September 12, 2017
appeal from the Superior Court of New Jersey, Chancery
Division, Middlesex County, Docket Nos. F-30990-10 and
F-21231-13, and Monmouth County, Docket No. F-26278-10.
R. Kaufman argued the cause for appellants.
Anthony B. Vignuolo argued the cause for respondent (Borrus,
Goldin, Foley, Vignuolo, Hyman & Stahl, PC, attorneys;
Anthony B. Vignuolo, on the brief).
Judges Fisher, Fasciale and Moynihan.
second appeal of a group of convoluted and consolidated
foreclosure actions, we review the findings and conclusions
drawn by the experienced chancery judge from the proofs
elicited at an evidentiary hearing required by our earlier
remand. Brunswick Bank & Tr. v. Affiliated Bldg.
Corp., 440 N.J.Super. 118 (App. Div. 2015). We certainly
did not burden the chancery judge with the easiest of tasks,
and defendants' presentation of evidence certainly gave
voice to the song lyric, "when nothing makes any sense,
you have a reason to cry." But, after careful review, we
cannot endorse the judge's finding that defendants failed
to present "competent" evidence to support the
remedy they seek. Consequently, we are constrained to again
consolidated cases concern five construction and development
loans, four of which were made to defendant Heln Management,
LLC, and the fifth to Affiliated Building Corp.; Jeffrey
Miller, a principal of both entities, and his daughter
Melanie Miller, were joined as defendants because they
guaranteed repayment. Repayment was also ensured by mortgages
held by Brunswick Bank on properties owned by Heln and
Affiliated. We provided greater detail about these
transactions in our earlier opinion, id. at 120 n.2, and will
attempt not to unduly repeat what was then said.
deciding the earlier consolidated appeals, we ultimately
remanded because issues concerning whether Brunswick Bank
collected more than one-hundred percent of defendants'
collective debt on all the loans could not be resolved
"without a full accounting of the cash and property
collected by plaintiff applied against the amount of the Law
Division judgment and the interest that accrued on that
judgment, as well as expenditures in 'different
categories of [permissible] damages' not adjudicated in
the Law Division action." Id. at 128
(alteration in original; quoting First Union Nat'l
Bank v. Penn Salem Marina Inc., 190 N.J. 342, 345
(2007)). The judgment referred to was the product of
Brunswick Bank's 2010 complaint in the Law Division
seeking a money judgment on four of the five loans; Brunswick
Bank chose that option rather than pursuing foreclosure on
the mortgage properties. Default judgment was entered on
August 18, 2010, against Heln for $1, 884, 141.84, and
against Affiliated for $175, 000; both guarantor-defendants
were declared jointly and severally liable on both those
obligations. Id. at 120-21. By taking that course,
Brunswick Bank opted to allow the unpaid debt on the four
defaulted loans alleged in the Law Division complaint to
accrue interest at the rate provided by Rule 4:42-11(a),
rather than the interest rate to which the parties had been
contractually bound. Brunswick Bank, 440 N.J.Super.
filing the Law Division action, Brunswick Bank filed four
separate foreclosure actions. Three were filed in 2010,
shortly before Brunswick Bank obtained the Law Division
judgment: two in Middlesex County and a third in Monmouth
County. A fourth was filed in Middlesex County in 2013.
Default judgments setting redemption amounts were entered in
2012 and 2013. There followed - as we previously described in
greater detail, id. at 121-22 - sales of properties
encumbered by mortgages; this provided rolling compensation
for Brunswick Bank against all defendants' obligations.
earlier decision, the chancery judge recognized the loans
might have been "over-collateralized" and questions
about whether Brunswick Bank had been fully compensated on
the entire obligation were presented. The judge concluded,
however, that the record was "too muddled, " and he
acknowledged his power to "prevent a windfall" had
to await "a full and complete factual record."
Id. at 122.
resolving the prior consolidated appeals, we drew the same
conclusion about the lack of clarity or certainty about the
amount of compensation obtained by Brunswick Bank, and we
remanded for illumination. We emphasized a court's power
to prevent a windfall and to ensure a judgment creditor
recovers no more than the amount of the debt by applying the
fair market value credit of property struck off at a sheriff
sale. Id. at 125; see also MMU of N.Y., Inc. v.
Grieser, 415 N.J.Super. 37, 40 (App. Div. 2010). We also
recognized that the proceedings would be most efficiently
handled by a single judge; we, thus, designated the Middlesex
chancery judge to provide a "global resolution" of
the pending issues. Id. at 128.
question before us now is whether, following our remand, the
factual clarity we sought was actually achieved. Following
our remand, the chancery judge conducted as thorough an
evidentiary hearing, over the course of four days, as the
parties' presentations permitted and rendered written
findings. After identifying and quantifying the various
debts, property sales, and collection efforts, the judge
concluded Brunswick Bank was entitled to "$2, 670,
825.92 plus additional interest not calculated,
attorney's fees and costs, such as real estate taxes
paid, not included in the [Law Division
judgment]." The judge was not precise about the total
dollar amount due when adding those other items; he simply
concluded Brunswick Bank was owed
at least $2.7 million dollars [and] . . . has received $2,
599, 208.51. [Brunswick Bank] also, as a result of two
[s]heriff's [s]ales, owns Beacon Hill and Baldwin.
Defendants failed to introduce any competent evidence to
establish the fair market value of these properties at the
time of the [s]heriff's [s]ale.
the judge "discharged" the Law Division judgment
and, because Brunswick Bank so "stipulated, " the
judge restrained - we assume permanently - Brunswick Bank
from "pursuing any deficiency judgment" against
defendants. The judge entered orders memorializing those
determinations in October and December 2015.
appealing, defendants argue that: (1) Brunswick Bank's
many claims "merged into" the Law Division judgment
and created "one debt to be collected and
satisfied"; (2) the successive foreclosure complaints
constituted "de facto deficiency actions" and
allowed defendants to challenge them as deficiency actions;
(3)the judge erred in failing to provide them with the
benefit of a fair market value credit for the properties
ultimately received by Brunswick Bank through the foreclosure
actions; and (4)"a deficiency action is illusory where a
mortgagee has first brought an action on its note prior to
foreclosing its mortgage." In a fifth point, defendants
explain they "are not seeking damages, but only a credit
against the amount due and the voiding of the sheriff's
sales, the return of title and the enforcement of settlement
on Loren Terrace."
start by recognizing, as previously held, that Brunswick Bank
was entitled to collect only what was collectively owed from
these defendants. Although the loans were separately made,
Brunswick Bank recognized the link among all the loans by,
among other things, commencing a single Law Division suit on
four of the loans, apparently leaving out the fifth only
through oversight.Although our earlier opinion could have
been clearer, our mandate directed that all the loans and
payments against all the loans be accounted for in a single
proceeding so that Brunswick Bank would not, as a result of
the sequential manner in which collection was sought or
occurred, come away from these proceedings with a windfall.
It cannot be over-emphasized that the very nature of a
foreclosure action suggests the potential for a forfeiture,
and that - because "equity abhors a forfeiture, "
Dunkin Donuts of Am., Inc. v. Middletown Donut
Corp., 100 N.J. 166, 182 (1985) - a court of equity may
in appropriate circumstances, through application of fair
market value credits, or by other recognized means, spare a
party from an unwarranted forfeiture. Foreclosure, as we have
observed, is a discretionary remedy. Sovereign Bank, FSB
v. Kuezlow, 297 N.J.Super. 187, 196 (App. Div. 1997).
Because the pursuit of that remedy summons the court's
equity jurisdiction, the court may, through the imposition of
flexible remedies, adjust the parties' rights, with
regard to the facts, to achieve a fair and just result.
See Sears, Roebuck & Co. v. Camp, 124 N.J. Eq.
403, 411-12 (E. & A. 1938) (citation omitted)
(recognizing that "[e]quitable remedies are
distinguished for their flexibility, their unlimited variety,
their adaptability to circumstances, and the natural rules
which govern their use"); see also U.S. Bank Nat.
Ass'n v. Guillaume, 209 N.J. 449, 476 (2012);
Matejek v.Watson, 449 N.J.Super. 179, 183
(App. Div. 2017); Marioni v. ...