Paul A. Woodford v. Lori Alexis Lynn- Martinolich

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

DOCKET NO. A-3630-24

PAUL A. WOODFORD, Plaintiff-Appellant,

v.

LORI ALEXIS LYNN- MARTINOLICH, previously known as LORI GARFINKEL, and LORI LYNN, also known as LORI LYNN MARTINOLICH, LORI Z. LYNN-MARTINOLICH, and LORI ALEXIS MARTINOLICH, PETER GARFINKEL, UNITED STATES OFAMERICA, INTERNAL REVENUE SERVICE, and CASHA, CASHA & EVANS,

Defendants,

and

STATE OF NEW JERSEY, DIVISION OF TAXATION, STATE OF NEW JERSEY, DIVISION OF MEDICAID FRAUD, and FREEDOM

MORTGAGE CORPORATION,

Defendants-Respondents.

_____________________________

Submitted June 15, 2026 – Decided August 17, 2026 Before Judges Rose and Berdote Byrne.

On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No.

C-000193-21.

Paul A. Woodford, self-represented appellant.

Brian D. Romanowsky, attorney for respondent Freedom Mortgage Corporation.

Finestein & Malloy, LLC, attorneys for amicus curiae New Jersey Land Title Association (Russell M.

Finestein, Michael D. Malloy, and Daniel L. Finestein, on the brief).

PER CURIAM This matter returns to us following a remand to the Chancery court for findings as to whether defendant Freedom Mortgage Corporation (FMC) adequately investigated red flags in defendant Lori Alexis Lynn-Martinolich's (debtor) application to refinance a loan secured by a mortgage on residential property located in West Orange. Plaintiff Paul A. Woodford, a self-represented retired attorney, appeals from three companion General Equity Part orders declaring FMC held a first priority mortgage on the West Orange property. The A-3630-24

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orders were issued on June 30, 2025 following cross-motions for summary judgment separately filed by plaintiff, FMC, and the New Jersey Division of Medicaid Fraud (MFD).

The genesis of this appeal is rooted in plaintiff's judgment against debtor, and FMC's subsequent acquisition and refinance of a purchase money mortgage on debtor's West Orange property. On appeal, plaintiff maintains the Chancery judge improperly departed from the directives of our prior decision and erroneously concluded FMC's purchase money mortgage retained first priority following a refinancing. We granted New Jersey Land Title Association (NJLTA) leave to appear as amicus curiae. NJLTA supports FMC's contentions that FMC's mortgage is deemed a first priority mortgage under the doctrine of replacement.

We have reviewed de novo the judge's decision on summary judgment, see Boyle v. Huff, 257 N.J. 468, 477 (2024), and her decision on the application of the equitable doctrine of replacement for abuse of discretion, see Ocwen Loan Servs., LLC v. Quinn, 450 N.J. Super. 393, 397 (App. Div. 2016). Discerning no basis to disturb the orders under review, we affirm.

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I.

The facts and procedural history of this case are set forth at length in our prior opinion and need not be repeated in the same level of detail here. Woodford v. Lynn-Martinolich, No. A-1179-22 (App. Div. July 5, 2024) (slip op. 3-11). In summary, "[o]n May 30, 2012, plaintiff obtained a $66,946 judgment, plus costs, against debtor" for outstanding legal fees following plaintiff's representation of debtor in a family matter. Id. at 3-4. "On July 23, 2012, the judgment was recorded as a lien against 'Lori Garfinkel' by the Superior Court Clerk in Trenton." Id. at 4. Debtor subsequently changed her name multiple times. Ibid.

"[I]n August 2018, debtor purchased the West Orange property under the name, Lori Alexis Lynn-Martinolich, with a purchase money mortgage made by Family First Funding, LLC." Ibid. That same month, as evidenced in an exhibit attached to the certification of Kevin Kelly, the Senior Vice President of Lending Operations and Credit Risk at FMC, FMC acquired the purchase money mortgage. "In July 2019, debtor refinanced the West Orange property with . . . FMC under the name, Lori Alexis Lynn-Martinolich." Ibid.

In October 2021, plaintiff filed a complaint in the Chancery Division to determine the priority of liens on the West Orange property. In March 2022,

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plaintiff filed his amended complaint, adding the law firm, Casha, Casha & Evans, LLC, as a judgment creditor. Thus, in his amended complaint, plaintiff sought to determine the priority of the following liens:

April 28, 2011 – New Jersey Division of Taxation's (NJDOT) $1,257.62 tax lien against "Lori Garfinkel";

July 23, 2012 – plaintiff's $66,946 lien against "Lori Garfinkel" described above;

February 23, 2017 – NJDOT's $3,571.61 tax lien against "Lori L. Garfinkel";

August 1, 2019 – FMC's mortgage against "Lori Alexis Lynn-Martinolich";

September 19, 2019 – United States Internal Revenue Service's (IRS) $17,101.33 tax lien against "Lori Z.

Lynn-Martinolich"; and

August 19, 2019 – MFD's $627,419 amended certificate of debt against "Lori Alexis Lynn Martinolich";

originally entered on August 16, 2018 against "Lori Lynn Garfinkel."

[Id. at 5.]1

1 In our prior opinion, we noted FMC's case information statement stated "plaintiff's claims against debtor, Peter Garfinkel, the IRS, and Casha, Casha & Evans, LLC, were dismissed without prejudice in the trial court for lack of prosecution." Woodford, slip op. at 5 n.4. We further gleaned "NJDOT did not file a brief but joined MFD's motion." Ibid. Our review of the present record indicates only plaintiff, MFD, and FMC participated in the remand proceedings. Neither MFD nor NJDOT filed a brief on this appeal.

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On September 30, 2022, plaintiff, MFD, and FMC moved for summary judgment. On November 14, 2022, the first motion judge denied plaintiff's and MFD's motions, and granted FMC's motion. The judge determined FMC held a first priority lien on the West Orange property, MFD held a judgment lien, the IRS held a lien interest, and "[t]he asserted interests of all other defendants and plaintiff d[id] not attach to the [p]roperty."

In her written statement of reasons accompanying the orders, the judge rejected plaintiff's argument that FMC had constructive notice of his judgment based on discrepancies in debtor's credit report. The judge determined "constructive notice comes from the information entered onto the public docket, and what a search of the public record would reveal based on an applicant's name on the Affidavit of Title." Thus, the judge held there was "no apparent legal basis for reordering priority on account of the lending bank failing to investigate credit report discrepancies after receiving an Affidavit of Title and before extending a refinancing mortgage."

On appeal, plaintiff argued FMC failed to "exercise due diligence in ascertaining debtor's true identity and, as such, FMC c[ould ]not rely on a title search of the public record." Woodford, slip op. at 10. Plaintiff was the sole appellant, but MFD joined plaintiff's due diligence argument. Ibid.

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In our prior opinion, we explained parties are charged with constructive knowledge of the results of a reasonable inquiry whenever "the surrounding circumstances are suspicious and the party purposefully or knowingly avoids further inquiry." Id. at 13 (quoting Friendship Manor, Inc. v. Greiman, 244 N.J. Super. 104, 108 (App. Div. 1990)). We concluded "additional information [wa]s necessary to determine whether FMC 'purposefully or knowingly avoid[ed] further inquiry'" of the red flags in debtor's refinancing application. Id. at 15 (second alteration in original) (quoting Friendship Manor, 244 N.J. Super. at 108). We therefore "vacate[d] the orders under review and remand[ed] for a plenary hearing, deferring to the motion judge's discretion whether to reopen and permit limited discovery." Id. at 16.

On remand, during an October 29, 2024 case management conference, FMC's counsel asserted FMC intended to argue it enjoyed a first priority lien as a result of refinancing the purchase money mortgage. The first motion judge stated she would not preclude FMC from raising its new theory and permitted limited discovery between the parties.

In April 2025, FMC moved for partial summary judgment. In his certification supporting FMC's motion, Kelly stated FMC acquired the purchase

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money mortgage on the West Orange property in August 2018. Assignment documents related to that purchase were attached to his certification.

The following month, plaintiff moved for summary judgment seeking to establish the priority of liens on the West Orange property and MFD cross- moved to declare it enjoyed priority over subsequently recorded claims. On June 27, 2025, following the first motion judge's retirement, the second motion judge heard arguments on the parties' motions. FMC's counsel clarified, although FMC moved for partial summary judgment, as a matter of law, plaintiff's action should be dismissed assuming the judge found the refinanced loan was for the same amount that was outstanding at the time of the refinancing.

On June 30, 2025, the judge issued three companion orders, granting FMC summary judgment, and denying plaintiff's and MFD's motions, thereby dismissing plaintiff's action. In her written decision, the judge found we did not reverse the portion of the first motion judge's orders determining plaintiff's judgment did not attach to the West Orange property. However, the judge recognized neither this court nor the first motion judge had an opportunity to

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address FMC's new theory regarding the refinance of a purchase money mortgage.

The judge found the mortgage securing Family First Funding's loan to debtor was a purchase money mortgage because that loan was used to acquire the West Orange property. The judge found thereafter FMC acquired the purchase money mortgage and priority over senior liens. Following this purchase, FMC refinanced debtor's loan for the same amount. The judge recognized, under N.J.S.A. 46:9-8, purchase money mortgages "enjoy a priority over pre-recorded judgments."

The judge acknowledged we remanded the matter to determine whether FMC properly investigated red flags in debtor's refinancing application. Quoting our decision in Sisler v. Gannet Co., 222 N.J. Super. 153, 160 (App. Div. 1987), the judge recognized the law of the case doctrine is "more stringent" when a trial court is confronted with "a prior appellate decision in the same case." However, the judge explained, in evaluating FMC's new argument, she was "not disregarding [our] express instruction for remand but considering a new, but crucial, issue."

The judge next considered whether FMC's refinanced mortgage continued to hold priority over senior lienholders. Quoting our decision in Sovereign Bank

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v. Gillis, 432 N.J. Super. 36, 44 (App. Div. 2013), the judge held, under the replacement and modification doctrine, "where a mortgage loan is refinanced by the same lender, a mortgage securing the new loan may be given the priority of the original mortgage."

The judge rejected the argument that the replacement doctrine entitled FMC to enjoy priority over "intervening claims that arose between the purchase money mortgage and FMC's replacement mortgage but does not allow such priority as to 'senior' lien holders." In doing so, the judge recognized, "a Purchase Money Mortgage has priority over senior liens and . . . a refinancer of a Purchase Money Mortgage steps into the shoes of the Purchase Money Mortgage."

The judge next acknowledged the replacement doctrine, similar to the related doctrine of equitable subrogation, "is an equitable doctrine, applied in the exercise of the court's equitable discretion."2 However, quoting our decision in New York Mortgage Trust 2005-3 v. Deely, 466 N.J. Super. 387, 401 (App. Div. 2021), the judge explained equitable subrogation is designed to prevent

2 The equitable subrogation doctrine governs the priority of competing liens when "a third party advances money to pay off a mortgage." Sovereign Bank, 432 N.J. Super. at 44. Conversely, the replacement doctrine applies where, as here, a mortgage loan is refinanced by the same lender. Id. at 50.

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other creditors from reaping an "undeserved windfall" by "vault[ing] over the priority of the refinancing mortgage lender." The judge held the same reasoning applied here "as to the senior creditor as it relates to a Purchase Money Mortgage holder and the replacement of the same."

The judge recognized plaintiff's argument that FMC should have known of the liens on the West Orange Property. However, the judge found, if FMC had investigated debtor's refinancing application, FMC would likely not have refinanced debtor's loan, and the purchase money mortgage would have continued to hold first priority. Indeed, for purposes of the motions, the judge presumed FMC could and should have discovered the judgments recorded against debtor. But because any investigation would have left plaintiff subordinate to a purchase money mortgage, the judge held it would be "illogical" to vault plaintiff over FMC due to FMC's failure to conduct an investigation.

II.

On appeal, plaintiff initially argues FMC waived its right to "raise the issue of equitable subrogation" and the second motion judge violated the law of the case doctrine by failing to conduct the constructive notice analysis discussed in our prior opinion. Secondly, plaintiff asserts "equitable subrogation" does not allow a refinanced purchase money mortgage to obtain priority over liens

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that preceded the purchase money mortgage, and in any event it was inequitable to apply the doctrine here in light of the red flags in debtor's mortgage application. Plaintiff next contends the evidence shows FMC knowingly and purposefully failed to inquire into the red flags in debtor's application.

Finally, plaintiff challenges the second motion judge's determination that our prior opinion did not vacate the portion of the November 14, 2022 order concluding his judgment did not attach to the West Orange property. Plaintiff asserts, because he was the only party to appeal the November 14, 2022 orders, we implicitly held his judgment attached to the property.

Having considered plaintiff's contentions in view of the governing law, we conclude they lack sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons stated in the second motion judge's cogent written decision.

Affirmed.

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