DITECH FINANCIAL, LLC VS. MAXWELL P. CLEMMONS, SR. (F-022294-09, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-2264-17T3
DITECH FINANCIAL, LLC,
Plaintiff-Respondent,
v.
MAXWELL P. CLEMMONS, SR.,
his heirs, devisees, and personal
representatives, and his, their or any
successors in right, title, and interest,
Defendants,
and
MAXWELL P. CLEMMONS, JR.,
Defendant-Appellant.
_______________________________
Argued September 19, 2019 – Decided October 4, 2019
Before Judges Alvarez, Suter and DeAlmeida.
On appeal from the Superior Court of New Jersey,
Chancery Division, Essex County, Docket No. F-
022294-09.
Brian T. Flanagan argued the cause for appellant
(Vyzas & Associates PC, attorneys; Vincas M. Vyzas,
of counsel; Brian T. Flanagan, on the briefs).
Lauren Silver Zabel argued the cause for respondent
(Reed Smith LLP, attorneys; Henry F. Reichner, of
counsel and on the brief).
PER CURIAM
Defendant Maxwell P. Clemmons, Jr. (Heir) appeals from the August 24,
2016 order of the Chancery Division granting summary judgment to plaintiff
Ditech Financial, LLC (Ditech), and denying his motions to enforce litigant's
rights and to vacate a prior order of the court denying his motion for summary
judgment in this foreclosure matter, as well as the court's March 1, 2017 order
denying his motion for reconsideration. We affirm.
I.
The following facts are derived from the record. In 2003, Maxwell P.
Clemmons, Sr. (Borrower) executed a promissory note to GMAC Mortgage
Corporation (GMAC Corp.) for $61,500. To secure the note, Borrower executed
a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS) as
nominee for GMAC Corp., its successors, and assigns, encumbering residential
property in Newark. The mortgage was recorded on September 13, 2003.
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On January 1, 2009, Borrower defaulted on the note. On April 24, 2009,
MERS assigned the mortgage to GMAC Mortgage, LLC (GMAC). The
assignment was recorded on June 2, 2009.
On April 28, 2009, GMAC filed a complaint for foreclosure on the
mortgage in the Chancery Division. On December 16, 2009, the court entered
summary judgment in favor of GMAC.
On May 14, 2012, GMAC ResCap, Inc. (ResCap) and its affiliates,
including GMAC, filed a bankruptcy petition. On July 13, 2012, the Bankruptcy
Court entered an order granting GMAC relief from the automatic stay
established in 11 U.S.C. § 362(a). The order permits GMAC "to operate [its]
business in the ordinary course" and to "to take all actions and execute such
documents as may be necessary and appropriate to carry out" that authority. In
addition, the order permits borrowers to assert claims and counterclaims against
GMAC in "pending and future foreclosure proceedings initiated by" GMAC.
On November 19 and 21, 2012, the Bankruptcy Court approved the sale
of ResCap's loan portfolio, including its mortgage servicing rights, to Walter
Investment Management (Walter) or one of its affiliates. Green Tree Servicing,
LLC (Green Tree) is a Walter affiliate.
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On January 9, 2013, GMAC sent Borrower a revised notice of intention to
foreclose. On February 1, 2013, Borrower's note, indorsed in blank, was
delivered to Green Tree. On July 30, 2013, GMAC assigned Borrower's
mortgage to Green Tree. The assignment was recorded on August 5, 2013. On
December 18, 2013, Green Tree filed an amended complaint substituting itself
as plaintiff.
On August 14, 2014, following the death of Borrower, Green Tree filed a
second amended complaint to join Borrower's unidentified heirs as defendants.
On October 21, 2014, Heir filed a contesting answer, identifying himself as
Borrower's heir and alleging the assignment of the mortgage to Green Tree was
invalid.
On May 28, 2015, Heir moved for summary judgment, arguing GMAC
violated the automatic stay when it transferred the mortgage to Green Tree. In
response, Green Tree provided a copy of the July 13, 2012 order of the
Bankruptcy Court and argued the assignment was carried out in the ordinary
course of GMAC's business. On September 28, 2015, the trial court denied
Heir's motion for summary judgment.
On February 16, 2016, Green Tree moved for summary judgment. In its
moving papers, it noted that in August 2015, it merged with, and changed its
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name to, Ditech.1 In addition to opposing the motion, Heir moved pursuant to
Rule 1:10-3 for relief in aid of litigant's rights, arguing Green Tree failed to
comply with a prior order to produce proof of the validity of its ownership of
the mortgage.
On June 2, 2016, Green Tree filed a cross-motion for sanctions pursuant
to Rule 1:4-8, arguing that Heir's motion was frivolous because its possession
of the note indorsed in blank, even if obtained through an invalid transfer, gives
it standing to foreclose under settled law.2 Heir cross-moved to vacate the
September 28, 2015 order denying his prior summary judgment motion.
On August 24, 2016, the court granted Green Tree's motion for summary
judgment, denied its motion for sanctions, and denied Heir's motions. The court
concluded that the automatic stay applies only to actions against the debtor in
bankruptcy, in this case ResCap and its affiliates, and that GMAC's transfer of
its asset to Green Tree did not violate the stay. The court also found regardless
1
On October 27, 2016, the trial court entered an order amending the caption to
reflect Green Tree's name change. For ease of understanding, the court will
continue to refer to plaintiff as Green Tree in this opinion.
2
On April 5, 2016, Green Tree wrote to the Trustee for the ResCap bankruptcy
stating it was proceeding with the foreclosure and that the Trustee should move
to intervene if it had an interest in the matter. No such motion has been filed.
Other than Green Tree, no entity has tried to foreclose on the mortgage.
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of the propriety of the transfer of the mortgage, Green Tree had standing to
foreclose because it had possession of the note indorsed in blank when it filed
the second amended complaint.
On March 1, 2017, the court denied Heir's motion for reconsideration of
the August 24, 2016 order. A final judgment of foreclosure was entered on
December 6, 2017.
This appeal followed. Before us, Heir reiterates his argument that GMAC
violated the automatic stay when it transferred the mortgage to Green Tree,
thereby invalidating Green Tree's ability to foreclose. In addition, he argues
Green Tree violated Rule 4:64-1 when it filed the second amended complaint
without an affidavit detailing a diligent inquiry to confirm its right to bring a
foreclosure action. On October 2, 2018, we entered a stay of the final judgment
of foreclosure.
II.
We review the trial court's decision granting summary judgment de novo,
using "the same standard that governs trial courts in reviewing summary
judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super.
162, 167 (App. Div. 1998). Rule 4:46-2(c) provides that a court should grant
summary judgment when "the pleadings, depositions, answers to interrogatories
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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 or order as a matter of law." "Thus, the movant must
show that there does not exist a 'genuine issue' as to a material fact and not
simply one 'of an insubstantial nature'; a non-movant will be unsuccessful
'merely by pointing to any fact in dispute.'" Prudential, 307 N.J. Super. at 167
(citation omitted). We review the record "based on our consideration of the
evidence in the light most favorable to the parties opposing summary judgment."
Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523 (1995).
Defenses to a foreclosure are narrow. "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" foreclose on the property. Great
Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993), aff'd, 273 N.J.
Super. 542, 547 (App. Div. 1994). Heir does not challenge the validity of the
mortgage or the amount of indebtedness. The sole issue he raises is Green Tree's
standing to foreclose on the mortgage.
Having carefully reviewed Heir's arguments in light of the record and
applicable precedents, we conclude that there is ample evidence supporting the
trial court's findings of fact and conclusions of law.
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To have a right to foreclose on a mortgage, "a party . . . must own or
control the underlying debt." Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323,
327-28 (Ch. Div. 2010). Standing is created by "either possession of the note
or an assignment of the mortgage that predated the original complaint . . . ."
Deutsche Bank Tr. Co. Ams. v. Angeles, 428 N.J. Super. 315, 318 (App. Div.
2012).
In the case of negotiable instrument, such as a promissory note, a
"[p]erson entitled to enforce" an instrument means the
holder of the instrument, a nonholder in possession of
the instrument who has the rights of a holder, or a
person not in possession of the instrument who is
entitled to enforce the instrument pursuant to [N.J.S.A.]
12A:3-309 or subsection d. of [N.J.S.A.] 12A:3-418. A
person may be a person entitled to enforce the
instrument even though the person is not the owner of
the instrument or is in wrongful possession of the
instrument.
[N.J.S.A. 12A:3-301.]
The instrument must be negotiated in order for a person other than the one
to whom the instrument is made payable to become the holder. "'Negotiation'
means a transfer of possession, whether voluntary or involuntary, of an
instrument by a person other than the issuer to a person who thereby becomes
its holder." N.J.S.A. 12A:3-201(a). "[I]f an instrument is payable to an
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identified person, negotiation requires transfer of possession of the instrument
and its indorsement by the holder." N.J.S.A. 12A:3-201(b).
a. If an indorsement is made by the holder of an
instrument, whether payable to an identified person or
payable to bearer, and the indorsement identifies a
person to whom it makes the instrument payable, it is a
"special indorsement." When specially indorsed, an
instrument becomes payable to the identified person
and may be negotiated only by the indorsement of that
person.
....
b. If an indorsement is made by the holder of an
instrument and it is not a special indorsement, it is a
"blank indorsement." When indorsed in blank, an
instrument becomes payable to bearer and may be
negotiated by transfer of possession alone until
specially indorsed.
[N.J.S.A. 12A:3-205.]
Here, Green Tree produced a copy of the note indorsed in blank in its
possession, along with a certification evidencing its possession of the note, prior
to the filing of the second amended complaint. Green Tree's possession of the
note indorsed in blank as of the filing of the second amended complaint is
sufficient to give it standing to foreclose on the mortgage securing the note.
This conclusion alone is sufficient to affirm the August 24, 2016 order.
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We need not, therefore, address Heir's arguments regarding the automatic
stay. As noted above, Green Tree's standing to foreclose would not be affected
even if GMAC's transfer of the mortgage to Green Tree violated the stay. For
the sake of completeness, however, we note our agreement with the trial court's
interpretation of § 362(a), and the Bankruptcy Court orders allowing GMAC to
conduct its ordinary business and approving the transfer of the Borrower's
mortgage to Green Tree.
With respect to the March 1, 2017 order, Rule 4:49-2 provides:
Except as otherwise provided by R. 1:13-1 (clerical
errors) a motion for rehearing or reconsideration
seeking to alter or amend a judgment or order shall . . .
state with specificity the basis on which it is made,
including a statement of the matters or controlling
decisions which counsel believes the court has
overlooked or as to which it has erred, and shall have
annexed thereto a copy of the judgment or order sought
to be reconsidered and a copy of the court’s
corresponding written opinion, if any.
"A motion for reconsideration . . . is a matter left to the trial court's sound
discretion." Lee v. Brown, 232 N.J. 114, 126 (2018) (quoting Guido v. Duane
Morris, LLP, 202 N.J. 79, 87 (2010)); see also Cummings v. Bahr, 295 N.J.
Super. 374, 389 (App. Div. 1996). A party may move for reconsideration of a
court's decision pursuant to Rule 4:49-2, on the grounds that (1) the court based
its decision on "a palpably incorrect or irrational basis," (2) the court either
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failed to consider or "appreciate the significance of probative, competent
evidence," or (3) the moving party is presenting "new or additional information
. . . which it could not have provided on the first application . . . ." Id. at 384
(quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401-02 (Ch. Div. 1990)). The
moving party "must initially demonstrate that the [c]ourt acted in an arbitrary,
capricious, or unreasonable manner, before the [c]ourt should engage in the
actual reconsideration process." D'Atria, 242 N.J. Super. at 401.
Our review of the record in light of these precedents reveals no basis on
which to reverse the March 1, 2017 order denying Heir's motion for
reconsideration. In support of his motion, Heir, in effect, reiterated the
arguments rejected by the court when it entered the August 24, 2016 order.
To the extent we have not specifically addressed any of Heir's remaining
arguments, we conclude they lack sufficient merit to warrant discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Affirmed. The October 2, 2018 stay is vacated.
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