On Appeal from Superior Court, Chancery Division, Ocean County.
Before Judges Pressler and Keefe. The opinion of the court was delivered by Pressler, P.j.a.d.
The opinion of the court was delivered by: Pressler
The opinion of the court was delivered by PRESSLER, P.J.A.D.
Defendant Phyllis DeVincentis appeals from the summary judgment entered against her in the mortgage foreclosure action brought by plaintiff Family First Federal Savings Bank (bank). We affirm.
Defendant is the owner of two adjacent but separately designated parcels of land in Beach Haven. The parcel known as 205 Taylor Avenue was acquired by defendant and her husband in 1952, and title passed to her individually upon his death in 1966.There are two residential units on that lot, one of which defendant customarily occupies during the summer months. The adjacent lot, known as 209 Taylor Avenue, was acquired by defendant and her husband in 1954, and title passed to her individually upon her husband's death. That lot is vacant. Each of the two lots is the subject of a separate and distinct mortgage given to different mortgagees. This action concerns only the mortgage encumbering the vacant lot.
Insofar as appears from this record, the bank lent defendant and her son, defendant Philip DeVincentis, the sum of $135,000 on December 12, 1988. The instrument of obligation was a note executed by both. The debt was secured by a mortgage on 209 Taylor Avenue executed by defendant Phyllis Devincentis. The mortgage documents were prepared by Albert E. Fershing, Esq., a partner of the law firm of Shurkin and Fershing. Giving plaintiff the benefit of all permissible inferences in her favor, it appears that plaintiff participated in the mortgage closing accompanied by her son and Fershing. Fershing was the attorney of one Albert Pepe, a principal of Irex Real Estate. The apparent purpose of the loan was to finance Philip DeVincentis's engagement in a business venture with Pepe and Irex. Plaintiff's check for the gross loan proceeds was drawn to the order of Mrs. DeVincentis, her son and Fershing. It was negotiated through Fershing's attorney trust account, from which Fershing drew a check to Mrs. DeVincentis for the net loan proceeds. That check was endorsed by her and bears under her signature the legend "Pay to the order of IREX Realty."
Philip DeVincentis, for whose benefit the loan was made and the mortgage given, apparently failed to make the required amortization payments to plaintiff. Nor did Mrs. Devincentis make any payments. As a result of the default, plaintiff commenced this foreclosure action against both Mrs. DeVincentis and her son by complaint filed in the Chancery Division, Ocean County, in February 1991. Service of process was made on both defendants at the Bergen County home of Philip DeVincentis, a place which was not and apparently has never been Mrs. DeVincentis's place of residence. No answer was filed to the foreclosure complaint. In January 1993, a judgment by default was entered, and an order for sheriff's sale of the vacant lot was ordered.
Some months after the entry of the default judgment, Mrs. Devincentis became aware of the ordered sheriff's sale and consulted her attorney. In December 1993, Mrs. DeVincentis filed a motion pursuant to R. 4:50-1 seeking vacation of the judgment of foreclosure, claiming that service upon her was defective and that she had in fact not been noticed of the pendency of the action. Her affidavit in support of that motion averred in part that:
My husband, Carl DeVincentis, died on March 8, 1966, and I succeeded to the ownership of this property in Beach Haven [209 Taylor Avenue] as the surviving spouse. I have been the sole owner of this property ever since. It is essentially a summer residence. I have resided for many years at an apartment in the City of Hackensack known as 24 Berkshire Place, Hackensack, New Jersey. My principal residence is at my Berkshire Place apartment.
Based on the defect on personal service, the default judgment was vacated, and defendant filed an answer to the foreclosure complaint raising a number of affirmative defenses. In essence she claimed that the mortgage was invalid and unenforceable for two reasons. First was the asserted failure of the bank to allow her the three-day period to rescind the transaction as required by 12 C.F.R. § 226.23 (Truth in Lending-Regulation Z). Second is the assertion that she was induced to execute the mortgage by the fraud, duress, undue influence, misrepresentations and other improper conduct on the part of her son, Pepe, or Fershing, or all or some of them, and that the bank was chargeable, if not with knowledge of that improper conduct, at least with the duty of inquiry as to whether she was executing the mortgage as a matter of her own voluntary, knowing and purposeful act. The bank moved for summary judgment of foreclosure, contending that as a matter of law and of undisputed fact, none of the affirmative defenses raised was sufficient to defeat its right to foreclose. The trial Judge agreed. This appeal is taken from the consequent summary judgment in favor of the bank granting the foreclosure.
We consider first the Truth in Lending Law defense. There is no question that defendant was not afforded the three-day rescission right accorded by 12 C.F.R. § 226.23(a)(1), which provides in relevant part, that
In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction....
The bank contends that the regulation was inapplicable to this transaction because the mortgaged property is not defendant's principal dwelling. The Judge agreed, and so do we. We point out first that defendant's own certification in support of her motion to vacate the default judgment asserts that her principal residence is her Hackensack apartment. Beyond that, there is no question that the property that is the subject of the mortgage is a vacant lot. It is nobody's dwelling. Defendant argues that since the vacant lot is adjacent to the improved lot and since at least one, if not both, of the two lots is non-conforming under the Beach Haven zoning ordinance, the two lots merge as a matter of law under the principles articulated by Loechner v. Campoli, 49 N.J. 504, 231 A.2d 553 (1967). We do not question Loechner. The point is simply that it is not applicable here. The bank lent money on the security of a vacant lot. The loan was accepted and the mortgage given on that basis. Obviously, the bank would hardly be in a position to claim, on a merger theory, that its mortgage encumbered the improved lot as well as the vacant one. Consequently, it cannot be burdened by a merger theory any more than it could be benefitted thereby. For financing purposes, the two lots were treated as entirely separate entities by their owner, separate mortgages were given and accepted on each, and neither mortgage could be deemed to encumber anything other than the single lot securing the respective loan. In these circumstances, it may well be that the financing of the improved lot was subject to Regulation Z. The financing of the vacant lot was not.
We are also satisfied that irrespective of whatever rights Mrs. DeVincentis may have against her son, Pepe, Irex Realty andFershing, their imposition upon her, if that in fact was the case, is not a matter affecting the validity of the bank's mortgage. Defendant contends that she never meant to encumber her property, did not know what she was doing, was not freely exercising her own will, was not independently represented by counsel, and was, in sum, taken advantage of by her son, his associate, and his associate's lawyer. That may all be true. The issue, ...