WELLS FARGO BANK, NA v. CHRISTOPHER J. MOUNT

NOT FOR PUBLICATION WITHOUT THE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.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-4932-16T2

WELLS FARGO BANK, NA,

          Plaintiff-Respondent,

v.

CHRISTOPHER J. MOUNT,

     Defendant-Appellant.
_____________________________

                    Argued December 17, 2018 – Decided January 28, 2019

                    Before Judges Messano and Rose.

                    On appeal from Superior Court of New Jersey,
                    Chancery Division, Monmouth County, Docket No. F-
                    008621-16.

                    Joseph Albanese argued the cause for appellant.

                    David G. Murphy argued the cause for respondent
                    (Reed Smith, LLP, attorneys; Henry F. Reichner, of
                    counsel; David G. Murphy, on the brief).

PER CURIAM
      Defendant Christopher J. Mount defaulted on his home mortgage loan

with plaintiff, Wells Fargo Bank, NA. Wells Fargo served defendant with a

Notice of Intention to Foreclose, and defendant filed a Chapter 13 bankruptcy

petition. During the pendency of the bankruptcy action, defendant negotiated a

"Streamlined Modification" agreement with Wells Fargo.           The Streamlined

Modification was a proposed trial period plan (TPP), as explained in Wells

Fargo's December 2014 letter, which included three monthly payments

commencing February 1, 2015. The notice clearly stated Wells Fargo could

extend the TPP prior to modifying the mortgage if, for example, defendant

needed to clear "other liens" on the property, although it did not specify any

particular lien. As an example, the letter stated defendant might need to provide

"a subordination agreement from the other lenders, so that [Wells Fargo] can

maintain [its] lien position . . . ."

      Defendant began making payments under the TPP, and Wells Fargo

served defendant with a letter and title report dated February 20, 2015. The

letter stated Wells Fargo's mortgage was "not in first lien position," and required

plaintiff to furnish a "completed subordination agreement" before the mortgage

modification could be finalized. The title report showed there was a mortgage

with Fulton Bank of New Jersey (Fulton), as well as a subordination agreement


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recorded on the same date Wells Fargo's mortgage was recorded. The title report

clearly provided that the Fulton mortgage was subordinate to Wells Fargo's

mortgage. Additionally, the letter somewhat confusingly advised defendant he

also was required to furnish a "Notice of Release of Mortgage or

Discharge . . . ." On April 17, 2015, in an effort to have the Fulton mortgage

discharged, defendant filed a modification of his bankruptcy petition, which

provided for the release of the mortgage upon defendant's completion of

payments to the bankruptcy trustee.

      By letter two weeks later, Wells Fargo advised defendant that he needed

to furnish "documented proof" the title issues were resolved "within ten business

days," or defendant would no longer be eligible for a permanent loan

modification. In June, the trustee advised Wells Fargo that defendant had made

all payments, "subject to final review . . . ." Defense counsel advised Wells

Fargo that the Fulton mortgage soon would be removed of record.

      On August 20, 2015, however, Wells Fargo notified defendant that he was

no longer eligible for assistance because of unspecified "title issues" with the

property. On August 27, 2015, the county clerk received an executed release of

the Fulton mortgage.




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      Defendant continued to make timely TPP payments through February

2016. In March, Wells Fargo refused to accept any further payments and

commenced a foreclosure action.     Defendant filed an answer that included

affirmative defenses and a counterclaim alleging, among other things, breach of

contract, breach of the implied covenant of good faith and fair dealing,

violations of federal regulations and consumer fraud.      An amended case

management order provided discovery would end on March 31, 2017, and all

dispositive motions were to be filed thirty days prior to trial. Despite the

ongoing litigation, Wells Fargo offered defendant another TPP plan in August

2016, which he refused.

      Wells Fargo moved for summary judgment; defendant filed a cross-

motion for summary judgment and a motion to compel discovery.            After

considering oral argument, the chancery judge granted Wells Fargo's motion and

denied defendant's motions.     Wells Fargo subsequently moved for final

judgment, which the Foreclosure Unit entered on June 8, 2017. This appeal

followed.

      Defendant argues the judge should have granted his cross-motion for

summary judgment because Wells Fargo breached its contract — the TPP —

with defendant, had "unclean hands," and was equitably estopped from


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prosecuting the foreclosure. Alternatively, defendant claims the judge should

have denied summary judgment to Wells Fargo because there were genuine

factual disputes as to whether it breached the TPP. Lastly, defendant argues the

judge should have granted his discovery motion. Having considered these

arguments in light of the record and applicable legal principles, we reverse and

remand for further proceedings consistent with this opinion.

      We review the grant of summary judgment de novo, applying the same

standard used by the trial judge, which

            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. of Pittsburgh,  224 N.J. 189, 199 (2016) (quoting R.
            4:46-2(c)).]

We decide "whether the competent evidential materials presented, when viewed

in the light most favorable to the non-moving party, are sufficient to permit a

rational factfinder to resolve the alleged disputed issue in favor of the non-

moving party." Davis v. Brickman Landscaping, Ltd.,  219 N.J. 395, 406 (2014)

(quoting Brill v. Guardian Life Ins. Co. of Am.,  142 N.J. 520, 540 (1995)). We

owe no deference to the trial court's legal analysis or interpretation of a statute.

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The Palisades At Fort Lee Condo. Ass'n, Inc. v. 100 Old Palisade, LLC,  230 N.J.
 427, 442 (2017) (citing Manalapan Realty, LP v. Twp. Comm. of Manalapan,

 140 N.J. 366, 378 (1995)).

       We have likened a TPP to "'a unilateral offer,' pursuant to which the bank

promise[s] to give plaintiff[] a loan modification, if and only if plaintiff[]

complie[s] fully and timely with [his] obligations under the TPP . . . ." Miller

v. Bank of Am. Home Loan Servicing, LP,  439 N.J. Super. 540, 549 (App. Div.

2015) (quoting Arias v. Elite Mortg. Grp., Inc.,  439 N.J. Super. 273, 279 (2015)).

"[W]hen the issuance of a loan modification agreement is explicitly made

contingent upon the evaluation and satisfaction of all prescribed conditions

precedent within a TPP, . . . the declination of a lender to present a loan

modification agreement may be actionable." Ibid. (citing Arias,  439 N.J. Super.

at 276). "[T]he specific terms of the TPP govern the parties' agreement." Id. at

550.

       When it moved for summary judgment, Wells Fargo's statement of

undisputed material facts relied solely on the contents of the February, April and

August 2015 letters to defendant, contending those documents demonstrated

defendant "did not timely remedy the title issues."         The chancery judge

seemingly accepted this as an undisputed fact, noting simply that the Fulton


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mortgage was not released until after Wells Fargo terminated the TPP. As a

result, she concluded there was no breach of the TPP, and, since it was

undisputed that defendant was in default of the mortgage, summary judgment

was appropriate. 1

      However, as we have demonstrated, the documents that set the terms of

the TPP are confusing, at best. The February 2015 letter says defendant was

required to obtain both a subordination agreement for the Fulton mortgage, and

a "Notice of Release," because Wells Fargo's mortgage was not a first lien on

the property. In fact, Wells Fargo's own title report demonstrated its mortgage

was a first lien. Although it is undisputed that defendant made other attempts

to have the mortgage actually discharged, Wells Fargo's April letter and the final

August 2015 letter simply stated, without specificity, that defendant failed to

clear title to the property.

      Defendant's motion to compel discovery was an attempt to flesh out the

contacts that took place between Wells Fargo and himself, and to depose the

bank's representatives in charge of the modification process. This was relevant

evidence, given federal regulations that obligated Wells Fargo to give defendant


1
   It is apparently undisputed that if the TPP payments were applied to
defendant's account under the original terms of his mortgage with Wells Fargo,
he would be in default as of January 2014.
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"a reasonable period of time to fulfill any remaining requirements of the servicer

for acceptance of the [TPP] . . . ."  12 C.F.R. 1024.41(e)(2)(ii). It was also

potentially relevant to demonstrate whether Wells Fargo, which was servicing

the mortgage for Freddie Mac, complied with that association's guidelines,

which, at the time, required the servicer to "work with the [b]orrower . . . to

obtain any court and/or trustee approvals required[,]" and suggested that

mortgagees "should extend" a TPP period to assist mortgagors in fulfilling their

obligations, but for no more than one year. Freddie Mac Servicing Guidelines,

§ 9205.10(b) (2017) (removed 2018).

      In short, we do not think the facts were so one-sided as to compel summary

judgment in favor of Wells Fargo as a matter of law. Brill,  142 N.J. at 533. We

reverse the order granting Wells Fargo summary judgment. 2




2
   The order granting Wells Fargo summary judgment dismissed defendant's
counterclaims with prejudice. Defendant's brief asserted no argument regarding
other causes of action in his counterclaim, e.g., violations of the Consumer
Fraud Act,  N.J.S.A. 56:8-1 to -210. Nor did the brief address whether alleged
violations of regulations and guidelines in the counterclaim are cognizable
independent causes of action. "An issue not briefed on appeal is deemed
waived." Sklodowsky v. Lushis,  417 N.J. Super. 648, 657 (App. Div. 2011).
We affirm the order dismissing all of defendant's counterclaims except breach
of contract, breach of the implied covenant of good faith and fair dealing, and
the equitable defenses of "unclean hands" and equitable estoppel.


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       Defendant contends we should also reverse the order that denied his

motion for partial summary judgment because he established as a matter of law

that Wells Fargo breached the TPP, and because it initiated the foreclosure suit

with "unclean hands." We think it is obvious from our prior discussion that

material questions of fact exist, and, therefore, defendant's motion for partial

summary judgment was properly denied. We affirm the judge's separate order

that denied defendant's motion for partial summary judgment.

       In light of our decision, we remand the matter to the trial court, which

shall reconsider defendant's motion for additional discovery and rule on those

requests in the context of the current posture of the case before the court. In that

regard, we consider what is the appropriate remedy should defendant prevail.

       In GMAC Mortg., LLC v. Willoughby,  230 N.J. 172, 177-78 (2017), the

mortgagor entered into a mediated settlement with the mortgagee to save her

home from foreclosure. 3      Although she complied, the mortgage servicer

attempted to modify the settlement agreement. Id. at 178. When the mortgagor

refused to execute the new proposed agreement, the mortgagee initiated

foreclosure proceedings that ultimately led to the sale of the property at a

sheriff's sale. Id. at 180.


3
    Willoughby was decided after the proceedings in this case.
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      The Court concluded that the mediated settlement agreement was a

binding contract that, based upon the mortgagor's performance, compelled the

permanent modification of her mortgage in accordance with the terms of the

agreement. Id. at 186, 188-89. Recognizing that the mortgagor might "not be

entitled to specific performance" if the property had been sold to a "good faith

purchaser" in the interim, the Court remanded the case so "the chancery court

[may] fashion a suitable and equitable remedy[,]" including damages for the

mortgagee's "breach of contract." Id. at 189-90.

      Here, we do not know what has transpired since entry of the final

judgment of foreclosure, nor can we predict the outcome of the remand and

whether defendant will prevail on his counterclaim. Even if defendant does

prevail, the equities of the moment might dictate that the final judgment of

foreclosure not be disturbed. Defendant's recovery may be limited to proven

financial damages or some other appropriate remedy fashioned by the chancery

judge at that time. Id. at 189. Therefore, we do not vacate the final judgment

of foreclosure.

      Reversed in part and remanded. We do not retain jurisdiction.




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