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Adelman v. BSI Financial Services, Inc.

Superior Court of New Jersey, Appellate Division

January 31, 2018

SHULAMIS ADELMAN, Individually and as Executrix of the Estate of NORMAN G. ADELMAN, Plaintiffs-Appellants,
v.
BSI FINANCIAL SERVICES, INC., Defendant, and WELLS FARGO HOME MORTGAGE, Defendant-Respondent.

          Argued November 29, 2017

         On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-3143-11.

          Joshua W. Denbeaux argued the cause for appellants (Denbeaux and Denbeaux, attorneys; Abigail D. Kahl, on the brief).

          Henry F. Reichner argued the cause for respondent (Reed Smith, LLP, attorneys; Henry F. Reichner and David G. Murphy, on the brief).

          Before Judges Fuentes, Koblitz and Manahan.

          KOBLITZ, J.A.D.

         A defendant in a foreclosure case may not fail to diligently pursue a germane defense and then pursue a civil case against the lender alleging fraud by foreclosure. Plaintiff, Shulamis Adelman, individually and as executrix of the estate of her deceased husband Norman, appeals from a June 12, 2015 order dismissing with prejudice her individual claims for breach of contract and violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to 56:8-206. She also appeals from the February 19, 2016 order granting summary judgment to Wells Fargo on the remaining claims in her complaint.

         In the related foreclosure action, in opposition to a motion for possession of the property after the sheriff's sale, plaintiff for the first time raised the issue that a loan modification had been granted. Her belated application was denied and possession granted to Wells Fargo in the foreclosure action.

         Plaintiff filed her Law Division complaint after final judgment was entered in the foreclosure case, but before opposing the motion for possession and before dismissing her appeal of the foreclosure case. In this civil complaint she alleged that Wells Fargo pursued a final foreclosure judgment in spite of having modified her husband's mortgage on the home during the pendency of the foreclosure case. Plaintiff could have pursued her appeal of the denial of this germane claim in the foreclosure litigation rather than raising the same issue in other litigation. Because plaintiff attempted to litigate the same issue in two forums, we affirm the grant of summary judgment.

         Defendant Wells Fargo made a $330, 890 loan to Norman on May 18, 2006, securing his promissory note with a mortgage on his Freehold property. More than eighteen months later, Norman married plaintiff. The loan went into default on January 1, 2009. Six months later, Wells Fargo filed a foreclosure complaint. Norman offered no defense, and default was entered in November 2009.

         Three months later, Norman began submitting financial documents to Wells Fargo seeking a loan modification. In April 2010, Wells Fargo sent Norman a letter requesting an initial payment of $4500, stating "[i]f you are not approved for a loan modification, the initial payment will be returned to you." Norman made that payment, which was never returned. The following month, Wells Fargo sent Norman loan modification agreement documents. Norman signed the documents in May 2010. Although a representative of Wells Fargo also signed the loan modification, Wells Fargo never sent the signed document to Norman. The loan modification documents disclosed that a title report might be required to validate that the mortgage would remain in first lien priority. The first $3110.25 payment under the loan modification was due July 1, 2010.

         On July 2, 2010, Norman called Wells Fargo to say he could not make the first payment under the loan modification due to "curtailment of income." Wells Fargo called Norman on July 13, 2010, to explain that it could not go forward with the modification because the title search disclosed five judgment liens on the property. Norman claimed those judgments had been satisfied.

         On December 14, 2010, months after plaintiff claims the loan modification was finalized, a final foreclosure judgment in the amount of $361, 251.77 was entered. Although represented by counsel, Norman did not object to the entry of final judgment, nor did he seek to vacate the final judgment. Instead, more than six months later, on June 30, 2011, Norman and plaintiff filed this action in the Law Division. Almost a year later, in May 2012, the property was sold at a sheriff's sale. Nine months later, Wells Fargo filed a motion for possession of the property in the foreclosure action. Norman opposed the motion for possession, belatedly arguing that the existence of the 2010 loan modification cured the default. The court granted Wells Fargo's motion for possession on October 25, 2013.

         In February 2014, the Adelmans filed an order to show cause in the foreclosure action, seeking to recuse the Chancery judge and to stay eviction. The Adelmans argued again that the default was cured by the loan modification. The judge refused to recuse herself, but stayed the eviction due to Norman's ill health. Plaintiff filed an appeal in the foreclosure action in April 2014. A ...


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