On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. F-9837-12.
Douglas G. Leney argued the cause for appellants (Archer & Greiner, P.C., attorneys; Mr. Leney and Stephen M. Packman, on the briefs).
Lyndsay E. Rowland argued the cause for respondent (The Lamm Group, attorneys; Ms. Rowland, on the brief).
This is a mortgage foreclosure action. Defendants Harry R. Blackburn and Jayne Billinson appeal from three orders: an October 11, 2013 summary judgment order striking their answer and authorizing foreclosure to proceed through the Office of Foreclosure; a September 2, 2014 order denying defendants' motion to dismiss plaintiff's application for final judgment, or, alternatively, to stay foreclosure proceedings and waive the supersedeas bond or permit filing of a partial supersedeas bond; and a September 19, 2014 order entering final judgment. We affirm.
We derive the following facts from the motion records.
In addition, Blackburn signed a mortgage, "[t]he lien of [which] shall not exceed at any one time the principal amount of $250,000," on his Medford Lakes residence. The mortgage stated "[t]he word 'Grantor' means Harry R. Blackburn" and "[t]he word 'Borrower' means [the Firm]." The mortgage also stated the "Grantor," Blackburn, warranted and represented, among other things, he had "the full power, right, and authority to enter into this Mortgage and to hypothecate the Property". Notwithstanding these recitations, the mortgage also stated it "was made and executed between [the Firm] (referred to below as "Grantor") and [Bancorp]." Blackburn signed the mortgage by writing his name followed by a comma and "Pres." He also signed an "Individual Acknowledgment" that was notarized. The mortgage was duly recorded.
The Note's maturity date was December 1, 2009. In January 2010, Blackburn and Bancorp entered into a Change-In-Terms Agreement (First Modification), which among other terms, extended the note's maturity date through December 1, 2010. Blackburn executed the First Modification individually and in his capacity as President of the Firm.
3 During 2010, the Firm was able to make the monthly interest payments. The same year, in August, Blackburn married co-defendant Jayne Billinson, (Billinson). In December, the Firm and Bancorp entered into a second Change-In-Terms Agreement (Second Modification), which increased the note's balance to $502,000, extended the maturity date to December 1, 2011, and required Blackburn to assign a life insurance policy to Bancorp. Like the documents that preceded it, the Second Modification contained a confession-of-judgment clause whereby the borrower authorized any attorney to appear in any court and confess judgment for the unpaid amount of the note. The Commercial Guaranty signed by Blackburn contained a similar confession-of-judgment clause.
Beginning in May or June 2011, the Firm was unable to make monthly interest payments. Blackburn attempted to enter into a forbearance agreement with Bancorp. In May 2011, Blackburn contacted Erin Rubin, a bank employee with whom he had previously dealt, seeking a one-year forbearance agreement. Between May and October, Blackburn and Rubin had periodic discussions concerning the status of the loan. According to Blackburn, the discussions included "when the Bank would be preparing documents memorializing that arrangement."
3 In October 2011, Rubin informed Blackburn the matter had been transferred to counsel, Lamm Rubenstone LLC (Lamm). In November 2011, Blackburn began to discuss the forbearance agreement with an attorney at Lamm and informed the attorney of his general plan to repay the loan during the forbearance period. According to Blackburn, "[b]y December 2011, I believed that all of the material terms of the forbearance agreement were in place and that the Bank, subject to the parties working out minor details, was going to be preparing documents to memorialize those terms. I was awaiting receipt of those documents."
The Firm and Blackburn not only defaulted on the monthly interest payments, but also failed to pay the principal by the extended maturity date, December 1, 2011. Notwithstanding Blackburn's belief that all material terms of the forbearance were in place, On December 23, 2011, Bancorp filed a confession of judgment against Blackburn and the Firm in the Pennsylvania Court of Common Pleas, Philadelphia County (Pennsylvania Judgment).
3 In January 2012 the parties continued to exchange emails concerning the forbearance agreement. On January 20, 2012, Blackburn sent Bancorp's attorney an email regarding the forbearance agreement, which stated in pertinent part
Since I have not heard back from you regarding our discussion earlier this week about your client vacating the judgment it has placed, I assume that your client is still mulling the issue over. Notwithstanding the lack of feedback I thought it might be helpful to at least start the ball rolling by listing some key terms which I offer for your client's consideration. They are - in no particular order - as follows
1) Original docs regarding the Change of Beneficiary to go to your client. Ok.
3) Term of Forbearance Agmnt. [twelve] months and renewable for [six] months subject to terms being honored by the parties.
I would appreciate a response at your earliest convenience.
Bancorp's attorney responded a week later: "Pursuant to our phone conversation today, my client has requested that you immediately remit the balance of the $25,000 check discussed in December and the insurance policy showing that Bancorp . . . is a beneficiary on your life insurance policy. Please contact me with questions regarding this."1
3 In May 2012, Bancorp filed in the Superior Court of Burlington County, Chancery Division, the mortgage foreclosure action on Blackburn's Medford Lakes property.2 Thereafter, Bancorp attempted to have the Pennsylvania Judgment transferred to New Jersey. On October 17, 2012, Blackburn filed in the Law Division a "Motion to Vacate Transferred Confession of Judgment." On December 12, 2012, a Law Division judge entered an order that provided in relevant part
1. [Bancorp's] Motion to Vacate Transferred Confession of Judgment is DENIED.
a. There shall be a stay of enforcement of and/or execution of the judgment until February 5, 2013 to allow [Blackburn] to pursue his appeal of the confession of judgment in the appropriate Pennsylvania court.
b. If, for any reason, an application appealing the confession of judgment is not filed on or before February 5, 2013, the stay is automatically lifted.
i. It is [Blackburn's> responsibility to advise the court of any issues regarding an extension of the stay period beyond February 5, 2013.
3 On February 22, 2013, another Law Division judge continued the stay until March 7, 2013, "to permit [Blackburn] to continue the pursuit of his appeal of the underlying confession of judgment in the Pennsylvania Court of Common Pleas."
3 In February 2013, Blackburn filed in the Philadelphia Court of Common Pleas a pro se "Motion to Strike and/or Vacate and/or Open a Confessed Judgment." On May 6, 2013, the Court of Common Pleas denied his motion to strike or vacate the judgment, but granted his motion to open the confessed judgment.
Four months later, in September 2013, following motion practice and the amendment of the complaint in the Superior Court mortgage foreclosure action, Bancorp filed a summary judgment motion. Blackburn and Billinson opposed the motion on three grounds: the mortgage on the Medford Lakes Property was executed by the Firm and Blackburn in the capacity of the Firm's president, but Blackburn owned the property in his individual capacity; Billinson, though not an owner of the property, had a claim to the property by virtue of occupying it "coupled with a promise of support"; and outstanding discovery precluded summary judgment.
3 On October 11, 2013, in a written opinion, the court granted the motion, entering the first of the three orders from which defendants appeal. The court determined: Blackburn was the Grantor; he appeared before the notary; and he owned the property. The court noted that if Blackburn signed the mortgage in his capacity as president, "he knew as the owner of the property and as an attorney this was a misrepresentation to the [B]ank. He hardly should be able to come before the court and assert this to create an ambiguity to avoid the debt." The court also determined that Billinson "may have a claim against Blackburn but she has not recorded her interest in [the] property and has failed to be deposed." Lastly, the court noted discovery had ended.
The court entered an order striking defendants' answer and permitting the foreclosure to proceed through the Office of Foreclosure as uncontested. In January 2014, the court denied defendants' motion for reconsideration.
3 On April 25, 2014, Bancorp moved for final judgment in the foreclosure action. On May 6, 2014, defendants filed a motion to dismiss plaintiff's application for final judgment based on the doctrine of comity, or in the alternative, to stay the foreclosure proceedings. They argued: the "final judgment package" submitted by Bancorp was procedurally defective; and the final judgment should be stayed, as a matter of comity, until Blackburn's challenge to the confession of judgment in Pennsylvania had been resolved. Alternatively, they argued for a waiver of a supersedeas bond.
3 On September 2, 2014, the court denied defendants' motion. The court rejected Blackburn's arguments, finding no procedural deficits in Bancorp's application for final judgment. As to the doctrine of comity, the court noted the Pennsylvania action was not a first-filed foreclosure action and did not involve the same parties, claims, or legal issues. In the Pennsylvania action, Bancorp sought to enforce a note executed by a corporation and guaranteed by Blackburn, an action in personam; in the Chancery Division action, Bancorp sought to foreclose a mortgaged property, an action quasi in rem. The court also noted the confession of judgment against the Firm had been entered and remained in effect. Lastly, the court noted the parties have not adequately explained why no action had taken place in the Pennsylvania proceedings since 2013.
3 On September 19, 2014, final judgment was entered in favor of Bancorp. Defendants filed this appeal.
On appeal, defendants argue the trial court erred in granting summary judgment and thereafter final judgment, rather than applying the rule of comity and staying the foreclosure action pending disposition of the Pennsylvania Judgment, particularly in view of the Law Division orders that had been entered staying execution on the confessed judgment against Blackburn. Defendants further argue the trial court erred by granting summary judgment when the mortgage was either defective or ambiguous as to whether New Jersey or Delaware law should apply, and in any event, genuinely disputed issues of material fact precluded summary judgment.
After considering defendants' arguments in light of the record and controlling legal principles, we find the arguments to be without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following comments.
We fail to discern from the record where defendants raised the issue of comity in response to Bancorp's September 2013 summary judgment motion. A defendant seeking a comity stay is "required to establish (1) that there is a first-filed action in another state, (2) that both cases involve substantially the same parties, the same claims, and the same legal issues, and (3) that plaintiff will have the opportunity for adequate relief in the prior jurisdiction." Am. Home Prods. Corp. v. Adriatic Ins. Co., 286 N.J. Super. 24, 37 (App. Div. 1995) (footnote omitted). Here, defendants did not raise the comity issue, let alone establish these three criteria. It can hardly be said the trial court erred by failing to act on an issue defendants neither raised nor carried their burden of establishing.
In consequence of defendants' failure to raise the comity rule in response to Bancorp's summary judgment motion, the court decided the mortgage's validity. By the time the court decided Bancorp's motion for a final foreclosure judgment, the Pennsylvania action had been dormant for more than a year and defendants could not explain either the Pennsylvania action's dormancy or its status. Additionally, the Pennsylvania Judgment against the Firm the debt secured by the mortgage had never been opened. In fact, no one had made any attempt to open it. Under those circumstances, and in view of the quasi in rem nature of the foreclosure proceedings, as distinguished from the in personam Pennsylvania action on the note, the court committed no abuse of discretion by denying defendants' motion to stay the final foreclosure judgment. Sensient Colors, Inc. v. Allstate Ins. Co., 193 N.J.373, 390 (2008) ("The determination of whether to grant a comity stay or dismissal is generally within the discretion of the trial court.").3
We reject defendants' argument the mortgage was ambiguous as to the grantor for substantially the same reasons the trial court rejected the argument. Blackburn should not be able to avoid the consequences of his conduct and actions by, in effect, perpetrating a fraud on Bancorp. We also reject as entirely lacking in merit defendants' argument that genuinely disputed issues of material fact precluded summary judgment.
1 In later motion practice, Bancorp's attorney certified there were never any forbearance terms discussed as Blackburn had not assigned the life insurance policy to Bancorp as he previously promised to do, and never paid Bancorp $25,000, which he had promised to pay. The attorney further certified she told Blackburn on several occasions "a judgment would be entered against him if he did not submit evidence of the assignment of the life insurance policy and the submission of the $25,000.00 prior to December 16, 2011."
2 Bancorp also filed actions in the United States District Courts for the Districts of Delaware and New Jersey. Both complaints were dismissed for lack of jurisdiction.
3 Defendants also argue the Law Division orders staying the transfer of the Pennsylvania Judgment against Blackburn to New Jersey was the law of the case. Because defendants did not properly raise this argument in the Chancery Division, we decline to consider it. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
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