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Poray v. Altimate Discount Mortgage


September 1, 2010


On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1443-06.

Per curiam.


Submitted August 17, 2010

Before Judges Sabatino and Ashrafi.

Plaintiff appeals from an order of August 13, 2009, granting summary judgment to defendants and dismissing plaintiff's complaint with prejudice. We affirm.

In reviewing a grant of summary judgment, an appellate court applies the same standard under Rule 4:46-2(c) that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), cert. denied, 154 N.J. 608 (1998). We "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In this case, we view the facts most favorably to plaintiff, the party that opposed summary judgment.

In April 2004, plaintiff Kenneth Poray entered into a contract to purchase an ocean-front home in Point Pleasant Beach for $2,900,000. He engaged the mortgage brokerage services of defendant Scott Olinger and his company, Altimate Discount Mortgage, to obtain loans for seventy-five percent of the purchase price. Plaintiff requested an interest-only loan, and Olinger told him that such a "product" was available on the mortgage market. At the low adjustable interest rate sought by plaintiff, he expected his initial monthly payment to be approximately $3,534 on loans totaling $2,175,000.

According to plaintiff, Olinger assisted him in completing a mortgage application. Olinger allegedly told plaintiff that for the seventy-five percent loan-to-value and the dollar amount that he was seeking, plaintiff would have to show $33,000 per month income on the application. According to plaintiff's deposition testimony, he did not have that much income, but Olinger insisted on placing that amount on the application.

Several deadlines passed for plaintiff's exercise of the mortgage contingency option of the contract, but plaintiff still did not have approval for a mortgage loan. Plaintiff was compelled to pay additional amounts of non-refundable deposit money to the seller of the home so that his time to close on the contract would be extended. By August 2004, plaintiff was faced with a time-of-the-essence closing date. On September 16, 2004, he finally received approval for two mortgage loans from defendant Countrywide Home Loans.*fn1 The terms, however, were not for interest-only payments but rather provided options requiring payment of principal. The initial monthly payments were to be $7,205.

Plaintiff reluctantly accepted the mortgage loans and closed on the purchase on September 17, 2004. He was represented at the closing by an attorney, and he signed all the papers disclosing the nature and terms of the loans. Plaintiff asserted that he signed the mortgage documents only because he would have lost his deposit of $430,000 on the contract if he did not accept the loans.

After the closing, plaintiff made only one monthly payment to Countrywide. He then negotiated with Countrywide to forbear on collection of the monthly payments while he sought refinancing. He obtained refinancing in May 2005 and paid off the Countrywide loans.

Plaintiff then filed suit against Countrywide and Altimate, and the principals of each with whom he had dealt, alleging violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, as well as several other State and federal statutory causes of action. He alleged that he had suffered losses of more than $540,000, which would amount to a claim of more than $1,600,000 in damages when trebled under the Consumer Fraud Act. See N.J.S.A. 56:8-19.

In September 2007, Countrywide moved successfully for dismissal of plaintiff's claims based on alleged statutory and regulatory violations other than misrepresentation under the Consumer Fraud Act. In March 2009, Countrywide and its agent obtained summary judgment dismissing all of plaintiff's remaining claims against them. Plaintiff did not appeal those rulings.

Altimate and Olinger then moved for summary judgment on the ground that plaintiff himself had engaged in fraud by falsely representing that he had a substantially higher income than he did, and therefore, he could not recover from defendants on allegations of their fraud. Defendants cited the deposition testimony of plaintiff, in which he admitted that his monthly income in 2004 was not $33,000 but substantially less. Defendants alleged that, without the knowing misrepresentation of his income, plaintiff would not have obtained the mortgage loans that he claims were fraudulently negotiated by defendants, and he would not have suffered his alleged losses.

In opposition to the motion for summary judgment, plaintiff submitted his certification stating that his income was in fact approximately $33,000 per month in April 2004.

The trial court concluded that plaintiff's certification was "a sham affidavit" because it directly contradicted his deposition testimony. Citing Shelcusky v. Garjulio, 172 N.J. 185 (2002), the court disregarded plaintiff's certification and granted summary judgment to defendants dismissing plaintiff's complaint with prejudice.

On appeal, plaintiff argues that the trial court erred because he adequately explained the inconsistency between his deposition testimony and his certification in opposition to summary judgment, and because the truth or falsity of his claim of $33,000 monthly income was a disputed issue of fact for a jury to determine.

In Shelcusky, supra, 172 N.J. at 193-94, the Court explained "the sham affidavit doctrine" as the judicial "practice of disregarding an offsetting affidavit that is submitted in opposition to a motion for summary judgment when the affidavit contradicts the affiant's prior deposition testimony." In the "summary judgment setting," the Court recognized "the tension between allowing parties the opportunity to 'fully expose [their] case' and protecting potential defendants from meritless claims." Id. at 199-200 (quoting Brill, supra, 142 N.J. at 541-42). The Court said: "The very object of the summary judgment procedure then is to separate real issues from issues upon which there is no serious dispute.

Sham facts should not subject a defendant to the burden of a trial." Id. at 200-01. The Court also said:

Courts should not reject alleged sham affidavits where the contradiction is reasonably explained, where an affidavit does not contradict patently and sharply the earlier deposition testimony, or where confusion or lack of clarity existed at the time of the deposition questioning and the affidavit reasonably clarifies the affiant's earlier statement.

Id. at 201-02.

In this case, defendants argued that plaintiff's deposition testimony eliminated any issue of fact regarding plaintiff's knowledge that the representation of his monthly income on the mortgage application was false. Having defrauded Countrywide into making the loans by overstating his income, plaintiff could not claim that he had suffered damages because the loans were not offered on as favorable terms as he had hoped to obtain through his fraud.

To address these contentions, plaintiff changed his position regarding the nature of the fraud allegedly committed by defendants. In his deposition, plaintiff had alleged that his income was not $33,000 and Olinger fraudulently inserted that amount in the application. In his certification in opposition to summary judgment, plaintiff asserted that his income did in fact approximate $33,000 per month. He claimed that the 2004 W-2 income for him and his wife was $216,215, he expected a bonus of $82,500 in 2004 (which was actually paid in 2005 in the amount of $65,000), and he collected annual rents of $94,860 per year from various rental properties. He claimed that the sum of these amounts was $32,797.92 per month. He also submitted the joint 2004 federal income tax return for him and his wife to support his claims that his representation of monthly income was not fraudulent.

Plaintiff's certification and tax return, however, do not adequately answer defendants' contentions. First, plaintiff could not add his rental income to the monthly amount he claimed on the loan application because he sold at least some of the income-producing properties in 2004 to obtain the twenty-five percent payment of the purchase price that his contract required him to pay. The income from those properties was no longer available to him at the time that he closed on the purchase and executed the mortgage documents. Second, plaintiff either did not have a bonus in 2004, or the bonus paid in that year was already accounted for in the W-2 income reported at $216,215. His 2004 tax return shows no additional amount of income that could be a bonus paid in 2004. Therefore, his adding of a bonus in 2004 appears to be double-counting of that employment income. Finally, the income earned in that year by plaintiff's wife could not be calculated in the monthly income that plaintiff reported on the loan application because she was not a party to the contract, she was not applying for the mortgage loan, and, according to defendants, she was not even married to plaintiff at the time of the mortgage application. Plaintiff's explanation of income approaching $33,000 per month was an after-the-fact, but ultimately unpersuasive, attempt to backtrack from the fact he admitted at the time of his deposition - namely, that his loan application falsely overstated his income. He cannot credibly deny that he knew and participated in that misrepresentation to the mortgage lender.

We have previously rejected the efforts of a plaintiff opposing summary judgment to alter facts that he had previously asserted. In Mosior v. Insurance Company of North America, 193 N.J. Super. 190, 195 (App. Div. 1984), the plaintiff had originally submitted a proof of loss on an insurance claim stating that he was totally disabled as of August 1972. In opposition to a motion for summary judgment on statute of limitations grounds, he attempted to show that his total disability actually arose in 1983. Ibid. We said that plaintiff could not "create an issue of fact simply by raising arguments contradicting his own prior statements and representations." Ibid. We held that the trial court correctly disregarded his opposition argument. Ibid.

In this case, plaintiff's explanation of the inconsistency similarly attempts to create an issue of fact by contradicting prior facts that plaintiff had admitted. The trial court appropriately applied the sham affidavit doctrine to disregard the new facts alleged in plaintiff's certification and opposition papers. It correctly granted summary judgment dismissing plaintiff's consumer fraud claims because plaintiff could not refute that he had participated in the falsification of his income figure to obtain the loans, and he cannot benefit under those circumstances from defendants' failure to negotiate yet better loan terms for him.


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