On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-0084-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves, Messano and Waugh.
Following a bench trial, the judge concluded that defendant Ricardo Maldonado violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184 (the CFA), and entered judgment in favor of plaintiffs Anthony and Denise D'Agostino in the amount of $203,196. This "amount reflect[ed] . . . treble damages . . . of $150,694 . . ., as well as $50,590 in reasonable counsel fees, and $1,912 in costs." The judgment further set aside "[t]he conveyance from plaintiffs to defendant of title to . . . property located [in] Garfield [(the property)]." The judgment dismissed the balance of plaintiffs' claims.
Defendant now appeals contending: 1) the CFA does not apply to the facts of the case; 2) he did not commit "an unconscionable commercial practice"; 3) plaintiffs were equitably estopped from asserting any claim under the CFA; 4) the judge incorrectly determined damages; and 5) the amount of attorney's fees awarded reflects an abuse of the judge's discretion. Plaintiffs cross-appeal, arguing that the judge erred in calculating damages and in dismissing their common law fraud and breach of fiduciary duty claims.
We have considered the arguments raised in light of the record and applicable legal standards. We affirm in part, reverse in part, and remand the matter to the trial court for entry of an amended judgment in plaintiffs' favor.
As the judge succinctly stated in her written opinion that accompanied the judgment, "This case involves an irregular mortgage rescue plan that went awry." Plaintiffs were married in 1992. Anthony worked in the financial field, at times attaining a salary of $250,000 per year, and Denise, who returned to the work force after having children, became the director of St. Mary's Cemetery.*fn1
In 1993, Anthony inherited the property free of any mortgage. Anthony's grandfather had constructed two houses on the property; the "front house" consisting of three rental units, and the single-family "back house" where the couple and their children lived. Anthony maintained the front house and collected rent from the tenants.
In 2005, the couple began to experience "marital difficulties." Anthony "stepped out" of the marriage and resided with another woman. Denise and the children continued to live in the back house. Also in 2005, Anthony's employerdeclared bankruptcy, and he was unemployed for some of 2006. The couple's combined income dropped precipitously, causing "financial difficulties." The front house was cited for numerous housing code violations, the couple's credit card debt soared, and Anthony believed "time was of the essence." The couple decided to refinance a mortgage they had taken out at an earlier date.
In March 2007, Anthony persuaded Denise to secure a new mortgage in her name alone because his credit rating had "deteriorated." A quitclaim deed was executed adding Denise to the title of the property, and a mortgage in the amount of $325,000 was recorded on March 27, 2007.
Despite the refinancing, Denise and Anthony continued to experience financial difficulties. Although he collected rents from the front house, Anthony had difficulty finding work and used the money to cover his own personal expenses instead of paying the monthly mortgage. Under the terms of that mortgage, the monthly payment increased and soon exceeded the rent roll from the front house. In September 2007, Denise obtained a restraining order against Anthony that forbade his presence at the property. When Anthony went to the property to gather some belongings, the police, who accompanied him, arrested him for possession of an assault rifle, an old M-1 that Anthony claimed belonged to his grandfather.
By fall 2007, the new mortgage was in default. Plaintiffs were served with a foreclosure complaint on October 20, 2007, and default was entered in November. By December, the amount due on the mortgage was $360,000.
Anthony testified that plaintiffs received numerous "foreclosure rescue" letters in the mail, one of which was from defendant. Anthony responded to some of the solicitations and first spoke to defendant at the "end of November [or] early December." According to Anthony, defendant told him:
[He had] worked with people all of the time in this type of situation, and he helped people who were behind on their mortgages or in distress, and he worked with them to get their mortgage . . . caught up. He would manage the property . . . for a certain fee, and then at the end of a certain amount of time, maybe a year or so, . . . I would pay him his fee and he would be out of the picture.
Anthony and defendant met at the property, defendant spoke to the tenants to determine what repairs needed to be made and plaintiffs gave defendant information regarding their mortgage. Defendant told Anthony, "[F]rom here on [out,] do not contact the lender. . . . I will take care of everything. . . . I'll act as your advisor in this matter."
Anthony claimed that at a second meeting he specifically told defendant he wanted the property placed "in trust for [his] children." Defendant stressed that the mortgage was in significant arrears and plaintiffs "ha[d] to get this done immediately."
Anthony agreed that defendant would make sure the property was fully rented; collect the monthly rent payments; make all the necessary repairs on the property and pay the mortgage. If there was a shortfall, defendant would cover those costs out of pocket, and, after one year's time, defendant would be paid $40,000 for his services. Anthony told Denise defendant's plan "might be a good idea."
On January 8, 2008, the bank sent Denise notice of its request to enter final judgment in the foreclosure action. On January 17, defendant came to the property with paperwork he had prepared for plaintiffs' signatures. He was accompanied by Luis
A. Ramos, whom Anthony believed was defendant's friend, and who was actually a notary public attesting to plaintiffs' signatures.
Anthony did not read any of the documents prior to signing them "on the hood of a car in [front] of the house." Anthony believed Denise signed the documents in the back house. Plaintiffs never brought the documents to an attorney for review and never received copies of the documents after signing them. Anthony only signed documents on one occasion and believed he and Denise retained title to the property. "[He] would have never entered into an agreement had [he] know[n] [he] was . . . giving somebody else title to [his] house."
It is undisputed that the documents at issue were prepared by defendant who downloaded them from the Internet. Plaintiffs executed a "LETTER OF AGREEMENT," in which they acknowledged: that their mortgage contained "a due on sale clause"; that the mortgage would remain "in [their] names until it's paid off"; that defendant "ha[d] no intention of assuming said loan" and plaintiffs were holding him "harmless in the event the loan is called due or goes into default for any reason"; and that plaintiffs would vacate the property by January 31. Plaintiffs also executed a warranty deed to trustee conveying the property to defendant as trustee, and an "ACKNOWLEDGEMENT OF DEPOSIT," in which plaintiff's acknowledged receipt of $10 as "consideration" for the deed. In fact, no money exchanged hands, and the deed was never recorded.
Plaintiffs and defendant signed an "AGREEMENT AND DECLARATION OF TRUST," naming plaintiffs as beneficiaries of the trust, and defendant as trustee. Plaintiffs also executed an "ASSIGNMENT OF BENEFICIAL INTEREST IN TRUST," conveying their interests in the trust to defendant. Lastly, defendant executed an "OPTION AGREEMENT," that provided: "In consideration of $10.00, Ricardo Maldonado . . . grant[s] Anthony D'Agostino . . . the option to purchase the . . . property for the purchase price of $400,000 . . . . Option term begins on January 17, 2008 and expires on January 17, 2009."*fn2 However, the option could be exercised only by those who signed the agreement.
On March 28, 2008, defendant had plaintiffs execute a quitclaim deed to the property in which plaintiffs acknowledged receipt of $360,000 as consideration, and a power of attorney designating defendant as their attorney-in-fact regarding the property. Neither plaintiff recalled signing the deed or power of attorney, although Ramos testified that he was present when they did and he notarized their signatures. Defendant recorded the deed. Again, no money was exchanged.
In April or May, Anthony claimed he became aware of the quitclaim deed having been filed while in the courthouse with his divorce attorney. Over the ensuing months, Anthony offered "numerous times" to pay defendant his $40,000 fee, however, defendant declined the offer and told Anthony that pursuant totheir option agreement, the property could only be repurchased for $400,000. Anthony admitted on cross-examination that he, in fact, never had $40,000 to pay defendant.
Although he tried to obtain a new mortgage for $400,000, Anthony was unable to do so. Facing the expiration of the one-year option agreement, on January 17, 2009, Anthony wrote defendant:
As per our agreement . . . [,] [i]f you will not grant me an extension on the option to buy back, I wish to have the property sold to the highest bidder [and the] proceeds put into a trust for my children, (less the monies ...