NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

Defendants, commercial borrowers, appeal from the trial court's February 1, 2013, order, reconsidering and vacating a prior order that vacated a final default judgment of foreclosure in favor of plaintiff, Cheron Holdings LLC (Cheron). Defendants renew arguments they presented to the trial court that their default resulted from excusable neglect and they have a meritorious defense to the complaint based on plaintiff's alleged lack of standing. We affirm.

I.

The relevant facts in the case generally pertain to the transfers of the mortgage that is the subject of the foreclosure, and the related note. We discern the following facts from the record.

Defendant Lisboa Barbecue LLC (Lisboa), by its members, Maria and Italo Fernandes, mother and son, borrowed $250,000 from Northern Funding, LLC, evidenced by a mortgage note dated February 17, 2004, with a maturity date of February 17, 2005, and an annual interest rate of fifteen percent, commencing April 1, 2004. The borrowers had a qualified option to extend the term for a single-six month period upon payment of "two (2) points of the loan amount." Maria and Italo provided personal guarantees of payment.

The note was secured by a mortgage and security agreement encumbering two properties defendants already owned: one that Maria and Italo owned in Verona Township, from which Lisboa apparently operated its restaurant business, and a property in Hillside Township, which Maria owned. The mortgage on the Hillside property was a second mortgage. Maria apparently sold the Hillside property during the term of the loan. She alleged she did so with the mortgagee's consent, upon paying $50,000 to reduce the loan's principal amount due.1

Northern Funding was part of a group of affiliated entities, including Northern City, LLC, and Northern Source, LLC (collectively, Northern Entities). The Northern Entities were engaged in lending to numerous individuals and businesses in New York and New Jersey. Between 2004 and 2009, there were multiple assignments of the mortgage and note, with or between one or more of the Northern Entities, which we review below.

Also, during this same period, Lisboa, by Maria, entered into three modification agreements, on March 7, and July 16, 2007, and January 16, 2008, extending the loan's maturity. Northern City was a party to the first two agreements; Northern Source was a party to the third. Each agreement acknowledged that $200,000 was then due on the note. The first one extended the maturity date to August 17, 2007, and imposed a $20,000 extension fee, due no later than maturity. The second agreement extended the maturity date to February 17, 2008, and imposed a $27,000 extension fee on similar terms. The third modification extended the maturity date to August 17, 2008, and imposed a $31,000 extension fee.2 The record does not include any written agreements extending the loan between its original maturity date of February 2005, and March 2007.

Beginning in 2005, the Northern Entities received credit lines from CapitalSource Finance LLC (CapitalSource). Later, CSE Mortgage LLC (CSE) joined CapitalSource as a lender to the Northern Entities. The Northern Entities pledged various loans in their portfolios, including the Lisboa note, as collateral. Pursuant to a refinancing of the Northern Entities' portfolio, CapitalSource took physical possession of the note in late 2007. The Northern Entities eventually defaulted. CapitalSource and CSE formed Cheron in June 2009, for the purpose of foreclosing on the collateral. Cheron notified the Northern Entities, including Northern Funding and Northern Source, that it intended to sell the collateral, providing a schedule that included the Lisboa note. At a public sale on July 2, 2009, Cheron purchased the note and other loans in the Northern Entities' portfolio.

The mortgage was assigned to Cheron in the last of a series of recorded mortgage assignments. Northern Funding initially assigned the mortgage to Wells Fargo Foothill, Inc. (Wells Fargo) in late 2004. Thereafter, the mortgage was assigned from Wells Fargo back to Northern Funding on April 19, 2006, which was recorded on July 6, 2006, and from Northern Funding to Northern City on January 10, 2007, recorded on March 15, 2007. There were two assignments on September 8, 2008: from Northern City to Northern Source, and from Northern Source to CapitalSource. The first was recorded January 14, 2009, and the second January 26, 2009. On June 26, 2009, CapitalSource assigned the mortgage to Cheron, and recorded it on August 7, 2009. A bill of sale and assignment dated July 2, 2009, confirmed the CapitalSource-to-Cheron assignment.

Cheron also acquired possession of the original note following a series of apparent transfers. Although the note itself was never endorsed by Northern Funding to any other party, the record includes four allonges that Cheron argues reflect the intended transfer of the note to Cheron. An undated allonge signed by Eli Tisser, as Northern Funding's chief financial officer (CFO), expressly referred to the Lisboa note, and made it payable to Northern City.

A second allonge, dated as of October 31, 2007, purportedly endorsed the note from Northern City to Northern Source. However, the allonge only vaguely refers to a "Promissory Note. . . originally payable to Northern Source," as opposed to Northern Funding. The second allonge is also signed by Tisser, but this time as Northern City's CFO.

A third allonge expressly refers to the Lisboa note, describes it as "payable to the order of Northern Source," and makes the note payable to CapitalSource. The third allonge is also signed by Tisser, as CFO of Northern Source. However, the third allonge is dated October 24, 2007 — a week before the October 31, 2007, allonge that made the note payable to Northern Source. Cheron argues that the dating of the second or third allonge was in error, and those allonges were likely executed on the same day.

A fourth undated allonge, executed by a signatory of CapitalSource, expressly and accurately refers to the Lisboa note and makes it payable to Cheron.

Defendants defaulted under the note and mortgage on August 17, 2008, when the note matured under the last modification agreement and the full amount of principal was due. Cheron filed a Law Division action on the note in 2009. At some point after the filing of the Law Division complaint, Maria retained an attorney, Wanda Nieves, who engaged in fruitless negotiations with Cheron. Defendants did not answer the Law Division complaint. Upon notice to defendants' counsel, Cheron ultimately sought in April 2010, and obtained in August, default judgment in the Law Division action. Cheron then pursued post-judgment supplemental proceedings in October.

On May 17, 2010, Cheron filed its foreclosure action in Essex County. Service was accomplished on Maria and Lisboa in June 2010, but Cheron had difficulty locating Italo, and ultimately obtained an order in June 2011 permitting substituted service, which was accomplished later that month. None of the defendants answered the complaint. Cheron requested entry of default judgment against Maria and Lisboa in September 2010, and against Italo in July 2011. In November 2011, upon notice to defendants, Cheron applied for a final judgment of foreclosure by default, which ultimately was entered on April 26, 2012. A writ of execution was issued the same day, setting the amount due as $269,997.20, plus interest from June 30, 2011. The final judgment was served on May 11, 2012, and a sheriff's sale was scheduled for July 31, 2012.

While the foreclosure action was pending, Nieves continued to correspond with Cheron. Nieves stated in an unsworn letter that she was not retained to represent defendants in the foreclosure action. She asserted Maria asked her to assist her in obtaining a modification of her loan. Maria claimed in a certification that she believed Nieves represented her on both matters. Without mentioning her son Italo, she stated that she did not speak English and did not understand the details of her legal matter. In November 2010, Nieves proposed to Cheron that defendants would offer a deed in lieu of foreclosure in return for a two-year lease from Cheron at $1500 a month in year one and $1700 in year two, with a right of first refusal to purchase. Although Cheron's counsel essentially accepted the offer — countering only with a minor adjustment in the proposed rent — an agreement was not reached. Subsequent correspondence from Nieves in November 2011 sought various documents from Cheron's counsel, suggesting that Cheron had not accurately accounted for defendants' payments. Cheron's counsel responded that a final default judgment had already been entered on the note.

In late June 2012, defendants retained their current attorney and filed a motion to vacate the default judgment of foreclosure.3 Counsel argued in a certification that defendants excusably neglected the matter in reliance on Nieves.4 He also asserted that Cheron lacked standing. In a proposed answer, defendants alleged, among other defenses, that Cheron lacked standing, and the loan was fraudulently procured.

In two hearings on the motion, defendants asserted that Cheron was not a proper assignee of the mortgage. Defendants relied on a report of a claimed expert in loan audits who asserted the mortgage had been securitized. Defendants also argued that Cheron was not a holder of the note, as there was no evidence of an endorsement, the allonges were not affixed to the note, and they displayed various discrepancies, which we have already described.

The court found that the documents raised serious questions regarding Cheron's standing. In particular, the court was troubled by the lack of an endorsement of the note, the irregularities in the allonges, and the fact that the allonges were not attached to the note. Without expressly deciding that defendants had established excusable neglect, the court held that the substantive issue of Cheron's standing predominated over the issue of excusable neglect. On October 5, 2012, the court vacated the default judgment to allow a period of discovery.

Cheron then moved for reconsideration. Relying on our decisions in Deutsche Bank National Trust Co. v. Russo, 429 N.J.Super. 91 (App. Div. 2012), and Deutsche Bank Trust Co. Americas v. Angeles, 428 N.J.Super. 315 (App. Div. 2012), issued in the weeks immediately following the court's October 2012 order, Cheron argued that defendants should not be permitted to raise a standing defense after entry of default judgment. Cheron also argued that even if it were not a holder of the note, it nonetheless was a non-holder in possession with rights of a holder. N.J.S.A. 12A:3-301.

The court agreed. Citing US Bank National Ass'n v. Guillaume, 209 N.J. 449 (2012), the court held that defendants had not established excusable neglect, indicating that a court is generally less indulgent of a commercial borrower, and the prior attorney's alleged lack of diligence was insufficient. Turning to the meritoriousness of defendants' standing defense, the court held, relying on Angeles, supra, and Deutsche Bank National Trust Co. v. Mitchell, 422 N.J.Super. 214 (App. Div. 2011), that a plaintiff may establish standing by proving either it possessed the note, or was assigned the mortgage before filing the complaint. The court found no irregularities in the series of assignments of the mortgage, which culminated in the assignment to Cheron. The court also found that even if Cheron were not a holder of the note, it was a non-holder in possession with rights of a holder. By order entered February 1, 2013, the court vacated its October 2012 order, reinstated the default judgment, and ordered the scheduling of a sheriff's sale.

This appeal followed. Defendants present the following points for our consideration:

II.

Our decision is guided by well-established principles. The decision whether to grant a motion to vacate a default judgment is "left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion." Mancini v. EDS, 132 N.J. 330, 334 (1993). See also Guillaume, supra, 209 N.J. at 467 (stating decision on motion to vacate default judgment "should not be reversed unless it results in a clear abuse of discretion"). A motion to vacate a default judgment implicates two often competing goals: the desire to resolve disputes on the merits, and the need to efficiently resolve cases and provide finality and stability to judgments. "The rule is designed to reconcile the strong interests in finality of judgments and judicial efficiency with the equitable notion that courts should have authority to avoid an unjust result in any given case." Manning Eng'g, Inc. v. Hudson Cnty. Park Comm'n, 74 N.J. 113, 120 (1977).

The movant bears the burden of demonstrating that its failure to answer should be excused and default judgment vacated, Jameson v. Great Atl. & Pac. Tea Co., 363 N.J.Super. 419, 425-26 (App. Div. 2003), certif. denied, 179 N.J. 309 (2004), although close issues should be resolved in the movant's favor. Mancini, supra, 132 N.J. at 334. At bottom, the decision whether to grant or deny a motion to vacate a default judgment must be guided by equitable considerations. Prof'l Stone, Stucco & Siding Applicators, Inc. v. Carter, 409 N.J.Super. 64, 68 (App. Div. 2009) (stating that "Rule 4:50 is instinct with equitable considerations").

A motion to vacate on the basis of excusable neglect under Rule 4:50-1(a) must be brought "within a reasonable time" but not later than one year after judgment. R. 4:50-2. Although not expressly included in the Rule, it is well-settled that a defendant claiming excusable neglect must also demonstrate that he or she has a meritorious defense. Marder v. Realty Constr. Co., 84 N.J.Super. 313, 318 (App. Div.), aff'd, 43 N.J. 508 (1964). The justification for requiring a showing of meritorious defenses is simple. There is little point in setting aside a default judgment, sacrificing interests in repose and burdening a plaintiff and the court with additional litigation, if the ultimate result will inevitably be the same. See Schulwitz v. Shuster, 27 N.J.Super. 554, 561 (App. Div. 1953) (requiring the showing of a meritorious defense so "[t]he time of the courts, counsel and litigants [is] not . . . taken up by . . . a futile proceeding").

We turn first to the court's finding that defendants failed to demonstrate excusable neglect. We have found excusable neglect where a defendant reasonably assumes that his counsel, who was handling other actions, was addressing the complaint at issue. Reg'l Constr. Corp. v. Ray, 364 N.J.Super. 534, 541 (App. Div. 2003). We have also recognized that a defendant's promptness in moving to vacate a default judgment is a factor that favors granting the motion. Ibid. (affirming finding of excusable neglect "when examined against the very short time period between the entry of default judgment and the motion to vacate"); Jameson, supra, 363 N.J. Super. at 428 (noting the "speed and diligence with which [the defendant] moved to attempt to vacate the default judgment"); Morales v. Santiago, 217 N.J.Super. 496, 504-05 (App. Div. 1987) (reversing denial of motion to vacate because, among other factors, "[s]ellers moved to vacate the judgment soon after it was entered").

Nonetheless, we are not prepared to conclude the trial court erred in this case. In Regional Construction Corp., the movant reasonably believed defense counsel was defending the complaint at issue because counsel was actively litigating in related cases. Here, a default judgment was entered in the related Law Division action. Counsel sought to negotiate but not, apparently, to litigate. Consequently, there is no basis for us to conclude defendants believed the approach to the foreclosure action would have been any different.

Moreover, although defendants' motion was filed in June 2012, just two months after entry of the default judgment of foreclosure in April, the evidence does not reflect prompt action after the discovery of default. Cheron requested entry of default judgment against Maria and Lisboa in September 2010, and against Italo in July 2011. Measured against that warning bell, defendants did not move swiftly. Moreover, post-judgment supplemental proceedings had begun in the Law Division action in 2010. Although the foreclosure judgment was in effect only briefly before the motion was filed, the circumstances entitled Cheron to rely on the legitimacy of its judgments. Cf. Reg'l Constr. Corp., supra, 364 N.J. Super. at 545.

We indicated in Angeles and Russo that we will determine the presence of excusable neglect in light of the nature of the defense. In particular, a trial court may be less forgiving of a defendant's belated attempt to raise standing as a defense to a foreclosure action. Russo, supra, 429 N.J. Super. at 101; Angeles, supra, 428 N.J. Super. at 320. A plaintiff suffers prejudice from delay. Angeles, supra, 428 N.J. Super. at 320 (stating that "equity must be applied to plaintiffs as well as defendants"). Also, in many cases, the defense ultimately is futile, because the lack of standing is curable. For example, a plaintiff that lacked standing because it did not possess the note before filing may, after a dismissal without prejudice, re-file once it obtains possession. Aside from encouraging plaintiffs to properly address standing, little may be accomplished other than delay. Cf. Bank of N.Y. v. Raftogianis, 418 N.J.Super. 323, 356 (Ch. Div. 2010).

We also discern no error in the court's assessment of the merits of defendants' standing defense. "As a general proposition, a party seeking to foreclose a mortgage must own or control the underlying debt." Mitchell, supra, 422 N.J. Super. at 222 (internal quotation marks and citations omitted). "[E]ither possession of the note or an assignment of the mortgage that predated the original complaint confer[s] standing." Angeles, supra, 428 N.J. Super. at 318. In this case, Cheron has demonstrated both, and defendants' claim to the contrary lacks merit.

The record reflects an uninterrupted trail of recorded mortgage assignments that lead directly to Cheron. The rights originally vested in Northern Funding were ultimately assigned to Cheron. See N.J.S.A. 46:9-9 (stating that mortgages are assignable in writing and assignee may sue in its own name); EMC Mortg. Corp. v. Chaudhri, 400 N.J.Super. 126, 141 (App. Div. 2008) (discussing assignability of mortgages). Defendants have not presented competent evidence to question the validity of the mortgage assignments.

Also, Cheron indisputably possesses the original note. We recognize that it was not endorsed on its face, and the note itself remains payable to Northern Funding. The allonges reflect various inconsistencies, and were not attached to the note. Nonetheless, we are satisfied that Cheron at the least qualifies as a non-holder in possession with the rights of a holder pursuant to N.J.S.A. 12A:3-301. A party may become a non-holder in possession with rights of a holder when the instrument, without negotiation, "is delivered for the purpose of giving the person receiving the instrument the right to enforce it." Raftogianis, supra, 418 N.J. Super. at 331. The transactions between CapitalSource and the Northern Entities, and the public sale of collateral, reflect a clear intent to deliver the note and the right to enforce it to CapitalSource, which in turn transferred the note and right to Cheron.

For the first time on appeal, defendants assert in their reply brief the defenses that the modification agreements were unenforceable because Italo did not sign them; and the original note and extensions were obtained by the fraudulent representation "that the balloon feature was to be removed." We are not obliged to address points first raised in a reply brief. Randolph Town Ctr., L.P. v. Cnty of Morris, 374 N.J.Super. 448, 452, n.2 (App. Div. 2005), aff'd in part, vacated in part on other grounds, 186 N.J. 78 (2006).

In any event, defendants have not demonstrated that Maria lacked the authority, generally vested in a member of a member-managed limited liability company (LLC), to enter into agreements on the LLC's behalf. N.J.S.A. 42:2B-27(b)(1).5 Moreover, the validity of the modifications would, presumably, only affect the amount due and owing on the note. However, we presume the amount due was preclusively determined in the Law Division action. See First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 356 (2007) (stating "when there is an action on the note followed by an action to foreclose on the security, the trial court in the second action should be bound by the judgment entered in the first action" regarding same categories of damages).

Finally, alleged oral misrepresentations are insufficient as a matter of law to avoid a written contract that they directly contradict. See Filmlife, Inc. v. Mal "Z" Ena, Inc., 251 N.J.Super. 570, 574-76 (App. Div. 1991) (granting motion to dismiss complaint which sought to avoid a contract based on alleged oral misrepresentations that directly contradicted writing); Winoka Village, Inc. v. Tate, 16 N.J.Super. 330, 334 (App. Div. 1951) (reversing trial judgment, holding that alleged oral misrepresentation regarding the length of a lease was "insufficient in law to relieve defendant of rental obligations he knew were imposed by the express terms of the leases"). Consequently, defendants may not be heard to complain that they were induced to enter into the loan based on the false representation that the balloon provision of the note would not be enforced.

Defendants' remaining arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.