February 10, 2009
ANGELO MALLOZZI, PLAINTIFF-APPELLANT,
FILOMENA CERCIELLO AND NADIV BITON, DEFENDANTS, AND VINCENT J. CERCIELLO, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-47-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 13, 2009
Before Judges Parker, Yannotti and LeWinn.
Plaintiff Angelo Mallozzi appeals from an order entered by Judge John F. Malone on November 16, 2007, which granted summary judgment in favor of defendants Filomena Cerciello and Vincent J. Cerciello (the Cerciellos), discharged a notice of lis pendens that had been filed against the real property that is the subject of this lawsuit, and awarded defendants $6,500 on their counterclaim along with costs of suit.*fn1 Plaintiff also appeals from an order entered on January 4, 2008, which denied his motion for reconsideration. For the reasons that follow, we affirm.
The following facts are relevant to our decision. On December 17, 2002, plaintiff purchased from the Cerciellos certain real property on Spring Street in Elizabeth, New Jersey. The property is described on the City's tax map as Block 8, Lots 1570.W08 and 1572.W08. The purchase price for the property was $425,000.
Plaintiff paid the Cerciellos $100,000 in cash and provided defendants with a note in the amount of $325,000 plus interest. The note provided, among other things, that plaintiff would pay twenty-four monthly installments of interest only, with the principal of $325,000 due on January 17, 2005. Plaintiff granted the Cerciellos a purchase money mortgage to secure payment of the note. In addition, plaintiff executed a deed that conveyed title of the property back to the Cerciellos. The parties agreed that the deed would be held in escrow and filed in the event plaintiff defaulted on his obligations under the note and mortgage.
Plaintiff thereafter failed to pay certain interest payments due under the note and, by letter dated August 7, 2006, the Cerciellos' attorney, Howard L. Egenberg (Egenberg), notified plaintiff that he was in "serious default under the terms of the mortgage note and mortgage[.]" Egenberg advised plaintiff that, unless the past-due payments were brought current, the deed transferring title to the Cerciellos would be filed and plaintiff's ownership of the property terminated.
On September 11, 2006, the parties entered into a mortgage extension agreement, under which plaintiff agreed to pay by October 30, 2006, all interest payments then due and owing under the aforementioned note and mortgage. The agreement extended all of the terms and conditions of the note and mortgage to February 28, 2007. The agreement provided that, in the event plaintiff defaulted on his obligations, the Cerciellos could file the deed in lieu of foreclosure transferring title to the property to the Cerciellos.
Plaintiff thereafter failed to make the payments required under the note and mortgage. On November 28, 2006, Egenberg again informed plaintiff that he was in default because he had not made the required payments and failed to pay real estate taxes on the property. In his letter, Egenberg stated that, unless plaintiff made all of the payments due under the note within thirty days, the deed in lieu of foreclosure transferring title to the Cerciellos would be recorded and plaintiff's ownership interest in the subject property terminated. Because plaintiff failed to pay the amounts due within thirty days, the Cerciellos filed the deed with the county clerk and it was recorded on January 9, 2007.
Plaintiff subsequently informed the Cerciellos that he was interested in re-acquiring title to the property. In January 2007, the Cerciellos provided plaintiff with a summary of the amounts due and owing under the note and mortgage through December 16, 2007, which totaled $28,166.59. Plaintiff tendered to the Cerciellos a check in that amount. Plaintiff said that this payment was "an act of good faith" to prevent a sale of the property to a third party. The Cerciellos accepted the payment.
The parties' attorneys negotiated the terms of a contract for the sale of the property to plaintiff. On February 5, 2007, Egenberg wrote to plaintiff's attorney, Fred S. Dubowsky (Dubowsky), and proposed that plaintiff re-purchase the property at a price of $325,000. Egenberg wrote, "[The] closing must occur within [ninety] days and a 10% deposit is required within [ten] days." Egenberg said that plaintiff or Dubowsky must provide written confirmation that they agreed to the proposed terms, along with the deposit. Dubowsky responded in a letter dated February 13, 2007, and tendered a deposit in the amount of $32,500, but stated that plaintiff would have six months to close on the transaction.
Egenberg replied in a letter dated February 20, 2007, in which he set forth certain additional terms, including a requirement that plaintiff name the Cerciellos as additional insureds on plaintiff's then-current property liability policy. Egenberg stated that, in order for any contract to be effective, plaintiff had to provide proof of such insurance coverage, in the form of an endorsement, no later than 12:00 noon on Friday, February 23, 2007. Egenberg wrote, "In order for this transaction to advance and go forward the insurance endorsement is mandatory. If I don't receive same I will return the deposit to your office as of Friday afternoon. This is not an issue for negotiation."
Plaintiff failed to provide proof of the required insurance coverage within the time prescribed and, by letter dated February 23, 2007, Egenberg advised Dubowsky that the attempts to enter into the agreement were "cancelled." The Cerciellos thereafter entered into a contract to sell the property to Nadiv Biton (Biton).
On March 7, 2007, plaintiff filed this action seeking an order re-titling the property in his name, damages for the alleged breach of the mortgage agreement, compensatory and punitive damages, attorney's fees, and costs of suit. On the same date, plaintiff filed a notice of lis pendens with the county clerk. On August 22, 2007, plaintiff filed an amended complaint in which he named Biton as a defendant. The Cerciellos thereafter filed an answer and asserted a counterclaim seeking an order requiring plaintiff to pay real estate taxes due on the property. The Cerciellos also sought compensation for what they alleged was plaintiff's intentional and malicious damage to the property.
On October 15, 2007, the Cerciellos filed a motion for summary judgment on plaintiff's claims, discharge of the notice of lis pendens, and summary judgment on their counterclaim. Judge Malone considered the motion on November 16, 2007, and entered an order on that date granting summary judgment in favor of the Cerciellos on plaintiff's claims, dismissing plaintiff's complaint in its entirety, and ordering the county clerk to discharge the notice of lis pendens. The court also granted summary judgment in favor of the Cerciellos on their counterclaim. The court awarded the Cerciellos $6,500 as well as costs of the suit. Plaintiff thereafter filed a motion for reconsideration, which was denied by order entered on January 4, 2008. This appeal followed.
When reviewing an order granting summary judgment, we apply the same standards that are applied by the trial court when ruling on a motion seeking that relief. Liberty Surplus Ins. Corp., Inc. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Stoffels v. Harmony Hill Farm, 389 N.J. Super. 207, 209 (App. Div. 2006). Summary judgment may be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Notwithstanding plaintiff's arguments to the contrary, we are convinced that Judge Malone correctly determined that there were no genuine issues of material fact and the Cerciellos were entitled to judgment on plaintiff's claims and their counterclaim.
Plaintiff first argues that he executed a deed, not a deed in lieu of foreclosure. He contends that he executed that deed contemporaneously with the note and mortgage and the deed could not thereafter be recorded to divest him of title when he defaulted. Plaintiff therefore maintains that the court erred as a matter of law by finding that the deed had been validly filed and plaintiff no longer has an interest in the subject property. We disagree.
Here, the record makes clear that plaintiff executed a deed in lieu of foreclosure. It is undisputed that, after plaintiff defaulted on the note and mortgage, the parties entered into the mortgage extension agreement, which states in pertinent part that the parties "specifically understood and agreed that default in any of the terms of the mortgage note, mortgage or this agreement on the part of [plaintiff] shall allow [defendants] the right to file a [d]eed in lieu of foreclosure." By executing the mortgage extension agreement, plaintiff expressly acknowledged that the deed he executed was, in fact, a deed in lieu of foreclosure. Thus, there is no merit in plaintiff's assertion that he executed a deed rather than a deed in lieu of foreclosure.
There also is no merit to plaintiff's argument that the deed in lieu of foreclosure was void and could not confer title upon the Cerciellos. In support of this contention, plaintiff relies upon the general principle that, "[a] mortgagor may not deprive himself of a right to redeem even by an express agreement for that purpose if such agreement is a part of, or made contemporaneously with, the conveyance." Smith v. Shattls, 66 N.J. Super. 430, 436 (App. Div. 1961) (citing Dorman v. Fisher, 31 N.J. 13, 15 (1959); Griffen v. Cooper, 73 N.J. Eq. 465, 466 (Ch. 1907)). However, it is well established that "a mortgagor may at any time after the execution of the mortgage, by a separate and distinct transaction, sell or release his equity of redemption to the mortgagee." Id. at 437 (citing 4 Pomeroy's Equity Jurisprudence (5th ed. 1941), § 1193, pp. 568-69).
In this matter, the record shows that plaintiff executed the deed at the time of the initial conveyance of the property in December 2002; but the deed was not filed pursuant to the terms of the mortgage and note executed at the time of the initial conveyance. Rather, the deed was filed pursuant to the terms of the mortgage extension agreement, which was executed in September 2006 after plaintiff defaulted on the initial note and mortgage and the Cerciellos agreed to afford plaintiff an opportunity to cure that default and to modify and extend the terms of the initial agreement. The trial court correctly found that, even if the Cerciellos could not file the deed after plaintiff's default under the note and mortgage executed in December 2002, they could do so after plaintiff defaulted on the terms of the extension agreement because that agreement was "separate and distinct" from the initial conveyance.
Plaintiff also argues that title to the property did not pass to the Cerciellos upon the recording of the deed in lieu of foreclosure because the Cerciellos had refused to discharge the mortgage and cancel the note. Again, we disagree. As the trial court correctly determined, when the deed was recorded, the mortgage was extinguished by operation of law. Furthermore, the note states that it would be cancelled when the deed was recorded. The trial court correctly viewed the cancellation of the note as a ministerial act and the deed was not void simply because that act, had not been performed.
In addition, plaintiff contends that the trial court erred because the parties had allegedly entered into a new agreement that should be considered a novation that extinguishes all prior agreements between the parties. However, "a contract does not come into being unless there [is] a manifestation of mutual assent by the parties to the same terms[.]" Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 538 (1953). Such mutual assent may be demonstrated through words or conduct that unequivocally shows assent to an offer according to its terms. Ibid. There must be a "meeting of the minds" as to the terms of the contract "or there is no legally enforceable obligation." Ibid.
The correspondence between the attorneys for the parties in February 2007, which we have discussed previously, indicates that there was no "meeting of the minds" on a contract for plaintiff to re-purchase the property after the deed in lieu of foreclosure was filed. Indeed, Egenberg's letter of February 20, 2007 made clear that the agreement could not go forward unless plaintiff provided by 12:00 noon on February 23, 2007 the endorsement indicating that the Cerciellos were covered under plaintiff's property liability insurance policy. Plaintiff did not provide the endorsement by that deadline.
Plaintiff raises several additional arguments. He contends that summary judgment should not have been granted because the deed in lieu of foreclosure was contemporaneous with the execution of the mortgage extension agreement; the court failed to strictly scrutinize the extension agreement to ensure that it was fair and unconnected with the original contract; the court ignored certain alleged misrepresentations made by Egenberg regarding the filing of the deed; the court did not explore certain evidence which purportedly established that the Cerciellos had agreed to allow plaintiff to re-purchase the property; and the court did not consider whether the extension agreement was a contract of adhesion. In our judgment, these contentions are without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).
We note additionally that plaintiff does not challenge the trial court's award of $6,500 to the Cerciellos on their counterclaim for the damage that plaintiff caused to the property. Indeed, the record shows that plaintiff did not oppose the Cerciellos' motion for summary judgment on their counterclaim and never argued that he was not liable for the $6,500 claimed by the Cerciellos.