NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1964-23
U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as OWNER TRUSTEE for RCF 2 ACQUISITION TRUST,
Plaintiff-Appellant,
v.
BRONX GIRLS FLIPS, LLC, LAYO TOYIN OYAWUSI, VICTORIA O. ODUNOWO, ROUCHELLE GLOVER, MR. GLOVER, husband of ROUCHELLE GLOVER,
Defendants,
and
ALPHA FLOW TRANSITIONAL MORTGAGE TRUST 2021-WL1, formerly PML FUNDING, LLC,
Defendant-Respondent. _______________________________
Argued January 28, 2025 – Decided February 4, 2025 Before Judges Susswein, Perez Friscia and Bergman.
On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-008670-23.
Christina A. Livorsi argued the cause for appellant (Day Pitney LLP, attorneys; Christina A. Livorsi and Chelsea Turiano, of counsel and on the briefs).
Joseph R. McCarthy argued the cause for respondent (Stark & Stark, PC, attorneys; Joseph R. McCarthy and Marshall T. Kizner, of counsel and on the brief).
PER CURIAM
In this residential foreclosure matter, plaintiff U.S. Bank Trust National
Association, not in its individual capacity but solely as Owner Trustee for RCF
2 Acquisition Trust (U.S. Bank),1 appeals from the March 4, 2024 Chancery
Division order, which granted defendant Alpha Flow Transitional Mortgage
Trust 2021-WL1's (Alpha)2 motion for summary judgment, expunged and
discharged the underlying mortgage, deemed the mortgage satisfied, and
1 On October 4, 2021, U.S. Bank was assigned the loan and mortgage. Therefore, we reference U.S. Bank as plaintiff throughout the opinion. We further note that plaintiff's loan servicer changed on July 16, 2021 from Rushmore Loan Management Services LLC to Selene Finance LP. 2 We reference Alpha as defendant throughout the opinion because its predecessor in interest, PML Funding LLC, assigned codefendant Bronx Girls Flips, LLC's mortgage to Alpha on April 30, 2021. A-1964-23 2 dismissed plaintiff's complaint with prejudice. Plaintiff also appeals the trial
court's denial of its cross-motion for summary judgment. Having reviewed the
record, parties' arguments, and governing legal principles, we affirm.
I.
In April 2008, codefendants Victoria Odunowo and Layo Toyin Oyawusi
(the borrowers) purchased a residential property in Orange for $205,000. On
April 30, Security Atlantic Mortgage loaned the borrowers $201,832 to finance
the property, which an executed promissory note memorialized. The note
provided for a fixed interest rate of 6.50% per annum and monthly loan
payments of $1,275.72 beginning June 1. To secure the note, the borrowers
executed a purchase money mortgage on the property. On June 6, the borrowers
recorded their deed and mortgage with the Office of the Clerk of Essex County.
Under paragraph one of their mortgage, the borrowers were required to
"pay when due the principal of, and interest on, the debt evidenced by the [n]ote
and any prepayment and late charges due under the [n]ote." Additionally, they
were responsible under paragraph two to pay "[t]axes, [i]nsurance, and [o]ther
[c]harges." The mortgage's paragraph three provided for the "Application of
Payments," stating:
. . . All payments under [p]aragraphs [one] and [two] shall be applied by Lender as follows:
A-1964-23 3 First, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premium; Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as required; Third, to interest due under the [n]ote; Fourth, to amortization of the principal of the [n]ote; and Fifth, to late charges due under the [n]ote.
Paragraph nine of the mortgage addressed "Grounds for Acceleration of
Debt," providing:
(a) Default. Lender may, except as limited by regulations issued by the Secretary in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument if: (i) Borrower defaults by failing to pay in full any monthly payment required by this Security Instrument prior to or on the due date of the next monthly payment, or (ii) Borrower defaults by failing, for a period of thirty days, to perform any other obligations contained in this Security Instrument. (b) Sale Without Credit Approval. Lender shall, if permitted by applicable law (including section 34l (d) of the Garn-St. Germain Depository Institutions Act of 1982, 12 U.S.C. [§] 170lj-3(d)) and with the prior approval of the Secretary, require immediate payment in full of all sums secured by this Security Instrument if: (i) All or part of the Property, or a beneficial interest in a trust owning all or part of the Property is sold or otherwise transferred (other than by devise or descent), and
A-1964-23 4 (ii) The Property is not occupied by the purchaser or grantee as his or her principal residence, or the purchaser or grantee does so occupy the Property, but his or her credit has not been approved in accordance with the requirements of the Secretary. (c) No Waiver. If circumstances occur that would permit Lender to require immediate payment in full, but Lender does not require such payments, Lender does not waive its rights with respect to subsequent events.
On February 23, 2015, Odunowo conveyed title to the property by deed to
Oyawusi, which was recorded on March 3. On February 12, 2018, Oyawusi
executed a loan modification agreement with plaintiff's predecessor, Bayview
Loan Servicing, LLC (Bayview), 3 modifying the monthly payments due to
$1,663.93 in addition to an estimated monthly escrow payment of $635.19. On
December 1, 2020, the borrowers defaulted on the loan.
On April 15, 2021, Oyawusi, conveyed title by deed to codefendants
Bronx Girls Flips, LLC (Bronx Girls) and Rouchelle Glover, which was
recorded.4 On April 30, Bronx Girls executed a purchase money mortgage on
the property in favor of PML Funding LLC (PML) to secure the financing in the
3 Bayview was assigned the loan and mortgage on March 9, 2016. 4 Oyawusi had inadvertently conveyed title by deed to Rouchelle Glover on April 15, 2021. On November 14, 2022, Glover conveyed title by deed to codefendant Bronx Girls, solely, which was recorded. A-1964-23 5 amount of $260,140, which was recorded on July 6. On April 30, PML assigned
the Bronx Girls' mortgage to defendant. The April 30, HUD-1 property closing
statement provided for "[p]er [d]iem [i]nterest for [m]ortgage [l]oan [p]ayoff
(18 days)" in the amount of $549.54 and an "escrow hold-payoff" in the amount
of $500.
By letter dated April 9, 2021, Rushmore Loan Management Services LLC
(Rushmore), plaintiff's immediate predecessor's servicer, sent a loan payoff
statement to the borrowers stating, the "figures [we]re good to April 16, 2021"
and recited a "TOTAL AMOUNT TO PAY LOAN IN FULL" of $177,276.75.
Rushmore's letter further stated: "[f]unds received on or after April 16 . . .
require[d] [payment of] an additional $30.53 interest per [d]ay"; "[t]hese figures
[we]re subject to final verification by the [n]oteholder"; "[t]here may be
additional fees incurred for which [the borrowers] are responsible that are
unknown as of the date of this letter"; and "[a] late charge of $41.15 will be
assessed [fifteen] days after a current payment is due and should be added to the
payoff total if received after that time." Rushmore instructed that the payoff
amount was to be paid to its Wells Fargo account.
On May 7, Rushmore received a wire transfer from Entrust Solutions LLC
(Entrust) in the amount of $177,887.35, and it specifically identified Odunowo
A-1964-23 6 and Oyawusi as the borrowers, their loan identification number, and the property
address. Rushmore did not apply the funds to the loan because the amount was
twenty-one days past the "Good-Through Date" identified in plaintiff's payoff
letter, and additional accumulated fees were not paid. On May 12, Oyawusi
called Rushmore's loss mitigation team regarding the status of the funds.
Rushmore held the funds for fourteen days before it wired the funds back to
Entrust's JP Morgan Chase Bank account.
Rushmore's return notes indicated, "[r]eason for [the] return . . . payoff is
short by $3,312.88 due to fees and costs and [e]scrow/[i]mpound [o]verdraft."
The notes further stated, "bwr said will have attny contact us." The document
memorializing Rushmore's created request to return Entrust's wire transfer
indicated it made no contact with the borrowers and provided the funds were
rejected and returned because the "payoff [wa]s short by $3,312.88."
Rushmore's cash advice detail form noted the payment source was a third party,
the department was loss mitigation, the principal balance was $171,440.84, and
the funds received were $177,887.35.
On July 16, 2021, Selene Finance LP became the loan servicer after
Rushmore. On September 27, 2022, Selene sent the borrowers a notice of
intention to foreclose in accordance with the Fair Foreclosure Act, N.J.S.A.
A-1964-23 7 2A:50-53 to -82. On October 4, plaintiff was assigned the borrowers' loan and
mortgage.
On July 19, 2023, plaintiff filed a foreclosure action against the borrowers.
On September 20, PML filed a contesting answer and counterclaim, which
plaintiff answered. No other defendants answered the complaint. On October
3, defendant, as assignee of PML, filed a motion to intervene and to dismiss
plaintiff's complaint for failure to state a claim. On November 20, plaintiff and
defendant entered a consent order substituting defendant as the subsequent party
of interest in the action and revising their motion briefing schedule. Defendant
filed a statement of material facts pursuant to Rule 4:46-2, converting its motion
to dismiss into a summary judgment motion. Defendant's motion requested the
court to discharge plaintiff's mortgage and to compel plaintiff to accept $30.53
plus interest in full satisfaction of the mortgage. Plaintiff filed opposition and
cross-moved for summary judgment, seeking to strike defendant's answer,
defenses, and counterclaim, deem the matter uncontested, enter default, and
transfer the matter to the Office of Foreclosure. Plaintiff filed a limited counter-
statement of material facts. At oral argument, plaintiff's counsel represented to
the trial court that the motions were ripe for the court to address on summary
judgment.
A-1964-23 8 After argument, the court issued an oral decision accompanied by an order
granting defendant summary judgment and denying plaintiff's cross-motion.
The court concluded plaintiff was required to discharge the borrowers' mortgage
because it should have accepted and applied the deficient payoff payment from
defendant toward the borrowers' loan. It reasoned that after plaintiff applied
defendant's payment, it could have waited to "discharge[] the [m]ortgage" until
the limited remaining funds were paid. The court recognized the loan "contract
was not with the new owners," but "was with the former owners." The court
found plaintiff's "internal notes, d[id] not establish that anyone was advised that
the wire was coming back." Because plaintiff held the funds for almost fourteen
calendar days, the court found it was "too long," noting plaintiff had "accepted"
the money and had "use of that money." Finally, the court determined "that the
equities . . . favor an immediate discharge of this mortgage" because "on
balance, [examining] . . . the actors here, . . . by a large margin, the blame falls
squarely on the plaintiff for returning those funds, and in the manner they did it,
without any foreknowledge by anyone."
On appeal, plaintiff argues the court erred: in granting summary judgment
to defendant and discharging the mortgage because a genuine issue of material
A-1964-23 9 fact exists as to whether plaintiff was required to accept the partial payment; and
alternatively, in finding that plaintiff was barred from pursuing its foreclosure.
II.
Our review of a trial court's summary judgment decision is de novo.
DeSimone v. Springpoint Senior Living, Inc., 256 N.J. 172, 180 (2024); see also
R. 4:46-2(c). "To decide whether a genuine issue of material fact exists, the trial
court must 'draw[] all legitimate inferences from the facts in favor of the non -
moving party.'" Rios v. Meda Pharm., Inc., 247 N.J. 1, 13 (2021) (alteration in
original) (quoting Friedman v. Martinez, 242 N.J. 449, 472 (2020)). "The court's
function is not 'to weigh the evidence and determine the truth of the matter but
to determine whether there is a genuine issue for trial.'" Ibid. (quoting Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). To rule on summary
judgment, a court must determine "whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law." Vizzoni v. B.M.D., 459 N.J. Super.
554, 567 (App. Div. 2019) (quoting Liberty Surplus Ins. Corp. v. Nowell
Amoroso, P.A., 189 N.J. 436, 445-46 (2007)).
Generally, in an action to foreclose a mortgage, the only material issues
are "the validity of the mortgage, the amount of the indebtedness, and the right
A-1964-23 10 of the mortgagee to resort to the mortgaged premises." N.Y. Mortg. Tr. 2005-3
Mortg.-Backed Notes, U.S. Bank Nat'l Ass'n as Tr. v. Deely, 466 N.J. Super.
387, 397 (App. Div. 2021) (quoting Invs. Bank v. Torres, 457 N.J. Super. 53, 65
(App. Div. 2018), aff'd and modified, 243 N.J. 25 (2020)). We review a motion
court's summary judgment "decision de novo and afford [its] ruling no special
deference." Torres, 457 N.J. Super. at 56. A foreclosure action will be deemed
uncontested if "none of the pleadings responsive to the complaint either contest
the validity or priority of the mortgage or lien being foreclosed or create an issue
with respect to plaintiff's right to foreclose it." R. 4:64-1(c)(2).
"[A] trial court's interpretation of the law and the legal consequences that
flow from established facts are not entitled to any special deference." Rowe v.
Bell & Gossett Co., 239 N.J. 531, 552 (2019) (quoting Manalapan Realty, L.P.
v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). Accordingly, legal
questions of statutory interpretation are reviewed de novo. Bowser v. Bd. of
Trs., Police & Firemen's Ret. Sys., 455 N.J. Super. 165, 170-71 (App. Div.
2018).
III.
On appeal, plaintiff argues for the first time that there are genuine issues
of material fact in dispute regarding whether it "was required to accept or reject
A-1964-23 11 the partial payment" defendant made. We note at oral argument before the trial
court, plaintiff represented the foreclosure matter was ripe for summary
judgment and did not argue further discovery was needed. Plaintiff relied on
the established documentary record and largely undisputed course of events, as
evidenced by plaintiff's January 12, 2024 limited "objections to the [s]tatement
of [u]ndisputed [m]aterial [f]acts filed by [d]efendant." Plaintiff did not aver
specific factual disputes regarding its authority to accept or reject the received
deficient payoff from defendant. Rule 4:46-2(b).
"The filing of a cross-motion for summary judgment generally limits the
ability of the losing party to argue that an issue raises questions of fact, because
the act of filing the cross-motion represents to the court the ripeness of the
party's right to prevail as a matter of law." Spring Creek Holding Co. v.
Shinnihon U.S.A. Co., 399 N.J. Super. 158, 177 (App. Div. 2008). While we
have "recognize[d] that there is no per se rule that the existence of cross-motions
for summary judgment precludes a party from seeking . . . alternative relief ," in
the present matter, plaintiff affirmatively represented to the court the motions
were ripe for summary judgment. Ibid.
Further, we generally decline to consider issues not raised below when an
opportunity for such a presentation was available unless the questions raised on
A-1964-23 12 appeal concern jurisdiction or matters of great public interest. Nieder v. Royal
Indem. Ins. Co., 62 N.J. 229, 234 (1973); see also Zaman v. Felton, 219 N.J.
199, 226-27 (2014) (recognizing claims that are not presented to a trial court are
inappropriate for consideration on appeal). Nevertheless, we have considered
plaintiff's argument on the merits and are unpersuaded.
We reject plaintiff's arguments that it was required to return defendant's
deficient payoff payment of the borrowers' loan and that the court erred in
denying its summary judgment motion to deem its foreclosure matter
uncontested pursuant to Rule 4:64-1(c). Plaintiff accelerated Odunowo's and
Oyawusi's loan after default occurred and required payment of all sums due.
The mortgage's uniform covenants section, paragraph one, required Odunowo
and Oyawusi to "pay when due the principal of, and interest on, the debt
evidenced by the [n]ote" as well as any late charges. (emphasis added). While
accelerated, they were required to pay the loan amount due or face foreclosure.
"The plain language of the contract is the cornerstone of the interpretive
inquiry; 'when the intent of the parties is plain and the language is clear and
unambiguous, a court must enforce the agreement as written, unless doing so
would lead to an absurd result.'" Barila v. Bd. of Educ. of Cliffside Park, 241
N.J. 595, 616 (2020) (quoting Quinn v. Quinn, 225 N.J. 34, 45 (2016)). "The
A-1964-23 13 interpretation of a contract is generally subject to de novo review." Arbus,
Maybruch & Goode, LLC v. Cogen, 475 N.J. Super. 509, 515 (App. Div. 2023).
Paragraph three of the mortgage provided that "[a]ll payments under
[p]aragraphs [one] and [two] shall be applied by [l]ender." Therefore, plaintiff
was required to accept and apply defendant's deficient payoff amount of
$177,887.35 toward the borrowers' loan. Plaintiff was thereafter not foreclosed
from pursuing the remaining balance owed. Notably, the fifth subparagraph of
paragraph three recognizes that the borrowers' payment toward the loan may be
applied to "late charges due under the note," implicating contemplation that
plaintiff must accept payment when the loan is not current. Therefore, we
conclude no genuine issue of material fact is in dispute regarding plaintiff's
requirement under the loan to have applied the payment received from defendant
to the borrowers' accelerated sum due.
We also observe the performance of the parties subject to the note and
mortgage are tempered by the implied covenant of good faith and fair dealing,
which exists in every contract in New Jersey. See Wood v. N.J. Mfrs. Ins. Co.,
206 N.J. 562, 577 (2011) ("Every party to a contract . . . is bound by a duty of
good faith and fair dealing in both the performance and enforcement of the
contract." (quoting Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping
A-1964-23 14 Ctr. Assocs., 182 N.J. 210, 224 (2005))); see also Wilson v. Amerada Hess
Corp., 168 N.J. 236, 250 (2001).
We further concur with the trial court's determination that equity requires
plaintiff to discharge the borrowers' mortgage. "It is a maxim of equity that
[one] who comes into a court of equity must enter with clean hands . . . ." Brown
v. Rowland, 137 N.J. Eq. 462, 464 (1946). We discern no error in the court's
findings that "equity follows the law" and that here, "there [wa]s no out in this
mortgage anywhere or in the note that just says [plaintiff] can return money after
they[ ha]ve received it." After plaintiff received defendant's wired $177,276.75
to pay off the borrowers' promissory note that was in default, and it held the
funds for about fourteen days, it failed to notify anyone in writing of the payment
deficiency and return of the funds. Notably, plaintiff's own payoff letter
contemplated the borrowers may have owed further monies, stating, "There may
be additional fees incurred for which you are responsible that are unknown as
of the date of this letter." Yet, plaintiff provided no written notification to the
borrowers of the amount of the payoff deficiency and instead returned the
received wired funds to Entrust's JP Morgan account.
Relevant to a review of plaintiff's actions was that it undisputedly knew:
the borrowers had defaulted on their loan payments on December 1, 2020,
A-1964-23 15 Oyawusi had sold the property, and Entrust's wired funds on behalf of the new
purchasers were intended to "payoff" the borrowers' promissory note. The Wells
Fargo wire transfer specifically instructed defendant's predecessor servicer
"RUSHMORE . . . [TO] PAYOFF LOAN 760******** LAYO OYAWUSIAND
[sic] VICTORIA ODUNOWO." Therefore, plaintiff knew the wired funds were
intended to satisfy the mortgage debt and cancel the outstanding mortgage. Cf.
United Orient Bank v. Lee, 208 N.J. Super. 69, 75 (App. Div. 1986) (requiring
a bank to accept a payoff pursuant to the direction "upon receipt of the
refinancing proceeds to have satisfied the mortgage indebtedness").
Regardless of whether the payoff amount was deficient $30.53 or
$3,312.88, plaintiff's failure to notify the borrowers in writing of the remaining
balance owed precluded them from curing the deficiency and preventing
plaintiff's foreclosure. Plaintiff waited approximately fourteen days to return
the wired funds; thus, plaintiff had ample time to provide the borrowers written
notice of the deficiency and the amount necessary to pay the loan in full. Indeed,
such notice would have achieved the ultimate objective of the payoff letter—to
explain how to complete the payoff and reconcile any amount owed. Plaintiff's
actions ultimately resulted in the loss of funds.
A-1964-23 16 "[E]quity will generally conform to established rules and precedents[] and
will not change or unsettle rights that are created and defined by existing legal
principles." W. Pleasant-CPGT, Inc. v. U.S. Home Corp., 243 N.J. 92, 108
(2020) (first alteration in original) (quoting Dunkin' Donuts of Am., Inc. v.
Middletown Donut Corp., 100 N.J. 166, 183 (1985)). "This is the basis for the
equitable maxim 'equity follows the law,' which instructs that as a rule a court
of equity will follow the legislative and common-law regulations of rights, and
also obligations of contract." Borough of Seaside Park v. Comm'r of N.J. Dep't
of Educ., 432 N.J. Super. 167, 222 (App. Div. 2013) (quoting Dunkin', 100 N.J.
at 183). Further, "[i]t is true that '[e]quity does not ordinarily aid one whose
indifference was the sole cause of the injury of which he [or she] now
complains.'" Goodyear Tire & Rubber Co. v. Kin Props., Inc., 276 N.J. Super.
96, 105 (App. Div. 1994) (second alteration in original) (quoting Moro v.
Pulone, 140 N.J. Eq. 25, 30 (Ch. 1947)). After reviewing the undisputed facts,
we discern no error in the court's equitable determination that plaintiff's
inappropriate actions surrounding the return of the wired funds to Entrust
dictates that plaintiff must discharge the borrowers' mortgage. Accordingly, we
discern no error in the court's granting of defendant's summary judgment
motion.
A-1964-23 17 Having concluded the promissory note required plaintiff to apply
defendant's payoff amount to the borrowers' loan and that equity supports
discharging the mortgage, we need not address the parties' arguments regarding
the application of the Uniform Commercial Code (UCC) Article 4A, N.J.S.A.
12A:4A-101 to -507, and the Truth in Lending Act (TILA), 15 U.S.C. §§ 1601
to 1667f.
To the extent that we have not addressed plaintiff's remaining contentions,
it is because they lack sufficient merit to be discussed in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed.
A-1964-23 18