197 A.3d 686
N.J. Super. Ct. App. Div.2018Background
- Torres defaulted on a $650,000 promissory note secured by his home in February 2010; Investors Bank sued to foreclose.
- The original note was lost before CitiMortgage (Citi) assigned the mortgage to Investors; a Citi representative executed a lost-note affidavit stating Citi had lost the note after a diligent search.
- Citi merged with the originating lender and later assigned the mortgage to Investors; the lost-note affidavit was executed over a year before the mortgage assignment.
- Investors moved for summary judgment and sought a final judgment of foreclosure; Torres argued Investors lacked the right to enforce because it did not possess the note when it was lost and the affidavit was inadmissible.
- The motion judge admitted the lost-note affidavit as authenticated and a business record, granted summary judgment, and entered final judgment of foreclosure; Torres appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Right to enforce lost note when assignee (not possessor at time of loss) seeks foreclosure | Assignee (Investors) may enforce where the prior possessor (Citi) was entitled to enforce when loss occurred and transferred its enforcement rights | 3-309(a) requires the claimant to have been in possession and entitled to enforce at time of loss, so a later transferee cannot enforce | Court: 3-309 permits transfer of enforcement rights; a transferee who proves the instrument’s terms and right to enforce under 3-309(b) may enforce a lost note |
| Construction of N.J.S.A. 12A:3-309 (possession requirement) | Read 3-309(a) and (b) together: subsection (b) does not require possession; transferees can enforce if prior possessor met (a) and transfer occurred | Plain-text reading of (a) forbids enforcement by those not in possession when loss occurred | Court: Statutory text, UCC practice, common-law assignment, and equity support allowing transferees to enforce; reading (a) to block assignment yields absurd results |
| Admissibility/authentication of lost-note affidavit | Affidavit was sworn, notarized, and authenticated as a business record; admissible under N.J.R.E. 803(c)(6) and 901 | Affidavit not properly authenticated; not admissible without subscribing notary testimony | Court: Affidavit prima facie authenticated by notarization and qualified as business record; judge did not abuse discretion in admitting it |
| Summary judgment standard application | Investors met burden; Torres failed to produce evidence showing genuine issue of material fact (no competing assignment, no payments, no evidence note exists elsewhere) | Judge misapplied summary judgment standard and improperly inferred facts for the movant | Court: Standard correctly applied; Torres produced only insubstantial or mistaken interrogatory answers and no evidence to defeat summary judgment |
Key Cases Cited
- Tumpson v. Farina, 218 N.J. 450 (N.J. 2014) (rules for statutory interpretation and resort to extrinsic aids when language is ambiguous)
- DiProspero v. Penn, 183 N.J. 477 (N.J. 2005) (plain-meaning canon for statute construction)
- Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189 (N.J. 2016) (standard of review for summary judgment and evidentiary materials)
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (N.J. 1995) (summary judgment standard and view of evidence in favor of non-moving party)
- Sprint Commc'ns Co. v. APCC Servs., 554 U.S. 269 (U.S. 2008) (commercial practices and assignment principles supporting assignability)
- Deutsche Bank Nat'l Tr. Co. v. Mitchell, 422 N.J. Super. 214 (App. Div. 2011) (who may be a person entitled to enforce under UCC 3-301)
- Konop v. Rosen, 425 N.J. Super. 391 (App. Div. 2012) (authentication standard for documents)
- Hisenaj v. Kuehner, 194 N.J. 6 (N.J. 2008) (appellate review of evidentiary rulings limited to abuse of discretion)