SELECT PORTFOLIO SERVICING, INC. VS. MARY L. LOIGU (F-017590-18, OCEAN COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-2021-19
SELECT PORTFOLIO
SERVICING, INC.,
Plaintiff-Respondent,
v.
MARY L. LOIGU, and
AMERICAN EXPRESS
CENTURION BANK,
Defendants,
and
JURI ANTHONY LOIGU,
Defendant-Appellant.
_______________________
Submitted January 25, 2021 – Decided March 24, 2021
Before Judges Fasciale and Rothstadt.
On appeal from the Superior Court of New Jersey,
Chancery Division, Ocean County, Docket No.
F-017590-18.
Juri Anthony Loigu, appellant pro se.
Eckert Seamans Cherin & Mellott, LLC, attorneys for
respondent (Anita J. Murray, on the brief).
PER CURIAM
In this residential foreclosure action, defendant Juri Loigu appeals from
the Chancery Division's May 10, 2019 order denying his motion to vacate
default and from its December 9, 2019 default judgment of foreclosure in favor
of plaintiff, Select Portfolio Servicing, Inc. On appeal, defendant argues that
the Chancery judge abused his discretion by denying his Rule 4:43-3 motion to
vacate default because he established "good cause" and meritorious defenses
based on plaintiff's predecessor-in-interest's alleged failure to provide proof of
defendant's lack of payment and/or its failure to serve him with notice of intent
to foreclose as required by the Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-53
to -68. Defendant further asserts that the Chancery judge erred in entering
default judgment by extension of his failure to vacate default. We affirm.
The material facts are generally undisputed and are summarized as
follows. On March 26, 2009, Mary Loigu,1 defendant's wife, signed and
delivered a promissory note to Countrywide Bank, FSB (Countrywide) in
exchange for a residential loan in the amount of $323,475.00. On that same day,
1
We use Mary's first name throughout this opinion in order to avoid confusion
stemming from she and her husband's common last name. Mary is not a party
to this appeal.
2 A-2021-19
Mary and defendant secured payment of the note by executing a mortgage in
favor of Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for
Countrywide, its successors, and assigns, which encumbered property they
owned in Point Pleasant Borough. This mortgage was recorded with the Clerk
of Ocean County on April 6, 2009.
On February 28, 2012, the mortgage was assigned to Bank of America,
NA, successor by merger to BAC Home Loans Servicing, LP (formerly known
as Countrywide), and this assignment was recorded with the Clerk of Ocean
County on March 2, 2012. Thereafter, on October 15, 2012, the mortgage was
assigned to Nationstar Mortgage LLC (Nationstar). On November 1, 2012, this
second assignment of the mortgage was recorded with the Clerk of Ocean
County.
Mary defaulted on the payment due on the note on April 1, 2018, and
failed to make all payments due thereafter. Consequentially, Nationstar sent
Mary a notice of intent to foreclose at least 30 days prior to filing a complaint
as required by the FFA. N.J.S.A. 2A:50-56.
When Mary failed to respond to the notice, on August 24, 2018, Nationstar
filed a complaint in foreclosure against Mary and defendant. Defendant was
named as a party by virtue of his status as a mortgagor.
3 A-2021-19
On August 29, 2018, defendant was personally served with a summons
and the complaint at the property via private process server. On September 1,
2018, Mary was served the same documents at a different address. When neither
defendant nor Mary answered the complaint, Nationstar filed a request for entry
of default against all defendants on October 9, 2018. After default was entered,
on November 21, 2018, Nationstar assigned the mortgage to plaintiff, and the
assignment was then recorded in the office of the Clerk of Ocean County on
November 26, 2018.
Almost eight months after being served, on April 17, 2019, defendant filed
a motion to vacate the default supported by a proposed answer. In a certification
accompanying his motion, defendant asserted that Nationstar lacked standing to
bring the action against him because the Federal Home Loan Mortgage
Corporation (Freddie Mac) was the mortgagee, not Nationstar, as evidenced by
the name "Freddie Mac" appearing on a loan modification agreement executed
in April 2009. He also challenged Nationstar's ownership of the loan by
insisting that Bank of America never sold the loan to Nationstar, asserted that
Nationstar failed to comply with notice requirements with respect to its intention
to foreclose on defendant's residence, and argued that service of process was
deficient.
4 A-2021-19
In his supporting certification, defendant did not deny receiving service
of process; rather, he explained that because the process server had asked for
Mary at the time of service, he mistakenly believed the documents were for her.
Nonetheless, defendant admitted that the documents' caption read "Mary L.
Loigu, et als" and that he never read them.
In the proposed answer submitted with his motion, defendant denied
Nationstar's allegation that Mary had defaulted on the April 2018 payment based
on the fact that Nationstar had not provided a computer-generated
"[l]oan/[p]ayment [h]istory" evidencing the default—without which, he argued,
Mary could not be assumed to have defaulted. Defendant did not assert that he
or Mary made any payments after the March 2018 payment.
Nationstar filed opposition to defendant's motion, in which it averred that
Mary had indeed failed to make the payment due on April 1, 2018, and all
payments thereafter. It also stated that it had complied with the applicable notice
requirements and that defendant and Mary had both been properly served with
the summons and complaint, which neither had answered. Nationstar also
asserted that defendant had failed to support his belief that he did not need to
file an answer even though he was a named defendant. It also argued that
defendant had failed to support any of his supposedly meritorious defenses to
the foreclosure action and noted specifically that the assignment of mortgage
5 A-2021-19
from Bank of America to Nationstar, which provided the latter with standing to
bring the foreclosure action, had been properly set forth in the foreclosure
complaint.
On May 10, 2019, the Chancery judge entered the order denying
defendant's motion and issued a supporting statement of reasons. In denying
defendant's motion, the judge found that defendant had not made the necess ary
showing of "good cause." He explained that standard could have been met if
defendant had shown that Nationstar had failed to effectuate service as he
claimed, but found that defendant had been properly personally served.
Additionally, the judge concluded that good cause to vacate the default did not
exist because defendant had not demonstrated the existence of a meritorious
defense. The judge also found that the use of the Freddie Mac form in the 2009
modification did not demonstrate ownership of the loan by Freddie Mac. The
judge concluded that Nationstar had established standing to bring the suit
through a chain of documented assignments of the mortgage. Finally, the judge
found that Nationstar would be prejudiced by vacating the default, noting that
neither defendant nor Mary had paid on the mortgage after the date of default
and the continued non-payment served to prejudice Nationstar.
On August 6, 2019, Nationstar filed a successful motion to substitute
plaintiff into the action and plaintiff then filed a motion seeking the entry of
6 A-2021-19
final default judgment on November 21, 2019, which the Chancery judge
granted. Thereafter, the final default judgment of foreclosure was entered and
a writ of execution was issued. This appeal followed.
We review the denial of a motion to vacate default based on an abuse of
discretion standard. See US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467
(2012). "[A]n abuse of discretion 'arises when a decision is made without a
rational explanation, inexplicably departed from established policies, or rested
on an impermissible basis.'" State v. R.Y., 242 N.J. 48, 65 (2020) (quoting Flagg
v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).
It is well-settled that "the 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. Mfr.'s Ins. v. Prestige Health Grp., 406 N.J.
Super. 354, 360 (App. Div. 2009) (citing Bernhardt v. Alden Café, 374 N.J.
Super. 271, 277 (App. Div. 2005)). Under Rule 4:43-3, a court may vacate the
entry of default upon a mere showing of "good cause," which, under the Rule
means "the presence of a meritorious defense . . . and the absence of any
contumacious conduct." O'Connor v. Altus, 67 N.J. 106, 129 (1975).
Considering whether good cause to vacate default exists "requires the exercise
of sound discretion by the court in light of the facts and circumstances of the
particular case." Ibid.7 A-2021-19
"[T]he 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 (2020); see also O'Connor, 67 N.J.
at 129 (finding "good cause" under Rule 4:43-3 includes "the presence of a
meritorious defense"). 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 futile proceeding." Guillaume, 209 N.J. at 469 (quoting Schulwitz v.
Shuster, 27 N.J. Super. 554, 561 (App. Div. 1953)).
On appeal, defendant contends that the Chancery judge erred in
concluding that defendant failed to demonstrate a meritorious defense.
Particularly, defendant argues that the proposed answer he provided with his
motion to vacate the entry of default established a meritorious defense insofar
as he claimed Nationstar allegedly failed to "support its claim that [d]efendant
and Mary defaulted on the April 2018 payment." Defendant's argument is
premised upon Nationstar not providing a "[l]oan" or "[p]ayment [h]istory" in
support of its claims by the time it sought the entry of default. In this regard,
defendant's argument was premature.
Upon filing a complaint in a residential foreclosure action, a plaintiff is
required to provide the information detailed in Rule 4:64-1(a)-(b). There is no
8 A-2021-19
requirement in that Rule for a plaintiff to file a payment or loan history at that
point in time. Rather, the obligation to provide proofs of the outstanding balance
owed is imposed on a plaintiff at trial or upon seeking entry of summary
judgment or a default judgment. As to the latter, Rule 4:64-1(d) and Rule 4:64-
2 read together require the plaintiff seeking entry of default judgment to provide,
among other things, "evidence of [the defendant's] indebtedness," "the principal
due as of the date of default," and the sum of any applicable interest accrued.
In any event, by filing a motion to vacate the entry of default, it was
defendant's burden to demonstrate a defense to the foreclosure. In a foreclosure
action, the only meritorious defenses are challenges to the validity of the
mortgage, the amount of indebtedness and default, and the right of the
mortgagee to foreclose on the mortgaged property. See Great Falls Bank v.
Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993). Where payment is relied upon,
the burden is on defendant to establish he or she was not in default as alleged.
Here, defendant's proposed answer averred that payments had been made
on the note up to March 2018. The proposed answer denied Nationstar's
allegation that Mary had defaulted on the payment due in April 2018 and failed
to make payments thereafter, but defendant never asserted that payments had
indeed been made on April 1, 2018, or at any point following that date nor did
he certify that such payments had been made. Accordingly, the Chancery judge
9 A-2021-19
correctly concluded defendant failed to assert a meritorious defense and did not
abuse his discretion by denying defendant's motion.
We are not persuaded otherwise by defendant's additional contention that
the Chancery judge erred in failing to recognize a meritorious defense based
upon Nationstar's failure to serve defendant with a notice of intent to foreclose
as required by the FFA, N.J.S.A. 2A:50-56. Suffice it to say, that the mortgage
defendant had signed recognized that he was "not personally obligated to pay
the sums secured by th[e mortgage]," and the notice requirements under the FFA
only obligated a mortgagee to send notice to a "residential mortgage debtor."
N.J.S.A. 2A:50-56. See also N.J.S.A. 2A:50-55, ("'Residential mortgage debtor'
or 'debtor' means any person shown on the record of the residential mortgage
lender as being obligated to pay the obligation secured by the residential
mortgage."). Here, Mary was the only debtor and notice sent to her satisfied
Nationstar's obligation under the FFA.
To the extent we have not specifically addressed defendant's remaining
arguments, we conclude they are without sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
10 A-2021-19