Before Judges Skillman, Conley and Lesemann.
The opinion of the court was delivered by: Lesemann, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 24, 2000
On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County.
This appeal involves an issue which one would expect to have been resolved decades—-or even a century—-ago. It concerns the statute of limitations applicable to a mortgage foreclosure and, while this opinion does not offer a vehicle to resolve all unsettled questions concerning that issue, it does provide an opportunity to at least simplify and perhaps provide some additional guidance concerning the applicable law.
The facts are not complicated. On June 22, 1988, defendants Robert and Ethel Mahler executed a note and mortgage for $137,000 to Colonial Savings Bank. The mortgage was a second mortgage and covered the Mahler's home in East Brunswick. It called for monthly payments of principal and interest in the sum of $1,600.42, with the final payment due in fifteen years, on June 22, 2003.
Defendants defaulted by failing to make the payment due on March 22, 1989, and on August 8, 1990, Colonial filed a foreclosure complaint. Defendants answered and thereafter the mortgage was transferred to the Resolution Trust Corporation (RTC). There then followed a series of assignments which ended with the mortgage being held by the present plaintiff, Security National Partners Limited Partnership (Security).
During that series of assignments, the then mortgage holder, G. E. Capital Asset Management Corporation, had its attorneys file a unilateral discontinuance of the pending foreclosure proceeding. Subsequently, on June 26, 1996, Security filed the present foreclosure proceeding. Defendants answered again, but this time plaintiff moved to strike the answer and obtain summary judgment in its favor. On February 10, 1997, the trial court granted that relief.
On this appeal, defendants argue that the unilateral discontinuance of the earlier foreclosure proceeding barred plaintiff from subsequently instituting the current proceeding, and also argue that, since the present proceeding was filed more than six years after defendants' default, it is barred by the statute of limitations. We shall deal first with the discontinuance issue, which we find to have no merit, and then turn to the statute of limitations question which may profit from some discussion. Defendants correctly note that a dismissal of the first proceeding by unilateral stipulation was not authorized under our rules.
Defendants had filed an answer to that complaint and thus, under R. 4:37-1, the complaint should have been dismissed only by a "stipulation of dismissal . . . signed by all parties who have appeared in the action" or, "by leave of court." Under R. 4:37- 1(a), a unilateral dismissal by the plaintiff would have been proper only "before service by the adverse party of an answer" or other responsive pleading.
Subsection (a) of R. 4:37-1 provides that a dismissal by stipulation shall be "without prejudice" unless "otherwise stated in the notice or stipulation," and subsection (b) contains a similar provision respecting an order of dismissal. Defendants argue, however, that because the stipulation of dismissal here was improperly filed without their consent, it should be treated as being "with prejudice," and as barring any subsequent filing of a new complaint.
Defendants offer no rationale for that conclusion.
Simply because the unilateral stipulation was not authorized by the rule, it does not follow—-and defendants suggest no reason why it should follow—-that such a dismissal should be deemed "with prejudice" and bar any further proceeding. The irregularity caused no prejudice of any kind to defendants. Even when they learned of the dismissal, defendants raised no objection. Indeed, since they have shown no substantive defense to the foreclosure complaint, it is difficult to see any reason why they would have objected to the initial dismissal. If that irregularity prejudiced anyone, it was the holder of the note and mortgage who have received no payment on defendants' obligation since 1989 and whose remedy was only delayed by the dismissal of the first foreclosure complaint. The argument that the improper procedure employed in dismissing the first foreclosure proceeding should bar the second proceeding, is without merit.
As to the statute of limitations, we note first that a primary reason for the lack of certainty noted above is that this State has never had a statute of limitations expressly referring to mortgage foreclosures. See 30 New Jersey Practice, Law of Mortgages § 298, at 196 (Roger A. Cunningham & Saul Tischler) (1975) ("New Jersey has no statute of limitations which is expressly made applicable to an action to foreclose . . ."). When faced with limitation issues respecting foreclosure proceedings, our courts have perforce ...