DAVID ZUCKER et al. v. ONE SOURCE MORTGAGE CORP.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1955-03T21955-03T2

DAVID ZUCKER and CARRIE ZUCKER,

Plaintiffs-Appellants,

v.

ONE SOURCE MORTGAGE CORP.,

Defendant-Respondent.

_________________________________

 

Submitted: September 20, 2005 - Decided:

Before Judges Skillman and Axelrad.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-3918-02.

Michael S. Kimm, attorney for appellants.

Respondent has not filed a brief.

PER CURIAM

Plaintiffs David and Carrie Zucker, contract purchasers of a residence, appeal from denial of their motion for a directed verdict, judgment notwithstanding the verdict (j.n.o.v.) or a new trial following a no-cause jury verdict in their suit against One Source Mortgage Corp. (One Source). Plaintiffs had asserted Consumer Fraud Act (CFA) violations, breach of contract and misrepresentation resulting from defendant's disapproval of their mortgage application following issuance of a prequalification letter. We affirm.

On October l0, 200l defendant sent plaintiff a letter of prequalification for a $260,000 mortgage "based on the information provided" and "subject to final lender approval and an appraisal." No specific terms were included. On October l5, 2001 plaintiffs signed a sales agreement to purchase a townhouse condominium known as 2086 Drake Court in Mahwah, with closing scheduled for December l5, 200l. The agreement provided for a sales price of $272,500, and contained a forty-five day mortgage contingency clause for financing of $260,000 based on a thirty-year payout with interest at not more than 7.5%. On November l, 200l plaintiffs' attorney was provided with general closing instructions from defendant noting the mortgagee was "First Union Mortgage Corporation and/or its successors and assigns" (First Union).

On November 6, 2001 plaintiffs completed a formal mortgage application with One Source and provided additional financial information and documentation, including a gift letter from Carrie's mother as to the downpayment and a letter from David's mother assuming responsibility for his $8,700 in school loans. In mid-November defendant forwarded the package to the lender for review. On November 21, 200l defendant received correspondence from United Guaranty Residential Insurance Company (United Guaranty) directed to First Union, denying its application for private mortgage guaranty insurance for plaintiffs' real estate transaction. The underwriter listed the following principal reasons for the denial: "Various factors pertaining to this file preclude it from being an acceptable risk. Does not meet investor guidelines. Slow Ratings on installment and/or revolving debt. Excessive Debt."

Defendant's president Sean Miller, who had been handling plaintiffs' application, took additional steps to attempt to assist plaintiffs in obtaining a mortgage. When he realized he would be unsuccessful, he faxed to plaintiffs' attorney and mailed to plaintiffs a disapproval letter on November 28, within the mortgage contingency period. The reasons were listed as "lack of cash reserves" and "insufficient funds to close [the] loan." Plaintiffs invoked the mortgage contingency clause, cancelled the contract and were subsequently refunded their entire downpayment.

On May 6, 2002 plaintiffs filed suit against One Source, asserting a violation of the CFA, breach of contract and misrepresentation. The alleged consumer fraud consisted of defendant's issuance of the October l0, 200l letter which misled plaintiffs to believe they had a mortgage commitment, their misrepresentation to plaintiffs up to days before the scheduled closing date that their mortgage was in "good standing" and their last-minute denial "for reasons defendant had earlier reviewed before providing plaintiffs with a commitment letter." At trial, plaintiffs further asserted as unconscionable and deceptive commercial practices defendant's failure to disclose: (1) the broker's dependence on First Union as the third-party lender for review and approval of plaintiffs' mortgage; (2) United Guaranty's guidelines which were used to measure plaintiffs' creditworthiness; and (3) denial of plaintiffs' formal mortgage application by the lender and submission of the federal Truth in Lending Disclosure form they executed on November 15, 2001 as a second application. Plaintiffs also asserted as a CFA violation defendant's misstatement of First Union's reasons for the mortgage denial.

During the three-day trial, plaintiff Carrie Zucker and her mother testified about conversations with Miller and the timeline of financial information and documentation provided to him. Miller explained the loan process and the attempts he made to secure alternate forms of mortgage financing for plaintiffs. He disputed that he had been provided with all the information and documentation necessary for a mortgage commitment prior to the issuance of the prequalification letter. He testified he had informed plaintiffs that he had to send their loan to the underwriter for a commitment and denied he had ever represented to them that they had or were going to receive a mortgage commitment. He further explained he had phrased the mortgage disapproval letter in a way he believed would assist plaintiffs in receiving a prompt refund of their downpayment.

The court denied defendant's motion for a directed verdict and reserved decision on plaintiffs' cross-motion for a directed verdict. Plaintiffs had sought a verdict on liability under the CFA, requesting the court to "rule as a matter of law that when you use those kinds of graphic, committal words [preapproved and prequalified], you've got to have clear and unambiguous disclaimer. Otherwise, those words are meaningless and they ought to be taken at face value." Plaintiffs' attorney concluded:

[T]he standard under which you have to evaluate the Consumer Fraud Act claim is a lay consumer, Judge. The question is an ordinary consumer looking at that letter and the series of events that followed, is it possible for a disagreement as to the intentment. We respectfully suggest preapproved has to mean pre-approved. And we're asking for a legal ruling on the basis of Defendant's own documents in evidence, Judge.

Following a verdict in favor of defendant, plaintiffs moved

for a j.n.o.v. or, alternatively a new trial. By letter opinion of October 27, 2003 the trial court denied plaintiffs' motions for a directed verdict, a j.n.o.v. and a new trial. We discern no error in the trial court's rulings. We are satisfied the evidence adduced at trial, together with all legitimate inferences, could sustain a judgment in favor of defendant. Pressler, Current N.J. Court Rules, comment on R. 4:40-2 (2006) ("The standard for determining both a motion for judgment [at trial] under R. 4:40-1 and a motion for judgment notwithstanding the verdict under R. 4:40-2 is . . . the court must accept as true all the evidence which supports the position of the party defending against the motion and must accord him the benefit of all legitimate inferences which can be deduced therefrom, and if reasonable minds could differ, the motion must be denied.) (citations omitted). We are also satisfied the verdict of the jury, which had the opportunity to pass upon the credibility of the witnesses, did not constitute a miscarriage of justice under the law warranting a new trial. R. 4:49-1(a).

"The CFA affords a private cause of action under limited circumstances." Dabush v. Mercedes Benz USA, LLC, 378 N.J. Super. 105, 114 (App. Div. 2005). To sustain a claim under the CFA a private plaintiff must demonstrate unlawful conduct by the defendant, an ascertainable loss on the part of the plaintiff and a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss. Ibid.; N.J.S.A. 56:8-2; N.J.S.A. 56:8-19.

The proscribed unlawful conduct is defined as:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale . . . of . . . real estate. . .whether or not any person has in fact been misled, deceived or damaged thereby [.]. . .

[N.J.S.A. 56:8-2.]

The court properly found the October l0, 200l letter was not deceptive as a matter of law. Moreover, "the jury had a reasonable basis to conclude that the language of the 'Pre-Approved' letter . . . did not violate the CFA." The form letter, read in its entirety, provides conditional prequalification for a $260,000 mortgage based on the preliminary information submitted and clearly discloses dependence on a third-party lender. On its face, it is not a mortgage commitment. There was also ample testimony by Miller and documentary evidence from which a jury could have concluded, and in fact did, that defendant did not make any fraudulent or deceptive statements or promises to plaintiffs regarding their loan application.

 
Affirmed.

(continued)

(continued)

8

A-1955-03T2

October 4, 2005