HSBC BANK USA, ETC. VS. MICHAEL KEANE(F-019668-12, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-5346-15T4
HSBC BANK USA, NATIONAL
ASSOCIATION AS TRUSTEE
FOR NOMURA ASSET ACCEPTANCE
CORPORATION MORTGAGE PASS
THROUGH CERTIFICATES SERIES
2005-AR3,
Plaintiff-Respondent,
v.
MICHAEL KEANE,
Defendant-Appellant.
_________________________________
Submitted September 26, 2017 – Decided October 5, 2017
Before Judges Fasciale and Moynihan.
On appeal from Superior Court of New Jersey,
Chancery Division, Monmouth County, Docket No.
F-019668-12.
Joseph C. Lane, attorney for appellant.
Reed Smith, LLP, attorneys for respondent
(Henry F. Reichner, of counsel and on the
brief).
PER CURIAM
Michael Keane (defendant) appeals from a March 20, 2015 order
denying his motion "to vacate judgment and reinstate defendant's
answer, affirmative defenses, and counterclaims pursuant to R[ule]
4:50-1." The motion that led to the entry of the March 20, 2015
order was not one to vacate a default judgment, which the judge
subsequently entered in 2016. Instead, the March 20, 2015 order
denied defendant's attempt to seek reconsideration of an August
9, 2013 order, which had denied reconsideration of a previous
order suppressing his pleading. We affirm.
In February 2005, defendant obtained a note from Gateway
Funding Diversified Mortgage Services L.P. d/b/a Ivy Mortgage
(Gateway) with a $292,000 principal balance. As security for the
loan, defendant encumbered real property in Spring Lake. The
mortgage named Mortgage Electronic Registration Systems, Inc.
(MERS) as mortgagee in a nominee capacity for Gateway and its
assigns. Gateway endorsed the note in blank.
In April 2011, defendant failed to make the payment due. In
July 2011, HSBC Bank USA, National Association as Trustee for
Nomura Asset Acceptance Corporation Mortgage Pass Through
Certificates Series 2005-AR3 (plaintiff) sent defendant a Notice
of Intention to Foreclose by certified mail. In September 2011,
MERS assigned the mortgage to plaintiff.
In September 2012, plaintiff filed a complaint for
foreclosure. On March 14, 2013, the court issued an order
requiring that defendant apply for mediation within ten days, and
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that the parties exchange paper discovery by June 1, 2013, complete
depositions by June 15, 2013, and complete discovery by September
1, 2013.
On June 5, 2013, plaintiff filed a motion to suppress
defendant's answer, affirmative defenses, and counterclaims for
failure to provide discovery. On June 13, 2013, defendant filed
a motion to dismiss the complaint. On June 21, 2013, the judge
granted plaintiff's motion and suppressed defendant's pleading for
failure to provide discovery; and denied defendant's motion to
dismiss the complaint.
In July 2013, defendant filed a motion to reinstate his
answer, affirmative defenses, and counterclaims. This motion
essentially sought reconsideration of the judge's June 21, 2013
order suppressing defendant's pleading. On August 9, 2013, the
judge denied the reconsideration motion. On August 29, 2013,
defendant filed a Chapter 13 bankruptcy, which the bankruptcy
court dismissed on April 22, 2014. On November 6, 2014, the judge
entered default. Defendant filed a second petition for bankruptcy,
which the bankruptcy court dismissed on November 10, 2014.
On March 2, 2015, defendant filed his motion, which led to
the entry of the March 20, 2015 order. At this point, plaintiff
had not obtained a judgment. Instead, plaintiff had successfully
suppressed defendant's pleading for failure to provide discovery.
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Defendant's March 2, 2015 motion primarily sought reconsideration
of the August 9, 2013 order denying reconsideration of the June
21, 2013 order suppressing defendant's pleading. On March 20,
2015, the judge heard oral argument and denied defendant's motion,
treating it as a motion to reconsider the August 9, 2013 order.
On May 2, 2016, the judge entered final judgment against defendant.
On appeal, defendant argues for the first time that he is
entitled to relief from the May 2, 2016 default judgment pursuant
to Rule 4:50-1. Defendant contends that we should vacate the
final default judgment because he demonstrated mistake,
inadvertence, surprise "and/or" excusable neglect; he has shown a
meritorious defense; plaintiff's proofs were insufficient to
support final judgment; plaintiff lacked standing to foreclose;
and the judge was biased.
Defendant's Notice of Appeal and Case Information Statement
reflect, however, that defendant is appealing from the March 20,
2015 order, which the judge properly treated as a motion to
reconsider. In other words, defendant did not file a Rule 4:50-1
motion before the judge following the May 2, 2016 default judgment.
Nevertheless, defendant's merits brief makes Rule 4:50-1
arguments, focusing primarily on the default judgment and the
soundness of the final judgment.
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As to defendant's March 2015 attempt seeking reconsideration
of the August 9, 2013 order denying reconsideration of the June
21, 2013 order, which suppressed defendant's answer, our court
rules do not provide for such an application. Even if they did,
defendant failed to seek reconsideration timely. Rule 4:49-2
required defendant to serve his motion for reconsideration twenty
days after service of the August 9, 2013 order. Pursuant to Rule
1:3-4(c), the twenty-day limitation shall not be enlarged.
Defendant served his reconsideration motion in March 2015, well
after the deadline expired.
We find no support whatsoever in the record for, and decline
to address, defendant's new arguments. Alloway v. Gen. Marine
Indus., L.P., 149 N.J. 620, 643 (1997); Nieder v. Royal Indem.
Ins. Co., 62 N.J. 229, 234 (1973). Nevertheless, we conclude
defendant's arguments are "without sufficient merit to warrant
discussion in a written opinion[.]" R. 2:11-3(e)(1)(E). We add
the following remarks.
Where, as here, "the court has entered a default judgment
pursuant to Rule 4:43-2, the party seeking to vacate the judgment
must meet the standard of Rule 4:50-1[.]" US Bank Nat'l Ass'n v.
Guillaume, 209 N.J. 449, 467 (2012). We will review the court's
decision whether to vacate or set aside the judgment under Rule
4:50-1 under an abuse of discretion standard. Ibid.
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"The trial court's determination under [Rule 4:50-1] warrants
substantial deference, and should not be reversed unless it results
in a clear abuse of discretion[,]" namely where the "decision is
'made without a rational explanation, inexplicably departed from
established policies, or rested on an impermissible basis.'"
Guillaume, supra, 209 N.J. at 467-68 (quoting Iliadis v. Wal-Mart
Stores, Inc., 191 N.J. 88, 123 (2007)).
Most relevant to defendant's contentions is either Rule 4:50-
1(a) or (f). Under Rule 4:50-1(a), defendant must show excusable
neglect and a meritorious defense. Id. at 468. Rule 4:50-1(f)
is reserved for "exceptional situations" where "truly exceptional
circumstances are present." Hous. Auth. of Morristown v. Little,
135 N.J. 274, 286 (1994) (citations omitted). Defendant has failed
to satisfy either criteria, or any other section of the rule.
"The 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." Great
Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993),
aff'd, 273 N.J. Super. 542 (App. Div. 1994). "[W]e [have] held
that either possession of the note or an assignment of the mortgage
that predated the original complaint confer[s] standing."
Deutsche Bank Tr. Co. Americas v. Angeles, 428 N.J. Super. 315,
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318 (App. Div. 2012) (citing Deutsche Bank Tr. Co. Americas v.
Mitchell, 422 N.J. Super. 214, 216 (App. Div. 2011)).
Here, plaintiff was in possession of the note and mortgage
before filing the complaint and properly had standing to bring the
case. As the judge noted, defendant "does not controvert the
prima facie right to foreclose with any genuine material issue of
fact." Defendant refused to respond to plaintiff's discovery
requests in part because he claimed plaintiff was not the
"appropriate party" and thus he did not want to share confidential
information. In less than a page in his brief, defendant claims
he has a meritorious defense showing "significant violations of
the New Jersey Home Ownership Security Act." He argues generally
that the subprime loan crisis entitled him to relief from
voluntarily taking a loan that he later could not pay. Although
defendant may have been in financial distress, he does not present
any excusable neglect, meritorious defense, or other exceptional
circumstances to warrant any relief under Rule 4:50-1.
Assuming defendant filed the March 2015 reconsideration
timely, which is not the case, the judge also appropriately denied
defendant relief under the reconsideration standard. As an
appellate court, we review the denial of a motion for
reconsideration to determine whether the judge abused his
discretionary authority. Cummings v. Bahr, 295 N.J. Super. 374,
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389 (App. Div. 1996). "Reconsideration should be utilized only
for those cases which fall into that narrow corridor in which
either 1) the [c]ourt has expressed its decision based upon a
palpably incorrect or irrational basis, or 2) it is obvious that
the [c]ourt either did not consider, or failed to appreciate the
significance of probative, competent evidence." Id. at 384
(quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div.
1990)). Additionally, the decision to deny a motion for
reconsideration falls "within the sound discretion of the [trial
court], to be exercised in the interest of justice." Ibid.
(quoting D'Atria, supra, 242 N.J. Super. at 401).
The judge reviewed the circumstances of the motion for
reconsideration on the record on March 20, 2015. The judge
recounted that she already reconsidered the striking of
defendant's answer, defenses, and counterclaims in August 2013,
after the original decision in June 2013. The judge noted that
she would have been willing to reinstate defendant's answer if he
had provided proof that he actually complied with discovery, but
he failed to provide any credible proof. The judge also noted
that defendant waited a year and a half from the first
reconsideration to file another motion. The judge's decision to
deny the motion for reconsideration was within her discretion.
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The judge properly denied the motion, regardless of whether it was
a motion for reconsideration or a motion to vacate judgment.
Finally, defendant's argument that the judge was biased is
without merit. Rule 1:12-1(g) states that a judge should be
disqualified on the court's own motion "when there is any other
reason which might preclude a fair and unbiased hearing and
judgment, or which might reasonably lead counsel or the parties
to believe so." Our Supreme Court has stated that the applicable
standard in determining whether disqualification is necessary is:
"Would a reasonable, fully[-]informed person have doubts about the
judge's impartiality?" DeNike v. Cupo, 196 N.J. 502, 517 (2008).
"[A] judge need not 'withdraw from a case upon a mere
suggestion that he is disqualified unless the alleged cause of
recusal is known by him to exist or is shown to be true in fact.'"
Chandok v. Chandok, 406 N.J. Super. 595, 603 (App. Div.) (quoting
Panitch v. Panitch, 339 N.J. Super. 63, 66 (App. Div. 2001)),
certif. denied, 200 N.J. 207 (2009). Moreover, "the mere
appearance of bias may require disqualification[,] . . . [h]owever,
before the court may be disqualified on the ground of an appearance
of bias, the belief that the proceedings were unfair must be
objectively reasonable." State v. Marshall, 148 N.J. 89, 279
(citations omitted), cert. denied, 522 U.S. 850, 118 S. Ct. 140,
139 L. Ed. 2d 88 (1997).
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A reasonable, fully-informed person would not have doubts
about the judge's impartiality. Defendant argues the judge was
friendlier with plaintiff's counsel and claims that the judge made
a comment about defendant putting his arm around his wife during
proceedings, without any cite to the record. There is no
appearance of bias. The judge even stated that she would have
reinstated defendant's answer had he provided her with credible
proof he complied with discovery, but he did not provide any such
proof.
Affirmed.
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