U.S. BANK NATIONAL ASSOCIATION, ETC. VS. KENNETH D. DWYER (F-016353-17, OCEAN 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NOT FOR PUBLICATION WITHOUT THE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-5882-17T1
U.S. BANK NATIONAL
ASSOCIATION AS INDENTURE
TRUSTEE ON BEHALF OF AND
WITH RESPECT TO AJAX
MORTGAGE LOAN TRUST 2015-C,
MORTGAGE-BACKED NOTES,
SERIES 2015-C,
Plaintiff-Respondent,
v.
KENNETH D. DWYER and
CATHERINE T. DWYER,
Defendants-Appellants.
________________________________
Submitted August 13, 2019 – Decided October 2, 2019
Before Judges Messano and Natali.
On appeal from the Superior Court of New Jersey,
Chancery Division, Ocean County, Docket No. F-
016353-17.
Kenneth D. Dwyer and Catherine T. Dwyer, appellants
pro se.
Pluese Becker & Saltzman, LLC, attorneys for
respondent (Stuart H. West, on the brief).
PER CURIAM
In this residential foreclosure action, defendants Kenneth D. Dwyer and
Catherine T. Dwyer appeal from two March 2, 2018 Chancery Division orders
granting plaintiff U.S. Bank National Association (U.S. Bank) summary
judgment, denying defendants' cross-motion to dismiss, striking defendants'
answer, deeming the dispute an uncontested foreclosure, and transferring the
matter to the Office of Foreclosure for entry of final judgment. Defendants also
appeal from a June 4, 2018 final judgment, and a July 6, 2018 order denying
their motion to vacate the final judgment and dismiss the complaint. We affirm
in part, vacate in part, and remand solely for the court to address the factual
issues related to plaintiff's standing.
I.
According to the foreclosure complaint, on December 6, 2005, defendants
executed a $404,700 promissory note to Ameriquest Mortgage Company
(Ameriquest). As security for repayment, defendants executed a mortgage to
Ameriquest, encumbering their property in Brick Township.
The Ameriquest mortgage was assigned five times. Ameriquest assigned
the mortgage to CitiMortgage, Inc., who thereafter assigned it to Bayview Loan
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Servicing, LLC (Bayview Loan Servicing). 1 Bayview Loan Servicing then
assigned the mortgage to Bayview Dispositions, LLC, who assigned it to AJX
Mortgage Trust I, three days later on July 13, 2015. Finally, on November 24,
2015, AJX Mortgage Trust I executed an assignment to U.S. Bank. Each
assignment was duly recorded.
In addition to the aforementioned assignments, the summary judgment
record establishes that on June 19, 2013, Bayview Loan Servicing informed
defendants that the "mortgage loan" was transferred to U.S. Bank National
Association, as trustee, in trust for the benefit of the holder of Bayview
Opportunity Master Fund REMIC 2013-13NPL1 Beneficial Interest
Certificates, Series 2013-13NPL1. In addition, on November 25, 2013, Bayview
Loan Servicing advised defendants that the note and mortgage was transferred
yet again to a separate entity, BOMF 2013-13NPL1 Corp., and that the
"ownership transfer" took place on November 5, 2013. Finally, on November
17, 2014, Bayview Loan Servicing informed defendants that their loan was
transferred to U.S. Bank National Association, as trustee, in trust for the benefit
of the holder of Bayview Opportunity Master Fund Grantor Trust 2014 -15PL1
1
After the assignment to Bayview Loan Servicing, defendants entered into a
loan modification which lowered the interest rate, and significantly reduced their
monthly principal and interest obligation.
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Beneficial Interest Certificates, Series 2014-15RPL1, and this "ownership
transfer" occurred on October 28, 2014. The aforementioned transfers by
Bayview Loan are hereinafter referred to as the "Bayview 2013 and 2014 loan
transfers."
Defendants defaulted on the loan by failing to make the monthly payment
due on February 1, 2017, and thereafter. Consequently, and in accordance with
the Fair Foreclosure Act, N.J.S.A. 2A:50-53 to -68, U.S. Bank's representative
sent defendants a notice of intention to foreclose. Shortly thereafter, U.S. Bank
filed its foreclosure complaint and defendants filed a contesting answer with
nineteen affirmative defenses.
U.S. Bank filed a motion for summary judgment supported by a
certification from Julia Rust, a Litigation Specialist, who was employed by
Gregory Funding, LLC (Gregory), U.S. Bank's "authorized representative" and
loan servicer. Rust certified that she attached true and correct copies of the note
and mortgage to her certification along with defendants' loan modification
agreement with Bayview Loan Servicing, the referenced assignments, and a
copy of the payment history from the prior loan servicer, as well as the payment
history when Gregory began servicing the loan for U.S. Bank. Based on that
payment history, Rust stated that defendants remained in default under the note.
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Rust also attested that the original note was in U.S. Bank's possession
prior to the filing of the complaint. In this regard, she stated that the "original
note was sent to [U.S. Bank's] foreclosure counsel on or about September 8,
2017, and . . . foreclosure counsel remains in possession of the note . . . ."
Plaintiff's foreclosure counsel also certified that his "office received . . . the
original note . . . endorsed in blank . . . on September 11, 2017." And, during
oral argument on U.S. Bank's summary judgment application, plaintiff's counsel
presented the original note to the court and defendants for inspection.
In their opposition and cross-motion, defendants argued that: 1) U.S.
Bank lacked standing to prosecute the foreclosure because the summary
judgment record did not include competent proof that it possessed the not e the
day the complaint was filed, and breaks in the chain of title caused by the
Bayview 2013 and 2014 loan transfers made all subsequent assignments invalid;
2) U.S. Bank's motion was not supported by competent evidence as Rust based
her certification on "unreliable" information; 3) defendants made the disputed
mortgage payments and consequently were not in default; and 4) U.S. Bank
improperly accelerated the note contrary to its express terms.
After considering the parties' oral arguments, the court granted U.S. Bank
summary judgment and denied defendants' cross-motion. In its oral decision,
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the court rejected defendants' standing argument, finding plaintiff produced the
original note and established "a chain of unbroken assignments which were
recorded." Based on the Rust certification, the court concluded defendants did
not "make the payments due on the mortgage, and the matter remains in default."
Finally, the court concluded defendants failed to raise a genuine or material
factual question to dispute plaintiff's right to foreclose.
U.S. Bank filed an unopposed motion for final judgment, which the court
granted on June 4, 2018. Plaintiff's counsel submitted a certification stating that
on April 11, 2018, he communicated with representatives of Gregory Funding,
who "reviewed . . . the original (or a true copy of) the [n]ote, [m]ortgage and
recorded assignments . . . submitted, . . . and confirmed their accuracy." Counsel
also stated he inspected "the documents about to be filed" and acknowledged his
obligation pursuant to Rule 1:4-8 "to amend [the] affidavit if a reasonable
opportunity for further investigation or discovery indicates insufficient
evidentiary support for [the] factual assertion proffered by plaintiff in any court
filings or documents in this case."
Significantly, the note submitted in support of final judgment was not the
same note to which Rust and plaintiff's counsel attested, and to which plaintiff's
counsel presented to the court and defendants for inspection. Rather, the note
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submitted in support of plaintiff's motion for final judgment was materially
different as it contained two allonges. 2 The first allonge showed that Bayview
Loan Servicing endorsed the note to Bayview Dispositions, LLC. The second
allonge indicated that Bayview Dispositions, LLC, endorsed the note to AJX
Mortgage Trust 1.
Defendants promptly moved to vacate the final judgment. Although their
application failed to identify which subsection of Rule 4:50-1 upon which they
relied, defendants did argue that based on plaintiff's counsel's submissions, the
note submitted in support of summary judgment was inaccurate, and thus a
factual question existed, at a minimum, as to plaintiff's standing because the
second note established that AJX Mortgage Trust I, not plaintiff, was the holder
in due course of the note. Defendants also restated their argument that the
Bayview 2013 and 2014 loan transfers rendered the subsequent assignments
defective, as there was no evidence of an assignment from any of the entities
2
An allonge is "[a] slip of paper sometimes attached to a negotiable instrument
for the purpose of receiving . . . indorsements." Black's Law Dictionary, 68 (9th
ed. 2009). An indorsement is a signature "made on an instrument for the purpose
of negotiating the instrument . . . ." N.J.S.A. 12A:3–204(a). "For the purpose
of determining whether a signature is made on an instrument, a paper affixed to
the instrument is a part of the instrument." Ibid. "An indorsement on an allonge
is valid even though there is sufficient space on the instrument for an
indorsement." N.J.S.A. 12A:3–204, Official Comment 1.
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identified in the Bayview 2013 and 2014 loan transfers to Bayview Dispositions,
LLC.
Plaintiff did not oppose defendants' motion to vacate, asserting on appeal
that it never received a copy of the motion papers, a claim which defendants
dispute. The court issued an oral decision denying defendants' motion and
concluded that "there [were] no issues with regard to standing . . . [or] a
fraudulent allonge[,]" as plaintiff had "established standing to record
[a]ssignments" and that the assignments were presumed valid. The court also
concluded defendants lacked standing to challenge the Bayview 2013 and 2014
loan transfers. This appeal followed.
On appeal, defendants maintain that the trial court erred in granting
summary judgment because genuine and material factual disputes existed
regarding plaintiff's standing, defendants' default, and plaintiff's attendant right
to accelerate the note. Second, defendants contend that the court committed
error in refusing to vacate the final judgment because they were entitled to relief
pursuant to Rules 4:50-1(c) and 4:50-3. On this point, they assert that the note
and allonges that plaintiff submitted in support of final judgment "demonstrate
. . . fraud, and [that] there was no intent to transfer the mortgagee rights . . . ."
After carefully reviewing the record in light of the arguments advanced by the
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parties, and as more fully detailed in this opinion, we conclude that a remand is
necessary solely to address the standing issues raised by defendants.
II.
Our review of a ruling on summary judgment is de novo, applying the
same legal standard as the trial court. Townsend v. Pierre, 221 N.J. 36, 59
(2015). "Summary judgment must be granted 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 . . . as a matter of law.'" Town
of Kearny v. Brandt, 214 N.J. 76, 91 (2013) (quoting R. 4:46-2(c)). We accord
no special deference to the trial judge's conclusions on issues of law. Nicholas
v. Mynster, 213 N.J. 463, 478 (2013).
"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). A party
seeking to foreclose must demonstrate "execution, recording, and non-payment
of the mortgage . . . ." See Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37
(App. Div. 1952).
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In addition, the foreclosing party must "own or control the underlying
debt." Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J. Super. 214, 222 (App.
Div. 2011) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597
(App. Div. 2011)). In Mitchell, we held that possession of the note or an
assignment of the mortgage predating the original complaint conferred standing.
Id. at 225.
Here, the trial court granted plaintiff summary judgment after concluding
that plaintiff possessed standing to prosecute the foreclosure action because it
possessed both the note and a valid assignment prior to the filing of the
foreclosure complaint. Based on the competing notes submitted by plaintiff in
support of its applications for summary judgment and final judgment, we are
unable to determine on the current record if plaintiff properly possessed the note
prior to the filing of the foreclosure complaint. In addition, neither the summary
judgment record nor the record in support of plaintiff's application for final
judgment adequately address the issues raised by defendants regarding the
Bayview 2013 and 2014 loan transfers.
In its merits brief, plaintiff's counsel contends that the note and allonges
submitted in support of final judgment were filed in error. Specifically, counsel
states:
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When this file was referred to our firm, we
electronically received copies of the [n]ote and three
[a]llonges. The note had an endorsement on the back
of the second page with an endorsement from
Ameriquest, payable to Bayview Loan Servicing, LLC.
There was an [a]llonge signed by Bayview Loan
Servicing, LLC, payable in blank. There was an
[a]llonge also signed by Bayview Loan Servicing,
payable to Bayview Dispositions, LLC. Finally, there
was an [a]llonge signed by Bayview Dispositions, LLC,
made payable to AJX Mortgage Trust I . . . . AJX was
the predecessor in interest to the [plaintiff].
Our firm received the original [n]ote with one attached
[a]llonge payable in blank, on September 11, 2017. The
[n]ote and [a]llonge were accompanied by a [b]ailee
[l]etter, specifying we were receiving the original
[n]ote and one [a]llonge, payable in blank. I personally
made a copy of the [n]ote and [a]llonge and executed
an [a]ttorney's [c]ertification to that effect. The
original [n]ote and [a]llonge were presented to the
Dwyers and the Chancery Judge at oral argument. We
never received the originals of the two other [a]llonges,
which were created in error.
When the [plaintiff] was ready to file the [m]otion for
Final Judgment, [a different attorney at plaintiff's firm]
also created a certified true copy of the [n]ote from the
original still held in our file. When documents were
uploaded in support of the [m]otion for Final Judgment,
the two additional [a]llonges, which had been
electronically received and scanned into the firm's file
for the Dwyers at referral, were inadvertently included
with the [n]ote and one valid attached [a]llonge.
There are significant procedural infirmities with respect to the
aforementioned statements as it relates to our appellate review. First, those
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factual assertions are contained in a brief and are neither of record, judic ially
noticeable, nor stipulated. Accordingly, they do not constitute cognizable facts.
Second, although we acknowledge plaintiff's claim that it was not served with
the motion to vacate, plaintiff did not seek to supplement the record on appeal,
nor did it move for a limited remand to permit the trial court to consider these
arguments in the first instance, as the Rules permit. See R. 2:5-4(a); R. 2:9-1(a).
On remand, should plaintiff seek to establish standing based on possession
of the note prior to the filing of the summary judgment complaint, it shall submit
a certification fully compliant with Rule 1:6-6, and it shall address the
inconsistency between the note submitted in support of summary judgment and
that filed with its application for final judgment so that the trial court can make
appropriate factual findings in the first instance. R. 1:7-4; Deutsche Bank Nat'l
Trust Co. v. Mitchell, 422 N.J. Super. 214, 226 (App. Div. 2011) ("Attorneys in
particular should not certify to facts within the primary knowledge of their
clients."); Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (stating that an
appellate court's "original factfinding authority must be exercised only with
great frugality and in none but a clear case free of doubt") (quoting R. 2:10-5,
Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003)).
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With respect to plaintiff's alternative standing argument that it possessed
a valid assignment prior to the filing of the complaint, we likewise remand for
the court to make additional factual findings that address the Bayview 2013 and
2014 loan transfers. On appeal, plaintiff states in conclusory fashion that
"[t]here [was] no break in the chain of the [a]ssignments of [m]ortgage, and all
of the [a]ssignments of [m]ortgage were properly executed, notarized and
recorded. Any intermediate transfers of the loan that were not memorialized in
an [a]ssignment of [m]ortgage[] are not relevant to the [plaintiff's] standing."
We are not satisfied that the trial record or the court's factual findings
adequately explain those transfers, however. To the extent plaintiff relies on the
five recorded assignments to establish standing, including the final November
24, 2015 assignment from AJX Mortgage Trust I, on remand plaintiff shall detail
the Bayview 2013 and 2014 loan transfers in greater detail to enable the trial
judge, and any reviewing court, to determine if the subsequent assignments to
Bayview Dispositions, AJX, and plaintiff are valid. We acknowledge case law
questioning whether defendants have standing to challenge those transactions.
See Giles v. Phelan, Hallinan, & Schmieg, LLP, 901 F. Supp. 2d 509 (D.N.J.
2012); Jersey Shore Med. Ctr.-Fitkin Hosp. v. Estate of Baum, 84 N.J. 137
(1980). Without a clearer record and understanding as to the nature of those
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transactions, however, including whether they represent securitized mortgage
loans governed by a Pooling and Servicing Agreement, we cannot resolve that
legal issue. We also are unable to glean from the trial record the relationship, if
any, those entities have with plaintiff.
III.
Finally, we reject defendants' arguments that genuine and material factual
questions existed in the summary judgment record regarding their default and
the acceleration of the loan. The Rust certification contained competent
evidence that defendants were habitually late on their mortgage obligations, and
at the time plaintiff sent the March 21, 2017 notice of intention to foreclose,
they owed over $10,000 in late payments, interest, and other fees. Although
defendants made subsequent mortgage payments after receipt of the March 21
notice, and prior to plaintiff's filing of the foreclosure complaint, those payments
addressed earlier delinquencies and did not satisfy all of the outstanding monthly
payments, and the other amounts due. Nor does the summary judgment record
contain competent documentary evidence that defendants made any payments
subsequent to the filing of the foreclosure complaint.
We accordingly vacate the orders under review only to the extent they
incorporate the court's conclusions that plaintiff established standing to
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prosecute this foreclosure action and we expressly limit the scope of our remand
for the court to address that narrow issue. To the extent we have not specifically
addressed any of defendants' remaining arguments, we conclude they are
without sufficient merit and do not warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed in part, vacated in part, and remanded for proceedings consistent
with our opinion. We do not retain jurisdiction.
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