On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-49373-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 17, 2012
Before Judges Axelrad, Sapp-Peterson and Haas.
In this commercial mortgage foreclosure action, defendant Princeton Park Associates, L.L.C. (PPA) appeals from the December 17, 2010 order of the Chancery Division, granting summary judgment to plaintiff Bank of America, N.A. (the Bank), and from the March 4, 2011 order denying PPA's motion for reconsideration. PPA argues the Bank did not have standing to file a foreclosure complaint and, if it did have standing, the Bank did not establish there had been a default on the mortgage. After reviewing the record in light of the contentions advanced on appeal, we affirm.
PPA was the owner of an office building (the Building) in South Brunswick. On June 1, 2001, PPA borrowed $19.5 million from GMAC Commercial Mortgage Corporation (GMAC). As collateral security for these funds, PPA executed a promissory note (the Note), promising to pay GMAC or its assigns the principal sum of the loan, plus interest. On that same date, PPA executed and delivered a mortgage and security agreement (the Mortgage Agreement) on the property to secure payment and performance on the Note. On June 22, 2001, GMAC recorded the mortgage.
On June 1, 2001, PPA also executed a Tenant Improvement and Leasing Commission Reserve Agreement (the Improvement Agreement) and delivered it to GMAC. Under the Improvement Agreement, GMAC made an initial $351,906 deposit into a Tenant Improvement and Leasing Commission Reserve Fund (the Improvement Reserve) and PPA was required to make monthly deposits of $22,917 into the Improvement Reserve in repayment. By using monies in the Improvement Reserve, GMAC was to pay or reimburse PPA for the cost of certain tenant improvements or broker commissions in connection with PPA's leases with its tenants at the Building.
The Note, Mortgage Agreement and Improvement Agreement are known collectively by the parties as the Loan Documents. Each of the Loan Documents contained a clause regarding default. The Note provides that, in the event of default, at the lender's option, the outstanding balance of the loan, in addition to all unpaid interest accrued, shall immediately become due and payable. Under the Note, a default occurs "if any payment of principal and interest or any other payment required under this Note is not received by the Lender on or before the date that is five (5) days after the date such payment is due" or "if any default should occur under any of the other Loan Documents which is not fully cured following applicable notice or prior to the expiration of any grace or cure period."
The Mortgage Agreement likewise provides that, in the event of default, the lender can declare the entire unpaid debt to be immediately due and payable, and commence an action to foreclose PPA's rights in the Building. Under the Mortgage Agreement, a default occurs when there is any default under the Note, any violation of specific sections of the Mortgage Agreement, or when any default is not cured within the applicable time periods set forth in the Agreement.
Under the Improvement Agreement, PPA would not be permitted to receive any funds from the Improvement Reserve if it was in default. The Improvement Agreement defines default as any failure to make any monthly deposit payment within five days after the payment is due, failure to comply with the agreement, or failure to cure any default within thirty days notice from the lender. Any default under the Note or Mortgage Agreement also constitutes default under the Improvement Agreement.
The Note also provided that no failure by the lender to accelerate the debt in accordance with these default provisions would constitute a waiver of the lender's right to do so or a waiver of the lender's right to insist on strict compliance with the terms of the Note or any of the other Loan Documents. The Note contained a provision stating the Loan Documents could only be modified by "an agreement in writing." The Mortgage had a similar provision, as did the Tenant Improvement Agreement.
On November 6, 2001, GMAC assigned the Loan Documents to LaSalle Bank, N.A. (LaSalle) as trustee for the Registered Certificate Holders of GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificate Series 2001-C2. This assignment was recorded on November 30, 2001. Significantly, an undated allonge to the Note (the Allonge) provides that GMAC endorsed the PPA loan on the Building to LaSalle.
The Loan Documents were also securitized pursuant to a Pooling and Servicing Agreement (PSA). The PSA provided for GMAC to act as Master Servicer and Special Servicer for LaSalle with respect to the securitized loan pool.
The Bank became the trustee of the Loan Documents after it merged with LaSalle. On May 2, 2006, GMAC changed its named to Capmark Finance Inc. (Capmark).
In August 2007, PPA lost its largest tenant. Prior to that, however, PPA was able to re-lease some of that tenant's space to two other tenants. Capmark approved the two leases and, by letters dated May 4, 2007 and July 19, 2007, it confirmed that this "consent shall not be construed to be a modification or waiver of any of the terms or conditions" of the Loan Documents.
PPA defaulted under the Loan Documents on September 10, 2007 by beginning to remit its payments sixty days past due. Thus, the payment due from PPA on September 5, 2007 was not received until November 2007. Thereafter, PPA continued to make the payments sixty days late. As a result, Capmark's Client Relations Manager, Barbara Shaffer, sent PPA a series of letters between September 2007 and March 31, 2008, advising that the loan was in default and demanding payment of the full amount owed, plus interest and late fees. These letters also stated that the lender was not waiving any of its rights under the Loan Documents to foreclose on the loan.
In October 2007, PPA asked Capmark to make certain disbursements to it from the Improvement Reserve. Because PPA was in default, Capmark ...