US BANK, NA, ETC. VS. DAVID E. WALSH(F-009696-14, SOMERSET COUNTY AND STATEWIDE)
A-0063-15T1
| N.J. Super. Ct. App. Div. | Nov 30, 2017Background
- David and Deborah Walsh executed a $1,950,000 promissory note to Guardhill secured by a mortgage naming MERS as nominee; they later agreed to a 2007 modification.
- The note and mortgage were assigned through several entities ultimately to U.S. Bank, N.A., which filed foreclosure in March 2014 after debtors defaulted in May 2009.
- Defendants did not accept service of an amended complaint and a default was entered; the court nonetheless later addressed defendants' standing challenge on the merits.
- After extensive discovery, the trial court granted plaintiff summary judgment in January 2015, entered final judgment in May 2015, and denied defendants' motions to vacate/reconsider.
- Defendants asserted Rule 4:50-1 grounds (newly discovered evidence, fraud, other reason), contested the validity of the note/allonge and assignments, and argued plaintiff lacked standing.
- The appellate court affirmed, concluding plaintiff had standing (possession of the note when suit was filed), defendants failed to show newly discovered or fraudulent evidence, and defendants lacked standing to challenge trust/assignment technicalities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | U.S. Bank possessed the original note before filing and thus had standing under UCC Article III | Allonge fraudulent/assignments invalid; plaintiff lacked ownership/control at filing | Affirmed: plaintiff had possession of the note and standing to proceed |
| Rule 4:50-1(b) (newly discovered evidence) | No new evidence that would probably change the result; defendants had access to discovery | Handwriting/expert report and Guardhill email show allonge fraud and prove standing defect | Denied: defendants did not show due diligence or that evidence would likely change outcome; expert inconclusive |
| Rule 4:50-1(c) (fraud) | No proven fraud that would void judgment | Alleged fraudulent allonge and misrepresentations in assignment chain | Denied: insufficient proof of fraud and no persuasive basis to vacate judgment |
| Right to challenge trust/assignments | Assignments and possession conferred standing; trust compliance issues do not defeat foreclosure by a non-party | Assignments invalid; trust breaches render transfers void and defeat plaintiff's claim | Denied: defendants lack standing to enforce or challenge trust terms; even if trust breached, assignments are not automatically void |
Key Cases Cited
- US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449 (court reviews 4:50-1 for abuse of discretion)
- Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88 (reversal standard for discretionary trial-court decisions)
- DEG, LLC v. Twp. of Fairfield, 198 N.J. 242 (standards for Rule 4:50-1(b) newly discovered evidence)
- Mitchell v. [sic] (discussing persons entitled to enforce negotiable instruments), 422 N.J. Super. 214 (App. Div.) (application of N.J.S.A. 12A:3-301)
- Deutsche Bank Tr. Co. Ams. v. Angeles, 428 N.J. Super. 315 (App. Div.) (possession of note or assignment confers standing)
- Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592 (App. Div.) (ownership/control at time complaint filed required for standing)
- Reinagel v. Deutsche Bank Nat'l Tr. Co., 735 F.3d 220 (5th Cir.) (borrower lacks right to enforce trust agreement breaches unless third-party beneficiary)