SANDRA KIMMELMAN v. DR. RANDY S. KIMMELMAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

SANDRA KIMMELMAN,

Plaintiff-Appellant,

v.

DR. RANDY S. KIMMELMAN,

Defendant,

and

1266 APARTMENT CORP.,

Defendant-Respondent,

and

NCB SAVINGS BANK, FSB, A

Federal Savings Bank,

Defendant/Third-Party

Plaintiff-Respondent,

v.

MICHAEL BIRNBERG, ESQ.,

Third-Party Defendant-

Respondent.

__________________________________________________

Argued telephonically on August 13, 2013 Decided January 23, 2014

Before Judges Koblitz and Accurso.

On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket

No. C-107-11.

Laura S. Kirsch argued the cause for appellant (Kirsch & Kirsch, LLP, attorneys; Ms. Kirsch and Daniel E. Kirsch, on the briefs).

Edward A. Vincent argued the cause for respondent NCB Savings Bank, FSB (Frenkel Lambert Weiss Weisman & Gordon, LLP, attorneys; Mr. Vincent, on the brief).

The opinion of the court was delivered by

ACCURSO, J.A.D.

Plaintiff Sandra Kimmelman appeals from a July 18, 2012 final judgment following a bench trial dismissing with prejudice her claims for rescission and equitable fraud against defendant NCB Savings Bank, FSB (NCB or the bank). We affirm.

Although this matter has a complicated and contentious procedural history, the issues presented on appeal are limited and discrete. We provide only so much of the facts and procedural history as is necessary to give context to the discussion of the issues we decide.

In August 1999, Sandra Kimmelman had sold her home and planned to use the proceeds to purchase an apartment in Fort Lee. Her son Randy Kimmelman convinced her to finance part of the purchase price with a loan from NCB. The two jointly purchased the stock and proprietary lease associated with the cooperative apartment with the proceeds of the sale of Sandra Kimmelman's home and $67,500 borrowed jointly from NCB and secured by the stock and the proprietary lease. Randy Kimmelman arranged the financing and managed all details of the purchase. Sandra Kimmelman has solely occupied the apartment and she made the loan payments and paid the monthly co-op maintenance charges.

In July 2000, Randy Kimmelman advised his mother that he needed funds to purchase a home in Florida and wanted to refinance the NCB loan for a substantially larger amount. In order to induce his mother to consent to the refinance, he assured her that he would sign the note individually and make all the payments, and that the existing loan would be paid off. Sandra Kimmelman agreed to allow the refinance. Randy Kimmelman borrowed $165,000 from NCB in his own name, secured by the stock and the proprietary lease. Randy Kimmelman did not attend the closing. He executed a power of attorney in favor of his mother and the loan documents bear what purports to be her signature. $67,499.14 of the proceeds were used to pay off the prior NCB loan and another $23,100 to pay off a loan to Bank of America. The remaining proceeds, $71,389.40, were paid to Randy Kimmelman.

The loan went into default in November 2008, after Randy Kimmelman failed to make the loan payment due on October 1, 2008. The bank scheduled a public auction for the shares of stock securing the loan in June 2009, but voluntarily cancelled the sale to allow reinstatement. When the loan was not reinstated, the bank rescheduled the sale. After being contacted by counsel for Sandra Kimmelman questioning the legitimacy of the loan documents, NCB again cancelled the sale to allow Sandra Kimmelman to take legal action to resolve any questions regarding the transaction.

Sandra Kimmelman filed this action against her son Randy Kimmelman, NCB and her apartment cooperative. NCB filed a third-party complaint against Randy Kimmelman's counsel, Michael Birnberg, who represented him in connection with the loan closing. Birnberg filed a fourth-party complaint against the lawyer who closed the loan on NCB's behalf.

Randy Kimmelman defaulted and a monetary judgment was entered against him, and his interest in the stock and proprietary lease was transferred to his mother, subject to whatever interest NCB may have therein. Judge Contillo tried Sandra Kimmelman's claim against NCB for rescission and equitable fraud over two days.

In his opinion from the bench, Judge Contillo noted that Sandra Kimmelman claimed that the bank's mortgage on her co-op should be rescinded because she was not aware that she was putting her collateral at risk because her son misled her, and the bank failed to correct her misapprehension and caused her to encumber her co-op to a substantially greater degree than she had undertaken in the initial financing. NCB countered that Sandra Kimmelman signed the loan documents, that she was bound by the instruments, that the bank did not mislead her as to their meaning but was under no affirmative duty to counsel her regarding the transaction.

Sandra Kimmelman denied executing the documents and testified that she had no recollection of ever having attended the loan closing. Judge Contillo rejected that testimony and found that she had attended the closing. Moreover, the judge found

that Mrs. Kimmelman knows she was at the closing. She has an incentive not to recall being at the closing because what happened at the closing was a betrayal of her by her son, and it's painful, and she doesn't want to revisit it. And also, there is substantial documentation suggesting that she put her own interest in further jeopardy, whether she knew it or not, and that is the reason why she doesn't admit that she was at the closing. But she was, and I think she understands that she was at the closing.

Judge Contillo, however, accepted Sandra Kimmelman's testimony that she went into the transaction with the understanding that her son was refinancing the loan, paying off the first loan and getting money to allow him to buy a house with the second loan "[b]ut that she would not be responsible for it; he would be." The judge also accepted the testimony of Michael Birnberg, Randy Kimmelman's lawyer and a family friend of many years who represented mother and son in their purchase of the co-op. Birnberg testified that although he had no independent recollection of the closing, he was confident, on the basis of the documents, that both he and Sandra Kimmelman had attended the closing on the refinance in 2000 and that he had notarized her signature as attorney-in-fact for Randy Kimmelman on the loan documents.

Judge Contillo found that Sandra Kimmelman bore the burden of proving that she did not sign the loan documents, either as attorney-in-fact for her son or individually, in order to succeed on her rescission claim. The judge stated that he did not "believe for a minute" that Birnberg falsely notarized her signature and found that she had not proved by a preponderance of the evidence that anyone had altered the documents after the closing. Accordingly, the judge found that Sandra Kimmelman had failed to prove that she had not signed the loan documents and denied her claim for rescission.

As to the equitable fraud claim, Judge Contillo found that the bank was under no duty to explain to Sandra Kimmelman that although she was not a borrower, her shares in the co-op and her interest in the proprietary lease would continue to serve as collateral for the increased loan to her son. The judge rejected the claim that the bank misled her because there was no proof of reliance. Specifically, the judge found that Sandra Kimmelman's testimony that she did not attend the closing or sign the loan documents precluded a finding that she was misled by their terms.

The judge ventured no prediction as to whether the bank could successfully enforce its loan documents against Sandra Kimmelman, noting that the bank was not asserting an affirmative claim in the action. Underscoring that plaintiff was seeking rescission and thus bore the burden of proof "in this discrete, oddly procedurally contexted case," the judge dismissed her complaint as to the bank in its entirety.

On appeal, plaintiff does not challenge the Chancery judge's finding that she signed the loan documents on her son's behalf pursuant to a power of attorney. Instead, she contends that there was no proof that she signed the security agreement in her individual capacity, or if she did, that she understood what she was signing. Plaintiff claims that under N.J.S.A 12A:3-308, the burden of proving plaintiff's signature on the document was on the bank.

Plaintiff's arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). Judge Contillo determined that plaintiff bore the burden of proof on her claims for rescission and equitable fraud. Plaintiff cites no case that would support assigning the burden of disproving her claims to the bank. Plaintiff asserts only that N.J.S.A 12A:3-308 provides that "when the validity of a signature is denied in the pleadings, the burden of proving validity shifts to the party seeking to enforce the instrument." Because she claims that the action "had its genesis in NCB's efforts to enforce the security agreement by twice scheduling a public sale of the stock in the co-op" plaintiff's denial of her signature in her complaint shifted the burden of proving its validity to the bank.

Accepting plaintiff's argument at face value, it ignores that the bank had no affirmative claim for enforcement in this action. Moreover, Judge Contillo was clear that he was not finding that the bank could enforce the security agreement but only that plaintiff had not succeeded in proving her claims for rescission and equitable fraud. In addition, our cases make plain that even assuming the statute applies,1 a signature is presumed valid until its alleged maker comes forward with evidence to support a finding that the signature is forged or unauthorized. See Triffin v. Somerset Valley Bank, 343 N.J. Super. 73, 86 (App. Div. 2001). Here, Judge Contillo found that plaintiff had not introduced any evidence to support a finding that her signature on the loan documents was forged.

Because the judge's factual findings and legal conclusions are supported by adequate substantial and credible evidence in the record, Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974); State v. Locurto, 157 N.J. 463, 470-71 (1999), we affirm.

1 NCB claims that the security agreement is not a negotiable instrument and thus that N.J.S.A. 12A:3-308 does not apply. Our disposition of the matter does not depend on resolution of this dispute and we thus make no finding as to the statute's applicability.