DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR IXIS REAL ESTATE CAPITAL TRUST 2005- HE4 MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2005-HE4 v. LINDSEY et al

Filing 28

MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 9/25/2014. (TH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE FOR IXIS
REAL ESTATE CAPITAL TRUST 2005
– HE4 MORTGAGE PASS THROUGH
CERTIFICATES, SERIES 2005-HE4,

HONORABLE JEROME B. SIMANDLE

Civil Action
No. 13-2040 (JBS/JS)

Plaintiff,
MEMORANDUM OPINION
v.
LORRAINE LINDSEY, et al.,
Defendants.

SIMANDLE, Chief Judge:
This matter came before the Court on Defendants Lorraine
and Raymond Lindsey’s motion to vacate default judgment. [Docket
Item 15.] Defendants request that the Court vacate its August
22, 2013 Order entering default judgment for Plaintiff Deutsche
Bank National Trust Company, as Trustee for IXIS Real Estate
Capital Trust 2005 – HE4 Mortgage Pass Through Certificates,
Series 2005-HE4 against Defendants. [Docket Item 14.] Pursuant
to an order entered August 25, 2014, the Court continued
Defendants’ motion until hearing oral argument on the pivotal
question of whether Defendants were served in this action.
[Docket Item 24.] The Court held a hearing on September 16, 2014
during which the Court heard testimony from the process server

Thomas Crean, Jr., as well as Defendants Raymond and Lorraine
Lindsey. In addition to the findings stated in the Court’s
August 25, 2014 Order, the Court now finds as follows:
1.

The present action involves a dispute over a

settlement agreement and loan modification related to a mortgage
on Defendants’ home in Franklinville, New Jersey. On April 1,
2013, Plaintiff filed its Complaint in the District of New
Jersey seeking rescission of a Settlement Agreement and Release
and Loan Modification Agreement executed on January 31, 2013.
[Docket Item 1.] Plaintiff alleges that the loan modification
was based on terms intended for a different loan by a different
lender. Plaintiff contends it was unaware of the mistake until
“(i) the loan medication terms were offered to the Lindseys, and
(ii) Ocwen Loan Servicing, LLC, as attorney in fact for Wells
Fargo (not Deutsche Bank) and the Lindseys executed both a
Settlement Agreement and Release and a Loan Modification
Agreement.” (Am. Compl. [Docket Item 12] ¶ 26.])
2.

The settlement and modification followed litigation in

New Jersey state court between the parties, including a
foreclosure action Plaintiff filed against Defendants on
February 15, 2012 in the Superior Court of New Jersey,
Gloucester County, Deutsche Bank National Trust Company, as
Trustee for IXIS Real Estate Capital Trust 2005 – HE4 Mortgage
Pass Through Certificates, Series 2005-HE4 v. Lindsey, F-0031602 

12. That action was voluntarily dismissed when the parties
reached their alleged settlement agreement, but the Superior
Court did not adopt the settlement as a judgment nor did it play
a role in convening settlement negotiations of the 2012 suit.
3.

According to Plaintiff, Defendants were personally

served with the Summons and Complaint in the instant action at
their residence on April 3, 2013. [Docket Items 3 & 4.]
Defendants’ time to answer or otherwise respond expired on April
24, 2013. On August 22, 2013, after the Court required Plaintiff
to address deficiencies in the Complaint regarding diversity
jurisdiction, the Court granted Plaintiff’s second motion for
default judgment and entered judgment against Defendants.
[Docket Item 14.]
4.

In support of their motion to vacate default judgment,

Defendants argue that they were never served with the summons or
complaint in the present action and only became aware of this
suit after Plaintiff on April 10, 2014 filed a second
foreclosure action against them in Superior Court of New Jersey,
Gloucester County, docket number F-013741-14. Defendants contend
that their delay in responding is excusable because they were
never served, that they maintain a meritorious defense, and that
Plaintiff will not be prejudiced if the Court vacates the August
22, 2013 default judgment.

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5.

Plaintiff opposes Defendants’ motion [Docket Item 19]

and argues that Defendants’ failure to appear in this action was
a conscious decision, calculated to permit them to stay in their
home for months without making any mortgage payments. Plaintiff
contends that it will be prejudiced if the Court vacates the
default judgment because it detrimentally relied on the default
in filing a second foreclosure action against Defendants.
Moreover, Plaintiff asserts that Defendants’ failure to appear
in the instant action was culpable and their allegations
regarding lack of service are unworthy of belief. Plaintiff
concedes however that Defendants have satisfied their burden of
establishing a plausibly meritorious defense.
6.

Fed. R. Civ. P. 55(c) provides that “[t]he court may

set aside an entry of default for good cause, and it may set
aside a default judgment under Rule 60(b).” Pursuant to Fed. R.
Civ. P. 60(b)(4), “[o]n motion and just terms, the court may
relieve a party . . . from a final judgment” if “the judgment is
void.” The Third Circuit leaves the decision to vacate the entry
of default or a default judgment to the “sound discretion of the
[trial] court.” Tozer v. Charles A. Krause Milling Co., 189 F.2d
242, 244 (3d Cir. 1951). However, “[the Third Circuit] has
adopted a policy disfavoring default judgments and encouraging
decisions on the merits.” Harad v. Aetna Cas. & Sur. Co., 839
F.2d 979, 982 (3d Cir. 1988).
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7.

In exercising its discretion to vacate entry of a

default or a default judgment, the Court must consider (1)
whether the plaintiff will be prejudiced; (2) whether the
defendant has a meritorious defense; and (3) whether the default
was the result of the defendant’s culpable conduct. United
States v. $ 55,518.05 in U.S. Currency, 728 F.2d 192, 194–195
(3d Cir. 1984). Because “[a] default judgment entered when there
has been no proper service of the complaint is, a fortiori,
void, and should be set aside,” in such instances, the district
court need not resort to an analysis of the three factors listed
above. Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14,
19 (3d Cir. 1985); Mettle v. First Union Nat. Bank, 279 F. Supp.
2d 598, 603 n.3 (D.N.J. 2003) (“As this Court finds that entry
of default against [defendant] is void based on the improper
service of the summons and complaint, the Court need not
consider the factors set forth in Gold Kist.”).
8.

Thus, the threshold issue is whether Defendants were

properly served. Upon hearing testimony on September 16, 2014,
the Court finds that Defendants were served with the summons and
complaint in this action. The Court finds credible the process
server’s testimony that he personally served Mr. Lindsey at his
home on April 3, 2013 at 8:05 p.m. The process server, Mr.
Crean, candidly admitted that he could not specifically recall
the evening in question. However, he relied on his
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contemporaneous notes from April 3, 2013 in which he recorded
personal service of Mr. Lindsey at his home in Franklinville,
New Jersey, as well as an approximate physical description of
Mr. Lindsey and the time of service.1 It is unsurprising that Mr.
Crean could not remember specific details about the Lindsey
household or Mr. Lindsey’s appearance given that he has served
between 800 and 1,000 complaints in the intervening time. Mr.
Crean credibly described his practice of taking detailed notes
of his work within minutes of service which he has consistently
utilized throughout his nearly 20 years in the industry.
9.

In his contemporaneous notes, Mr. Crean noted the

appearance of the man he served, namely as a male, white, with
dark hair, age 55, height 5’9” and weight 180, with no special
mention of facial hair. He also testified that his notes are
accurate, that he left the Lorraine Lindsey summons and
complaint with “Raymond,” and that he understood from Raymond
that Lorraine also lived at the same home. See Pl. Ex. 6. The
Defendants argue that the physical description does not match
Raymond Lindsey, who weighs 250 and has lighter hair and a
“beard.” The Court finds, from observing Mr. Lindsey, that he
closely fits the description in age, height, race and hair color
(which is medium toned brown and grey). His “beard” is easily
1

The Court is unpersuaded by Defendants’ contention that Mr.
Lindsey does not match the description of the person Mr. Crean
served as recorded in his notes.
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missed because it is only the outline, with facial hair, of the
perimeter of a goatee that is clean-shaven on the front of the
chin. He has a normal mustache, but Mr. Crean usually does not
note a mustache when it is present. As to weight, Mr. Lindsey
does not appear to be 250 pounds, and Mr. Crean’s estimate of
180 pounds, in the evening light and probably without a full
view of the body, is quite plausible. Also, Mr. Crean testified
that he wrote “Raymond” when the individual confirmed his name
upon personal service, as was Mr. Crean’s custom.
10.

The Court does not find credible Mr. Lindsey’s

assertion that he was never served. Mr. Lindsey did not have the
demeanor of someone who is engaged in paying careful attention
to mail, bills or legal matters. His wife takes care of all such
matters, according to their testimony. The Court believes Mrs.
Lindsey’s testimony that on this particular occasion her husband
did not inform her of the documents with which he was served,
including her summons and complaint. Mrs. Lindsey’s testimony
that she would have responded to the complaint had she known
about it is supported by her active involvement in the first
state court foreclosure action, including responding to summary
judgment motions and filing her own cross-motion, despite
proceeding pro se.2 She testified credibly that she is the person

2

Defendants’ assertions of diligence remain valid despite
failing to respond to the second state court foreclosure filing.
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who, acting pro se, in 2012 negotiated what she regarded as a
favorable mortgage reduction settlement which Deutsche Bank
seeks to vacate in this case, and that she would not have stood
idly by if she had been aware of this case in 2013. This also
seems credible. Accordingly, the Court concludes that although
Mr. Lindsey was served with the summons and complaint on April
3, 2013, Mrs. Lindsey never received those documents and
remained unaware of this action until Plaintiff filed the second
foreclosure action in state court in 2014.
11.

Because Plaintiff concedes that Defendants may satisfy

their burden of proffering a meritorious defense, i.e., that the
underlying settlement agreement from January, 2013 was valid,
the Court need only consider the prejudice to Plaintiff and the
culpability of Defendants’ conduct. It is clear that Plaintiff
has been prejudiced by Defendants’ failure to appear in this
action given the time and expense of filing two motions for
default judgment in this court, the defense of this motion to
vacate default judgment in which Defendants were duly served,
and a second foreclosure action in state court. On the other
hand, the Court considers Mrs. Lindsey’s culpability to be

Defendants’ counsel and Mrs. Lindsey explained at the hearing
that after being served with the second state court complaint,
Mrs. Lindsey immediately retained counsel. Counsel then made the
strategic decision, whether misguided or not, to file the
instant motion to vacate default judgment in this court, rather
than respond to the second state court foreclosure action.
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slight. While Mr. Lindsey’s failure to read the documents served
upon him or inform his wife of their existence is not
acceptable, Mrs. Lindsey is guilty only of trusting her husband
to inform her and to turn over documents to her. Mrs. Lindsey,
though duly served by Mr. Crean leaving her summons and
complaint with an adult in her household, nonetheless remained
completely unaware of its existence until retaining counsel in
response to the second state court foreclosure action a year
later. Although the parties agreed at oral argument that no
payments have been applied to Defendants’ account since
December, 2012, Defendants’ failure to remit additional payments
is perhaps understandable in light of Plaintiff’s concession
that it returned Defendant’s December, 2012 payment due to the
mistaken settlement agreement.3 The prejudice to Plaintiff in
vacating the default judgment is palpable but not as substantial
as the prospect of Defendants, particularly Mrs. Lindsey, losing
their home without a decision on the merits. The prejudice in
needless expenditure of legal fees to obtain default and to

3

It is troublesome that the Lindseys have not reduced even the
negotiated version of their mortgage loan balance by payments
since December, 2012; it is not part of this record whether the
Lindseys have escrowed their monthly payments for these 21
ensuing months. If they are unable to satisfy their obligations
under even the January, 2013 settlement agreement, foreclosure
under either version of their mortgage – the original or the
negotiated settlement of January, 2013 – would seem inevitable.
But without this information, the Court cannot make the
assumption that the Lindseys cannot remit their unpaid amounts.
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litigate the present motion can be recouped. Especially
considering the Third Circuit’s policy favoring decisions on the
merits, the equities in this case weigh in favor of vacating
default judgment if the prejudice to Plaintiff can be mitigated
through proper conditions placed upon the vacating of the
default judgment.
12.

Defendants’ neglectful conduct in this action is not

without consequence. Mr. Lindsey’s nonchalance in receiving
service of the summonses has its price. The Court will grant
Defendants’ motion to vacate default judgment and reopen this
action on the condition that Defendants pay Plaintiffs’
reasonable attorney’s fees and expenses associated with the
litigation of the instant motion for relief from default
judgment. Under Fed. R. Civ. P. 60(b), “prejudice suffered by a
non-defaulting party can be rectified through the trial court’s
power to impose terms and conditions upon the opening of a
judgment.” Hritz v. Woma Corp., 732 F.2d 1178, 1188 n.3 (3d Cir.
1984); see also Chaaban v. Criscito, Civ. 08-1567 (JAG), 2009 WL
275948, at *3 (D.N.J. Feb. 5, 2009). Payment of Plaintiff’s
reasonable attorney’s fees and expenses accrued in opposing
Defendants’ motion will substantially diminish the prejudice to
Plaintiff in reopening this case. This waste of Plaintiff’s
efforts and resources was the fault of Defendants. Accordingly,
Plaintiff shall within 14 days of today’s date submit a fee
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application consistent with L. Civ. R. 54.2. Defendants will
have 14 days thereafter to contest Plaintiff’s application as to
reasonableness of the amounts sought. The Court will determine
the amount of fees and expenses and the Defendants will be
directed to pay the sum equal to Plaintiff’s reasonable
attorney’s fees and expenses ultimately approved by the Court.
Upon satisfaction of this condition, the Court will set aside
the default judgment.
The accompanying Order is entered.

September 25, 2014
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

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