U.S. BANK TRUST, N.A., ETC. VS. NICOLE THOMAS (F-020139-15, OCEAN COUNTY AND STATEWIDE)
A-4662-15T2
N.J. Super. App. Div. USep 21, 2017Background
- Nicole and Vincent Thomas executed a recorded purchase-money mortgage in 2005; payments stopped in 2008.
- Washington Mutual (originator) acquired the loan; JP Morgan later sued in foreclosure; action stayed and later revived.
- JP Morgan assigned the mortgage to LSF8 (a Delaware trust) in July 2014; LSF8 filed an amended foreclosure complaint and obtained summary judgment in 2014.
- Defendants moved in 2015 to dismiss, asserting LSF8 (a foreign corporation) failed to file the Reporting Act business activities report; the court stayed proceedings and then the parties dismissed the action without prejudice.
- LSF8 assigned the mortgage to U.S. Bank Trust, N.A. (a federally chartered national bank); U.S. Bank filed a new foreclosure action in May 2015; defendants defaulted, then moved to vacate default and dismiss invoking the Recording/Reporting Act.
- Trial court denied the motion to vacate and dismiss and denied reconsideration; final foreclosure judgment entered; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Reporting Act bars the foreclosure because LSF8 failed to file a business activities report | U.S. Bank is a federally chartered national bank and is exempt from the Reporting Act; therefore the action is not barred | LSF8 (assignor) failed to file required report; under Bozzarello II an assignee cannot evade the Reporting Act by suing after assignment | Held for plaintiff: Reporting Act does not apply to foreign banks/national banking associations; U.S. Bank may maintain the action |
| Whether an assignee may bring suit when assignor failed to comply with Reporting Act (Bozzarello II argument) | Plaintiff contends bank status/exemption distinguishes this case from Bozzarello II | Defendants rely on Bozzarello II to argue assignment cannot circumvent reporting deficiency | Held: Bozzarello II inapplicable here because Lott excludes foreign banks from the Reporting Act's scope |
| Whether the court abused its discretion by denying reconsideration | Plaintiff: prior rulings and controlling precedent support denial | Defendants: sought reconsideration based on same Reporting Act argument | Held: Denial of reconsideration affirmed; no new facts or showing of palpable error |
| Whether default should be vacated (meritorious defense, good cause) | Plaintiff: defendants had no meritorious defense because Reporting Act exemption applies and defendants admitted nonpayment | Defendants: asserted Reporting Act defense and requested default vacated to litigate dismissal motion | Held: Denial of motion to vacate default upheld; defendants lacked a meritorious defense because the Reporting Act defense fails here |
Key Cases Cited
- Associates Financial Services Company of New Jersey v. Bozzarello, 168 N.J. Super. 211 (App. Div. 1979) (assignor's Reporting Act noncompliance cannot be evaded by assignment in that case)
- American Bank & Trust Company of Pennsylvania v. Lott, 99 N.J. 32 (1985) (Reporting Act does not apply to foreign banks; banks treated differently)
- US Bank National Association v. Guillaume, 209 N.J. 449 (2012) (standards for vacating default and default judgment discussed)
- O'Connor v. Altus, 67 N.J. 106 (1975) (meritorious defense and absence of contumacious conduct required to set aside default)