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In re Estate of Coven


October 28, 2008


On appeal from Superior Court of New Jersey, Chancery Division, General Equity-Probate Part, Somerset County, Docket No. 04-00442.

Per curiam.


Submitted: September 17, 2008

Before Judges Lihotz and Messano.

Richard Schachter is the Administrator, C.T.A., of the Estate of Maria Coven (Estate). Maria Coven (decedent) passed away on March 21, 2004. Schachter replaced the named executor, Lawrence Coven (Coven), who is decedent's son. Coven engaged in a pattern of fraud, encumbering property now owned by the Estate, for the purpose of covering Coven's theft of assets from real estate closings where he had served as a representative of the title company.*fn1 Decedent executed mortgages to Gary Lesser as mortgagee that encumbered three parcels of realty titled in her name.

Schachter moved to discharge the mortgages and to recover $70,000 paid by decedent to Lesser, asserting the transactions were fraudulent. Lesser did not respond to the motion. The trial court granted summary judgment, discharged the three mortgages and ordered payment of $70,000. Lesser appeals from the entry of summary judgment and the denial of his motion for reconsideration.

In section V of the Memorandum of Decision, accompanying the order granting partial summary judgment, Judge Derman recited the undisputed facts of record and rendered legal conclusions with respect to the Estate's request to discharge Lesser's mortgages. We need not restate Judge Derman's findings, but include this brief synopsis to provide context.

On an initial $30,000 loan, Coven agreed to repay Lesser with interest of $6,000 per month. Coven remitted between $38,000 and $46,000 in monthly payments, then ceased payment. Coven executed a second mortgage note to Lesser reflecting a debt of $96,000, with interest of $197.26 per day. No evidence of Lesser's transfer of additional monies was presented.

Sometime thereafter, on November 26, 2003, decedent and Coven executed a "Demand Mortgage Note" in favor of Lesser, agreeing to repay $70,000 with ten percent interest. In addition, decedent gave Lesser $70,000 and executed the mortgages at issue. There was no evidence that decedent received any monies from Lesser at any time. Lesser suggested this was a new obligation. To the contrary, the note and mortgage along with the $70,000 payment issued by decedent all relate to the amount alleged to be owed by Coven under the initial usurious transaction.

Judge Derman determined the November 26, 2003 transaction must be analyzed with reference to the transactions between Lesser and Coven, which preceded it. She concluded the transaction with decedent was "a product of a usurious loan to [Coven]" and the "taint of usury" followed the November 26, 2003 mortgage, which was substituted for the initial usurious obligation. Berk v. Isquith Prods. Inc., 98 N.J. Eq. 608, 611 (Ch. 1925). Thus, pursuant to N.J.S.A. 2C:21-19, Lesser's claim was limited to the return of principal from the "loan" transaction, which would have been satisfied by the prior "interest" payments made by Coven.

After consideration of the arguments advanced on appeal and our review of the record and the applicable law, we find the contentions raised by defendant lack merit. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons recited by Judge Derman in her written memoranda accompanying the summary judgment order and the order denying reconsideration.


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