January 15, 2009
R.C. SEARCH CO., INC., PLAINTIFF-APPELLANT,
WILLIAM J. TORRE, ESQ., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5761-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 12, 2008
Before Judges Winkelstein and Gilroy.
Plaintiff R.C. Search Co., Inc., appeals from the September 12, 2007 order dismissing its complaint against defendant William J. Torre, Esq., and from the October 29, 2007 order denying its motion for reconsideration. We affirm.
I. Plaintiff is a licensed title insurance agency of New Jersey. The company is owned and operated by Richard Cecere, Sr. (Cecere, Sr.). From 1994 through March 2006, plaintiff employed Richard Cecere, Jr. (Cecere, Jr.), a licensed insurance producer. Defendant is an attorney who represents parties in real estate transactions, including the buying and selling of properties, and mortgage refinancing. From 1994 through March 2006, defendant placed orders with plaintiff through Cecere, Jr., for title searches and commitments for title insurance.
On August 3, 2006, plaintiff filed a complaint against defendant, demanding payment on an open book account for services rendered at defendant's request. On September 6, 2007, the matter was tried to the court without a jury. At the conclusion of the trial, the court rendered an oral decision dismissing plaintiff's complaint, determining that plaintiff "failed to prove by a preponderance of the evidence that any money is due and owing from the defendant." A confirming order was entered on September 12, 2007. On October 29, 2007, the court denied plaintiff's motion for reconsideration.
The only witnesses who testified were Sharlene Walker, plaintiff's Accounts Receivable Manager, and defendant. Walker testified that in November 2005, she made a demand on defendant for payment of the outstanding balance on defendant's running book account for title searches and commitments for title insurance. The accounts receivable totaled $31,268 and covered the period of May 1, 2001 to June 7, 2005. One of the invoices, No. 609763, dated April 12, 2004, in the amount of $4,674, was for a commitment for title insurance, together with its concomitant title search and examination, that defendant requested in relation to the purchase of his home.
According to Walker, plaintiff issued its invoices to defendant at the time it delivered its commitments for title insurance and title searches. Plaintiff would not issue a title insurance policy until the title insurance premium part of the invoice was paid. When title did not close, plaintiff did not seek payment of the title insurance premium; however, plaintiff did expect payment on its title search and examination fees (hereinafter collectively referred to as search fees), including any out-of-pocket expenses. Some of the invoices contained in the accounts receivable list attached to the complaint included premiums for title insurance and title search fees.*fn1 At or before trial, Walker learned that several of those transactions had not closed title. Based on that information, plaintiff, in accordance with its past business practices, reduced the amounts of those invoices by deleting only the amount of the title insurance premiums, not the amounts for the title searches and out-of-pocket expenses.
Walker also acknowledged that plaintiff received payments from defendant against some of the invoices contained in the accounts receivable list between the dates the complaint was filed and the start of trial. Plaintiff credited those payments against defendant's account; and based on those adjustments, plaintiff reduced its demand to $9,174.
As to the invoice pertaining to defendant's own residential closing, Walker conceded that she was unaware whether plaintiff issued a title insurance policy to either defendant or his mortgagee. However, she stated that prior to that closing, plaintiff did issue a closing protection letter in favor of defendant's mortgagee, naming defendant as the closing attorney. Lastly, Walker conceded that she was unaware of any agreement between Cecere, Jr., and defendant wherein plaintiff had agreed to forego its search fees and out-of-pocket expenses when title failed to close.
Defendant testified that from 1994 through March 2006, he developed a close business relationship with Cecere, Jr. During that time, defendant and Cecere, Jr., acknowledged between themselves that they were subject to losses when defendant's clients failed to close title on transactions after plaintiff performed title searches and issued commitments for title insurance. Accordingly, the two agreed that, if defendant ordered either a title search without a commitment for title insurance or a commitment for title insurance that included a title search, and the transaction did not close, defendant would forego a legal fee for his services, and plaintiff would forego its fee for the title searches and out-of-pocket expenses. Pursuant to this agreement, from 1994 through November 2005, plaintiff never charged defendant for its search fees or expenses when defendant's clients failed to close title; nor did defendant charge his clients for his services or for the services performed by plaintiff.
As to his personal real estate transaction, defendant acknowledged that he did not pay a title search fee or a title insurance premium. However, he stated that he did not do so on the advice of Cecere, Jr., who advised him that the invoice was marked "POC" (paid outside of closing), on the title closing statement, "because of the courtesies and relationship with the company for over a ten year period." As to the closing, defendant stated that he did not close the title himself, but rather, title was closed by his brother, also an attorney. Lastly, defendant is unaware of plaintiff issuing a title insurance policy after closing of title to either him or his mortgagee.
At the conclusion of the trial, the court dismissed the complaint, determining that plaintiff failed to prove any monies were owed on defendant's account. In rendering its decision, the trial court reduced plaintiff's claims to three categories. First, the court addressed plaintiff's claim for the balance allegedly owed on a title insurance premium in the amount of $1,040.33 on Invoice No. 610947.*fn2 The court accepted defendant's testimony that his client purchased the property without financing and did not want to insure the property for the full purchase price amount. Accordingly, defendant's client only paid defendant $1,649.67 for a reduced amount of title insurance, and defendant forwarded that sum to plaintiff with a request for a lesser amount of title insurance than what was originally ordered. The court concluded that plaintiff accepted defendant's payment on that basis, and that the act of depositing defendant's check constituted an accord and satisfaction.
Next, the court addressed plaintiff's claim for $4,674 on Invoice No. 609763. That invoice represented monies owed for a title insurance premium, together with its related title search fee and out-of-pocket expenses, after plaintiff issued defendant a commitment for title insurance in relation to defendant's personal real estate transaction. The court determined that nothing was owed on that invoice because plaintiff failed to prove it had issued a title insurance policy to defendant or his mortgagee. The court concluded that the prohibitions contained in N.J.S.A. 17:46B-35a and b were not applicable because the title insurance policy was not issued, and as such, "no fee was incurred and no service was rendered to the defendant."
Lastly, as to the balance of the invoices for search fees and out-of-pocket expenses, the court determined that nothing was owed on those invoices, plaintiff having waived the charges pursuant to the agreement between Cecere, Jr., and defendant. On these remaining invoices, the court found "that they were in effect like loss leaders. They were--in order to help a client, and very often clients come to attorneys that hope to buy a property but deals fall through, that as such they could eat that charge." The court concluded that plaintiff's waiver of title search fees was not prohibited by N.J.S.A. 17:46B-35.
On appeal, plaintiff argues:
IT WAS PLAIN ERROR FOR THE TRIAL COURT TO FIND THAT APPELLANT WAS BOUND BY ITS AGENT'S ALLEGED WAIVER OF SEARCH FEES AND "COMPING" OF RESPONDENT'S OWN SEARCH FEES AND TITLE INSURANCE PREMIUMS, SINCE BOTH ARE ILLEGAL.
IN FINDING THAT RESPONDENT DID NOT OWE A PREMIUM FOR TITLE INSURANCE ON HIS OWN RESIDENCE BECAUSE A POLICY HAD NEVER BEEN ISSUED, THE TRIAL COURT COMMITTED PLAIN, REVERSIBLE ERROR.
A judgment in a non-jury case shall not be overturned except where, after a careful review of the record and weighing of the evidence, the appellate court determines that "'continued viability of the judgment would constitute a manifest denial of justice.'" In re Adoption of a Child by P.F.R., 308 N.J. Super. 250, 255 (App. Div. 1998) (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 597-98 (1977)). We will not disturb the factual findings and legal conclusions of a trial court unless they are "so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). Consequently, "the appellate court should exercise its original fact finding jurisdiction sparingly and in none but a clear case where there is no doubt about the matter." Ibid. "'That the case may be a close one or that the trial court decided all evidence or inference conflicts in favor of one side has no special effect.'" Czoch v. Freeman, 317 N.J. Super. 273, 283 (App. Div.) (quoting State v. Johnson, 42 N.J. 146, 162 (1964)), certif. denied, 161 N.J. 149 (1999)).
The rationale underlying this limited scope of appellate review is that "a trial judge's findings are substantially influenced by his or her opportunity to hear and see the witnesses and to get a'feel' for the case that the reviewing court [cannot] enjoy." Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 132 (1997). For this reason, credibility determinations are entitled to particular deference, because the trial judge has a superior perspective "in evaluating the veracity of witnesses." Id. at 132-33. However, the same level of deference is not required when we are reviewing a legal conclusion. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). It is against these principles that we consider plaintiff's arguments.
The trial court's factual and credibility findings are sufficiently supported by the record. Rova Farms Resort, Inc., supra, 65 N.J. at 484. We agree with the court's determination that there is nothing inconsistent between Walker's and defendant's testimony. Although defendant testified as to an agreement by plaintiff to forego search fees and out-of-pocket expenses when title failed to close, Walker did not deny the existence of that agreement; she only stated that she was unaware of the agreement. Accordingly, we discern no valid reason to interfere with the trial court's conclusion that no monies were due and owing on Invoice No. 610947, the court having determined plaintiff accepted defendant's check as full payment for the reduced amount of title insurance purchased by defendant's client.
We also agree with the trial court's determination that no monies were owed on the remaining invoices. However, we disagree with the judge's blanket determination that N.J.S.A. 17:46B-35 does not prohibit a title insurance agency from waiving title search fees and out-of-pocket expenses. We conclude that it does when those fees are incurred in furtherance of the agency issuing a commitment for title insurance. Nevertheless, we determine the error is harmless. Appeals are taken from judgments, not from oral opinions. Glaser v. Downes, 126 N.J. Super. 10, 16 (App. Div. 1973), certif. denied, 64 N.J. 513 (1974). An order of judgment will be affirmed on appeal if it is correct, even though the judge gave the wrong reasons for it. Isko v. Planning Bd. of Livingston Twp., 51 N.J. 162, 175 (1968), abrogated on other grounds, Commercial Realty & Resources Corp. v. First Atl. Properties Co., 122 N.J. 546 (1991).
Plaintiff argues that the "comping" of title insurance premiums and waiver of search fees are prohibited by N.J.S.A. 17:46B-35a and b. Plaintiff contends that because both acts violate the statute, any agreement by Cecere, Jr., to waive the search fees and premiums was void as against public policy and should not have been enforced by the trial court in denying its claim for monies owed on the book account. We address plaintiff's arguments by examining the legislative act of which N.J.S.A. 17:46B-35 is a part.
The Title Insurance Act of 1974 (Act), N.J.S.A. 17:46B-1 to-62, "represents the first comprehensive regulation of title insurance companies doing business in this State and which requires, among other things, that rates charged by such insurers comport with filed rate schedules which have been first approved by the Commissioner of [the Department of Banking and Insurance (Commissioner)]." N.J. Land Title Ins. Rating Bur. v. Sheeran, 151 N.J. Super. 45, 48 (App. Div. 1977). The Act prohibits a title insurance company or title insurance agency (hereinafter, collectively, referred to as the "title insurance agency") from allowing, giving, or offering to pay, whether directly or indirectly, "any commission or part of its fee or charge or any other consideration as an inducement or compensation for the placing or procuring of any order for title insurance." N.J.S.A. 17:46B-34.
The Act also prohibits a title insurance agency from charging any fee for any policy or contract for title insurance "except in accordance with filings or rates" approved by the Commissioner. N.J.S.A. 17:46B-42d. Accordingly, title insurance agencies are prohibited from giving rebates of title insurance premiums or from charging fees in amounts less than contained in the approved schedule of fees and charges. N.J.S.A. 17:46B-35a and b. If a title insurance agency violates N.J.S.A. 17:46B-34 or-35, it is subject to a "penalty not exceeding five times the amount of such commission, or unlawful rebate, discount... or any special favor or advantage or valuable consideration or inducement whatever in addition to any other penalty imposed by law." N.J.S.A. 17:46B-37.
N.J.S.A. 17:46B-35 provides in part:
a. No title insurance company and no title insurance agent shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to insure, or after insurance has been affected, any rebate, discount, abatement, credit or reduction of premium or special favor, advantage, or other benefit to accrue thereon or any valuable consideration or inducement whatever, not specified or provided for in the policy, except to the extent provided for in an applicable filing with the [C]commissioner as provided by this act.
b. No title insurance company and no title insurance agent shall quote any fee or make any charge to any person which is less than that currently available to others in a like amount and involving the same factors as set forth in the schedule of fees and charges established pursuant to section 41 of this act,*fn3 or otherwise make or permit any unfair discrimination in the premium or rates charged for insurance or in other fees and charges or in other benefits, or in any other of the terms and conditions of the insurance policy, except to the extent provided for in an applicable filing with the commissioner as provided by this act. The amount by which any fee or charge is less than that prescribed by the schedule of fees and charges established pursuant to section 41 of this act is an unlawful rebate.
The principles governing construction of statutes are well established. A court's goal in interpreting a statute "is always to determine the Legislature's intent." D'Annunzio v. Prudential Ins. Co., 192 N.J. 110, 119 (2007). "[G]enerally, the best indicator of that intent is the statutory language." DiProspero v. Penn, 183 N.J. 477, 492 (2005). "A clear and unambiguous statute is not open to construction or interpretation, and to do so in a case where not required is to do violence to the doctrine of the separation of powers." Watt v. Mayor & Council of Franklin, 21 N.J. 274, 277 (1956). Thus, when a statute "is clear in its meaning... [,] no one need look beyond the literal dictates of the words and phrases used for the true intent and purpose of its creation." Ibid. However, "[w]hen the plain language of a statute is susceptible to multiple interpretations,... then recognized principles of statutory construction allow resort to extrinsic tools to determine the Legislature's likely intent." D'Annunzio, supra, 192 N.J. at 120.
Applying these principles, we first address plaintiff's argument that the trial court erred in dismissing its claim for monies owed on Invoice No. 609763, pertaining to defendant's personal residential closing. Plaintiff contends that N.J.S.A. 17:46B-35a prohibits the comping of title insurance premiums.
We agree. That statute prohibits a title insurance company from giving a rebate, an abatement, or reduction of a title insurance premium when provided by the title insurance agency as "an inducement to insure." N.J.S.A. 17:46B-35a. However, we find the statute not applicable to plaintiff's claim for a title insurance premium on the invoice for defendant's own real estate transaction.
Walker testified that plaintiff never issues a title insurance policy until the premium is paid. In accord with that practice, plaintiff, through Walker, reduced the amount claimed on various invoices where plaintiff did not issue title insurance policies by deducting the amount of the title insurance premium, not the amount for the title search or outof-pocket expenses. We determine that the same principle is applicable to defendant's personal real estate transaction because, as determined by the trial court, plaintiff failed to prove that it issued a title insurance policy to defendant or his mortgagee.
We next address plaintiff's argument that a title insurance agency is prohibited from granting a waiver of a title search fee and related out-of-pocket expenses, no matter the reason for the title search. We disagree.
Title insurance agencies are required to file a schedule of its fees and charges with the Department of Banking and Insurance, pursuant to N.J.S.A. 17:46B-42. That schedule governs the amount that a title insurance agency is required to charge for title searches it conducts for the purpose of issuing a title insurance "policy or contract of title insurance." N.J.S.A. 17:46B-42d. Accordingly, we conclude that N.J.S.A. 17:46B-35b only prohibits a title insurance agency from waiving or reducing its search fees and out-of-pocket expenses when that waiver results in a charge less than those contained in the stated schedule, and the search was conducted in anticipation of issuing a commitment for title insurance or policy. That statute does not prohibit a title insurance agency from waiving or reducing its title search fees and out-of-pocket expenses when those fees and expenses are not incurred in furtherance of issuing a commitment for title insurance.
For example, an attorney may request a title insurance agency to conduct a title search on a debtor's property for the sole purpose of executing on a judgment. That the title insurance agency charges a lesser fee than that contained in the schedule filed with the Department, or even waives the fee and expense altogether, is not prohibited by the Act. It is a business decision that the title insurance agency is free to determine. N.J.S.A. 17:46B-41 ("Nothing herein is intended to prohibit or discourage reasonable competition, or to require, prohibit or discourage, except to the extent necessary to accomplish the purposes stated above, uniformity in title insurance rates, rating systems and rating plans and practices.").
Here, some of the invoices contained in the accounts receivable list were for title searches and out-of-pocket expenses that plaintiff incurred on defendant's request in contemplation of issuing a commitment for title insurance, and some were not. As to the latter category, plaintiff was not prohibited from waiving those charges. Thus, the trial court correctly determined that nothing was owed on those invoices. As to the invoices for monies owed for title searches and outof-pocket expenses incurred in contemplation of issuing a commitment for title insurance, plaintiff could not legally waive those charges when the underlying real estate transaction failed to close. N.J.S.A. 17:46B-35b. Generally, we would remand this matter to the trial court to determine the balance owed on those invoices and enter judgment in favor of plaintiff accordingly. However, that is not the end of our analysis.
Plaintiff, through Cecere, Jr., agreed to waive all title insurance charges and out-of-pocket expenses when the underlying real estate transaction failed to close. Plaintiff argues that denying it the right to recover title search fees and out-of-pocket expenses equates to the court's enforcement of an illegal agreement. Under the present facts, we disagree.
As previously stated, the parties' agreement that plaintiff would waive its title search fees and out-of-pocket expenses on real estate transactions where defendant requested a commitment for title insurance and the underlying real estate transaction failed to close, is in contravention of N.J.S.A. 17:46B-35b. As such, because the agreement runs in contravention of the statute, enforcement of the illegal agreement would violate the public policy of the State. Vasquez v. Glassboro Serv. Ass'n., Inc., 83 N.J. 86, 98 (1980).
However, an exception to the right of a party to rescind an illegal agreement is the doctrine of in pari delicto. That doctrine refers to "[t]he principle that a plaintiff who has participated in wrongdoing may not recover damages resulting from the wrongdoing." Black's Law Dictionary, 806 (Deluxe 8th ed. 2004). Under that doctrine, where both parties equally participated in an illegal contract, courts will not assist either party. See Marx v. Jaffe, 92 N.J. Super. 143, 146 (App. Div.) (quoting Cameron v. Int'l Alliance of Theatrical Stage Empl., Local 384, 118 N.J. Eq. 11, 20 (E. & A. 1935)) ("'[T]he law will not assist either party to an illegal contract. The parties being in pari delicto, it will leave them where it finds them. If the contract be still executory, it will not enforce it, and if already executed, it will not restore the status quo ante.'"), certif. denied, 48 N.J. 140 (1966).
Here, as determined by the trial court, plaintiff was an active, voluntary participant in the unlawful activity, that is, the forming of the agreement which plaintiff now seeks to void and to recover title search fees and out-of-pocket expenses it previously agreed to waive. Because of plaintiff's participation in the agreement, we conclude that the court should not assist plaintiff in recovery of those charges. This is particularly so where defendant, relying on plaintiff's representation, did not require his clients to pay those charges or to pay a legal fee. Plaintiff, now through Cecere, Sr., seeks to compel payment of those charges knowing that defendant has not received payment from his clients. To permit plaintiff to recover those charges against defendant under those facts would be unjust.