On appeal from Superior Court of New Jersey, Law Division, Morris County, L-2940-98.
Before Judges Carchman and Lintner.
The opinion of the court was delivered by: Carchman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
In this legal malpractice appeal, we address the issue of when the six-year statute of limitations runs when monetary damages are allegedly not readily ascertainable at the time the alleged malpractice is discovered. We conclude that where an attorney's negligence resulted in a purported first mortgage lien actually being a second mortgage, the limitations period commenced at the time the negligent conduct was discovered even in the absence of the mortgagors' default as to either mortgage.
These are the uncontested facts. Property owners James Trierweiler and Elizabeth Hurley Trierweiler (the borrowers) retained defendant Roy Kurnos, Esq., to represent them in the refinancing of their home mortgage. The principal amount of the loan was $425,000 and was to be secured by a first mortgage on their residence in Mendham. Plaintiff Citicorp Mortgage, Inc. (the bank) was the lender; plaintiff Commonwealth Land Title Insurance Company (the title company) was to provide title insurance guaranteeing that the bank's mortgage was a first lien on the property. The refinance was to discharge both the first lien of the then mortgagee, Morris County Savings Bank, and a second lien held by Midlantic National Bank (the Midlantic mortgage). The second lien secured a $150,000 home equity line of credit.
Defendant sought a "pay-off" letter from Midlantic and received a response indicating a pay-off figure of $150,122.96 as of July 17, 1990, with a per diem interest charge of $48.79. The pay-off letter also contained the following instructions: "[i]f you wish to close the account, we require a letter from either the customer or the acting attorney." The loan commitment was issued on August 23, 1990, conditioned upon the bank being in a first lien position. Closing took place on September 7, 1990, and defendant subsequently disbursed the mortgage funds satisfying the first mortgage and remitted a check in an amount consistent with the pay-off letter to Midlantic. Unfortunately, neither the borrowers nor defendant instructed Midlantic to close the account, and the mortgage securing the home equity loan remained on the record.
After the original first mortgage was cancelled, the Midlantic mortgage moved into first position ahead of the bank's mortgage. Thereafter, the borrowers drew down an additional $150,000 on their still available home equity line of credit.
Within nine months after the mortgage refinance closing, the title company knew of the error. In her June 7, 1991 letter to defendant, Kathy Esposito, the title company's branch manager, stated:
It has come to my attention thru a conversation with Doris that the Equity Line Credit Mortgage to Midlantic National Bank recorded in book 2326, page 446 in the amount of $150,000.00 has not been closed out nor postponed to the lien of the new Citicorp mortgage.
As you are aware, this Midlantic mortgage would remain [sic] in first position. It is imperative that this mortgage be discharged or postponed immediately. A paydown of the mortgage is not sufficient to clear this item. In the event [defendants] ha[ve] used any of this equity line in the interim, this must be paid off.
Should you have any questions, please contact me. Your immediate attention to this matter is imperative.
Despite, defendant's efforts, Midlantic was unwilling to subordinate, postpone, or discharge its mortgage. In fact, on August 16, 1991, Midlantic again not only refused to subordinate to the bank's mortgage, but explained why in its correspondence to defendant:
We have considered your request for a Subordination to Citicorp Mortgage very carefully. At this time, we cannot grant this request because there is insufficient equity in the Trierweiler's [sic] property. This decision was made according to Midlantic National Bank's ...