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Magloire v. Bayview Loan Servicing

July 31, 2007


On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2588-05.

Per curiam.


Argued March 13, 2007

Before Judges R. B. Coleman and Gilroy.

Plaintiff, Jacques Magloire, appeals from a March 1, 2005, order of the Law Division granting summary judgment in favor of defendant, Bayview Loan Servicing. For the reasons that follow, we affirm.

Plaintiff was the owner of a multi-dwelling building at Harrison Avenue in Roselle. Plaintiff executed a mortgage on the property on July 31, 1997, with Parmann Mortgage Associates, LLC, for $490,000. The terms of the mortgage required that plaintiff obtain and maintain fire and casualty insurance insuring the interest of the mortgagee for the term of the mortgage. Initially, plaintiff secured the requisite insurance coverage, but ultimately failed to make payments, allowing the policy to lapse.

Consequently, on November 10, 2003, defendant's predecessor in interest, Interbay Funding, LLC, notified plaintiff in writing that, unless a satisfactory casualty or hazard insurance was put into force by plaintiff within thirty days, defendant would obtain and/or renew a sufficient policy directly. The same letter also advised plaintiff that he would not be an insured under the coverage contemplated by defendant. At the conclusion of the thirty days, on December 11, 2003, Interbay notified plaintiff in writing that it had secured an insurance policy with Balboa Life and Casualty, that plaintiff was not an insured and that plaintiff would not be entitled to receive any proceeds from the insurance coverage in the event of a loss or damage to the property. Defendant made payments on the policy directly to Balboa and debited these costs to plaintiff's loan account.

On February 18, 2004, a fire occurred at the premises which damaged a portion of the structure. Balboa paid the insurance proceeds directly to defendant which, in turn, disbursed certain sums to plaintiff. These disbursements began after commencement of repairs on the property and were made in installments as repairs on the premises progressed.

In October 2004, plaintiff intended to sell the property, however, he realized that the sale proceeds would be insufficient to secure a release of the mortgage lien. Therefore, after negotiations, defendant issued to plaintiff a discount payoff letter dated October 28, 2004. Therein, defendant agreed to accept the sum of $625,500 for release in lieu of the $652,000 actually owed by plaintiff. Defendant's agreement to accept the discounted amount was expressly made subject to plaintiff's agreement, acceptance and compliance with the terms and conditions of the discount payoff letter.

The discount payoff letter contained a comprehensive release in favor of defendant. This release states in relevant part as follows:

As consideration for this discount payoff offer and as a condition to Borrower's acceptance of this discount payoff offer, Borrower, . . . knowingly and voluntarily releases, discharges, and covenants not to sue Bayview Loan Servicing, LLC . . . from [sic] any and call [sic] claims, demands, liabilities, . . . counterclaims, actions, and causes of action of whatsoever kind or nature, whether known or unknown, whether legal or equitable, which he or she has, or may assert in the future against Bayview Loan Servicing, LLC . . . directly or indirectly, or in any manner connected with any event, circumstance, action or failure to act, of any sort or type, whether known or unknown, whether legal or equitable, which was related or connected in any manner, directly or indirectly, to the Property or Loan. Borrower further acknowledges and agrees that, to the extent any such claims exist, the value to the Borrower of the discount payoff offer by Bayview Loan Servicing, LLC contained in this letter substantially and materially exceeds any and all value of any kind or nature whatsoever of any such claims.

Plaintiff agreed to these terms and executed the document. Although the mortgage was discharged of record in November 2004, pursuant to the agreed terms of the discount payoff letter, defendant maintained the right to pursue plaintiff for the entire contractual amount due.

In November 2004 and April 2005, after satisfaction of the mortgage, Balboa released additional funds totaling $19,425.47 to the defendant. Plaintiff, through counsel, wrote to Balboa and asserted that the mortgage had been satisfied and that any future proceeds should be paid directly to him. Balboa, in a letter dated April 6, 2005, declined to remit proceeds to plaintiff because the policy was lender-based and plaintiff was not an "insured" under the policy.

Plaintiff filed a complaint, dated July 20, 2005, in the Law Division of the Superior Court of New Jersey, Union County, against defendant in an effort to obtain the monies Balboa released to defendant. On March 1, 2006, the court entered orders denying plaintiff's motion for ...

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