Opinion
DOCKET NO. A-1217-13T2
01-21-2015
MAHER SALEEB, Plaintiff-Appellant, v. WELLS FARGO HOME MORTGAGE, INC., Defendant-Respondent.
Tomas Espinosa, attorney for appellant. Reed Smith, L.L.P., attorneys for respondent (Henry F. Reichner, of counsel; Joseph J. Mahady, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Lihotz, St. John and Rothstadt. On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-5905-11. Tomas Espinosa, attorney for appellant. Reed Smith, L.L.P., attorneys for respondent (Henry F. Reichner, of counsel; Joseph J. Mahady, on the brief). PER CURIAM
Plaintiff Maher Saleeb appeals from the Law Division's September 24, 2013 final judgment, dismissing his complaint against defendant Wells Fargo Home Mortgage Inc., following a jury trial. In his complaint, plaintiff generally alleged defendant made a loan to him even though it knew he could not afford to repay the sum borrowed. The jury found plaintiff failed to prove defendant committed fraud in the inducement or violated the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, in the origination of the loan. On appeal, plaintiff argues the jury's verdict was against the weight of the evidence, the court improperly dismissed one of his claims prior to trial, and he challenges an evidentiary ruling made by the trial court. After considering plaintiff's arguments, the record and the applicable law, we affirm.
We granted plaintiff's motion to pursue his appeal "without order and to accept the jury verdict as the final decision," noting no final judgment was entered; rather, the court's clerk filed a "Statement of Verdict Judgment" confirming the dates of trial and the jury's verdict of "no cause."
The following facts were developed at trial. In March 2004, plaintiff contacted defendant to apply for a loan to refinance two existing loans secured by mortgages on his home and to obtain an additional approximately $50,000 in cash. One of defendant's representatives interviewed plaintiff over the telephone and assisted him in completing a Uniform Residential Loan Application. Plaintiff claimed the representative told him his monthly payment would be $2200 or $2300 including taxes and insurance. Plaintiff also claimed he did not sign this form and never saw the form until he received a typed version on the day of closing.
The application listed plaintiff's monthly income as $10,000. Although plaintiff acknowledged the accuracy of his sources of income, which included his deli business, a rental property, a business in Egypt and funds he received from members of his family, he disputed telling defendant the amount was that high. Plaintiff introduced as evidence of his actual income copies of various state and federal income tax returns and forms for 2002, 2003 and 2004 which indicated his income from his deli and rental property was a fraction of the amount stated on the loan application. Initially, plaintiff stated he provided his financial information and documents to defendant prior to closing. However, plaintiff eventually admitted his 2002 and 2003 tax returns were in fact not prepared until March 26, 2011, so they did not exist when he applied for the loan. Similarly, his 2004 information could not have been available in March 2004 — before the tax year ended. In addition, defendant confirmed plaintiff's tax forms were not in its loan file.
On April 26, 2004, the parties closed on a $297,500 loan with a fixed interest rate of five percent, and a fifteen-year term. After applying the loan proceeds towards satisfaction of his existing mortgages, plaintiff received $55,352.18.
Plaintiff stated, before going to the closing, he asked one of defendant's representatives if he needed an attorney, and he was told he did not. He also claimed he had not received or seen any forms regarding his loan prior to closing. In addition, he had not met or spoken with the representative who prepared his application. However, according to defendant's representative, it sent plaintiff pre-closing disclosures on March 31, 2004, and faxed certain documents to him, which plaintiff signed and returned.
Upon his arrival, the closing documents were already prepared and ready for plaintiff to sign. However, he did not read or even look at the documents before he signed them. Plaintiff explained he did not have an opportunity to look at the documents:
Because I don't have — they no give me a chance to do anything.
. . . .
Just once I go there, I see two ladies. Mr. Saleeb, how are you? You sit there, my wife sit next to me. You have to sign here. Somebody ready for you to just sign it; you put, like, marker, green marker in the paper[.]
. . . .
Like sticker, like, just sign here. My wife sign, for me. Look on there, sign for that, just second, sign, okay. Good luck, and we gonna send a check for you.
Plaintiff's repayment terms were memorialized in a Fixed Rate Note, which was among the documents he signed. The note set forth his monthly payment of $2,352.62 for principle and interest. At closing, plaintiff also executed a Settlement Statement, a Truth in Lending Act (TILA) Disclosure Statement, a Rate Lock-In Agreement, a Loan Payment Information Statement, and a Statement of Borrowers' Benefits. The TILA Disclosure Statement and Loan Payment Information Statement also stated plaintiff's monthly loan payment amount. However, the Loan Payment Information form recited the payment would actually be $2896.22 per month, once taxes and insurance were added.
Plaintiff's appendix contained only unsigned copies of the Truth in Lending Disclosure and Loan Payment Information Statement.
One of the other documents plaintiff received and signed was a TILA Notice of Right to Cancel. As stated in the notice, plaintiff had a right to rescind the loan for any reason, at any time during the three days following the closing. Plaintiff never exercised his right to cancel even though he was "surprised" that the monthly payment was $2896 and not $2200 or $2300 as defendant's employee had assured him. Further, plaintiff acknowledged the increased amount was attributable to real estate taxes and homeowner's insurance. Plaintiff took copies of all the closing documents home with him and never raised an issue about the terms of his loan.
Plaintiff fell behind in his payments by June 2004. He said he received an initial notice of intention to foreclose in July 2004. However, he was able to remedy his default and made timely monthly payments towards the loan during the next three years. He also made twenty-nine additional principal payments between June 2004 and March 2007. Plaintiff claimed he "struggled with the loan, and through savings and the help of third parties, managed to pay for almost three years . . . ."
In April 2007, plaintiff defaulted on the loan. He pursued a loan modification and informed defendant he could not meet his obligation because he had recently changed his business from a deli to a pizza and fried chicken restaurant. In a letter to defendant, plaintiff explained his business' monthly income was $5400 per month, and that its expenses were $5250 per month. Defendant would not consent to a modification.
On July 13, 2007, defendant filed a foreclosure action against plaintiff and his wife. Plaintiff did not respond to the complaint and, as a result, the court entered a default against him. The parties entered into a number of forbearance agreements. Plaintiff made two late payments: $4500 on July 26, 2007, and $3500 on August 27, 2007. He also said he paid $7500 and would pay defendant an additional $40,000 which was being sent to him from Egypt in consideration for defendant's agreement to terminate the foreclosure. Plaintiff claimed defendant refused to accept the money, and returned $12,000 he paid towards the agreement. He also claimed defendant again promised to modify his loan, but instead foreclosed.
In November 2007, plaintiff sent defendant another letter, stating that his deli had lost a substantial amount of business and he had recently spent $95,000 to convert it into a fast food restaurant. He also stated he had been unable to rent his second floor apartment for eight months. During 2008, the parties entered into additional forbearance agreements but plaintiff failed to make the required payments.
The court entered a Final Judgment of Foreclosure and issued a Writ of Execution on August 15, 2008. Plaintiff sent additional letters on October 10, 2008, November 10, 2008, and December 15, 2008, attributing his late payments only to a lack of business. Defendant, however, proceeded with the foreclosure. The property was sold at a sheriff's sale on February 5, 2009. Just prior to his eviction from the subject property, plaintiff filed for Chapter 7 bankruptcy relief on June 29, 2009.
We assume defendant obtained relief from the bankruptcy court's automatic stay and eventually secured possession of the premises.
Plaintiff filed his complaint against defendant on November 14, 2011. In it he alleged violation of the CFA in connection with defendant making the subject loan to plaintiff (count one), fraud in the inducement (count two), and fraud in the factum for falsifying information in his original loan application (count three); breach of contract, for repeatedly denying him a loan modification, falsely representing the denials were not final, and violating an agreement not to foreclose in exchange for plaintiff's $7500 payment (count four); and breach of the implied covenant of good faith and fair dealing, for being deceptive during the loan origination phase and while plaintiff was seeking a modification (count five). He later filed an amended complaint to include an additional count alleging breach of the implied covenant of good faith and fair dealing based on his belief defendant lacked standing in the foreclosure action (count six).
Defendant moved for summary judgment, which the court granted in part by dismissing counts four through six. Before trial, the court heard and granted defendant's motion in limine to dismiss count three, alleging fraud in the factum, as it found the claim was not an independent cause of action, as compared to a defense against enforcement of a note.
The court also partially granted defendant's motion to bar certain evidence or testimony relating to the foreclosure, loan modification or forbearance negotiations. The court reasoned that evidence was only related to the dismissed claims "regarding the modification of the loan and the foreclosure" and was not relevant to the remaining claims regarding the loan's origination. While the court barred any "opinion testimony as to the characterization of the foreclosure as proper or improper," it permitted
plaintiff [to] reference the factual circumstances surrounding the foreclosure . . . as a fact witness; that it happened, that he tried to modify his loan, because they could be relevant and helpful to the jury in calculating — if they find that there was a cause of action that was a proximate causation . . . to damages. These are factual statements related, as a potential consequence, to the loan itself.Thus, while the court permitted plaintiff to present factual evidence about the modification or forbearance negotiations taking place, he was not allowed to opine the denial of his modification requests were wrongful or improper, or about why defendant refused to grant him a modification.
At the commencement of the trial, plaintiff's counsel commented in his opening statement to the jury about the defendant's denial of plaintiff's request for a loan modification being part of defendant's alleged plan to insure plaintiff would default on his loan. Counsel essentially told the jury defendant "knew that plaintiff was going to fail" when it made the loan to him which is why it "denied every attempt" plaintiff made to modify the loan. Defense counsel objected to this comment, and asked the court again to bar any testimony or evidence concerning defendant's denials of plaintiff's requests for modification. The court instead directed the parties to agree to stipulate to certain facts, which the court later read to the jury:
On July 31, 2007, Wachovia Bank, NA, as Trustee for WFASC Mortgage Asset backed, based through certificates, series 2005 through 2, filed a complaint for foreclosure against plaintiff and his wife, in Superior Court of New Jersey, Chancery Division, Hudson County, Docket F-17023-07.
Default was entered against [plaintiff and his wife] on August 21st, 2007.
Plaintiff entered into a special forbearance plan with Wells Fargo in March, 2008. Per the special forbearance agreement, plaintiff was required to make payments in the amount of $3567.75 on March 25th, 2008; April 25th, 2008; May 25th, 2008, and a payment of $34,519.51 on June 25th, 2008. Plaintiff failed to make the payment of $3,567.75 due on April 25, 2008.
As of May 28th, 2008, plaintiff's loan was past due for 12 months, from June 1st, 2007 through May 1st, 2008. Per the special forbearance agreement, plaintiff was to make payments in the amount of $3,286.22 on June 20th, 2008; July 20th, 2008; August 20th, 2008; and a payment of $36,343 on September 20th, 2008. Plaintiff failed to make the payment due July 20th, 2008.
As per the special forbearance agreement, plaintiff was to make payments in the amount of $2,000 on August 1st, 2008; $3,286.22 on August 20th, 2008; and a payment of $36,343 on September 20th, 2008. Plaintiff failed to make the payment due on August 20th, 2008.
On August 15th, 2008, the final judgment was filed. On August 15th, 2008, the writ of execution was filed.
At the conclusion of the trial, the jury found plaintiff failed to prove defendant violated the CFA or committed fraud. Although plaintiff believed the jury's verdict was against the weight of the evidence, plaintiff never filed a motion for a new trial or for a judgment notwithstanding the jury's verdict. Instead, plaintiff filed this appeal. On appeal he argues:
Plaintiff's Notice of Appeal is limited to the "jury decision and affirmation of [the trial judge] of September 24, 2013." His amended Case Information Statement, however, states his appeal is from the "jury verdict of September 24, 2013, and summary judgment order of September 12, 2013." His brief only addresses the jury's verdict and not the summary judgment order. As a result, we deem any intended appeal from the summary judgment order to have been abandoned by plaintiff. Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011) ("An issue not briefed on appeal is deemed waived.").
POINT I.In his reply brief, he also submits for our consideration these additional arguments:
THE COURT ERRED IN NOT ALLOWING EVIDENCE ABOUT THE NEGOTIATIONS FOR MODIFICATION AND LOSS MITI[G]ATION BETWEEN APPELLANT AND APPELLEE.
POINT II.
APPELLEE COMMITTED FRAUD ON THE APPELLANT.
POINT III.
FRAUD BY BAIT AND SWITCH.
POINT IV.
THE COURT ERRED IN NOT ALLOWING THE APPELLANT'S CLAIM OF FRAUD IN THE FACTUM.
POINT V.
THE LOAN WAS IMPAIRED FROM THE BEGINNING AND THE PLAINTIFF KNEW ABOUT IT AND NEVERTHELESS UNCONSCIONABLE BURDEN THE DEFENDANT WITH THE IMPAIRMENT THE LOAN WAS NON SUITABLE AND IN VIOLATION OF THE [CFA].
POINT I.
THE APPEAL IS REVIEWABLE BY THE APPELLATE DIVISION AS TO QUESTIONS OF LAW.
POINT II.
THE COURT COMMITTED PLAIN ERROR IN ITS INSTRUCTIONS AND CHARGES TO THE JURY ON THE
VIOLATION OF THE CONSUMER FRAUD ACT FOSTERING A MISCARRIAGE OF JUSTICE.
POINT III.
THE COURT COMMITTED PLAIN ERROR IN NOT ALLOWING TESTIMONY ABOUT WHAT TRANSPIRED DURING THE FORBEARANCE AGREEMENTS IN VIOLATION OF THE RULES OF EVIDENCE.
As a preliminary matter, to the extent plaintiff argues the jury's verdict was against the weight of the evidence, his argument is not cognizable on appeal because plaintiff did not move for judgment notwithstanding the verdict (JNOV), R. 4:40-2, or file a motion for a new trial, R. 4:49-1. See, e.g., Ogborne v. Mercer Cemetery Corp., 197 N.J. 448, 462 (2009). Under these circumstances Rule 2:10-1 prohibits our consideration of plaintiff's claims:
In both civil and criminal actions, the issue of whether a jury verdict was against the weight of the evidence shall not be cognizable on appeal unless a motion for a new trial on that ground was made in the trial court. The trial court's ruling on such a motion shall not be reversed unless it clearly appears that there was a miscarriage of justice under the law.
Absent a motion for a new trial, we may entertain a verdict against the weight of the evidence challenge in the interest of justice. State v. Smith, 262 N.J. Super. 487, 511-12 (App. Div.) (citing State v. Pickett, 241 N.J. Super. 259, 266 (App. Div. 1990)), certif. denied, 134 N.J. 476 (1993). Similarly, an exception to this bar exists if the issues raised involve the court's jurisdiction or matters of great public interest. Zaman v. Felton, 219 N.J. 199, 226-27 (2014) (citing State v. Robinson, 200 N.J. 1, 20 (2009) ("'[I]t is a well-settled principle that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'") (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973))).
We conclude plaintiff has not raised any of these types of issues. We therefore decline to entertain plaintiff's challenge especially because it lacks merit. The jury's verdict was grounded on its assessment of witness' credibility. The jury simply did not believe plaintiff. We "may not intercede, absent clear evidence on the face of the record that the jury was mistaken or prejudiced." Smith, supra, 262 N.J. Super. at 512 (citing State v. Haines, 20 N.J. 438, 446-47 (1956)). Accordingly, we must reject plaintiff arguments in Points II, III, and V that the jury's verdict finding defendant did not commit fraud in the inducement or violated the CFA was against the weight of evidence.
Our review of the record persuades us the evidence weighed heavily in favor of finding defendant did not commit fraud by knowingly loaning plaintiff money it knew he could not afford to repay. Minimally defendant provided the jury with substantial credible evidence to rely upon in reaching its verdict. For example, after a brief initial delinquency, plaintiff met his obligations to defendant for three years without a problem. It was only after he changed his business that he experienced difficulties in repaying the loan. Also, despite his claims, plaintiff admitted to signing the note, and disclosure documents. There was no evidence he was pressured or coerced into signing the documents before reading them. Moreover, the tax forms he offered as proof of his income were not prepared until 2011 — he therefore could not have presented those forms to defendant when making his loan application. Finally, although he had a right to rescind the loan after he found the monthly payments to be higher than he expected because of taxes and insurance, he never exercised his right to cancel.
We also cannot consider the additional argument raised for the first time in plaintiff's reply brief. Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 527 n.5 (App. Div. 2009), certif. denied, 203 N.J. 93 (2010). "This kind of presentation of an issue for appellate review is improper." Mid-Atl. Solar Energy Indus. Ass'n v. Christie, 418 N.J. Super. 499, 508 (App. Div.) (citing N.J. Citizens Underwriting Reciprocal Exch. v. Kiernan Collins, D.C., LLC, 399 N.J. Super. 40, 50 (App. Div.), certif. denied, 196 N.J. 344 (2008)), cert. denied, 207 N.J. 190 (2011). For that reason, we must reject plaintiff's argument in Point II of his reply brief concerning the court's allegedly committing plain error in its instructions to the jury.
As to the balance of plaintiff's arguments, we first address the trial court's exclusion of evidence relating to the parties' negotiations for loan modifications and forbearance as argued to us by plaintiff. According to plaintiff, the court erred by not allowing testimony or evidence indicating defendant's denials of plaintiff's request for a modification were wrongful, or testimony characterizing the foreclosure as wrongful. The court ruled the evidence was irrelevant to the issue of fraud in the loan's origination, which the jury had to decide.
Our consideration of plaintiff's argument is guided by "'[t]raditional rules of appellate review [which] require substantial deference to a trial court's evidentiary rulings.'" Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999) (quoting State v. Morton, 155 N.J. 383, 453 (1998)), certif. denied, 163 N.J. 79 (2000). The admission of evidence is therefore entrusted to the sound discretion of the trial judge. McDarby v. Merck & Co., Inc., 401 N.J. Super. 10, 72 (App. Div. 2008) (citing Benevenga, supra, 325 N.J. Super. at 32), certif. granted, 196 N.J. 597 (2008), appeal dismissed, 200 N.J. 267 (2009).
Applying this standard, we do not discern any abuse of discretion. The court permitted the parties to stipulate to facts relating to the foreclosure and forbearance agreement. It only limited testimony indicating defendant's conduct during modification and forbearance discussions was wrongful. It did so pursuant to N.J.R.E. 402, which requires the exclusion of irrelevant evidence, especially when the proffered evidence may cause "undue prejudice, confusion of issues, or mislead[] the jury." N.J.R.E. 403. If the issues presented to the jury related to defendant's conduct during the modification and forbearance negotiations, competent evidence of wrongful conduct would have been admitted. See Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 586-87 (2011). Plaintiff's claims relating to the foreclosure had already been determined in the foreclosure litigation. The court had also dismissed the counts relating to the modification and foreclosure. Any testimony in the trial not bearing on fraud at the time of the loan's origination was irrelevant, potentially prejudicial, and therefore properly excluded.
Plaintiff also argues that the court erred in dismissing his claim of fraud in the factum. We disagree.
The court did so in response to what we presume to be defendant's motion to dismiss for failure to state a cause of action upon which relief can be granted, R. 4:6-2(e), although not specifically identified as such in the record.
A defendant may move to dismiss a count for "failure to state a claim upon which relief can be granted" pursuant to Rule 4:6-2(e). In deciding the motion, the court must "accept as true the complaint's factual assertions," Richardson v. Standard Guar. Ins. Co., 371 N.J. Super. 449, 467 (App. Div. 2004) (citing Smith v. SBC Communs., Inc., 178 N.J. 265, 268-69 (2004); Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 625 (1995)), and "[t]he complaint must be examined 'in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim . . . .'" Lyons, Doughty & Veldhuis, P.C. v. William M.E. Powers, Jr., Chartered, 331 N.J. Super. 193, 195 (App. Div. 2000) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). "Courts should grant these motions with caution and in the rarest instances." Ibid. (citations and internal quotation marks omitted).
In our review of a trial court's granting of a motion to dismiss, we apply "the well-established standard that governs motions to dismiss for failure to state a claim." Green v. Morgan Properties, 215 N.J. 431, 437 (2013). As the Court held:
We approach our review of the judgment below mindful of the test for determining the adequacy of a pleading: whether a cause of action is "suggested" by the facts. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988). In reviewing a complaint
dismissed under Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. Rieder v. Dept. of Transp., 221 N.J. Super. 547, 552 (App. Div. 1987). However, a reviewing court "searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary." Di Cristofaro v. Laurel Grove Mem. Park, 4 3 N.J. Super. 244, 252 (App. Div. 1957). At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint. Somers Constr. Co. v. Bd. of Educ., 198 F.Supp. 732, 734 (D. N.J. 1961). For purposes of analysis plaintiffs are entitled to every reasonable inference of fact. Indep. Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956). The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach.
[Printing Mart, supra, 116 N.J. at 746.]
Applying that standard, we are satisfied the court properly dismissed plaintiff's cause of action alleging fraud in the factum, which is a common law defense against the enforcement of a note or contract. Bancredit, Inc. v. Bethea, 68 N.J. Super. 62, 65-66 (App. Div. 1961). It is "defin[ed] . . . as 'such fraud in the procurement of the execution of a note or bill as results in the signer's being ignorant of the nature of the instrument he is signing.'" Id. at 65 (quoting N.J. Mortg. & Inv. Co. v. Dorsey, 60 N.J. Super. 299, 302 (App. Div.), aff'd, 33 N.J. 448 (1960)); see also Langley v. FDIC, 484 U.S. 86, 93, 108 S. Ct. 396, 402, 98 L. Ed. 2d 340, 348 (1987) ("[T]he real defense of fraud in the factum -- . . . is, the sort of fraud that procures a party's signature to an instrument without knowledge of its true nature or contents.").
We held in Bancredit, Inc., supra, 68 N.J. Super. at 71, "[o]rdinarily, one who, though able to read, signs a negotiable instrument in reliance on false representations as to its character, is deemed negligent as a matter of law, thus precluding invocation of the defense of fraud in the factum . . . ." To preserve confidence in commercial paper, we said, "[t]he signer must . . . exercise the caution of a reasonably prudent man to determine the character of the paper upon which he has purposefully placed his signature." Id. at 66.
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The trial court therefore correctly found plaintiff's defense did not give rise to an independent cause of action. Moreover, as noted above, the evidence presented to the jury supplied it with substantial, credible evidence to reject this defense.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION