ANIMINVESTMENT COMPANY v. GEORGE SHALHOUB and KATHLEEN SHALHOUB, d/b/a GJ SHALHOUB, INC -
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5266-15T2
ANIM INVESTMENT COMPANY,
Plaintiff-Appellant,
v.
GEORGE SHALHOUB and KATHLEEN
SHALHOUB, d/b/a GJ SHALHOUB, INC.,
Defendants-Respondents.
___________________________________
Argued September 28, 2017 – Decided February 28, 2018
Before Judges Simonelli and Gooden Brown.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No.
F-030508-15.
Arnold G. Shurkin argued the cause for
appellant.
Kevin J. Bloom argued the cause for
respondents (Law Offices of Abe Rappaport,
attorneys; Kevin J. Bloom, on the brief).
PER CURIAM
Plaintiff Anim Investment Company appeals from a June 30,
2016 Chancery Division order, granting defendants' motion for
summary judgment and dismissing plaintiff's foreclosure complaint
with prejudice. We affirm.
We briefly summarize the relevant facts, which are undisputed
and viewed in a light most favorable to plaintiff. See Brill v.
Guardian Life Ins. Co. of Am.,
142 N.J. 520, 540 (1995). On
September 19, 1990, defendants George and Kathleen Shalhoub
executed a five-year note for $178,100, secured by a mortgage on
their River Vale property in favor of Mortgage Electronic
Registration Systems, Inc. (MERS) as nominee for Mina Investment
Company. The note and mortgage had a maturity date of October 1,
1995. The mortgage was recorded on September 25, 1990. Defendants
immediately defaulted on the mortgage on November 1, 1990, and
remained in default. On October 14, 1997, the mortgage was
assigned to plaintiff and the assignment was recorded on October
22, 1997. On February 12, 2015, plaintiff filed a Notice of Intent
to foreclose in compliance with the Fair Foreclosure Act,
N.J.S.A.
2A:50-56, and, on August 31, 2015, a foreclosure complaint. On
October 5, 2015, defendants filed a contesting answer asserting
affirmative defenses, including expiration of the statute of
limitations.
Defendants moved for summary judgment, arguing that the
complaint was barred by the statute of limitations codified in
2 A-5266-15T
2 N.J.S.A. 2A:50-56.1,1 which took effect on August 6, 2009, and
applied retroactively to their mortgage. After hearing oral
1 N.J.S.A. 2A:50-56.1 provides:
An action to foreclose a residential mortgage
shall not be commenced following the earliest
of:
a. Six 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, whether the date is itself set forth
or may be calculated from information
contained in the mortgage or note, bond, or
other obligation, 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;
b. Thirty-six years from the date of
recording of the mortgage, or, if the mortgage
is not recorded, [thirty-six] years from the
date of execution, so long as the mortgage
itself does not provide for a period of
repayment in excess of [thirty] years; or
c. Twenty years from the date on which the
debtor defaulted, which default has not been
cured, as to any of the obligations or
covenants contained in the mortgage or in the
note, bond, or other obligation secured by the
mortgage, except that if the date to perform
any of the obligations or covenants has been
extended by a written instrument or payment
on account has been made, the action to
foreclose shall not be commenced after
[twenty] years from the date on which the
3 A-5266-15T2
argument and requesting supplemental briefing, in a June 30, 2016
written decision, Judge Edward Jerejian agreed that
N.J.S.A.
2A:50-56.1 "[met] the criteria for retroactive application" under
Gibbons v. Gibbons,
86 N.J. 515, 523 (1981), Phillips v. Curiale,
128 N.J. 608, 617 (1992), and In re D.C.,
146 N.J. 31, 50 (1996).
The judge reasoned:
In New Jersey, a two-part test is used for
determining whether a statute could be applied
retroactively:
The first part questions "whether
the Legislature intended to give the
statute retroactive application."
The second part involves "whether
retroactive application of that
statute will result in either an
unconstitutional interference with
'vested rights' or a 'manifest
injustice.'" [Ibid.] (quoting
[Phillips,
128 N.J. at 617]).
Elaborating on the two-part test, the court
in In re D.C. specified:
In applying this test generally,
there are three circumstances that
will justify a retroactive
application of a statute: (1) where
the Legislature has declared such an
intent, either explicitly or
implicitly; (2) where the statute is
curative; and (3) where the
expectations of the parties warrant
retroactive application. [Id. at
50-51]. . . . However, even if a
statute is found to apply
default or payment on account thereof occurred
under the terms of the written instrument.
4 A-5266-15T2
retroactively based on those
factors, under the second prong of
the basic test, retroactive
application must not "result in
'manifest injustice' to a party
adversely affected by such
application." Id. at 51 . . . .
Judge Jerejian acknowledged that "the legislature did not
specify whether the statute should be applied retroactively
. . . ." However, the judge concluded that the statute was "meant
to be curative, and provide guidance on an issue that was
previously unaddressed." Moreover, according to the judge,
plaintiff failed to "offer any reason why a retroactive application
would result in manifest injustice," or "why the expectations of
the [d]efendants do not warrant retroactive application."
Turning to the applicable limitations period contained in
N.J.S.A. 2A:50-56.1, Judge Jerejian explained:
Under this statute, there are three
triggering events which commence the running
of the statute of limitations period, after
which a mortgage foreclosure action cannot be
brought. Whereas [
N.J.S.A.] 2A:50-56.1(c) is
triggered by nonpayment or default, [N.J.S.A.]
2A:50-56.1(a) is triggered by the date fixed
for making . . . the last payment or the
maturity date. Here, the Note and Mortgage
states on its face: "[s]aid principal sum and
the interest to be paid as follows: $1,899.33
on the first day of November 1990, and a like
sum on the first day of each and every month
thereafter, until the first day of October
1995, when the balance of the unpaid principal
and interest shall be due and payable." . . .
5 A-5266-15T2
Here, the mortgagors took out a five-year
loan on September 19, 1990. The Note and
Mortgage specifies that the maturity date is
October 1, 1995. Applying the plain language
of the limitations period described in
subsection (a), an action to foreclose on the
Mortgage is timely as long as it is commenced
no later than six years from October 1, 1995,
the maturity date set forth on the Note and
Mortgage. Six years from the maturity date
would provide [p]laintiff until October 1,
2001 to file a timely [c]omplaint. . . . Thus,
the earliest date triggered by the [statute]
is October 1, 2001, six years from the
maturity date stated on the Note . . . . It
is immaterial what the date of default is, as
subsection (c) is not the applicable statute
on this matter.
In opposing the application of
N.J.S.A. 2A:50-56.1(a) to the
mortgage, plaintiff pointed to the inter-relationship and
consistency between
N.J.S.A. 2A:50-56.1(a) and "[
N.J.S.A.] 12A:3-
118(a) of the Uniform Commercial Code" governing proceedings "on
the underlying Note" and providing an identical six year statute
of limitations. According to plaintiff, because "a foreclosure
action [was] not a lawsuit on the Note, [
N.J.S.A.] 2A:50-56.1(a)
[was] inapplicable." In rejecting plaintiff's argument, Judge
Jerejian reasoned:
Contrary to [p]laintiff's argument,
[
N.J.S.A.] 2A:50-56.1(a) sets forth a six year
statute of limitations from the date of
maturity. A foreclosure proceeding and its
accompanying statute of limitation is uniquely
distinct and separate from a proceeding on the
underlying Note under [
N.J.S.A.] 12A:3-
118(a).
6 A-5266-15T2
Elaborating on this issue, the court
notes that the District Court in Hartman v.
Wells Fargo Bank, N.A. (In re Hartman), Nos.
15-4437 (ES) & 15-5060 (ES), 2016 U.S. Dist.
LEXIS 40470, (D.N.J. Mar. 28, 2016)[,]
compared the difference between an action
commenced on an obligation to pay and an
action to foreclose, finding:
[A]s noted by the [d]efendants, the
statute's silence with respect to
the effect of acceleration on the
mortgage foreclosure limitations
period is particularly significant
since New Jersey's statute of
limitations for negotiable
instruments, [
N.J.S.A.] 12A:3-
118(a), specifically addresses
acceleration . . . .[2]
Thus, there is no doubt that the New
Jersey legislature knows how to
clearly draft a statute that
provides for the commencement of a
statute of limitations from an
accelerated due date. The fact that
the legislature did not include such
language when it enacted [N.J.S.A.]
2A:50-56.1 is evidence that it did
not intend for the six-year
limitations period to commence upon
acceleration of a mortgage . . . .
Plaintiff's argument would also be contrary
to [Security National Partners Limited
Partnership v. Mahler,
336 N.J. Super. 101
(App. Div. 2000)], which held that the "claim
that the foreclosure suit is governed by the
same six-year statute of limitations [applying
2 N.J.S.A. 12A:3-118a provides "[a]n action to enforce the
obligation of a party to pay a note payable at a definite time
must be commenced within six years after the due date or dates
stated in the note or, if a due date is accelerated, within six
years after the accelerated due date."
7 A-5266-15T2
to notes] is contrary to long settled case law
and has no merit."
Judge Jerejian also rejected plaintiff's reliance on
Specialized Loan Servicing, LLC v. Washington, No. 2:14cv-8063-
SDW 2
015 U.S. Dist. LEXIS 105794 (D.N.J. Aug 12, 2015), explaining:
Plaintiff relies on Specialized Loan
Servicing, which he states is directly on
point. Plaintiff explains the District Court
in that case held that a twenty (20) year
statute of limitations applied to plaintiff's
foreclosure action and that commencement date
began to run on the agreed maturity date.
The District Court in Specialized Loan
Servicing addressed the issue of the term
"accelerated" in [
N.J.S.A.] 2A:50-56.1(a),
which was never clearly defined. [Id. at
*12.] The District Court found that neither
the date of filing of the [c]omplaint nor the
default date would constitute an acceleration
of a mortgage. Id. at *14. To accept such
an interpretation would render [N.J.S.A.]
2A:50-56.1(c) "superfluous and
insignificant," and without a functional
purpose. Id. at *13. For those reasons, the
District Court found that the maturity date
was not accelerated to the alleged dates of
default or the date of the filing of the
[c]omplaint; instead, the District Court held
that the terms of the Note and Mortgage
provided that the Mortgage would mature on
March 1, 2037, the date fixed for the making
of the last payment. Id. at *15.
Additionally, [the] [c]ourt opined that in
that circumstance, the twenty[-]year statute
of limitations promulgated under [N.J.S.A.]
2A:50-56.1(c) was the pertinent subsection to
be applied in that case, as it would trigger
the earliest date under the statute. [Ibid.]
8 A-5266-15T2
Based on the foregoing, Specialized Loan
Servicing does not support [p]laintiff's
proposition that subsection (a) applies only
to lawsuits for damages on the Note and
[thirty-six] years or [twenty] years apply to
the commencement of a foreclosure action in
the Chancery Division. The dispute between
the parties in Specialized Loan Servicing
concerned whether it was appropriate to
calculate the maturity date as accelerated for
the purpose of applying the six year statute
of limitations under [
N.J.S.A.] 2A:50-
56.1(a), not whether subsection (a) is
inapplicable to all foreclosure actions. The
case simply does not stand for the proposition
that subsection (a) does not apply at all to
foreclosure matters. Further, [p]laintiff
offers no authority to evidence the
legislature's intent that it limited
subsection (a) to lawsuits on the Mortgage
Note itself.
. . . .
The limitations period described in
subsection (a) of [
N.J.S.A.] 2A:50-56.1 is
unambiguously defined as six years from "the
maturity date set forth in the mortgage or the
note." The [c]ourt sees no reason why
acceleration would change the commencement of
the limitations period from that date.
Therefore, applying the six-year limitations period in
N.J.S.A. 2A:50-56.1(a), the judge concluded that plaintiff's
action to foreclose was untimely and thus barred. Noting that
"the purpose of a statute of limitations is to ensure defendants
a fair opportunity to defend against claims, to prevent parties
from sitting on their rights, and to promote repose[,]" Judge
Jerejian entered a memorializing order on June 30, 2016, dismissing
9 A-5266-15T2
the foreclosure complaint with prejudice, and this appeal
followed.
On appeal, plaintiff argues "the court erred by applying
N.J.S.A. 2A:50-56.1(a) to the mortgage in question." Plaintiff
asserts that
N.J.S.A. 2A:50-56.1(a) does not apply to "mortgage
foreclosure actions" and to hold otherwise renders "parts (b) and
(c) of the statute . . . meaningless." Plaintiff contends that
"mortgage foreclosure actions" continue to follow Security
National Partners, prescribing a twenty-year limitations period,
and applying
N.J.S.A. 2A:50-56.1 retroactively "to all pre-
existing mortgages" deprives "plaintiff of an existing substantive
right to foreclose that existed prior to August 6, 2009," when the
statute became effective. Plaintiff continues by renewing the
arguments rejected by Judge Jerejian. Like the judge, we reject
plaintiff's arguments and affirm substantially for the reasons
expressed in Judge Jerejian's comprehensive and well-reasoned
written decision. We add the following brief comments.
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
10 A-5266-15T2
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. (citing Manalapan Realty, LP v. Twp.
Comm. of Manalapan,
140 N.J. 366, 378 (1995)). Because issues
involving the applicable statute of limitations 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 provision
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)). "If the plain language leads to a clear and
unambiguous result, then our interpretive process is over."
Richardson v. Bd. of Trs., Police & Firemen's Ret. Sys., 192 N.J.
11 A-5266-15T2
189, 195 (2007). It is only when there is ambiguity in the
language that we turn to extrinsic evidence, such as legislative
history. Id. at 195-96.
Generally, newly enacted laws are applied prospectively.
James v. N.J. Mfrs. Ins. Co.,
216 N.J. 552, 556 (2014). This
approach is based on "long-held notions of fairness and due
process." Cruz v. Cent. Jersey Landscaping, Inc.,
195 N.J. 33,
45 (2008). That practice, however, is no more than a rule of
statutory interpretation meant to "aid the court in the search for
legislative intent." Twiss v. State,
124 N.J. 461, 467 (1991).
As such, it "is not to be applied mechanistically to every case."
Gibbons,
86 N.J. at 522. Rather, in Johnson v. Roselle EZ Quick
LLC,
226 N.J. 370, 386-89 (2016), our Supreme Court reaffirmed the
inquiry articulated in Gibbons and Phillips to guide the
retroactivity analysis.
Applying those principles, we agree with Judge Jerejian that
N.J.S.A. 2A:50-56.1 was intended to be curative, and to provide
guidance on an issue that was previously unaddressed by statute.
Further, we are satisfied that the expectations of the parties
warrant retroactive application, and we discern no basis to
conclude that a retroactive application would result in manifest
injustice, particularly in these circumstances where plaintiff
12 A-5266-15T2
inexcusably delayed asserting its rights for over fourteen years.3
We also agree that subsection (a) of the statute applies.
N.J.S.A.
2A:50-56.1(a) unequivocally provides that the statute of
limitations for a mortgage foreclosure action will expire six
years from the date fixed for the making of the last payment or
the maturity date set forth in the mortgage or the note. In this
case, six years from the October 1, 1995 maturity date of the note
and the mortgage was October 1, 2001, rendering plaintiff's August
31, 2015 filing of its foreclosure complaint untimely.
Affirmed.
3
In a certification submitted in opposition to defendants'
summary judgement motion, plaintiff's counsel averred that
"[p]laintiff did not accelerate the [m]ortgage or declare a
default" because defendants "had several [m]ortgages [on the
property] that had priority" over plaintiff's mortgage.
13 A-5266-15T2
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