BRUNSWICK BANK & TRUST VS. AFFILIATED BUILDING CORP., ET AL.
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2929-20 BRUNSWICK BANK & TRUST, Plaintiff-Respondent, v. AFFILIATED BUILDING CORP., and HELN MANAGEMENT, LLC, Defendants-Appellants, and THE STATE OF NEW JERSEY, Defendant. ______________________________ Submitted May 3, 2022 – Decided May 13, 2022 Before Judges Fisher and DeAlmeida. On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, Docket Nos. F030989-10, F-030990-10 and F-021231-13, Monmouth County, Docket No. F-026278-10. Philip R. Kaufman, attorney for appellants. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, attorneys for respondent (Anthony B. Vignuolo, on the brief). PER CURIAM The parties have, for the past twelve years, engaged in extensive litigation concerning plaintiff Brunswick Bank & Trust Co.'s attempts to collect on loans made to defendants. The matter has come before us twice before. See Brunswick Bank & Trust Co. v. Heln Mgmt. LLC, 453 N.J. Super. 324 (App. Div. 2018); Brunswick Bank & Trust Co. v. Affiliated Bldg. Corp., 440 N.J. Super. 118 (App. Div. 2015). The circumstances are certainly convoluted but the mandate in our second decision issued more than four years ago was clear: the chancery judge was to ascertain the fair market value of certain properties and apply those values to the collective debt to ensure plaintiff did not receive more than it was owed. Because the judge failed to comply with our mandate, we take the extraordinary step of exercising original jurisdiction over one particular issue and remanding for a determination of others. The circumstances are more fully amplified in our prior opinions, so we will not repeat ourselves except as may be necessary for a full understanding of today's disposition. In a nutshell, the cases in the trial court concern five construction and development loans, four of which were made to defendant Heln 2 A-2929-20 Management, LLC, and a fifth to Affiliated Building Corp.; Jeffrey Miller, a principal in both entities, and his daughter Melanie Miller, guaranteed the repayment of these loans. The promise to repay was further supported by mortgages held by the bank on defendants' properties. When a default occurred, the bank first commenced a Law Division action and obtained a money judgment in 2010 against Heln for $1,884,141.84, and against Affiliated for $175,000; this judgment encompassed only four of the five loans. The bank also commenced four separate foreclosure actions, three in Middlesex County and one in Monmouth County. Three of the four were filed in 2010 before the money judgment was entered in the Law Division, and the fourth was filed in 2013. Default judgments setting redemption amounts were entered in 2012 and 2013, and properties encumbered by mortgages held by the bank were sold. In the first appeal (Brunswick Bank I) we were concerned, as was the chancery judge at the time, that the bank may have already been fully compensated. 440 N.J. Super. at 328. To prevent a windfall, we remanded so there could be further factual development about what defendants owed and what the bank had collected. When questions remained after the disposition in the chancery court that followed, we again remanded, reinforcing the central 3 A-2929-20 theme of both our decisions: the bank was entitled to collect "only what was collectively owed [by] these defendants." Brunswick Bank II, 453 N.J. Super. at 330. We observed in Brunswick Bank II that the now-retired chancery judge had endeavored to comply but questions remained. That is, the judge recognized the bank was owed "at least" $2,700,000 and had received $2,599,208.51. Id. at 331. There remained slightly more than $100,000 that arguably had not been collected but the bank had "also c[o]me away with the properties known as Baldwin and Beacon Hill" beyond the nearly $2,600,000 collected. Id. at 332. Recognizing these circumstances and the effect of the other collection efforts that took place as the gap between what was owed and what was collected closed, we explained "exact[ly]" what was required in the trial court: [W]e direct that the judge first determine whether Baldwin had a fair market value greater than the approximate $250,000 shortfall [existing at the time]. If so, then Brunswick Bank, by becoming Baldwin's owner, would have been fully compensated and no further right in equity would have existed to proceed against any other mortgaged property or any other assets of defendants. The precise amount above the rounded shortfall of $250,000 – that is, if Baldwin's fair market value was greater – would be irrelevant since that is the type of windfall law and equity would allow Brunswick Bank to reap. 4 A-2929-20 If, however, Baldwin did not possess a fair market value in excess of $250,000, then Brunswick Bank was entitled to further pursue its collection efforts and to force a sheriff sale of Beacon Hill. If the judge's future findings are in accord with this possibility, the judge must ascertain what thereafter remained due to Brunswick Bank and, once ascertained, whether the fair market value of Beacon Hill exceeded what remained of the $250,000 shortfall. If Beacon Hill's fair market value did not swallow that remaining shortfall, then the judge could find Brunswick Bank entitled to pursue the Loren Terrace proceeds but only to the extent of the remaining shortfall once the fair market values of both Baldwin and Beacon Hill have been applied against the shortfall existing on June 17, 2013. If, however, the shortfall was extinguished by Brunswick Bank's receipt of the fair market value of both Baldwin and Beacon Hill, Brunswick Bank would have no right to any part of the Loren Terrace funds ($147,387.37) obtained in January 2014. [Id. at 333-34.] Soon after our February 21, 2018 remand, the parties stipulated the relevant facts. They agreed, for example, that Baldwin's fair market value in June 2013 was at least $320,000. Based on our detailed explanation in Brunswick Bank II, the bank's collection efforts leading up to and concluding with its obtaining of Baldwin fully compensated the bank for the entire debt. Had the chancery judge now handling the matter simply complied with our mandate, he would have been compelled to enter a judgment based on the stipulated facts that the entirety of the loans were paid off when the bank 5 A-2929-20 obtained Baldwin; that would have left the judge with the job of crafting for defendants a remedy because the bank had recovered more than one hundred percent of the debt. 1 But that's not what happened. Indeed, nothing happened immediately after the parties stipulated the facts in November 2019. 2 The case sat dormant until the judge rendered his opinion on April 16, 2021, and entered judgment on May 7, 2021, dismissing – apparently based solely on the judge's interpretation of the law – defendants' claim to the application of the fair market value credit of properties taken by the bank by way of sheriff's sale or by settlement. 1 We recognized in Brunswick Bank II that even if the value of Baldwin exceeded the remainder due from defendants, the bank would not be obligated to disgorge the difference. 453 N.J. Super. at 333 (holding "the precise amount above the rounded shortfall of $250,000 – that is, if Baldwin's fair market value was greater – would be irrelevant since that is the type of windfall law and equity would allow Brunswick Bank to reap"); see West Pleasant-CPGT, Inc. v. U.S. Home Corp., 243 N.J. 92, 109 n.3 (2020). 2 The parties' submissions to this court suggest the pandemic caused the delay but considering the clarity of our mandate and the stipulation of the remaining relevant facts, it is not clear how the limitations placed on our courts during the pandemic could have caused any delay. There was no testimony to be taken. The matter required nothing more than the judge's application of the stipulated facts to the framework provided by Brunswick Bank II's mandate. 6 A-2929-20 Defendants again appeal, arguing, among other things, that our decision about their entitlement to fair market value credits was the "law of the case" and binding on the trial judge. We agree. Disregarding our mandate and ensorcelled by the bank's arguments and its "disagree[ment]" with Brunswick Bank II, the judge relied on other earlier authorities, which we had already considered, rather than comply with our own binding decision about how the court was to proceed. In short, the judge adopted the bank's view, which we had already rejected, that "a [f]air [m]arket [v]alue credit is only available where a deficiency is pursued" and believed he was supported in this regard by the Supreme Court's 2020 decision in West Pleasant, in ignoring our mandate and concluding that defendants "are not entitled to any fair market credit" and, even more surprising and unexplained, that the bank "has never been fully paid." Justice Brennan long ago expressed the well-established principle that a trial judge "is under a peremptory duty to obey in the particular case the mandate of the appellate court precisely as it is written." Flanigan v. McFeely, 20 N.J. 414, 420 (1956) (citing In re Plainfield-Union Water Co., 14 N.J. 296, 303 (1954); McGarry v. Central R. Co. of N.J., 107 N.J.L. 382 (E. & A. 1931); Hellstern v. Smelowitz, 17 N.J. Super. 366, 371 (App. Div. 1952); Jewett v. 7 A-2929-20 Dringer, 31 N.J. Eq. 586 (Ch. 1879)); see also Park Crest Cleaners, LLC v. A Plus Cleaners & Alterations Corp., 458 N.J. Super. 465, 472 (App. Div. 2019); State v. Kosch, 454 N.J. Super. 440, 444 (App. Div. 2018); Henebema v. Raddi, 452 N.J. Super. 438, 451 (App. Div. 2017); Tomaino v. Burman, 364 N.J. Super. 224, 233 (App. Div. 2003). Our mandate in Brunswick Bank II could not have been clearer. We required the trial judge to ascertain the fair market values of certain properties and instructed the judge specifically on how to apply those values in determining whether the bank had been fully compensated and, if so, when. The chancery judge failed to comply with our mandate; his decision and the order on which it is based cannot stand. We are mindful that part of the judge's decision to sidestep our mandate was the Supreme Court's recent West Pleasant decision. Still, the judge was required to comply with our mandate and not determine whether our prior decision had been undermined by a more recent, higher authority. As the Supreme Court has held, any "[r]elief from [an appellate court's] directions, even though manifestly erroneous, can be had only in the appellate court whose judgment it is." Plainfield-Union Water Co., 14 N.J. at 303; see also Hellstern, 17 N.J. Super. at 370-71. In other words, it was incumbent on the bank – if it believed West Pleasant had eviscerated our prior holding – to come to us and 8 A-2929-20 seek a modification of our mandate rather than ask and persuade the trial judge to depart from his clear obligations. Absent some other direction from us, the judge was required to strictly adhere to our mandate. Moreover, had the bank sought relief from us because of West Pleasant, we would not have altered our mandate. In that case, the Supreme Court expressly noted that the debtor's reliance on Brunswick Bank II was "of no help" to its position because of distinguishing circumstances. See 243 N.J. at 109 n.3. If we were wrong in Brunswick Bank II, and if West Pleasant intended to preempt the field of all fair market value credits, it would have said so. Instead, the Court found Brunswick Bank II was different to what was before it. We therefore conclude West Pleasant does not present a basis for changing or adjusting our prior mandate. Although we do not question the bank's motives in the manner in which it sought collection of the debt, our jurisprudence, including West Pleasant, recognizes the mischief that might follow if courts required to allow creditors, without recourse, to orchestrate collection efforts on over-collateralized loans for the sole purpose of maximizing a recovery beyond the collective debt owed. The West Pleasant Court recognized this by observing that courts continue to possess "equitable, 'analogous nonstatutory relief' in the form of fair market 9 A-2929-20 value credit in appropriate circumstances." 243 N.J. at 107-08 (citing 79-83 Thirteenth Ave., Ltd. v. De Marco, 44 N.J. 525, 534-35 (1965), and Morsemere Fed. Sav. & Loan Ass'n v. Nicolaou, 206 N.J. Super. 637, 645 (App. Div. 1986)). In reaching its holding in West Pleasant about fair market value credits, the Court expressly observed that this very case was different, 243 N.J. at 109 n.3, which was proof enough that our mandate had not been rendered infirm. And to repeat, even if West Pleasant required that our mandate be modified or even rejected, it was for us or the Supreme Court to say so, not the chancery judge. Finding West Pleasant poses no impediment to the continued application of our prior mandate, we turn to a consideration of an appropriate remedy. Because the legal framework for a full disposition of this matter is already contained in Brunswick Bank II, because the facts relevant to our concerns about a windfall have been stipulated, and because this saga has already lasted more than twelve years, we deem it appropriate to exercise – in part – original jurisdiction under Rule 2:10-5. As we recognized in Vas v. Roberts, 418 N.J. Super. 509, 523-24 (App. Div. 2011) (citations omitted), "[r]esort to original jurisdiction is particularly appropriate to avoid unnecessary further litigation, as where the record is adequate to terminate the dispute and no further factfinding 10 A-2929-20 . . . is involved." See also Price v. Himeji, LLC, 214 N.J. 263, 294-95 (2013) (quoting Vas with approval). In exercising original jurisdiction, we conclude that the stipulated facts compel a determination that the bank was fully compensated when it obtained the Baldwin property. Our exercise of original jurisdiction, however, stops there because this holding requires an additional factual determination about the extent to which the bank should be required to disgorge that which it obtained beyond that which Brunswick Bank II said it was entitled. We remand for that determination. *** We remand for the entry of an order that declares the bank has been fully compensated as described in this opinion. We also remand for an order fixing the proper amount to be disgorged to defendants as a consequence of the bank having collected more than one hundred percent of what was due based on the fair market value of the Beacon Hill property and the undisputed $147,387.36 relating to the Loren Terrace property; if necessary, the court may conduct whatever additional proceedings are appropriate in seeking and reaching a fair and equitable resolution of that issue so long as the trial judge adheres to the legal framework and principles contained in our prior opinions in this case and 11 A-2929-20 in today's decision. And we direct that the Assignment Judge or his designee reassign this matter to a different judge. Reversed and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction. 12 A-2929-20
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