DEUTSCHE BANK NATIONAL TRUST COMPANY, ETC. VS. NICHOLAS F. FERRARA, JR.(F-013909-09, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4200-15T3

DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee of the
Indymac INDX Mortgage Loan Trust
2005-AR31, Mortgage Pass-Through
Certificates, Series 2005-AR31
Under the Pooling and Servicing
Agreement, Dated November 1,
2015,

Plaintiff-Respondent,

v.

NICHOLAS F. FERRARA, JR. and
KATHRYN A. FERRARA,

Defendants-Appellants,

and

JPMorgan Chase Bank, N.A.,

Defendants.
_________________________________

Submitted September 14, 2017 – Decided September 28, 2017

Before Judges Nugent and Geiger.

On appeal from Superior Court of New Jersey,
Chancery Division, Monmouth County, Docket No.
F-013909-09.
 Schillberg Law, LLC, attorneys for appellants
(Robert F. Schillberg, Jr. and Corey D.
Blaustein, on the briefs).

Duane Morris LLP, attorneys for respondent
(Brett L. Messinger, Stuart I. Seiden and
Kelly K. Huff, on the brief).

PER CURIAM

In this residential mortgage foreclosure action, defendants

Nicholas F. Ferrara, Jr. and Kathryn A. Ferrara appeal from a May

13, 2016 order denying their motion to vacate the final judgment

of foreclosure and to dismiss the complaint. After a review of

the contentions in light of the applicable legal principles, we

affirm.

We discern the following facts and procedural history from

the record on appeal. On December 20, 2004, defendants executed

an $806,000 promissory note and a mortgage in the same amount to

IndyMac Federal Bank, F.S.B. (IndyMac), a federally chartered

savings bank to secure payment of the note. The mortgage granted

a security interest in defendants' residential property located

in Rumson, New Jersey. It was recorded in the Monmouth County

Clerk's Office on January 22, 2005.

The note and mortgage required payment of 360 monthly

installments commencing January 1, 2005. Defendants defaulted on

the loan on January 1, 2009, and have made no subsequent payments

on account.

2 A-4200-15T3
 On March 19, 2009, OneWest Bank FSB (OneWest) acquired

IndyMac, including all of its assets, from the Federal Deposit

Insurance Corporation (FDIC). OneWest thereby became the owner

of the note and mortgage, giving it authority to foreclose the

mortgage. An assignment of mortgage dated November 22, 2011 was

executed by the FDIC as receiver for IndyMac, assigning the

mortgage to OneWest. On December 5, 2011, OneWest assigned the

mortgage to Deutsche Bank National Trust Company, as Trustee of

the IndyMac INDX Mortgage Loan Trust. Both assignments were

recorded in the Monmouth County Clerk's Office on December 29,

2011.

OneWest served defendants with the required notice of intent

to foreclose more than thirty days prior to filing its foreclosure

complaint on May 4, 2009. The complaint pled that plaintiff had

acquired all assets of IndyMac from FDIC on March 19, 2009,

including the note and mortgage, by way of merger and acquisition.

The merger is a matter of public record.1 Plaintiff thereby owned

and controlled the note and mortgage when the complaint was filed.

Defendants never filed an answer to the complaint or raised

any affirmative defenses in the foreclosure action. Defendants

1
See FDIC, Failed Bank Information: Information for IndyMac Bank,
F.S.B., and IndyMac Federal Bank, F.S.B., Pasadena, CA,
https://www.fdic.gov/bank/individual/failed/IndyMac.html (last
visited September 21, 2017).

3 A-4200-15T3
do not deny the validity of the note or mortgage, their

responsibility for the mortgage debt, or the payment default. They

have filed two bankruptcies while this foreclosure action has been

pending.

On March 18, 2010, OneWest moved for entry of final judgment.

Defendants did not oppose the motion. Final judgment was entered

in favor of OneWest on November 18, 2010.

On January 12, 2012, OneWest's motion to substitute Deutsche

Bank National Trust Company, as Trustee of the IndyMac INDX

Mortgage Loan Trust, as plaintiff was granted. Plaintiff filed a

motion to amend the final judgment and writ of execution on

February 1, 2016, which was also granted.

Defendants waited until April 26, 2016, the eve of a scheduled

sheriff's sale, and more than five years after the judgment was

entered, to file their motion to vacate the final judgment and to

dismiss the complaint. On April 26, 2016, the motion judge granted

a postponement of the sheriff's sale to June 6, 2016. On May 13,

2016, the motion judge denied defendants' motion. Defendants then

filed this appeal.

Defendants argue that their motion to vacate the foreclosure

judgment and to dismiss the complaint should have been granted

because plaintiff did not own or control the mortgage at the time

the complaint was filed, as evidenced by the mortgage assignments

4 A-4200-15T3
executed after the complaint was filed. Defendants maintain that

plaintiff thereby lacked standing to bring the foreclosure action.

The Chancery judge denied defendants' motion, finding that

it was both substantively without merit and time-barred by Rule

4:50-2. In her oral decision, the judge noted that "defendants

did nothing to raise any of these defenses for six years[,]" and

"let more than four years pass before filing this motion to

vacate." The judge concluded that defendants' motion was time-

barred by Rule 4:50-2, stating:

Defendant seeks relief from a final judgment
and . . . pursuant to Rule 4:50-2, the motion
shall be made within a reasonable time and for
Reasons A, B, C of Rule 4:50-1, not more than
one year after the judgment, order, or
proceeding was entered or taken. The
defendant filed this motion in April of 2016.
That's well beyond that one year and it's also
six years after final judgment was entered or
taken.

The judge also addressed the merits of defendants' motion,

finding that defendants had failed to meet the standard imposed

by Rule 4:50-1 for setting aside a default judgment, citing U.S.

Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-67 (2012). After

noting that fraud must be pled with particularity, the judge found

that defendants failed to provide "any particulars here." The

judge further determined that there was no fraud or

misrepresentation.

5 A-4200-15T3
 As to defendants' contention that the judgment should be

vacated because plaintiff lacked standing, the judge explained

that standing is not a jurisdictional issue and a foreclosure

judgment obtained by a party that lacked standing is not void

within the meaning of Rule 4:50-1(d), citing Deutsche Bank Nat'l

Trust Co. v. Russo, 429 N.J. Super. 91, 101 (App. Div. 2012).

The judge further determined that plaintiff had standing to

initiate the foreclosure since it owned or controlled the

underlying debt when the complaint was filed, citing Wells Fargo

Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011).

With regard to the mortgage assignments executed after the judgment

was entered, the judge stated,

it is clear that a formal assignment of
mortgage is not required to maintain a
mortgage foreclosure action. Standing can be
conferred by possession of the note and that
is what the plaintiff showed. All the . . .
assignments that the defendant complained of
were post-judgment, so it . . . really begs
the question. So I find that there is no
reason to vacate the judgment.

I.

Defendants seek relief under Rule 4:50-1, which provides:

On motion, with briefs, and upon such terms
as are just, the court may relieve a party or
the party's legal representative from a final
judgment or order for the following reasons:
(a) mistake, inadvertence, surprise, or
excusable neglect; (b) newly discovered
evidence which would probably alter the

6 A-4200-15T3
 judgment or order and which by due diligence
could not have been discovered in time to move
for a new trial under R. 4:49; (c) fraud
(whether heretofore denominated intrinsic or
extrinsic), misrepresentation, or other
misconduct of an adverse party; (d) the
judgment or order is void; (e) the judgment
or order has been satisfied, released or
discharged, or a prior judgment or order upon
which it is based has been reversed or
otherwise vacated, or it is no longer
equitable that the judgment or order should
have prospective application; or (f) any other
reason justifying relief from the operation
of the judgment or order.

The rule "governs an applicant's motion for relief from default

when the case has proceeded to judgment." Guillaume, supra, 209

N.J. at 466. "The rule is 'designed to reconcile the strong

interests in finality of judgments and judicial efficiency with

the equitable notion that courts should have authority to avoid

an unjust result in any given case.'" Id. at 467 (quoting Mancini

v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J.

330, 334 (1993)).

Relief from judgment under Rule 4:50-1 "is not to be granted

lightly." Bank v. Kim, 361 N.J. Super. 331, 336 (App. Div. 2003).

Moreover, "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,

comment on R. 4:43-3 (2017). That is so because when a party has

no meritorious defense, "[t]he time of the courts, counsel and

7 A-4200-15T3
litigants should not be taken up by such a futile proceeding."

Guillaume, supra, 209 N.J. at 469 (quoting Schulwitz v. Shuster,

27 N.J. Super. 554, 561 (App. Div. 1953)).

An appellate court reviews a trial court's order denying a

Rule 4:50-1 motion for relief under an abuse of discretion

standard. Id. at 467. "The trial court's determination under the

rule warrants substantial deference, and should not be reversed

unless it results in a clear abuse of discretion." Ibid. An

abuse of discretion occurs "when a decision is 'made without a

rational explanation, inexplicably departed from established

policies, or rested on an impermissible basis.'" Id. at 467-68

(quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123

(2007)).

A.

Defendants seek relief from the final judgment under Rule

4:50-1(c), claiming that OneWest committed fraud and

misrepresentation in its pleadings and filings because it did not

own or control the note and mortgage at the time of the complaint.2

2
In their reply brief, defendants assert that their argument is
that the judgment is void pursuant to subparts (d) and (f) of Rule
4:50-1, rather than subparts (a), (b) or (c). During oral argument
before the motion judge, however, defendants repeatedly alleged
that plaintiff perpetrated a fraud. Moreover, in their appellate
brief, defendants argued that OneWest committed "unconscionable
fraud" by misrepresenting that it was the holder of the note and

8 A-4200-15T3
They rely on the mortgage assignment to OneWest dated November 22,

2011, more than two years after the complaint was filed.

Defendants assert they believed OneWest owned the note and

mortgage when the complaint was filed, claiming that OneWest hid

the true ownership of the note and mortgage from the defendants

and the court. Defendants claim that OneWest did so with the

intent that they rely upon the misrepresentation, which they claim

they reasonably did.

To bring an action in foreclosure, a plaintiff must possess

either the note or an assignment of the mortgage. Deutsche Bank

National Trust Co. v. Mitchell, 422 N.J. Super. 214, 216 (App.

Div. 2011). Here, OneWest acquired all of the assets of IndyMac

from FDIC on March 19, 2009, almost two months prior to the filing

of the complaint on May 9, 2009. The complaint specifically pled

that plaintiff had acquired all assets of IndyMac from FDIC on

March 19, 2009, including the subject note and mortgage, by way

of merger and acquisition. The merger is a matter of public

record. Plaintiff thereby had timely ownership and possession of

the note. Consequently, plaintiff stood in the shoes of IndyMac

with regard to both the note and mortgage and had the right to

mortgage at the time the complaint was filed. In addition to
quoting subsection (c), they stated: "This misconduct is egregious
and exactly the type of fraud that would trigger the use of R.
4:50-1(c) to vacate a judgment."

9 A-4200-15T3
enforce the mortgage. See Suser v. Wachovia Mortg., FSB, 433 N.J.

Super. 317, 321 (App. Div. 2013), certif. denied, 227 N.J. 114

(2016) (explaining that the right to enforce a mortgage can arise

from the ownership of assets acquired through merger and

acquisition). Accordingly, plaintiff did not commit fraud or

misrepresentation in its pleadings and motion practice.

B.

Defendants also seek relief under Rule 4:50-1(d) and (f),

alleging that plaintiff lacked standing when the complaint was

filed, rendering the judgment void. We disagree.

In order to have standing, "'a party seeking to foreclose a

mortgage must own or control the underlying debt.'" Ford, supra,

418 N.J. Super. at 597 (quoting Bank of N.Y. v. Raftogianis, 418

N.J. Super. 323, 327-28 (Ch. Div. 2010)). Without ownership or

control of the underlying debt, "the plaintiff lacks standing to

proceed with the foreclosure action and the complaint must be

dismissed." Ford, supra, 418 N.J. Super. at 597 (citing

Raftogianis, supra, 418 N.J. Super. at 357-59). "The essential

holding in Raftogianis was that to establish standing to maintain

a foreclosure action, a plaintiff must generally have had ownership

or control of the underlying debt as of the date of the filing of

the complaint." Id. at 597, n. 1.

10 A-4200-15T3
 The record does not support defendants' contention that

plaintiff lacked standing. Through merger and acquisition,

plaintiff owned and controlled the note and mortgage at the time

the complaint was filed, giving it standing to initiate the

foreclosure. See Suser, supra, 433 N.J. Super. at 321. The

belated written assignments of the mortgage did not affect

plaintiff's standing. Thus, plaintiff had standing to initiate

the foreclosure.

We reject defendants' contention the court erred by denying

their motion to vacate the final judgment under Rule 4:50-1(d),

which permits relief from a final judgment that is void. Any

purported lack of standing does not render the final judgment or

the amended final judgment void. See Russo, supra, 429 N.J. Super.

at 101 (finding that "standing is not a jurisdictional issue in

our State court system and, therefore, a foreclosure judgment

obtained by a party that lacked standing is not 'void' within the

meaning of Rule 4:50-1(d).").

Here, defendants waited more than five years after entry of

the final judgment to assert the defense of lack of standing. As

we further explained in Russo:

Based on our reading of Guillaume and [Ford],
we conclude that, even if plaintiff did not
have the note or a valid assignment when it
filed the complaint, but obtained either or
both before entry of judgment, dismissal of

11 A-4200-15T3
 the complaint would not have been an
appropriate remedy here because of defendants'
unexcused, years-long delay in asserting that
defense. Therefore, in this post-judgment
context, lack of standing would not constitute
a meritorious defense to the foreclosure
complaint.

[Ibid.]

We agree with the chancery judge that vacating the judgment

and dismissing the complaint more than five years after judgment

was entered based on the purported lack of standing would be

inappropriate. For this additional reason, defendants' motion was

properly denied.

We are also unpersuaded that defendants are entitled to relief

from the final judgment under Rule 4:50-1(f), "which permits courts

to vacate judgments for 'any other reason justifying relief from

the operation of the judgment or order.'" Guillaume, supra, 209

N.J. at 484 (quoting R. 4:50-1(f)). Relief under the subsection

(f) is "available only when 'truly exceptional circumstances are

present.'" Ibid. (quoting Hous. Auth. of Morristown v. Little,

135 N.J. 274, 286 (1994)). Subsection (f) "is limited to

'situations in which, were it not applied, a grave injustice would

occur.'" Ibid. (quoting Little, supra, 135 N.J. at 289).

Based on our careful review of the record and defendants'

arguments, and for the reasons set forth above, we discern no

basis permitting relief from the final judgment under Rule 4:50-

12 A-4200-15T3
1(f). Defendants have not demonstrated any exceptional

circumstances or that a grave injustice will result if the final

judgment is not vacated.

C.

The trial court also ruled that defendants' motion was time-

barred by Rule 4:50-2. We concur.

Motions made under any subsection of Rule 4:50-1 must be

filed within a reasonable time. R. 4:50-2; see Deutsche Bank

Trust Co. v. Angeles, 428 N.J. Super. 315, 319 (App. Div. 2012).

Defendants did not file an answer or responsive pleading asserting

the defense of lack of standing. They first raised that defense

when they filed their motion on April 26, 2016, almost seven years

after the complaint was filed, and more than five years after the

judgment was entered. By any measure, defendants did not raise

the defense or file their motion within a reasonable time.

Accordingly, the motion was time-barred by Rule 4:50-2.

"In addition, Rule 4:50-2 bars relief outright to 'motions

based on Rule 4:50-1(a), (b) and (c)' when filed 'more than one

year after the judgment, order or proceeding was entered or

taken.'" Angeles, supra, 428 N.J. Super. at 319 (quoting Orner

v. Liu, 419 N.J. Super. 431, 436-37 (App. Div.), certif. denied,

208 N.J. 369 (2011)). Defendants allege, in part, that plaintiff

committed fraud or misrepresentation. To that extent, their motion

13 A-4200-15T3
falls under Rule 4:50-1(c), and is barred by the one-year time

limit imposed for such motions by Rule 4:50-2.

II.

In summary, the motion judge properly applied the standard

of Rule 4:50-1. Defendants have not met their burden of

demonstrating a meritorious defense based on fraud,

misrepresentation, or lack of standing, and are not eligible for

relief from the judgment on those grounds under Rule 4:50-1. See

Guillaume, supra, 209 N.J. at 467. We discern no error in the

court's May 13, 2016 order denying defendants' motion to vacate

the judgment and to dismiss the complaint.

Affirmed.

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