On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2265-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 3, 2007
Before Judges Weissbard and Baxter.
Defendants Allen Longstreet, Alicia Longstreet,*fn1 and Marilee Ryan appeal from a March 30, 2007 order that entered judgment against them and in favor of plaintiff Abbe L. Block, Inc., in the amount of $172,442. That sum consisted of $119,831, which was the principal amount on a mortgage note, $7,500 for the payment of plaintiff's legal fees, and pre-judgment interest totaling $45,111. We affirm in part, reverse in part, and remand for entry of a modified judgment in plaintiff's favor.
The March 30, 2007 judgment resulted from stipulated facts that were submitted to the trial judge. The parties testified under oath that they had voluntarily stipulated to those facts and that the facts contained in the stipulation were true. The judge relied on the stipulation when he entered the March 30, 2007 judgment. We summarize those facts. In February 2001, Allen Longstreet obtained a mortgage loan from Chase Manhattan Mortgage Corporation (Chase) in the amount of $104,000 on his home located at 305 Churchill Avenue in Hamilton Township. The mortgage and note were in the name of Allen Longstreet and his mother Marilee Ryan because Longstreet was unable to secure financing unless his mother co-signed the loan. Longstreet assured his mother that he would be solely responsible for payment of the Chase note, and she relied on his assurances. The Chase note was payable on March 1, 2031, at an initial interest rate of 8.25% per annum. The monthly principal and interest payment was $1,124.
In 2001, Longstreet lost his job and was unable to make payments on the Chase note, which resulted in default on the note. Consequently, Chase instituted a mortgage foreclosure action in January 2002. Longstreet then retained Michael Block, Esq.,*fn2 a principal of the now defunct law firm of Block & Sobel, L.L.C., to represent him in the foreclosure action and to negotiate a payment plan with the bank to avoid foreclosure of his home. Neither Ryan nor Alicia Longstreet retained Block, nor were they in contact with him concerning the foreclosure action or to negotiate a payment plan to avoid foreclosure. Block assured Longstreet that he would "take care of everything."
Over the next several months, Longstreet called Block numerous times to inquire about the status of the foreclosure action, but Block never returned his calls. Block failed to respond to the foreclosure action and did nothing to effectuate a new payment plan.
The first time Longstreet heard from Block was on July 22, 2002, when he received a phone call in which Block told Longstreet to leave his job and immediately come to Block's office or he would lose his home. The redemption period for the property was due to expire that day at 1:00 p.m. Longstreet and Ryan "had no means or ability to redeem the property on their own."
When Longstreet arrived at Block's office, Block gave him a check in the amount of $119,831 (the Block loan) to redeem the property. The check was drawn from the operating account of Block & Sobel, L.L.C.; however, Abbe Block, the wife of Michael Block, trading as Abbe L. Block, Inc., was the source of the funds. As security for the loan, Longstreet executed a promissory note and mortgage on the property in favor of Abbe L. Block, Inc. Block did not allow Longstreet to read the documents; he merely said "sign here now" and instructed Longstreet to take the check and proceed immediately to the Sheriff's Office to redeem his home. Block never discussed the terms of the mortgage or note with Longstreet, nor did Block ever provide Longstreet with a payment schedule or any other information regarding the note. Block never advised Longstreet to seek other counsel to review the mortgage or note, nor did he ever tell Longstreet that he represented Abbe Block or Abbe L. Block, Inc. Fearful of losing his home, Longstreet immediately signed the documents that Block had placed in front of him and told him to sign. Consequently, Longstreet did not know the terms of the note or mortgage at the time he signed them. Specifically, he did not know that the mortgage contained an interest rate of 14%. When he later discovered how high the interest rate was, he was "shocked" because he knew that mortgage rates were considerably less. His Chase loan was, at that time, at an interest rate of only 8.5%.
Longstreet also did not know that Abbe L. Block, Inc. was the mortgagee; as far as he knew, he owed the money to Block & Sobel. In addition, in his haste, Longstreet unknowingly warranted to plaintiff in the mortgage documents the he was the sole owner of the property.
In relevant part, the promissory note between Longstreet and Abbe L. Block, Inc. provided that Longstreet would repay the principal of $119,831 over a thirty-year term, with interest at an annual rate of 14% on the remaining balance. Although the note specified that monthly payments were to be made on the first day of each month commencing August 1, 2002, and ending August 1, 2032, the dollar amount of each monthly payment was left blank. The note also specified the following: any monthly payment that was more than ten days late would result in a late charge consisting of five percent of the payment; and if Longstreet failed to make any payment required by the note, or failed to comply with any other obligation specified in the note, Abbe Block, Inc. could declare him in default only and institute foreclosure proceedings. The note was signed by Longstreet and Bruce Sobel, Esq., of Block & Sobel, and bore no signature from either Michael Block or Abbe L. Block, Inc.
The mortgage listed Allen Longstreet as mortgagor and Abbe L. Block, Inc. as mortgagee. The mortgage specified a loan amount of $119,833, plus interest in accordance with the terms of the note. Like the note, the mortgage provided for monthly payments, but the line on which the dollar amount of such monthly payments would have been specified was left blank, as was the portion of the mortgage that specified the date on which "[a]ll sums owed under the note" were due. The mortgage document specified that if the lender declared Longstreet in default, he would be immediately required to pay the full amount of all unpaid principal, interest, and any other amounts due on the mortgage and note, in addition to the lender's attorney's fees and costs of collection. Like the promissory note, the only signatures on the mortgage were those of Longstreet and Bruce Sobel, Esq., of Block & Sobel.
Neither Ryan or Alicia Longstreet signed the mortgage or the note. Neither one had knowledge of Longstreet's dealings with Michael Block, nor did they know anything about the sheriff's sale, the foreclosure action, the redemption period, or the $119,831 check issued by Block & Sobel. At the time Longstreet signed the promissory note and mortgage, he was not married to Alicia, and they did not marry until almost a year later, in June 2003. Four months after their marriage, Ryan conveyed her interest in the property to Allen and Alicia as husband and wife. Ryan never lived in the house nor did she receive any benefit from acting as co-signer on the Chase note and mortgage. Longstreet never issued a single payment to Abbe Block, Inc., thereby entitling Abbe Block to consider the loan in default.
In the summer of 2004, Allen and Alicia Longstreet were able to refinance the Block loan without satisfying their indebtedness on the Block loan. By that point, Alicia Longstreet was aware of the Block loan, that the Block loan had not been satisfied, and that she and her husband had been using the funds from the new mortgage for their own personal use. It is unclear from the stipulated facts if one or both of them made the decision not to repay the Block loan.
On August 31, 2004, plaintiff instituted suit against Longstreet and Ryan. As to Longstreet, she alleged breach of contract, fraud, misrepresentation and breach of warranty. As to Alicia Longstreet and Ryan, she alleged unjust enrichment. Longstreet and Ryan filed a counterclaim alleging fraud, and a third-party complaint against Michael Block and Block & Sobel, alleging malpractice. ...