JEFFREY LICHTENSTEIN v. DLJ MORTGAGE CAPITAL INC EDWARD ROCHFORD

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Superior Court of New Jersey, Appellate Division.

JEFFREY LICHTENSTEIN, Plaintiff–Appellant, v. DLJ MORTGAGE CAPITAL, INC., and EDWARD V. ROCHFORD, Solely in his Capacity as Sheriff of Morris County, Defendants–Respondents.

DOCKET NO. A–4293–10T3

Decided: November 17, 2011

Before Judges Alvarez and Skillman. Eric C. Garrabrant argued the cause for appellant (Flaster/Greenberg, attorneys;  Mr. Garrabrant, on the brief). Denise E. Carlon argued the cause for respondent DLJ Mortgage Capital, Inc. (Zucker, Goldberg & Ackerman, attorneys;  Ms. Carlon, on the brief). Daniel W. O'Mullan, Morris County Counsel, argued the cause for respondent Edward V. Rochford (County of Morris, County Counsel, attorneys;  Mr. O'Mullan, on the brief).

Plaintiff Jeffrey Lichtenstein appeals from an order entered April 1, 2011, which granted summary judgment to defendants DLJ Mortgage Capital, Inc. (DLJ) and the Sheriff of Morris County, Edward J. Rochford, and dismissed Lichtenstein's complaint that sought to set aside a deed from the Sheriff to DLJ for a property in Randolph formerly owned by Lichtenstein based on a final judgment of foreclosure entered on May 2, 2006.

The plaintiff in the mortgage foreclosure action was Washington Mutual Bank (Washington Mutual).   The sale of the property foreclosed upon was substantially delayed by Lichtenstein's filing of a petition for bankruptcy and various litigation seeking to collaterally attack the final judgment of foreclosure.

Sometime after entry of the foreclosure judgment, DLJ, which is a subsidiary of Credit Suisse, acquired that judgment and the note and mortgage upon which it was based.   On December 7, 2006, DLJ filed a proof of claim in Lichtenstein's bankruptcy proceeding.

That proceeding resulted in an automatic stay of proceedings to enforce the foreclosure judgment.   On July 26, 2007, the bankruptcy court entered an order requiring Lichtenstein's bankruptcy estate to pay DLJ $15,972.08 in arrearages on the mortgage for the Randolph property and thereafter to pay $2,662.02 per month on the mortgage.   The order further provided that if those payments were not made to DLJ, the automatic stay with respect to the final judgment of foreclosure would be vacated.

The bankruptcy proceeding in which this order was entered was apparently concluded on November 30, 2007.   However, Lichtenstein apparently filed another bankruptcy proceeding sometime thereafter as well as various litigation to forestall enforcement of the foreclosure judgment.

While these proceedings relating to Lichtenstein's bankruptcy and the foreclosure judgment against him were ongoing, Washington Mutual filed for bankruptcy.   On September 25, 2008, the Federal Deposit Insurance Company (FDIC), acting as the receiver in the bankruptcy proceedings, sold Washington Mutual's assets to J.P. Morgan Chase.

After the stays of enforcement of the foreclosure judgment expired or were vacated, on June 24, 2010, the Sheriff sold the Randolph property to DLJ at a Sheriff's sale.   Lichtenstein did not bid at the Sheriff's sale or take any action after the sale to redeem the property.

Instead, on August 18, 2010, Lichtenstein filed this action to set aside the deed for the property, naming both DLJ and the Sheriff as defendants.   The action was based on Lichtenstein's allegation that Washington Mutual had not validly transferred the foreclosure judgment to DLJ before Washington Mutual went bankrupt and its assets were transferred to J.P. Morgan Chase.

DLJ filed a motion for summary judgment, in which the Sheriff joined.   In support of this motion, DLJ submitted a certification by Troy Noble, the servicing agent for Credit Suisse and DLJ, which stated that Credit Suisse, the parent company of DLJ, is “the holder of the foreclosure judgment [for the Randolph property] which has merged with the underlying mortgage[.]”  This certification also stated that the note secured by the mortgage had been “stamped as payable to [DLJ]” and was being held by its attorney.

After hearing argument, the trial court granted defendants summary judgment dismissing the complaint.   In the course of its oral opinion, the court stated:

[I]f there is a defect in the deed by which [DLJ] has come into possession of the property, [DLJ] is going to have to deal with that.   Mr. Lichtenstein no longer has an interest in this property.   He has no pecuniary interest in the outcome because the deed, the note has been discharged, so the mortgagee cannot go after him for the deficiency, nor is he claiming that there would be any legal [e]ffect of changing somehow the Sheriff's sale, the sheriff's deed.

On appeal, Lichtenstein argues that the summary judgment must be reversed because DLJ did not present adequate evidence that Washington Mutual assigned the 2006 foreclosure judgment to DLJ. However, notwithstanding the absence from the record of a formal assignment of the judgment, there is compelling evidence that DLJ obtained an assignment of the judgment from Washington Mutual.   The record includes DLJ's December 7, 2006 proof of claim in one of Lichtenstein's bankruptcy proceedings for a secured claim of $644,603.51.   It appears clear that this claim was based on the foreclosure judgment.   The docket of the bankruptcy proceeding contains numerous entries indicating that DLJ was the judgment creditor seeking enforcement of the foreclosure judgment for the Randolph property and there is no indication Lichtenstein ever disputed DLJ's status as the judgment creditor in that bankruptcy proceeding.   In addition, the previously quoted certification by Troy Noble, an employee of the service agent for Credit Suisse and DLJ, states that Credit Suisse is the holder of the foreclosure judgment and that DLJ is the holder of the note secured by the mortgage on the Randolph property.

In any event, even if there were a question whether DLJ obtained a valid assignment of the foreclosure judgment from Washington Mutual before its bankruptcy in 2008, this would not provide a basis for Lichtenstein to obtain relief from the foreclosure judgment or invalidate the Sheriff's sale to DLJ. A finding that DLJ had failed to establish that it obtained an effective assignment of the judgment before Washington Mutual's bankruptcy in 2008 would only mean that the judgment was one of Washington Mutual's assets that the FDIC sold to J.P. Morgan Chase in 2008.   Such a finding could provide a foundation for J.P. Morgan Chase to assert a claim against DLJ, but it would not provide a basis for relief to Lichtenstein.   Therefore, the trial court properly granted summary judgment dismissing Lichtenstein's complaint.

Before concluding this opinion, we briefly comment upon the “Certification as to Assignment of Bid” executed by a partner in the law firm representing DLJ on June 24, 2010, which stated:

I hereby certify that the Plaintiff set forth above [referring to Washington Mutual] does assign, set over and transfer to DLJ Mortgage Capital, Inc. [the Randolph property], which sale arose out of a suit instituted by Plaintiff to foreclose a mortgage on said premises, and said Plaintiff does authorize and direct the Deed for said premises to be executed and delivered by the Sheriff to the said assignee.

This document is inexplicable.   Washington Mutual no longer existed as of the date this certification was executed and counsel for DLJ clearly did not have authority to act on its behalf at that time.   Therefore, if the summary judgment dismissing Lichtenstein's complaint were in any way dependent upon this document, a reversal would be required.   However, we are satisfied for the reasons previously set forth that summary judgment was properly granted without consideration of this document.

Affirmed.

PER CURIAM

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