LOUISE I. FITTS v. CHASE MANHATTAN MORTGAGE CORPORATION

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0814-05T50814-05T5

LOUISE I. FITTS,

Plaintiff-Appellant,

v.

CHASE MANHATTAN MORTGAGE

CORPORATION,

Defendant-Respondent.

________________________________________________________________

 

Argued October 31, 2006 - Decided November 30, 2006

Before Judges Skillman, Lisa and Grall.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-3066-04.

Stuart A. Eisenberg (McCullough & Eisenberg) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellant (Steven K. Eisenberg, Carol B. McCullough, Stuart A. Eisenberg and Jack L. Bernard, of the Pennsylvania bar, admitted pro hac vice, attorneys; Steven K. Eisenberg, Stuart A. Eisenberg, Ms. McCullough and Mr. Bernard, on the brief).

LeAnn Pedersen Pope (Burke, Warren, MacKay & Serritella) of the Illinois bar, admitted pro hac vice, argued the cause for respondent (Shain, Schaffer & Rafanello and Ms. Pedersen Pope, attorneys; Marguerite M. Schaffer, Ms. Pedersen Pope and Stephen R. Meinertzhagen, of the Illnois bar, admitted pro hac vice, of counsel and on the brief).

PER CURIAM

Plaintiff, Louise I. Fitts, appeals from a summary judgment dismissing her putative class action against Chase Manhattan Mortgage Corporation (Chase) arising out of attorney's fees incurred by Chase and charged to plaintiff on three occasions when plaintiff filed Chapter 13 bankruptcy proceedings. On each occasion, Chase engaged outside counsel to protect its security interest. The original amount of the mortgage in 1977 was $21,000. Plaintiff paid off the mortgage debt when she sold her home on January 20, 2004, at which time the principal balance was $7,149.97.

Chase charged plaintiff attorney's fees and costs in connection with her bankruptcy proceedings pursuant to paragraphs 13 and 14 of the mortgage, which provide in relevant part:

13. If, at any time, a Writ of Execution (Money Judgment) or other execution is properly issued upon a judgment obtained upon said Note, or if an Action of Mortgage Foreclosure or any other appropriate action or proceeding to foreclose a mortgage is instituted upon or under this Mortgage, an attorney's commission of five per centum (5%) of said principal debt shall be payable, and recovered in addition to all principal and interest and all other recoverable sums then due, together with costs of suit.

14. If any deficiency in the amount of any aggregate monthly payment mentioned in (b) of paragraph 2 shall not be made good by Mortgagor prior to the due date of the next such payment, or if default be made at any time in any of the covenants and agreements herein, or in the Note secured, or if the Mortgagor be adjudicated bankrupt or made a defendant in a bankruptcy or receivership proceeding, then and in every such case, the whole principal debt shall, at the option of Mortgagee, become due and payable immediately. Payment thereof and all interest accrued thereon, with an attorney's commission as hereinbefore mentioned, may be enforced and recovered at once, anything herein contained to the contrary notwithstanding.

. . . .

The remedies provided by . . . this Mortgage . . . are cumulative and concurrent, and may be pursued singly, or successively, or together, at the sole discretion of Mortgagee, and may be exercised as often as occasion therefor shall occur.

Chase charged plaintiff the following amounts to recoup its counsel fees and costs incurred in her 1998, 2000 and 2002 bankruptcy proceedings: 1998 - $800 in fees and $317.50 in costs; 2000 - $900 in fees and $179 in costs; 2002 - $800 in fees and $124 in costs. Plaintiff claims Chase could not charge any fees or costs because it never exercised its option to accelerate the debt. Plaintiff alternatively claims Chase overcharged her. She claims Chase was limited to 5% of the balance due when she paid off the mortgage, $7,149.97, for a total of $357.50. Chase contends that it was not required to accelerate the debt to exercise the separate remedy of charging attorney's fees and costs within the limits contractually provided. Chase also contends that each bankruptcy proceeding was a separate event, for which it could invoke a separate remedy. Chase further contends that on each occasion the limit of attorney's fees was 5% of $21,000, or $1,050, plus costs.

Plaintiff filed a five-count complaint, asserting claims for breach of contract, breach of implied covenant of good faith and fair dealing, violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -166, unjust enrichment, and imposition of a constructive trust and other injunctive relief.

During the course of discovery, Chase's records reflected that Chase had erroneously charged $100 to plaintiff's account as a foreclosure fee although no foreclosure proceeding had been instituted. A Chase officer deposed that the fee was mistakenly assessed because the loan was referred for foreclosure on the same day plaintiff filed for bankruptcy. The $100 was refunded to plaintiff when Chase discovered the charge during the litigation. Plaintiff's complaint asserted no claim based upon the $100 erroneous charge.

Chase moved for summary judgment. Judge McCormick determined that no material facts were in dispute, and the case turned on interpretation of the mortgage provisions. At oral argument on the motion, plaintiff's counsel conceded that if the mortgage provisions were interpreted in a manner to defeat plaintiff's breach of contract claim, all of the other counts should be dismissed as well.

Judge McCormick rejected plaintiff's argument that the $100 foreclosure fee was actionable and should defeat summary judgment because that fee was clearly charged in error, a refund was paid to plaintiff, and "there really [was] no cause of action that [was] premised on that hundred dollars." Judge McCormick agreed with Chase's position that acceleration of the debt was not required as a prerequisite to charging attorney's fees and costs, that Chase was entitled to charge plaintiff with respect to each of the bankruptcy proceedings, and that on each occasion the 5% limit applied to the original principal debt. She therefore granted summary judgment dismissing the complaint. We agree with Judge McCormick's analysis and affirm.

We first note that no material facts were in dispute, and the matter was ripe for summary judgment. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995). Where the facts needed to interpret a contract are not in dispute, there are no genuine issues of fact, and summary judgment is appropriate. Kilarjian v. Vastola, 379 N.J. Super. 277, 283 (Ch. Div. 2004). "The interpretation of the terms of a contract are decided by the court as a matter of law unless the meaning is both unclear and dependent on conflicting testimony." Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). When interpreting the terms of a contract, the writing must be interpreted as a whole and the "terms of the contract must be given their 'plain and ordinary meaning.'" Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997). The court should interpret contract terms "so as to avoid ambiguities, if the plain language of the contract permits." Stiefel v. Bayly, Martin and Fay of Conn., Inc., 242 N.J. Super. 643, 651 (App. Div. 1990).

Plaintiff first argues that paragraph 13 was not properly invoked because there was never a judgment, a writ of execution, any other type of execution, an action in mortgage foreclosure, or any other type of proceeding to foreclose a mortgage as required in paragraph 13. Plaintiff further argues that paragraph 14 applies only if Chase exercised its option to accelerate the outstanding debt, which it did not. Chase argues that paragraph 14 authorizes the imposition of attorney's fees in the event of the mortgagor's adjudication in bankruptcy, thus obviating the requirement for a triggering event specified in paragraph 13, which establishes the amount allowable. It further argues that paragraph 14 applies whether or not the mortgagee accelerates the debt because the language clearly provides that acceleration is "at the option of the Mortgagee" and is therefore not a prerequisite to imposing attorney's fees and costs.

Judge McCormick agreed with Chase. She noted that counsel for both parties agreed "that the very filing of the bankruptcy petition [was] an adjudication of bankruptcy," thus triggering the provisions of paragraph 14. As to whether Chase was required to accelerate the mortgage in order to invoke paragraph 14, she analyzed the plain reading of the contract thusly:

It is clear under Paragraph 14 that Chase had the option to accelerate or not accelerate. They didn't have to. They were not compelled to. And in fact, in this case in a bankruptcy proceeding they could not because it would have been violative of bankruptcy law. . . . [T]o say that the assessment of attorney's fees and costs in the context of the bankruptcy was dependent on Chase's doing something that the Bankruptcy Code itself did not allow them to do would make the . . . sentence [regarding] the assessment of the attorney's fees meaningless. And contracts should not be construed to be meaningless.

Accordingly, the judge found that the unambiguous language of paragraph 14, in conjunction with paragraph 13, authorized Chase to assess a 5% attorney's fee plus costs on the occasion of each of plaintiff's bankruptcies, without first accelerating the mortgage.

We agree. When interpreting the terms of a contract, the writing must be interpreted as a whole and the terms of the contract must be given their plain and ordinary meaning. Nester, supra, 301 N.J. Super. at 210. Chase's right to accelerate the debt was intended to be optional. Paragraph 14 further provides that the remedies available to Chase are "cumulative and concurrent, and may be pursued singly, or successively, or together, at the sole discretion of Mortgagee." Chase was not required to accelerate the mortgage as a prerequisite to invoking its attorney's fee remedy.

Having determined that Chase was authorized to charge attorney's fees and costs, we next address the amount allowable. This requires a determination of the meaning of "principal balance," to which the 5% allowance is applied. It also requires a determination of whether the allowance is a one-time sum, or whether each of plaintiff's bankruptcy proceedings could support a separate assessment within the allowable limit.

"It is generally said that, in interpreting the words of a contract, the courts seek the meaning and intention of the parties." 5 Corbin on Contracts 24.5 at 15 (Perillo ed. 1998). However, the "actual intent of the parties is ineffective unless made known in some way in the writing. It is not the real intent but the intent expressed or apparent in the writing that controls." Newark Publishers' Ass'n v. Newark Typographical Union No. 103, 22 N.J. 419, 427 (1956). When interpreting the terms of the writing, the court is required to give meaning to every word in the contract rather than leave a portion of the writing useless or inexplicable. Am. Shops, Inc. v. Reliance Ins. Co. of Phila., 22 N.J. Super. 564, 566-67 (Law Div. 1952).

Here, we must interpret whether the term "said principal debt" as written in paragraph 13 refers to the "original principal debt" or the "outstanding principal debt" at the time of each bankruptcy proceeding. By including the word "said," the term principal debt was intended to mean the "original principal debt" as referred to at the beginning of the mortgage contract. Black's Law Dictionary defines the term "said" as the "[a]foresaid; above-mentioned," which means mentioned above or referred to previously. Black's Law Dictionary 1337 (7th ed. 1999). "The word 'said' is used by many practitioners rather than 'the' to refer back to previously recited elements[.]" Ibid. By using this term, the drafter intended "principal debt" to refer to the "original principal debt" as previously cited at the beginning of the contract, namely $21,000, as a basis for calculating attorney's fees. And, this construction logically and sensibly differentiates the term "said principal debt" from another term used in paragraph 13, "all principal . . . then due," which the mortgagee is entitled to recover "in addition to" the attorney's fees and costs.

Also, the plain language of paragraph 13 provides that attorney's fees are separate from costs. Finally, the fees and costs are recoverable in connection with each bankruptcy proceeding, rather than collectively as argued by plaintiff. Paragraph 14 authorizes their imposition when the mortgagor is adjudicated bankrupt, "in every such case," and authorizes the mortgagee to exercise its remedies "as often as occasion therefor shall occur." Thus, we agree with Judge McCormick's conclusion that the fees and costs were properly calculated separately and assessed in conjunction with each bankruptcy proceeding, each time within the allowable limit defined by paragraph 13.

With respect to the $100 mistaken charge for a foreclosure fee, we agree with Judge McCormick's determination that it provides no basis for continuing this litigation, because no cause of action with respect to it was asserted and the fee was refunded.

Plaintiff further argues on appeal that the mortgage provisions are ambiguous and should be interpreted against Chase because the mortgage is a contract of adhesion. We reject this argument because we do not view the terms as ambiguous. We reject, as did Judge McCormick, plaintiff's argument that the "American Rule" prohibits Chase from imposing attorney's fees. That rule is irrelevant in this context, because fee-shifting provisions are enforceable when they are part of an agreement between the parties.

We reject plaintiff's appeal argument that Judge McCormick erred by cutting off discovery that may have been required by an earlier order entered in the case by a different judge. We find no abuse of discretion in Judge McCormick's ruling in this regard. Indeed, we agree that no further discovery was needed to aid the court in interpreting the contract documents.

Finally, we reject plaintiff's argument on appeal that because only her breach of contract claim was addressed in granting summary judgment, the claims asserted in the other four counts of the complaint remain viable. As we stated, plaintiff's counsel conceded that if the judge ruled adversely on the breach of contract count, "all the other causes of action go away." By consenting to the judgment rendered by the trial court regarding the viability of the remaining claims, plaintiff waived the right to raise the issue on appeal. Winberry v. Salisbury, 5 N.J. 240, 255, cert. denied, 340 U.S. 877, 71 S. Ct. 123, 95 L. Ed. 638 (1950).

 
Affirmed.

(continued)

(continued)

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A-0814-05T5

November 30, 2006