On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5785-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Graves, and Harris.
This appeal involves a dispute over a prepayment penalty of $167,133.98 on a $700,000 ten-year commercial loan --- secured by a mortgage on real estate -- between plaintiff Essecare, Inc. (Essecare), and a federally-chartered bank, JPMorgan Chase Bank, NA (Chase). Specifically, Essecare challenges the propriety and amount of the prepayment penalty when the indebtedness was paid in full seven years early. The Law Division granted summary judgment dismissing Essecare's complaint on the ground that its causes of action were preempted by the National Bank Act of 1864 (the Act), 12 U.S.C. § 1 et seq., and regulations promulgated thereunder by the Office of the Comptroller of the Currency (OCC). We affirm in part, reverse in part, and remand for further proceedings.
In early 2006, an Essecare representative approached its banker at Chase seeking a commercial loan. After reviewing documentation already in its files and other data provided by Essecare, Chase issued a written commitment stating that it was "pleased to confirm its willingness to extend . . . credit accommodations to 'Essecare, Inc.' subject to . . . terms and conditions." The commitment stated that Essecare had represented its intention to use the loan proceeds for the "refinanc[ing] of Commercial Real Estate" located in Orange, New Jersey. Under the section entitled "Basic Credit Terms," the commitment stated that the loan principal would be $700,000, and that it was "[p]ayable in One hundred and Twenty (120) monthly installments of principal and interest based on an amortization of Twenty (20) years. The interest rate on this loan will be fixed for ten (10) years." The commitment required a commitment fee of $7,000.
The commitment set forth that the collateral for the loan would be a first mortgage on Essecare's real property located in Orange, and the loan would be personally guaranteed by two individuals. The commitment also stated that loan documents would evidence the transaction, stating in the section entitled "Loan Documents" that the "Borrower's relationship with Lender shall be evidenced by a promissory note, Loan Agreement, mortgage/deed of trust, and such other agreements, instruments and documents as described herein or as the Lender and its counsel may require in their sole and absolute discretion."
The commitment also expressly stated that additional terms of the loan, including prepayment provisions, would be set out in the loan documents. It further made clear that the "terms, covenants, and conditions set forth herein are intended to be an outline of some of the principal provisions of the Loan Documents rather than a full and complete description or exclusive list of all terms, covenants and conditions therein." By signing the commitment letter, Essecare acknowledged that "not every ancillary provision imposing duties, burdens or limitations on [it] and to be contained in the final documentation customary for this type of transaction can be set forth in this Offer of Commitment." Finally, it provided that to the extent that "any terms, covenants and conditions in the Loan Documents are inconsistent with this Commitment, the terms, covenants and conditions in the Loan Documents shall control."
On March 6, 2006, both parties signed the commitment. Three months later, the loan was finalized and the proceeds distributed when Essecare's representatives signed a business loan agreement, a promissory note, and a mortgage on Essecare's real property. A corporate resolution authorizing the transaction was adopted on June 22, 2006. Essecare took the proceeds and directed them to pay, in full, two existing loans secured by real estate mortgages totaling $525,234.16. The balance was used for working capital.
The business loan agreement set forth detailed terms of the transaction. For example, under the section entitled "Financial Statements," the business loan agreement stated that Essecare would provide Chase with financial statements and copies of tax returns "[a]s soon as available." The promissory note set forth additional terms. Under the section entitled "Prepayment Penalty," the promissory note stated:
Upon prepayment of this Note, Lender is entitled to the following prepayment penalty: (as liquidated damages and not as a penalty) upon prepayment in whole or in part the Borrower shall make an additional payment to Lender equal to the amount determined by the following formula: (1) the result of the following: (a) principal prepaid times (b) the result, if positive, of (i) the per annum interest rate on this Note in effect as of the date of such prepayment, minus (ii) the annual yield to maturity (reflecting both stated Interest rate and discount) of the United States Treasury Securities obligations assumed to be purchased at the date of such prepayment and maturing at the scheduled maturity date of this Note, or as close thereto as possible (the "Treasury Rate"); times (c) the result of (i) number of days from the date of prepayment to the scheduled maturity date of this Note, divided by (ii) 360; and
(2) discounted to present value at the Treasury Rate. Lender's determination of the Treasury Rate and the amount of any prepayment charge shall be conclusive, in the absence of any obvious error. . . . If this Note is secured by Collateral consisting of real property any prepayment of principal . . . will be deemed a voluntary prepayment and Borrower shall pay Lender the prepayment charge.
In or around June 2009, Essecare sold the real property securing the loan and used the sale proceeds to pay the balance due to Chase. It asserted that it "was advised and forced to pay a ...