MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC BANK v. MANUEL GUERRERO (2013)

Defendants in a mortgage foreclosure action, Kil Ja Kim and Jong Keum Kim, appeal the May 8, 2011 Chancery Division order denying their motion to vacate a sheriff's sale.   We affirm for the reasons stated by Judge Contillo in his oral decision.

A default was entered against defendants on March 8, 2010, and final judgment on April 29, 2011.   Defendants then filed a bankruptcy petition, as a result of which the proceedings were stayed until an order entered on July 13, 2011.   The bankruptcy terminated October 25, 2011.

Defendants were able to obtain adjournments of two sheriff's sales of the subject property until March 3, 2012, when the sale was completed.   Defendants' motion to vacate followed.   In rendering his decision, Judge Contillo said:

․ the legal standard that has to be adhered to is under Rule 4:50–1 and the only particular subsections of that that I think could possibly be in play would be that ․ there was some sort of fraud by listing it as M & T, as opposed to MERS as nominee for M & T. But I think that's a far stretch to call that a fraud when it was clearly a—simply a shorthand designation of the plaintiff, incorrect, but nevertheless, not a fraud.   And there's no evidence in the record before that there was any misleading of the defendants, that they were misled, or that the failure to identify the plaintiff as MERS as nominee for M & T Bank as opposed to simply M & T Bank make any difference whatsoever.

The other potential errors that the judgment might be vacated under would be 4:50–1(a) that would be excusable neglect.   But in this case the defendants were served in either 2009 or early 2010.   They were served and did nothing.   They were served with the request to enter default in March of 2010, they did nothing.   They were served with the final judgment of foreclosure in 2011.   They did nothing.   They filed for Chapter 7, I think in 2011 but did nothing to engage the litigation process, until literally the day before the sheriff's sale.   And that's neglect, but it's not excusable neglect.   There's no excuse and the theory that they weren't fully aware of what all their rights were, is just not a valid excuse․

I am permitted to vacate a default judgment if it's in the interest of justice to do so.   But that's an extremely rare basis upon which to vacate a judgment of default and foreclosure.   There's nothing out of the ordinary in this particular application that I can see.

I think the main argument and the defendant's best argument is that the judgment is void on the theory that this plaintiff doesn't have the right to bring the action because they're not the proper plaintiff, because they haven't proven that they hold the note, and because of the misidentification of the plaintiff in the caption, both in the summons and in the applications for default.

With respect to those sort of challenges they are not down by the one year challenge.   By the way this was brought within one year anyway.   It was brought within 11 months of the entry of final judgment.   But they still have to be brought within a reasonable time.   And I will say two things about that.   I don't think it's reasonable to wait until the day before the sheriff's sale to bring the application, to contest the standing or to raise the issue of void-ness or whatever.

But the fundamental point that I think defeats the application unfortunately of the Kims, is that this plaintiff or M & T bank rather, is the originator of this loan.   The loan was never assigned to anybody else.   It was never taken over by anybody else.   It's always been plaintiff's loan.   They did have a mortgage that they utilized the MERS system for.   But the note itself is to the plaintiff.   There's no suggestion in the record that having—that MERS ever held the note.   My understanding is MERS never holds the note.   There's no contrary evidence in this case.   And the only suggestion is and the only inference is that the plaintiff that originated the transaction, M & T still has the note.

Now it's true that plaintiff hasn't proven to me today that they physically held the note from the date of closing until the foreclosure sale.   But I don't think it's really fair for the defendant to come in at the last minute having ignored the case since 2009, early 2010 and say oh don't sell the property, I want to throw out the case against me because I want you to prove right now that you have the note.   That's just not the way it works.   If there were questions about holding the note, there was plenty of time to answer those questions in the years past.   But more significantly and conclusively there's actually no reason, no reason, to think that anyone but M & T has ever controlled the underlying debt.   That's the fundamental question.

So likewise with respect to the notice of intent to foreclose if this [is] indeed an investment property, I'm not even sure the Fair Foreclosure Act would apply.   If the Fair Foreclosure Act applies, and notice of intent to foreclosure was sent, it was sent by the holder of the note, that's M & T and it set forth exactly what was the default and what the family had to do to cure the default.   No action was taken.   It's way too late to challenge that now.

To reiterate, we affirm based on Judge Contillo's reasons and add only the following.

Contrary to defendant's assertions, plaintiff, who originated the mortgage at issue, always had standing to pursue this foreclosure.   Because MERS filed the complaint in no way deprived plaintiff of standing as defendants suggest.   No authority supports that position.   See Deutsch Bank Nat'l Trust Co. v. Russo, 429 N.J.Super. 91, 101–02 (App.Div.2012).   Nor is there a basis, in law or any fact in the record, for a finding that a jurisdictional flaw exists which makes the final judgment void or unenforceable so as to nullify the sheriff's sale, or provide some other basis for vacating the judgment and the sale.

With regard to the claims for relief under Rule 4:50, defendants cannot demonstrate excusable neglect.   They were properly served, allowed defaults to be entered, filed for bankruptcy, and obtained two stays of the sheriff's sale.   Defendants' failure to directly engage in the mortgage foreclosure litigation is not the equivalent of excusable neglect.   It does not establish any meritorious defense, or the existence of exceptional circumstances.   In fact, defendants do not even argue that they have a meritorious defense to this proceeding.   In sum, we find defendants' specific points of errors to be so lacking in merit as to not warrant further discussion in a written opinion.   Rule 2:11–3(e)(1)(E).

Affirmed.

PER CURIAM