
property.
Having failed to submit any competent evidence tending to call Ms. Smith’s
certification of the note being in the Bank’s possession since 2007 into question, defendants
have failed to present an issue of material fact as to the Bank’s standing to foreclose.
B. The NOI
At least one of the NOI’s provided to defendants satisfied the requirements of
N.J.S.A. 2A:50-56(a). Although defendants incorrectly posit the NOI was deficient, as it
failed to state the Bank possessed the note, if a defect did exist, it would not mandate
dismissal of a foreclosure action.7 A court may use its discretion to apply the appropriate
remedy if the NOI was defective, including permitting time to cure. See US Bank National
Association v. Guillaume 209 N.J. 449, 469 (2012). The NOI is meant to give a borrower
an opportunity to cure their default. See Guillaume, supra, 209 N.J. at 449. In the absence
of a prejudicing defendants ability to cure the default, the NOI is not meant to be grounds
for defending a foreclosure action.
Defendants were mailed at least four Notices of the Intention to Foreclosure. The
June 13, 2013, NOI correctly asserted BOA was the servicer of the note, the Bank was the
Defendants challenge Ms. Smith’s veracity in a number of different ways. One such attack focused on the
general validity of a MERS assignment of mortgages and asserted they are not valid because MERS was
never in physical possession the mortgage. Asserting MERS is guilty of theft for unlawfully transfer[ing[
an[] interest in immovable property of another with purpose to benefit himself or another not entitled thereto”
pursuant to N.J.S.A. 2C:20-3 (b), and consequently all the assignments were invalid. Without delving too
deep into the falsity of the assertion, defendants conspicuously fail to address penultimate requirement of the
statute, “not entitled thereto.” The only ones with standing to challenge whether MERS was entitled to
transfer the mortgage would be Fairmont, BOA or the Bank, as they are the only entities that were/are lenders
and holders of the note. In addition, defendants failed to cite any published opinion, statute or rule to support
the assertion an invalid assignment of a mortgage gives “rise to an inference that the whole chain of title is
broken.” As such, the court is not persuaded by the mere assertion.
7
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holder of the note and satisfied the remaining conditions of N.J.S.A. 2A:50-56(c).
Although, the June 13, 2013 NOI was transmitted prior to the second valid assignment of
the mortgage to the Bank, a fifth letter was sent by counsel for the Bank’s on December
18, 2013. The letter informed defendants that the Bank was the creditor and was seeking to
collect a debt, the amount owed on the loan, foreclosure was a possibility and a litany of
other information. It is unclear if there were attachments to satisfy the remaining
requirements of N.J.S.A. 2A:50-56(c). Nevertheless, with defendants receiving five NOI’s,
defendants ability to cure the default was not prejudiced by the shortcomings, if any
existed.
While defendants correctly asserted the 2011 and 2012 NOI’s should be found
defective, they manufactured misguided attempts to invalidate the June 13, 2013 NOI. For
instance, the June 13, 2013 NOI stated the Bank was the lender and BOA the servicer, yet
defendants assert the NOI did not identify the Bank as the holder. However, this was yet
another “smoke and mirrors” defense, which failed to present an issue of material fact.
There was no ambiguity as to the Bank being the holder, as the nomenclature “lender” and
“holder” are interchangeable in these circumstances.
Again, defendants have not shown an issue of material fact for trial.
C. The Bank’s Certification of Possessing the Note
Defendants made a number of unfounded allegations to support their cross motion, one of
which was that Ms. Smith’s certification is false and inadmissible hearsay evidence. While
defendants’ explanation of the admissibility of evidence and hearsay may very well be
accurate, they again failed to cite supporting case law finding a certification by an
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employee with access to and personal knowledge of the business records is inadmissible
evidence.
On the other hand, the Bank’s counsel offers BAC Home Loans Servicing, LP v. Durelli,
2012 N.J. Super. Unpub. LEXIS 1732, 14 (Ch. Div. July 18, 2012), as supporting a finding
that a certification, such as Ms. Smith’s, is competence evidence regarding the Bank’s
standing to satisfy its requirement of demonstrating it had ownership or control over the
note at the time the complaint was filed. See Ford, supra, 418 N.J. Super. at 597 (finding a
plaintiff in a foreclosure must provide evidence of ownership or control of the note at the
time the complaint was filed).
In her certification, Ms. Smith certified she was the Assistant Vice President for Bank of
America, the servicing agent for the Bank. Ms. Smith certified she accessed and reviewed
the relevant business records, which were created at or near the time of the event. If
defendants wished to contest the truthfulness of Ms. Smith certification and whether the
business records she reviewed satisfied all three elements as delineated in State v.
Matulewicz, 101 N.J. 27, 30 (1985), they should have used discovery to further their
objectives. With only assertions of possible misdoings by Ms. Smith presently before the
court, and no evidence rebutting her certification that she reviewed business records made
and recorded near the time of the event, the certification is relevant and admissible evidence
to which the court relies upon in making its decision.
Conclusion
The Bank’s motion for partial summary judgment is granted. The valid assignment
predated the filing of this action and an indebtedness has been shown, Therefore,
defendants answer is deemed noncontesting and the matter is remanded to the Foreclosure
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Unit for final judgment. Accordingly, the need for trial has now been abrogated.
The motion was opposed.
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