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Leonard A. Bove, Jr. and Denise Czyzewicz v. Gloucester County Federal Savings Bank

January 10, 2011

LEONARD A. BOVE, JR. AND DENISE CZYZEWICZ, PLAINTIFFS-APPELLANTS,
v.
GLOUCESTER COUNTY FEDERAL SAVINGS BANK, EFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1011-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted November 4, 2010 - Decided Before Judges R. B. Coleman, Lihotz and J. N. Harris.

Plaintiffs Leonard A. Bove, Jr. and Denise Czyzewicz appeal from two orders: the first granting summary judgment and dismissing their complaint with prejudice because they lacked standing to assert the claimed causes of action, and the second entering judgment against Czyzewicz on the counterclaim filed by defendant Gloucester County Federal Savings Bank (GCF). Following our review, we conclude plaintiffs' appeal is not properly before the court and we dismiss. R. 2:2-3(a)(1).

Plaintiffs are shareholders of Home Network Builders, Inc. (HNB, Inc.) and members of Home Network Builders at Maple Shade, LLC (HNB, LLC) (collectively HNB). Beginning in 1999, HNB executed a series of loan agreements*fn1 with GCF to obtain financing for the acquisition and construction of an eighteen-lot residential development in Maple Shade to be known as "The Community at Farmhouse Lane" (Farmhouse Lane development). The debts were secured by a blanket mortgage on the property, recorded on October 12, 1999 in Mortgage Book 7646 at page 650 in the Offices of the Clerk of Burlington County. Plaintiffs executed commercial guaranty agreements for each promissory note issued by HNB. An additional $150,000 was secured by HNB through GCF to fund the construction of a house located at 240 Mt. Laurel Road, Mt. Laurel (the Mt. Laurel property).

Problems developed shortly after the initial transaction to acquire the realty. GCF determined the eighteen lots were overvalued and its debt was undersecured, causing the bank to revise the terms of the initially proposed infrastructure and construction financing. HNB accepted the revised proposal terms and contacted another lender to obtain additional monies. HNB commenced construction of the single-family homes and sold several properties in the Farmhouse Lane development.

Between December 1999 and December 2002, HNB was current on all loan repayments. In 2002, GCF advised HNB that no additional funds were available. HNB challenged the loan disbursement records and sought an independent audit. An impasse developed.

Thereafter, HNB defaulted on its loan repayment obligations, causing GCF to commence foreclosure proceedings. Plaintiffs counter-claimed, alleging GCF and its former loan officer, Barbara Klitchko, negligently and tortiously failed to timely disburse hundreds of thousands of dollars of construction loan advances, causing construction delays and misappropriated or diverted $800,000 in monies charged to HNB that it never received.*fn2 Based on its records, HNB believed GCF had advanced only $2.1 million, even though almost $3 million had been authorized. As a result, HNB maintained GCF exercised domination and superiority over the construction activities of HNB, interfering with HNB's contractual relationships with third parties and preventing completion of the Farmhouse Lane development.

On November 17, 2005, HNB filed a voluntary petition seeking protection under Chapter 11 of the Bankruptcy Code. 11 U.S.C.A. § 301. The foreclosure proceedings were stayed. 11 U.S.C.A. § 362(a). GCF filed its proof of claim as a secured creditor seeking $1,592,476.02. Ultimately, the consolidated bankruptcy matters were converted to Chapter 7 liquidations. 11 U.S.C.A. § 1112(b). A Chapter 7 Trustee was appointed to oversee the liquidation of the businesses.

In the course of the Chapter 7 administration, the trustee abandoned the Mt. Laurel property and the structure formerly serving as HNB's offices (429 East Main Street Property), entered into an agreement of sale for another completed home in the Farmhouse Lane development and negotiated the sale of the remaining unimproved Farmhouse Lane development lots. The trustee also commenced adversary proceedings against GCF, seeking to void the mortgages executed by HNB as security for GCF's loans and to reclassify GCF's proofs of claim as unsecured debts.

GCF and the Chapter 7 trustee reached a global settlement of all disputes raised in the adversary proceedings. Specifically, the parties agreed the Trustee was authorized to complete the sale of the Farmhouse Lane development lots and the completed home and disburse the proceeds as stated in the stipulation, subject to Bankruptcy Court approval. The stipulation agreement also contained a mutual release of all claims along with a carve-out of unaffected claims, as follows:

3. Release of Claims Against [GCF]. Effective upon the approval of the settlement by the Bankruptcy Court and the expiration of all appeal periods, the Trustee, for himself and on behalf of the Estates of [HNB], will, without further action, forever waive, release and discharge any and all legal and equitable claims and/or causes of action, which the Trustee has or may have, or may otherwise have been able to assert against [GCF], and its representative officers, employees, agents and attorneys, successors or assigns, from any cause whatever, known or unknown, whether or not matured or contingent, including but not limited to claims arising out of or relating to the creation, operation, or termination of loans by [GCF] to [HNB], the development and operation of the Farmhouse Lane Lots, the Mt. Laurel Property, the 429 East Main Street Property, or claims which were made or could have been made in the adversary proceeding set forth above. The foregoing releases do not include any claims and/or causes of action, which the members . . . or the shareholders of [HNB] may have, if any, have against [GCF] and its respective officers, employees, agents and attorneys, successors or assigns.

4. Release and Expungment of All claims of [GCF] against [HNB]. Effective upon the approval of the settlement by the Bankruptcy Court and the expiration of all appeal periods, [GCF] will, without further action, be deemed to have withdrawn and forever waived, released and expunged all filed secured and unsecured proofs of claim and against [HNB] and is prohibited by the terms of this Agreement to file or assert any additional proofs of claim against [HNB].

This Agreement shall have no effect on any claims of [GCF] against the guarantors or sureties of [HNB] or the rights of [GCF] with respect to the Mt. Laurel Property and the 429 East Main Street ...


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