CHRISTOPHER JACOBS v. FANNIE MAE MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC MERS AND SETERUS INC (2013)

Plaintiff, Christopher J. Jacobs, appeals from a May 23, 2012 Chancery Division order denying his motion for entry of a default judgment and dismissing his complaint in a quiet title action.   We affirm.

We glean the following facts from the sparse record.   In 2005, Jacobs borrowed $272,650 from Ivanhoe Financial, Inc. (Ivanhoe), which was secured by a mortgage on his property.   Defendant Mortgage Electronic Registration Systems, Inc. (MERS) was listed as the nominee on the mortgage.   On January 4, 2012, MERS assigned the mortgage to defendant Federal National Mortgage Association (Fannie Mae), which designated defendant Seterus, Inc. (Seterus) as its loan servicer.   Ivanhoe has been out of business for some time.

In September 2011, Jacobs stopped making his mortgage payments.   Shortly thereafter, Jacobs wrote letters to Fannie Mae, MERS, and Seterus demanding that they provide documentation proving that Fannie Mae was the current holder of the mortgage loan.   The letters stated that “public records” do not list Fannie Mae as the mortgage holder and demanded that each defendant provide proof of its interest in the mortgage within fifteen days.

Seterus responded by providing the requested documentation, including the mortgage, note and assignment of mortgage.¹  Jacobs sent a second letter to Seterus declaring that its proof was inadequate, demanding further documentation, and stating that a failure to respond “to the letter within five days signaled Seterus' agreement” that he may “discontinue any payment whatsoever without recourse.”   When MERS and Fannie Mae did not respond within fifteen days, Jacobs sent each a second letter listing “agreed upon stipulation [s] of facts,” and declaring that if defendants did not respond within five days, they agreed that they had no interest in his mortgage.   Neither entity responded.

On January 24, 2012, Jacobs filed a quiet title action in the Chancery Division, naming Fannie Mae, MERS and Seterus as defendants.²  Jacobs claimed that because no “public record” listed Fannie Mae as the mortgage holder, the court should declare his property unencumbered by any mortgage.   He alleged that defendants' failure to respond to his “notices of agreement” meant that defendants “exercised the express option of nonresponse ․ as their confirmation that no such verifiable claim exists.”   Based on defendants' failure to answer his letters, Jacobs argued that defendants had stipulated that his property was unencumbered and asked the court to declare it free and clear of the mortgage lien.

Defendants did not file a timely answer to the complaint due to a potential conflict between counsel for Seterus and then-defendant Chase.   After obtaining the conflict waiver on March 23, 2012, defendants' counsel attempted to contact Jacobs at least twice by phone and left a voicemail each time.

On March 30, after defendants' counsel left the first voicemail, Jacobs filed a Request for Entry of Default.³  On April 10, 2012, defendants sent a letter by certified mail asking Jacobs to stipulate to vacate any default so that defendants could file an answer.

On April 23, 2012, Jacobs filed a motion for a default judgment.   On May 23, 2012, the trial judge denied the motion and dismissed the complaint for failure to state a claim.   In her statement of reasons, the judge explained as follows:

The court may, sua sponte, refuse to enter judgment for the plaintiff even where defendant has defaulted, if the complaint on its face fails to state a cause of action for which relief can be granted.   Cf. Prickett v. Allard, 126 N.J.Super.   438 (App.Div.), aff'd o.b. 66 N.J. 6 (1974).   Here, plaintiff's complaint fails to state a cause of action for which relief can be granted.   The thrust of the complaint suggests it is an action to quiet title.   However, an action to quiet title is designed only to remove clouds, disputes or doubts infecting an otherwise good chain of record ownership.  Hyland v. Kirkman, 204 N.J.Super.   345 (Ch. Div.1985).   It was not intended to permit a person to create a title out of whole cloth or shortcut the rigorous requirements of adverse possession to acquire title.  Powell v. Mayo, 24 N.J. Eq. 178 (Ch. Div.1873).

On appeal, Jacobs argues that the trial judge erred in dismissing the complaint because the facts presented in the complaint and reasonable inferences therefrom demonstrate a cloud on his title exists.   Jacobs further argues that defendants did not have “standing” to contest the quiet title action, since their failure to adequately respond to his correspondence confirmed they had no property interest in the mortgage.   We disagree.

Having carefully considered Jacobs' arguments, we find them without sufficient merit to warrant discussion in a written opinion.   R. 2:11–3(e)(1)(E).   We affirm substantially for the reasons stated in the judge's May 23, 2012 statement of reasons.   We add the following brief comments.

As the lower court dismissed the complaint for failure to state a cause of action, see Rule 4:6–2(e), we review the dismissal de novo.  Smerling v. Harrah's Entm't, Inc., 389 N.J.Super. 181, 186 (App.Div.2006).   A trial court should grant the dismissal “in only the rarest of instances.”  Printing Mart–Morristown v. Sharp Elecs.   Corp., 116 N.J. 739, 772 (1989).   Such review “is limited to examining the legal sufficiency of the facts alleged on the face of the complaint,” and, in determining whether dismissal under Rule 4:6–2(e) is warranted, the court should not concern itself with the plaintiff's ability to prove its allegations.  Id. at 746.   If “the fundament of a cause of action may be gleaned even from an obscure statement of claim,” then the complaint should survive this preliminary stage.  Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 626 (1995) (citation omitted).

Applying the liberal standard for finding a cause of action required under Rule 4:6–2(e), we cannot construe Jacobs' complaint to establish a valid claim.  “[A] court must dismiss [a] complaint if it has failed to articulate a legal basis entitling plaintiff to relief.”  Sickles v. Cabot Corp., 379 N.J.Super. 100, 106 (App.Div.) (citing Camden Cnty. Energy Recovery Assocs., L.P. v. N.J. Dep't of Envtl.   Prot., 320 N.J.Super. 59, 64 (App.Div.1999)), certif. denied, 185 N.J. 297 (2005).   Jacobs acknowledges that he obtained a loan secured by the mortgage and note in question and does not allege that he paid off the note and extinguished the mortgage lien.   We perceive no basis for finding that Jacobs' one-sided and ineffective “notices of agreement” create a doubt on his chain of title.   Therefore, the judge correctly determined that the “complaint does not sensibly demonstrate that there is any cloud or doubts affecting Plaintiff's title.”

Affirmed.

FOOTNOTES

FN1. The record does not contain these documents..  FN1. The record does not contain these documents.

FN2. Jacobs also named “Chase,” the holder of his second mortgage, as a defendant, but apparently dismissed his claims against the bank at some point before the appeal..  FN2. Jacobs also named “Chase,” the holder of his second mortgage, as a defendant, but apparently dismissed his claims against the bank at some point before the appeal.

FN3. The record does not contain an order entering default..  FN3. The record does not contain an order entering default.

PER CURIAM