Court Opinion

ID: 4428482
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:07:35.223618+00
Date Added: 2024-06-11T08:48:04.747184
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-3361-17T1

HSBC BANK USA,
NATIONAL ASSOCIATION AS
TRUSTEE FOR WELLS FARGO
ASSET SECURITIES
CORPORATION, MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 2007-14,

          Plaintiff-Respondent,

v.

DEBORA A. SCHMIDT and
JAMES T. SCHMIDT,

     Defendants-Appellants.
______________________________

                   Submitted February 11, 2019 – Decided May 23, 2019

                   Before Judges Haas and Sumners.

                   On appeal from Superior Court of New Jersey,
                   Chancery Division, Morris County, Docket No. F-
                   008075-17.

                   Elizabeth Tandy Foster, attorney for appellants.
             Reed Smith, LLP, attorneys for respondents (Henry F.
             Reichner, of counsel and on the brief).

PER CURIAM

       Defendants Debora A. Schmidt and James T. Schmidt appeal from the

February 16, 2018 Final Judgment of Foreclosure in favor of plaintiff HSBC

Bank USA, National Association as Trustee For Wells Fargo Asset Securities

Corporation, Mortgage Pass-Through Certificates, Series 2007-14.             They

contend that the Chancery judge erred in entering his order of January 31, 2018,

which denied their cross-motion to vacate default. Having carefully reviewed

the arguments raised in light of the record and applicable law, we affirm.

       We discern the following factual and procedural history from the

pleadings and motion record. In August 2007, defendants entered into a non-

purchase money mortgage with Wells Fargo Bank, encumbering their residence

in Randolph. The mortgage was subsequently recorded in September 2007.

Over five years later, the parties entered into a loan modification agreement in

December 2012. The mortgage encumbering the property was later assigned to

plaintiff.

       Defendants' loan went into default on August 1, 2016, due to non-

payment. Plaintiff then filed a foreclosure complaint against defendants in

March 2017. Following service of the foreclosure complaint, defendants filed a

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Rule 4:6-2(e) motion to dismiss the complaint in lieu of an answer. The motion,

supported by a certification of their counsel, contended that defendants filed an

action in federal district court two weeks earlier, involving the same issues and,

therefore, in the interest of comity and judicial economy, the foreclosure

complaint should be dismissed or stayed.

      On June 21, the Chancery judge executed an order denying the motion.

However, for reasons that are unstated in the record, the order was marked filed

on August 21. In his statement of reasons attached to the order, the judge

explained that "in view of the quasi in rem nature of the foreclosure proceedings,

. . . the matters are not substantially similar . . . . [T]he parties are different and

the rights and claims being invoked are not substantially similar." At plaintiff's

request, two days after the order was filed, default was entered on August 23,

due to defendants' failure to file an answer to the foreclosure complaint.

      To continue its foreclosure efforts, plaintiff filed a motion for final

judgment on October 5. Apparently, defendants were unaware that their motion

to dismiss was denied in the order filed on August 21, and that default was

entered against them on August 23, until they received plaintiff's motion. They

opposed the motion to enter final judgment, followed by their cross-motion to

vacate default and extend time to answer the foreclosure complaint.

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      On January 31, 2018, the Chancery judge entered an order granting the

motion for final judgment and denied the cross-motion to vacate default. In his

statement of reasons attached to the order, the judge stated that the later motion

was denied, despite defendants showing good cause for not filing an answer as

they were not made aware of the denial of their motion to dismiss, because they

did not establish a meritorious defense to the foreclosure complaint as required

by Rule 4:43-3. The judge noted that under Great Falls Bank v. Pardo, 236 N.J.

Super. 388, 394 (Ch. Div. 1993), "[t]he only material issues in a foreclosure

proceeding are the validity of the mortgage, the amount of the indebtedness, and

the right of the mortgagee to resort to the mortgaged premises."         Because

defendants' motion was supported by a certification by their counsel, who did

not have personal knowledge of the facts as required by Rule 1:6-6, the judge

determined that defendants raised no meritorious defenses to support their

motion to vacate default. The judge then set forth his reasons under Rules 4:64-

1 and -2, for granting entry of Final Judgment.

      On appeal, defendants argue:

            [POINT I]

            THE HOMEOWNERS' FAILURE TO PUT IN AN
            AFFIDAVIT SHOULD NOT VITIATE THEIR RIGHT
            TO ANSWER THE COMPLAINT[.]

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                                        4
            [POINT II]

            THE BANK, NOT THE HOMEOWNER, IS
            REQUIRED TO PROVIDE THE INFORMATION AS
            TO THE PROPER AMOUNT DUE UNDER THE
            LOAN, AND THE NUMBER PROVIDED IS
            INCORRECT[.]

            [POINT III]

            ALICIA   BARKSDALE,     WHO   SIGNED A
            CERTIFICATION OF THE AMOUNT DUE, ETC.,
            LACKS KNOWLEDGE ADEQUATE TO CERTIFY
            THE LOAN[.] (NOT RAISED BELOW)

            [POINT IV]

            THE   BANKS     ARE    DEFRAUDING  THE
            GOVERNMENT BY ASSIGNING THE LOAN TO A
            CLOSED TRUST[.] (NOT RAISED BELOW)

            [POINT V]

            ROBO SIGNING PROBLEMS WITH JOHN
            KEALY'S SIGNATURES[.] (NOT RAISED BELOW)

      Initially, we point out that defendants' arguments in Points III, IV and V

were not raised before the Chancery judge and will not be considered on appeal

because they do not "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

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

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      As for our standard of review, we review the denial of a motion to vacate

default based on an abuse of discretion standard. See U.S. Bank Nat'l Ass'n v.

Guillaume, 209 N.J. 449, 467 (2012). Pursuant to Rule 4:43-3, a court may

vacate the entry of default upon "good cause shown." "[T]he requirements for

setting aside a default under Rule 4:43-3 are less stringent than . . . those for

setting aside an entry of default judgment under Rule 4:50-1." N.J. Mfrs. Ins.

Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div. 2009).

"[G]ood cause . . . requires the exercise of sound discretion by the court in light

of the facts and circumstances of the particular case." O'Connor v. Altus, 67

N.J. 106, 129 (1975) (citation omitted).

      In considering whether good cause exists, courts generally consider the

movant's "absence of any contumacious conduct" and the presence of a

meritorious defense. Ibid. In particular, "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 (2019). As with a motion to vacate a default judgment, there is no point in

setting aside an entry of default if the defendant has no meritorious defense.

"The time of the courts, counsel and litigants should not be taken up by such a

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futile proceeding." Guillaume, 209 N.J. at 469 (citation omitted). We have

noted,

            This is especially so in a foreclosure case where the
            mere denominating of the matter as a contested case
            moves it from the expeditious disposition by the Office
            of Foreclosure in the Administrative Office of the
            Courts, R. 1:34-6 and R. 4:64-1(a), to a more protracted
            treatment by the Chancery Division providing
            discovery and raising other problems associated with
            trial calendars. If there is no bona fide contest, a
            secured creditor should have prompt recourse to its
            collateral.

            [Trs. of Local 478 Trucking & Allied Indus. Pension
            Fund v. Baron Holding Corp., 224 N.J. Super. 485, 489,
            (App. Div. 1988).]

      Guided by these principles, we cannot conclude that the Chancery judge

abused his discretion in denying defendants' motion to vacate default because of

his determination that they failed to set forth a meritorious defense to the

foreclosure complaint in accordance Rules 1:6-6 and 4:43-3. Consequently, we

affirm substantially for the reasons expressed in his thoughtful statement of

reasons. To the extent we have not specifically addressed arguments raised by

defendants, they lack sufficient merit to warrant discussion in a written opinion.

R. 2:11-3(e)(1)(E).

            Affirmed.

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