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Toppi v. Federal National Mortgage Association


January 9, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, F-3608-02.

Per curiam.


Submitted December 12, 2007

Before Judges Cuff and Lisa.

Following the recording of a sheriff's deed resulting from a mortgage foreclosure action against them, plaintiffs, John D. Toppi, Jr. and Regina Toppi, initiated this action seeking a stay of their eviction and an order compelling defendant, Federal National Mortgage Association (Fannie Mae), to convey the property back to them pursuant to an alleged agreement. Judge Freeman entered an order on March 2, 2007 denying the requested relief. Plaintiffs argue, for the first time on appeal, that the sheriff wrongfully rejected their attempt to redeem the property before the sheriff's deed was recorded. They further argue that the trial judge erred in failing to grant them relief under principles of equitable estoppel or specific performance. We reject these arguments and affirm.

In connection with the purchase of their home in Gloucester Township in 1998, plaintiffs executed a purchase money mortgage in favor of Columbia National, Inc. Plaintiffs ceased making payments on the monthly installments due in September 2001. Columbia National filed a foreclosure action on February 15, 2002. In efforts to avoid foreclosure of their home, plaintiffs filed bankruptcy petitions in November 2003, May 2005, June 2006, and July 2006. Although these filings significantly protracted the foreclosure proceedings, Columbia National obtained final judgment on February 28, 2005, with the amount required to redeem set at $210,077.25, plus interest, costs and counsel fees. A writ of execution was ultimately issued and, after two statutory adjournments and an additional stay, the sheriff's sale was held on September 6, 2006. In the absence of other bidders, Columbia National was the successful bidder, purchasing the property for a nominal amount. Columbia National assigned its bid to Fannie Mae. The sheriff executed a deed to Fannie Mae on September 18, 2006. Although the record does not disclose the date of delivery of the deed, it was recorded on October 31, 2006.

On November 17, 2006, Fannie Mae's counsel, Fei F. Lam, served plaintiffs with a notice of eviction, to take place on December 13, 2006. On December 11, 2006, plaintiffs sought a hardship stay, supported by Regina Toppi's certification, which stated:

I have a mother on hospice living with me and my three children in school. I have made arrangements to purchase the property back. However the law firm [representing Fannie Mae] is denying me to do that. I have a person who will purchase my house with all fees [and] late charges in full on my behalf if I could have sometime to make arrangements if the court decided to evict me and my family. I will need a few weeks. Thank you.

Judge Vogelson entered an order on December 12, 2006 staying the eviction until January 12, 2007. Despite ordering that there would be no further adjournments, he later extended the stay to February 12, 2007. The eviction was ultimately scheduled for February 16, 2007.

On February 15, 2007, plaintiffs commenced this action by filing a verified complaint and order to show cause seeking a stay of the eviction and an order compelling Fannie Mae to convey the property to them pursuant to an alleged agreement. The complaint alleged breach of contract, violation of the covenant of good faith and fair dealing, negligent misrepresentation, and promissory and equitable estoppel. In support of the estoppel claims, plaintiffs alleged that they directed their attorney to negotiate with Lam regarding the possible repurchase of the property and that Fannie Mae "agreed to sell the property to plaintiffs once plaintiffs secured financing and once National Future Mortgage issued plaintiffs a mortgage commitment to purchase the property." Plaintiffs contended that they secured a mortgage commitment in early 2007 and, even though Fannie Mae expressed a willingness to cooperate with them, Lam refused to deal with plaintiffs and would pursue their eviction.

Lam certified that she first spoke with Regina Toppi on October 3, 2006, and advised her to present any repurchase proposal in writing, which Lam would present to Fannie Mae. However, Lam certified that she "advised her that there was no guarantee that Fannie Mae would consider the proposal." Lam further certified that she had received from the Toppis a mortgage commitment on November 13, 2006, but it was deficient and unacceptable for consideration of any possible repurchase, which she explained to plaintiffs and their attorney. Plaintiffs' attorney acknowledged the discussion, certifying that "Ms. Lam advised me that plaintiff[s] should submit a mortgage commitment in plaintiffs' name(s) only and if the agreement met with Ms. Lam's principal[']s approval, that defendant would relinquish defendant's interest in the property to plaintiff[s]." Plaintiffs secured a mortgage commitment on January 4, 2007, but did not submit it to Lam until February 15, 2007, the day they filed this action.

Judge Freeman heard oral argument on February 26, 2007. He rejected plaintiffs' argument that an agreement existed between plaintiffs and Fannie Mae for reconveyance of the property. He concluded that at best there were discussions and negotiations regarding the possibility of such an agreement. He therefore denied plaintiffs' application to compel specific performance because there was insufficient evidence of a binding agreement between the parties. The judge stayed the eviction until March 27, 2007. Plaintiffs vacated the property prior to that date. This appeal followed.

For the first time on appeal, plaintiffs argue that they attempted to redeem their property within the time prescribed by Rule 4:65-5, and they were wrongfully precluded from doing so. They argue in their appellate brief that "[a]lthough there is no proof as to the precise date [they] tendered the funds to the sheriff in an effort to exercise their right of redemption, the record discloses it was prior to the date the sheriff's deed was recorded." Thus, relying on Mercury Capital Corp. v. Freehold Office Park, Ltd., 363 N.J. Super. 235 (Ch. Div. 2003), plaintiffs argue that they were entitled to relief. We reject plaintiffs' argument on two grounds.

First, plaintiffs failed to raise this issue in the trial court. Their verified complaint did not allege an unsuccessful attempt to tender to the sheriff payment of the full amount required to redeem. Plaintiffs' certification did not set forth any specific steps taken to exercise the right of redemption. Plaintiffs produced no evidence and presented no oral argument concerning the issue. Appellate courts "will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available 'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)). On this basis alone, we reject plaintiffs' argument.

Further, unlike the evidentiary record presented in Mercury Capital Corp., the record in this case contains no evidence of an attempt by plaintiffs to tender payment to the sheriff at any time prior to delivery or recording of the sheriff's deed. In their appellate brief, plaintiffs claim they tendered funds to the sheriff and "it is undisputed the Sheriff returned the redemption funds." They support this contention by reference to Lam's certification, in which, referring to her October 3, 2006 conversation with Regina Toppi, she said, "During that conversation, Mrs. Toppi alleged that she attempted to redeem, but that the Sheriff returned the redemption funds."

We reject the contention that this certification establishes competent evidence that plaintiffs attempted to redeem the property. Lam's statement did not accept the veracity of Regina Toppi's assertion. On the contrary, Lam suggested to Regina Toppi that she submit "whatever proof she had in writing." Plaintiffs submitted no such proof to Lam, Fannie Mae, or the trial court. Lam's certification actually demonstrates the absence of record evidence of an attempt to redeem. The inclusion in Lam's certification of Regina Toppi's self-serving hearsay statement is not competent evidence to establish the fact asserted by plaintiffs. Moreover, the general statement does not meet the Mercury Capital Corp. standard, which included the production of certified checks that were tendered to the sheriff before delivery of the sheriff's deed, with particularized information regarding the time and circumstances under which the checks were tendered and rejected by the sheriff's office.

We next consider plaintiffs' specific performance argument. There must be an enforceable agreement to warrant application of the specific performance remedy. In re Estate of Yates, 368 N.J. Super. 226, 235 (App. Div. 2004); LoBiondo v. O'Callaghan, 357 N.J. Super. 488, 500 (App. Div.), certif. denied, 177 N.J. 224 (2003). Because there is no allegation that the parties executed a written contract, it is necessary to determine if the facts support the finding of an oral agreement.

The Legislature amended the Statute of Frauds in 1996 to provide that oral agreements to transfer an interest in real property are enforceable if "proved by clear and convincing evidence." N.J.S.A. 25:1-13b; see Morton v. 4 Orchard Land Trust, 362 N.J. Super. 190, 197 (App. Div. 2003), aff'd, 180 N.J. 118 (2004); Prant v. Sterling, 332 N.J. Super. 292, 293 (App. Div.), certif. denied, 166 N.J. 606 (2000). To enforce an agreement against an opposing party, there must be clear and convincing evidence of an offer, acceptance, and mutual assent to the essential terms of the agreement. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992). Only if the parties manifest an intent to be bound by reasonably ascertainable standards of performance will there be an enforceable agreement. Ibid. "'It is requisite that there be an unqualified acceptance to conclude the manifestation of assent.'" Id. at 435-36 (quoting Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 539 (1953)).

There is no basis to conclude that Fannie Mae assented to a contractual relationship with plaintiffs. The relationship between the parties and the form of the negotiations does not suggest a binding, oral agreement to alter the parties' interests in the property. Lam informed plaintiffs there was no guarantee her client would consider any proposal. Plaintiffs' counsel understood that only if Fannie Mae approved of the commitment would it "consider" an agreement to return the property to plaintiffs. It is clear that Fannie Mae reached a point where it would not consider an agreement. Only a few days after Lam received the incomplete mortgage commitment document in November 2006, she served plaintiffs with a notice of eviction. By the time Fannie Mae received the January 4, 2007 mortgage commitment, Lam stated that Fannie Mae refused to discuss repurchase with plaintiffs and advised them accordingly.

There is adequate credible evidence to support Judge Freeman's finding that the discussions between plaintiffs and Fannie Mae never moved beyond the negotiation stage. See Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). The lack of an enforceable agreement precludes specific performance.

Finally, we consider plaintiffs' argument that because Fannie Mae's conduct induced them to secure a mortgage commitment, the doctrine of equitable estoppel requires remand to the trial court for further proceedings. Estoppel is "an equitable doctrine, founded in the fundamental duty of fair dealing imposed by law, that prohibits a party from repudiating a previously taken position when another party has relied on that position to his [or her] detriment." State v. Kouvatas, 292 N.J. Super. 417, 425 (App. Div. 1996). "The burden of proof of a claim based on principles of equitable estoppel is clearly on the party asserting estoppel." Miller v. Miller, 97 N.J. 154, 163 (1984). To succeed on their equitable estoppel claim, plaintiffs must demonstrate that Fannie Mae "engaged in conduct, either intentionally or under circumstances that induced reliance, and that plaintiffs acted or changed their position to their detriment." Knorr v. Smeal, 178 N.J. 169, 178 (2003).

Fannie Mae's conduct with respect to the mortgage commitment did not induce cognizable detrimental reliance. First, it is clear that plaintiffs attempted to secure the new mortgage commitment prior to any discussions with Fannie Mae about the possible repurchase of the property and prior to the sheriff's sale. Thus, they did not "rely" on the negotiations with Fannie Mae to seek the new commitment.

Further, plaintiffs cannot demonstrate they changed their position to their detriment. Plaintiffs lost legal ownership of their home at the time of the foreclosure sale. They subsequently learned that Fannie Mae would possibly consider the repurchase of the home if they provided a firm mortgage loan commitment. After a few months, they successfully secured a commitment. Plaintiffs point to this fact alone in support of their claim. Yet, it is unclear how the mere application for a mortgage commitment worked to their detriment. There is no claim that the attempt to secure a mortgage commitment required plaintiffs to abstain from an alternative course of conduct to their ultimate detriment. Plaintiffs' complaint and appellate brief do not allege, for example, that they stopped looking for new housing, or alternative medical and schooling arrangements, in reliance on Fannie Mae's representations. The detriment to plaintiffs occurred with the initial loss of the home. It did not stem from reliance induced by the aborted negotiations. Plaintiffs did not demonstrate entitlement to relief under the equitable estoppel doctrine.



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