On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-1379-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: September 13, 2006
Before Judges Cuff, Fuentes and Messano.
In March 2003, plaintiffs Jeffrey and Paula Paretti refinanced their home. Contrary to governing statutes, plaintiffs received a discharge of mortgage from defendant CitiMortgage, Inc. (CitiMortgage) with instructions to file it immediately with the appropriate county clerk. Alleging that CitiMortgage's business practice regarding the discharge and cancellation of mortgages was contrary to the obligations imposed by statute on the mortgagee upon payment and satisfaction of a mortgage and that this practice violated the Consumer Fraud Act, plaintiffs filed a complaint on behalf of themselves and similarly situated persons*fn1 seeking damages, statutory fines, costs of suit and attorneys' fees. Plaintiffs appeal from the order granting summary judgment in favor of CitiMortgage and its subsidiary and agent, defendant Verdugo Trustee Service Co. (Verdugo).
We commence this opinion with a discussion of the statutory framework governing the conduct of mortgagees at the time of payment and satisfaction of a mortgage and mortgagors' remedies in the event of default. In 1975, the Legislature established procedures for cancellation of a mortgage after it had been redeemed, paid and satisfied. The legislation provided penalties for non-compliance. L. 1975, c. 137. In 1991, the statute was amended. L. 1991, c. 289. Relevant to this case, when a mortgage is redeemed, paid or satisfied and the mortgagee is a savings bank, a savings and loan association, a credit union, or other corporation in the business of making or purchasing mortgage loans, the mortgagee must "cause the mortgage to be submitted to the county recording officer for cancellation of record within 30 days of receipt of all fees which are required to be paid by the mortgagor." N.J.S.A. 46:18-11.2b(1)(a). Simultaneously, the mortgagee must send to the mortgagor or the mortgagor's agent a copy of the letter of transmittal requesting cancellation of the mortgage. N.J.S.A. 46:18-11.2b(1)(b). The mortgagee has the right to charge the mortgagor the appropriate filing fees, plus a service charge not to exceed $25.*fn2 N.J.S.A. 46:18-11.2b(2). The mortgagee must notify the mortgagor of the required fees and the mortgagee may collect the service fee at the time the mortgage is executed or at the time of redemption or satisfaction; the fee charged by the county clerk to cancel the mortgage is payable at the time the mortgage is redeemed, paid and satisfied. Ibid.
If the mortgagee fails to comply with N.J.S.A. 46:18-11.2b, the mortgagor may serve a notice of noncompliance and the mortgagee has fifteen days to cure the default. N.J.S.A. 46:18-11.3a(1). If the mortgagor does not comply within fifteen days of receipt of written notice, the mortgagee is subject to a fine of $50 per day. Ibid. The maximum fine may not exceed $1000. Ibid. This fine may be collected by a private citizen in accordance with N.J.S.A. 2A:58-11 (the Penalty Enforcement Law of 1999). N.J.S.A. 46:18-11.3b. In addition, if the mortgagee fails to apply to cancel the mortgage within the fifteen-day cure period, the mortgagor may recover the greater of the mortgagor's actual damages or the $1000 statutory fine, as well as costs of suit and attorneys' fees. N.J.S.A. 46:18-11.3c.
If a mortgagee fails to record the appropriate documents to discharge the mortgage within fifteen days of the notice of default and the mortgagor is required to commence a legal action to cancel the mortgage of record, the mortgagee is liable for the costs of that action, including attorneys' fees. N.J.S.A. 46:18-11.4. No attorneys' fees will be allowed unless written notice is provided to the mortgagee twenty days prior to commencement of the action to cancel the mortgage. Ibid.
In 1999, further amendments were adopted governing the cancellation of residential mortgages. A person entitled to receive payment of a residential mortgage "may execute a discharge, satisfaction-piece, [or] release" and the county clerk shall accept the document for recordation as long as the document indicates that the party executing the document has the authority to do so. N.J.S.A. 46:18-11.6a. A similar provision governs a party which owns or holds the mortgage through an unrecorded assignment. N.J.S.A. 46:18-11.6b. The 1999 amendments also authorize an alternative procedure to an action to cancel a mortgage that allows for recordation of a discharge or satisfaction of mortgage by an attorney or title agent. N.J.S.A. 46:18-11.7.
On March 27, 2003, plaintiffs executed a note and mortgage on their home in Gibbsboro, Camden County. The purpose of this transaction was to refinance the October 31, 1995 note and mortgage on their home in favor of Collective Bank and held by defendant CitiMortgage in March 2003. Three days prior to the closing date of this transaction, CitiMortgage faxed a payoff statement to the new lender. The $82,422.44 payoff amount consisted of the principle balance of $81,904.92, interest of $502.52 from March 1, 2003 to April 1, 2003, and a statement fee of $15. Plaintiffs were not charged a fee for the recordation of the mortgage discharge with the county clerk. The transaction was completed on March 27, 2003.
By check dated April 1, 2003, the new lender tendered full payment to CitiMortgage. On April 21, 2003, CitiMortgage advised plaintiffs by letter that it would file the discharge of mortgage with the county clerk. The letter stated:
Please find enclosed the final document showing that the above reference loan has been paid off. The release has been forwarded to the county for recording. When release is recorded, it will be available as a public record any time you enter into a real estate transaction.
This mailing also contained a second letter that informed plaintiffs that CitiMortgage would send the release of mortgage or satisfaction of mortgage to the county clerk, if that practice was consistent with ...