EVARISTO CRUZ v. QUALITY CONSTRUCTION & RENOVATION INC.
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4604-15T2
EVARISTO CRUZ,
Plaintiff-Appellant/
Cross-Respondent,
v.
QUALITY CONSTRUCTION & RENOVATION,
INC. and MARIO ESPADA,
Defendants/Third-Party Plaintiffs-
Respondents/Cross-Appellants,
v.
EDWARD CRUZ and E.E. CRUZ &
COMPANY, INC.,
Third-Party Defendants-Respondents.
Argued May 1, 2018 – Decided May 10, 2018
Before Judges Carroll and DeAlmeida.
On appeal from Superior Court of New Jersey,
Chancery Division, Essex County, Docket No.
C-000073-15.
Marilyn K. Barbosa argued the cause for
appellant/cross-respondent (Law Office of
Barbosa Donovan, LLP, attorneys; Maurice J.
Donovan and Marilyn K. Barbosa, of counsel and
on the briefs).
Gary Potters argued the cause for
respondents/cross-appellants (Potters & Della
Pietra LLP, attorneys; Gary Potters and
Michele L. DeLuca, on the brief).
Mitchell W. Taraschi argued the cause for
respondent E.E. Cruz & Company, Inc. (Connell
Foley LLP, attorneys; Mitchell W. Taraschi,
of counsel and on the brief).
Roger B. Kaplan argued the cause for
respondent Edward Cruz (Greenberg Traurig,
LLP, attorneys; Roger B. Kaplan, of counsel
and on the brief).
PER CURIAM
On November 30, 2000, plaintiff Evaristo Cruz and his cousin,
third-party defendant Edward Cruz ("Edward"), loaned defendant
Quality Construction and Renovation, Inc. ("Quality") $520,000.
The loan was secured by a mortgage on property located on Prospect
Street in Newark that Quality was developing into residential and
commercial condominiums. By its terms, the loan was to be repaid
incrementally upon the sale of the individual condominium units
or in full by November 30, 2002.
The note and mortgage listed plaintiff and Edward as the
"Lender." The note provided "[a]ll payments will be made to the
Lender at the address shown above or at a different place if
required by the Lender." The Lender's address was specified as
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"Cruz Plaza, 943 Holmdel Road,1 Holmdel, New Jersey." The record
reflects that this was also the address for third-party defendant
E.E. Cruz & Company, Inc. ("E.E. Cruz").2
A dispute developed in November 2014, as Quality prepared to
sell a commercial condominium unit but the 2000 mortgage still
appeared open of record. Quality took the position that it had
previously repaid the loan in full by virtue of a $349,547.40
check in 2001, and a $237,493.50 check in 2003. Plaintiff disputed
this contention, and on March 27, 2015, filed a verified complaint
and order to show cause seeking to escrow the proceeds from
Quality's sale of the condominium until proof of payment could be
established. On April 6, 2015, Quality filed an answer,
counterclaim and third-party complaint against Edward and E.E.
Cruz. Quality also filed a cross-order to show cause seeking to
discharge the mortgage.
A period of discovery ensued during which various documentary
evidence was produced. Included was a copy of the front of
Quality's check dated July 29, 2001, in the amount of $349,547.40,
payable to plaintiff and Edward, which contained a notation
1
The mortgage identified the address of Cruz Plaza as 953 Holmdel
Road, Holmdel.
2
E.E. Cruz is a construction company originally founded by
plaintiff and Edward. According to plaintiff, he sold his interest
in E.E. Cruz to Edward in 2002.
3 A-4604-15T2
"320,000 plus interest 1st Installment." The check was accompanied
by a July 30, 2001 letter from Quality's attorney, Richard C.
Sherman, to plaintiff and Edward at the Cruz Plaza address, and
an Airborne Express mail receipt. Sherman's letter stated:
I am enclosing herewith Check No. 1566
of Quality Construction & Renovation, Inc.
payable to your order in the sum of
$349,547.40. The within check represents the
following in connection with Note and Mortgage
from Quality to you bearing date of November
30, 2000 covering property in the City of
Newark, County of Essex as follows:
1. Principal payment in the sum of
$320,000;
2. Interest on the original
principal balance of $520,000
at 8-1/2% per annum from
November 30, 2000 through and
including August 1, 2001 in the
amount of $29,547.40.
The within check is in full satisfaction
of mandatory principal payment which was
otherwise due on November 30th next pursuant
to Paragraph 1 of Rider to Note and Rider to
Mortgage. Accordingly, there remains a
principal balance of $200,000 to you from my
client.
My client is not, at this time, asking
for release of any units from the lien of
mortgage notwithstanding it is entitled to
same under aforesaid Paragraph 1 of Rider to
Mortgage. However, Quality reserves its right
to request said release, should the need arise
in the future.
4 A-4604-15T2
Records obtained from Quality's bank confirmed that funds in the
amount of $349,547.50 were debited from Quality's account.
With respect to the second and final payment, Quality's
documentary proofs included an October 8, 2003 letter from Sherman
addressed to plaintiff and Edward at the Cruz Plaza address. The
letter reflects it was sent via facsimile, and stated:
According to my records, there remains
outstanding to you from my client [Quality],
the sum of $200,000 with interest thereon from
August 1, 2001.
My client is about to close title to [an
unrelated property] . . . on Friday, October
10th next. Although your Mortgage does not
cover the subject property but instead covers
adjoining property . . . my client wants to
satisfy your obligation in full at this time.
Would you kindly fax to me on or before
October 10th next your calculation as to the
amount due assuming that you would be in
receipt of check on October 13th next via
overnight mail.
The next day, Sherman received a written response from E.E.
Cruz's Chief Financial Officer, Bennet Klausner, advising the loan
payoff amount was $237,446.92, comprised of $200,000 in principal
plus $37,446.92 in interest.
Copies of the front and back sides of an October 10, 2003
check drawn on the Giantomasi and Oliveira attorney trust account,
payable to plaintiff and Edward in the amount of $237,493.50, were
produced in discovery. The check was thereafter endorsed and
5 A-4604-15T2
deposited by E.E. Cruz. E.E. Cruz also produced ledgers of checks,
and its checking account records were obtained from Wells Fargo
Bank. These records showed E.E. Cruz deposited $237,521.50 on
October 14, 2003, and shortly thereafter issued two checks to
plaintiff and Edward, each in the amount of $118,746.75.
Edward was satisfied the loan had been fully repaid and
accordingly he signed a discharge of the mortgage. Plaintiff was
still not satisfied, however, and refused to discharge the mortgage
absent an agreement to escrow the sale proceeds. Consequently,
prior to the close of discovery, E.E. Cruz filed a motion for
summary judgment seeking dismissal of Quality's third-party
complaint. Quality filed a cross-motion for summary judgment
seeking to dismiss plaintiff's complaint, which relief Edward also
supported.
Following oral argument on the motions, Judge Thomas M. Moore
concluded there was
undisputed evidence that [Quality's first
check in 2001] was properly made out. That
it was properly delivered to the correct
address. It was properly presented,
negotiated and paid by Quality's bank two days
later. What I would consider . . . in the
ordinary course of business.
The judge further determined it did not matter whether the first
check was deposited by E.E. Cruz because in 2001, plaintiff and
Edward jointly owned and had equal interests in E.E. Cruz. Thus,
6 A-4604-15T2
as to this first check, the judge found there was "clear and
convincing proof that it was paid. And [plaintiff] got the
benefit."
As to the second payment in October 2003, Judge Moore
similarly concluded there was
[a]mple evidence that Mr. Sherman had
requested and received the [mortgage] payoff
amount, as required under the loan documents.
The check was issued . . . [i]t was paid. The
entry of the [E.E. Cruz] ledger indicates the
check for the identical amount was issued and
payment made to [plaintiff].
So it's clear, it's beyond any doubt in
my mind, . . . that Quality Construction
satisfied, paid off the mortgage in full, with
checks paid out to the mortgagees, to the
lenders as required by the loan documents,
undisputed.
I don't think it could be much clearer
that [plaintiff's] claims are . . . without
merit at this time and should be dismissed.
Judge Moore further determined:
I don't believe further discovery on this
matter would make any difference. The parties
have acted extraordinarily diligent[ly] in
trying to fl[e]sh out all of these issues from
[thirteen, fourteen, fifteen] years ago.
Accordingly, the court granted Quality's motion for summary
judgment and dismissed plaintiff's complaint. Since this relief
effectively rendered Quality's third-party complaint moot, the
court also granted E.E. Cruz's motion to dismiss. The August 20,
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2015 memorializing order provided for discharge of the subject
mortgage by the Essex County Registrar and its cancellation of
record pursuant to
N.J.S.A. 2A:51-1.
Quality then moved for an award of attorneys' fees and costs
against plaintiff pursuant to
N.J.S.A. 46:18-11.4.3 Quality also
sought frivolous litigation sanctions against plaintiff and
plaintiff's counsel pursuant to
N.J.S.A. 2A:15-59.1 and Rule 1:4-
8.
The court heard oral argument on the motion on December 4,
2015, and reserved decision pending a full review of the record.
On February 29, 2016, the court granted Quality's motion for
attorneys' fees and costs pursuant to
N.J.S.A. 46:18-11.4, but
denied its request for frivolous litigation sanctions "by the
slimmest of margins." Quality's counsel was directed to submit a
supplemental certification of services addressing the fees and
costs that Quality sought to recover.
3
The version of
N.J.S.A. 46:18-11.4 in effect when this suit was
filed provides in relevant part:
Any mortgagee . . . who fail[s] to comply with
[N.J.S.A. 46:18-11.2] shall be liable to the
mortgagor . . . for the cost of any legal
action to have the mortgage canceled of
record, including reasonable attorneys' fees,
but no attorneys' fees shall be allowed unless
20 days written notice is given to the
mortgagee prior to institution of the suit.
8 A-4604-15T2
On March 14, 2016, plaintiff filed a motion for
reconsideration of the court's decision to award counsel fees.
Plaintiff argued the court's dismissal of its complaint on August
20, 2015, did not address cancellation of the subject mortgage
pursuant to
N.J.S.A. 46:18-11.2, thus extinguishing Quality's
right to seek fees under the mortgage discharge statute,
N.J.S.A.
46:18-11.4. Judge Moore disagreed, noting the court's August 20,
2015 order did not amount to a final adjudication of all issues
related to the litigation under Rule 4:42-9(d), since Quality's
counterclaim for attorneys' fees remained outstanding. The judge
recognized that Quality specifically sought attorneys' fees
pursuant to
N.J.S.A. 46:18-11.4 in count one of its counterclaim,
and again at oral argument on December 4, 2015.
Judge Moore also noted plaintiff failed to raise this argument
in its original opposition. The judge elaborated:
[P]laintiff failed to make these particular
arguments at the time of the motion for
attorney[s'] fees. . . . [P]laintiff, in the
[c]ourt's view, was well aware of claims under
[
N.J.S.A.] 48:18-11.4 prior to the entry of
the [c]ourt's February [29, 2016] order.
Failure to raise any issue as to this claim
prior to the motion is evident in the record.
And the failure to raise it . . . precludes
reconsideration.
Citing Cummings v. Bahr,
295 N.J. Super. 374, 384 (App. Div. 1996),
the judge noted a motion for reconsideration cannot be based upon
9 A-4604-15T2
facts that were known to the moving party when the judgment being
challenged was entered.
Turning next to the issue of the quantum of fees to which
Quality was entitled, Judge Moore began with a determination of
the lodestar. He evaluated the fees charged by defendant's counsel
in light of the factors enumerated in RPC 1.5 and concluded "that
the fees sought satisfy the baseline hurdle of reasonableness
under the [New Jersey Rules of Professional Conduct].
Judge Moore additionally determined post-judgment fees,
including the reasonable cost of preparing Quality's fee
application, should be included in the award. However, the judge
rejected an award for time spent on defendant's unsuccessful
frivolous litigation argument. The judge also concluded Edward,
while equally situated to plaintiff as a mortgage lender, should
not be "saddled with fees" because he executed a discharge of the
mortgage before July 24, 2015, the date of oral argument on the
motions for summary judgment, while plaintiff contested his duty
to discharge the mortgage throughout the entire litigation.
Ultimately, the judge made certain reductions to the calculations
submitted by Quality's counsel, and entered a fee award of
$116,110.07.
Plaintiff now appeals from the August 20, 2015 order entering
summary judgment for Quality, the February 29, 2016 order awarding
10 A-4604-15T2
attorneys' fees, and the companion orders entered on June 14,
2016, denying reconsideration and fixing the amount of the fee
award. Quality has filed what it terms a "contingent cross appeal"
of the August 20, 2015 order dismissing its third-party complaint
against Edward and E.E. Cruz, for the purpose of preserving those
claims in the event plaintiff's appeal is successful.
Before us, plaintiff raises the following arguments in
support of his position that summary judgment was improperly
granted: (1) genuine issues of material fact exist; (2) an open
mortgage of record raises a presumption of non-payment; (2) the
court erroneously accepted E.E. Cruz's financial ledgers without
properly authenticating them as business records; and (4) summary
judgment was premature because the discovery period had not ended.
Additionally, plaintiff contends the trial court's award of
attorneys' fees pursuant to the mortgage discharge statute,
N.J.S.A. 46:18-11.4, was an abuse of discretion because (1) the
mortgage was not "redeemed, paid and satisfied;" and (2) Quality
was granted summary judgment on the basis of
N.J.S.A. 2A:51-1, not
N.J.S.A. 46:18-11.2, so that a fee award under
N.J.S.A. 46:18-11.4
was not implicated. Plaintiff also challenges the quantum of
attorneys' fees and costs awarded by the court as excessive and
palpably unreasonable.
11 A-4604-15T2
Having considered plaintiff's arguments in light of the
record and applicable legal standards, we affirm on the appeal and
the cross-appeal substantially for the reasons stated in Judge
Moore's comprehensive oral opinions. Plaintiff's arguments lack
sufficient merit to warrant extended discussion. R. 2:11-
3(e)(1)(E). We add only the following limited comments.
We review a grant of summary judgment de novo, observing the
same standard as the trial court. Townsend v. Pierre,
221 N.J.
36, 59 (2015). Summary judgment should be granted only if the
record demonstrates 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." R. 4:46-2(c).
"An issue of fact is genuine only if, considering the burden
of persuasion at trial, the evidence submitted by the parties on
the motion, together with all legitimate inferences therefrom
favoring the non-moving party, would require submission of the
issue to the trier of fact." R. 4:46-2(c). If the evidence
submitted on the motion "'is so one-sided that one party must
prevail as a matter of law,' the trial court should not hesitate
to grant summary judgment." Brill v. Guardian Life Ins. Co. of
Am.,
142 N.J. 520, 540 (1995) (quoting Anderson v. Liberty Lobby,
Inc.,
477 U.S. 242, 252 (1986)). If no genuine issue of material
fact exists, the inquiry then turns to "whether the trial court
12 A-4604-15T2
correctly interpreted the law." DepoLink Ct. Reporting & Litig.
Support Servs. v. Rochman,
430 N.J. Super. 325, 333 (App. Div.
2013) (citations omitted).
Applying these standards, we conclude Quality was entitled
to summary judgment as a matter of law. It is true, as plaintiff
contends, that an open mortgage of record creates a presumption
of non-payment. Kushinsky v. Samuelson,
142 N.J. Eq. 729, 731 (E.
& A. 1948) (citing Ocean Cty. Nat'l Bank v. Stillwell,
123 N.J.
Eq. 337 (E. & A. 1938)). Nonetheless, we conclude, as did Judge
Moore, that this presumption was overcome by the abundant evidence
presented that Quality's obligation under the note and mortgage
was fully paid.
Next, we note "[t]he general rule as to the admission or
exclusion of evidence is that '[c]onsiderable latitude is afforded
[to] a trial court in determining whether to admit evidence, and
that determination will be reversed only if it constitutes an
abuse of discretion.'" State v. Kuropchak,
221 N.J. 368, 385
(2015) (alterations in original) (citation omitted). "Under that
standard, an appellate court should not substitute its own judgment
for that of the trial court, unless 'the trial court's ruling "was
so wide of the mark that a manifest denial of justice resulted."'"
Ibid. (citation omitted).
13 A-4604-15T2
Here, we discern no abuse of discretion in Judge Moore's
decision to accept as a business record E.E. Cruz's ledger sheet
showing receipt of Quality's second mortgage payment and
subsequent disbursements in equal amounts to plaintiff and Edward.
We note the entries in the ledger are supported by the records
obtained from Wells Fargo Bank, which show E.E. Cruz deposited
$237,521.50 on October 14, 2003, and shortly thereafter issued two
checks, each in the amount of $118,746.75. Even if the ledger was
improperly admitted, we view any such error as harmless, in view
of the substantial other evidence in the record as to the second
payment. This evidence includes the payoff correspondence between
Sherman and Klausner; the front and back sides of the October 10,
2003 check drawn on the Giantomasi and Oliveira attorney trust
account, payable to plaintiff and Edward in the amount of
$237,493.50, which was thereafter endorsed and deposited by E.E.
Cruz; and the Wells Fargo records of the E.E. Cruz account.
Nor do we find that summary judgment was prematurely granted.
While summary judgment is often inappropriate when discovery has
not been completed and "critical facts are peculiarly within the
moving party's knowledge," Velantzas v. Colgate-Palmolive Co.,
109 N.J. 189, 193 (1988) (quoting Martin v. Educ. Testing Serv., Inc.,
179 N.J. Super. 317, 326 (Ch. Div. 1981)), plaintiff has not shown
that further discovery would have changed the relevant facts. See
14 A-4604-15T2
Wellington v. Estate of Wellington,
359 N.J. Super. 484, 496 (App.
Div. 2003); Auster v. Kinoian,
153 N.J. Super. 52, 56 (App. Div.
1977). Further, we note that actions to cancel or discharge a
mortgage pursuant to
N.J.S.A. 2A:51-1 may be brought summarily in
accordance with Rules 4:67-1(a) and 4:67-2(a).
We also agree with Judge Moore that attorneys' fees were
properly awarded to Quality pursuant to
N.J.S.A. 46:18-11.4, and
that Quality gave plaintiff timely notice of its request to
discharge the mortgage prior to filing its counterclaim, which
specifically sought such fees on this statutory basis.
With respect to the quantum of the fee award, in calculating
the amount of reasonable attorneys' fees, "an affidavit of services
addressing the factors enumerated by RPC 1.5(a)" is required. R.
4:42-9(b). Courts then determine the "lodestar," defined as the
"number of hours reasonably expended" by the attorney, "multiplied
by a reasonable hourly rate." Litton Indus., Inc. v. IMO Indus.,
Inc.,
200 N.J. 372, 386 (2009) (citing Furst v. Einstein Moomjy,
Inc.,
182 N.J. 1, 21 (2004)). "The court must not include
excessive and unnecessary hours spent on the case in calculating
the lodestar." Furst,
182 N.J. at 22 (citing Rendine v. Pantzer,
141 N.J. 292, 335-36 (1995)). The court is required to make
findings on each element of the lodestar fee. Id. at 12. The fee
awarded must be "reasonable," RPC 1.5(a), and reasonableness is a
15 A-4604-15T2
"calculation" to be made in "every case." Furst,
182 N.J. at 21-
22.
We afford trial courts "considerable latitude in resolving
fee applications . . . ." Grow Co., Inc. v. Chokshi,
424 N.J.
Super. 357, 367 (App. Div. 2012). We will not disturb the trial
court's award of counsel fees "except 'on the rarest occasions,
and then only because of a clear abuse of discretion.'" Ibid.
(quoting Rendine,
141 N.J. at 317). Here, Judge Moore engaged in
a thorough analysis of the applicable factors when calculating the
fee award. We discern no abuse of discretion.
Affirmed.
16 A-4604-15T2
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