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City of Jersey City v. Vasquez


February 24, 2010


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1923-07.

Per curiam.


Argued: January 13, 2010

Before Judges Stern, Sabatino and J. N. Harris.

Plaintiff, City of Jersey City (the City), appeals from a judgment of the Law Division dismissing its amended complaint, and seeks to reinstate a "second repayment mortgage." The City argues (1) summary judgment was erroneously granted to defendant, Theresa Vasquez, (2) "dismissal of plaintiff's complaint due to procedural deficiencies constituted reversible error," (3) the decision of the Law Division is "contrary to important public policy," (4) it was improper to dismiss the complaint for lack of standing, (5) it was "reversible error" to dismiss the complaint for lack of joinder of an indispensable party, and (6) the dismissal on the merits also constituted "reversible error." Plaintiff requests "reinstate[ment]" of the complaint "to the trial list," presumably in the Chancery Division, as it now seeks only equitable relief.


As part of the City's federally assisted efforts to revitalize neighborhoods and provide affordable housing to its inhabitants, the City initiated the Green Villa Affordable Housing Project (the Project). The Project was substantially funded by federal aid through the Community Development Block Grant Program administered by the Jersey City Department of Housing and Economic Development.*fn1 The Project was in the area of Bergen and Orient Avenues in Jersey City and the City selected J.P. Affordable Housing Holding Co., Inc. (J.P.) as the developer. Consistent with the purpose of the Project, J.P. built two-family houses that were to be sold only to individuals of low and moderate income. In order to purchase one of these houses, the prospective buyer had to qualify as a low or moderate income purchaser.

On August 9, 1991, defendant purchased a two family home on Bergen Avenue as a qualified buyer. At the time of the purchase, she executed two mortgages as required by the Project. The lender on the first mortgage was the United Jersey Bank (UJB). The UJB first mortgage had a face value of $69,250 and a thirty-year amortization period with September 1, 2021, as the final payoff date. Defendant was to pay both the principal and the interest on this mortgage.

Defendant also executed a "second repayment mortgage," with the City as lender, in the amount of $59,000. This mortgage was subordinate to the UJB mortgage pursuant to regulations of the Council on Affordable Housing. To assure long term benefits for low and moderate income families, the terms of the "second repayment mortgage," entitled "Borrower Acknowledgments," provided that the premises had "been designated as housing which must remain affordable to low and moderate income households for ten years." Accordingly, the provision entitled "Borrower's Promises" stated that "[w]ithin the restricted period starting with the date the Borrower obtained title to the Property and continuing for a period of a minimum of ten years," defendant could not "sell or transfer title" to the premises for an amount exceeding the resale price the City had established, and that:

c) At the first non-exempt transfer of title of the Property after the ending date of the restricted period [August 9, 2001], the Borrower agrees to repay [ninety-five percent] of the incremental amount between the maximum allowable resale price and the fair market selling price which has accrued to the Property during the restricted period to the Municipality.

A provision, entitled "Rights Given To Lender," further stated that the restrictions placed on the premises were "covenants running with the land."

On March 29, 1993, the City assigned the "second repayment mortgage" to the Jersey City Development Corporation (JCDC). The assignment was executed by the Mayor of Jersey City. It is undisputed that the JCDC is an autonomous agency created by the City to administer the federal grants being used to implement the Project. The JCDC is managed by a Board of seventeen trustees who are appointed by the Mayor of Jersey City.

On June 22, 2001, the JCDC discharged Vasquez's "second repayment mortgage." The "Discharge of Mortgage" provided that "[t]his Mortgage has been PAID IN FULL or otherwise SATISFIED and DISCHARGED. It may now be discharged of record. This means that this Mortgage is now cancelled and void." The discharge was executed by JCDC's Vice President, attested to by the JCDC secretary and notarized by a New Jersey Notary Public. On June 27, 2001, the discharge was recorded by the Hudson County Register. According to the Jersey City Tax Assessor, at the time of the discharge, the premises were valued at $195,500.

Subsequently, Vasquez refinanced the premises on three occasions. The first refinancing occurred on July 24, 2001, when defendant refinanced the premises with HomeAmerica Credit, Inc. (HomeAmerica) discharging her mortgage with UJB. Defendant's mortgage to HomeAmerica had a face value of $172,000. According to the City, this mortgage was "in excess of the then fair market value of the [p]remises." The second refinancing occurred on March, 27, 2002,*fn2 when defendant discharged the HomeAmerica mortgage and refinanced the premises with HomeAmerica Credit, Inc., d/b/a Upland Mortgage (Upland). This mortgage had a face value of $180,000. The final refinancing took place on September 8, 2006, in the amount of $300,000. This mortgage was executed in favor of People's Choice Home Loan Inc. of Irvine California (People's Choice). The City maintains that it had no knowledge of the premises being refinanced on those three occasions.

In April 2007, the City initiated this suit against defendant. It filed a single count complaint in six sentences. It referred to the "Second Repayment Mortgage" and to "Mortgage Note" the latter of which is not in the record. It further alleged that "[t]he defendant was required to pay the amount of $17,955.00 in order to obtain the Discharge of Mortgage from the City of Jersey City," and sought a judgment for $17,955, counsel fees and "[s]uch other relief as the Court may deem to be equitable and just." In an amended complaint, filed on September 26, 2007, the City sought the same relief based on breach of contract, breach of implied contract, quasi contract and unjust enrichment. While seeking "other relief as the Court may deem to be equitable and just," plaintiff also sought "damages," "counsel fees and costs of suit."

Despite the reference to $17,955 as the amount "owe[d]," plaintiff's supporting documents asserted that defendant owed the City "the recapture amount of" $110,811 "in the event of a sale at this time." That amount constituted ninety-five percent of the $54,538 difference between the "Fair Market Value as [of] August 9, 2001" ($196,500), less the "Maximum Allowable Resale Price" ($141,962), or $51,811, plus the "face value of [the] mortgage," $59,000.

The papers also assert that defendant had purchased other properties in violation of the parties' contract,*fn3 and that the discharge "was executed in error by the Jersey City Development Corporation" "during the transition between former Mayors Bret Schundler and Glenn D. Cunningham." In support of plaintiff's motion for summary judgment, the Acting Director of the JCDC certified "that the JCDC erred in discharging the Second Repayment Mortgage, as the plain language of the Second Repayment Mortgage provides for a discharge only at the first non-exempt sale of the... Bergen Avenue Unit." She further asserted, without supporting facts, "that an error was made by a staff member who may have requested that a discharge be prepared in anticipation of forwarding the documents to the JCDC's then attorney causing confusion and [the] discharge of a mortgage that could not be discharged by either law or by facts."

At the argument on the City's motion for summary judgment and defendant's cross-motion to dismiss the complaint, the City emphasized that "this mortgage was not paid," the City "hasn't been paid at all," "not even a penny" of the $59,000 mortgage.

On February 3, 2009, the JCDC adopted a resolution giving the City the authority, "by way of ratification," "to prosecute, litigate, defend, settle and take all other actions" in this case through the City's Law Department. The resolution was adopted while plaintiff's motion for summary judgment and defendant's cross-motion for dismissal were pending. The court endorsed the order of dismissal to the effect that it "found JC lacked standing to make this complaint."*fn4 Plaintiff's motions for summary judgment and transfer to the Chancery Division were denied.


While the order of dismissal referred only to the issue of standing, the motion judge's oral opinion emphasized that plaintiff offered no evidence of what led to the discharge nor evidence of a "mutual mistake,"*fn5 that its case was "speculative," and that "this mortgage was legally discharged of record and the defendant properly relied upon this discharge of mortgage." It found plaintiff's certifications regarding a "mistake" and "error" to have been executed by people who were not associated with the City or JCDC at the time of discharge, and had no probative value. As to standing, the judge found the JCDC to be an "autonomous body."

The parties suggest the judge also dismissed the complaint because the first mortgagee, as an indispensable party, was not joined in the proceedings. That is based only on the judge's statement:

As to the reason for not joining People's Choice, that was the plaintiff's decision. The Court agrees with the defense that this action has -- this action [a]ffects this [other] mortgagee.

To the extent the judge may have concluded the failure to join an indispensable party justified dismissal, we disagree. If plaintiff was seeking money damages, a recovery could not affect the first mortgagee's priority. Moreover, when plaintiff argued that the matter should be transferred to the Chancery Division and that it was entitled to equitable relief, it emphasized it was only endeavoring to reinstate its second mortgage. The City was "looking" to "subordinate its $59,000 mortgage," and was "not looking to go in first place in front of her [first] mortgage" and wanted to bring the house "back into the stream of affordability for somebody who needs it" once defendant sells the house.

However, we agree with the motion judge's conclusion that the City had no standing to bring the action. It appears to have had no interest in the mortgage when the action was commenced. "The real party in interest rule is ordinarily determinative of standing to prosecute an action." Pressler, Current N.J. Court Rules, comment R. 4:26-1 (2010). Moreover, "standing has been held to be an element of justiciability, neither subject to waiver nor conferrable by consent." Ibid. See also, e.g., In Re Baby T, 160 N.J. 322, 340 (1999). The resolution "authorizing the City of Jersey City to represent the [JCDC]" did not reassign the mortgage or give any interest therein to the City. Accordingly, the judge properly dismissed the complaint based on the standing defect which was apparent from the face of the complaint.

The record leaves us with no understanding of why the mortgage was discharged. Defendant does not express any facts, relevant to that issue, and need not do so in light of the dismissal.*fn6 However, those facts may well corroborate what the City asserts as political favoritism or other impropriety. Under the circumstances, there may be an equitable basis for recission of the discharge. Accordingly, we do not preclude a new action by the JCDC subject to all equitable and legal defenses and preclusions which the defendant may raise.

Affirmed, as modified.

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