William Suser v. Wachovia Mortgage, Fsb

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1330-12T2
WILLIAM SUSER,
Plaintiff-Appellant,
APPROVED FOR PUBLICATION
v.
November 4, 2013
WACHOVIA MORTGAGE, FSB f/k/a APPELLATE DIVISION
WORLD SAVINGS BANK, FSB, and
DEUTSCHE BANK NATIONAL TRUST
COMPANY, f/k/a WASHINGTON
MUTUAL BANK, FA,
Defendants-Respondents,
and
PORT IMPERIAL CONDOMINIUM
ASSOCIATION and UNITED STATES
DEPARTMENT OF THE TREASURY –
INTERNAL REVENUE SERVICE, and/or
his, her, their or its successor
in right, title and interest,
Defendants.
___________________________________________________
Submitted October 8, 2013 – Decided November 4, 2013
Before Judges Fisher, Espinosa and O'Connor.
On appeal from the Superior Court of New
Jersey, Chancery Division, Hudson County,
Docket No. C-25-12.
Zwerling & Deshpande, LLC, attorneys for
appellant (Shay S. Deshpande and David J.
Zwerling, on the brief).
Reed Smith, LLP, attorneys for respondent
Wachovia Mortgage, FSB f/k/a World Savings
Bank, FSB (Henry F. Reichner, of counsel;
Kevin L. Jayne, on the brief).
Bertone Piccini, LLP, attorneys for
respondent Deutsche Bank National Trust
Company, f/k/a Washington Mutual Bank, FA
(Grace C. Bertone and Cristina Z. Sinclair,
of counsel; Ms. Sinclair, on the brief).
The opinion of the court was delivered by
FISHER, P.J.A.D.
In this appeal, we consider whether the trial judge
correctly granted summary judgment in this convoluted quiet-
title action, which sought, in part, to remove a mortgage
because of alleged inadequacies in its assignment.
Many of the relevant facts are undisputed. Plaintiff
William Suser obtained and recorded, on July 29, 2006, a
mortgage on a West New York condominium unit securing his
$150,000 loan to the prior owner. Plaintiff later sued for and
obtained a foreclosure judgment and, after making a successful
$100 bid, obtained a sheriff's deed which acknowledged title was
subject to prior encumbrances. Plaintiff then commenced this
action seeking to quiet title through the removal of the two
prior mortgages on the property, one of which was recorded by
World Savings Bank, FSB (the World Savings mortgage), on
September 23, 2004, to secure a $200,000 loan to the original
owner, and the other recorded by Washington Mutual Bank, FA (the
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WaMu mortgage), on October 8, 2004, to secure a $999,999 loan to
the original owner. Defendant Wachovia Mortgage FSB, doing
business as Wells Fargo Bank, N.A. (Wells Fargo), appeared with
regard to the World Savings mortgage, and defendant Deutsche
Bank National Trust Company, as Trustee WAMU 2005-AR2 (Deutsche)
appeared to defend the WaMu mortgage.
In his quiet-title complaint, plaintiff claimed the World
Savings and WaMu mortgages "should not be recognized in equity
because they have been satisfied, settled, obtained by mistake
and/or [sic] improperly encumber the subject premises without
legal right or standing to enforce same." Despite this
allegation's broad tone, the main thrust of plaintiff's
arguments in the trial court related to defendants' standing to
seek foreclosure of the mortgages and not the validity of the
mortgages.
After a discovery dispute between plaintiff and Deutsche
resulted in a protective order favorable to the latter, both
defendants moved for summary judgment, and plaintiff cross-moved
for summary judgment. The trial judge granted defendants'
motions and denied plaintiff's, and plaintiff now appeals,
arguing with respect to Deutsche that he was erroneously denied
discovery into the circumstances surrounding the assignment of
the WaMu mortgage and that both defendants should have been
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"estopped and barred from maintaining their liens on the subject
property under doctrines of laches and waiver."1 We separately
consider plaintiff's arguments as to each defendant.
I
Plaintiff's arguments regarding defendants' standing to
seek foreclosure – based on concerns of "robo-signing" in any
relevant assignments of a nature that led to the Supreme Court's
emergent amendments in December 2010 to Rule 4:64 – have no
bearing on Wells Fargo. The record does not suggest that Wells
Fargo's authority to seek foreclosure of the World Savings
mortgage was based on an assignment. Instead, Wells Fargo
asserted, without substantial contradiction, that the original
mortgage holder – World Savings Bank, FSA – changed its name to
Wachovia Mortgage, FSB, effective December 31, 2007, and that
Wachovia was acquired by and merged into Wells Fargo effective
November 1, 2009. It would appear that Wells Fargo's right to
enforce the mortgage arises by operation of its ownership of the
asset through mergers or acquisitions, not assignment.
Accordingly, plaintiff's assertions regarding standing have no
1
Both Wells Fargo and Deutsche argue that plaintiff never
presented his laches and waiver arguments in the trial court and
that, as a consequence, they should not be considered now. The
record on appeal, however, is not sufficiently clear for us to
agree with that contention, so we have considered the merits of
plaintiff's equitable arguments.
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bearing on Wells Fargo; in addition, the discovery issue raised
by plaintiff relates only to Deutsche.
As to Wells Fargo, plaintiff only argues that the World
Savings mortgage should not further burden his title because, in
plaintiff's view, Wells Fargo's failure to enforce its interest
equitably bars any future attempt to enforce it. In this
regard, plaintiff alludes to the fact that in July 2008 Wells
Fargo commenced a foreclosure action which was dismissed without
prejudice a few months later when the prior owner cured the
default. With that factual event as background, plaintiff
argues Wells Fargo has had "three previous bites at the apple,"
referring to the undisputed facts that Wells Fargo did not
intervene in plaintiff's foreclosure action, did not bid at the
sheriff's sale, and did not commence its own foreclosure action
after the prior owner again defaulted. Absent evidence that
plaintiff obtained ownership of the property in the good faith
belief title was free and clear of the World Savings mortgage,
Wells Fargo was under no obligation to commence its own
foreclosure action, join in another's, or bid at a sheriff's
sale to protect its interest.
In support of his theory, plaintiff cites only Last v.
Audubon Park Assocs., 227 N.J. Super. 602 (App. Div. 1988). The
application of the doctrine of laches in Last, however, was
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necessary in light of the new owner's good faith belief that
senior mortgage rights had been cut off by a tax sale together
with the owner's investment of millions of dollars in a housing
project on the land that the mortgagee "silently observed . . .
from the sidelines" over a period of years. Id. at 608. Those
compelling circumstances materially distinguish Last from the
case at hand. And plaintiff has failed to demonstrate any other
compelling circumstances that warrant the extraordinary relief
of extinguishing a valid mortgage of which he was aware when he
took title.
We find insufficient merit in any of plaintiff's other
arguments – to the extent they are intended as an attack on the
summary judgment entered in favor of Wells Fargo – to warrant
further discussion in a written opinion. R. 2:11-3(e)(1)(E).
II
Plaintiff's argument regarding the propriety of summary
judgment in favor of Deutsche is somewhat different. To be
sure, Deutsche's position is similar to Wells Fargo insofar as
it was stipulated between plaintiff and Deutsche that plaintiff
made his loan to the original owner with knowledge of: the
existence of the WaMu mortgage; that the WaMu mortgage was
senior to plaintiff's; and that the interest conveyed by the
sheriff to plaintiff remained encumbered by all "[p]rior
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mortgage[s] or liens." Plaintiff claimed, however, that
Deutsche lacks standing to seek foreclosure based upon some
irregularity in the assignment to Deutsche – a fact which
plaintiff claims warrants removing that encumbrance from his
title to the property.
In examining the summary judgment entered in favor of
Deutsche, we must assume the truth of plaintiff's assertion that
the assignment of the mortgage to Deutsche was defective or
otherwise precludes Deutsche from foreclosing on the mortgage
pursuant to the procedures contained in Rule 4:64. Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The
fact that the trial judge barred discovery into the assignment
amplifies the importance of our assumption of the truth of
plaintiff's allegations. See Velantzas v. Colgate Palmolive
Co., 109 N.J. 189, 193 (1988) (recognizing "it is especially
inappropriate to grant summary judgment when discovery is
incomplete"). Because the suit was dismissed before the facts
were fully developed, we are required to review summary judgment
"from the standpoint of whether there is any basis upon which
plaintiff should be entitled to proceed further." Bilotti v.
Accurate Forming Corp., 39 N.J. 184, 193 (1963).
Notwithstanding the caution militated by the incomplete
record, the existing evidence permitted an inference of
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insufficiencies in the assignment of the WaMu mortgage. The
record reveals that Deutsche commenced a foreclosure action
against the prior owner in July 2009, alleging its right to
foreclose the WaMu mortgage based on the following:
[The WaMu mortgage] was assigned by an
assignment dated 06/03/2009 from JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION to DEUTSCHE
BANK NATIONAL TRUST COMPANY AS TRUSTEE WAMU
2005-AR2, plaintiff herein, which is
unrecorded at this time.
The real party in interest in the proceeding
is JPMorgan Chase Bank, National
Association, as purchaser of the loan and
other assets of Washington Mutual Bank,
formerly known as Washington Mutual Bank, FA
(the "Savings Bank") from the Federal
Deposit Insurance Corporation, acting as
receiver for the Savings Bank and pursuant
to its authority under the Federal Deposit
Insurance Act[,] 12 U.S.C. § 1821(d), as
further evidenced by Affidavit of the
Federal Deposit Insurance Corporation dated
October 2, 2008, recorded in the office of
the Director of Records and Licensing, King
County, State of Washington on October 3,
2008.
The absence of a recorded assignment and these other confusing
and otherwise unexplained allegations, which alone cast a shadow
over Deutsche's claim of standing to foreclose the WaMu
mortgage, were not tested or adjudicated in this earlier suit.
Instead, Deutsche dismissed the action without prejudice in
September 2010 and, apparently, has made no attempt to enforce
its interest since.
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Until discovery casts greater illumination on the subject,
we must conclude there is a legitimate dispute as to whether
Deutsche obtained an effective assignment of the WaMu mortgage.
And, in viewing the facts and inferences in the light most
favorable to plaintiff, Brill, supra, 142 N.J. at 540, we
proceed in determining the maintainability of this quiet-title
action on the assumption that the assignment did not validly
transfer the mortgage to Deutsche. That does not, however, end
the matter. If the assignment was invalid or otherwise
defective, it does not automatically follow that the WaMu
mortgage must be extinguished. A finding of a defect in the
assignment would simply mean that the right to foreclose would
reside with the assignor or some other entity.
On the other hand, that the relief to which plaintiff may
be entitled is so limited does not mean plaintiff is barred from
pursuing this quiet-title action. N.J.S.A. 2A:62-1 permits a
person "in the peaceable possession of lands" to bring an action
to "clear up all doubts and disputes" concerning some other
person's claim to "a lien or encumbrance thereon." Here, there
is no legitimate dispute that the WaMu mortgage was valid when
executed, has not been satisfied, and was recorded prior to
plaintiff's mortgage. But there is a dispute about whether
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Deutsche is the proper holder of the WaMu mortgage and that
question may be adjudicated in a quiet-title action.
One of the purposes of N.J.S.A. 2A:62-1 is to permit a
landowner to sue for clarification of the validity or reach of
his title in circumstances that otherwise preclude a forum for
the resolution of such a dispute. Albro v. Dayton, 50 N.J. Eq.
574, 575 (Ch. 1892). Stated another way, a plaintiff in a
quiet-title action must show not only that there is no other
forum for an adjudication of the dispute but also that there is
no other adequate remedy at law.2 Here, plaintiff has not
claimed the WaMu mortgage is invalid or unenforceable,3 only that
Deutsche has no standing to enforce or foreclose the WaMu
mortgage. Although an adjudication of that question may not
2
For example, if plaintiff challenged the legitimacy of the WaMu
mortgage, he could sue to quiet title without being required to
wait until the mortgage holder sued him. Additionally, if a
plaintiff's interest in property could be adequately vindicated
through an ejectment action, the court need not invoke its
equitable jurisdiction to quiet title. The quiet-title action,
which, even though codified by statute retains its equitable
underpinnings, see Holland v. Challen, 110 U.S. 15, 24-25, 3 S.
Ct. 495, 500-01, 28 L. Ed. 52, 56 (1884); Estate of Smith v.
Cohen, 123 N.J. Eq. 419, 425 (E. & A. 1938); Brady v. Carteret
Realty Co., 70 N.J. Eq. 748, 754 (E. & A. 1906), is generally
appropriate only in the absence of an adequate remedy at law,
McGrath v. Norcross, 71 N.J. Eq. 763, 765 (E. & A. 1907).
3
As mentioned – and rejected – earlier, plaintiff has argued that
neither Wells Fargo nor Deutsche may seek foreclosure based on
the doctrines of laches, estoppel and waiver. Plaintiff has not
otherwise argued that the World Finance or WaMu mortgages are
unenforceable or do not have priority over his interest.
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lead to the relief plaintiff most fervently desires –
extinguishment of the mortgage – he is certainly entitled to a
ruling as to whether Deutsche, and not some other entity,
possesses the right to foreclose by way of a quiet-title action.
As the record demonstrates, that Deutsche believes it
possesses and may some day assert such a right is not illusory.
Deutsche has already sued on the mortgage; that Deutsche may in
the near or distant future hale plaintiff into court seeking
foreclosure of the WaMu mortgage is not inconceivable. That
cloud sufficiently enshrouds plaintiff's title as to permit
invocation of the rights provided by N.J.S.A. 2A:62-1.4
Plaintiff is entitled to an adjudication of Deutsche's right to
pursue such an action even though the outcome of that dispute
might only be that some other entity is found to be the proper
mortgage holder.
Because the trial judge mistakenly precluded discovery into
the circumstances surrounding Deutsche's assignment and
Deutsche's entitlement to sue on the mortgage, we find it
4
To be clear, although what constitutes a cloud on title has
always been broadly interpreted, see 65 Am. Jur. 2d, Quieting
Title § 13 (2011), we do not suggest every perceived or imagined
cloud on title is entitled to adjudication. Courts need not
entertain doubts about title that are trifling or suggest only
immaterial damage. See Paternoster v. Shuster, 296 N.J. Super.
544, 559 (App. Div. 1997). Each case must be assessed in view
of its particular facts and the magnitude of the threat to the
plaintiff's title and use of the property.
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necessary to: vacate the order denying plaintiff's motion for
summary judgment against Deutsche; vacate the order granting
Deutsche's motion for summary judgment; reverse the protective
order; and remand for discovery and other proceedings in
conformity with this opinion.5
Affirmed in part; vacated in part; reversed in part; and
remanded. We do not retain jurisdiction.
5
We do not suggest that summary judgment may not be appropriate
once discovery is complete.
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