HSBC BANK USA, NATIONAL ASSOCIATION, ETC. VS. (F-008075-17, MORRIS 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NOT FOR PUBLICATION WITHOUT THE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-3361-17T1
HSBC BANK USA,
NATIONAL ASSOCIATION AS
TRUSTEE FOR WELLS FARGO
ASSET SECURITIES
CORPORATION, MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 2007-14,
Plaintiff-Respondent,
v.
DEBORA A. SCHMIDT and
JAMES T. SCHMIDT,
Defendants-Appellants.
______________________________
Submitted February 11, 2019 – Decided May 23, 2019
Before Judges Haas and Sumners.
On appeal from Superior Court of New Jersey,
Chancery Division, Morris County, Docket No. F-
008075-17.
Elizabeth Tandy Foster, attorney for appellants.
Reed Smith, LLP, attorneys for respondents (Henry F.
Reichner, of counsel and on the brief).
PER CURIAM
Defendants Debora A. Schmidt and James T. Schmidt appeal from the
February 16, 2018 Final Judgment of Foreclosure in favor of plaintiff HSBC
Bank USA, National Association as Trustee For Wells Fargo Asset Securities
Corporation, Mortgage Pass-Through Certificates, Series 2007-14. They
contend that the Chancery judge erred in entering his order of January 31, 2018,
which denied their cross-motion to vacate default. Having carefully reviewed
the arguments raised in light of the record and applicable law, we affirm.
We discern the following factual and procedural history from the
pleadings and motion record. In August 2007, defendants entered into a non-
purchase money mortgage with Wells Fargo Bank, encumbering their residence
in Randolph. The mortgage was subsequently recorded in September 2007.
Over five years later, the parties entered into a loan modification agreement in
December 2012. The mortgage encumbering the property was later assigned to
plaintiff.
Defendants' loan went into default on August 1, 2016, due to non-
payment. Plaintiff then filed a foreclosure complaint against defendants in
March 2017. Following service of the foreclosure complaint, defendants filed a
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Rule 4:6-2(e) motion to dismiss the complaint in lieu of an answer. The motion,
supported by a certification of their counsel, contended that defendants filed an
action in federal district court two weeks earlier, involving the same issues and,
therefore, in the interest of comity and judicial economy, the foreclosure
complaint should be dismissed or stayed.
On June 21, the Chancery judge executed an order denying the motion.
However, for reasons that are unstated in the record, the order was marked filed
on August 21. In his statement of reasons attached to the order, the judge
explained that "in view of the quasi in rem nature of the foreclosure proceedings,
. . . the matters are not substantially similar . . . . [T]he parties are different and
the rights and claims being invoked are not substantially similar." At plaintiff's
request, two days after the order was filed, default was entered on August 23,
due to defendants' failure to file an answer to the foreclosure complaint.
To continue its foreclosure efforts, plaintiff filed a motion for final
judgment on October 5. Apparently, defendants were unaware that their motion
to dismiss was denied in the order filed on August 21, and that default was
entered against them on August 23, until they received plaintiff's motion. They
opposed the motion to enter final judgment, followed by their cross-motion to
vacate default and extend time to answer the foreclosure complaint.
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On January 31, 2018, the Chancery judge entered an order granting the
motion for final judgment and denied the cross-motion to vacate default. In his
statement of reasons attached to the order, the judge stated that the later motion
was denied, despite defendants showing good cause for not filing an answer as
they were not made aware of the denial of their motion to dismiss, because they
did not establish a meritorious defense to the foreclosure complaint as required
by Rule 4:43-3. The judge noted that under Great Falls Bank v. Pardo, 236 N.J.
Super. 388, 394 (Ch. Div. 1993), "[t]he 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 resort to the mortgaged premises." Because
defendants' motion was supported by a certification by their counsel, who did
not have personal knowledge of the facts as required by Rule 1:6-6, the judge
determined that defendants raised no meritorious defenses to support their
motion to vacate default. The judge then set forth his reasons under Rules 4:64-
1 and -2, for granting entry of Final Judgment.
On appeal, defendants argue:
[POINT I]
THE HOMEOWNERS' FAILURE TO PUT IN AN
AFFIDAVIT SHOULD NOT VITIATE THEIR RIGHT
TO ANSWER THE COMPLAINT[.]
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[POINT II]
THE BANK, NOT THE HOMEOWNER, IS
REQUIRED TO PROVIDE THE INFORMATION AS
TO THE PROPER AMOUNT DUE UNDER THE
LOAN, AND THE NUMBER PROVIDED IS
INCORRECT[.]
[POINT III]
ALICIA BARKSDALE, WHO SIGNED A
CERTIFICATION OF THE AMOUNT DUE, ETC.,
LACKS KNOWLEDGE ADEQUATE TO CERTIFY
THE LOAN[.] (NOT RAISED BELOW)
[POINT IV]
THE BANKS ARE DEFRAUDING THE
GOVERNMENT BY ASSIGNING THE LOAN TO A
CLOSED TRUST[.] (NOT RAISED BELOW)
[POINT V]
ROBO SIGNING PROBLEMS WITH JOHN
KEALY'S SIGNATURES[.] (NOT RAISED BELOW)
Initially, we point out that defendants' arguments in Points III, IV and V
were not raised before the Chancery judge and will not be considered on appeal
because they do not "go to the jurisdiction of the trial court or concern matters
of great public interest." Zaman v. Felton, 219 N.J. 199, 226-27 (2014) (quoting
Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).
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As for our standard of review, we review the denial of a motion to vacate
default based on an abuse of discretion standard. See U.S. Bank Nat'l Ass'n v.
Guillaume, 209 N.J. 449, 467 (2012). Pursuant to Rule 4:43-3, a court may
vacate the entry of default upon "good cause shown." "[T]he requirements for
setting aside a default under Rule 4:43-3 are less stringent than . . . those for
setting aside an entry of default judgment under Rule 4:50-1." N.J. Mfrs. Ins.
Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div. 2009).
"[G]ood cause . . . requires the exercise of sound discretion by the court in light
of the facts and circumstances of the particular case." O'Connor v. Altus, 67
N.J. 106, 129 (1975) (citation omitted).
In considering whether good cause exists, courts generally consider the
movant's "absence of any contumacious conduct" and the presence of a
meritorious defense. Ibid. In particular, "the showing of a meritorious defense
is a traditional element necessary for setting aside both a default and a default
judgment . . . ." Pressler & Verniero, Current N.J. Court Rules, cmt. on R. 4:43-
3 (2019). As with a motion to vacate a default judgment, there is no point in
setting aside an entry of default if the defendant has no meritorious defense.
"The time of the courts, counsel and litigants should not be taken up by such a
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futile proceeding." Guillaume, 209 N.J. at 469 (citation omitted). We have
noted,
This is especially so in a foreclosure case where the
mere denominating of the matter as a contested case
moves it from the expeditious disposition by the Office
of Foreclosure in the Administrative Office of the
Courts, R. 1:34-6 and R. 4:64-1(a), to a more protracted
treatment by the Chancery Division providing
discovery and raising other problems associated with
trial calendars. If there is no bona fide contest, a
secured creditor should have prompt recourse to its
collateral.
[Trs. of Local 478 Trucking & Allied Indus. Pension
Fund v. Baron Holding Corp., 224 N.J. Super. 485, 489,
(App. Div. 1988).]
Guided by these principles, we cannot conclude that the Chancery judge
abused his discretion in denying defendants' motion to vacate default because of
his determination that they failed to set forth a meritorious defense to the
foreclosure complaint in accordance Rules 1:6-6 and 4:43-3. Consequently, we
affirm substantially for the reasons expressed in his thoughtful statement of
reasons. To the extent we have not specifically addressed arguments raised by
defendants, they lack sufficient merit to warrant discussion in a written opinion.
R. 2:11-3(e)(1)(E).
Affirmed.
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