LYNX ASSET SERVICES, L.L.C. v. MICHELE MINUNNO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

APPELLATE DIVISION

DOCKET NO. A-0

LYNX ASSET SERVICES, L.L.C.,

Plaintiff-Respondent,

v.

MICHELE MINUNNO, MR. MINUNNO,

husband of MICHELE MINUNNO;

STEVEN MINUNNO; MRS. STEVEN

MINUNNO, wife of STEVEN

MINUNNO;

Defendants-Appellants,

and

PREMIER CONSTRUCTION I, INC.,

PETER CUTTONE, and FORD MOTOR

CREDIT COMPANY, L.L.C.,

Defendant.

___________________________________________

February 13, 2017

Submitted October 25, 2016 Decided

Before Judges Messano, Espinosa and Guadagno.

On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-047100-14.

Fazzio Law Offices, attorneys for appellants (John P. Fazzio, III, of counsel and on the brief).

Joshua G. Curtis, attorney for respondent.

PER CURIAM

Defendants Michele and Steven Minunno appeal from the July 31, 2015 final judgment of foreclosure entered in favor of plaintiff, Lynx Asset Services, LLC. The record reveals plaintiff's complaint, filed in November 2014, alleged that Michele executed a promissory note in the amount of $456,000 in favor of Mortgageit, Inc. (Mortgageit), and both defendants contemporaneously executed a mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Mortgageit.1 In 2009, the mortgage was assigned by TCIF REO GCM LLC (TCIF) to plaintiff. Defendants entered into unrecorded loan payment agreements with plaintiff in 2010, 2011 and 2012. They ultimately failed to make the required monthly payments and were in default as of July 1, 2014.

Defendants filed an answer, asserting various affirmative defenses, including the statute of limitations (SOL), and a counterclaim alleging violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184 (the CFA), and common law fraud. Shortly thereafter, plaintiff moved for summary judgment striking the answer as insufficient as a matter of law, and seeking transfer to the foreclosure unit as an uncontested case.

Plaintiff relied upon the affidavit of Arlene Lieberman, a portfolio manager who was familiar with plaintiff's business records. Lieberman explained in detail the terms and conditions of the various loan modification agreements, which were attached to her affidavit. Defendants' payments made pursuant to the two initial loan modification agreements were applied only to interest. The final loan modification actually reduced the interest rate on defendants' loan, forgave more than $29,000 then due and reduced defendants' monthly payments by nearly $400, while increasing the principal amount and amortizing payments of principal and interest over forty years, instead of the original loan's thirty-year amortization.

Defendants cross-moved to dismiss the complaint relying on Michele's certification in support. Michele did not contradict the prior procedural history or facts alleged in the complaint, noting a foreclosure judgment was entered in March 2007 causing defendants to file for bankruptcy. She acknowledged the bankruptcy petition was discharged in October 2010. Michele claimed plaintiff's loan modification agreements were "confusing," and she and her husband "did not fully understand" them. Michele asserted plaintiff's complaint was barred by the applicable SOL because it was not filed within six years of the original default declared by TCIF in 2006. Defense counsel relied upon an unpublished Bankruptcy Court decision, Washington v. Specialized Loan Servicing, LLC, 2 014 Bankr. LEXIS 4649 (U.S. Bankr. D.N.J. Nov. 5, 2014), to support the SOL argument.2

Plaintiff filed a reply certification from Lieberman that further explained the history of defendants' loan. She noted that defendants made payments under the original loan for less than one year before defaulting, and TCIF accelerated the maturity date for the loan as permitted by the promissory note. TCIF obtained a final judgment in foreclosure in 2007, which was never vacated.

TCIF assigned the mortgage, note and judgment to plaintiff, but the bankruptcy court's stay in effect at the time prevented plaintiff from executing on the judgment. When defendants were discharged from bankruptcy, they agreed to modify the loan in lieu of plaintiff executing on the foreclosure judgment. After two temporary modifications in 2010 and 2011, the parties executed a permanent modification in 2012 that kept defendants "in their home" and recast the terms of the note, reducing the interest rate and fully amortizing the loan in monthly payments, but extending the term of the loan. Defendants made payments under this agreement from December 2012 through May 2014, but again defaulted, resulting in plaintiff's foreclosure complaint.3

Judge David F. Bauman heard oral argument on the motion and cross-motion. Defendants argued their interest-only payments made for three years under the loan modification agreements denied them any accumulation of equity in their home. Noting it was early in the litigation and there had been no discovery, defense counsel asserted plaintiff had engaged in an "unconscionable practice" under the CFA, and also reiterated that the complaint was barred by the SOL.

Judge Bauman entered an order on May 12, 2015, granting plaintiff's motion and denying defendants' cross-motion. In a written statement of reasons, the judge cited N.J.S.A. 2A:50-56.1(a), which provides,

[a]n action to foreclose a residential mortgage shall not be commenced following . . . [s]ix years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note, bond, or other obligation secured by the mortgage, . . . except that if the date fixed for the making of the last payment or the maturity date has been extended by a written instrument, the action to foreclose shall not be commenced after six years from the extended date under the terms of the written instrument . . . .

[(Emphasis added).]

Although the Bankruptcy Court in Washington concluded acceleration upon default advances the "maturity date" of the note, thereby commencing the limitations period, 2 014 Bankr. LEXIS 4649, at *35-36, Judge Bauman found defendants' reliance on the case was misplaced. He reasoned there were no modification agreements executed in Washington, whereas defendants had executed three of them, most recently in December 2012. The judge found "[t]his new agreement re-sets the statute of limitations from [the] initial default in 2006." Judge Bauman also concluded defendants' fraud claims lacked specific facts, and they cited "no case law nor other authority to support their contentions that the loan modifications were unconscionable commercial practices." Lastly, the judge rejected any claim that "more time [was] needed for discovery[,]" observing defendants failed to "suggest what additional discovery will uncover . . . or point to items of discovery that [were] outstanding." The matter proceeded to a final judgment of foreclosure as an uncontested case, and this appeal ensued.

Defendants contend the judge erred in granting plaintiff's motion to strike pursuant to Rule 4:6-2(e) because it relied upon "matters outside the pleading." They also argue they asserted "cognizable claims for violations of the Consumer Fraud Act and common law fraud which would equitably bar" plaintiff from proceeding. We have considered these contentions in light of the record and applicable legal standards. We affirm substantially for the reasons expressed by Judge Bauman. We add only the following.

Defendants' procedural argument overlooks the express terms of Rule 4:6-2, which provides

If, on a motion to dismiss based on the defense numbered (e), matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R.4:46, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion.

Plaintiff's motion was expressly denominated as a summary judgment motion, and defendants were given a full and fair opportunity to rebut Lieberman's factual claims. However, Michele's certification, filed in support of defendants' cross-motion, failed to do so.

Judge Bauman properly rejected defendants' claim that the lack of discovery forestalled the grant of summary judgment. "[A] respondent to a summary judgment motion, who resists the motion on the grounds of incomplete discovery is obliged to specify the discovery that is still required." Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super.510, 538 (App. Div. 2009) (citing Trinity Church v. Lawson-Bell, 394 N.J. Super.159, 166 (App. Div. 2007)), certif. denied, 203 N.J.93 (2010). The motion record in this case was quite extensive, containing every important document and certifications from both sides that established the uncontested facts. Defendant has failed to identify what further discovery was necessary.

Turning to defendants' substantive arguments, when reviewing the grant of summary judgment, we analyze the decision applying the "same standard as the motion judge." Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016) (quoting Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)).

That standard mandates that summary judgment be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."

[Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)).]

"When no issue of fact exists, and only a question of law remains, [we] afford[] no special deference to the legal determinations of the trial court." Ibid. (citingManalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.366, 378 (1995)).

Defendants argue they presented "cognizable" CFA and common law fraud claims that should not have been dismissed, and these claims presented an equitable bar to plaintiff's foreclosure complaint. We disagree.

Allegations of fraud must be pled with specificity and a litigant's failure to do so should result in dismissal of the complaint. State, Dep't of Treasury v. Qwest Commc'ns Int'l, Inc., 387 N.J. Super. 469, 484 (App. Div. 2006); see R. 4:5-8(a) (requiring any complaint alleging fraud set forth the "particulars of the wrong, with dates and items if necessary, . . . insofar as practicable"). Alleged violations of the CFA must also be pled with the same level of specificity. Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105, 112 (App. Div. 2009). Usually, a dismissal for failure to comply with Rule 4:5-8(a) is without prejudice to a litigant's right to amend the pleading, Rebish v. Great Gorge, 224 N.J. Super. 619, 627 (App. Div. 1988), however, we part from the usual course in this case.

Defendants' counterclaim stated plaintiff engaged in "knowing concealment, suppression and omission of material facts," and "made a false representation of fact" which they relied upon. However, no specifics were stated in the complaint. More importantly, when plaintiff moved for summary judgment, Michele's certification failed to supply any factual predicates for the CFA or fraud claims. Michele only alleged that she and her husband were in desperate financial circumstances and did not understand the terms of the loan modification agreement. In short, there were no facts supporting defendants' counterclaim.

Defendants also argue plaintiff's complaint was barred by the SOL. We again must disagree.

Because issues involving the SOL are purely legal in nature, our review is plenary. State v. Perini Corp., 221 N.J. 412, 425 (2015). No published case has interpreted the limitations provisions of N.J.S.A. 2A:50-56.1(a), however, the plain language of the statute is the best indicator of the Legislature's intent. See Tumpson v. Farina, 218 N.J. 450, 467 (2014) ("In construing any statute, we must give words 'their ordinary meaning and significance,' recognizing that generally the statutory language is 'the best indicator of [the Legislature's] intent.'" (alteration in original) (quoting DiProspero v. Penn, 183 N.J. 477, 492 (2005)).

N.J.S.A. 2A:50-56.1(a) requires a residential mortgage foreclosure action to commence within six years of "the date fixed for the making of the last payment or the maturity date" in the note. An exception applies, however, if "the date fixed for the making of the last payment or the maturity date has been extended by a written instrument," in which case the action must commence within six years of "the extended date." Ibid.

Here, the maturity date in the note was September 1, 2035. The 2010 and 2011 loan payment agreements specifically did not modify the maturity date. The 2012 final modification agreement set a new maturity date, November 1, 2052.

Defendants contend the original maturity date was transformed into a new maturity date upon the acceleration of the loan and declaration of default in 2006, meaning plaintiff only had until 2012 to foreclose. Some discussion in our cases lends force to the argument. See, e.g., Westmark Commercial Mortg. Fund IV v. Teenform Assocs., L.P., 362 N.J. Super. 336, 345-46 (App. Div. 2003) (quoting Restatement (Third) of Property 6.2 comment c (1997), for the proposition that "it is still the mortgagor's action in defaulting that triggers the acceleration," and In re LHD Realty Corp., 726 F.2d 327, 330-31 (7th Cir. 1984), for the proposition that "by definition, acceleration 'advances the maturity date of the debt'"). However, the Third Circuit specifically rejected this analysis of subsection (a) in affirming the District Court's reversal in Washington, supra. Washington v. Bank of N.Y. Mellon, 2 016 U.S. App. LEXIS 17727, *5. We need not definitively resolve that issue, because in this case, the parties executed a written instrument extending the maturity date. N.J.S.A. 2A:50-56.1(a).

Defendants essentially argue the 2012 final loan modification agreement could not revive plaintiff's right to foreclose, because it was executed after the six-year SOL expired and plaintiff had already secured a judgment of foreclosure. The cases defendants cite, Adamar of New Jersey, Inc. v. Mason, 399 N.J. Super. 63, 67 (App. Div. 2008), and Giordano v. Wolcott, 46 N.J. Super. 278, 282-83 (App. Div. 1957), do not support the argument. Those cases dealt with enforcement of judgments that had expired.

Here, plaintiff held a judgment of foreclosure upon which it could not execute because of defendants' bankruptcy. Upon dismissal of the bankruptcy petition, the parties negotiated a modification agreement, then another and then a third and final agreement. Defendants at no time objected. After defendants executed the final modification agreement and commenced payments, defendant dismissed the previous foreclosure action. Defendants fail to assert any authority that prohibits such actions.

To the extent we have not otherwise addressed them, the remaining arguments advanced by defendants lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).

Affirmed.

1 We sometimes use the first names of defendants to avoid confusion and intend no disrespect by this informality.

2 We note that Rule 32.1 of the Federal Rules of Appellate Procedure does "not prohibit or restrict the citation of federal judicial opinions, orders, judgments, or other written dispositions that have been: (i) designated as 'unpublished,' 'not for publication,' 'non-precedential,' 'not precedent,' or the like; and (ii) issued on or after January 1, 2007." The Bankruptcy Court's decision was subsequently reversed. Specialized Loan Servicing, LLC v. Washington, 2 015 U.S. Dist. LEXIS 105794 (D.N.J. Aug. 11, 2015), aff'd, Washington v. Bank of N.Y. Mellon, 2 016 U.S. App. LEXIS 17727 (3d Cir. Sept. 26, 2016).

3 Plaintiff dismissed the earlier foreclosure action in July 2013.