US Bank National Ass'n v. Guillaume
209 N.J. 449
| N.J. | 2012Background
- Guillaume couple and others purchased a home in East Orange, NJ; they refinanced in 1999 and then took a new loan on Sept. 7, 2006 from Credit Suisse secured by a mortgage.
- Mortgage was assigned to U.S. Bank via a Pooling and Servicing Agreement; ASC was appointed as loan servicer and communicated that ASC’s name would appear on statements.
- Notice of intention to foreclose dated May 18, 2008 was mailed to the Guillaumes; it listed ASC and not the lender (U.S. Bank) and did not include the lender’s address.
- Foreclosure action filed July 15, 2008; Guillaumes did not answer, and a default judgment was entered May 6, 2009 in favor of U.S. Bank.
- ASC notified of loan workout opportunities in 2008–2009; Guillaumes sought rescission under TILA and moved to vacate the default judgment.
- Trial court ordered cure of the notice and later held that the original notice did not comply with N.J.S.A. 2A:50-56(c)(11) but cured by later notices; appellate court affirmed the denial of vacatur.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FFA notice defect and remedy | Guillaumes claim ASC name violated 2A:50-56(c)(11); seek dismissal without prejudice per Laks. | U.S. Bank argues servicer listing suffices; substantial compliance; remedy limited to cure not dismissal. | Strict compliance required; initial defect not cured by substantial compliance; remedy may include cure, not necessarily dismissal. |
| TILA rescission meritorious defense | Guillaumes entitled to rescission due to $120 recording-fee error and TILA disclosures. | Rescission inappropriate because Guillaumes cannot tender the loan balance. | TILA rescission denied where borrower cannot tender; not a meritorious defense. |
| Excusable neglect standard | Guillaumes were misled by simultaneous foreclosure and modification discussions creating confusion. | Guillaumes had long been aware of litigation and had opportunities to respond; no excusable neglect. | No excusable neglect; trial court did not abuse discretion in denying relief under Rule 4:50-1(a). |
| Remedies for notice violation | Laks requires dismissal without prejudice as sole remedy for noncompliant notice. | Remedies can include cure or other equitable relief; not limited to dismissal. | Overrules Laks to allow cure or other remedies; initial notice defect warrants equitable cure and possibly other relief. |
Key Cases Cited
- Mancini v. EDS, 132 N.J. 330 (1993) (excusable neglect requires honest mistake compatible with due diligence)
- Baumann v. Marinaro, 95 N.J. 380 (1984) (carelessness generally not sufficient for relief from judgment)
- Sroczynski v. Milek, 197 N.J. 36 (2008) (case-specific equitable remedies for statutory notice violations)
- Cho Hung Bank v. Kim, 361 N.J. Super. 331 (2003) (notice of intention requirements and cure possibilities in App.Div.)
- GE Capital Mortgage Servs., Inc. v. Weisman, 339 N.J. Super. 590 (2000) (notice of intention curing can be ordered; equitable relief concepts)
- EMC Mortgage Corp. v. Chaudhri, 400 N.J. Super. 126 (2008) (notice of intention and foreclosures; dismissal without prejudice discussed)
- Bank of N.Y. Mellon v. Elghossain, 419 N.J. Super. 336 (2010) (Chancery Div. decision on notice of intention and FFA compliance)