WAGE GARNISHMENT ARTICLE - BANKRUPTCY LAWYER IN NEW JERSEY (201) 646-3333

 

INVESTORS BANK, f/k/a GLOUCESTER COUNTY FEDERAL SAVINGS BANK, Plaintiff-Respondent,
v.
TRAVELERS CABLE TV, INC., a/k/a TRAVELERS CABLE COMM., INC., TRAVELERS UTILITY SUPPLY, INC., TRAVELERS CABLE & UTILITIES, TRAVELERS CONSTRUCTION, TRAVELERS UTILITY SUPPLY, INC., TRAVELERS CABLE AND UTILITIES, TRAVELERS MEETING, INC., TRAVELERS TELECOM, CORP., TRAVELERS CABLE, INC., TRAVELERS CABLE COMMUNICATIONS, CORP., TRAVELERS CONSTRUCTION, LTD., BROADSTAR COMMUNICATIONS, LLC, ACCESS PROGRAM SERVICE, INC., BROADSTAR SECURITY, LLC, MILTON BELL, RUSSELL BELL, DERRICK BELL, and REBECCA E. BELL, GUARANTOR, Defendants, and
TYLER BELL, GUARANTOR, Defendant-Appellant.

Docket No. A-2496-15T2.

Superior Court of New Jersey, Appellate Division.

Submitted April 25, 2017.Decided May 5, 2017.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1283-03.

Jardim, Meisner & Susser, P.C., attorneys for appellant (Anthony Bedwell, of counsel and on the brief; Brian Baum, on the brief).

Saldutti Law Group, attorneys for respondent (Robert T. Lieber, Jr., of counsel and on the brief).

Before Judges Koblitz and Mayer.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

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PER CURIAM.

Defendant Tyler Bell appeals from two orders entered by the trial court. On February 10, 2015, the trial court entered judgment jointly and severally against various defendants, including Bell, for approximately $1.8 million. Bell was a personal guarantor of a promissory note issued by plaintiff Investors Bank (Bank) to defendants. In seeking to collect on the judgment, the Bank filed a motion for payment out of income directed to Bell. On December 10, 2015, the trial court ordered Bell to pay out of income the sum of $1,355.80 monthly to satisfy the judgment. On February 5, 2016, the trial court denied Bell's motion for reconsideration. Bell appealed the trial court's orders dated December 10, 2015 and February 5, 2016.

On appeal, Bell argues the trial court lacked jurisdiction to enter the order requiring payment out of income because Bell was a resident of the State of Florida and lacked any contact, assets or property in New Jersey. Bell also argues the payment out of income motion was contrary to Florida law. We disagree and affirm both orders.

In presenting arguments to the trial court, both Bell and the Bank relied upon Mechanics Finance Co. v. Austin, 8 N.J. 577 (1952). In Mechanics Finance, our Supreme Court rejected the very same arguments made by Bell. The Court expressly found that a foreign corporate employer authorized to transact business in New Jersey was subject to a wage garnishment by a judgment creditor against a judgment debtor. The Court held:

[T]here [was] no discernible reason of principle or policy why a foreign corporation whose right to do business in New Jersey is conditioned upon submission to the State's judicial process should not be subject to notice that, in accordance with the statute, moneys in its possession owing to the judgment debtor have been appropriated by judicial decree to the satisfaction of the judgment and as well to an order of compliance. . . . Although the employer here is not a citizen of or domiciled in New Jersey, there is residency in the State sufficient to subject it to the statutory process thus invoked. It is subject to the State's judicial power. A foreign corporation is amenable to the jurisdiction of the New Jersey courts in garnishment if it could itself be sued by its creditor in this State.

[Id. at 581.]

The Bank presented evidence that Bell's employer was registered in the State of New Jersey. Bell claimed his employer, National Cable and Internet, LLC, was registered in the State of Florida and was a separate corporate entity from National Cable and Internet, Limited Liability Company, a New Jersey limited liability company.

Consequently, prior to ruling on the Bank's motion to compel payment out of income, the trial court required the parties to depose Howard Bernstein, the chief financial officer of National Cable and Internet, LLC. He had submitted a certification in opposition to the Bank's motion to compel payments out of income. The trial court opined that if National Cable and Internet, LLC was not registered in New Jersey and conducted no business in New Jersey, then the court would lack jurisdiction under the holding in Mechanics Finance. Therefore, the trial court adjourned disposition of the Bank's motion to compel payment out of income until the completion of Bernstein's deposition.

After reviewing supplemental submissions filed by the parties, including Bernstein's deposition testimony, the trial court found Bell's arguments in opposition to the Bank's motion lacked merit. The trial court concluded that National Cable and Internet, Limited Liability Company, a New Jersey entity, was an alter ego of National Cable and Internet, LLC, a Florida entity. The trial court found:

The similarities are just crystal clear in that they overlap. The names are the same, except for the spelling out of the LLC. The — you know, the officer or the formation officer, is Bernstein, who is also the CEO in the Florida organization. The members, managers, National Cable and Internet, LLC, 3965 Investment Lane, A-5, West Palm Beach, Florida. 33404 is the zip code. That's the address of the LLC in Florida. Same for the main business address. You know, they clearly are in New Jersey, formed in New Jersey. There is an extension of that Florida Limited Liability Company in New Jersey. It's not disputed that they, after forming this, updated, paid their annual fees, kept alive. They are authorized, registered to do business in the State of New Jersey . . . it's the same players, it's the same organization.

Consequently, the trial court held National Cable and Internet, Limited Liability Company was an alter ego of National Cable and Internet, LLC and therefore ordered Bell to make monthly payments out of income to the Bank.

Bell filed a motion for reconsideration from the order compelling payment out of income. He argued that despite the trial court finding jurisdiction over Bell's employer, National Cable and Internet, LLC, the trial court lacked jurisdiction over Bell personally.

In response to the reconsideration motion, the Bank argued that by signing the personal guaranty, Bell waived any jurisdictional objections. The personal guaranty signed by Bell provided

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:

If there is a lawsuit, Guarantor agrees upon Lender's request to submit to the jurisdiction of the courts of Gloucester County, State of New Jersey. . . . This Guaranty shall be governed by and construed in accordance with the laws of the State of New Jersey.

Based upon Bell's waiver of jurisdiction by signing the personal guaranty, the trial court held that Bell's consent to jurisdiction extended not only to the collection lawsuit but also to post-judgment collection applications as well. Defendant's counsel was unable to cite any case establishing that waiver of jurisdiction in a personal guaranty was limited to collection litigation and not applicable to post-judgment collection applications. The trial court denied Bell's reconsideration motion finding no new facts or evidence submitted in support of the motion and that Bell failed to demonstrate the trial court acted in an arbitrary, capricious or unreasonable manner.

Given the equitable nature of the remedy created by the trial court in this case, the standard of appellate review is abuse of discretion. See Sears Mortg. Corp. v. Rose, 134 N.J. 326, 354 (1993) (finding the trial court did not abuse its discretion in balancing the equities when formulating a remedy). Similarly, appellate review of a trial court's decision on a motion for reconsideration is the same abuse of discretion standard. See Cummings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). Applying this standard to the orders on appeal, we find no abuse of discretion.

The trial court found jurisdiction over Bell as well as Bell's employer. The trial court properly determined National Cable and Internet, LLC was doing business in New Jersey through its alter ego National Cable and Internet, Limited Liability Company. The Bank's application was a request for a wage execution directed to Bell's employer, a New Jersey company. Because Bell's employer was a New Jersey company, the trial court had jurisdiction to enter the order requiring payment from Bell's wages. The trial court also properly concluded it had jurisdiction over Bell personally based upon the waiver of jurisdiction provision in the personal guaranty executed by Bell.

Affirmed.

FORECLOSURE ARTICLE - BANKRUPTCY LAWYER IN NEW JERSEY (201) 646-3333

SANTANDER BANK, N.A., Plaintiff-Respondent,

v.

GARRETT F. GRIGGS and LAURA F. GRIGGS, Defendants-Appellants, and

STATE OF NEW JERSEY, Defendant.

No. A-0705-15T1.

Superior Court of New Jersey, Appellate Division.

Submitted July 25, 2017.Decided August 4, 2017.

On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. F-11977-10.

Garrett F. Griggs and Laura F. Griggs, appellants pro se.

Phelan Hallinan Diamond & Jones, PC, attorneys for respondent (Sonya Gidumal Chazin, on the brief).

Before Judges Reisner and Suter.

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.

PER CURIAM.

Defendants Garrett and Laura Griggs (defendants) appeal an August 21, 2015 order that denied their motion to vacate a May 11, 2015 final judgment foreclosing their interest in certain residential real estate. We affirm.

I.

In September 2006, defendants executed a $315,000 note to U.S. Mortgage Corporation (U.S. Mortgage) and a non-purchase money mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for U.S. Mortgage, on a residential property in the City of Union, Union County. The mortgage was recorded.

Defendants defaulted on the note in August 2009. In October 2009, a notice of intention to foreclose the mortgage was sent to defendants at their address in Union, which advised defendants they were in default and the amount needed to cure.

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Defendants' mortgage was assigned by MERS to Sovereign Bank in February 2010 and recorded. Also in February 2010, Sovereign Bank filed a foreclosure complaint, which was personally served on defendants. Defendants did not respond and a default was entered.

Sovereign Bank, N.A. was substituted for Sovereign Bank. Plaintiff Santander Bank, N.A. (plaintiff), formerly known as Sovereign Bank, N.A., filed an amended foreclosure complaint in December 2013. Defendants were served by mail when personal service on defendants was not successful. Defendants acknowledge receiving the amended foreclosure complaint by mail on March 10, 2014. Defendants did not answer the amended complaint, explaining that they were "trying to get in touch with the mortgage lender for some time" and were both ill. A default was entered against defendants on December 2, 2014.

Plaintiff requested entry of a final judgment of foreclosure in May 2015. Defendants claim they did not receive notice of this, but the record shows the notice of motion was sent to defendants' address in Union. When there was no opposition to the application, a final judgment of foreclosure was entered on May 11, 2015. wclaim not to have received a copy of the final judgment, but the record shows it was mailed to their address in Union.

Efforts commenced by plaintiff to sell the property at a sheriff's sale. Defendants filed a motion to vacate the final judgment of foreclosure, but on August 21, 2015, the trial court denied defendants' motion. The foreclosed property was sold to plaintiff on August 26, 2015.

On appeal, defendants contend the court erred in denying the motion to vacate the final judgment of foreclosure because they "raised legally sufficient questions as to the merits of respondent's foreclosure action and legal justification." Defendants also claim plaintiff lacked standing to foreclose.

We do not know whether the court issued a memorandum decision or placed its reasons on the record when it denied defendants' motion, but the record does not include the court's findings nor have the parties supplied a transcript or written decision. See R. 1:7-4(a) ("The court shall by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon in all actions tried without a jury. . . ."). We could remand the case to the trial court for clarification, but under Rule 2:10-5, we also "may exercise such original jurisdiction as is necessary to the complete determination of any matter on review." Here, the record enables us to resolve the issues without a remand.

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We review the trial court's order denying defendants' Rule 4:50-1 motion to vacate the final judgment of foreclosure, under an abuse of discretion standard. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994) (citations omitted). Defendants have not disputed the amount owed in the final judgment of foreclosure or that the mortgage is in default. Defendants never contested the application of this mortgage to their residential property. As such, they acknowledge the primary facts needed to foreclose on the property. See Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993) (citations omitted) ("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."), aff'd, 273 N.J. Super. 542 (App. Div. 1994).

Defendants' principal contention is that plaintiff lacks standing to pursue the foreclosure action. In a foreclosure matter, a party seeking to establish its right to foreclose on the mortgage must generally "own or control the underlying debt." Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011) (quoting Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)). See also Bank of N.Y. v. Raftogianis, 418 N.J. Super. 323, 327-28 (Ch. Div. 2010) (citations omitted). In Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J. Super. 315, 318 (App. Div. 2012), we held that "either possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing," thereby reaffirming our earlier holding in Mitchell, supra, 422 N.J. Super. at 216.

Here, in making application for the final judgment of foreclosure, the bank's representative certified that plaintiff Santander Bank, N.A. was the "holder of the aforesaid note." Also, an attorney for plaintiff certified as required by Rule 4:64-2(d) about communications with plaintiff's employee who personally reviewed the affidavit of the amount due and the original note, mortgage and assignments. The mortgage to Sovereign Bank was recorded before any foreclosure complaint was filed. Sovereign Bank then became Santander Bank. "Given that the mortgage was properly recorded and appears facially valid, under New Jersey law there is a presumption as to its validity, and the burden of proof as to any invalidity is on the party making such an argument." In re S.T.G. Enters., Inc., 24 B.R. 173, 176 (Bankr. D.N.J. 1982) (citations omitted). Defendants submitted nothing to the court to overcome this presumption. Therefore, the trial court did not abuse its discretion in denying the motion to vacate because plaintiff was assigned the mortgage and held the note prior to filing the complaint or amended complaint.

After carefully reviewing the record and the applicable legal principles, we conclude that defendants' further arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

MORTGAGE ARTICLE - ATTORNEY IN HACKENSACK NEW JERSEY (201)646-3333 BANKRUPTCY

CITI MORTGAGE, INC., Plaintiff-Respondent,
v.
ELVIRA L. PENG a/k/a ELVIRA PENG, Defendant-Appellant, and
MR. PENG, her husband; DANIEL L. CHIONG a/k/a DANIEL CHIONG and MRS. DANIEL CHIONG, his wife, Defendants.

Docket No. A-3068-15T3.
Superior Court of New Jersey, Appellate Division.

Submitted September 14, 2017.Decided January 24, 2018.

On appeal from Superior Court of New Jersey, Chancery Division, Cumberland County, Docket No. F-007427-14.

Elvira L. Peng, appellant pro se.

Respondent has not filed a brief.

Before Judges Simonelli and Gooden Brown.

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.

PER CURIAM.

In this residential foreclosure matter, defendant Elvira Peng appeals from a February 16, 2016 Chancery Division order dismissing with prejudice her objection to plaintiff CitiMortgage, Inc.'s motion for final judgment, and a February 29, 2016 final judgment of foreclosure in favor of CitiMortgage. We affirm.

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The record discloses defendants Elvira Peng and her son, Daniel Chiong, purchased the subject property in Vineland in 2004. On March 16, 2006, they refinanced by executing a thirty-year fixed rate note to CitiMortgage in the amount of $233,024. To secure payment of the note, on the same date, defendants executed a non-purchase money mortgage on the property to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for CitiMortgage. The mortgage was recorded with the Cumberland County Clerk on April 5, 2006.

Defendants defaulted on March 1, 2012, and have not made any mortgage payments since that date. On May 16, 2012, MERS assigned the mortgage to CitiMortgage and CitiMortgage recorded the assignment with the Cumberland County Clerk on May 18, 2012. CitiMortgage sent defendants a notice of intention to foreclose. Over thirty-one days later, after defendants failed to cure, CitiMortgage filed a foreclosure complaint on February 27, 2014. At that time, CitiMortgage was in possession of the note and had been assigned the mortgage.

Defendant Elvira Peng filed an answer, essentially alleging fraud by the developer.^[1] Defendant's^[2] answer did not respond to the allegations in the complaint nor contest the default or the validity of the note and assignment. On October 24, 2014, the motion judge heard oral argument on CitiMortgage's motion to strike defendant's answer and enter summary judgment. Thereafter, the judge entered summary judgment in favor of CitiMortgage, struck defendant's answer, and referred the matter to the Office of Foreclosure as an uncontested matter for further proceedings, see Rule 4:64-1(c).

On February 16, 2016, the same judge denied defendant's motion objecting to the entry of final judgment. The judge noted:

[P]ursuant to [Rule 4:64-1(d)(3)], only objections that dispute the . . . correctness of the Certification of Amount Due, and do so with specificity, are appropriately reviewed at this level.

As indicated, Ms. Peng has a dispute with the builder of longstanding. It does appear from the papers filed that she has filed a claim or an action in Superior Court against the builder.

And that that matter was disposed of by Judge Geiger and may be the subject of . . . an appeal. I'm satisfied that it is not related to the foreclosure action.

That it's a money damages matter that stands on its own and I would dismiss the objection with prejudice and return the matter to the Office of Foreclosure for entry of Judgment.

On February 29, 2016, final judgment was entered and this appeal follows.

On appeal, defendant renews the arguments presented to the motion judge. We have reviewed the record and considered defendant's arguments and conclude they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We offer the following brief comments.

To establish a prima facie right to foreclose on a mortgage, there must have been execution, recording and non-payment of the mortgage. Thorpe v. Floremoore Corp., 20 N.J. Super. 34, 37-38 (App. Div. 1952). Additionally, "[a]s a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt" to have standing to foreclose. Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J. Super. 214, 222 (App. Div. 2011) (quoting Wells Fargo, N.A. v. Ford, 418 N.J. Super. 592, 597 (App. Div. 2011)). "[E]ither possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." 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).

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Here, the competent evidence in the record confirms that plaintiff established a prima facie right to foreclose on the mortgage. Additionally, plaintiff had standing to foreclose by virtue of the fact that it had both possession of the note and assignment of the mortgage that pre-dated the filing of the complaint. Accordingly, the final judgment was properly entered and defendant's motion objecting to its entry was properly denied.

Affirmed.

[1] Defendant Elvira Peng has a longstanding dispute with the developer, Landmark Development, dating back to 2004 in which she claims she was defrauded by the construction of a larger house than she agreed to purchase. According to Peng, she agreed to purchase "2515 square feet of dwelling" but "an area of 3,219.00 square feet of dwelling[]" was "substituted" instead. As a result of these misrepresentations and deceptive business practices, Peng asserts there was an unlawful increase in price, property taxes and hazard insurance that constitute "ground[s] to void and nullify" the mortgage contract and promissory note executed in connection with the purchase of the property in 2004 as well as the "refinance contract" entered in 2006. Peng claimed she was fraudulently induced to enter into the 2006 "refinance contract" with CitiMortgage based on misrepresentations of "negative escrow[.]"

[2] Although there are other named defendants, none have appealed the final judgment. For simplicity, our reference to "defendant" in this opinion refers only to Elvira Peng.

BANKRUPTCY ARTICLE - LAWYER IN NEW JERSEY (201) 646-3333

 

SANDRA STEUDTNER, Plaintiff-Appellant,
v.
PATRICIA PECORARO, Defendant-Respondent.No. A-4262-11T1.Superior Court of New Jersey, Appellate Division.Submitted January 9, 2013.Decided August 8, 2013.

Brian R. Quentzel, attorney for appellant.

John W. Sywilok, attorney for respondent.

Before Judges Nugent and Haas.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

Plaintiff Sandra Steudtner appeals from the denial of her motion for reconsideration of a Law Division judge's order that cancelled and discharged her judgment lien against defendant Patricia Pecoraro's residence under N.J.S.A. 2A:16-49.1. That statute authorizes the cancellation and discharge of a judgment lien that was discharged or dischargeable in bankruptcy proceedings. The Law Division judge had earlier determined that the parties' dispute about whether the judgment lien was dischargeable in defendant's bankruptcy proceedings should have been addressed by plaintiff during those proceedings. When the judge made that determination, he failed to appreciate the significance of plaintiff's evidence that the judgment lien had not been discharged, and was not dischargeable, during the bankruptcy proceedings. Consequently, plaintiff's motion for reconsideration should have been granted. We reverse the order denying that motion.

The parties do not dispute the facts. Plaintiff sued defendant in the Special Civil Part for breach of contract, and the parties settled the suit. Defendant breached the settlement agreement and in January 2007^[1] plaintiff secured a judgment in the amount of $13,132 against defendant. More than two years later, on November 17, 2009, plaintiff recorded the judgment.^[2]

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On March 2, 2010, the court issued a writ of execution, which a sheriff's officer served on defendant on May 17, 2010. The next month, on June 24, 2010, defendant filed a bankruptcy petition under Chapter 7 of the United States Bankruptcy Code, listing plaintiff as a creditor in the petition's "Schedule F, Creditors Holding Unsecured Non-priority Claims."

Although defendant petitioned the Bankruptcy Court to discharge her debt to plaintiff, she did not petition the court to cancel the judgment lien on her residence. Rather, in the petition's "Schedule A — Real Property," she represented that her home's value was $399,900 and that she owed a mortgage balance of $344,734.35, leaving $55,165.65 in equity. Against that equity, defendant claimed an exemption of $21,625 under 11 U.S.C.A. § 522(d)(1). Thus, based on the information provided by defendant in her bankruptcy petition, she had $33,540.65 in equity in her home not subject to exemptions; more than double plaintiff's judgment lien of $13,132.

In September 2010, the bankruptcy trustee filed a "Report of No Distribution," in which he reported "that there is no property available for distribution from the estate over and above that exempted by law." On January 18, 2011, the bankruptcy judge entered an order discharging defendant.^[3]

A year later, in January 2012, plaintiff filed a motion in the Law Division to "maintain the status quo." She sought to have the court both extend indefinitely the writ of execution and direct the sheriff not to return the writ. Plaintiff supported her motion with her attorney's certification, which recounted the entry of the judgment, her attempts to collect the judgment from defendant's personalty, defendant's obstruction of that process, and the sheriff's levy on defendant's residence. The attorney averred that defendant's discharge in bankruptcy prevented plaintiff from pursuing personal liability against defendant, and that "the [p]laintiff is now limited to the real property, upon which was levied prior to the onset of the [d]efendant's Chapter 7 bankruptcy case." Explaining that the writ she had obtained before defendant declared bankruptcy was scheduled to be returned in March 2012, two years from the date it was issued, plaintiff sought to maintain the status quo "by extending the life of the subject writ of execution and continu[ing] its levy upon the subject property[.]"

In response to plaintiff's motion, defendant filed a cross-motion seeking to have the court discharge and cancel the judgment under N.J.S.A. 2A:16-49.1, which provides in pertinent part:

At any time after 1 year has elapsed, since a bankrupt was discharged from his debts, pursuant to the acts of Congress relating to bankruptcy, he may apply, upon proof of his discharge, to the court in which a judgment was rendered against him, or to the court of which it has become a judgment by docketing it, or filing a transcript thereof, for an order directing the judgment to be canceled and discharged of record. . . . Where the judgment was a lien on real property owned by the bankrupt prior to the time he was adjudged a bankrupt, and not subject to be discharged or released under the provisions of the Bankruptcy Act, the lien thereof upon said real estate shall not be affected by said order and may be enforced, but in all other respects the judgment shall be of no force or validity, nor shall the same be a lien on real property acquired by him subsequent to his discharge in bankruptcy. (Emphasis added).

The dispositive question on defendant's cross-motion was whether plaintiff's judgment lien was "subject to be discharged or released under the provision of the Bankruptcy Act." The judge never directly addressed or answered that question. Rather, he decided that the issue should have been resolved in the bankruptcy court, believing that "otherwise there's no point in having a [b]ankruptcy [c]ourt."

In her opposition to the cross-motion, plaintiff explained that she was attempting to levy upon the non-exempt equity in defendant's home; that N.J.S.A. 2A:16-49.1 existed to eliminate a lien that impaired a defendant's exempt equity only; and that her judgment lien did not impair defendant's exempt equity. Defendant responded that the bankruptcy trustee's decision not to pursue her property demonstrated that the property had no equity, and she had therefore satisfied N.J.S.A. 2A:26-49.1.

In separate orders entered on February 17, 2012, the Law Division judge denied plaintiff's motion to maintain the status quo and granted defendant's cross-motion to dismiss the judgment lien. As previously stated, the judge granted defendant's motion on the basis that plaintiff had not resolved in the bankruptcy action the issue she was now raising; and that she was placing the court in a position of superseding the bankruptcy proceedings. Declining to substitute his judgment for that of the bankruptcy trustee, the judge discharged the judgment lien.

Plaintiff filed a motion for reconsideration, which the judge denied on March 16, 2002. In a written decision, the judge found plaintiff failed to satisfy the reconsideration standard. The judge relied, in large part, on the Chapter 7 trustee abandoning the property as there being no equity in the property.

Plaintiff appealed. The sole argument plaintiff presents on this appeal is:

THE LOWER COURT ERRED BY DISCHARGING THE PLAINTIFF'S JUDGMENT LIEN.

Plaintiff repeats the substantive arguments that she made in the Law Division and also asserts that the denial of her motion for reconsideration was palpably incorrect. Defendant disputes neither the procedural history nor the facts set forth by plaintiff, "except to assert that [defendant] is not precluded from re-opening the bankruptcy and filing an [a]ffirmative [m]otion under 11 U.S.C.A. Section 522(f) to avoid the [plaintiff's] lien."

When a party appeals from an order denying a motion for reconsideration, we review the denial under an "abuse of discretion" standard. Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div. 1997). An abuse of discretion occurs when the basis for the judge's decision is either "palpably incorrect or irrational"; or when the judge has "failed to appreciate the significance of probative, competent evidence." Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002). Here, the basis for the judge's decision is incorrect.

When a debtor attempts to discharge a valid and perfected^[4] judgment lien on real property under N.J.S.A. 2A:16-49.1, "the threshold and controlling issue is whether the judgment [lien] was subject to discharge or release in bankruptcy." Gaskill v. Citi Mortg., Inc., 428 N.J. Super. 234, 241 (App. Div. 2012). The statute applies if "the debtor could have obtained a discharge of the lien through the bankruptcy proceedings, [even if] the debtor [did] not . . . actually obtai[n] a discharge of the lien." Ibid.

"[W]hether a judgment lien is `subject to discharge or release' [under N.J.S.A. 2A:16-49.1] must be measured by the circumstances existing as of the time of the filing of the bankruptcy petition." Chem. Bank v. James, 354 N.J. Super. 1, 10 (App. Div. 2002). Consequently, "[a]bandonment of property by the trustee does not affect whether a judgment lien is subject to discharge or release." Gaskill, supra, 428 N.J. Super. at 241. In the case before us, the motion judge erroneously based its decision on a report from the bankruptcy trustee who had apparently abandoned the real property that was subject to the judgment lien.

To determine whether plaintiff's judgment lien was subject to discharge, we turn to the Bankruptcy Code. The Bankruptcy Code permits a debtor to "avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled ... if such lien is a judicial lien. . . ." 11 U.S.C.A. § 522(f)(1)(a). Here, defendant claimed an authorized exemption in the amount of $21,625. As plaintiff explained to the Law Division judge, due to the amount of equity in defendant's home, defendant's exemption was not impaired by the judicial lien. The lien was not subject to discharge under 11 U.S.C.A. § 522(f)(1)(a), and defendant did not argue that her lien was subject to discharge under any other section of the Bankruptcy Code.

Plaintiff demonstrated on the motion record, on undisputed facts, that her judgment lien "was a lien on real property owned by [defendant] prior to the time [s]he was adjudged a bankrupt, and not subject to be discharged or released under the provisions of the Bankruptcy Act[.]" N.J.S.A. 2A:16-49.1. Defendant produced no competent evidence to the contrary, and does not argue before us that the judgment lien was subject to discharge under the Bankruptcy Act. Rather, she asserts that she is "not precluded from re-opening the bankruptcy and filing an [a]ffirmative [m]otion under 11 U.S.C. Section 522(f) to avoid ... the lien." That assertion appears to be based on her belief that the value of her residence has further depreciated.

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The motion judge misapplied his discretion when he denied plaintiff's motion for reconsideration. He did not analyze whether the lien was subject to discharge. He should have granted plaintiff's motion and should have vacated his previous order cancelling and discharging her judgment lien against defendant.

Plaintiff has not appealed the denial of her motion to "maintain the status quo," believing that it may be "premature" to address the issue. Plaintiff nevertheless expresses her "belief" that the underlying writ of execution should be extended for the amount of time that it was stayed during defendant's bankruptcy proceedings. That issue is not properly before us and we therefore decline to address it.

The February 17, 2012 Law Division order cancelling and discharging plaintiff's judgment, and the order denying plaintiff's motion for reconsideration, are reversed. The parties may pursue in the Law Division, or in bankruptcy court, any remedies that may be available to them.

Reversed.

[1] Two certifications in the appellate record state that judgment was entered on January 23, 2006. A writ of execution states that judgment was entered on January 23, 2007. The order entering judgment is not included in the appellate record.

[2] A creditor who has docketed a judgment against a debtor "has a lien on all real property held by the judgment debtor in the state." New Brunswick Sav. Bank v. Markouski, 123 N.J. 402, 411-412 (1991); accord, New Century Fin. Servs., Inc. v. Staples, 379 N.J. Super. 489, 494 (App. Div. 2005). Accordingly, the "act of docketing ... a Special Civil Part judgment in the Superior Court makes it a judgment entitled to lien status against the real property of the judgment debtor." New Century Financial, supra, 379 N.J. Super. at 496; see N.J.S.A. 2A:18-32.

[3] After the bankruptcy case was closed, the court reopened it on defendant's motion to address a debt that appears to be irrelevant to the issues raised in this appeal.

[4] Plaintiff perfected its judgment lien against defendant's real property "by levying against it prior to the filing of the bankruptcy petition." New Century Financial, supra, 379 N.J. Super. at 497.

MORTGAGE ARTICLE - BANKRUPTCY LAWYER IN NEW JERSEY (201) 646-3333

 

NATIONSTAR MORTGAGE, L.L.C., Plaintiff-Respondent,
v.
MAXWELL J. BROTHERS, Defendant-Appellant, and
BARBARA J. BROTHERS, HIS WIFE, AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR QUICKEN LOANS, INC., Defendants.

No. A-3327-15T2.
Superior Court of New Jersey, Appellate Division.

Submitted June 1, 2017.Decided July 10, 2017.

On appeal from Superior Court of New Jersey, Chancery Division, Mercer County, Docket No. F-29885-09.

Maxwell J. Brothers, appellant pro se.

Stern, Lavinthal & Frankenberg, and Sandelands Eyet, attorneys for respondent (Robert D. Bailey, of counsel and on the brief).

Before Judges O'Connor and Whipple.

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.

PER CURIAM.

Defendant Maxwell Brothers appeals from a March 16, 2016 order denying his emergent application to stay the sheriff's sale of property in Ewing Township. We affirm.

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Plaintiff Nationstar Mortgage, L.L.C.^[1] filed a foreclosure complaint against defendants Maxwell Brothers, his wife, Barbara Brothers, and Quicken Loans on June 8, 2009. No defendant filed an answer, and default was entered May 18, 2011. Defendant, Maxwell Brothers, filed an emergent application for a stay on March 16, 2016, the day of the scheduled sheriff's sale. The trial court heard argument and considered defendant's emergent application that day. Defendant argued he was not served with the foreclosure complaint. The judge denied the application, relying on the court's JEFIS^[2] record indicating defendant was served with the complaint in 2009. This appeal followed.

On appeal, defendant argues the trial court's order should be reversed because he was never served with the foreclosure complaint. We disagree.

Rule 4:4-3(a) provides, If personal service cannot be effected after a reasonable and good faith attempt, . . . service may be made by mailing a copy of the summons and complaint by registered or certified mail, return receipt requested, to the usual place of abode of the defendant or a person authorized by rule of law to accept service for the defendant or, with postal instructions to deliver to addressee only, to defendant's place of business or employment. If the addressee refuses to claim or accept delivery of registered or certified mail, service may be made by ordinary mail addressed to the defendant's usual place of abode. The party making service may, at the party's option, make service simultaneously by registered or certified mail and ordinary mail, and if the addressee refuses to claim or accept delivery of registered mail and if the ordinary mailing is not returned, the simultaneous mailing shall constitute effective service.

The trial judge addressed the issue of service when denying the emergent application. During the hearing, defendant testified the property was his residence, but he was never served with the foreclosure complaint.

A review of the transcript reveals the judge referred to the court's JEFIS file and discovered plaintiff provided proof to the court it served defendant by both certified and regular mail. Plaintiff provided certifications, which stated service had been completed by certified and regular mail as confirmed by the United States Postal Service, on December 28, 2009. Plaintiff also included the appropriate electronic confirmation the certified mail was "unclaimed" and the regular mail was not returned. The court was satisfied plaintiff established proper service under Rule 4:4-3.

Moreover, the trial judge advised defendant he had recourse to seek two statutory adjournments pursuant to the sheriff's directive about the sale, which defendant had not attempted to do. We discern no error in the trial judge's finding defendant was properly served with the complaint. Defendant's chief argument is the court erred in relying upon the allegedly false submissions of plaintiff regarding service but provides no demonstration of error beyond his dissatisfaction with the outcome.

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To the extent defendant makes any other arguments, we find they lack merit and do not warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

[1] The original plaintiff in this matter was BAC Home Loans Servicing, L.P. Nationstar Mortgage, L.L.C. was substituted as plaintiff by the court in an order dated January 10, 2014.

[2] JEFIS stands for Judiciary Electronic Filing and Imaging System. Defendant asserts he was not shown the JEFIS file in court but looked at it a few days later.