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Elaine A. Taylor v. American Home Mortgage Servicing Inc

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 11, 2012

ELAINE A. TAYLOR, PLAINTIFF-APPELLANT,
v.
AMERICAN HOME MORTGAGE SERVICING INC., AND WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2004 AND ASSET-BACKED CERTIFICATES SERIES 2004-1, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4484-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 21, 2012

Before Judges Sabatino and Fasciale.

Plaintiff Elaine Taylor appeals from separate orders*fn1 granting summary judgment in favor of defendants American Home Mortgage Servicing, Inc. (AHMSI), and Wells Fargo Bank, N.A., as Trustee for Option One Mortgage Loan Trust 2004 and Asset-Backed Certificates Series 2004-1 (Wells Fargo), and awarding defendants $40,022.81 in attorney's fees and costs. We affirm summary judgment, but vacate the award of attorney's fees because the trial court's decision does not identify the legal basis for fee-shifting in this case.

In 2003, plaintiff bought property located at 89 N. 22nd Street, East Orange, New Jersey (the East Orange property), which property is the subject of this litigation. Ten days later, she bought property located at 321 Leslie Street, Newark, New Jersey (the Newark property). In order to purchase the East Orange property, plaintiff obtained a mortgage loan from Option One Mortgage Corporation (now AHMSI). In the final loan application, signed on the day of the closing, she represented that she was purchasing the property as an investment, which was also reflected in the mortgagee's internal underwriting documents. Subsequently, plaintiff defaulted on the mortgage, and the mortgagee brought a foreclosure action.*fn2

In July 2009, plaintiff filed a complaint against AHMSI, alleging breach of contract and violations of the New Jersey Home Ownership Security Act of 2002 (HOSA), N.J.S.A. 46:10B-22 to -35, and the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. In its answer, AHMSI asserted that the East Orange property was not plaintiff's primary residence, which is a requirement for a borrower to obtain relief under HOSA.*fn3

In January 2010, AHMSI moved for summary judgment to dismiss the complaint in its entirety. Plaintiff filed opposition,*fn4 contending that she "resides at [the East Orange property] and ha[s] done [so] for more than six years." Plaintiff further represented that she had purchased the East Orange property to use as her primary residence, that she was the only occupant and had never had tenants, and that AHMSI addressed her mail, including her mortgage loan statements, to the East Orange property. Also, she represented that on the mortgage application documents, her mortgage broker had misidentified the East Orange property as investment property, alleging that when "it was discovered that the application was in error," "the error was corrected." In a supplemental opposition brief, plaintiff asserted that AHMSI "present[ed] expired documents that implie[d] [the] subject property [was] for investment. As stated previously, there was an error. The error was corrected; [the East Orange] property was and always [has] been for [p]laintiff's primary residence."

On February 25, 2010, the judge entered an order granting partial summary judgment to both defendants. The judge dismissed plaintiff's breach of contract and CFA claims with prejudice,*fn5 but denied summary judgment as to plaintiff's HOSA claim. The judge permitted an additional ninety days of discovery for AHMSI to investigate whether plaintiff resided at the East Orange property.

Subsequently, the judge ordered plaintiff to provide defense counsel with a "full account of whom she spoke to at the mortgage broker where the conversation occurred, what was said by both parties[, and] whether there are any documents other than the applications." The judge also ordered plaintiff to give "the name [and] docket number of the other Essex County foreclosure action [involving the Newark property, and] send [defense counsel] all the . . . documents."

Although plaintiff did not produce any of this information, defense counsel in the present case located legal documents relating to the Newark property foreclosure. The documents revealed that plaintiff had counterclaimed asserting HOSA violations against the mortgagee in that foreclosure, too. She had contended that the Newark property mortgagee "may argue that [HOSA] does not cover investment property; but the purpose of the loan was to purchase [the Newark] property as the primary residence of [plaintiff]." Further, she had also represented that she "was going to and had occupied [the Newark] property as her principal residence." Other documents in the Newark property foreclosure revealed that plaintiff's mortgage application for the Newark property indicated that she intended to use that property as her "primary residence."

In light of this evidence, defendants submitted a renewed motion for summary judgment, including a request for attorney's fees and costs. On October 1, 2010, the judge conducted a hearing, at which plaintiff admitted to the judge that she had "lied" in the Newark property foreclosure matter that the Newark property was her primary residence. The judge intimated that he was inclined to grant defendants' motion, but would first require a certification from defense counsel that plaintiff "benefitted by slowing the [Newark property] foreclosure process," which would be "sufficient to justify" judicially estopping plaintiff from asserting that the East Orange property was her primary residence.

Defense counsel submitted the requested certification, which stated that plaintiff had "derived a significant benefit by delaying the [Newark] [p]roperty [f]oreclosure for almost two years while asserting her frivolous HOSA claim." The certification quoted from the Newark property mortgagee's opposition to plaintiff's motion for reconsideration of summary judgment against plaintiff, which opposition stated that plaintiff "has stalled this foreclosure for almost two years and still seeks to delay the proceeding further [by] seek[ing] reconsideration on two issues, an alleged lack of standing and violations of [HOSA], both of which have been addressed numerous times." Furthermore, defense counsel's certification indicated that plaintiff had admitted at the October 1, 2010 hearing that she continued to collect rents at the Newark property while it was in foreclosure and had not remitted any of those rents.

On October 7, 2010, the judge entered an order granting defendants' renewed motion for summary judgment, dismissing plaintiff's complaint with prejudice, and granting defendants' request for "reasonable attorneys' fees and costs incurred since February 1, 2010." The judge relied on defense counsel's certification and granted summary judgment because plaintiff's "false statements in a previous litigation judicially estop her from taking a contrary position here."

Thereafter, plaintiff sought reconsideration of the October 7, 2010 order. On December 17, 2010, the judge conducted a hearing and explained:

The fact that the [c]court in the prior [Newark foreclosure] action ultimately did not rule in favor of plaintiff is . . . irrelevant. What is relevant, is that while the foreclosure proceeding brought against the plaintiff was delayed as a result of her admitted factual misrepresentations, [she] continued to legally hold title to the [Newark] investment property being foreclosed on. That's clearly true. You held title. Continued to collect rent from tenants living in those properties.*fn6

The judge denied plaintiff's motion for reconsideration, stating that "if there were any good faith I might almost be inclined to reconsider my ruling, but I don't see it here at all." He stated that plaintiff "certainly received a fair amount of rent [from the Newark property] without paying [the mortgage]," estimating "$1,500 to $2,000 a month[,] which would be $18,000 to $24,000 a year."*fn7

Subsequently, on June 24, 2011, the judge conducted a hearing on attorney's fees and heard oral argument from the parties. He then entered an order, of the same date, for final judgment against plaintiff in the amount of $40,022.81, "which constitutes [d]efendants' legal fees and costs incurred as a result of [p]laintiff's misrepresentations in this litigation during the time period of February 1, 2010 through the issuance of the [c]court's October 7, 2010 [o]rder." The judge reduced the award by 10% because he "believed the legal fees charged ($500 for a partner[,] $300 for an associate [and] $180 for a paralegal) were too high for a case of this size."

This appeal followed. *fn8

On appeal, plaintiff argues that the judge erred by applying the doctrine of judicial estoppel and dismissing her complaint. She contends that because she did not successfully defend against the Newark foreclosure, she therefore did not obtain a benefit from her position in that case, and so the judge here should not have applied judicial estoppel to prevent her from taking a contrary position. We disagree.

We begin by addressing whether the judge erred by applying the doctrine of judicial estoppel. Generally speaking, judicial estoppel "precludes a party from taking a position contrary to the position he has already successfully espoused in the same or prior litigation." McCurrie ex rel. Town of Kearny v. Town of Kearny, 174 N.J. 523, 533 (2002). The purpose of the doctrine is limited to protecting "'the integrity of the judicial process.'" Ali v. Rutgers, 166 N.J. 280, 288 (2000) (quoting Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 608 (App. Div. 2000), certif. denied, 167 N.J. 88 (2001)). Of course, the doctrine does not "bar every conceivable inconsistency," but "is designed to prevent litigants from playing fast and loose with the courts." Cummings v. Bahr, 295 N.J. Super. 374, 387 (App. Div. 1996) (internal quotation marks omitted).

As such, "[a] threat to the integrity of the judicial system sufficient to invoke the judicial estoppel doctrine only arises when a party advocates a position contrary to a position it successfully asserted in the same or a prior proceeding." Kimball Int'l, supra, 334 N.J. Super. at 606. Our Supreme Court has explained:

The evil to be avoided is untoward control of the system, leading to inconsistent results. Central to that concern is the principle that a litigant should not be allowed to mislead courts by having one tribunal rely on his or her initial position while a subsequent body is led in a different direction. Thus, it follows that "[t]o be estopped a party must have convinced the court to accept its position in the earlier litigation." [State v. Jenkins, 178 N.J. 347, 359 (2004) (quoting Kimball Int'l, supra, 334 N.J. Super. at 606-07).]

Cf. Kimball Int'l, supra, 334 N.J. Super. at 606-07 n.2 (overruling the holding in Levin v. Robinson, Wayne & La Sala, 246 N.J. Super. 167, 188-91 (Law Div. 1990), that "'prior success' is not a prerequisite of judicial estoppel").

Here, plaintiff relies on Guido v. Duane Morris LLP, 202 N.J. 79, 94 (2010), in which the Court stated that "where a party has prevailed on a litigated point, principles of judicial estoppel demand that such party be bound by its earlier representations." She contends that the judge erred by applying the doctrine of judicial estoppel because she did not prevail in the Newark property case. However, under the particular circumstances of this case, we conclude that judicial estoppel is also appropriate because plaintiff derived a substantial benefit from maintaining her position in the Newark property foreclosure. Her position enabled her to stave off the Newark property mortgagee's motion for summary judgment in late 2008. Further, when the mortgagee sought reconsideration of the denial of summary judgment, plaintiff utilized the same position in her opposition, falsely asserting that the Newark property was not investment property, but rather had been intended as her primary residence. In early 2009, the mortgagee's reconsideration motion in the Newark property litigation was granted and the court struck plaintiff's answer and counterclaim. However, plaintiff sought reconsideration of that decision and again asserted the same misrepresentation, further stalling those proceedings.

By asserting to the court and to her adversary that the Newark property was her primary residence, plaintiff avoided summary judgment temporarily, perpetuated that litigation, and delayed foreclosure for almost two years. During this time, as she admitted at the October 1, 2010 hearing, she continued to collect rents from the Newark property and did not remit any of those rents. As such, she benefited from the position she asserted in the Newark property foreclosure. Here, even if plaintiff has truthfully asserted that the East Orange property is her primary residence, she cannot maintain that position without consequences because it contradicts her earlier successful position. The judge therefore did not err by judicially estopping plaintiff, in light of her previous contrary representations made for her own advantage, from asserting that the East Orange property was her primary residence.

Turning to the judge's grant of summary judgment, we review that determination de novo, applying the same standard that governs the trial courts under Rule 4:46. LVNV Funding, L.L.C. v. Colvell, 421 N.J. Super. 1, 6 (App. Div. 2011) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). The judge should "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party . . ., are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995).

Here, in her complaint, plaintiff alleged the violation of HOSA, which applies to property that is "occupied by a borrower as the borrower's principal dwelling." N.J.S.A. 46:10B-24. However, for the reasons we have stated, plaintiff is judicially estopped from asserting that the East Orange property is her principal dwelling. As such, there was no material issue of fact requiring resolution before a factfinder. Additionally, we note that plaintiff produced no evidence of communication with her mortgage broker indicating that the mortgage application did in fact erroneously state that she would use the East Orange property as investment property, and the vast majority of documents signed by plaintiff at the closing indicated the property as an investment. Thus, even if the judge had not applied judicial estoppel, plaintiff failed to present evidence to raise a material issue of fact as to whether the house located at the East Orange property was "occupied by a borrower as the borrower's principal dwelling." N.J.S.A. 46:10B-24(1). Thus, the mortgage on the East Orange property was not a "home loan" within the meaning of N.J.S.A. 46:10B-24. The judge did not err, therefore, in granting summary judgment against plaintiff on her HOSA claim.

Next, we consider the attorney's fee award of $40,022.81. Plaintiff argues simply that "the wrongdoer cannot be awarded attorney fees." She does not specifically argue that the award is excessive. We nevertheless focus on whether the judge explained the legal basis for the award and supported his decision with sufficient reasons.

Our review of attorney fee awards is generally deferential to the trial judge. In re Estate of F.W., 398 N.J. Super. 344, 355 (App. Div.), certif. denied, 196 N.J. 347 (2008). We only disturb such determinations, assuming that they are founded upon proper legal authority, "on a showing of 'clear abuse of discretion' based on the record presented on the fee application." Ibid. (citing Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).

Here, at the June 24, 2011 hearing on attorney's fees, the judge explained that the award was based on "all the work" of defendants' counsel from "the time period of February 1, 2010 through the issuance of the [c]court's October 7, 2010 [o]rder." He stated:

[Plaintiff] bought . . . at least a couple of residences . . . in Newark and obtained financing for them. It appears that in both cases she objected to certain charges by the financee or lender on the basis that the residences were her primary residence. And, this has been going on for some time both the other law suit and this. [Although plaintiff stopped paying mortgage on the East Orange property in 2008,] she's remained . . . owning both these residences. . . . I did come to the conclusion that she'd be judicially estopped from going further in this action because she told the [c]courts in both actions that they . . . both were the principal residences and that just is not possible.

The judge then told plaintiff:

[y]ou c[a]me to the belief that if you took a tough position and fought [defendants] forever, you could avoid a judgment . . . .

You could avoid losing the two properties and you might even make some money affirmatively . . . . I felt that you were playing fast and loose. . . . I think they were entitled to legal fees here and I guess this matter will be resolved by the Appellate Division.

Having reviewed the record and transcripts, we conclude that the judge did not clearly articulate his reasons for the attorney's fees award, other than his general observation that plaintiff had played "fast and loose" with the courts. See R. 1:7-4 (requiring that "on every motion decided by a written order," the judge must "by an opinion or memorandum decision, either written or oral, find the facts and state [his or her] conclusions of law"). Moreover, the judge did not cite any authority, statutory, Rule-based, or contractual, on which the award may have been based. Thus, we vacate the order granting defendants' motion for counsel fees. Defendants, however, may reapply to the trial judge and seek counsel fees, citing appropriate legal authority for such relief, provided that they do so within 30 days of this opinion.

Affirmed in part, vacated in part. We do not retain jurisdiction.


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