On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-191-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Graves and Koblitz.
After a bench trial, Property Asset Management (Property Asset) appeals the portion of the November 18, 2010 order that excluded the value of a PNC Bank (PNC) line of credit and a second mortgage held by U.S. National Bank Association, termed the "Litton Loan," in the equitable lien placed on Dr. Theresa Jordan's property. After reviewing the record in light of the contentions advanced on appeal, we remand for a clarification of the trial judge's opinion.
Following a divorce from her prior husband, Jordan gained sole ownership of her home in Millburn. In 1993, Jordan took out a mortgage of approximately $183,000 from Source Mortgage Co., Inc., which was later assigned to GMAC Mortgage Corporation. In 1996, Jordan married a colleague, Richard Montgomery.
In June 2001, Jordan fell and sustained a serious brain injury, rendering her unable to read, write, or comprehend most things.*fn1 After her injury, Montgomery took over her finances, but failed to keep up payments on Jordan's debts, including the mortgage on her home. Faced with the prospect of foreclosure, Montgomery forged Jordan's signature to a power of attorney. In an attempt to avoid foreclosure, on May 20, 2004, Montgomery sold Jordan's home to a straw man, George Ringel, without her consent.
Montgomery subsequently purchased the house in his own name from Ringel, obtaining a mortgage from BNC Mortgage on October 21, 2005, in the amount of $544,000. This mortgage was assigned to Property Asset on August 3, 2006. Property Asset later commenced a foreclosure action on this mortgage that resulted in the entry of a final default judgment on July 28, 2008.
Jordan first became aware of Montgomery's actions and the impending foreclosure shortly after May 20, 2009, when Montgomery suffered a stroke and confessed to mismanaging Jordan's finances. Montgomery later signed a statement admitting that he had forged Jordan's name on the power of attorney. Jordan filed a complaint against Montgomery, Ringel, Property Asset, and others, accusing Montgomery of fraud and seeking to have the house conveyed back to her and the mortgage held by Property Asset invalidated. Montgomery defaulted and Jordan settled with Ringel.
The trial judge determined that Jordan was an innocent victim of fraud and ordered the property conveyed back to her free of any liens filed against Montgomery, including those held by Property Asset. To prevent unjust enrichment, the judge ordered that Property Asset be equitably subrogated to the Source/GMAC mortgage that had previously been satisfied, and that an equitable lien be issued to Property Asset in the amount of the encumbrances placed on the property by Jordan that were satisfied on her behalf through Montgomery's sale of the property. Property Asset does not appeal from these rulings.
The trial judge included in the equitable lien the GMAC mortgage of $198,148; a Small Business Administration loan of $24,379 referred to as the "flood loan," which Jordan took out in 1999 in the amount of $30,000 to repair damages to her home caused by Hurricane Floyd; interest payments of $65,611; and $57,502 in taxes and hazard insurance that was paid on the property. The equitable lien thus totaled $345,640.
Property Asset appeals the trial judge's decision not to include the two other debts. It argues that the judge improperly ruled that Property Asset failed to show Jordan was responsible for or had knowledge of the Litton Loan, which totaled $147,364 at the time of payoff. Property Asset also argues that the judge failed to include the value of the PNC line of credit issued to Jordan prior to her injury. The value of that loan was $16,272 at the time of its payoff in May 2004.
Appellate review of a trial judge's fact-finding in a non-jury case is limited. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). A trial judge's factual findings will not be overturned "unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Id. at 484 (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). This is especially true when the trial court's holdings were based on determinations of witness credibility. State v. Locurto, 157 N.J. 463, 472-75 (1999).
To avoid Jordan's unjust enrichment, the trial court imposed an equitable lien on her property in the amount proven by Property Asset to exist as a lien prior to Montgomery's fraudulent activity. Unjust enrichment may constitute a basis for imposing an equitable lien. VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 553-54 (1994) (citations omitted). To recover under this theory of liability, Property Asset "must prove that [Jordan] was enriched, viz., received a benefit, and that retention of the benefit without payment therefor would be unjust." Callano v. Oakwood Park Homes Corp., 91 N.J. ...