RONALD AND EILEEN GILGALLON v. LOWENSTEIN SANDLER PC, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1533-04T2
1533-04T2

RONALD AND EILEEN GILGALLON,

Plaintiffs-Appellants,

v.

LOWENSTEIN SANDLER PC, JEFFREY

PROL, VALLEY NATIONAL BANK AND

THOMAS BARNETT,

Defendants-Respondents.

____________________________________________

 

Argued October 26, 2005 - Decided

Before Judges Conley, Weissbard and Francis.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, L-755-04.

Ronald Gilgallon, appellant, argued the cause pro se.

David M. Wissert argued the cause for respondents (Lowenstein Sandler, attorneys; Mr. Wissert, on the brief).

PER CURIAM

This appeal follows: (1) two foreclosures, (2) one deficiency action, (3) one order to show cause proceeding arising from a deficiency judgment against appellants Ronald and Eileen Gilgallon (Gilgallons) encumbering a separate, parcel which they sought to sell but which was encumbered by a judgment lien arising from the deficiency action, (4) one unsuccessful appeal from the second foreclosure action and, (5), finally, a civil complaint brought by the Gilgallons against the foreclosing bank and its attorneys. It is the grant of summary judgment to the bank and attorneys resulting in a dismissal of that civil complaint which is presently before us. That complaint alleged that defendants "engaged in a pattern of fraud and corruption concerning the foreclos[ures]," that the bank's attorneys "engaged in attorney misconduct and legal malpractice for failure to adhere to the rules of professional conduct and provide the required duty of care to nonclients," that the bank defendants "conspired with [the attorneys] to deceive the court by filing false certifications," that the "mistake of failing to file all claims in a single proceeding has led to countless acts of fraud and deceit," all of which "caused irreparable personal and financial harm to the [plaintiffs]." The complaint sought compensatory and punitive damages.

Underlying all of Gilgallons' claims is their contention that the entire controversy doctrine required defendants to include the second foreclosure in the first foreclosure action, apparently being of the belief that had that been done, there would have been no deficiency judgment arising from the suit on their personal guaranty and no lien therefrom upon the property they sought to sell. But at this point, all properties have been sold and the deficiency judgment has been paid. Moreover, a mortgagee is not required to first foreclose before pursuing guarantors on a mortgage default. Summit Trust Co. v. Willow Bus. Park, 269 N.J. Super. 439, 444-45 (App. Div.), certif. denied, 136 N.J. 30 (1994). Furthermore, the second foreclosure proceeding involved transactionally unrelated claims and, therefore, could not have been joined in the first proceeding. R. 4:64-5. See also Vision Mortgage Corp. Inc. v. Patricia J. Chiapperini, 156 N.J. 580, 584 (1999).

And, too, the entire controversy doctrine claim had already been litigated and decided against the Gilgallons in the second foreclosure action. As we noted in our prior opinion on the Gilgallons' appeal therefrom:

The underlying foreclosure action was commenced in Hudson County on May 19, 2003, by the filing of a complaint seeking to foreclose on a first mortgage, dated December 13, 1985, held by Valley National on premises located at 9-11 Patterson Street, Harrison. The Mortgage was granted to a predecessor of Valley National by Friends, Inc. to secure obligations due under a note (the note), bearing the same date and executed by Friends and defendants. Valley National declared a default under the note and mortgage on May 7, 2002, as a result of the failure of Friends and defendants to make payments under the note beginning in March 2002. Defendants are not co-owners of the Harrison Property or signatories on the mortgage, but are co-obligors on the note.

Valley National filed the complaint together with an Order to Show Cause seeking the appointment of a rent receiver. Defendants opposed the Order to Show Cause, arguing that the underlying foreclosure action was barred by the entire controversy doctrine because Valley National was obligated to foreclose on the Harrison mortgage in another foreclosure action filed by Valley National on July 24, 2001 in Morris County. The latter was an action to foreclose on other mortgages granted by the defendants and other entities which they owned or controlled to secure obligations on other notes, as follows:

(i) a mortgage dated November 19, 1993, granted by the Gilgallons to Valley National encumbering real property located at 135 Watchung Avenue, Chatham, to secure their obligations under a promissory note, executed and delivered to Valley National on the same date.

(ii) a second mortgage recorded on June 7, 1999, granted by the Gilgallons to Valley National encumbering the Chatham property to secure a note dated June 25, 1996 executed by CFS Services, Inc. in favor of Valley National.

(iii) a second mortgage dated June 25, 1996, granted by Friends to Valley National encumbering the Harrison Property to secure the CFS note.

The complaint in the Morris County foreclosure action was filed more than ten months prior to the default in payments due under the note and the mortgage foreclosed in the underlying Hudson County foreclosure action. Final judgment was entered in the Morris county action on October 24, 2002. Defendants filed an appeal from that final judgment, but that appeal was dismissed for lack of prosecution.

At a hearing held on June 19, 2003, the judge in Hudson County rejected defendants' argument that the entire controversy doctrine barred Valley National from maintaining separate actions to foreclose on separate notes and mortgages, stating:

Now regarding the so-called Entire Controversy Doctrine, this is a separate note and a separate mortgage, although encumbering the same property, and this plaintiff, and in this court's opinion as I understand the laws regarding dealing with foreclosure, has an absolute right to foreclose on in this litigation, in this vicinage. The fact that the Morris County ([foreclosure action] may be on appeal dealing with a separate note and separate mortgage, while it being a companion matter, I don't believe as I look at [R. 4:64-5] and the Entire Controversy Doctrine that it requires a dismissal of this matter because it violates the Entire Controversy Doctrine. It is a separate note and a separate mortgage that is sought to be foreclosed, that is the foreclosing the right to redeem. So, I do not accept the defendant's argument that somehow under the Entire Controversy Doctrine this mater is not viable in this court, for the reasons, I've stated.

[Valley Nat'l Bank v. Friends, Inc. Ronald & Eileen Gilgallon, AFI Food Distribs. Inc. & State of New Jersey, A-3530-03T2 (App. Div. March 9, 2005).]

In granting defendants the summary judgment that is presently before us, the motion judge said:

In this regard, this Court must take into account, because this is a motion for a summary judgment, all possibly favorable inferences in favor of the non-movant, in this case, the plaintiffs, the Gilgallons.

This Court finds that it must also consider a balancing and a consideration as to whether or not there are any genuine issues . . . material fact at issues under Brill v. Guardian Life [Ins. Co., 142 N.J. 520 (1995)].

Moreover, this Court finds that the history of this case is somewhat unique. This Court finds that a full determination on all of these issues was made by Judge Olivieri. This Court finds that res judicata does apply to the bank pursuant to Judge Olivieri's order.

This Court finds that the entire controversy action would be barred in regard to the questions involving the CFS note. No answer was filed in this case. There was a default judgment on that case.

This Court finds specifically, and at the time of the oral argument I believe that I quoted from the decision of Judge Clyne, which clearly validated the judgment, Judge Clyne's order is absolutely clear and unequivocable.

This Court finds that there are - there is no basis for conspiracy or fraud or any impropriety in regard to the settlement offers which were referred to by Mr. Gilgallon.

It is clear, and this Court incorporates the findings of Judge Olivieri and Judge Clyne in its decision today, Judge Olivieri made a finding on the entire controversy issue in his June 19th, 2004 order. Judge Olivieri found that the CFS note was a separate note and a separate mortgage.

Additionally, the order of Judge Clyne, as previously indicated, is clear and unequivocable, and that clearly validated the judgment.

In regard to Judge Olivieri's decision, that decision is now pending in the Appellate Division, and the Appellate Division will make its determination. But it is not appropriate to re-litigate this matter in this case, and this Court so finds.

Plaintiffs' claim for conspiracy requires an underlying wrong or . . . an unlawful act. Plaintiffs must . . . establish not only a conspiratorial objective, but that the objective was unlawful pursuant to Kingston Trap Rock v. [Int'l] Union of Operating Engineers, [ 129 N.J. Eq. 570 (1941)]. And this Court finds that although the paperwork submitted here makes a lot of unfounded allegations, this Court finds that the plaintiffs have not established that there was an underlying unlawful act.

In regard to the claim of fraud and willful misrepresentation, this Court finds that there was no[t] sufficient evidence to show any material misrepresentation by any defendant; there was no evidence to establish knowledge or belief by a defendant as to falsity; there was no evidence as to an intent that the plaintiffs would rely on it, in fact, the opposite appears to have been accurate; there was no reasonable reliance by the plaintiffs; and, in that regard, there was no resulting damage.

Having found that the claim is precluded under the doctrine of res judicata and for the other reasons put on the record during this decision, this Court finds that is it appropriate to grant the summary judgment motion.

We have carefully considered the Gilgallons' contentions on appeal from the motion judge's decision. We are satisfied they are of insufficient merit to require further opinion and that the judge's findings and conclusions are amply supported by the motion record and the applicable law. R. 2:11-3(e)(1)(A),(E).

Affirmed for the reasons set forth by Judge Barbara A. Curran in her November 18, 2004, oral decision.

 

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A-1533-04T2

November 7, 2005