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.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
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 ...