GREEN TREE SERVICING, LLC v. LINDA WAGONER (F-054322-14, PASSAIC COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: October 4, 2022
• Docket: A-3696-20
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3696-20

GREEN TREE SERVICING, LLC,

Plaintiff-Respondent, v.

LINDA WAGONER,

Defendant-Appellant,

and

MR. WAGONER, husband of LINDA WAGONER, MICHAEL WAGONER and MRS. WAGONER, wife of MICHAEL WAGONER,

Defendants. ______________________________

Submitted September 20, 2022 – Decided October 4, 2022

Before Judges Sumners and Geiger.

On appeal from the Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. F-054322-14.

Stratton Ashtyani, LLP, attorneys for appellant (Nima Ashtyani, on the briefs). Akerman LLP, attorneys for respondent (James Ng and Erica R. S. Goldman, on the brief).

PER CURIAM

In this residential mortgage foreclosure action, defendant Linda Wagoner

appeals from two post-judgment orders that: (1) denied her motion to enforce

litigant's rights; and (2) denied her motion to join Shellpoint Mortgage Servicing

(Shellpoint) and the Federal Home Loan Mortgage Corporation (Freddie Mac)

as defendants. We affirm.

We take the following facts from the unusual and incomplete record in

this matter. On September 6, 2006, Linda Wagoner and Michael Wagoner 1

borrowed the sum of $256,400 from First Horizon Home Loan Corporation

(First Horizon), to be initially repaid at the rate of $1,442.25 per month. The

debt was secured by a non-purchase money mortgage affecting a residence in

Wayne. The interest rate on the mortgage was subject to an adjustable-rate rider.

The note and mortgage were serviced by Everhome Mortgage (Everhome).

The mortgage contains an acceleration clause that granted the lender, its

servicing agent, and its assigns, the option to declare the entire balance owed on

1 Because the borrowers share the same surname, we refer to them individually by their first names and collectively as defendants. We intend no disrespect in doing so. Michael has not participated in this appeal. A-3696-20 2 the loan, including unpaid interest and any other charges, "if any installment

payment of interest and principal, taxes and/or insurance premiums" fell thirty

days past due.

Defendants initially defaulted on the mortgage in March 2009. By this

point, Freddie Mac was the owner of the mortgage. Linda applied to Everhome

for a loan modification. Everhome offered a Home Affordable Modification

Trial Period Plan which represented "an estimate of the payment[s] that [would]

be required under the modified loan terms." Under the plan, Defendants would

make mortgage payments in the amount of $1,265.84 per month in June, July,

and August 2009. If those payments were made in a timely fashion, Everhome

would provide a permanent loan modification.

Defendants accepted and completed the Trial Period Plan. Because

Everhome's underwriting took longer than expected, a permanent loan

modification was not immediately executed. 2 Consequently, defendants

continued to make mortgage payments at the Trial Period Plan rate for the

months of September 2009 through January 2010. Because the modified loan

2 Everhome states that the underwriting delay was due to "the overwhelming response to the treasury modification plan in 2009." A-3696-20 3 terms had not yet been determined, Everhome held the post-trial period

payments in suspense.

A permanent loan modification agreement was executed on December 11,

2009, with the first modified payment retroactively due on December 1, 2009.

The modification increased the principal balance to $279,173.96 and the

monthly mortgage payment to $1,265.92. The modification also changed the

interest rate to two percent for the first five years, three percent for the sixth

year, four percent for the seventh year, and 4.875 percent thereafter until the

November 1, 2049 maturity date. No new monies were advanced.

Upon execution of the loan modification agreement, Everhome applied

the funds held in suspense to the December 2009 through March 2010 mortgage

payments. According to the trial court, however, defendants made additional

payments during those months, resulting in several "double" payments.

From 2010 to 2014, defendants consistently made both short and late

payments on the loan, resulting in escrow deficiencies and monthly mortgage

payment fluctuations. In May 2014, defendants defaulted on the loan, and First

Horizon transferred servicing of the loan to Green Tree Servicing, LLC (Green

Tree). In July 2014, defendants were served with a notice of intent to foreclose,

which called for payment of $3,591.84 by August 15, 2014. Linda continued to

A-3696-20 4 make payments on the loan thereafter, but ultimately fell $781.38 short of the

cure amount.

On August 30, 2014, following expiration of the foreclosure deadline,

Linda made another payment, which Green Tree used to satisfy the May 1, 2014

mortgage installment, bringing the account due for June 1, 2014. At this point,

Green Tree returned the remaining funds held in suspense, and defendants made

no further mortgage payments.

On December 31, 2014, Green Tree filed this foreclosure action. Linda

filed an answer in February 2015, admitting default, but contesting Green Tree's

right to foreclose on the property. In August 2015, Green Tree changed its name

to Ditech Financial LLC (Ditech) and Ditech was substituted as plaintiff.

The case proceeded to trial. At trial, Ditech presented extensive testimony

by Thomas Krehl, whose position is not identified in the record. 3 On April 15,

2016, the trial court issued a judgment and written opinion dismissing the

complaint with prejudice because plaintiff had failed "to sustain [its] burden of

proof to establish . . . the amount of indebtedness and non-payment of the

mortgage." The court noted it was possible that Linda was "not . . . actually in

default at the time the [notice of intent to foreclose] was mailed on July 11,

3 The record does not include the transcript of the trial. A-3696-20 5 2014[,] . . . [or] on the cure date of August 15, 2014." The court reasoned that

Ditech had failed to show that Linda's "double payment[s]" were "properly

credited," and that even Ditech's own witness appeared "confused" on the

matter. Since the total of those payments was "greater than the $3,591.84 cure

amount," the court concluded that Ditech was "unable to prove . . . that [Linda]

actually defaulted on the mortgage."

The court ordered Ditech and Linda to "enter into a new installment

payment schedule under the existing mortgage whereby [Linda] will continue to

make monthly mortgage payments at an amount similar to that paid monthly

prior to the default which forms the basis of [the action]." The judgment barred

Ditech from bringing further foreclosure actions for any default that occurred

before the date of the judgment. The judgment preserved Ditech's right to

legally contest the note. The judgment further provided that Ditech was not

barred from filing a future foreclosure action if "[Linda] defaults on the payment

schedule to be established by the parties[.]" The parties did not appeal from the

judgment.

In December 2016, Ditech offered, and Linda rejected, a loan modification

with monthly payments of $1,672.72. In June 2017, servicing of the loan

transferred from Ditech to Shellpoint. By this point, it appears that ownership

A-3696-20 6 had also transferred, as Shellpoint began identifying New Penn Financial, LLC

(New Penn) as the "owner" of the loan and "[l]ender." In August 2017,

following Linda's continued default, Shellpoint issued a notice of intent to

foreclose.

On December 6, 2017, Linda filed a complaint in federal district court

against Everhome, Ditech, Shellpoint, New Penn, and Freddie Mac. Linda

identified Freddie Mac as the current or previous owner of the loan. 4 (Da139).

Linda alleged: violation of the Fair Debt Collection Practices Act (FDCPA), 15

U.S.C. §§ 1692 to -1692p; violation of the Real Estate Settlement Procedure Act

(RESPA), 12 U.S.C. §§ 2601 to -2617; breach of contract; violation of the New

Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20; violation of the covenant of

good faith and fair dealing; intentional infliction of emotional distress; and

fraud. On May 15, 2018, the district court issued an order and opinion

dismissing the FDCPA and RESPA claims on the merits and dismissing the state

law claims for lack of subject matter jurisdiction. There is no indication that

Linda appealed the dismissal.

4 The ownership timeline as it relates New Penn and Freddie Mac is not clear. A-3696-20 7 In June 2018, Linda filed a motions to enforce litigant's rights and to join

Shellpoint and Freddie Mac as defendants in the previously dismissed

foreclosure action.

In December 2018, Shellpoint offered a loan modification to Linda with

monthly payments of $1,465.77, which Linda rejected. Linda argued that the

modification offers did not satisfy the trial court's original order because: (1) a

modification is not the proper remedy; (2) despite the trial court finding that the

amount of indebtedness needed to be established, Ditech and Shellpoint's

modification offers did not address the issue; (3) First Horizon did not apply

trial period payments held in suspense to Linda's principal, as required by the

2009 modification agreement; (4) the modification offers did not address escrow

deficiencies and mortgage payment fluctuations, which according to Linda, were

caused by Green Tree's misapplication of tax payments; and (5) the court cannot

force Linda to accept modification offers. Linda also argued that by returning

payments in 2014, Ditech waived its right to future payments.

The motions remained pending due to adjournment requests and the

COVID-19 pandemic. On July 8, 2021, the trial court heard oral argument and

issued two orders and an oral decision denying Linda's motions.

A-3696-20 8 The trial court found that the submitted filings were "conflicting," and that

therefore, it needed to conduct a "full evidentiary hearing" to determine "who

paid what and when," and if "the numbers that [Ditech] offered after [the

original] order were . . . in keeping with the spirit of what [the trial judge]

intended." The court also noted that the original foreclosure action had been

dismissed with prejudice five years earlier and, therefore, the parties had to

"press the reset button" and file "a new foreclosure complaint." Finally, the

court rejected the claim that the lender had somehow waived several years of

mortgage payments because they returned a payment, noting the mortgage itself

provides: "Lender may return any payment or partial payment if the payment or

partial payments are insufficient to bring the Loan current." The mortgage

further provides: "Lender may accept any payment or partial payment

insufficient to bring the Loan current, without waiver of any rights hereunder or

prejudice to its rights to refuse such payment or partial payments in the future."

This appeal followed. While this appeal was pending, Shellpoint served

Linda with a notice of intention to foreclose dated September 14, 2022. Linda

moved to supplement the record, which Shellpoint opposed. On September 22,

2022, we denied the motion because the new notice of intent to foreclose was

not germane to the issues on appeal.

A-3696-20 9 Linda raises the following points for our consideration:

POINT ONE

THE COURT ERRED WHEN IT DENIED THE MOTION TO ENFORCE LITIGANT'S RIGHTS.

A. The Court Erred When It Held That Plaintiff Did Not Waive Payments Tendered By Ms. Wagoner.

POINT TWO

THE COURT ERRED WHEN IT DENIED MS. WAGONER'S MOTION TO JOIN SHELLPOINT AND FREDDIE MAC AS PARTIES.

We review a trial court's decision to grant or deny a motion to enforce

litigant's rights for abuse of discretion. N. Jersey Media Grp. Inc. v. State, Off.

of the Governor, 451 N.J. Super. 282, 299 (App. Div. 2017). We likewise review

a trial court's decision to grant or deny a motion for joinder for abuse of

discretion. N.J. Dep't of Env't Prot. v. Standard Tank Cleaning Corp., 284 N.J.

Super. 381, 393 (App. Div. 1995).

An abuse of discretion occurs where the trial court's decision is "made

without a rational explanation, inexplicably departed from established policies,

or rested on an impermissible basis." N. Jersey Media Grp., 451 N.J. Super. at

299 (quoting US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012)).

"When examining a trial court's exercise of discretionary authority, we reverse

A-3696-20 10 only when the exercise of discretion was 'manifestly unjust' under the

circumstances." Newark Morning Ledger Co. v. N.J. Sports & Exposition Auth.,

423 N.J. Super. 140, 174 (App. Div. 2011) (quoting Union Cnty. Improvement

Auth. v. Artaki, LLC, 392 N.J. Super. 141, 149 (App. Div. 2007)).

We first address Linda's motion to enforce litigant's rights. Motions to

enforce litigant's right are governed by Rule 1:10-3, which "provides a 'means

for securing relief and allow[s] for judicial discretion in fashioning relief to

litigants when a party does not comply with a judgment or order.'" N. Jersey

Media Grp., 451 N.J. Super. at 296 (quoting In re N.J.A.C. 5:96, 221 N.J. 1, 17-

18 (2015)). "Relief under Rule 1:10-3 . . . is not for the purpose of punishment,

but as a coercive measure to facilitate the enforcement of [a] court order." Ridley

v. Dennison, 298 N.J. Super. 373, 381 (App. Div. 1997). "The particular manner

in which compliance may be sought is left to the court's sound discretion." N.

Jersey Media Grp., 451 N.J. Super at 296 (quoting Bd. of Educ. of Middletown

v. Middletown Twp. Educ. Ass'n, 352 N.J. Super. 501, 509 (Ch. Div. 2001)).

Here, Ditech and Shellpoint attempted to reach a mortgage modification

agreement that included a monthly payment level comparable to the original

monthly installment. Both payment schedules were rejected by Linda. There is

no evidence in the record that she extended any counteroffers. She cannot avoid

A-3696-20 11 foreclosure by refusing to execute a modification agreement that incorporates a

payment schedule similar to the prior payment level as contemplated by the trial

court. Even so, neither Ditech nor Shellpoint filed any pleadings to attempt to

enforce the mortgage as previously modified. They did not refuse to comply

with the judgment.

Moreover, the underlying foreclosure action was dismissed with prejudice

in April 2016. Although Shellpoint sent Linda a notice of intent to foreclose

dated August 25, 2017, there is no indication in the record that it filed a new

mortgage foreclosure complaint or an application to reopen the dismissed action.

Therefore, Linda's motion to enforce litigant's rights was premature and

speculative as it attempted to address an alleged violation that had not yet

occurred. The trial court correctly denied the motion.

We next address Linda's argument that by returning payments in June

2014, Green Tree waived its right to payments thereafter. The trial court

rejected this argument because the mortgage allowed the lender to return any

payment that was "insufficient to bring the loan current." That clause, known

as an acceleration clause, is widely contained in residential mortgages and

enforceable.

A-3696-20 12 Linda's reliance on N.J.S.A. 12A:3-603(b) is misplaced. N.J.S.A. 12A:3-

603(b) expressly provides that "[i]f tender of payment of an obligation to pay an

instrument is made to a person entitled to enforce the instrument and the tender

is refused, there is discharge, to the extent of the amount of the tender." The

statute does not discharge payment arrears beyond the payment tendered. Here,

$2,685.50 was tendered in 2014. The judgment only affected arrears accruing

before April 15, 2016. The tender in 2014 did not affect monthly installments

that fell due after April 15, 2016.

Finally, we address Linda's motion to join Shellpoint and Freddie Mac as

defendants. Generally, Rule 4:28-1 governs the joinder of parties, establishing

criteria for mandatory joinder and indispensable parties. However, Rule 4:6-3

requires that a motion for joinder "shall be heard and determined before trial on

application of any party, unless the court for good cause orders that the hearing

and determination thereof be deferred until the trial." Linda's joinder motion

was filed some five years after the trial court dismissed Ditech's complaint with

prejudice. The trial court correctly denied the motion as untimely.

Affirmed.

A-3696-20 13