Vermont Tenants, Inc. v. VT Housing Finance Agency

Vermont Tenants, Inc. v. VT Housing Finance Agency (98-405); 170 Vt. 77; 
742 A.2d 745

[Filed 08-Oct-1999]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as  formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the  Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 98-405


Vermont Tenants, Inc., et al.	                 Supreme Court

	                                         On Appeal from
     v.		                                 Chittenden Superior Court

Vermont Housing Finance Agency, et al.	         April Term, 1999


Linda Levitt, J.


       Geoffrey Walsh and Stephen Norman, Vermont Legal Aid, Inc.,
  Burlington, for Plaintiffs-Appellants.

       Glenn A. Jarrett, Burlington, for Defendant-Appellee Vermont Housing
  Finance Agency.

       John A. Serafino and Elizabeth A. Glynn of Ryan Smith & Carbine, Ltd.,
  Rutland, for Defendant-Appellee First Vermont Bank.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       DOOLEY, J.  This case concerns two residential tenants who had the
  misfortune of  leasing property without knowing it was the subject of
  strict mortgage foreclosure.  At issue is  whether Vermont's Residential
  Rental Agreements Act (RRAA), 1985, No. 175 (Adj. Sess.),  codified as
  amended in relevant part as 9 V.S.A. §§ 4451-69, prohibits the eviction of
  such  tenants when they have entered into rental agreements after the
  commencement of foreclosure  proceedings but before the expiration of the
  redemption period.  The superior court answered the  question in the
  negative and dismissed their action for failure to state a valid claim
  under  V.R.C.P. 12(b)(6).  We agree and affirm.

 

       This action was commenced by Vermont Tenants, Inc., a statewide
  advocacy  organization, and two former tenants, Heather Gross and Aaron
  Prince, who were evicted by  mortgagees who acquired title to the property
  in which they resided by strict foreclosure.  (FN1)  The defendants are the
  Vermont Housing Finance Agency (VHFA) and First Vermont Bank  (FVB),
  mortgagees of the two properties at issue.  The case never moved beyond
  plaintiffs'  complaint, and the motions to dismiss it.  Accordingly, for
  purposes of this appeal, we assume  all factual allegations in the
  complaint are true.  See Richards v. Town of Norwich, ___ Vt. ___,  ___,
  726 A.2d 81, 85 (1999). 

       Heather Gross was a month-to-month tenant in a mobile home, along with
  her children,  fiancé and the owner of the home.  During her tenancy, the
  mortgagee began foreclosure  proceedings because of non-payment of mortgage
  payments, but did not serve her.  She moved  out of the home for a period
  and moved back in during the Fall of 1997.  Thereafter, she learned  from
  her landlord that a strict foreclosure action was pending.  She attempted
  to avert it by  payments to the mortgagee, but the mortgagee obtained a
  foreclosure judgment and served the  mortgagor and tenants with a writ of
  possession on December 2, 1997.  Apparently, the eviction  has been stayed
  by agreement pending resolution of this case and a companion case in the
  United  States District Court. 

       Aaron Prince rented a room in the Alpenhof Lodge in Killington,
  Vermont on December  1, 1997, paying advance rent of $3500 for a term to
  end on June 1, 1998.  Prince was not aware  that the mortgagee of the
  Alpenhof Lodge had filed a foreclosure action in April, 1997, and  obtained
  a strict foreclosure judgment in July, 1997.  On January 16, 1998, the
  Rutland County 

 

  sheriff served on Prince a writ of possession, insisting that he vacate
  immediately.  Prince  promptly left the premises.

       One other fact is very significant in both cases.  Pursuant to 12
  V.S.A. § 4523(b), both  mortgagees filed copies of their strict foreclosure
  complaints in the town land records.  That  section provides:

     (b)  The plaintiff shall file a copy of the complaint in the town 
     clerk's office in each town where the mortgaged property is 
     located.  The clerk of the town shall minute on the margin of the 
     record of the mortgage that a copy of foreclosure proceedings on 
     the mortgage is filed.  The filing shall be sufficient notice of the 
     pendency of the action to all persons who acquire any interest or 
     lien on the mortgaged premises between the dates of filing the copy 
     of foreclosure and the recording of the final judgment in the 
     proceedings.  Without further notice or service, those persons shall 
     be bound by the judgment entered in the cause and be foreclosed 
     from all rights or equity in the premises as completely as though 
     they had been parties in the original action.  

       Plaintiffs filed actions in both state and federal courts.  The
  federal action challenged the  constitutionality of § 4523(b), alleging
  that the constructive notice provision denied tenants due  process of law. 
  The state action alleged that despite § 4523(b), mortgagees could evict
  tenants  only in compliance with the substantive and procedural
  requirements of RRAA.  The state action  did not contain the constitutional
  challenge contained in the federal action.  Defendants filed  motions to
  dismiss in both cases. (FN2)  In an unpublished decision, the federal court
  denied the  motion to dismiss, holding that the constructive notice
  provision of § 4523(b) is inadequate to 

 

  meet the notice requirements of the Due Process Clause of the Fourteenth
  Amendment. (FN3)   The superior court ruled that the mortgagee could evict
  tenants of the mortgagor without  complying with either the procedural or
  substantive requirements of RRAA, and dismissed the  complaint on that
  basis.  Plaintiffs have appealed, arguing the decision is incorrect on the
  merits.

       Plaintiffs apparently concede that, but for RRAA, and putting aside
  the due process  challenge which is not before us, the evictions were
  entirely lawful.  We agree with this  assessment.  The general law on the
  mortgagee's rights is as follows:

          Where the mortgage precedes the lease the lessee's rights 
     can rise no higher than those of his landlord, the mortgagor. . . . It 
     follows that if the mortgagee could take possession against the 
     mortgagor, as he can in title states at any time in the absence of 
     agreement to the contrary . . . he has the same right against a 
     tenant of the mortgagor.  And if such a right is exercised the 
     mortgagee can repudiate the lease and treat the tenant as a 
     trespasser subject to eviction by an action of ejectment.

  G. Nelson & D. Whitman, Real Estate Finance Law § 4.22, at 195 (2d ed.
  1985).  This general  statement was applicable here if the mortgagee
  complied with § 4523(b), at least if the  foreclosure action preceded the
  tenant's interest (FN4) and at least until the enactment of RRAA.  We 

 

  so held in Green Mountain Bank v. Bruehl, 148 Vt. 567, 568-69, 536 A.2d 554, 556 (1987), a  case with facts similar to those before us in this
  case.  Applying  § 4523(b), we held:
		
     Tenants . . . acquired . . . possessory rights in the premises after 
     November 8, 1983, the date of plaintiff's foreclosure filings.  The 
     possessory rights tenants acquired after November 8, 1983, clearly 
     fall within the broad ambit of interests encompassed by the 
     statute's "any interest" language . . . .  Therefore, when plaintiff 
     filed copies of the foreclosure complaint in the Winhall land 
     records, tenants were given and became bound by the notice 
     warranted by statute.  Once notice is given by filing the complaint 
     in the town clerk's office, the foreclosure action supersedes any 
     after-acquired interest, and the possessors of any such interest are 
     "foreclosed from all rights or equity in the premises as completely 
     as though they had been parties in the original action." 

  Id. (Citations omitted).  Bruehl establishes the mortgagee's right to evict
  the tenant of the  mortgagor, but not the procedure.  That is established
  by 12 V.S.A. § 4528, which provides:

    § 4528. Decree foreclosing equity of redemption; writ of possession

     If a decree is made foreclosing the right of redemption, the 
     time of redemption shall be six months from the date of the decree 
     unless a shorter time be ordered.  If the premises are not redeemed 
     agreeably to the decree, the clerk of the court may issue a writ of 
     possession.  Such writ shall have the same force and effect and be 
     executed in the same manner as similar writs issued after judgment 
     by a court of law in ejectment proceedings.  

  Under § 4528, the mortgagee need not bring a separate ejectment action to
  evict the tenant.  The  clerk can issue a writ of possession based on the
  foreclosure judgment and the failure to redeem,  and the writ allows
  removal of any tenants, as well as the mortgagor.  That is exactly what 
  occurred in the Gross and Prince cases.

       Plaintiffs argue that the mortgagee's right to evict a tenant of the
  mortgagor through a  writ of possession issued under 12 V.S.A. § 4528 was
  eliminated by RRAA.  To better analyze  this argument, we start with an
  overview of RRAA.  Generally, the statute defines the rights of 

 

  landlords and tenants.  It defines a landlord as "the owner, lessor, or
  where applicable, the  sublessor of a residential dwelling unit or the
  building of which it is a part."  9 V.S.A. §  4451(4).  A tenant is "a
  person entitled under a rental agreement to occupy a residential dwelling 
  unit to the exclusion of others."  Id. § 4451(9).  As between landlords and
  tenants, the Act  contains a detailed provision governing termination of
  tenancies.  See id. § 4467.  At least  fourteen days' notice is required
  when a landlord terminates a tenancy for nonpayment of rent.   See id. §
  4467(a).  Termination for "failure of the tenant to comply with a material
  term of the  rental agreement or with obligations imposed [under the Act]"
  requires a minimum of thirty  days' notice.  Id. § 4467(b).  When landlord
  and tenant have no written rental agreement, a  landlord may terminate the
  tenancy for no cause - but must give at least twenty-one days' notice  to
  tenants who pay rent weekly and at least sixty days' notice to tenants who
  remit on a monthly  basis.  See id. § 4467(c).  Likewise, the absence of a
  written rental agreement permits a landlord  to terminate a tenancy, on at
  least thirty days' notice when the landlord "has contracted to sell  the
  building."  Id. § 4467(d).  Finally, if a landlord terminates a tenancy
  under the terms of a  written rental agreement, tenants whose rent is
  payable monthly are entitled to at least thirty  days' notice and tenants
  who pay weekly must receive at least seven days' notice.  See id. § 
  4467(e).  The termination statute does not speak directly to the situation
  in which a tenancy is  terminated by a mortgagee who acquires title by
  strict foreclosure.  Although the Act has a  number of exclusions, see id.
  § 4452, they do not include the situation before us.

       Plaintiffs argue that the mortgagee becomes a landlord on obtaining
  title after the  property is not redeemed and can terminate a tenancy only
  pursuant to 9 V.S.A. § 4467.  There  are both substantive and procedural
  ramifications to this position.  Where none of the grounds 

 

  specified in § 4467 apply when the mortgagee acquires title, plaintiffs
  argue that the mortgagee  cannot obtain possession unless and until one of
  the grounds does apply.  Thus, on the date FVB  acquired title of Alpenhof
  Lodge, Aaron Prince was occupying a room under a lease for which  the rent
  had been prepaid, and, under plaintiffs' theory, could not be evicted until
  the lease  expired.

       In all cases, there would be procedural ramifications.  Even if RRAA
  did not prohibit the  termination of the tenancy, it would require the
  mortgagee to provide notice before termination.   Thus, under plaintiffs'
  theory, VHFA could terminate Heather Gross's tenancy only by  providing
  notice at least sixty days prior to the termination.  See id. § 4467(c)(1).

       Plaintiffs acknowledge that to reach the above results, we must hold
  that the remedy  provided by 12 V.S.A. §§ 4523(b) and 4528, and employed by
  the mortgagees in these cases,  has been superceded with respect to tenants
  of the mortgagor.  They argue that the statutes  produce inconsistent
  results, and two methods of resolving the conflict must be employed: (1)
  the  statute enacted later in time governs over the earlier statute, see
  Central Vermont Hosp. v. Town  of Berlin, 164 Vt. 456, 459, 672 A.2d 474,
  476 (1995); and (2) the specific statute governs over  the more general
  one, see Pearson v. Pearson, 10 Vt. L.W. 24, 26 (1999).  Both methods 
  require applying the RRAA termination provisions, they argue, because they
  are more recent and  more specific.

       Defendants respond with another principle of statutory construction. 
  They argue that  plaintiffs' position necessarily involves an implied
  repeal of §§ 4523 and 4528, with respect to  tenants of the mortgagor.  In
  construing statutes, we have presumed that no repeal by implication  is
  intended.  See State v. Foley, 140 Vt. 643, 646, 443 A.2d 452, 453 (1982)
  (presumption "is 

 

  grounded in judicial respect for the ultimate authority of the Legislature
  over lawmaking").  We  have found an implied repeal only if (a) the acts
  are so far repugnant that they cannot stand  together, or (b) are not so
  repugnant, but the later act covers the whole subject of the former and 
  plainly shows it was intended as a substitute therefore.  See id. at
  645-46, 443 A.2d  at 453; State  v. Watson, 138 Vt. 276, 279, 413 A.2d 806,
  807 (1980).  Defendants argue that the RRAA and  mortgage foreclosure
  statutes do not meet either prong of this test.
	
       Although the methods of resolving statutory conflicts urged by the
  parties are appropriate  in many cases, we prefer to first look for a
  construction that will harmonize the seemingly-inconsistent statutes.  See
  Vermont Agency of Natural Resources v. Riendeau, 157 Vt. 615, 620,  603 A.2d 360, 362 (1991); Lanphear v. Togenelli, 157 Vt. 560, 564, 601 A.2d 1384, 1386  (1991).  We believe the statutes can be harmonized by holding
  that the tenant of the mortgagor  does not become the tenant of the
  mortgagee for purposes of RRAA.
	
       As defendants argue, the definition of "tenant" does not appear to
  cover the situation  before us.  12 V.S.A. § 4523(b) provides that a tenant
  is "foreclosed from all rights . . . in the  premises."  If the property is
  not redeemed, § 4528 provides that the mortgagee is entitled to  immediate
  possession.  At that point, the tenant can no longer claim a right of
  possession from  the mortgagor, whose interest is then extinguished.  As a
  result, the tenant is no longer entitled  to occupy the rental unit "to the
  exclusion of others."  9 V.S.A. § 4451.  Since the tenant no  longer fits
  the RRAA definition of "tenant," RRAA does not apply.
	
       Plaintiffs suggest an alternative harmonizing interpretation of the
  statutes that would give  priority to RRAA.  They argue that the point of
  strict foreclosure is to give the mortgagee title,  but not necessarily
  possession, to the property.  Thus, they argue that § 4523(b) should not be 

 

  interpreted to affect the tenant's possessory interest.  Further, they
  argue that § 4528, on which  defendants relied to obtain a writ of
  possession, is discretionary because it uses the word "may,"  establishing
  the clerk's power, but not obligation, to issue the writ; and it does not
  mention  tenants explicitly.  Thus, they argue it too should be interpreted
  not to apply to tenants.

       The first part of the argument would require us to overrule Green
  Mountain Bank v.  Bruehl because it would mean that 12 V.S.A. § 4523(b)
  would have no effect on the interests of  a tenant.  It conflicts directly
  with the rationale of Bruehl because in that case we described the 
  tenant's interest foreclosed by § 4523(b) as a "possessory interest." 
  Breuhl, 148 Vt. at 568-69,  536 A.2d  at 556.

       We do not believe that the second part of the argument embodies a fair
  construction of §  4528.  There is no suggestion in the language that the
  writ of possession is limited to some  occupants, but not others.  It would
  be illogical to hold that the foreclosure action eliminated the  tenant's
  interest, as Bruehl did, but then add that the mortgagee has no remedy
  consistent with  that holding.  Moreover, the language of § 4528 states
  that the writ of possession has the same  effect as a writ of possession
  issued in an ejectment action, which is "conclusive against the  parties
  thereto, their heirs and assigns."  12 V.S.A. § 4766.

       We do not agree that the use of the word "may" in § 4528 means that
  the clerk of the  superior court has judicial discretion to refuse to issue
  a writ of possession in some cases, despite  a failure to redeem.  In
  context, particularly since the language refers to the clerk and not the 
  court or judge, we believe the statute provides authority to the clerk to
  issue the writ, which is  available as of right to the foreclosure
  plaintiff.  See Bisson v. Ward, 160 Vt. 343, 346-47, 628 A.2d 1256, 1259
  (1993); State v. Goyet, 119 Vt. 167, 171, 122 A.2d 862, 864-65 

 

  (1956) (to determine whether "may" imposes discretionary power or absolute
  duty, court must  ascertain and give effect to "true intent and purpose of
  the Legislature").

       For the above reasons, we reject the method of harmonizing the
  statutes urged by  plaintiffs and adopt that argued by defendants - that
  plaintiffs were not tenants under RRAA  when they were evicted.  We note
  that other considerations support this harmonizing  interpretation of the
  statutes.  The Legislature could have drafted RRAA to explicitly deal with 
  the situation of a mortgagee who takes title under strict foreclosure, but
  failed to do so.  We take  its silence as an indication that it did not
  intend RRAA coverage of this situation, particularly  because application
  of RRAA would modify the common law substantive rights of the mortgagee  in
  many cases.  See Estate of Kelley v. Moguls, Inc, 160 Vt. 531, 533, 632 A.2d 360, 361-62  (1993).  Our interpretation of legislative intent is also
  supported by a later action of the  Legislature with respect to nonjudicial
  foreclosure by sale.  In 1993, the Legislature added 12  V.S.A. § 4532(d),
  which reads as follows:

     (d) Recording notice of sale in land records.  In the case of a 
     nonjudicial foreclosure by power of sale under section 4531a(b) of 
     this title, the mortgage holder shall record the notice of sale in the 
     land records of the town or city where the land lies not less than 60 
     days prior to the sale.  The filing of the notice of the sale shall be 
     in lieu of filing a foreclosure complaint under section 4523 of this 
     title and shall be sufficient notice of the pendency of the 
     nonjudicial foreclosure by power of sale to all persons who acquire 
     any interest or lien in the mortgaged property between the dates of 
     recording the notice of sale and recording the foreclosure deed.  
     Without further notice or service, those persons shall be bound by 
     the power of sale and the foreclosure deed and shall be foreclosed 
     from all rights or equity in mortgaged property.

  This provision mirrors the substance of 12 V.S.A. § 4523 for nonjudicial
  foreclosure by sale and  sets up a similar inconsistency with the
  termination provisions of RRAA with respect to tenants 

 

  of the mortgagor. (FN5)  Although we agree with plaintiffs that the action
  of the Legislature in  1993 is not a definitive demonstration of the1986
  Legislature's intent in enacting RRAA, it is  evidence that the more recent
  Legislature did not see a conflict in the statutes.  See State v.  Foley,
  140 Vt. at 648, 443 A.2d  at 454. (FN6)

       Finally, plaintiffs have put before us cases from five other
  jurisdictions where, in their  view, the courts have resolved similar
  conflicts in favor of the landlord and tenant statute.  See  Gross v.
  Superior Court, 217 Cal. Rptr. 284 (Cal. Ct. App. 1985); Administrator of
  Veterans'  Affairs v. Valentine, 490 A.2d 1165 (D.C. 1985); Boston Rent
  Equity Board v. Dime Savings  Bank of New York, 611 N.E.2d 245 (Mass.
  1993); Chase Manhattan Bank v. Josephson, 638 A.2d 1301 (N.J. 1994);
  United Institutional Servicing Corp. v. Santiago, 310 N.Y.S.2d 733  (N.Y.
  Civ. Ct. 1970).  On the surface, most of these decisions favor plaintiffs'
  position, (FN7)  but

 

  there is one very significant, in our view determinative, difference
  between the statutory  schemes involved in those cases and that before us. 
  Each of these cases involves a statute or  ordinance, often annexed to a
  rent control measure, which limits the permissible grounds for  eviction
  and prohibits no-cause evictions.  Thus, in each case, eviction by the
  mortgagee offends  the fundamental tenant-protection purpose of the
  landlord and tenant statute.  See Comment, The  District of Columbia Rental
  Housing Act: Eviction Protection for the Tenants of a Defaulting  Mortgagor
  Under Administrator of Veterans Affairs v. Valentine, 35 Cath. U. L. Rev.
  1133,  1151-52 (1986); Note, Property - Landlord-Tenant - The New Jersey
  Anti-Eviction Act  Prohibits Foreclosing Mortgagees from Evicting Tenants
  of the Defaulted Mortgagor Without  Cause, 25 Seton Hall L. Rev. 1292, 1329
  (1995) ("Because the Act's primary purpose is to  protect tenants from
  eviction, the status of the evicting party should be of no consequence").  
  Although RRAA has tenant-protection and landlord-protection provisions, its
  primary purpose  appears to be to codify the common law relationship for
  residential rental agreements.  See State  v. Bisson, 161 Vt. 8, 12, 632 A.2d 34, 37 (1993) (RRAA "contains the general law of landlord  and tenant
  relations that is customarily applicable in any context").  It does not
  prohibit no-cause  eviction and is not tied to control of rent levels.  Our
  holding does not offend a fundamental  policy of RRAA.  For this reason,
  even if we accept plaintiffs' decisions as persuasive authority,  they do
  not change our view that the proper course is to harmonize the mortgage
  foreclosure 

 

  statutes with RRAA, and, as a result, to hold that RRAA does not apply to
  eviction following  strict foreclosure.

       Affirmed.

	                               FOR THE COURT:



	                               _______________________________________
	                               Associate Justice


------------------------------------------------------------------------------
                                  Footnotes


FN1.  A third tenant joined in the complaint, but has not joined in the
  appeal.
  
FN2.  FVB argued that the complaint failed to state a claim, that the action
  against it was moot, and that Vermont Tenants,  Inc. lacked standing to
  bring the action.  The superior court reached the merits and did not
  address the other grounds  asserted for dismissal.  Similarly, we do not
  address the other grounds for the motion.
       
FN3.  In a memorandum decision, dated September 7, 1999, the federal court
  clarified that it had not found § 4523(b)  "unconstitutional under all
  circumstances, but only as applied to this case," and that it had not
  resolved "issues relating to §  4523(b) which are now before the Vermont
  Supreme Court."  Vermont Tenants, Inc. v. First Vermont Bank and Trust Co., 
  No. 1:98cv30 (D. Vt. Aug. 13, 1999).  It also declined to award
  compensatory damages pursuant to 42 U.S.C. § 1983 to  plaintiff, Aaron
  Prince, because he failed to demonstrate mortgagee acted unreasonably in
  relying upon 12 V.S.A. §  4523(b), or that the foreclosure was taken with
  improper or wrongful motives.  See id.
  
FN4.  Although plaintiffs suggest otherwise, we see no reason to consider a
  situation where the foreclosure action is not  brought before the tenant's
  leasehold interest begins.  We note, however, that § 4523(b) does not apply
  in such a situation,  and the mortgagee is required to name the tenant in
  the foreclosure action.  See Reporter's Notes - 1982 Amendment to  V.R.C.P.
  80.1(b)(1). 
  
FN5.  Plaintiffs argue that the amendment to 12 V.S.A. § 4532 is not
  inconsistent with RRAA because it contains a  provision for notifying
  existing tenants by serving on them the notice of sale, see 12 V.S.A. §
  4532(e), and does not contain  a provision for issuance of a writ of
  possession.  The former difference goes to legislative policy, not whether
  there is an  inconsistency with RRAA.  The latter difference may require
  the purchaser at the foreclosure sale to bring a separate  ejectment action
  under Chapter 169 of Title 12, but the basic inconsistency with the
  termination provisions of RRAA  remains.
  
FN6.  We do not give weight to defendants' additional argument that we can
  derive legislative intent from the unsuccessful  introduction of bills to
  explicitly make evictions following mortgage foreclosures subject to RRAA. 
  Although we have  given weight to rejected floor amendments, even when the
  rejection was in a later session from that which adopted the  statutory
  language in question, see Muzzy v. Chevrolet Division, General Motors
  Corp., 153 Vt. 179, 188-89, 571 A.2d 609, 615 (1989), we draw no inference
  from the fact that legislation that would clearly resolve the conflict
  before us in a  particular way was unsuccessfully introduced.
  
FN7.  We believe that the New Jersey precedents, however, support
  defendants' position in this litigation.  The New Jersey  Supreme Court
  originally ruled that its anti-eviction act did not supercede the rights of
  a foreclosing mortgagee, see  Guttenberg Savings and Loan Ass'n v. Rivera,
  428 A.2d 1289, 1298 (N.J. 1981), essentially for the reasoning we have 
  adopted - that in harmonizing the relevant statutes, the anti-eviction act
  should be construed to apply only to traditional  landlord and tenant
  relationships and not to the relationship between the tenant of the
  mortgagor and the mortgagee.   Following this decision, the New Jersey
  Legislature amended its anti-eviction act, and the Court thereafter ruled
  that the  effect of the amendment was to overrule the Guttenberg decision. 
  See Chase Manhattan Bank v. Josephson, 638 A.2d  at  1309.  Based on the
  wording of our statute, the relevant New Jersey precedent is Guttenberg,
  not Josephson.