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Bank One National Association v. Andresen


June 21, 2007


On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-0565-04.

Per curiam.


Argued May 22, 2007

Before Judges Holston, Jr. and Grall.

Defendant, Peter C. Andresen, appeals the Law Division's August 19, 2005 order denying his motion to vacate the order dismissing his counterclaim against plaintiff, Bank One National Association (Bank One). The order was entered as a result of defendant's failure to file a timely demand for trial de novo, after an adverse arbitration finding, in accordance with Rule 4:21A-6(a) and (c). The reasons for the court's order are contained in the court's August 22, 2005 memorandum of decision. Defendant also appeals the Chancery Division's order transferring his counterclaim to the Law Division. We affirm.

The original plaintiff was Homecomings Financial Network, which filed a mortgage foreclosure complaint in October 2000 against defendant. Homecomings Financial Network was the holder of the mortgage being foreclosed by assignment from Old Kent Mortgage Company (Old Kent). The mortgage was security for a note in the amount of $270,000 from defendant to Old Kent against real property in Sea Isle City. Bank One National Association is the trustee for Homecomings in this litigation.

Defendant, in his May 6, 2002 answer and counterclaim, made claims for monetary damages and rescission. Defendant claimed that the property subject to the mortgage was his primary residence and that plaintiff failed to comply with terms of the Truth in Lending Act (15 U.S.C.A. §§ 1601 to -67) and the Fair Foreclosure Act (N.J.S.A. 2A:50-53 to -68) and that he was entitled to interest, fees and costs related to the transaction.

Plaintiff, while contending that defendant had received a truth in lending statement and had executed the same, claimed that defendant's primary residence was in Maryland and not Sea Isle City and thus the Truth in Lending Act was not applicable to his mortgage loan.

The matter was set for trial to determine if the residence to be foreclosed was defendant's primary residence. Prior to trial, in early 2004, defendant requested a payoff amount from the plaintiff and paid off the mortgage arrearage, without prejudice to his claim for return of funds over the principal debt. Given the payoff of the mortgage, on February 17, 2004, counsel for plaintiff wrote to then Chancery Division Judge Seltzer informing the judge of plaintiff's intention to dismiss the foreclosure action against defendant. Because plaintiff's counsel never received an executed stipulation of dismissal and defendant objected to executing same and because defendant still had a viable counterclaim pending, the judge entertained argument as to whether he should enter an order dismissing plaintiff's foreclosure complaint and transfer the counterclaim to the Law Division for resolution.

On August 27, 2004, after conducting oral argument, the judge entered an order dismissing plaintiff's complaint in foreclosure. Because defendant's counterclaim was a claim for money damages and because the judge was engaged at the time in a lengthy trial, which would delay the counterclaim being heard for several months, the judge exercised his discretion and severed the counterclaim from the Chancery Division foreclosure action, which he dismissed. The judge then transferred defendant's counterclaim for recoupment and money damages to the Law Division, which he ordered filed under a Law Division docket number.*fn1

On November 22, 2004, Judge Visalli, following transfer to the Law Division, denied defendant's motion for summary judgment. The judge then ordered that the case be listed for non-binding arbitration in April 2005 and set for trial thereafter.

On April 25, 2005, arbitration was conducted in accordance with Rule 4:21A-1 at the Cape May County Courthouse and the arbitration award was entered that date dismissing defendant's claim. Counsel for plaintiff signed the arbitration award. Defendant likewise signed the arbitration award but added "to acknowledge receipt of copy only."

The defendant then claimed "indigency status" in order to be relieved of the required filing fee of $200 required for a trial de novo. On May 22, 2005, defendant applied for waiver of the payment of the $200 as part of his purported notice of demand for trial de novo of an adverse arbitration award as required by Rule 4:21A-6(b)(1) and (c).

Judge Visalli, by order dated May 26, 2005, after examining the affidavit of defendant in support of his claim of indigency, determined that he had not demonstrated he was without sufficient funds to pay the $200 trial de novo fee. Defendant then paid the fee by check dated June 7, 2005. By letter dated June 9, 2005, the Civil Division team leader returned defendant's June 7, 2005 trial de novo filing fee check for $200. The letter informed defendant that if he had a legal basis for extending the de novo notice time he could file a motion for such relief for a judge's determination.

Defendant on July 12, 2005 filed a motion to alter or amend the order of dismissal of his counterclaim entered May 26, 2005.*fn2

Defendant in his certification in support of his motion stated that he did not understand he was to be penalized by submitting to arbitration when the case was not a proper subject. He further contended that the order of dismissal should have contained a provision allowing payment of the fee within a reasonable time as an alternative to dismissal.

In a memorandum of decision filed August 22, 2005, Judge Visalli denied defendant's motion. The judge stated:

Having carefully reviewed the moving papers and any response filed, I have ruled on the above motion as follows:

This matter was subject to mandatory, non-bin[d]ing arbitration in accordance with New Jersey Court Rules. The arbitration occurred on April 27, 2005. At the arbitration, the arbitrator found no cause of action for Andresen. Andresen had not, in accordance with R. 4:21A-1(c)(1) and R. 4:21A-1(c)(2), timely removed this matter from arbitration.

Andresen filed for a trial de novo. However, prior to filing, defendant sought to have the required $200.00 fee waived. This request was denied. In turn, the time to file for a trial de novo lapsed thus barring Andresen from filing for a trial de novo.

Because it is undisputed that Andresen failed to timely file his application and fee his request must be denied. It is also noted that [if] in fact defendant had established indigency with respect to the payment of the $200.00 fee, there would have been at least [an] equitable basis to allow a late filing of the de novo request for trial.

Judge Visalli's decision was memorialized in the August 19, 2005 order denying defendant's motion from which defendant now appeals.

Defendant presents the following arguments for our consideration:








Plaintiff sought the remedy of foreclosure based upon defendant obtaining a mortgage loan and then failing to make payment. The foreclosure complaint was properly commenced in the Chancery Division as prescribed by Rule 4:3-1(a)(1).

Defendant's counterclaim sought monetary damages claiming that plaintiff violated the Truth in Lending Act and the Fair Foreclosure Act.

Rule 4:3-1(a)(1) states:

Actions in which the plaintiff's primary right or principal relief sought is equitable in nature, except as otherwise provided by subparagraphs (2) and (3), shall be brought in the Chancery Division, General Equity, even though legal relief is demanded in addition or alternative to equitable relief.

The relief demanded by defendant in his counterclaim was not in addition or alternate to equitable relief but, in fact, was the primary relief sought by him. Defendant does not claim that his legal remedies were somehow prejudiced by that claim being heard in the Law Division.

After dismissal of the foreclosure complaint, as a result of defendant's payoff of the mortgage, the remedy sought by defendant, was entirely legal rather than equitable in nature. We are convinced, therefore, that pursuant to Rule 4:3-1(b), Judge Seltzer property exercised his discretion when he transferred defendant's counterclaim to the Law Division for adjudication.


Defendant contends the court erred in denying his application for waiver of the $200 filing fee. The $200 fee is required by Rule 4:21A-6, when, after filing of an arbitration award, a party seeks to reject the award and demand a trial de novo. Defendant sought waiver based on indigency pursuant to Rule 1:13-2(a).

Defendant attached to his application for waiver of payment of the $200 trial de novo filing fee a certification of indigency. The certification, dated May 22, 2005, indicated defendant resided at 1304 Landis Avenue, Sea Isle City, the very property on which he had made a mortgage payoff of $398,573.61 in December 2003, resulting in plaintiff dismissing the foreclosure complaint. Defendant listed monthly social security income of $651 and a rent/mortgage payment of $397.50. Defendant also listed as assets, but without giving a monetary value, minimal percentages of interest in real estate partnerships. The certification further indicates defendant's expenses do not exceed his social security income.

Judge Visalli, in the May 26, 2005 order rejecting defendant's application for waiver of the trial de novo filing fee, stated "the court is not satisfied that defendant was without sufficient funds [to pay the filing fee]."

Rule 1:13-2 in applicable part reads: "[W]hen ever a person by reason of poverty seeks relief from the payment of any fees provided for by law which are payable to any court or clerk of court . . . any court upon the verified application of such person . . . may in its discretion order the payment of such fee waived." Based on the certification submitted by defendant in support of his application for waiver of fee based on a claim of indigency, we find no abuse of discretion in the court's determination that defendant failed to demonstrate he was without sufficient funds to constitute an inability to pay the fee "by reason of poverty" as contemplated by the rule.


Defendant did not file his application for a demand for trial de novo and the $200 filing fee until June 7, 2005, outside the thirty-day window for filing a demand for trial de novo and rejection of the April 27, 2005 arbitration award. The reason defendant did not tender the $200 filing fee with his filing of the demand for trial de novo request was because he filed an indigency application, which the court justifiably determined lacked merit. We are satisfied that as a result of defendant's actions, the mandatory provision of Rule 4:21A-6 was not adhered to. The rule in applicable part states: "A party demanding a trial de novo must tender with the trial de novo request a check payable to the 'Treasurer, State of New Jersey' in the amount of $200 towards the arbitrator's fee." (emphasis added).

In Hartsfield v. Fantini, 149 N.J. 611, 618 (1997), the Supreme Court made clear that to relax the thirty-day requirement of Rule 4:21A-6(b) "courts must determine that 'extraordinary circumstances' exist and that those circumstances did not arise from . . . 'mere carelessness' or 'lack of proper diligence.'" (quoting In re T., 95 N.J. Super. 228, 235 (App. Div. 1967)). The Court quoted favorably from our opinion in Behm v. Ferreira, 286 N.J. Super. 566, 573-74 (App. Div. 1996), where we stated: "[t]he policy underlying the decision is to allow the arbitration process to bring about the termination of litigation when neither party has requested a trial de novo, . . . [thereby] bring[ing] about inexpensive, speedy adjudications of disputes and to ease case loads of state courts." Hartsfield, supra, 149 N.J. at 619. Our decisions have specifically found that exceptional circumstances do not encompass excusable neglect, negligence or carelessness by an attorney or his staff. Hartsfield, supra, 149 N.J. at 618; see Behm, supra, 286 N.J. Super. at 570-74; In re T., supra, 95 N.J. Super. at 235. Additionally, the Supreme Court has strictly construed extraordinary circumstances and determined that this standard does not include excusable neglect. See Hartsfield, supra, 149 N.J. at 618; Wallace v. JFK Hartwyck at Oak Tree, Inc., 149 N.J. 605 (1997); see also Martinelli v. Farm Rite, Inc., 345 N.J. Super. 306, 311-13 (App. Div. 2001), certif. denied, 171 N.J. 338 (2002).

We are satisfied that the defendant, as demonstrated by his subsequent tender of the trial de novo fee to the court had the ability to pay the filing fee as required by the court rule and simply elected not to do so. Rather, defendant filed a meritless indigency claim. The claim was supported by the limited financial information defendant provided to the court. We are satisfied that the limited information provided in defendant's certification clearly did not support a claim of indigency. We note defendant had access to substantial funds to pay off the mortgage on the Sea Isle City property, which caused the foreclosure complaint to be dismissed. Defendant also recited in his certification unquantified interests in real estate partnerships.

Judge Visalli correctly noted in his memorandum of decision that defendant had not in accordance with Rules 4:21A-1(c)(1) and (2) timely removed the matter from non-binding arbitration and by not filing the trial de novo with the mandatory filing fee allowed the mandatory thirty-day window for rejection of arbitration and demand for trial de novo to lapse. We are convinced that an attempt to avoid a filing fee by filing for indigency does not constitute "extraordinary circumstances" for the judicial expansion of the thirty-day requirement of Rule 4:21A-6(b)(1).


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