Law Lessons from Wells Fargo v. Bowman, Chan. Div., BER-F-10764-12, Peter E. Doyne, A.J.S.C., April 22, 2013:
The defenses to foreclosure actions are narrow and limited. The only material issues in a foreclosure proceeding are the validity of the mortgage, the amount of indebtedness, and the right of the mortgagee to foreclose on the mortgaged property. Great Falls Bank v. Pardo, 263 N.J. Super. 388, 394 (Ch. Div. 1993). In Thorpe v. Floremoore Corp., 20 N.J. Super. 34 (App. Div. 1952), the court set forth the elements for a prima facie right to foreclose:
Since the execution, recording, and non-payment of the mortgage was conceded, a prima facie right to foreclose was made out. Defendants argue since the mortgage was in their counsels’ possession and produced by him at the request of plaintiff, delivery thereof after execution was not established and consequently no case appeared. However, proof of the recording creates a presumption of delivery. Id. at 37. If the defendant’s answer fails to challenge the essential elements of the foreclosure action, plaintiff is entitled to strike defendant’s answer as a non-contesting answer.
Old Republic Ins. Co. v. Currie, 284 N.J. Super. 571, 574 (Ch. Div. 1995); Somerset Trust Co. v. Sternberg, 238 N.J. Super. 279, 283 (Ch. Div. 1989).
When a party alleges he/she is without knowledge or information sufficient to form a belief as to the truth of an aspect of the complaint, the answer shall be deemed noncontesting to the allegation of the complaint to which it responds. R. 4:64-1(a)(3). Pursuant to R. 4:64-1(c)(2), an answer to a foreclosure complaint is deemed to be noncontesting if none of the pleadings responsive to the complaint either contest the validity or priority of the mortgage or lien being foreclosed, or create an issue with respect to plaintiff’s right to foreclose.((The comments to R. 4:64-1(c) make clear that “a challenge by the mortgagor to the asserted amount due does not constitute a contesting answer for purposes of this rule. See Metlife v. Washington Ave. Assoc., 159 N.J. 484 (1999).” The Court in Metlife, dealing with a commercial loan, held that a default interest rate higher than the contract rate was reasonable given the uncertain circumstances that arise out of default. See also Mony Life Ins. Co. v. Paramus Pkwy. Bldg., Ltd., 364 N.J. Super. 92, 103-104 (App. Div. 2003). Accordingly, defendants’ argument as to the current amount due, presumably as a result of accrued interest and late fees, are non-germane and insufficient cause to deny summary judgment.)) Consequently, a plaintiff may move to strike such an answer pursuant to R. 4:6-5 on the grounds it presents “no question of fact or law which should be heard by a plenary trial.” Old Republic Ins. Co., supra, at 574-575.
In order to satisfy its burden of proof on a summary judgment motion, plaintiff must show that no genuine issue of material facts exists. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995). Once the moving party satisfies its burden, the burden then shifts to the non-moving party to present evidence there is a genuine issue for trial. Ibid. In satisfying its burden, the defendant may not rest upon mere allegations or denials in its pleading, but must produce sufficient evidence to reasonably support a verdict in its favor. Triffin v. Am. Int’l Group, Inc., 372 N.J. Super. 517, 523 (App. Div. 2004); R. 4:46-5(a). Moreover, R. 4:5-4 requires all affirmative defenses be supported by specific facts. Parties must respond with affidavits meeting the requirements of R. 1:6-6 as otherwise provided in this rule and by R. 4:46-2(b), setting forth specific facts showing that there is a genuine issue for trial. An “issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.” R. 4:46-2(c); see also Brill, 142 N.J. at 535.
A defendant in foreclosure is not permitted to raise personal defenses against a holder in due course. Carnegie Bank v. Shalleck, 256 N.J. Super. 23, 45 (App. Div. 1992) (“When a mortgage secures a negotiable instrument . . . a transfer of the negotiable instrument to a holder in due course to whom the mortgage is also assigned will enable the assignee to enforce the mortgage (as well as the negotiable instrument) according to its terms, free and clear of any personal defenses the mortgagor may have against the assignor.”); see also Bancredit, Inc. v. Bethea, 65 N.J. Super. 538, 544 (App. Div. 1961) (A holder in due course is “immune to all personal defenses of the maker against the payee, including that of fraud in the inducement.”).
Pursuant to N.J.S.A. § 3-301, an instrument may be enforced by “the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to § 12A:3-309 or subsection d. of 12A:3-418.” See also Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592, 597-98 (App. Div. 2011). In Ford, plaintiff was determined not to be a nonholder in possession of the instrument as it could not properly establish, through “personal knowledge,” that plaintiff properly obtained possession of the note. Id. at 599-600 (citing R. 1:6-6 and Claypotch v. Heller, Inc., 360 N.J. Super. 472, 489 (App. Div. 2003)). Plaintiff in that case had also not properly authenticated the assignments of the note and mortgage, as required pursuant to N.J.S.A. § 46:9-9.
When a foreclosure action is deemed uncontested, the procedure is dictated by R. 4:64-1(d). At the conclusion of a successful motion for summary judgment or to strike the defendant’s answer, the matter shall be referred to the Office of Foreclosure to proceed as uncontested. R. 1:34-6 further provides the Office of Foreclosure is responsible for recommending entry of default in uncontested foreclosure matters pursuant to R. 4:64-1 and R. 4:64-7.
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