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Robert Herdelin v. William F. Sherlock and Patricia A. Sherlock


December 28, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Cape May County, Docket No. F-12842-04.

Per curiam.


Argued December 15, 2010 - Decided Before Judges Fisher and Simonelli.

This case is before us a second time. Defendants William Sherlock and Patricia Sherlock owned property in Stone Harbor. In July 2003, they executed a mortgage note and mortgage to plaintiff Robert Herdelin for $1,789,570.91 together with interest at eleven percent per annum. Defendants defaulted, prompting plaintiff to file this foreclosure action.

By order entered on January 14, 2005, the judge granted plaintiff's summary judgment motion and struck defendants' answer and affirmative defenses. Plaintiff eventually filed a motion to enter final judgment. Defendants did not oppose the motion or file an objection, as required by Rule 4:64-1(d). On August 7, 2008, the judge entered a final foreclosure judgment in the amount of $2,755,939.11, which included $876,889.70 for interest at eleven percent per annum, $89,478.50 for extension fees, and $89,478.50 for administrative fees. Plaintiff purchased the property at the sheriff's sale.

Defendants did not file a motion to dispute the amount plaintiff claimed was due, a motion for reconsideration, or a notice of appeal. Instead, they filed a motion to vacate the judgment under Rule 4:50-1(c) and set aside the sheriff sale, claiming, in part, that plaintiff fraudulently misrepresented the amount due by (1) "purposely and in bad faith" delaying seeking final judgment for three years and seven months after entry of summary judgment "so that interest at 11% could continue to accumulate on the outstanding note;" and (2) fraudulently obtaining extension and administrative fees by unlawfully exercising their option to extend. Defendants argued that $565,075.87 of the judgment was fraudulent (calculated at $386,118.87 for excess interest accrued during the delay and $178,957 for the extension and administrative fees).

The judge denied the motion, and defendants appealed. In an unpublished opinion, we rejected defendants' delay and fraud claims and concluded that plaintiff is entitled to prejudgment interest at the contract rate of eleven percent per annum. Herdelin v. Sherlock, No. A-4357-08T2 (App. Div. Nov. 25, 2009) (slip op. at 7). Because we also concluded that the extension and administrative fees were inappropriate, we reversed the order denying the motion, set aside the sheriff's sale, and remanded for the entry of an amended judgment to exclude $178,957 from the judgment amount. Id. at 9.

In a supplemental unpublished opinion, we instructed the judge to determine the amount necessary to redeem the property and whether or not that amount should include out-of-pocket costs for maintenance, repair, upkeep and insurance plaintiff incurred between the issuance of the sheriff's deed and the date of the remand hearing. Herdelin v. Sherlock, No. A-4357-08T2 (App. Div. Dec. 30, 2009) (slip. op at 2). We also instructed the judge to set a reasonable time period for defendants to redeem the property, and if they failed to redeem, then plaintiff would retain title to the property pursuant to the previous sheriff's sale. Ibid.

On remand, the judge entered an order on February 24, 2010, fixing the redemption amount as of January 15, 2010 at $2,832,962.21, and set May 1, 2010 as the redemption date. The judgment included pre-judgment interest at eleven percent per annum from July 22, 2004 to August 7, 2008,*fn1 post-judgment interest from August 8, 2008 to January 15, 2010, at the rates set forth in Rule 4:42-11(a)(iii), and taxes, attorneys fees and costs of suit. The judgment also credited $23,360.36 to defendants for rental income less electric bills. This appeal followed.

On appeal, defendants again argue that plaintiff's unreasonable delay in seeking final judgment precludes an award of contract rate interest. Defendants also argue that judgment was entered on January 14, 2005, and thus, plaintiff is not entitled to contract rate interest thereafter pursuant to the doctrine of merger. We have considered these arguments in light of the record and applicable legal principles and conclude they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). However, we make the following brief comments.

We previously considered and rejected defendants' unreasonable delay argument on the merits, and concluded that plaintiff was entitled to pre-judgment interest at the contract rate of eleven percent. Because we determined these issues on the merits in the prior appeal, they cannot be re-litigated in this appeal. See State v. Cusick, 116 N.J. Super. 482, 485 (App. Div. 1971).

Also, the January 14, 2005 order, which granted plaintiff's summary judgment, was interlocutory, not final. Final judgment was entered on August 7, 2008. Accordingly, plaintiff was entitled to contract rate interest of eleven percent per annum from July 22, 2004, to August 7, 2008.


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