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Chua v. Deutsche Bank National Trust Company

Superior Court of New Jersey, Appellate Division

July 24, 2013

EDGAR AND ELVIN CHUA, Plaintiff-Appellants,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, TRUSTEE ON BEHALF OF CERTIFICATE HOLDERS OF MORGAN STANLEY ABS CAPITAL 1 INC. TRUST 2004-NC3 MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2004-N3, COUNTRYWIDE HOME LOANS, BANK OF AMERICA, AND BALBOA INSURANCE CO., Defendants-Respondents.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 21, 2013

On appeal from Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-0416-12.

Edgar and Elvin Chua, appellants pro se.

Reed Smith, LLP, attorneys for respondents Deutsche Bank National Trust Company, Trustee on Behalf of Certificate Holders of Morgan Stanley ABS Capital 1 Inc., Trust 2004-NC3 Mortgage Pass-Through Certificates Series 2004-N3, Countrywide Home Loans, and Bank of America (Donna M. Bates, on the brief).

Sweeney & Sheehan attorneys for respondent Balboa Insurance Company (Neal A. Thakkar, on the brief).

Before Judges Harris and Hoffman.

PER CURIAM

Plaintiffs Edgar and Elvin Chua appeal from June 21, 2012 Law Division orders dismissing their complaint against defendants Balboa Insurance Company (Balboa) and Deutsche Bank National Trust Company (Deutsche Bank). For the reasons that follow, we affirm.

I

This case has its genesis in an action that Deutsche Bank filed on January 27, 2010 to foreclose on the mortgage on plaintiffs' single-family home in Bernardsville. Plaintiffs contested the foreclosure and asserted that they were unable to pay their mortgage because mold infestation rendered their home uninhabitable. Plaintiffs filed a third-party complaint against Balboa seeking to recover on a lender-placed insurance policy issued on March 4, 2009, one year after plaintiffs defaulted on their loan.

Balboa moved to dismiss the third-party complaint as non-germane to the foreclosure action, but the Chancery judge denied the motion and the claim proceeded. Balboa then moved for summary judgment on the basis that plaintiffs lacked standing to sue for coverage under the policy, and on the separate ground that mold damage was not covered under the terms of the policy. The judge agreed on both issues, and dismissed the third-party complaint. On that date, the judge advised plaintiffs on the record that "if you think I'm wrong, you have a right of appeal but . . . you don't have a right of appeal until the case is finally over, and because this is a foreclosure, it's not finally over." Plaintiffs moved for reconsideration, which was denied. The judge further informed plaintiffs that if they wanted to try and appeal immediately, they could file for leave to appeal, or file a motion in the Chancery Division for an order certifying her decision as final so they could appeal as of right.

Plaintiffs did not seek leave to appeal from the dismissal of their third-party complaint, nor did they move for an order to have the dismissal certified as final. Instead, on March 27, 2012 they filed the Law Division action under review, and asserted the same insurance issues litigated in the foreclosure action. They also alleged that defendants violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C.A. §§ 2601 to -2617, including violations related to the lender-placed insurance. Both defendants moved to dismiss plaintiffs' complaint in lieu of filing an answer, pursuant to Rule 4:6-2(e).

The Law Division judge granted defendants' motion to dismiss based on both collateral estoppel and entire controversy grounds, noting that plaintiffs "unsuccessfully litigated the insurance coverage issues in the [f]oreclosure [a]ction, " and thus were improperly "seeking . . . a second bite at the apple." The judge further indicated that plaintiffs' claims for RESPA violations "cannot be sustained as a matter of law as they were previously litigated in the underlying foreclosure action." In fact, the Chancery judge expressly indicated, in denying plaintiffs' motion for reconsideration in the ...


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