AURORA LOAN SERVICES, LLC v. PAGANO
AURORA LOAN SERVICES, LLC, Plaintiff-Respondent,
v.
MICHAEL A. PAGANO and JANET L. PAGANO, Defendants-Appellants.
No. A-3887-10T1.
Superior Court of New Jersey, Appellate Division.
Argued: October 19, 2011.
Decided: December 13, 2011.
Eric C. Garrabrant argued the cause for appellants (Flaster Greenberg, P.C., attorneys; Mr.
Garrabrant, on the brief).
Douglas J. McDonough argued the cause for respondent (Zucker, Goldberg & Ackerman, LLC,
attorneys; Mr. McDonough, of counsel and on the brief).
Before Judges Axelrad and Ostrer.
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PER CURIAM.
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1
Defendants Michael and Janet Pagano appeal from an order entered
on February 25, 2011, which denied their second motion to vacate a default
judgment of foreclosure entered against them on August 31, 2009. They assert special
circumstances for relief, relying on the catchall provision of Rule 4:50-l(f). We affirm substantially
for the reasons articulated by Judge William C. Todd, III.
On July 13, 2007, Michael Pagano executed a note to AHM Mortgage securing a loan in the
amount of $999,999. The same day, he and his wife Janet executed a mortgage on their property
located in Margate to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for
AHM Mortgage, to secure repayment of the note. The mortgage was duly recorded on July 23,
2007. Defendants defaulted on or about June 1, 2008.
Plaintiff Aurora Loan Services, LLC filed a foreclosure complaint in September 2008. The
complaint expressly stated in the First Count that the note and mortgage were assigned to
plaintiff, and specifically, the mortgage was assigned by MERS, as nominee for AHM Mortgage,
2
on September 22, 2008, which was unrecorded at the time. Michael then filed a Chapter 7
bankruptcy. On May 18, 2009, plaintiff obtained an order from the Bankruptcy Court vacating the
automatic stay, and final judgment of foreclosure by default was entered on August 31, 2009.
Defendants filed a pro se motion to vacate default judgment on October 28, 2009, claiming
the corporate assignment of mortgage, along with the original note and mortgage, were not
properly recorded with the Atlantic County Clerk. Plaintiff filed opposition. Following oral
argument, Judge Todd denied defendants' motion. The memorializing order of December 14,
2009 expressly noted that defendants were advised of their right to participate in the Foreclosure
Mediation Program and, if they wished to do so, they should proceed promptly.
The record does not reflect whether defendants participated in the program. Through present
counsel they filed their second motion to vacate default judgment on December 20, 2010. They
challenged plaintiff's standing as the assignee of the note and mortgage originally made in favor
of AHM Mortgage and argued there was deficient title, noting they had raised the issue before
the Bankruptcy Court and in their first motion to vacate. Defendants sought relief under Rule
4:50-l(f), relying, in large part, on the purported "new law" articulated by Judge Todd in Bank of
New York v. Raftogianis, 418 N.J.Super. 323 (Ch. Div. 2010), that had recently been approved for
publication. The case involved a MERS transfer and held that for standing, a foreclosing plaintiff
must have had ownership or control of the underlying debt as of the date of the filing of the
complaint; in that instance, physical possession of the original note. Id. at 327.
Judge Todd issued a tentative letter opinion on January 19, 2011, and after receipt of
supplemental submissions from counsel, conducted oral argument on February 18, 2011. In his
written and oral decisions, Judge Todd denied defendants' motion as time-barred. The judge
noted his December 2009 final order denying defendants' motion to vacate default judgment was
not appealed and, to the extent the current motion was considered a motion for reconsideration,
it was time-barred. See R. 4:49-2 (requiring a motion for reconsideration to be served no later
than twenty days after service of the judgment or order). He also found to the extent the motion
to vacate was based on excusable neglect, newly discovered evidence or fraud, it was also
untimely as it was filed more than one year after entry of the foreclosure judgment. R. 4:50-1 (a),
(b), (c).
Judge Todd also found no justification for defendants' delay under Rule 4:50-l(f), "any other
reason justifying relief from the operation of the judgment or order," holding that Raftogianis was
an explication of existing law, not the expression of a change in law. He explained,
From my perspective, Raftogianis did not involve a change in the Law. My Opinion addressed a variety of
issues based on the provisions of the UCC and existing case law. I did not conceive my analysis involved
a change in the Law. It simply reflected my analysis of what was required under existing Law. To make the
point differently, there were no statutes or reported opinions which would have barred anyone from
presenting the legal issues which formed the basis for my decision in Raftogianis. I do not conceive the
issuance of that Opinion provides any independent basis for relief as suggested by [defendants']
submission.
Judge Todd additionally found the submissions demonstrated the foreclosure proceeded
"with the consent generally of the entity or entities that have the authority to act." He was
satisfied, consistent with the Raftogianis analysis and concept of equity, that it was appropriate to
look at the underlying transaction. The judge determined that, under the totality of the factual and
procedural history, possession of the note after the filing of the complaint was not fatal. Judge
Todd found defendants were time-barred from raising any technical defects and concluded that
"substantively [the present matter] appear[ed] to be an entirely appropriate foreclosure." His
ruling was memorialized in an order of February 25, 2011. This appeal ensued.
On appeal, defendants argue that exceptional circumstances are present to justify vacating
the foreclosure judgment. They rely on the general recognition by the judiciary of the need to
control the integrity of the judicial foreclosure process and protect pro se residential mortgagors
evidenced in its issuance of administrative directives and orders in December 2010. This
argument and these orders were not presented to Judge Todd, and are thus not appropriately
before us. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (holding that appellate
courts will decline to consider issues not properly presented to the trial court when an opportunity
for such a presentation is available "unless the questions so raised on appeal go to the
jurisdiction of the trial court or concern matters of great public interest[]") (internal quotation
marks and citations omitted).
Defendants also argue the court erred in its consideration of the bankruptcy record of AHM
Mortgage, the entity that originated the loan, and contend the documents failed to demonstrate
plaintiff established its right to proceed with the foreclosure. We discern no abuse of discretion by
Judge Todd in requesting the supplemental submissions. We are also satisfied, as was he, that
the foreclosure proceeded "consistent with the interests of the holder of the debt" and that
defendants are time-barred from asserting their technical challenges to plaintiff's standing.
We additionally note that relief is available under Rule 4:50-1(f) "only when truly exceptional
circumstances are present." A.B. v. S.E.W., 175 N.J. 588, 593 (2003) (quoting In re Guardianship
of J.N.H., 172 N.J. 440, 473 (2002) (citation and internal quotation marks omitted)). To prevent
endless re-litigation of settled cases, new developments in case law generally do not qualify as
"such an extraordinary circumstance as to justify relief from a final judgment . . . ." Hartford Ins.
Co. v. Allstate Ins. Co., 68 N.J. 430, 434 (1975). We do not discern any exceptional
circumstances resulting in a grave injustice that would justify vacating the 2009 foreclosure
judgment in this instance.
Affirmed.
Footnotes
1. When necessary, we will refer to each defendant by his or her first name, and mean no disrespect.
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2. The record contains an unrecorded corporate assignment of mortgage dated September 22, 2008, and a recorded
assignment dated February 24, 2009, and recorded on March 4, 2009.
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