NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3029-16T4
INVESTORS BANK,
Plaintiff-Respondent,
APPROVED FOR PUBLICATION
v.
November 16, 2018
JAVIER TORRES, APPELLATE DIVISION
Defendant-Appellant,
and
MRS. JAVIER TORRES, his wife,
and DORA M. DILLMAN,
Defendants.
______________________________
Argued September 13, 2018 – Decided November 16, 2018
Before Judges Fuentes, Accurso and Moynihan.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No. F-
001463-15.
Adam L. Deutsch argued the cause for appellants
(Northeast Law Group, LLC, attorneys; Adam L.
Deutsch, on the briefs).
Joshua N. Howley argued the cause for respondent
(Sills Cummis & Gross PC, attorneys; Joshua N.
Howley, of counsel and on the brief; Matthew L.
Lippert, on the brief).
The opinion of the court was delivered by
MOYNIHAN, J.A.D.
Defendant Javier Torres appeals from a final judgment of foreclosure
entered following his February 1, 2010 default on a $650,000 promissory note;
the note, alleged by plaintiff Investors Bank to be lost, was secured by a
mortgage on defendant's home. We are unpersuaded by defendant's arguments
that the motion judge: (1) misapplied the summary judgment standard; 1 (2)
erred by failing to properly apply N.J.S.A. 12A:3-309 when considering the
lost note issue – and accord the statute a textualist interpretation – and by
inferring facts in favor of the party moving for summary judgment; (3)
deferred the issue regarding the lost note to determination on final judgment;
1
The summary judgment order entered on August 7, 2015 does not appear as
an appealed order in defendant's notice of appeal or civil case information
statement. It is well-settled that "only the judgments or orders or parts thereof
designated in the notice of appeal . . . are subject to the appeal process and
review." Campagna ex rel. Greco v. Am. Cyanamid Co., 337 N.J. Super. 530,
550 (App. Div. 2001). See also R. 2:5-1(e)(3)(i). Furthermore, "an appellate
tribunal always has the authority to question whether its jurisdiction has been
properly invoked." Silviera-Francisco v. Bd. of Educ. of Elizabeth, 224 N.J.
126, 143 (2016). However, pursuant to Rule 2:2-4, we are satisfied that the
interest of justice warrants that we grant leave to appeal nunc pro tunc and
review the entry of the summary judgment.
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2
and (4) erred by considering an inadmissible lost-note affidavit.
Consequently, we affirm.
Summary judgment should be granted if the court determines "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." R. 4:46-2(c). We review
the motion judge's decision de novo and afford his ruling no special deference.
Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189, 199
(2016). We "consider whether the competent evidential materials presented,
when viewed in the light most favorable to the non-moving party" in
consideration of the applicable evidentiary standard, "are sufficient to permit a
rational factfinder to resolve the alleged disputed issue in favor of the non-
moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540
(1995).
Defendant challenges plaintiff's right to foreclose alleging plaintiff never
owned or controlled the underlying debt. See Wells Fargo Bank, N.A. v. Ford,
418 N.J. Super. 592, 597 (App. Div. 2011). Plaintiff's assignor CitiMortgage,
Inc. (Citi) acquired the note and mortgage through its merger with ABN
AMRO Mortgage Group, Inc., the originating lender. See Suser v. Wachovia
Mortg., F.S.B., 433 N.J. Super. 317, 321 (App. Div. 2013) (recognizing the
right to enforce a mortgage can arise by operation of ownership of the asset
A-3029-16T4
3
through mergers or acquisitions). Citi later assigned the mortgage to plaintiff.
The note was lost prior to the assignment. A Citi representative executed a
lost-note affidavit which provided that the note "was misplaced, lost or
destroyed" after execution by defendant and delivery to Citi, and "after a
thorough and diligent search, which consisted of [searching] loan files and
imaged documents," the original note could not be located.2 The affidavit was
executed over a year prior to Citi's November 20, 2014 assignment of the
mortgage to plaintiff. Defendant contends the plain language of N.J.S.A.
12A:3-309(a) prohibits plaintiff's enforcement of the note because plaintiff did
not possess the note at the time it was lost.
We follow our Supreme Court's statutory-interpretation cynosure:
In construing any statute, we must give words
"their ordinary meaning and significance," recognizing
that generally the statutory language is "the best
indicator of [the Legislature's] intent." DiProspero v.
Penn, 183 N.J. 477, 492 (2005); see also N.J.S.A. 1:1-
1 (stating that customarily "words and phrases shall be
read and construed with their context, and shall . . . be
given their generally accepted meaning"). Each
statutory provision must be viewed not in isolation but
"in relation to other constituent parts so that a sensible
meaning may be given to the whole of the legislative
scheme." Wilson ex rel. Manzano v. City of Jersey
City, 209 N.J. 558, 572 (2012). We will not presume
2
Defendant acknowledged Citi's right "to enforce the terms of the [l]oan and
to receive payments under the [n]ote" when he entered into a loan modification
agreement with Citi in 2008.
A-3029-16T4
4
that the Legislature intended a result different from
what is indicated by the plain language or add a
qualification to a statute that the Legislature chose to
omit. DiProspero, 183 N.J. at 493.
On the other hand, if a plain reading of the
statutory language is ambiguous, suggesting "more
than one plausible interpretation," or leads to an
absurd result, then we may look to extrinsic evidence,
such as legislative history, committee reports, and
contemporaneous construction in search of the
Legislature's intent. Id. at 492-93.
[Tumpson v. Farina, 218 N.J. 450, 467-68 (2014)
(alterations in original).]
Inasmuch as our analysis involves more than subsection (a) of 3 -309, we
are mindful of the Court's prescription that
[s]tatutes must be read in their entirety; each part or
section should be construed in connection with every
other part or section to provide a harmonious whole.
When reviewing two separate enactments, the Court
has an affirmative duty to reconcile them, so as to give
effect to both expressions of the lawmakers' will.
Statutes that deal with the same matter or subject
should be read in pari materia and construed together
as a unitary and harmonious whole.
[In re Petition for Referendum on Trenton Ordinance
09-02, 201 N.J. 349, 359 (2010) (citations omitted).]
We have recognized that N.J.S.A. 12A:3-301 provides three categories
of persons are entitled to enforce an instrument:
the holder of the instrument, a nonholder in possession
of the instrument who has the rights of the holder, or a
person not in possession of the instrument who is
entitled to enforce the instrument pursuant to 12A:3-
A-3029-16T4
5
309 or subsection [(d)] of 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.
[Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J.
Super. 214, 222-23 (App. Div. 2011) (citing N.J.S.A.
12A:3-301).]
The only applicable avenue to enforce a note for a person not in
possession is pursuant to N.J.S.A. 12A:3-309, which provides:
a. A person not in possession of an instrument is
entitled to enforce the instrument if the person was in
possession of the instrument and entitled to enforce it
when loss of possession occurred, the loss of
possession was not the result of a transfer by the
person or a lawful seizure, and the person cannot
reasonably obtain possession of the instrument
because the instrument was destroyed, its whereabouts
cannot be determined, or it is in the wrongful
possession of an unknown person or a person that
cannot be found or is not amenable to service of
process.
b. A person seeking enforcement of an instrument
under subsection [(a)] of this section must prove the
terms of the instrument and the person’s right to
enforce the instrument. If that proof is made, 12A:3-
308 applies to the case as if the person seeking
enforcement had produced the instrument. The court
may not enter judgment in favor of the person seeking
enforcement unless it finds that the person required to
pay the instrument is adequately protected against loss
that might occur by reason of a claim by another
person to enforce the instrument. Adequate protection
may be provided by any reasonable means.
A-3029-16T4
6
Unlike defendant, we do not read N.J.S.A. 12A:3-309(a) as precluding
enforcement by the assignee of a mortgage and the transferee of a lost note.
We acknowledge that contrary holdings supporting defendant's position
have been reached by other courts, most notably in Dennis Joslin Co., LLC v.
Robinson Broadcasting Corp., 977 F. Supp. 491, 495 (D.D.C. 1997)
(determining the plain language of 3-309 "mandates that the plaintiff suing on
the note must meet two tests, not just one: it must have been both in possession
of the note when it was lost and entitled to enforce the note when it was lost ").
But even the Joslin court recognized that "there does not appear to be a logical
reason to distinguish between a person who was in possession at the time of
the loss and one who later comes into possession of the rights to the note ."
Ibid.
Indeed, the Joslin decision was followed by a 2002 amendment to
section 3-309 of the Uniform Commercial Code (UCC) to make express that a
person who "has directly or indirectly acquired ownership of the instrument
from a person who was entitled to enforce the instrument when loss of
possession occurred" is entitled to enforce the instrument – eliminating the
possession requirement. U.C.C. § 3-309(a)(1)(B) (Am. Law Inst. & Unif. Law
Comm'n 2002). Although the New Jersey Legislature has not adopted the
amendment, we do not construe that inaction to signal a legislative intent to
A-3029-16T4
7
preclude a transferee of a lost note from enforcing it. See Amerada Hess Corp.
v. Director, Div. of Taxation, 107 N.J. 307, 322 (1987) (finding "the doctrine
of probable legislative intent a more reliable guide than the so-called doctrine
of legislative inaction. 'Legislative inaction has been called a "weak reed upon
which to lean" and a "poor beacon to follow" in construing a statute.'" (quoting
2A C. Sands, Sutherland Statutory Construction, § 49.10 (4th ed. 1984))).
We thus determine that under New Jersey's version of 3-309 a person
who was both in possession of a note and entitled to enforce it when the loss
occurred may enforce that note and may transfer that right to another; a
subsequent transferee need only prove "the terms of the instrument and the
person's right to enforce the instrument" as required by subsection (b). This
construction of the statutory language is grounded in both law and equity.
The legal community "almost universally" understands the assignment of
a mortgage to include
the transfer of the totality of the mortgagee's rights,
that is, his right to the debt as well as to the lien
securing it, and . . . that when one in terms assigns a
mortgage, he intends, not an effective transfer of his
rights as creditor against the land, but a transfer of his
lien alone, which is an absolute nullity, not only
ignores this ordinary use of the term "mortgage," but
is also in direct contravention of the well[-]recognized
rule that an instrument shall if possible be construed
so as to give it a legal operation.
A-3029-16T4
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[5 Tiffany on Real Property § 1451 (3d ed. 1939); see
also 29 N.J. Practice, Law of Mortgages § 11.2, at 754
(Myron C. Weinstein) (2d ed. 2001).]
The logical extension of that tenet was recognized by the former chief of the
New Jersey Office of Foreclosure when he counselled that an assignee of a
mortgage should "insist on receiving the note . . . because if the mortgagee has
already transferred the mortgage note to another party, the mortgagee can no
longer make a valid assignment of the mortgage." 29 N.J. Practice, Law of
Mortgages § 11.2, at 761.
In keeping with the well-recognized principles regarding the assignment
of mortgages, subsection (a) of 3-309 does not prohibit the transfer of a
person's enforcement rights, as long as the person claiming to have lost a note
possessed it and was entitled to enforce it when the loss occurred. That
provision allows for a person to transfer the right to the debt under the lost
note. Subsection (b) of 3-309 provides protection to an obligor if the claimed-
lost note was previously transferred to another entity which also attempts
enforcement, prohibiting entry of a judgment on the note unless the court finds
the obligor "is adequately protected against loss that might occur by reason of
A-3029-16T4
9
a claim by another person to enforce the instrument." 3 The statutory
framework, therefore, consonant with widely-accepted mortgage-assignment
business practices, see, e.g., Sprint Commc'ns Co., v. APCC Servs., 554 U.S.
269, 276 (2008) (explaining courts recognized as early as the seventeenth
century that anti-assignment rules are inconsistent with commercial needs),
allows the assignment of a mortgage even if the note is lost; and for an
assignee's enforcement of the transferred-lost note.
Importantly, we note that the Legislature provided that a person seeking
to enforce a note need only prove its terms "and the person's right to enforce"
it. N.J.S.A. 12A:3-309(b). The Legislature did not require the person
enforcing the note to prove its possession as it provided in subsection (a). The
resultant plain reading of the combined provisions of the subsections is that a
lost note may be transferred by a person who meets subsection (a)'s criteria,
and that instrument may be enforced by a transferee who meets subsection
(b)'s requirements.
This approach is in harmony with other New Jersey UCC provisions and
the common-law principles of assignment recognized by courts for centuries.
Pursuant to this "strong tradition" courts "have long found ways to allow
3
The trial judge, in overruling defendant's objection to plaintiff's final
judgment application, applied this provision and required plaintiff to
"indemnify [d]efendant should another party attempt to enforce the lost note."
A-3029-16T4
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assignees to bring suit." Sprint Commc'ns, 554 U.S. at 285. The common-law
principles of assignment are not preempted by our version of the UCC which
makes no specific mention of the assignability of a lost note. In ord er to
permit the widely-practiced assignment of obligations – especially those
secured by mortgages – gap-filler provisions such as the doctrine of
assignment are appropriate under N.J.S.A. 12A:1-103.4 In construing the
statutes, we heed the Legislature's mandate that our UCC "be liberally
construed and applied to promote its underlying purposes and policies,"
N.J.S.A. 12A:1-103(a), one of which is "to permit the continued expansion of
commercial practices through custom, usage, and agreement of the parties,"
N.J.S.A. 12A:1-103(a)(2). Permitting the transfer of a lost note promotes the
UCC's purpose of expanding commercial practices of contract-parties such as
Citi and plaintiff, which intended the transfer of rights to enforce the lost note
along with the assignment of defendant's mortgage. Application of common-
law assignment principles to the protections afforded obligors by the
requirements of 3-309, therefore, properly supplements the UCC provisions.
4
N.J.S.A. 12A:1-103(b) provides: "Unless displaced by the particular
provisions of the [UCC], the principles of law and equity, including the law
merchant and the law relative to capacity to contract, principal and agent,
estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and
other validating or invalidating cause supplement its provisions."
A-3029-16T4
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Our reading of both sections of 3-309 is also consistent with equitable
principles that guard against unjust enrichment. "[T]he doctrine of unjust
enrichment . . . rests on the equitable principle that a person shall not be
allowed to enrich himself unjustly at the expense of another." Callano v.
Oakwood Park Homes Corp., 91 N.J. Super. 105, 108 (App. Div. 1966). "A
cause of action for unjust enrichment requires proof that '[a] defendant
received a benefit and that retention of that benefit without payment would be
unjust.'" Cty. of Essex v. First Union Nat'l Bank, 373 N.J. Super. 543, 549-50
(App. Div. 2004) (quoting VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554
(1994)).
Adoption of defendant's argument would not only deprive plaintiff of the
benefit of its bargain with Citi, it would also allow defendant to stay in the
mortgaged premises and continue to ignore his obligations to pay principal,
interest, taxes and insurance premiums, adding to a debt that already exceeds
$900,000. It would be unjust to preclude enforcement of the obligations
defendant has disregarded since February 2010. Like the common-law
assignment principles, the doctrine of unjust enrichment does not displace 3 -
309 or any other provision of our UCC. It supplements those provisions in the
same manner as do the assignment principles.
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We also reject defendant's argument that 3-309 precludes plaintiff's
enforcement of the note because such argument produces an absurd result –
allowing the defaulted defendant to remain in possession of a house
obligation-free. See Turner v. First Union Nat'l Bank, 162 N.J. 75, 84 (1999)
(holding "where a literal interpretation [of a statute] would create a manifestly
absurd result, contrary to public policy, the spirit of the law should control").
We reject as meritless defendant's argument that the lost-note affidavit
was inadmissible as presented because it was not properly authenticated. The
affidavit, signed by the Citi representative before a notary public, was proved
prima facie genuine; that is the only requirement to establish authenticity
under N.J.R.E. 901. N.J.S.A. 2A:82-17; Konop v. Rosen, 425 N.J. Super. 391,
411 (App. Div. 2012). The testimony of the subscribing notary was not
required to authenticate the document. N.J.R.E. 903.
Further, the circumstances surrounding the document sufficiently
authenticated it. The affidavit sets forth: the actions taken to find the lost note;
Citi's status as the note's lawful owner; and that Citi, as the note's seller, did
not cancel, alter, assign or hypothecate the note. There was no reason for a
representative of Citi – considering the terms of 3-309 – to make the
statements set forth in the affidavit, if said statements were not true. If Citi did
A-3029-16T4
13
not lose the note, it would have been easier to attach it. Instead, it admitted
the note was lost, leaving the door ajar for defendant's arguments.
The lost-note affidavit was also properly qualified as a business record.
A Citi vice-president reviewed the lost-note affidavit, a standard document
effectively required by 3-309, and, as a person familiar with the business
records Citi maintained, certified that the pre-requisites under N.J.R.E.
803(c)(6) to qualify it as a business record were met. 5 See State v.
Matulewicz, 101 N.J. 27, 29 (1985) (recognizing the three well-established
requirements for admitting evidence pursuant to the predecessor of N.J.R.E.
803(c)(6), the business record exception to the hearsay rule: "First, the writing
must be made in the regular course of business. Second, it must be prepared
within a short time of the act, condition or event being described. Finally, the
source of the information and the method and circumstances of the prepa ration
of the writing must justify allowing it into evidence."). The judge did not
abuse his discretion by considering the lost-note affidavit. See Hisenaj v.
Kuehner, 194 N.J. 6, 12 (2008) ("In reviewing a trial court's evidential ruling,
an appellate court is limited to examining the decision for abuse of
discretion.").
5
The affidavit was attached to her certification in support of plaintiff's motion
for summary judgment.
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We do not agree with defendant's contention that the summary judgment
standard was misapplied. When the moving party in a summary judgment
motion satisfies its burden of proof, the burden shifts to the non-moving party
to present evidence that there is a genuine issue for trial. Globe Motor Co. v.
Igdalev, 225 N.J. 469, 479-80 (2016); Brill, 142 N.J. at 529. The non-moving
party may not satisfy its burden by merely making allegations or denials in its
pleading, but must produce sufficient evidence to reasonably support a verdict
in its favor. R. 4:46-5(a); G.D. v. Kenny, 205 N.J. 275, 304 (2011). The non-
moving party cannot defeat a summary judgment motion by the identification
of a disputed fact of an insubstantial nature. Brill, 142 N.J. at 529-30.
"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) (citations omitted), aff'd, 273 N.J. Super. 542,
545 (App. Div. 1994). A lender's right to foreclose is an equitable right
inherent in a mortgage, triggered by a borrower's failure to comply with the
terms and conditions of the associated loan. S.D. Walker, Inc. v. Brigantine
Beach Hotel Corp., 44 N.J. Super. 193, 202 (Ch. Div. 1957).
Defendant did not present any evidence of a genuine issue for trial. He
did not challenge that plaintiff possessed the recorded assignment of mortgage
A-3029-16T4
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at the time it filed its complaint. See Deutsche Bank Tr. Co. Ams. v. Angeles,
428 N.J. Super 315, 318 (App. Div. 2012). He did not assert that he has been
paying plaintiff or any other person on the outstanding note obligation; or that
payment has been demanded from any other person; or that foreclosure has
been commenced or threatened by any person. Further, no evidence was
presented demonstrating that the note was transferred or the mortgage was
assigned to a party other than plaintiff.
We also reject defendant's argument that the discrepancy between two
answers to interrogatories provided by a processor employed by Citi as
plaintiff's servicer presented a genuine issue of fact. The processor answered
one interrogatory, "[p]laintiff is unaware of any . . . destruction or
misplacement of documents pertinent to this matter," when asked to give
details about "any correspondence, documents, memoranda, policies of
insurance, contracts, reports or writings of any kind which in any way pertain
to the subject matter of this lawsuit [that were] destroyed and/or misplaced."
The processor referred to that same answer, replying, "[s]ee response . . .
above," when asked to "set forth a detailed description of the investigation
and/or search process conducted" before deeming the note lost. When asked to
set forth the location of the note, the processor then answered that plaintiff was
not in possession of the original note and referred to the lost-note affidavit.
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These arguably disputed facts are insubstantial in nature. Defendant has not
offered any evidence that the note was not lost. The obviously mistaken
answers are insufficient to support a finding in his favor. The balance of
defendant's arguments is without sufficient merit to warrant discussion. R.
2:11-3(e)(1)(E).
The grant of summary judgment and entry of the final judgment of
foreclosure were therefore proper.
Affirmed.
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