Suser v. Wachovia Mortgage FSB
Suser v. Wachovia Mortgage FSB, A-1330-12T2; Appellate Division; opinion by Fisher, P.J.A.D.; decided and approved for publication November 4, 2013. Before Judges Fisher, Espinosa and O'Connor. On appeal from the Chancery Division, Hudson County, C-25-12. [Sat below: Judge Velazquez.] DDS No. 34-2-1851 [12 pp.]
Plaintiff William Suser obtained and recorded a mortgage on a West New York condominium unit. He later obtained a foreclosure judgment and a sheriff's deed that acknowledged title was subject to prior encumbrances. He then filed this action seeking to quiet title through the removal of the two prior mortgages on the property, one recorded by World Savings Bank, FSB, and the other by Washington Mutual Bank, FA. Defendant Wachovia Mortgage FSB, doing business as Wells Fargo Bank, N.A., appeared regarding the World Savings mortgage. Deutsche Bank National Trust Company, as Trustee WAMU 2005-AR2, appeared to defend the WaMu mortgage.
The main thrust of plaintiff's arguments in the trial court related to defendants' standing to seek foreclosure of the mortgages. After a discovery dispute resulted in a protective order in favor of Deutsche, both defendants filed motions for summary judgment, which were granted.
On appeal, plaintiff argues that he was erroneously denied discovery into the circumstances surrounding the assignment of the WaMu mortgage and that both defendants should have been estopped from maintaining their liens on the property under doctrines of laches and waiver.
Held: Summary judgment in favor of Wells Fargo is affirmed because it acquired the mortgage through acquisition and merger, not through assignment, and it is not equitably estopped from trying to enforce the mortgage. However, because there is a legitimate dispute about whether Deutsche is the proper holder of the WaMu mortgage, plaintiff has a right to pursue that question in a quiet-title action.
The panel first finds that plaintiff's arguments regarding defendants' standing to seek foreclosure based on concerns regarding robo-signing have no bearing on Wells Fargo since its right to enforce the mortgage arises by operation of its ownership of the asset through mergers or acquisitions, not assignment.
Plaintiff argues that the World Savings mortgage should not further burden his title because Wells Fargo's failure to enforce its interest equitably bars any future attempt to enforce it. He points out that it did not intervene in plaintiff's foreclosure action, did not bid at the sheriff's sale, and did not file its own foreclosure action after the prior owner defaulted. However, the panel says that absent evidence that plaintiff obtained the property in the good-faith belief title was free and clear of the World Savings mortgage, Wells Fargo was under no obligation to file its own foreclosure action, join in another's, or bid at a sheriff's sale to protect its interest.
The panel then addresses plaintiff's claim that Deutsche lacks standing to seek foreclosure because of irregularity in the assignment of the mortgage to it.
It says the record reveals that Deutsche filed a foreclosure action against the prior owner based on an unrecorded assignment. The absence of a recorded assignment and other confusing and otherwise unexplained allegations were not tested or adjudicated in that suit. Instead, Deutsche dismissed it without prejudice and has made no attempt to enforce its interest since.
The panel says until discovery casts greater illumination on the subject, it must conclude there is a legitimate dispute as to whether Deutsche obtained an effective assignment of the WaMu mortgage. Viewing the facts and inferences in the light most favorable to plaintiff, it proceeds in determining the maintainability of this quiet-title action on the assumption that the assignment did not validly transfer the mortgage to Deutsche.
If the assignment was invalid or otherwise defective, it does not automatically follow that the WaMu mortgage must be extinguished. A finding of a defect in the assignment would simply mean that the right to foreclose would reside with the assignor or some other entity.
However, the panel says that does not mean plaintiff is barred from pursuing this action. N.J.S.A. 2A:62-1 permits a person in possession to bring an action to clear up another person's claim to a lien or encumbrance thereon. The WaMu mortgage was valid when executed, has not been satisfied, and was recorded prior to plaintiff's mortgage. But there is a dispute about whether Deutsche is the proper holder of the mortgage and that question may be adjudicated in a quiet-title action. Although an adjudication of that issue may not lead to the requested extinguishment of the mortgage, plaintiff is entitled to a ruling as to whether Deutsche, and not some other entity, possesses the right to foreclose by way of a quiet-title action.
For appellant—Zwerling & Deshpande (Shay S. Deshpande and David J. Zwerling on the brief). For respondents: Wachovia Mortgage—Reed Smith (Henry F. Reichner of counsel; Kevin L. Jayne on the brief); Deutsche Bank—Bertone Piccini (Grace C. Bertone of counsel; Cristina Z. Sinclair on the brief).
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