HSBC BANK, USA, N.A., ETC. VS. JOSE RODRIGUES (F-022058-17, HUDSON COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-3547-18T3
HSBC BANK, USA, N.A.,
AS TRUSTEE FOR WELLS
FARGO ASSET SECURITIES
CORPORATION, MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 2007-7,
Plaintiff-Respondent,
v.
JOSE RODRIGUES,
Defendant-Appellant,
and
ANDREA RODRIGUES,
Defendant.
________________________________
Submitted May 26, 2020 – Decided June 12, 2020
Before Judges Sabatino and Natali.
On appeal from the Superior Court of New Jersey,
Chancery Division, Hudson County, Docket No. F-
022058-17.
Alfred V. Acquaviva, attorney for appellant.
Reed Smith LLP, attorneys for respondent (Henry F.
Reichner, of counsel and on the brief).
PER CURIAM
In this residential foreclosure action, defendant Jose Rodrigues 1 appeals
from the following four Chancery Division orders: 1) a May 17, 2018 order
granting plaintiff HSBC Bank USA, N.A., as Trustee for Wells Fargo Asset
Securities Corporation, Mortgage Pass-Through Certificates, Series 2007-7
(HSBC) summary judgment, striking defendants' answer and affirmative
defenses, deeming the dispute an uncontested foreclosure, and returning the
matter to the Office of Foreclosure for entry of final judgment; 2) a May 17,
2018 order denying defendants' request for a deposition of LaToya Smith who
certified to the authenticity of the foreclosure documents and for an extension
of discovery; 3) a March 8, 2019 order dismissing their objection to the final
judgment, and; 4) an April 12, 2019 order denying their motion for
reconsideration. We affirm all the orders under review.
1
Although not participating in this appeal, the complaint also named Andrea
Rodrigues, defendant's spouse, in order to foreclose any redemption right to the
property that she may have possessed.
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I.
In October 2005, defendant gave a purchase money mortgage of $415,800
to WMC Mortgage Corporation (WMC) to purchase a residence in Kearny. The
mortgage designated Mortgage Electronic Registration Systems, Inc. (MERS)
as nominee for WMC and its successors and assigns.
In March 2007, defendant executed a fixed rate note and attendant
mortgage with Wells Fargo Bank, N.A. (Wells Fargo), in the amount of
$438,400 to refinance the WMC mortgage and MERS filed a timely Satisfaction
and Discharge of Mortgage. The Wells Fargo mortgage was properly recorded
in the Hudson County Clerk's office on April 18, 2007.
Wells Fargo thereafter endorsed the note in blank and securitized it into
the Wells Fargo Mortgage Backed Securities 2007-007 Trust (Trust) with a
closing date of May 30, 2007, with HSBC Bank acting as the trustee for the
Trust. The mechanics of the Trust are governed by a Pooling and Servicing
Agreement (PSA) entered into between Wells Fargo as Master Servicer, HSBC
Bank as Trustee, and Wells Fargo Asset Securities Corporation as Depositor.
Plaintiff failed to make monthly mortgage payments as required by the
Wells Fargo note and the loan became delinquent and entered into default on
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October 1, 2008. Plaintiff has not made a payment on the loan since the 2008
default.
It appears from the record that the Wells Fargo mortgage was assigned
twice, to two different trustees of the Trust. The first assignment was made to
U.S. Bank in February 2009 and the second assignment, which is the focus of
this appeal, was made to HSBC in 2013. On February 24, 2009, an assignment
of the Mortgage from Wells Fargo to U.S. Bank, as Trustee for the Trust, was
recorded in the Hudson County clerk's office. On June 25, 2013, Wells Fargo
assigned the same Mortgage to HSBC Bank, as Trustee for Wells Fargo Asset
Securities Corporation, Mortgage Pass-Through Certificates, Series 2007-7.
This assignment was duly recorded in the clerk's office on July 1, 2013.
As a result of plaintiff's default, U.S. Bank, the first Trustee, filed a
foreclosure complaint. Those foreclosure proceedings were ultimately
dismissed for lack of prosecution in September 2013. Defendant then filed an
action in the Chancery Division naming Wells Fargo, U.S. Bank, and HSBC in
which he alleged that the 2013 assignment and mortgage was void, and
defendants violated the New Jersey Consumer Fraud Act, as well as United
States Department of Housing and Urban Development regulations, and the Real
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Estate Settlement Procedures Act. Defendant was also granted leave to amend
his complaint to plead a quiet title claim.
The court ultimately dismissed plaintiff's complaint and concluded there
was no equitable reason to discharge the mortgage, despite challenges to the
assignments. We affirmed in an unpublished opinion and concluded that while
the assignments were subject to question, since there were "no defects with the
[m]ortgage, it follow[ed] that plaintiff [was] not entitled to an order
extinguishing it[,]" see Rodrigues v. Wells Fargo Bank, N.A., No. A-2373-14,
(App. Div. May 13, 2016) (slip op. at 3). Our Supreme Court denied
certification, see Rodrigues v. Wells Fargo Bank, N.A., 228 N.J. 27 (2016), and
the United States Supreme Court then denied defendant's petition for writ of
certiorari. See Rodrigues v. Wells Fargo Bank, N.A., 138 S. Ct. 116 (2017).
Defendant thereafter filed a federal action in the United States District
Court, which also named General Electric Company, as the purchaser of EMC,
and MERS. Defendant alleged that MERS was without authority to discharge
the October 2005 mortgage and the subsequent assignments of the underlying
debt were therefore invalid resulting in the inability of any of the plaintiffs to
enforce the mortgage. After the District Court dismissed defendant's complaint,
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the United States Court of Appeals for the Third Circuit affirmed. See
Rodrigues v. Wells Fargo Bank, N.A., 751 Fed. Appx. 312 (3d Cir. 2018).
On September 26, 2017, plaintiff filed the instant foreclosure action. On
November 6, 2017, defendant moved to stay the foreclosure action. In denying
his motion, Judge Barry P. Sarkisian held that defendant failed to meet any of
the requirements for him to grant a stay in the matter as his claims "have been
found to be meritless numerous times" and "there is absolutely no legal basis for
any of [his] arguments." He concluded that since defendant has been in default
since 2008, there was "no reason to continue to delay the action to the harm of
the [p]laintiff."
Defendant moved for reconsideration of the court's denial of his
November 6, 2017 motion to stay the foreclosure action based on fraud, judicial
error and bias, and "pursuant to the [d]ecision by the Third Circuit[,]" which
Judge Sarkisian denied in a January 24, 2018 order. In the accompanying
statement of reasons, he noted that defendant "failed, and still fails, to present
any evidence of irreparable harm, existence of a meritorious issue, and the
likelihood of success on the merits, which is considered when granting a stay of
proceedings." Judge Sarkisian emphasized that defendant "fails to present any
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new evidence, nor has [he] shown that [its] previous [o]rder was based on a
palpably incorrect or irrational basis."
Plaintiff also filed a December 5, 2017 motion to strike defendant's answer
and affirmative defenses, and to dismiss his counterclaims. Judge Sarkisian
denied that portion of plaintiff's motion to strike defendant's answer and
affirmative defenses. As to defendant's counterclaims, however, he dismissed
counts two and four (that the trust was improperly securitized), three (plaintiff
tampered with public records in violation of N.J.S.A. 2C:28-7(a)), six (plaintiff
violated court Rules because the certifications of title search and diligent inquiry
were flawed), and seven (plaintiff violated court Rules by failing to reinstate the
prior foreclosure action that had been dismissed for lack of prosecution). Judge
Sarkisian also granted defendant thirty days to amend his answer to allege facts
to support counts one and five (fraud).
On April 6, 2018, plaintiff moved for summary judgment and defendant
submitted a one-page certification opposing the motion, and cross-moved for an
extension of discovery and to compel the deposition of LaToya Smith, the Wells
Fargo employee who certified to the authenticity of the foreclosure documents.
In a May 17, 2018 order, Judge Sarkisian first denied defendant's motion to
compel LaToya Smith's deposition stating that he "failed to demonstrate how
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[her] deposition . . . will lead to relevant, discoverable evidence that would
contest [p]laintiff's prima facie right to foreclose" and that "[t]he questions
[d]efendant seeks to ask Ms. Smith appear [to] go to the validity of the
certification of diligent inquiry, which was already determined valid by this
[c]ourt, and do not delve into deeper issues of standing." Furthermore, Judge
Sarkisian found that defendant did not show good cause to warrant any extension
of the discovery deadline as his motion was untimely, he failed to provide any
relevant basis to seek the discovery, and, but for his lack of diligence, he could
have obtained the deposition well within the court's deadlines.
Judge Sarkisian also granted plaintiff's motion for summary judgment and
noted that plaintiff established a prima facie right to foreclose as defendant
executed the mortgage, plaintiff possessed a valid assignment, and defendant
had been in default since December 2008. Judge Sarkisian found that plaintiff
had standing to foreclose as assignee of the mortgage and holder of the note, and
that defendant did not have standing to challenge the validity of the assignments
as he was not a party to those assignments. More specifically regarding
plaintiff's standing to foreclose, Judge Sarkisian noted that the subject mortgage
was initially assigned to U.S. Bank in 2009, "[h]owever, on June 25, 2013, by
corrective assignment, Wells Fargo . . . assigned the mortgage to HSBC . . . ,
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which was recorded on July 1, 2013." As plaintiff did not file the foreclosure
complaint until September 26, 2017, Judge Sarkisian concluded that "[p]laintiff
has standing[] as the assignee of the mortgage prior to the initiation of the
foreclosure complaint."
With respect to defendant's fraud claims, he determined that defendant
failed to allege specific facts to support such claims despite granting him an
additional thirty days to amend his answer. Finally, Judge Sarkisian concluded
that defendant's remaining defenses and counterclaims failed to allege any
factual or legal basis to support them as required by Rule 4:5-4.
Defendant moved for reconsideration, which Judge Sarkisian denied in a
June 22, 2018 order. In his statement of reasons, he noted that defendant
"fail[ed] to present any new evidence or cite any law to allege that the [c]ourt
made its decision on an incorrect basis[,]" and defendant merely reasserted his
already rejected standing argument and made "a last ditch effort to cast doubt
on any facts that it incorrectly believes has any bearing on [p]laintiff's standing
to foreclose." Judge Sarkisian concluded that defendant's disagreement with the
court's May 17, 2018 decision was not a basis for granting his motion for
reconsideration.
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Plaintiff filed an application for entry of final judgment and included a
January 15, 2019 affidavit of amount due with a corresponding schedule
certified by Bianca Arlane McClure, a Wells Fargo Vice President for Loan
Documentation. The attached schedule indicated a total amount due of
$808,846.61 comprised of an unpaid principal balance of $430,751.51 plus
interest, late charges, plaintiff's advances for real estate taxes and home owners
insurance premiums, and inspections. The application also included a January
16, 2019 certification of diligent inquiry.
Defendant opposed the application, but Judge Jeffrey R. Jablonski denied
defendant's objection in a March 8, 2019 order. Defendant subsequently moved
for reconsideration and included a certification from William J. Paatalo,
defendant's private investigator, who principally stated that the note and
mortgage were assigned six times, not twice as plaintiff claimed, and that four
of those assignments were unrecorded. Paatalo also claimed that the "[t]rust
data shows the subject loan/debt as currently reporting . . . [a] current scheduled
debt balance owed to the certificate holders/investors as being '$373,512.00'"
Based on this purported new evidence, defendant contended that final judgment
should not be granted as additional discovery was necessary to determine the
actual holder of the mortgage.
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On April 12, 2019, after hearing oral argument, Judge Jablonski rendered
a decision on the record denying defendant's motion for reconsideration stating
that he was "once again attempting to relitigate the issue of standing" as
Paatalo's certification "was focused on the several assignments allegedly issued
by . . . plaintiff." The court also addressed defendant's suggestion that it
neglected to allow him to request further discovery and stated that he "had ample
opportunity to engage in discovery and prove [his] case," but he failed to do so.
He concluded that defendant had "not presented any evidence that [it] based its
decision on a palpably incorrect or irrational basis, or that the [c]ourt failed to
consider certain evidence that was produced[,]" and therefore, it did not act
arbitrarily, capriciously, or unreasonably. Judge Jablonski then entered final
judgment on April 24, 2019.
On appeal, defendant raises the following arguments2:
POINT I
THE WELLS FARGO FORECLOSURE MANUAL
SHOWS CLEAR FRAUD AND THERE WAS
SUBSTANTIAL ADDITIONAL FRAUD
THROUGHOUT THE CASE FROM PLAINTIFF.
2
We have modified defendant's point headings from alphabetic to numeric
designations for ease of reference and removed the heading "Conclusion" as it
is not a legal argument.
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POINT II
THE DEPOSITION OF WELLS FARGO EMPLOYEE
DONNIE JONES SHOWS THE ASSIGNMENT WAS
IN ERROR.
POINT III
FAILURE TO OBTAIN DISCOVERY PREJUDICED
DEFENDANT.
POINT IV
THE REPORT BY INVESTIGATOR WILLIAM J.
PAATALO WAS NOT TAKEN INTO
CONSIDERATION.
POINT V
THE REQUIRMENTS OF THE [U.S. SECURITIES
AND EXCHANGE COMMISSION (SEC)] WERE
NOT FOLLOWED IN THIS CASE AND
PREJUDICED DEFENDANT.
We have carefully considered all of defendant's arguments in light of the
record and the applicable legal principles and conclude they are without
sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
We affirm the orders under review substantially for the reasons stated in the
cogent oral and written opinions of Judges Sarkisian and Jablonski. We offer
the following brief comments.
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II.
Our review of a ruling on summary judgment is de novo, applying the
same legal standard as the trial court. Townsend v. Pierre, 221 N.J. 36, 59
(2015). "Summary judgment must be granted if 'the pleadings, depositions,
answers to interrogatories and admissions on file, together with the affidavits, if
any, show there is no genuine issue as to any material fact challenged and that
the moving party is entitled to a judgment . . . as a matter of law.'" Town of
Kearny v. Brandt, 214 N.J. 76, 91 (2013) (quoting R. 4:46-2(c)). We accord no
special deference to the trial judge's conclusions on issues of law. Nicholas v.
Mynster, 213 N.J. 463, 478 (2013).
"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
resort to the mortgaged premises." Great Falls Bank v. Pardo, 263 N.J. Super.
388, 394 (Ch. Div. 1993), aff'd, 273 N.J. Super. 542 (App. Div. 1994). A party
seeking to foreclose must demonstrate "execution, recording, and non-payment
of the mortgage." Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37 (App. Div.
1952). In addition, the foreclosing party must "own or control the underlying
debt." Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J. Super. 214, 222 (App.
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Div. 2011) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597
(App. Div. 2011)).
It is well-established that in order to have standing in a foreclosure action,
the "party seeking to foreclose a mortgage must own or control the underlying
debt." Ford, 418 N.J. Super. at 597 (quoting Bank of N.Y. v. Raftogianis, 418
N.J. Super. 323, 327-28 (Ch. Div. 2010)). Standing is conferred 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) (citing Mitchell, 422 N.J. Super. at 216, 225).
III.
Based on the summary judgment record, we agree with Judge Sarkisian
that HSBC had standing to proceed with the foreclosure action because it
possessed a valid assignment prior to filing the foreclosure complaint. Judge
Sarkisian acknowledged the initial Wells Fargo 2009 assignment to U.S. Bank
but also noted that Wells Fargo issued a later assignment on June 25, 2013
assigning the mortgage to HSBC, which was duly recorded on July 1, 2013, over
four years prior to the September 26, 2017 foreclosure complaint. That
assignment was characterized as a corrective assignment by Judge Sarkisian and
we are satisfied that the summary judgment record contained no proofs raising
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a genuine and material fact regarding the validity of the mortgage, the amount
of the indebtedness, and the right of HSBC to resort to foreclosure of the
mortgaged premises. Finally, defendant did not dispute that he signed the note
and mortgage, defaulted on the payment, and has not paid the mortgage since
2008.
IV.
We also reject defendant's challenge to the final judgment and any
challenge to the January 15, 2019 affidavit of amount due. Rule 4:64-2(b)
specifically delineates the required contents of the "affidavit of amount due"
filed by a mortgagor in support of the entry of final judgment, which affidavit
"may be supported by computer-generated entries." Rule 4:64-2(c) requires the
affiant to certify "that he or she is authorized to make the affidavit on behalf of
the plaintiff or the plaintiff's mortgage loan servicer;" "that the affidavit is made
based on a personal review of business records of the plaintiff or the plaintiff 's
mortgage loan servicer, which records are maintained in the regular course of
business;" "that the financial information contained in the affidavit is accurate;"
and "that the default remains uncured." Any objections to the amount due must
state "with specificity the basis of the dispute." R. 4:64-1(d)(3).
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As best we can determine from defendant's brief, he contends the court
erred in entering the final judgment because Paatalo claimed that as a result of
a "criminal act on behalf of [certain unnamed a]ttorneys[,]" the $808,846.61 sum
attested to by McClure in the January 15, 2019 affidavit of amount due is
incorrect. Defendant explains, without support in the record, that "[w]hen a
claim becomes [ninety] days in default, [i]nsurance pays the balance in full" and
pursuant to the "system" employed by Paatalo, "the actual balance owed to the
certificate holders" as of April 2019 is $373,512. As noted, supra, in an April
12, 2019 order, and after hearing oral argument, the court rejected defendant's
challenge to the January 15, 2019 affidavit and the $808,846.61 amount due.3
As Judge Jablonski cogently and correctly observed when denying
defendant's motion for reconsideration, the Paatalo affidavit was improper to
submit on reconsideration because it was merely newly commissioned evidence,
not newly discovered evidence, and did not warrant reconsideration of the
court's March 8, 2019 decision granting plaintiff's application for entry of final
3
Notably, among the procedural deficiencies in defendant's appeal is his failure
to enclose a copy of the transcript of the March 8, 2019 hearing when the court
denied defendant's objection to plaintiff's application for entry of final
judgment. See Newman v. Isuzu Motors Am., Inc., 367 N.J. Super. 141, 145
(App. Div. 2004) (finding plaintiff to have violated Rules 2:6-1(a) and 2:5-3(b)
for failing to include the transcript of the hearing on the motion below).
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judgment. Moreover, Judge Jablonski correctly characterized the Paatalo
affidavit as a belated and futile attempt by defendant to challenge HSBC's
standing, a position thoroughly rejected by Judge Sarkisian.
Further, we note that defendant himself failed to challenge anything
specifically in the January 15, 2019 affidavit of amount due and the record on
appeal does not appear to contain all the attachments to the Paatalo report that
would address any specific objection to the amount due. The only specific
argument raised concerns the real estate tax computation. Defendant contends
he may have paid two quarters of the real estate taxes in 2009, however, no
documentation to support this contention is included in the record.
Based on comments made by counsel at the April 12, 2019 oral argument
on defendant's reconsideration application, it nonetheless appears that neither
defendant, nor Paatalo, challenged the $430,751.51 amount, representing the
unpaid principal balance. In addition to that sum, the $808,846.61 is comprised
of interest accrued, late charges, real estate taxes advanced by plaintiff,
homeowners insurance premiums, and inspections, all of which are owed by
defendant as it is undisputed he has not made a mortgage payment since 2008
nor has he paid obligatory property taxes and other carrying costs.
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Accordingly, the final judgment was properly entered and defendant's
motion objecting to its entry was properly denied. McClure's January 15, 2019
affidavit satisfied all of the requirements of Rule 4:64-2.
V.
In addition, after careful review of the record, we find no legal or factual
support for defendant's arguments that there was evidence of "clear fraud . . .
throughout the case" by plaintiff, that he was prejudiced by the court's alleged
failure to allow further discovery, or that he was prejudiced by plaintiff's
supposed SEC violations.
We similarly find no merit to defendant's claims of error based on the
deposition of "Wells Fargo employee Donnie Jones." As we understand
defendant's argument, Donnie Jones, a Wells Fargo loan verification analyst,
acknowledged in a 2014 deposition in separate action that the 2009 mortgage
assignment to U.S. Bank "was created in error" resulting in a break in the chain
of title. In his appendix, however, defendant only includes a three-page excerpt
of the deposition transcript, depriving us from considering the testimony fully
and in context. In any event, defendant's argument is substantively without
merit as Judge Sarkisian found that the June 25, 2013 assignment to HSBC
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corrected the original, erroneous assignment to U.S. Bank and that HSBC
thereafter possessed a proper assignment of the mortgage.
Finally, we find no support for defendant's claims that the trial court
committed error in not extending or permitting certain discovery. We have
reviewed the record and are convinced that the trial court properly exercised its
discretion in denying defendant the additional discovery requested.
To the extent we have not addressed any of defendant's remaining
arguments, they lack sufficient merit to warrant discussion in a written opinion.
R. 2:11-3(e)(1)(E).
Affirmed.
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