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Central Jersey Bank v. Timm's Window Fashions, LLC

Superior Court of New Jersey, Appellate Division

June 20, 2013

CENTRAL JERSEY BANK, a Division of Kearny Federal Savings Bank, Plaintiff-Respondent,
TIMM'S WINDOW FASHIONS, LLC, BRIAN TIMM, and MICHAEL TIMM, Defendants-Appellants. BRIAN TIMM and MICHAEL TIMM, Third-Party Plaintiffs,
MAGGS & MCDERMOTT, LLC, all members and officers both individually and severally, and JAMES A. MAGGS, individually and severally, Third-Party Defendants.


Argued May 15, 2013

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4043-11.

Brian Timm, appellant, argued the cause pro se (Brian Timm and Michael, on the pro se brief).

James A. Maggs argued the cause for respondent (Maggs & McDermott, attorneys; Mr. Maggs and Tennant D. Magee, Sr., on the brief).

Before Judges Parrillo, Sabatino and Maven.


Defendants Timm's Window Fashions, LLC (TWF), Brian Timm, and Michael Timm appeal the entry of summary judgment in favor of plaintiff, Central Jersey Bank, in the amount of $29, 866.55, and the dismissal of the Timms's counterclaim and third-party complaint against plaintiff's counsel. We affirm.

By way of background, plaintiff currently operates as a division of Kearny Federal Savings Bank (Kearny Federal), a licensed banking institution in this State, following the merger of plaintiff's predecessor, Central Jersey Bank, N.A., with Kearny Federal. On November 3, 2008, plaintiff made a commercial loan to TWF in the principal amount of $60, 000, memorialized in a promissory note of the same date. Brian and Michael Timm, as agents and members of TWF, executed the note on behalf of TWF.

The note stated that interest would accrue on the unpaid principal balance of the loan at an initial interest rate of five and one-half percent per annum, which was calculated by adding one percentage point to the highest prime rate published in the Eastern Edition of the Wall Street Journal. The note required TWF to make one payment of all outstanding principal plus all accrued unpaid interest on November 3, 2009. Upon default, interest would be increased to eighteen percent per annum, and the note entitled plaintiff to collect a late fee of five percent for each payment not paid within fifteen days of the due date.

The Timms also individually executed a commercial guaranty on the note, which included the following provision:

Guarantor absolutely and unconditionally guarantees full and punctual payment and satisfaction of the Indebtedness of Borrower to Lender, and the performance and discharge of all Borrower's obligations under the Note and the Related Documents. This is a guaranty of payment and performance and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender's remedies against anyone else obligated to pay the Indebtedness or against any collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness . . . . Under this Guaranty, Guarantor's liability is unlimited and Guarantor's obligations are continuing.

"Indebtedness" included payment of any attorney's fees and costs incurred by plaintiff in collection of the loan.

Thereafter, the parties agreed to change the terms of the note twice, each time extending the maturity date. Specifically, on October 28, 2009, the Timms, acting again as agents of TWF, executed a "change in terms" agreement, which extended the maturity date of the loan to January 3, 2010, and set a minimum interest rate of four percent. On January 12, 2010, the Timms, also as agents of TWF, executed another change in terms agreement that extended the maturity date to November 3, 2010, and reduced the line of credit from $60, 000 to $35, 000. The individual guaranties of the Timms were likewise extended.

According to plaintiff, TWF defaulted on its obligations under the note by failing to make full payment on the November 3, 2010 maturity date, and the Timms individually failed to pay the sums due in accordance with their obligations under the guaranties. Consequently, by letter of March 2, 2011, plaintiff offered to modify the terms of the note by, among other things, extending the maturity date from November 3, 2010 to November 3, 2011, and setting an annual interest rate floor of four-and-a-half percent. On March 9, 2011, the Timms responded by signing the renewal letter, both in their official and individual capacities as guarantors of the note, adding the language "all rights reserved" and "agent" on all signature lines. The Timms also signed a "change in terms" agreement dated March 2, 2011, which set forth the same modifications as the renewal letter. They similarly added the language "all rights reserved" and "agent" to the signature lines. According to the Timms, these documents were executed at one of plaintiff's branch offices and accepted by the assistant vice president of the branch.

Shortly after receipt of the documents, by letter dated March 21, 2011, plaintiff advised defendants that the renewal letter and accompanying "change in terms" agreement were improperly executed, stating that "[t]he signature line on the loan documents clearly indicates the capacity in which you are signing, nowhere is it listed that you are to sign as 'agents'." Plaintiff enclosed another renewal letter and "change in terms" agreement to be executed as indicated and "returned to the bank immediately."

By letter dated April 25, 2011, plaintiff, through its counsel, again advised the Timms that the renewal letter and "change in terms" agreement had not been executed properly and would not be accepted. The letter read, in part:

This letter is to advise that you have improperly executed the Renewal Letter and Modification and, as such, it has not been accepted by the Bank. The defect arises from your insertion of the language "all rights reserved" on the execution line of the Renewal Letter and Modification. The Note, therefore, has not been extended to November 3, 2011.

When defendants failed to execute the proposed change to the agreement in accordance with plaintiff's specific and required terms, plaintiff directed its counsel (third-party defendants) Maggs & McDermott, LLC and James Maggs, Esq., to seek collection against defendants under the note and related documents. By letter dated June 2, 2011, counsel advised defendants that if a properly executed modification of the agreement was not received by June 12, 2011, plaintiff would "have no alternative other than to avail itself of its rights under the Note." The Timms responded by letter dated June 23, 2011, agreeing to execute a new agreement without the words "ALL RIGHTS RESERVED" added to the signature line, but requested that plaintiff first return the purportedly invalid documents. According to defendants, plaintiff refused to do so.

Over a period of about six months following defendants' default, plaintiff sent a reminder notice and several billing statements to TWF, on Kearny Federal Savings letterhead. The reminder notice dated June 13, 2011, set forth an amount due under the note of $18, 596.76. A billing statement dated June 30, 2011, shows a principal balance of $18, 529.15, a total amount due of $128.91, and a current payment of $61.30. Subsequent billing statements reflect payments made by TWF. The November 30, 2011 statement shows a principal balance of $17, 931.76. Handwritten notes at the bottom of that statement refer to four payments made by TWF from December 3, 2011 through February 3, 2012, totaling $594.11. According to defendants, plaintiff stopped sending statements and invoices in February 2012.

Plaintiff sued defendants for the amount due on the note, including all outstanding principal, interest, and attorney's fees and costs that had accrued through December 22, 2011. TWF and the Timms answered, denying liability. In addition, the Timms counterclaimed and filed a third-party complaint against plaintiff's counsel, which included various allegations involving frivolous pleadings and violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 to 1692p. A final judgment of default was entered against TWF on March 8, 2012.

Plaintiff moved for summary judgment on its complaint and for dismissal or, in the alternative, summary judgment, on the counterclaim. Third-party defendants also moved for dismissal or, in the alternative, summary judgment on the third-party complaint. Following defendants' opposition and a hearing, the court granted summary judgment to plaintiff in the amount of $29, 866.55 and dismissed the counterclaim and third-party complaint. The court later denied defendants' motion for reconsideration.

On appeal, defendants raise the following issues:

I. Whether the Lower Court erred by ruling against the Appellants by finding that the written words "all rights reserved" placed right above Appellants['] signature[s] on the Note modified the terms and conditions of the Note.
II. Whether the Lower Court erred by ruling against the Appellants by finding that Respondent could rescind the contract ten days after accepting the contract.
III. Whether an acceptance of payments by Respondent and Kearny Federal Savings Bank after the alleged rejection of the Note constituted tacit acceptance of the Note as it was signed with "all rights reserved."
IV. Whether the Respondent answered the counterclaim.
V. Whether the Lower Court erred by ruling against the Appellants on a motion for summary judgment prior to any discovery in the case.
VI. Whether the Lower Court erred by ruling against the Appellants on motion for summary judgment while there are unresolved issues of material facts in dispute including but not limited to alleged disputed amounts due, when at the time of deciding the motion the lower court concluded that the alleged amount due were wrong.
VII. Whether the Lower Court erred by ruling against the Appellants dismissing Appellants' Compulsory/Mandatory Counterclaim in the form of an Affidavit.
VIII. Whether the Lower Court erred by ruling against the Appellants dismissing Appellants' Strict Liability Tort Third Party FDCPA Complaint.
IX. Whether the Respondent Central Jersey Bank, N.A. being a defunct corporation could and did acquire subject matter jurisdiction and can appear in any court in New Jersey.
X. Whether the Lower Court had subject matter jurisdiction as to Respondent's complaint.
XI. Whether the Respondent Central Jersey Bank, N.A. being defunct corporation is Real Party in Interest and has Standing pursuant to R. 4:26-1.
XII. Whether the Lower Court exceeded its authority by sua sponte dismissing Appellants' Counterclaim and Third Party Complaint and simultaneously granting motion for summary judgment when Respondent had moved to dismiss Counterclaim and Third Party OR in the alternate grant the motion for Summary Judgment.
XIII. Whether the Appellants were in default at the time Respondent filed its complaint while Appellants [were] making payments to Kearny Federal Savings Bank.
XIV. Whether the Respondent has authority and/or capacity to sue or be sued.
XV. Whether the Lower Court exceeded its authority in dismissing Third Party Strict Liability Tort complaint where Third Party defendants failed to provide discovery.
XVI. To determine whether the Respondent is an injured party.

We find no merit to any of these issues.


As a threshold matter, defendants argue plaintiff lacked standing to sue and, having merged with Kearny Federal, is not the "real party in interest." In support of this argument, defendants rely exclusively on a document pulled from a Federal Deposit Insurance Corporation (FDIC) website stating that "Central Jersey Bank, National Association" became an "inactive institution" on November 30, 2010, after being "[m]erged without Assistance into Kearny Federal Savings Bank." In opposition, plaintiff submits an affidavit of Peter Cappello, the Senior Vice-President of Central Jersey Bank, certifying that plaintiff Central Jersey Bank "lawfully operates as a division of Kearny Federal Savings Bank following the merger of Central Jersey Bank, N.A., with Kearny Federal Savings Bank, a licensed banking institution in the State of New Jersey."

The motion judge agreed with plaintiff, finding no evidence in the record to refute Cappello's affidavit and stating further that the note and the subsequent documents modifying the terms of the note identified plaintiff as the lender and TWF as the borrower. Moreover, the proposed March 2, 2011 renewal letter lists "Central Jersey Bank" on its letterhead and under that, "a Division of Kearny Federal Savings Bank, " which the accompanying "change in term" agreement describes as the lender and formerly known as "Central Jersey Bank, N.A." We agree that plaintiff has standing to bring this action.

Standing "refers to the plaintiff's ability or entitlement to maintain an action before the court." In re Adoption of Baby T., 160 N.J. 332, 340 (1999) (internal quotation marks omitted). Rule 4:26-1, which provides that "[e]very action may be prosecuted in the name of the real party in interest[, ]" is "ordinarily determinative of standing." Campus Assocs. L.L.C. v. Zoning Bd. of Adjustment of Hillsborough, 413 N.J.Super. 527, 533 (App. Div. 2010). In determining whether a party has standing, the court must look at "whether the party has a sufficient stake in and real adverseness with respect to the subject matter, and whether the party will be harmed by an unfavorable decision." In re Grant of the Charter Sch. Application of Englewood, 320 N.J.Super. 174, 222 (App. Div. 1999), aff'd, 164 N.J. 316 (2000). "A financial interest in the outcome ordinarily is sufficient to confer standing." Campus Assocs., supra, 413 N.J.Super. at 534 (internal quotation marks omitted).

Moreover, a "complaint by a non-legal entity should not be entertained." Options v. Lawson, 287 N.J.Super. 209, 221 (App. Div. 1996); see also Marchitto v. Central R.R. Co. of N.J., 9 N.J. 456, 466 (1952) (unincorporated fraternal association had no standing beyond that conferred by statute), overruled on other grounds by Donnelly v. United Fruit Co., 40 N.J. 61 (1963); LoPresti ex rel. LoPresti v. Galloway Twp. Middle Sch., 381 N.J.Super. 314, 318 (Law Div. 2004) (noting that "[w]hile the Galloway Township Middle School was named as a defendant in this matter, in reality, the true defendant is the Galloway Township School District since the Galloway Township Middle School (Middle School) is not a legal entity"). Even if a party can show that it has a sufficient interest in the subject matter, it cannot obtain relief if it is not a proper legal entity. Options, supra, 287 N.J.Super. at 221. "The existence of a proper legal entity is not . . . a mere matter of form rather than substance. In any suit, . . . the plaintiff must subject itself to orders enforceable against itself, as well as availing itself of favorable orders." Ibid.

In Options, we requested supplemental briefs from the parties on whether the plaintiff was an "identified juridical entity" that the court could enter a judgment for or against. Id . at 220. We were satisfied with documents submitted by the plaintiff showing that "Options" was registered as an alternate name for the plaintiff corporation, and granted plaintiff's motion to supplement the record and amend the pleadings "nunc pro tunc" to include as plaintiff the original name of the corporation. Id. at 221.

Here, we are satisfied that plaintiff, as an operating division of Kearny Federal, has a sufficient stake in the subject matter and therefore has standing to sue. While the predecessor Central Jersey Bank, N.A. was no longer an active entity by virtue of its merger with Kearny Federal, there is no competent evidence that the named plaintiff is similarly defunct.


Defendants next argue that summary judgment was inappropriate because of disputed issues of material fact concerning whether the parties agreed to a third modification of the terms of the note. We disagree.

In Optopics Laboratories Corp. v. Sherman Laboratories, Inc., 261 N.J.Super. 536 (App. Div. 1993), we affirmed an order of the Law Division granting summary judgment to the plaintiff on the principal and interest due under a loan agreement. Id. at 538, 546. The defendant admitted that it had received and signed a loan, that the agreement provided for interest to be paid monthly, and that plaintiff had demanded repayment under the terms of the agreement. Id. at 546. Plaintiff therefore "clearly established that the debt was due and owing, warranting the granting of summary judgment[.]" Ibid.

Here, defendants dispute neither the validity of the underlying promissory note and loan agreement nor that they individually guaranteed repayment of the loan in the event of a default. They also do not dispute that the loan had a maturity date that triggered an obligation to pay all outstanding principal and interest and that as of the last agreed upon maturity date, November 2, 2010, defendant had not made full payment of all principal and accrued interest. Rather, as noted, they part company with plaintiff over whether there was an additional agreement to extend the maturity date of the loan a third time to beyond November 2, 2010.

On that score, it is well-settled that a "written contract is formed when there is a 'meeting of the minds' between the parties evidenced by a written offer and an unconditional, written acceptance." Morton v. 4 Orchard Land Trust, 180 N.J. 118, 129-30 (2004). "An expression of assent that modifies the substance of the tender, while it may be operative as a counteroffer, is yet not an acceptance and does not consummate a contract." Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 538 (1953). The acceptance must "'precisely match the offer.'" Morton, supra, 180 N.J. at 130. (quoting Milton R. Friedman & James Charles Smith, Friedman on Contracts and Conveyances of Real Property, § 1.2 (2002)). Moreover, an offer may be revoked at any time before acceptance. Am. Handkerchief Corp. v. Frannat Realty Co., 17 N.J. 12, 17 (1954). Like an initial offer, a counteroffer only becomes a binding contract if accepted prior to revocation. Morton, supra, 180 N.J. at 130.

A party may assent to the terms of an offer through either words or conduct. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 436 (1992). "Silence does not ordinarily manifest assent, but the relationships between the parties or other circumstances may justify the offeror's expecting a reply and, therefore, assuming that silence indicates assent to the proposal." Ibid. (citing Johnson & Johnson, supra, 11 N.J. at 539). Silence or inaction operates as an acceptance where, for example, "an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation." Ibid. (quoting Restatement (Second) of Contracts, § 69(1)(a)). As in the case of an express contract, "contracts implied in fact depend on 'mutual agreement and intent to promise[.]'" St. Barnabas Med. Ctr. v. Cnty. of Essex, 111 N.J. 67, 77 (1988) (quoting West Caldwell v. Caldwell, 26 N.J. 9, 29 (1958)).

Here, by unilaterally adding the language "all rights reserved" and "agent" next to their signatures — restrictive language intending to benefit defendants as individual guarantors — the Timms altered the terms of plaintiff's offer to modify the note. By doing so, defendants did not unconditionally accept plaintiff's offer. Instead, the signed renewal letter and "change in terms" agreement, as submitted to plaintiff by defendants, constituted a counteroffer, which plaintiff was free to accept or reject. Plaintiff explicitly rejected this counteroffer via letter approximately ten days later, and reinstated the original offer by enclosing a new renewal letter and "change in terms" agreement, which defendants never signed and returned to plaintiff. About one month later, by letter dated April 25, 2011, plaintiff again reminded defendants that the renewal letter and "change in terms" agreement had not been executed properly and did not constitute an acceptance of the original offer. Indeed, throughout all this time, plaintiff never conducted itself in any way that could reasonably be construed as manifesting its assent to defendants' proposed modification.

Nevertheless, defendants argue that subsequent billing statements from plaintiff demonstrate that plaintiff had in fact agreed to extend the due date of the loan. The motion judge rejected this same argument, finding this evidence actually dispositive of defendants' default:

This evidence is problematic for two reasons. First, it is evidence of default because under the terms of the Note and subsequent modifications, all principal and interest were supposed to have been paid by November 3, 2010. The account statement submitted by the Timms in opposition to this motion indicates an amount of $17, 931.76 due and owing on the TWF Note as of November 30, 2011. The Timms have failed to account for this outstanding "Principle Balance." Under the terms of the Second Modification, all outstanding principal and interest on the Note was due as of November 3, 2010. Even if the Proposed Third Modification constitutes a binding agreement, which it does not as discussed in reference to the motion to dismiss the Timms' Counterclaims, principal and interest would have been due on the Note as of November 3, 2011. In that respect, the account statement submitted by the Timms is evidence of an outstanding balance in the amount of $17, 931.76 as of November 30, 2011. Second, the account statement fails to rebut the certification of Mr. Cappello who certified to the amounts outstanding. As discussed, the account statement serves to corroborate Mr. Cappello's certification.

We agree. The terms of the note and plaintiff's rejection of defendant's counteroffer are clear as is the undisputed evidence of defendants' default. Nor did plaintiff's continued acceptance of monthly payments itself cure TWF's default. The note provided that "Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them." Any "intention to abandon a contract by actions or acquiescence . . . must be 'clearly expressed.'" County of Morris v. Fauver, 153 N.J. 80, 96 (1998) (quoting Mossberg v. Standard Oil Co., 98 N.J.Super. 393, 407 (Law Div. 1967)). There is no such clearly expressed intention here.

In any event, even if the parties had in fact agreed to extend the maturity date to November 3, 2011, the evidence remains undisputed that TWF and the individual defendants still defaulted on the loan at that time and, accordingly, summary judgment in favor of plaintiff was properly granted. Defendants also argue against summary judgment because discovery was still outstanding. We disagree.

Generally, courts "seek to afford 'every litigant who has a bona fide cause of action or defense the opportunity for full exposure of his case.'" Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 193 (1988) (quoting United Rental Equip. Co. v. Aetna Life and Casualty Ins. Co., 74 N.J. 92, 99 (1977)). When "critical facts are peculiarly within the moving party's knowledge, it is especially inappropriate to grant summary judgment when discovery is incomplete." Ibid. (internal quotation marks omitted). In such cases, the case should be reviewed "'from the standpoint of whether there is any basis upon which [the party opposing summary judgment] should be entitled to proceed further.'" Ibid. (quoting Bilotti v. Accurate Forming Corp., 39 N.J. 184, 193 (1963)).

Here, defendants do not explain what purpose further discovery would serve, as the parties substantially agree on all material facts, and simply differ over their legal significance. As the motion judge stated in her written decision, the motion documents "provide[d] sufficient evidence about the terms of the Note, including provisions upon default, and the Timms' personal liability on the Note." The court also found, after hearing defendants' motion for reconsideration, that "there's no dispute of fact in terms of what happened so there's no discovery that needs to be performed or needs to be taken or provided with reference to the last note, the one that was signed a little bit differently." Rather, as noted, defendants' essential quarrel is simply with the motion court's conclusion that the undisputed facts, viewed in the light most favorable to defendants, established that the parties never agreed to modify the terms of the note a third time, extending the maturity date to November 3, 2011. Thus, viewing all the evidence in the light most favorable to defendants, we conclude there is no genuine issue of material fact and the summary judgment ruling was correct as a matter of law.


Defendants next challenge the dismissal of their counterclaim, which alleged that: (1) plaintiff filed a frivolous complaint; (2) plaintiff's original complaint was improperly unverified; (3) breach of contract; (4) conversion; (5) unconscionable practices and fraud; (5) plaintiff is not the holder in due course of the note; and (6) violation of the Fair Debt Collection Practices Act.

On appeal of a motion to dismiss for failure to state a claim under Rule 4:6-2(e), we apply a plenary standard of review and owe no deference to the trial court's conclusions. Rezem Family Assocs., LP v. Borough of Millstone, 423 N.J.Super. 103, 114 (App. Div.), certif. denied and appeal dismissed, 208 N.J. 366 (2011). We must "accept as true all factual assertions in the complaint." Smith v. SBC Commc'ns, Inc., 178 N.J. 265, 268-69 (2004). Rule 4:6-2(e) motions to dismiss should be granted in "only the rarest [of] instances." Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (internal quotations omitted). Trial courts must search the complaint

in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary. At this preliminary stage of the litigation [a] [c]ourt [should not be] concerned with the ability of plaintiffs to prove the allegation contained in the complaint. . . . [P]laintiffs are entitled to every reasonable inference of fact.

[Ibid. (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (internal quotations and citations omitted)); see also Schulman v. Wolff & Samson, PC, 401 N.J.Super. 467, 473-74 (App. Div.), certif. denied, 196 N.J. 600 (2008).]

At the same time, "if the complaint states no basis for relief and discovery would not provide one, dismissal is the appropriate remedy." Banco, supra, 184 N.J. at 166.

A Rule 4:6-2(e) motion to dismiss should be treated as one for summary judgment under Rule 4:46 if "matters outside the pleading are presented to and not excluded by the court[.]" R. 4:6-2. "[A]ll parties shall be given reasonable opportunity to present all material pertinent to such a motion." Ibid.; see Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J.Super. 324, 337 (App. Div.) (finding that the motion judge properly "converted the motion to a summary judgment motion and considered the parties' certifications"), certif. denied, 188 N.J. 353 (2006). "The primary distinction between a motion under R. 4:6-2(e) and R. 4:46 is that the former is based on the pleadings themselves." Pressler and Verniero, Current N.J. Court Rules, comment 4.1.2 on R. 4:6-2(e) (2013).

Here, the motion judge found each count of defendants' counterclaim wanting for failure to state a claim upon which relief can be granted, or lacking in any evidentiary or legal support. For instance, in dismissing defendants' frivolous-pleading claim, the motion judge reasoned:

[f]rivolous pleading is not a cause of action but a means to compel a party to either dismiss an action or be sanctioned. Here, [plaintiff] has provided sufficient support for summary judgment on its direct claims. The undisputed facts when viewed in a light most favorable to the non-moving party demonstrate that [plaintiff] and TWF entered into a loan that the Timms personally guaranteed. TWF defaulted on the loan, and the Timms failed to remit payment as required by the personal guaranties. Although frivolous pleading is not a cause of action, the undisputed facts demonstrate that the claims by [plaintiff] are meritorious rather than meritless.

We agree, as we do with the motion court's further holding that Rule 4:5-1(a) does not require plaintiff's complaint to have been verified.

The motion judge also rejected defendants' substantive claims of breach of contract, conversion and unconscionable practices and fraud. As to the former, the judge found that the undisputed material facts did not give rise to an agreement to modify the note a third time:

[Plaintiff]'s letter to TWF and the Timms of March 21, 2011 and the letter of [plaintiff]'s Counsel to TWF and the Timms serve to establish that [plaintiff] categorically rejected any counteroffer by the Timms. Furthermore, as argued by [plaintiff], prior to [plaintiff]'s March 21, 2011 formal rejection of the counteroffer, there is no evidence or suggestion that [plaintiff] could have accepted the counteroffer through silence because to do so, [plaintiff] must have received something of value demonstrating acceptance. Here, no allegation or factual support exists that [plaintiff] received anything of value between signing the Proposed Third Modification and the March 21, 2011 notice that the Proposed Third Modification had not been accepted by [plaintiff.]

We similarly conclude that defendants' breach of contract claim was properly dismissed for the very same reasons summary judgment was granted to plaintiff on its claim.

The motion judge also dismissed defendants' fraud and unconscionable commercial practices claim based on their failure

to allege any acts of fraud with specificity as required under the Rules; rather, the Timms assert that they have no knowledge of any fraud committed by [plaintiff]. . . .
Second, the Timms' Counterclaim asserts that the Proposed Third Modification constitutes an unconscionable agreement. But the terms of the Proposed Third Modification are not binding on any party; the Proposed Third Modification does not constitute a contract but a counteroffer that [plaintiff] rejected. . . .
Third, and finally, the terms of the Note as modified are consistent with acceptable commercial practices upheld by the Courts of this State.

Here again, we agree with the motion court.

Rule 4:5-8 requires that for all allegations of fraud, the "particulars of the wrong, with dates and items if necessary, shall be stated insofar as practicable."

Defendants did not plead any facts which could possibly give rise to a cause of action for fraud or unconscionability. Instead, they simply stated in their counterclaim that "it is puzzling" why plaintiff "would not want our rights reserved under the note" and why plaintiff would not return the "change in terms" agreement so they could sign it without the words "all rights reserved, " and that this "brings into question that the March 2, 2011 Change in Terms (the Note) agreement is written to violate our rights and thus being unconscionable and under federal law would fall under 'unfair or deceptive acts or practices.'"

Not only did defendants fail to allege any acts of fraud with specificity, but, as the motion court noted, the renewal letter and "change in terms" proposal never became a binding contract in the first place. In any event, there is nothing in the record to suggest that plaintiff in any way acted fraudulently or unlawfully. Plaintiff simply rejected defendants' counteroffer, which it was in no way compelled to accept. And defendants never alleged that any other existing aspect of the loan agreement (the interest rate, the provisions for default, and so on) was unconscionable.

The motion judge further dismissed defendants' claim that plaintiff was not a holder in due course of the note because such a claim is an affirmative defense and not an affirmative cause of action. The court nevertheless found that plaintiff was a holder in due course as

[t]he undisputed facts establish that [plaintiff] is the original lender and the entity that entered into the First Modification and the Second Modification. [Plaintiff] merged with Kearny Federal Savings Bank and continues to trade as [Central Jersey Bank]. The Timms have failed to assert any reason to disturb [plaintiff]'s right to seek redress for the Timms' failure to remit payment as due under the terms of their contractual obligations.

Plaintiff's status as a holder in due course is relevant only to the extent of being immune from certain defenses the debtor may have against the original creditor. But here, defendants are not asserting any such personal defenses such as fraud in the inducement or a lack of consideration, but rather that the debt is not due and owing because the parties agreed to further extend the maturity date of the loan.

Thus, plaintiff's status as a holder in due course is immaterial to its power to enforce the note. Under N.J.S.A. 12A:3-301, the parties entitled to enforce a negotiable instrument include "the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to [N.J.S.A.] 12A:3-309 or subsection d. of [N.J.S.A.] 12A:3-418." Here, defendants do not dispute that plaintiff continues to maintain possession of the note. Moreover, under the Banking Act of 1948, N.J.S.A. 17:9A-1 to -467, when two or more banks merge, "the corporate existence of each merging bank shall be merged into that of the receiving bank, and the property and rights of each merging bank shall thereupon vest in the receiving bank without further act or deed[.]" N.J.S.A. 17:9A-139.

Lastly, as to defendants' counterclaim, the motion judge dismissed the claim under the FDCPA, finding that defendants failed to assert a viable cause of action and that, under the FDCPA, "only consumer loans for 'personal, family, or household purposes' are protected. The loan at issue here was from [plaintiff] to Timm's Window Fashion[s], a limited liability company."

The purpose of the FDCPA is "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692. "Debt" is defined as " ny obligation or alleged obligation of a consumer to pay money a arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5); see also Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000) (stating the FDCPA "provides a remedy for consumers who have been subjected to abusive, deceptive, or unfair debt collection practices by debt collectors"). Importantly, the FDCPA does not apply to commercial debts. Staub v. Harris, 626 F.2d 275, 278 (3d Cir. 1980); Depolink Court Reporting & Litigation Support Services v. Rochman, __ N.J.Super. __, __ (April 26, 2013).

Defendants do not dispute that the loan at issue was for TWF, a limited liability company, and thus commercial in nature. The motion court therefore properly dismissed plaintiff's FDCPA claim.


Finally, defendants argue the court wrongly dismissed their third-party complaint against counsel for plaintiff. The third-party complaint repeats the frivolous pleading claim made in the counterclaim and also alleges that plaintiff's counsel violated the FDCPA. The motion court properly dismissed these claims for the same reasons they were dismissed on defendants' counterclaim. Frivolous pleading is not a cause of action, the allegations in plaintiff's complaint were substantiated, and the FDCPA does not apply to commercial debts.

Defendants further alleged in the third-party complaint that third-party defendant Maggs & McDermott, LLC, the law firm representing plaintiff, violated the Professional Service Corporation Act, N.J.S.A. 14A:17-1 to -18 (PSCA), by rendering services other than the ones for which it was incorporated, and the firm "does not have the right or standing to engage in collection of the alleged debt."

In dismissing this particular claim, the motion court stated that

James A. Maggs, Esq. of Maggs & McDermott, LLC certifies that he is licensed to practice law in the state of New Jersey and that he and his firm represent [plaintiff] in this action. No credible or persuasive evidence has been presented demonstrating why James A. Maggs, Esq. and Maggs & McDermott, LLC cannot represent themselves and [plaintiff] in this matter.

The Professional Service Corporation Act (PSCA), N.J.S.A. 14A:17-1 to -18, provides, in relevant part:

No professional corporation or foreign professional legal corporation may render professional services in this State except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render such professional services within this State; . . . provided, that no person shall, under the guise of employment, practice a profession unless duly licensed to practice that profession under the laws of this State. . . .

[N.J.S.A. 14A:17-7.]

It is clear that third-party defendants were duly licensed attorneys providing legal representation to plaintiff in this action. Defendants offer no evidence suggesting otherwise. Accordingly, their claim of error in the dismissal of this count of their third-party complaint is without merit. R. 2:11-3(e)(1)(E).


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