NOT FOR PUBLICATION WITHOUT THE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-4361-16T4
LSF8 MASTER PARTICIPATION
TRUST,
Plaintiff-Respondent,
v.
SIMON ZAROUR,
Defendant-Appellant,
and
MRS. ZAROUR, wife of SIMON
ZAROUR, LYNX ASSET, and FRANKS
GMC TRUCK CENTER,
Defendants.
_____________________________
Submitted May 30, 2018 – Decided June 21, 2018
Before Judges Hoffman and Gilson.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No.
F-011927-14.
Simon Zarour, appellant pro se.
Fein Such Kahn & Shepard, PC, attorneys for
respondent (Ashleigh Levy Marin, of counsel
and on the brief).
PER CURIAM
In this mortgage foreclosure matter, defendant Simon Zarour
appeals from a February 3, 2017 order denying his motion to vacate
the final judgment entered on September 28, 2016. Defendant also
appeals from an April 28, 2017 order denying his motion for
reconsideration. We affirm.
I.
On August 10, 2007, defendant borrowed $1,000,000 from
Washington Mutual Bank, F.A. (WAMU). In connection with that
loan, defendant signed an adjustable rate note (Note) and gave a
mortgage on property located in Paramus (Mortgage).
Defendant stopped making payments on the Note in August 2008.
Thereafter, he defaulted on both the Note and Mortgage. Defendant
has not cured the defaults and he has not made any payments on the
Note or Mortgage since August 2008.
In 2008, WAMU, which was a federal bank, went into
receivership with the Federal Deposit Insurance Company (FDIC)
acting as receiver. In September 2008, JP Morgan Chase, National
Association (Chase Bank), acquired all of WAMU's assets, which
included all WAMU loans.
On March 28, 2014, Chase Bank filed a complaint against
defendant seeking to foreclose on the mortgaged property. In
preparation for filing that action, Chase Bank reviewed its
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business records and confirmed that as of March 13, 2014, it was
the owner of the Note and Mortgage.
On March 27, 2014, however, Chase Bank sold the Note and
Mortgage to LSF8 Master Participation Trust (LSF8 Trust). The
Note was not physically delivered to LSF8 Trust until April 30,
2014.
The FDIC formally assigned defendant's Mortgage to Chase Bank
on May 13, 2014. That same day, Chase Bank assigned the Mortgage
to US Bank Trust, N.A., as Trustee for LSF8 Trust (US Bank). Both
assignments were recorded in June 2014. On August 5, 2014, US
Bank further assigned defendant's Mortgage to LSF8 Trust. That
assignment was recorded in September 2014.
In May 2014, in response to the foreclosure complaint,
defendant filed a contesting answer. Thereafter, in September
2014, Chase Bank filed motions for summary judgment and to strike
defendant's answer. In support of its motions, Chase Bank filed
a certification stating that it had assigned the Mortgage to US
Bank in May 2014, and US Bank had assigned the Mortgage to LSF8
Trust in August 2014. The Chancery court denied the motion for
summary judgment, but granted the motion to strike defendant's
answer in an order entered on December 5, 2014. The December 5,
2014 order also substituted LSF8 Trust as the named plaintiff.
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On September 28, 2016, the final judgment in foreclosure was
entered against defendant. Three months later, defendant moved
to vacate the final judgment, contending that the judgment should
be voided because Chase Bank was assigned the Mortgage after it
filed its foreclosure complaint and had fraudulently
misrepresented facts in its certification of diligent inquiry.
The Chancery court heard oral argument on defendant's motion
on February 3, 2017. That same day, the court entered an order
denying defendant's motion to vacate the final judgment and issued
a written opinion. The court found that defendant had not shown
excusable neglect or a meritorious defense. The court also found
that when Chase Bank filed the foreclosure complaint, it physically
possessed the Note and, thus, had standing to bring the foreclosure
action.
On February 27, 2017, defendant filed a motion for
reconsideration. The Chancery court issued an order and written
opinion denying that motion on April 28, 2017.
II.
As already noted, defendant appeals from the February 3, 2017
order denying his motion to vacate the final judgment, and the
April 28, 2017 order denying his motion for reconsideration. He
argues that the final judgment should be vacated under Rule
4:50-1(c) and (f). In that regard, he contends that Chase Bank
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fraudulently represented that it was the holder of the Note and
Mortgage when it filed the foreclosure complaint on March 28,
2014. He also contends that representation was fraudulent because
Chase Bank had sold the Note and Mortgage on March 27, 2014, and
Chase Bank was only assigned the Mortgage on May 13, 2014. We are
not persuaded by these arguments and affirm because we discern no
abuse of discretion in the Chancery court's denial of the motion
to vacate the final judgment.
To vacate a judgment, a defendant must establish one of the
six grounds identified in Rule 4:50-1. See US Bank Nat'l Ass'n
v. Guillaume, 209 N.J. 449, 466 (2012). Here, defendant relies
on subsections (c) and (f) of Rule 4:50-1. Those subsections
provide that a party may vacate a judgment if he or she can
establish: "(c) fraud (whether heretofore denominated intrinsic
or extrinsic), misrepresentation, or other misconduct of an
adverse party; . . . or (f) any other reason justifying relief
from the operation of the judgment or order." R. 4:50-1(c), (f).
We review a Chancery court's order on a motion to vacate for
abuse of discretion. Guillaume, 209 N.J. at 467. "The trial
court's determination under [Rule 4:50-1] warrants substantial
deference," and the abuse of discretion must be clear to warrant
reversal. Ibid. (citing DEG, LLC v. Twp. of Fairfield, 198 N.J.
242, 261 (2009)).
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Defendant's contention is that the final judgment is void
because Chase Bank misrepresented that it was the holder of the
Note and Mortgage when it filed its foreclosure complaint. That
argument, however, is really an argument about standing. In other
words, defendant argues that Chase Bank lacked standing to bring
the foreclosure action because it was not the owner of the Note
when it filed the foreclosure action.
Under the circumstances of this case, Chase Bank had standing.
On March 28, 2014, when it filed the complaint, Chase Bank was the
holder of the Note. A representative of Chase Bank certified that
the bank physically possessed the Note on March 28, 2014. Indeed,
although Chase Bank sold the Note to LSF8 Trust on March 27, 2014,
the Note was not physically delivered until April 30, 2014, well
after the foreclosure complaint was filed. Possession of the note
prior to the filing of the complaint establishes standing in a
foreclosure action. See Deutsche Bank Nat'l Tr. Co. v. Mitchell,
422 N.J. Super. 214, 225 (App. Div. 2011). Moreover, we have
clarified that the lack of standing is not a meritorious defense
to a foreclosure complaint. Deutsche Bank Nat'l Tr. Co. v. Russo,
429 N.J. Super. 91, 101 (App. Div. 2012). In addition, even if
there were filing deficiencies, dismissal of the complaint is not
necessarily the appropriate remedy. Guillaume, 209 N.J. at 475.
In short, Chase Bank had standing to file the foreclosure action
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and defendant's contentions about the lack of standing do not
constitute a meritorious defense to the foreclosure action.
Just as importantly, we cannot lose sight of the commercial
reality of the situation. There is no dispute that defendant
defaulted on a $1,000,000 loan in 2008, and has not made any
payments since that default. There is also no dispute that the
current plaintiff – LSF8 Trust – owns and holds the Note and
Mortgage. At the time the final judgment was entered, LSF8 Trust
was the named plaintiff in the action and had the right to pursue
the action. Thus, the equitable considerations presented in this
matter supported entry of the final judgment in favor of plaintiff.
See Deutsche Bank Tr. Co. Ams. v. Angeles, 428 N.J. Super. 315,
320 (App. Div. 2012) ("In foreclosure matters, equity must be
applied to plaintiffs as well as defendants.").
While proper procedures are important in foreclosure actions,
here the record does not disclose any fraud or misrepresentation.
Chase Bank did its due diligence before filing its complaint. As
of March 13, 2014, Chase Bank was the owner of the Note and
Mortgage and was the holder of the Note. That the Note and
Mortgage were sold the day before the complaint was filed does
not, on this record, show either fraud or misrepresentation.
Moreover, there is no dispute that Chase Bank purchased the loan
in 2008 and, therefore, was the rightful owner of the Note and
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Mortgage in March 2014. That the FDIC only assigned the Mortgage
in May 2014, does not, on this record, show fraud or
misrepresentation.
Affirmed.
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