Opinion
DOCKET NO. A-2744-12T2
07-11-2014
GEORGE WARNER and MARGARET WARNER, his wife, Plaintiffs-Appellants, v. SOVEREIGN BANK, Defendant-Respondent.
George Warner and Margaret Warner, appellants pro se. Phelan Hallinan & Diamond, PC, attorneys for respondent (Vladimir Palma, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges St. John and Leone.
On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1642-11.
George Warner and Margaret Warner, appellants pro se.
Phelan Hallinan & Diamond, PC, attorneys for respondent (Vladimir Palma, on the brief). PER CURIAM
Plaintiffs George Warner and Margaret Warner appeal from a December 5, 2012 order granting summary judgment to the defendant Sovereign Bank, and a February 1, 2013 order denying plaintiffs' motion for reconsideration, entered by the Law Division. After reviewing the record in light of the contentions advanced on appeal, we affirm.
I.
Viewed in the light most favorable to plaintiffs, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the summary judgment record reveals the following facts and procedural history.
On April 24, 2011, plaintiffs filed a complaint against defendant asserting claims for fraud (count one); violation of the New Jersey Consumer Fraud Act (count two); breach of contract (count three); breach of the covenant of good faith and fair dealing (count four); breach of implied contract (count five); quantum meruit (count six); and violation of the New Jersey Fair Foreclosure Act (count seven).
In September 2011, each party moved for summary judgment, which requests were denied as being premature since discovery was incomplete. After discovery ended in July 2012, both parties again moved for summary judgment, which was granted to defendant.
This dispute arises out of a loan from defendant to the plaintiffs. In January 2008, plaintiffs executed a mortgage loan (the mortgage), which was used to purchase their home in Spring Lake Heights. Plaintiffs defaulted on the mortgage on November 1, 2008.
Plaintiffs contend that in February 2009, they sought a modification from defendant pursuant to the Home Affordable Modification Program (HAMP). They represent, with no evidential support, that, "in order to participate in this loan modification program, they would have to agree to two conditions; namely, that they could not list their home for sale while their request was in review, and they could make no partial payments on their loan balance." Although plaintiffs were informed that their modification request was under review, a foreclosure action was commenced against them in November 2009. Plaintiffs contend that defendant never made any serious efforts to settle or to modify their mortgage loan.
In 2008, Congress enacted the Emergency Economic Stabilization Act of 2008, 12 U.S.C. §§ 5201-61, to "restore liquidity and stability to the financial system" and ensure inter alia the protection of home values and the preservation of home ownership. 12 U.S.C. § 5201. The statute explicitly directed the Secretary to issue "[p]rogram guidelines." 12 U.S.C. § 5211(d). Specific to HAMP, section 5219(a)(1) "authorized the Secretary of the Treasury to, inter alia, 'implement a plan that seeks to maximize assistance for homeowners and encourage the servicers of the underlying mortgages' to minimize foreclosures." Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 228 (1st Cir. 2013) (quoting 12 U.S.C. § 5219(a)(1)) (internal ellipses and emphasis omitted). "To effectuate these goals . . . the Secretary created an array of programs" including HAMP. Ibid.
Sovereign Bank v. Warner, Docket No. F-57948-09, Chancery Division, Monmouth County.
Defendant represents that in January 2010, it sent a letter to plaintiffs denying their request for modification of the loan. Plaintiffs state that the "letter turned out to be a completely fraudulent letter that was created by the Loss Mitigation Department of the defendant when plaintiffs insisted that they had never received a written notice of rejection." Plaintiffs also assert that "false and misleading affidavits would be submitted by defendant's counsel and that it was part of an overall scheme to defraud the plaintiffs and clearly demonstrated the unclean hands on the part of the defendant." Finally, plaintiffs state that the "facts clearly demonstrate that defendant has little or no interest in modifying plaintiffs' loan."
The letter was properly addressed to George Warner, but the salutation read "Dear Theresa Burrage." Plaintiffs contacted the defendant upon receipt of the letter.
In June 2010, plaintiffs notified defendant that they had listed their house for sale. Defendant offered and plaintiffs accepted a forbearance agreement. As a result, defendant ceased the foreclosure proceedings and, on November 9, defendant voluntarily dismissed the foreclosure action.
By order dated December 5, 2012, the court granted defendant's cross-motion for summary judgment and denied plaintiffs' motion for summary judgment. The court dismissed plaintiffs' complaint with prejudice. Accompanying the order was a comprehensive written statement of reasons.
The order directed that the matter be returned to the Superior Court foreclosure unit for further proceedings as an uncontested matter. Pursuant to Rule 2:5-1(b), the court amended the order deleting that portion of the order.
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Plaintiffs moved for reconsideration and, by order dated February 1, 2013, the court denied their request. Attached to the order was a comprehensive statement of reasons.
Plaintiffs appeal from the December 5, 2012 grant of summary judgment to defendant and the February 1, 2013 denial of their motion for reconsideration.
On appeal, plaintiffs raise nine points for our consideration. Plaintiffs generally contend that the trial court relied on erroneous factual findings; that there were general issues of material fact; and that it applied inappropriate standards for the grant of summary judgment.
Plaintiffs further contend that the court erred by characterizing the matter "as being completely based on plaintiffs' inability to obtain a modification under HAMP." Plaintiffs assert that their complaint was based on defendant's breach of its mortgage contract, "by not allowing plaintiffs to cure their default through the proceedings." Plaintiffs contend that had they sold their home, they would not have sustained a substantial loss of their equity. In effect, plaintiffs argue that the court erred by not recognizing that, had defendant given plaintiffs a timely answer to the modification request, "they would have sold and moved on."
II.
In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46-2(c) that governed the motion court. See Gray v. Caldwell Wood Prods., Inc., 425 N.J. Super. 496, 499 (App. Div. 2012). Initially, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). This court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540. In such review, "'[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382 (2010) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
Applying these standards of review, we affirm substantially for the reasons expressed by Judge Linda Grasso-Jones in her comprehensive statement of reasons appended to each order under review. We add the following brief comments.
"[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 170 (internal citations omitted). 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, 2 38 N.J. Super. 588, 600 (App. Div.), certif. denied, 122 N.J. 142 (1990).
Plaintiffs, by urging us to find that defendant had a good faith duty to affirmatively cooperate with their efforts to sell their home by refraining from foreclosing on the mortgage, are in effect asking us to expand the existing duty of good faith to create additional obligations on the parties that counteract the terms in the mortgage. 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.
"The party claiming a breach of the covenant of good faith and fair dealing 'must provide evidence sufficient to support a conclusion that the party alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the bargain originally intended by the parties.'" Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 225 (2005) (quoting 23 Williston on Contracts § 63:22, at 513-14 (Lord ed. 2002)).
We also agree with Judge Grasso-Jones that the law is clear that there is no private cause of action under HAMP. See, e.g., Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 559 n.4 (7th Cir. 2012) ("Courts have uniformly rejected these claims because HAMP does not create a private federal right of action for borrowers against servicers."); see also Miller v. Chase Home Fin., LLC, 677 F.3d 1113, 1116 (11th Cir. 2012); Thomas v. U.S. Bank Nat'l Ass'n, 474 B.R. 450 (D.N.J. 2012). Plaintiffs have also failed to identify or provide any evidence that they were eligible under HAMP for a loan modification. Defendant was entitled to summary judgment on plaintiffs' HAMP claim.
Here, plaintiffs failed to demonstrate any right to a modification of the mortgage, forbearance of foreclosure, a cause of action against defendant under the provisions of HAMP, or a denial of the benefit of their bargain originally intended by the parties pursuant to the mortgage and its related documents.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION