Legal Memorandum In Opposition to Plaintiff’s Motion for Summary Judgment
April 30, 2009
(address of local counsel)
Atlantic City, NJ
(609)
DEUTSCHE BANK TRUST COMPANY AMERICA,
Plaintiff,
v.
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SUPERIOR COURT OF NEW JERSEY
CHANCERY DIVISION
ATLANTIC COUNTY
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CIVIL ACTION
DOCKET NO.:
(borrowers),
Defendants
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____________________________________________________
LEGAL MEMORANDUM IN OPPOSITION TO
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
____________________________________________________
Atlantic City, NJ
WILLIAM J. BARNES, ESQ. (admitted pro hac vice)
On the Brief
LEGAL ARGUMENT
<!--[if !supportLists]-->I. <!--[endif]-->PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
SHOULD BE DENIED AND SUMMARY JUDGMENT SHOULD BE ENTERED IN FAVOR OF THE
DEFENDANTS ON THEIR COUNTERCLAIM
Plaintiff has filed a Motion for Summary Judgment which relies on factually inapplicable
decisional law; ignores the threshold issue of legal standing; fails to justify the striking of Defendants
contesting Answer; and purports to be supported by a Certification of counsel for Plaintiff which is
not made on personal knowledge and which is in fact based on incompetent hearsay. Plaintiff has
failed to demonstrate the absence of genuine issues of material fact and has failed sustain its
burden to be entitled to the entry of summary judgment.
Plaintiff’s own submissions and admissions therein demonstrate that the Defendants are
entitled to the entry of summary judgment on their Sixth Separate Defense and their Counterclaim
as a matter of law, and pursuant to their Cross-Motion for Summary Judgment filed separately but
simultaneously herewith.
Plaintiff relies on the holding of Somerset Trust Co. v. Sternberg, 238 N.J. Super 279 (Ch.Div.
1989) in alleged support of its request to strike the contesting answer of the Fairhurst Defendants. A
close reading of the Sternberg opinion reveals that Plaintiff’s reliance is misplaced, as the cited
portion plainly states that the “pattern” involves a situation where “the mortgagor fails to respond”
[to the summary judgment motion]. It is of record that the Fairhurst Defendants have responded to
Plaintiff’s summary judgment motion.
The second cited portion of the Sternberg opinion states that “many of the answers and defenses
proffered are legally insufficient as they fail to challenge the essential elements of the mortgagee’s
right to foreclosure and fail to interpose a validly recognized defense in foreclosure suits”. It is of
record that the Defendants have challenged the Plaintiff’s very standing to foreclose and thus its
right to seek the remedy of foreclosure ab initio and as set forth more fully herein.
Plaintiff’s view of the scope of Chancery litigation is as wrongfully narrow as that found by the court
in Leisure Technology-Northeast, Inc. v. Klingbiel Holding Company, 137 N.J.Super. 353, 349 A.2d 96
(N.J. Super A.D. 1975), wherein it was held that “R.4:6-2 requires that every defense to an action
‘legal or equitable, in law or in fact” be asserted in an answer, and that one of the purposes of the
adoption of the Judicial Article of the 1947 Constitution was to permit the resolution of all aspects of
a controversy between parties to be resolved in a single forum, whether the claims be legal or
equitable in nature. 137 N.J.Super. at 357. These defenses include what are termed as “germane”
counterclaims in foreclosure actions. Such counterclaims are “germane” if they arise out of the
subject matter of the mortgage transaction, and discovery is permitted on such counterclaims. 137
N.J.Super. at 358 (reversing order striking defendants’ first affirmative defense, severing
counterclaim, and transferring to Law Division).
The sixth Separate Defense of the Defendants states that Plaintiff was not, at the time of the filing of
the Complaint and in view of the admissions in paragraph 4(a) thereof, in possession of any legal
interest in the mortgage sufficient to institute a foreclosure. The First Count of the Counterclaim of
the Defendants requests the entry of a Declaratory Judgment for dismissal of the foreclosure
complaint based on the absence of the necessary and proper proofs to satisfy the legal standing
requirements to institute a foreclosure. The Second Count of the Counterclaim requests the entry of
Injunctive Relief prohibiting the entry of a judgment of foreclosure and the sale, conveyance, or
transfer of the real property the subject of this action based on the lack of legal standing of the
Plaintiff/Counter-Defendant to institute a foreclosure. The Sixth Separate Defense and Counterclaim
are “germane” to the foreclosure action as they arise out of the subject matter of the mortgage
transaction, going to the threshold issue of the legal standing of the Plaintiff to institute this
foreclosure action. As such, the contesting Answer should not be stricken; discovery should be
permitted; and Plaintiff’s Motion for Summary Judgment should be denied.
Plaintiff has failed to cite a single case which precludes the assertion of an equitable
counterclaim for declaratory and injunctive relief which challenges the very legal standing of a
plaintiff to institute a foreclosure action, and has also failed to cite a single case which permits a
plaintiff to institute a foreclosure action when it has no legal interest in the mortgage and note at
the time of the filing of the foreclosure action. Plaintiff’s Motion for Summary Judgment should thus
be denied as being unsupported by any decisional law on the specific facts of this case.
The Courts of New Jersey have apparently not addressed the specific factual situation in this case. In
instances where there is no New Jersey case “on point”, the Courts of New Jersey have utilized
opinions from other jurisdictions for guidance. (See, e.g., Greate Bay Hotel & Casino, Inc. v. City of
Atlantic City, 264 N.J.Super. 213, 217-218, 624 A.2d 102 (N.J. Super L. 1993)(analysis of treatment of
business trusts as distinct legal entities by various other jurisdictions including California, New York,
and Michigan where no New Jersey case explicitly dealt with types of trusts in case); Gregory v.
Allstate Insurance Company, 315 N.J.Super. 78, 82-83, 716 A.2d 573 (N.J.Super.L. 1997)(analyzing
split of authority in jurisdictions which considered issue of whether victim of unintentional auto
collision was covered by uninsured motorist coverage). The Courts of the State of New York have
been repeatedly presented with the legal standing issues in foreclosure actions raised in this case,
and have consistently held that when there is no proof that the foreclosing party had the requisite
legal interest in the mortgage and note at the time that it filed the foreclosure action that dismissal
of the action was proper.
In mortgage foreclosure actions (as in all actions), the foreclosing party must have standing to bring
the action:
Standing to sue is critical to the proper functioning of the judicial system. It is
a threshold issue. If standing is blocked, the pathway to the courthouse is blocked. …Standing to
sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a
sufficient predicate for determining the issue at the litigant’s request….If a plaintiff lacks
standing to sue, the plaintiff may not proceed in the action.
IndyMac Bank v. Bethley, 2009 NY Slip Op 50186(U)(N.Y.Sup.Ct. 2/6/2009), citing Saratoga County
Chamber of Commerce, Inc. v. Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003]; Caprer
v. Nussbaum, 36 AD3d 176, 181 [2d Dept 2006]; Stark v. Goldberg, 297 A2d 203 [1st Dept 2002].
Where there is no evidence that the plaintiff, prior to commencing a foreclosure action, is the holder of
the mortgage and note or took physical delivery of the mortgage and note or that same were conveyed
by written assignment, the plaintiff did not have standing to institute the action. New Century Mortgage
Corporation v. Durden et al., 2009 NY Slip Op 50175(U) (N.Y. Sup. Ct. 2/2/09), citing Deutsche Bank Trust
Co. Ams. V. Peabody, 20 Misc. 3d 1108A (Sup.Ct. Saratoga County 2008) and Countrywide Home Loans,
Inc. v. Taylor, 17 Misc. 3d 595 (Sup.Ct. Suffolk County 2007) and additional cases cited therein.
A plaintiff has no foundation in law or fact to foreclose upon a mortgage in which the plaintiff has no
legal or equitable interest, and where an assignment of the mortgage post-dates the filing of the
complaint, the plaintiff does not have the requisite ownership interest at the time of filing. As a
foreclosure of a mortgage may not be brought by one who has no title to it and absent a legally effective
transfer of the debt, the (post-filing) assignment of the mortgage is a legal nullity. U.S. Bank National
Association v. Kosak et al., 2007 NY Slip Op 51680(U)(N.Y. Sup.Ct. 9/4/2007), citing Katz v. East-Ville
Realty Co., 249 AD2d 243, 672 NYS2d 308 [1st Dept 1998] and Kluge v. Fugazy, 145 AD2d 537, 536 NYS2d
92 [2d Dpet 1988].
In Bethley, the Court held that Plaintiff IndyMac lacked standing to foreclose on the mortgage and note
as it did not own the mortgage and note on the day that the Complaint was filed. IndyMac, as Plaintiff
has done here, attempted to assign the mortgage and note two days after filing the foreclosure action.
In the instant case, Plaintiff’s own submissions demonstrate that Plaintiff did not own the note and
mortgage on December 24, 2007 (the day that the Complaint was filed), having only [purportedly] come
into such ownership, at the earliest, some three days thereafter, that being on December 27, 2007 by
virtue of the very Assignment attached as Exhibit “B” to the Plaintiff’s moving papers. As the subject
Assignment was not even recorded by the Atlantic County Clerk until almost a year later on November 5,
2008, Plaintiff arguably had no interest in the mortgage until late 2008.
As such, Plaintiff lacked legal standing to institute this mortgage foreclosure action ab initio. This
issue of material fact warrants not only the denial of Plaintiff’s Motion for Summary Judgment, but also
supports the entry of summary judgment in favor of the Fairhurst Defendants on their Sixth Separate
Defense and their Counterclaim.
In addition to the disputed issues of material fact set forth in the Defendants’ Statement of
Material Facts filed separately but simultaneously herewith, the Defendants have propounded a First
Request for Production, First Request for Admissions, and First Set of Interrogatories upon Plaintiff,
none of which have been responded to as of the date of this Response. These discovery requests seek
information as to the Plaintiff’s legal standing including the chain of title to the mortgage and note
which are factual issues material to not only the Plaintiff’s claim but also the Counterclaim of the
Defendants. As there is a dispute as to the absence of factual issues at this early stage of the
proceedings where the case is not fully developed, summary judgment is inappropriate. Velantzas v.
Colgate-Palmolive Company, Inc., 109 N.J. 189, 193, 536 A.2d 237 (N.J. 1987):
Generally, we seek to afford “every litigant who has a bona fide cause of action or defense the
opportunity for full exposure of his case”, and “When “critical facts are peculiarly within the
moving party’s knowledge,” it is especially inappropriate to grant summary judgment when
discovery is incomplete.
109 N.J. at 193, citing United Rental Equip.Co. v. Aetna Life and Casualty Ins. Co., 74 N.J. 92, 99, 376 A.2d
1183 (1977)(citing Robins v. Jersey City, 23 N.J. 229, 240-41, 128 A.2d 673 (1957), and Martin v.
Educational Testing Serv., Inc., 179 N.J. Super 317, 326, 431 A.2d 868 (Ch.Div.1981).
In cases where a suit is in an early state and not fully developed, the standard by which a court ought to
review a judgment terminating it now is from the standpoint of whether there is any basis upon which
the plaintiff should be entitled to proceed further. Velantzas, supra at 193, citing Bilotti v. Accurate
Forming Corp., 39 N.J. 184, 193, 188 A.2d 24 (1963). As the Plaintiff herein did not have the legal
standing to institute this foreclosure action ab initio, Plaintiff cannot proceed any further, and thus
Plaintiff’s Motion for Summary Judgment must thus be denied.
Plaintiff also attempts to support its Motion for Summary Judgment with the Certification of Richard P.
Haber, Esq., who is counsel for the Plaintiff and who is not an officer or director of the Plaintiff. The
subject Certification is not made on personal knowledge, and admits that it is based on a “review of the
computerized records of the plaintiff”. As the Certification is not based on personal knowledge, the
statements in the Certification can only be based on information and belief.
Rule 1:6-6 requires that Certifications in support of Motions be made on personal knowledge. Personal
knowledge excludes matters based on information and belief. See., e.g., Wang v. Allstate Ins. Co., 125
N.J. 2, 16 (1991); Lamb v. Global Landfill Reclaiming, 111 N.J. 134, 153 (1988). The Haber Certification,
which is based on a “review of computerized records” (which are per se incompetent hearsay) by
someone without personal knowledge, is thus incompetent to support the Plaintiff’s Motion for
Summary Judgment as a matter of law and New Jersey procedure.
The Haber Certification also makes reference to and attaches the Assignment (Exhibit “B” to the
Certification). This Assignment, which constitutes an admission by the Plaintiff, is the very document
demonstrating that Plaintiff had no legal interest or ownership in either the note or mortgage at the
time that the Complaint was filed, and raises genuine issues of material fact as to when (if ever) Plaintiff
came into any ownership rights of either the Note or the Mortgage. Plaintiff’s Motion for Summary
Judgment must thus be denied, and summary judgment should be entered in favor of the Fairhurst
Defendants on their Sixth Separate Defense and their Counterclaim.
CONCLUSION
Plaintiff has, by its very submissions, demonstrated that there are genuine issues of material fact as to
when, if ever, Plaintiff came into any ownership interest in either the Note or Mortgage. Plaintiff’s
submissions demonstrate that there is no genuine issue of material fact that Plaintiff did not have any
legal interest in either the note or the mortgage at the time it filed this foreclosure action, and has thus
demonstrated that it was without legal standing to institute this action. Summary judgment for Plaintiff
is thus inappropriate.
Summary Judgment is also improper at this time given that discovery is incomplete. The Haber
Certification, which consists of incompetent hearsay, is legally inadmissible and does not in any way
support the entry of summary judgment for Plaintiff. If anything, the Haber Certification supports the
entry of summary judgment in favor of the Defendants on their Sixth Separate Defense and their
Counterclaim.
Plaintiff’s Motion for Summary Judgment must thus be denied, and summary judgment in favor
of the Defendants on their Sixth Separate Counterclaim should be granted pursuant to the Cross-Motion
for Summary Judgment filed by the Defendants.
Respectfully submitted,
(counsel)
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