In Deutsche Bank Trust Co. v. Angeles, 53 A.3d 673 (2012), Yony R. Angeles (“Angeles”) executed a note with First Equity Financial Corporation and, in order to secure that note, executed a mortgage on his home. About a year later, Deutsche Bank Trust Company Americas (Deutsche) filed a foreclosure complaint against Angeles in the Chancery Division of the New Jersey Superior Court ( “Lower Court”) because Angeles stopped making the required payments on the note. At the time Deutsche filed the complaint it was not the owner of the note and mortgage. Accordingly, a few weeks later, after Deutsche acquired ownership of the note and mortgage, it filed an amended complaint. Id. at 316-318.
The Lower Court entered default judgment against Angeles because he failed to properly respond to the complaint in a timely fashion. As a result, it ordered final foreclosure on Angeles’ residence. However, a few months later, it temporarily stopped the sheriff’s sale from taking place and ordered the parties to participate in a court-sponsored mediation program. After the mediation program failed, the sheriff’s sale proceeded. At the sheriff’s sale, Deutsche purchased the property. Subsequently, Angeles’ filed a hardship application to prolong the eviction so his children could complete the school year. The Lower Court granted that application. After the completion of the school year, Deutsche stopped the eviction even longer so that it could negotiate a short sale of the property back to Angeles.
After negotiations failed, Angeles applied to the Lower Court for an order seeking to vacate the sheriff’s sale, stop Deutsche from conveying title to another, and permit him to either respond to the complaint or, alternatively, dismiss it for lack of standing.
Standing is a legal concept that requires a plaintiff to have a legally protectable stake or interest in order to commence a lawsuit. Angeles claimed Deutsche did not have standing because at the time Deutsche filed the original complaint it did not yet own the note and mortgage. The Lower Court rejected Angeles’ argument and denied his application. Shortly thereafter Angeles was evicted from his home. Id. at 317.
Angeles filed an appeal to the Appellate Division of the New Jersey Superior Court (“Court”). He argued that the Lower Court’s judgment was void and therefore could not be enforced because Deutsche lacked standing. Angeles cited Deutsche Bank National Co. v. Mitchell, 422 N.J. Super. 214, 27 A. 3d 1229 (App.Div.2011). In that case, the court held that a plaintiff has standing if he had either:
(a) possession of the note, or
(b) the mortgage was assigned to him before the original complaint was filed.
Additionally, the Mitchell court stated that an amended complaint would usually be insufficient to overcome a plaintiff’s initial lack of standing. However, that impediment was overcome since the Michell defendant actively engaged in the litigation. For example, the defendant filed a timely and proper response to the plaintiff’s complaint. Importantly, the Mitchell court pointed out that the defendant contested plaintiff’s standing to file the foreclosure complaint long before the end of the litigation. Id. at 317-318.
In its analysis, the Court analogized its reasoning to New Jersey Court Rule 4:50-1 which governs the circumstances under which a litigant can seek relief from an order or judgment. The grounds upon which a party may seek to void a judgment pursuant to Rule 4:50-1 in the context of a foreclosure case are:
(a) mistake, inadvertence, surprise, or excusable neglect;
(b) newly discovered evidence which would probably alter the judgment or order and for which by due diligence could not have been discovered in time to move for a new trial under Rule 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 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 unfair results in any given case. It also stated that motions made under that rule must be filed within a reasonable time. Id. at 319.
In its holding, the Court discussed its analysis on two levels. First, it acknowledged that Angeles’ argument that the final judgment was void for lack of standing was a valid concern since the complaint was filed prior to the assignment of the note and mortgage. However, it found that the standing argument would fail since Angeles had not definitively demonstrated that Deutsche lacked standing. The Court explained that if Deutsche had possession of the note, at the time it filed the original complaint, it had adequate standing. Id. at 319-320.
More importantly, the Court asserted that Deutsche’s position would prevail since, in foreclosure matters, equity (principles of what is fair and just) must be applied. The Court held that it would be inequitable to allow Angeles to void the judgment because:
- Angeles did not raise the issue of standing until he had the advantage of many years of delay;
- Angeles never denied his responsibility for the debt incurred; and
- Angeles could not reasonably argue that Deutsche is not the party legitimately in possession of the property. Rather, when all hope of future delay expired, after his home was sold and he was evicted, he made a last-ditch effort to relitigate the case.
Id. at 320.
Accordingly, the Court upheld the Lower Court’s holding. Therefore, the eviction of Angeles from his home was proper. The foreclosure judgment against Angeles remained in place. Id.