On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-81-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: October 26, 2011
Before Judges Cuff and St. John.
This appeal presents the narrow issue of whether a mortgagor who tenders deeds in lieu of foreclosure remains liable on the notes following recordation of the deeds by the lender. When, as here, a mortgagor expressly agrees to remain personally liable on the notes, the debt survives tender and recordation of the deed in lieu of foreclosure. We, therefore, affirm the order denying a motion to declare the judgment on the note satisfied.
Defendant Adam Goldstein executed a note in the amount of $159,000 and mortgage on real property located in Pilesgrove Township. Goldstein and defendant Robin Runkle executed a note in the amount of $205,000 and mortgage on real property located in West Deptford. Defendants defaulted on both notes two years later in 2009. Plaintiff Capital Bank of New Jersey (Capital Bank) commenced separate foreclosure actions on both properties in 2009. In 2010, Capital Bank commenced a civil action against Goldstein on the Pilesgrove note and against Goldstein and Runkle on the West Deptford note. On May 11, 2010, Capital Bank obtained a judgment against Goldstein on the Pilesgrove note in the amount of $170,838.27, and a judgment against Goldstein and Runkle on the West Deptford note in the amount of $215,697.99.
On July 2, 2010, Goldstein, Runkle and Capital Bank executed an agreement entitled Agreement in Lieu of Foreclosure (the Agreement). Pursuant to the Agreement, Goldstein would tender the deed to the Pilesgrove property, and Goldstein and Runkle would tender the deed to the West Deptford property and pay $4000 from the proceeds of the sale of a third property. In return, the foreclosure proceedings would be dismissed, and Runkle would be released from liability for any deficiency on the West Deptford mortgage and the May 2010 judgment.
In the preamble to the Agreement, the parties expressed the intention of the document. It provides:
WHEREAS, Lender, GOLDSTEIN and RUNKLE desire to avoid further legal proceedings for their respective benefits based upon mutual consideration and to provide for the conveyance of the Properties to Lender by Deed in Lieu of Foreclosure, and the payment to Lender of a lump sum of $4,000.00 out of the proceeds of the sale of the Hickory Drive Property, in exchange for the release of RUNKLE from liability for any deficiency on the West Deptford Mortgage and on the Judgments, and the release of the Judgments from the Hickory Drive Property . . . .
The Agreement proceeds to detail Capital Bank's rights and the liability of the individual defendants. Specifically, Capital Bank could exercise any rights it may have to the property, Runkle was released from all liability on the West Deptford mortgage and note and the May 2010 judgment, and Goldstein remained liable on the Pilesgrove and West Deptford mortgages, both notes, and the May 2010 judgment, less the $4000 payment and any proceeds obtained from the sale or disposition of both properties. The Agreement provides:
f. Nothing in this Agreement shall be construed to limit the Lender from exercising any other remedy it may be granted by this Agreement, the Judgment, the Mortgages or the Notes, or any other loan documents executed in connection therewith. The exercising of the rights under this Agreement shall not limit the Lender from exercising any other rights it may have. . ..
11. In consideration for the receipt of the payment referred to in paragraph 5, above, and the delivery of the West Deptford Deed and the Pilesgrove Deed, Lender has agreed to release RUNKLE only, from any and all liability under the West Deptford Note, West Deptford Mortgage, and the Judgment. . . .
12. The parties expressly acknowledge and agree that nothing in this Agreement shall be deemed to release GOLDSTEIN from any liability under the Mortgages, Notes, or the Judgments. GOLDSTEIN shall remain fully liable to lender on the Judgments, which shall continue to accrue interest until the same have been satisfied.
13. GOLDSTEIN'S liability under the Judgments shall be reduced by the $4,000.00 payment referred in paragraph five above and the Net Proceeds received by Lender . . . from the sale or disposition of the ...