July 31, 2013
U.S. BANK, as successor by merger to STATE STREET BANK AND TRUST COMPANY, Trustee for the Registered Holders of J.P. Morgan Commercial Finance Corp., Mortgage Pass-Through Certificates, Series 1998-C6, Plaintiff-Respondent,
ALMONESSON ASSOCIATES, LP, and KENNETH GOLDENBERG, Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued telephonically February 15, 2013
On appeal from Superior Court of New Jersey, Chancery Division, Gloucester County, Docket No. F-48887-09.
Randi A. Wolf argued the cause for appellants (Spector Gadon & Rosen, P.C., attorneys; Ms. Wolf, on the brief).
Sheila E. Calello argued the cause for respondent (McCarter & English, LLP, attorneys; Ms. Calello, of counsel and on the brief; Danielle Weslock, on the brief).
Before Judges Fisher and St. John.
Defendants Almonesson Associates, LP and Kenneth Goldenberg, appeal from a May 11, 2012 Chancery Division order denying their request to vacate a February 3, 2012 consent judgment. On appeal, defendants argue the judge erred in denying their motion, as the circumstances required the consent judgment be vacated. Following our review of these arguments in light of the record and the applicable law, we affirm.
We briefly summarize the relevant procedural history and the facts based on the record before us.
Almonesson was the owner of a shopping center located in Deptford. In September 1997 it borrowed $30, 300, 000, executed a fixed rate note secured by a mortgage and other collateral documents. The loan was further secured by a guaranty given to the lender by Goldenberg. On October 16, 2009, plaintiff U.S. Bank filed a verified complaint for foreclosure, possession, entitlement to rents, appointment of a rent receiver, and foreclosure of security interest against defendants. Defendants did not file an answer, but entered into negotiations with the lender. As a result, a forbearance agreement was entered into among the parties on December 1, 2009. Pursuant to this agreement, defendants agreed to: (1) the appointment of a rent receiver; (2) the execution of a consent judgment; and (3) the execution of a deed in lieu of foreclosures and related documents. Plaintiff agreed to forebear from pursing its remedies for eighteen months, specifically until June 30, 2012.
The consent order appointing a rent receiver, pursuant to the agreement, was entered on April 15, 2010. Metro Commercial Management Services Inc. (Metro) was named as the court-appointed rent receiver. Metro remained in control of the shopping center during the forbearance agreement. As rent receiver, Metro was to issue monthly reports to the plaintiff and defendants showing income and expenses. According to the president of Metro, defendants did not present it with any prospective tenants or purchasers for the shopping center. Defendants contend that Metro did not comply with its reporting requirements.
In a June 29, 2011 letter to plaintiff, defendants requested a nine month extension of the forbearance agreement. Plaintiff did not agree to the extension. Defendants failed to pay all sums due under the loan documents, and on December 15, 2011, over five months from the date that it was authorized to file, plaintiff submitted the consent judgment for entry. On December 27, 2011, defendants objected to its entry, claiming plaintiff failed to comply with the terms of the forbearance agreement. However defendants could not evidence that, during the period of forbearance, they had given any notice to plaintiff that it was in violation of the forbearance agreement.
On February 3, 2012, the court entered the consent judgment. On April 11, 2012, defendants filed a motion to vacate the consent judgment asserting an entitlement to such relief pursuant to Rule 4:50-1. After considering oral arguments, the motion judge denied defendants' motion finding that they were not entitled to relief since, among other grounds, plaintiff had not violated the forbearance agreement. This appeal ensued.
Defendants argue: (1) plaintiff failed to provide promised information to defendants and refused to negotiate in good faith, thus plaintiff failed to live up to promises made in the forbearance agreement and therefore the consent judgment should have been vacated; (2) the consent judgment should have been deemed void because Rule 4:64-1(d) requires that all applications for entry of judgment in an uncontested case must be submitted to the foreclosure unit for consideration, and defendants maintain that here the matter was uncontested; (3) the consent judgment should have been vacated pursuant to Rule 4:50-1(f) because it would be inequitable for plaintiff to receive a final judgment of foreclosure because it failed to provide promised benefits pursuant to the forbearance agreement; and (4) this court should allow defendants to file a responsive pleading out of time because defendants have shown good cause since the reason for defendants' delay in filing any answer was the parties' decision to enter into the forbearance agreement.
A trial judge's "decision granting or denying an application to open a judgment rests within the sound discretion of the trial court, exercised with equitable principles in mind, and will not be overturned in the absence of an abuse of that discretion." Marder v. Realty Constr. Co., 84 N.J.Super. 313, 318 (App. Div.) (citations omitted), aff'd, 43 N.J. 508 (1964). See also DEG, LLC, v. Twp. of Fairfield, 198 N.J. 242, 261 (2009) ("On appellate review, the trial judge's determination will be left undisturbed unless it represents a clear abuse of discretion." (internal quotation marks and citations omitted)). "[A]buse of discretion is demonstrated if the discretionary act was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone v. Levine, 382 N.J.Super. 181, 193 (App. Div. 2005) (citation omitted). Accordingly, our task is not "to decide whether the trial court took the wisest course, or even the better course, since to do so would merely be to substitute our judgment for that of the lower court. The question is only whether the trial judge pursued a manifestly unjust course." Gittleman v. Cent. Jersey Bank & Trust Co., 103 N.J.Super. 175, 179 (App. Div. 1967), rev'd on other grounds, 52 N.J. 503 (1968).
Consent judgments resolving litigation are authorized by Rule 4:42-1, Midland Funding, LLC v. Giambanco, 422 N.J.Super. 301, 310 (App. Div. 2011), and are "'not strictly a judicial decree, but rather in the nature of a contract entered into with the solemn sanction of the court.'" Cmty. Realty Mgmt. v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at Freehold v. Twp. Comm. of Freehold, 139 N.J.Super. 311, 313 (Law Div. 1976)). Stated differently, a consent judgment is "an agreement of the parties under the sanction of the court as to what the decision shall be." Fid. Union Trust Co. v. Union Cemetery Ass'n, 136 N.J. Eq. 15, 25 (1944) (internal quotation marks and citations omitted), aff'd, 137 N.J. Eq. 456 (E & A 1946).
"[A] consent judgment may only be vacated in accordance with R[ule] 4:50-1." Harris, supra, 155 N.J. at 226 (internal quotation marks and citations omitted). See also DEG, supra, 198 N.J. at 261 ("The rule does not distinguish between consent judgments and those issued after trial."); Pope v. Kingsley, 40 N.J. 168, 173 (1963) ("A consent judgment has equal adjudicative effect to one entered after trial or other judicial determination." (citations omitted)).
A motion to vacate a judgment may be granted upon proof of one of the enumerated bases set forth in the rule. Relief from a judgment based on any one of these enumerated bases should be granted sparingly. Hous. Auth. Of Morristown v. Little, 135 N.J. 274, 289 (1994). "Rule 4:50-1 is not an opportunity for parties to a consent judgment to change their minds; nor is it a pathway to reopen litigation because a party either views his settlement as less advantageous than it had previously appeared, or rethinks the effectiveness of his original legal strategy." DEG, supra, 198 N.J. at 261.
Here, the motion judge considered defendants' motion in light of their burden of persuasion, as mandated by Rule 4:50-1. She found the proofs wanting and denied the requested relief.
Defendants primary contention is that the forbearance agreement afforded Almonesson "the opportunity to continue its efforts to redevelop/save the Property and restructure the loan or otherwise buy out of its loan at less than par so it could retain ownership of the Property." The agreement provided that Almonesson could present an offer to plaintiff. The agreement also stated that "[i]n no event shall Lender have any obligation to accept any such proposal. . . ."
Defendants also argue that plaintiff breached its obligations under the forbearance agreement because Metro, the rent receiver appointed by the court pursuant to a consent order, did not comply with its obligations. We are not persuaded by this argument since the forbearance agreement provides that neither defendants nor plaintiff "shall have any liability for actions taken by, or omissions of, the Receiver."
"[E]very contract" has "an implied covenant of good faith and fair dealing, " Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 182 (1981), which "applies to the parties' performances and their enforcement of the contract." East Penn Sanitation, Inc. v. Grinnell Haulers, Inc., 294 N.J.Super. 158, 170 (App. Div. 1996) (internal quotation marks omitted). However, "an implied obligation of good faith and fair dealing does not and cannot 'alter the terms of a written contract.'" Id. at 50 (quoting Rudbart v. N. Jersey Dist. Water Supply Comm'n, 127 N.J. 344, 366, cert. denied, 506 U.S. 871, 113 S.Ct. 203, 121 L.Ed.2d 145 (1992)). Moreover, this obligation does not require a party to a contract "to overlook its own rights under the agreement to protect its property interests because such action is detrimental to the other party's interests." Liqui-Box Corp. v. Estate of Elkman, 238 N.J.Super. 588, 600 (App. Div.), certif. denied, 122 N.J. 142 (1990).
Defendants, by urging us to find that plaintiff had a good faith duty to affirmatively cooperate with its efforts to restructure the loan at less than par, are in effect asking us to expand the existing duty of good faith to create additional obligations on the parties that counteract unambiguous express terms in the contract. This we will not do. The duty to cooperate exists only in relation to performance of a specific contract term. As a matter of law, there cannot be a breach of the duty of good faith when a party simply stands on its rights to require performance of a contract according to its terms.
Next, defendants, citing Rule 4:64-1(d)(2), contend that the order under review must be vacated and deemed void because "all applications for entry of judgment in uncontested cases, such as the one at bar, must be submitted to the foreclosure unit for consideration." We find this contention to be without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E). However we note that defendants contested the entry of the consent judgment before the motion court and persist in their contest before us. Their characterization of the matter as uncontested flies in the face of their motion before the motion judge and their arguments before us. "The Office of Foreclosure is not empowered to make any rulings but instead provides a very valuable service to the courts in making recommendations on matters expressly described in R. 1:34-6 . . . ." Wells Fargo Home Mortg., Inc. v. Stull, 378 N.J.Super. 449, 452 n.1 (App. Div.), certif. denied, 185 N.J. 267 (2005). Given the actions of defendants and the relief requested of the motion court, the Chancery Division was the appropriate forum.
We are satisfied that the legal principles governing the enforcement of settlements as legally binding agreements favors plaintiff's position. As a matter of public policy, the courts of this State favor the enforcement of settlement agreements. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); Jannarone v. W.T. Co., 65 N.J.Super. 472, 476-77 (App. Div.), certif. denied, 35 N.J. 61 (1961). This policy acknowledges the self-evident "'notion that the parties to a dispute are in the best position to determine how to resolve a contested matter in a way which is least disadvantageous to everyone.'" Jennings v. Reed, 381
N.J.Super. 217 226-27 (App Div 2005) (quoting Peskin v Peskin 271
N.J.Super. 261 275 (App Div) certif denied 137 N.J. 165 (1994)) "Consequently courts 'strain to give effect to the terms of a settlement wherever possible'" Id. at 227 (quoting
Dep't of Public Advocate Div of Rate Counsel v N.J. Bd of Pub Utils 206
N.J.Super. 523 528 (App Div 1985))
We conclude the motion judge's findings were fully supported by the record and no evidence sustains defendants' bald assertions of breach of the forbearance agreement by plaintiff There was no error in the court's analysis and the motion judge properly exercised her discretion