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Siwiec v. Financial Resources

February 22, 2005


On appeal from the Superior Court, Law Division, Special Civil Part, MiddleseX County, DC-007100-03.

Before Judges Stern, S.L. Reisner and Graves.

The opinion of the court was delivered by: S.L. Reisner, J.A.D.


Submitted February 1, 2005

Defendant, Financial Resources, Inc., appeals the denial of a motion to vacate a $6,351 judgment in favor of plaintiffs, David and Greta Siwiec, entered after a proof hearing in the Special Civil Part. We reverse.


On March 28, 2003, plaintiffs filed a complaint against Financial Resources, Inc., a mortgage lender. Their complaint alleged that they"were offered specific refinancing terms by Financial Resources, Inc. in November 2002." They contended that those"terms were communicated both verbally and in writing by Dave Pressel of Financial Resources." However, they alleged that Financial did not give them the mortgage loan. Apparently, the mortgage application was accomplished over the internet, since all of the communication took place through e-mail. Plaintiffs contended they"were unequivocally led to believe one thing and then told it wasn't available after much time had passed." As a result, they were forced to obtain a mortgage elsewhere at a higher rate of interest.

The complaint was served on Financial by certified mail on April 15, 2003. A notice sent to plaintiffs by the Special Civil Part confirmed service on defendant and indicated a default date of May 19, 2003 if no answer was filed. The parties attempted to settle the case, as evidenced by an e-mail from Financial's Vice-President Dave Pressel to plaintiffs dated June 25, 2003. That e-mail also explained to them that their loan application did not meet Fannie Mae or Freddie Mac guidelines because the ratio of mortgage payments to gross income was too high. The case was not settled, but no answer was filed.

Plaintiffs applied for default judgment, ex parte, on November 17, 2003. Their application was supported by voluminous proofs, although they did not produce a written mortgage commitment. Rather they produced an e-mail from Pressel, dated December 2, 2002, advising them that they were"approved" for a mortgage of $160,000 with a locked-in interest rate of 5.50 percent. However, that e-mail"commitment" was obviously based on plaintiffs' representations as to their financial condition, since the e-mail also advised that plaintiffs would be required to submit an application and proof of financial qualification. Their subsequent mortgage application was dated December 12, 2002. A later e-mail from Financial to plaintiffs set a tentative closing date of December 26, 2002, but requested additional financial documentation.

Rather than deciding the case based only on plaintiffs' documents, the trial court required a proof hearing, which was held, without notice to defendant, on January 15, 2004. No exhibits were marked or received in evidence at the proof hearing, although the trial judge apparently considered both the package of documents plaintiffs had initially submitted in support of their application for judgment as well as additional documents. Both plaintiffs testified at the hearing concerning the damages they had incurred by virtue of what they contended was Financial's initial promise to extend a loan, Financial's failure to notify them of the cancellation of two scheduled closings, and Financial's eventual refusal to give them the loan. The trial judge awarded damages consisting of the increased cost of a loan plaintiffs obtained elsewhere at a higher interest rate, duplicate expenses they claimed to have incurred for an appraisal and title work, and costs to travel to the cancelled closings.

Defendant was served with the judgment and, within two weeks after the proof hearing, filed a motion on January 28, 2004 to vacate the judgment. The motion was supported by a certification from defendant's president, David Findel, asserting that no answer was filed because the loan officer assigned to the matter had falsely told him that the case had been resolved and that the complaint was being dismissed. Findel's certification did not assert any facts which would constitute a meritorious defense. However, the June 25, 2003 e-mail from Pressel, which plaintiffs had placed before the court at the proof hearing, explained the problems with their loan application. After oral argument, the trial judge denied the motion for failure to demonstrate excusable neglect or a meritorious defense.


We begin our discussion by noting certain concerns. Since neither party provided us with copies of plaintiffs' application for default judgment, with its attached proofs, we have independently reviewed the file of the Special Civil Part. These documents, which were equally available to both parties upon review of the Special Civil Part file, should have been included in appellant's appendix. R. 2:6-1(a)(1).

In a certification in support of defendant's motion, Findel attested that he did not file an answer because an unnamed loan officer advised him that the case was resolved. But plaintiffs provided a copy of an e-mail dated June 25, 2003, from Pressel to plaintiffs with a"cc" to Findel and defendant's counsel explaining why the loan was denied and offering a settlement. The complaint was served on Financial on April 15, 2003. Obviously, on June 25, 2003, more than thirty-five days beyond the date the complaint was served, defense counsel and defendant's Vice President and President, were well aware that the case was not resolved. Defense counsel should have known that the case was either in default or that default ...

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