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Devaughn Edwards v. Countrywide Home Loans


December 28, 2012


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1721-09.

Per curiam.


Submitted October 15, 2012

Before Judges Graves, Espinosa, and Guadagno.

Plaintiff DeVaughn Edwards appeals from orders entered on August 18, 2010, October 15, 2010, and April 15, 2011, granting summary judgment and dismissing his complaint against defendant Countrywide Home Loans, Inc. (Countrywide). On appeal, plaintiff claims that the motion judge erred in dismissing his claims under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, the federal Truth in Lending Act (TILA), 15 U.S.C.A. §1601-67f, the Home Ownership and Equity Protection Act, (HOEPA), 15 U.S.C.A. §1639, the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.A. §§2610-17, as well as the common law. Plaintiff also claims that the mortgage assignment to Countrywide was not valid, Countrywide did not comply with discovery, and that he was entitled to relief under a Final Consent Judgment (FCJ) that Countrywide entered into with the New Jersey Attorney General. After considering plaintiff's contentions in light of the record and the applicable law, we affirm.

On June 29, 2006, plaintiff purchased certain real property in Barnegat for $459,000. In order to finance the purchase, plaintiff executed an adjustable rate note (First Note) secured by a purchase money mortgage (First Mortgage) in the amount of $367,200, in favor of Household Finance Corporation III (HFC). An addendum to the note required "interest only" payments for the first sixty months followed by monthly principal and interest payments for the next three hundred months in an amount sufficient to fully repay the unpaid principal. To finance the balance of the purchase price, plaintiff executed a second note and mortgage in the amount of $91,800 in favor of HFC.

HFC then assigned the First Note and First Mortgage to Decision One Mortgage Company LLC (Decision One). On November 1, 2006, Countrywide purchased the First Note and First Mortgage from Decision One in the secondary market.

In March 2009, plaintiff requested that Countrywide modify the terms of his loan. Countrywide initially determined that plaintiff demonstrated a positive cash flow and declined his request for modification. Instead, Countrywide offered a forbearance agreement which plaintiff declined.

On May 4, 2009, plaintiff filed a complaint in the Law Division against Countrywide, alleging fraud in inducing him to sign the mortgage, as well as failure to comply with various federal regulations. Plaintiff also claimed that Countrywide failed to comply with the FCJ.

After the conclusion of discovery, plaintiff moved for summary judgment and defendant sought dismissal of plaintiff's complaint. At the conclusion of oral argument, the motion judge reserved decision after defendant agreed to modify the loan. Countrywide proposed to cap plaintiff's arrears, convert the loan from adjustable to a fixed interest rate, and combine monthly principal and interest payments. Plaintiff declined the loan modification and advised Countrywide that he wanted to sell the home. Plaintiff then requested that Countrywide consider a short sale, as the anticipated sale proceeds would be insufficient to satisfy the first mortgage.

On June 22, 2010, Countrywide informed the motion judge that it denied plaintiff's request for a short sale as the proposed purchase price was $35,000 less than the fair market value of the home. Countrywide also noted that plaintiff had the ability to pay the deficiency between the value of the property and the loan balance, but chose not to do so.

On August 18, 2010, the motion judge entered an order dismissing several of plaintiff's claims as time-barred. On October 15, 2010, the motion judge entered a second order dismissing plaintiff's claim that defendant violated the FCJ.

Plaintiff filed a notice of appeal on November 25, 2010, and an amended notice of appeal on December 28, 2010. We granted defendant's motion for a temporary remand to permit the motion judge to enter an order granting Countrywide's summary judgment motion. On April 15, 2011, the motion judge dismissed plaintiff's remaining claims. Plaintiff then filed another amended notice of appeal to incorporate that order.

Common Law Fraud and Consumer Fraud Act Claims

Plaintiff concedes that he had no contact or communication with Countrywide prior to the loan closing, when he claims the fraudulent conduct occurred. When the motion judge told plaintiff that it was difficult to assign claims against Countrywide because "they didn't participate in any of this activity[,]" plaintiff responded, "All right. Well, that's true."

The five elements of common-law fraud are: (1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages. Jewish Ctr. of Sussex County v. Whale, 86 N.J. 619, 624-25 (1981).

To state a claim under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, three elements are required: (1) unlawful conduct by defendant; (2) an ascertainable loss by plaintiff; and (3) a causal relationship between the unlawful conduct and the ascertainable loss. Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372, 389 (2007).

HFC was the original lender and Countrywide purchased plaintiff's loan in the secondary market. Countrywide had no involvement in the initiation, underwriting or funding of plaintiff's loan and could not have made any misrepresentations sufficient to support a claim of fraud. None of the elements for common law fraud or the CFA were established below and the dismissal of these claims was proper.


Plaintiff's TILA, HOEPA, and RESPA claims are based on his allegations that Countrywide "failed to comply with Federal regulations including failing to provide documents including Truth in Lending and Right to Cancel[,]" and "did not provide any information for [h]igh [i]nterest [l]oans in compliance with the Truth in Lending Act."

We agree with the motion judge that plaintiff's claims were subject to a one-year statute of limitations. See 15 U.S.C. § 1640(e) and 12 U.S.C. § 2614. Plaintiff's loan closing took place on June 29, 2006, and he filed his complaint seeking damages on May 4, 2009, well after the expiration of the one-year statute of limitations applicable to TILA, HOEPA and RESPA claims of this type. While the statute of limitations period may be equitably tolled in cases involving fraudulent concealment, Jones v. TransOhio Savings Ass'n, 747 F.2d 1037, 1043 (6th Cir. 1984), no such evidence involving Countrywide has been presented here.

The Assignment

Plaintiff challenges the assignment of the First Note and First Mortgage from HFC to Decision One for the first time on appeal. It is a well-settled principle that "our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest." US Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 483 (2012) (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)(internal quotation omitted)). Because plaintiff did not raise this argument before the motion judge, we need not consider it.

Countrywide FCJ

The FCJ identifies a certain class of "Eligible Borrowers" and "Qualifying Mortgages" and provides that "Each Eligible Borrower shall be considered for a range of affordable loan modification options with respect to his or her Qualifying Mortgage."

Plaintiff claims only that his loan qualified for "restructuring" under the FCJ and Countrywide "as an alleged assignee of the mortgage, refused to comply." We note initially that plaintiff's position here, that Countrywide received a valid assignment of the mortgage, is inconsistent with his argument that the assignment to Countrywide was void.

Countrywide maintains that plaintiff lacks standing to raise any claims against Countrywide under the FCJ, as that agreement contains a provision that it "is not intended to confer upon any person any rights or remedies, including rights as a third party beneficiary."

During oral argument before the motion judge, counsel for defendant maintained that, even though plaintiff lacked standing to enforce the FCJ, Countrywide would attempt to negotiate a modification of his loan. The judge adjourned the matter for that purpose and in April 2010, Countrywide forwarded a Loan Modification Agreement to plaintiff that combined interest and principal payments and extended the term of the loan. Plaintiff rejected the offer for modification. Plaintiff's claim that there is no documentation to support defendant's offer to modify the loan is flatly contradicted by the January 22, 2010 transcript, the proposed Loan Modification Agreement, and related correspondence to the motion judge.

The remainder of plaintiff's arguments lack sufficient merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E).



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