WELLS FARGO BANK, N.A. VS. LOUIS CICENIA (F-021199-15, HUDSON COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 17, 2018
• Docket: A-2189-16T4
• Status: Unpublished

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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-2189-16T4

WELLS FARGO BANK, N.A.,

Plaintiff-Respondent,

v.

LOUIS CICENIA and MRS. LATEF, wife of Zafer Latef,

Defendants,

and

ZAFER LATEF and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., as nominee for METLIFE HOME LOANS,

Defendants-Appellants.

Submitted May 9, 2018 — Decided July 17, 2018

Before Judges Koblitz, Manahan and Suter.

On appeal from Superior Court of New Jersey, Chancery Division, Hudson County, Docket No. F-021199-15.

Herold Law, PA, attorneys for appellants (Raymond R. Siberine, of counsel and on the brief; Craig S. Provorny, on the brief). Reed Smith LLP, attorneys for respondent (Henry F. Reichner, of counsel and on the brief).

PER CURIAM

Zafer Latef and Mortgage Electronic Registration Systems,

Inc. (MERS) appeal from a December 21, 2016 final residential

foreclosure judgment and the preceding June 28, 2016 order of the

Chancery Division striking defendants' answer and returning the

matter to the Office of Foreclosure as an uncontested matter. R.

4:64-1(c)(3). We affirm.

By consent, this matter was tried by the Chancery Court based

on documentary evidence including depositions, with no live

testimony. Latef owns and resides at the residential condominium

property (Unit 2) subject to this foreclosure action. Unit 2 is

identified on the Hoboken tax map by block and lot number. MERS,

as nominee for MetLife Home Loans, is the mortgagee in the

Latef/MERS Mortgage. Cicenia is the previous owner of the property

who conveyed Unit 2 to Latef in 2010.

In October 2007, Cicenia entered into a $250,000 Prime Equity

Line of Credit Agreement with Wachovia (Wachovia Agreement). Wells

Fargo is the successor in interest to Wachovia by name change and

2 A-2189-16T4 merger.1 The section of the Wachovia Agreement entitled

"Collateral" did not specifically describe Unit 2.

To secure the line of credit, Cicenia executed and delivered

a mortgage to Wachovia (Wachovia HELOC) that was recorded. The

first page of the Wachovia HELOC describes the mortgaged property

by the address, without including the unit number. The second

page of the Wachovia HELOC contains a section entitled "TRANSFER

OF RIGHTS IN THE PROPERTY." That section states in pertinent

part:

This Security Instrument secures to [Wachovia] . . . (ii) the performance of [Cicenia's] covenants and agreements under this Security Instrument and [Cicenia's] covenants and agreements under the Debt Instrument. For these purposes, [Cicenia] does hereby mortgage, grant and convey to [Wachovia] the following described property located in the County of Hudson, State of New Jersey.

The space provided for insertion of a property description was

left blank.

The last page of the Wachovia HELOC, not numbered and titled

Schedule A, refers to the property by street address without unit

number, and notes that it is more particularly described in a

deed, noting the book and page numbers where the deed is recorded.

Cicenia and Wells Fargo's closing agent stated at their depositions

1 See Suser v. Wachovia Mortgage, FSB, 433 N.J. Super. 317, 321 (App. Div. 2013).

3 A-2189-16T4 that they had no recollection of Schedule A being attached to the

Wachovia HELOC at the time of execution.

In March 2010, Cicenia and Latef executed a contract of sale

(Latef contract) for $213,500 for Unit 2. Latef obtained a

$160,000 purchase money mortgage from MetLife Home Loans.

In April 2010, First Jersey Title Services, agent for First

American Title Insurance, conducted a title search for judgments

and liens, and reported the search was clear. First American then

issued a title policy stating the property was clear of any

encumbrances, liens, and judgments. After executing the Latef

contract, and before closing, Cicenia provided Latef with a copy

of Cicenia's owner policy of title insurance. The only mortgage

identified as an exception in Cicenia's owner policy was Cicenia's

1998 purchase money mortgage, which had since been discharged. It

did not disclose the Wachovia HELOC, nor did Cicenia or his

counsel.

Prior to closing, Latef's counsel obtained a title commitment

covering Latef's purchase of Unit 2 and Latef's purchase money

mortgage. The title commitment indicated there were no open

mortgages of record encumbering Unit 2. Also before closing,

Cicenia received a monthly statement from Wells Fargo indicating

the outstanding balance on the Wachovia HELOC was $249,048.17. He

did not disclose this information to Latef.

4 A-2189-16T4 The closing on Unit 2 took place on June 25, 2010. Cicenia

received $200,957.09. Wells Fargo discovered Cicenia sold Unit 2

over two months after the closing. Cicenia continued to make

payments on the Wachovia HELOC for approximately two more years.

Although it had accepted Cicenia's payments for almost two

years, in March 2012 Wells Fargo sent Cicenia a notice of default

based on the sale of Unit 2. Wells Fargo refused to accept

payments thereafter and sent two notices of its intent to

accelerate and foreclose, with a copy to Latef. As a result,

Latef filed a complaint against Cicenia in the Law Division of

Essex County, where Cicenia resided, alleging conversion, fraud,

and breach of covenant of title, seeking money damages only. The

complaint did not name Wells Fargo nor seek to quiet title for

Unit 2. Cicenia filed a third-party complaint against Wells Fargo,

which subsequently settled between the two parties.

The Law Division jury trial began in May 2014. At the

conclusion of Latef's case-in-chief, Cicenia moved for a directed

verdict and dismissal of Latef's claims, arguing Latef had not

established that the Wachovia HELOC was an encumbrance on Unit 2

and had not proved damages. The Law Division judge granted

Cicenia's motion, finding that no competent evidence was presented

that would allow the jury to calculate damages or determine that

Cicenia acted intentionally. She noted that the matter was not

5 A-2189-16T4 an action to quiet title and Latef had not joined Wells Fargo to

the action. She did not rule on the issue of whether the Wachovia

HELOC was a valid encumbrance on Unit 2 as against Latef or the

mortgage was properly recorded. A June 11, 2014 order dismissed

Latef's complaint with prejudice.

Latef appealed and we affirmed. Latef v. Cicenia, No. A-

5747-13 (App. Div. March 14, 2016). We determined Latef lacked

standing to seek the amount due Wells Fargo because Latef had not

proved there was a substantial likelihood he would suffer harm.

He had not demonstrated at trial that Wells Fargo had a valid

lien. We noted that "Wells Fargo was an indispensable party to

litigation that determined the validity of its [mortgage] claim

against [Cicenia]." Any judgment in the matter "would not be

binding on Wells Fargo."

Recognizing the litigation did not involve a quiet title

claim, we determined the evidence did not demonstrate that Wachovia

HELOC encumbered Unit 2, stating:

The evidence at trial failed to show a lien existed on the unit purchased by defendant by virtue of a valid and properly recorded mortgage. The actual security instrument executing the [m]ortgage merely describes the encumbered property as the address of the building; it does not specify that it pertains to Unit 2.

Because the mortgage did not specify that it encumbered Unit 2, plaintiff is not left

6 A-2189-16T4 unprotected against action to deprive him of his interest in Unit 2. . . .

It is undisputed that plaintiff provided "valuable consideration" to acquire his interest in the property and that he did not have notice of the Wells Fargo mortgage. Assuming that plaintiff recorded his deed before Wells Fargo filed any mortgage that specifically identified the lien on Unit 2, he would qualify as a bona fide purchaser whose position would be protected against a claim by Wells Fargo against the property. The evidence therefore fails to show a substantial likelihood he will suffer harm.

We concluded:

The deficiency in the description of the property to be encumbered permitted plaintiff to obtain insurable title and effectively defeats plaintiff's claim that there was an encumbrance upon Unit 2 constituting a breach of defendant's promises.

On June 15, 2015, Wells Fargo filed this residential

foreclosure complaint naming Cicenia, Latef, and MERS as

defendants. The complaint was filed approximately five years from

the Unit 2 closing between Cicenia and Latef and over three years

after Wells Fargo sent Cicenia its first notice of intention to

accelerate and foreclose.

The Chancery Division found that although Wachovia HELOC

itself did not contain a sufficient legal description, Schedule

A, attached to the mortgage when recorded, did refer to the deed,

7 A-2189-16T4 which clearly stated "the full address of the property, including

the unit number."

In his written opinion, the Chancery judge described the

issue as "whether the property description contained in the

recorded [m]ortgage [Cicenia] granted [Wells Fargo] was sufficient

to put [Latef], a subsequent purchaser, on notice that the

[m]ortgage covered [Unit 2]." The judge found no legal reason

precluding Wells Fargo "from executing and recording a mortgage

that incorporates by reference a prior recorded deed," and the

recording by Wells Fargo "adequately placed all subsequent

purchasers of [Unit 2] on notice of [Wells Fargo's] mortgage."

The judge found the description of the property in Schedule A

directed subsequent purchasers to the Cicenia deed, which

precisely described the Unit 2 property.

Issues of law are reviewed de novo. The Palisades At Fort

Lee Condo. Ass'n, Inc. v. 100 Old Palisade, LLC, 230 N.J. 427, 442

(2017). "A trial court's interpretation of the law and the legal

consequences that flow from established facts are not entitled to

any special deference." Ibid. (quoting Manalapan Realty, L.P v.

Twp. Comm. of Twp. of Manalapan, 140 N.J. 366, 378 (1995)).

I.

Defendants contend the law of the case doctrine is applicable

because Wells Fargo was brought in by Cicenia's third-party

8 A-2189-16T4 complaint, and attended the first day of trial. Defendants rely

on Schmidt v. Smith, 294 N.J. Super. 569 (App. Div. 1996), which

they argue is factually similar to this case because an insurance

company chose not to participate in a trial that found its insured

liable, and the insurance company was thereafter held to be

obligated to indemnify its insured.

Latef also argues that the law of the case requires that our

appellate discussion of the law division appeal be applied to the

Chancery decision. Both our written opinion and the Law Division

oral opinion conclude that Wells Fargo was an indispensable party

to litigation attempting to determine the validity of its lien

and, absent joinder, Wells Fargo would not be bound by the rulings.

"The 'law of the case' doctrine generally 'requires a decision

of law made in a particular case to be respected by all other

lower or equal courts during the pendency of that case.'" CFG

Health Sys., LLC v. Cty. of Essex, 411 N.J. Super. 378, 384 (App.

Div. 2010) (quoting State v. Reldan, 100 N.J. 187, 203 (1985)).

The doctrine generally applies to "legal issues in the same case."

Franklin Med. Assocs. v. Newark Pub. Schs., 362 N.J. Super. 494,

512 (App. Div. 2003).

The "law of the case" doctrine does not benefit defendants.

The doctrine applies to legal issues in the same case. Franklin

Med. Assocs., 362 N.J. Super. at 512. This Chancery case is not

9 A-2189-16T4 the same as the related Law Division or subsequent Appellate

Division case. Additionally, application of the doctrine to

preclude consideration of a legal issue is discretionary and not

a rule of law. Toto v. Princeton Twp., 404 N.J. Super. 604, 618

(App. Div. 2009). Lastly, defendants' reliance on Schmidt is

misguided, because the Schmidt decision was based upon the

insurer/insured relationship of the parties, which does not exist

here.

II.

Defendants argue the Wachovia HELOC does not adequately

describe the mortgaged premises, Unit 2, and should therefore be

considered invalid. Defendants contend the Wachovia HELOC fails

to comply with the New Jersey Statute of Frauds, N.J.S.A. 25:1-1

to -16.

Under the Statute of Frauds:

A transaction intended to transfer an interest in real estate shall not be effective to transfer ownership of the interest unless: (1) a description of the real estate sufficient to identify it, the nature of the interest, the fact of the transfer and the identity of the transferor and the transferee are established in a writing signed by or on behalf of the transferor.

[N.J.S.A. 25:1-11(a)(1).]

10 A-2189-16T4 "Generally, if property is not expressly included in the

instrument's description, it will not be covered by the mortgage."

Panetta v. Equity One, Inc., 190 N.J. 307, 323 (2007).

New Jersey allows for incorporation by reference in a recorded

document that refers to a previous deed. See Garden of Memories,

Inc. v. Forest Lawn Mem'l Park Ass'n, 109 N.J. Super. 523, 532-34

(App. Div. 1970) (explaining that references in a deed's exception

recitals placed a purchaser on constructive notice of other

previous deeds and the existence of another's interest in the

subject property). The "purpose of a description of land . . .

is to identify the subject-matter of the grant," which "may be

done either by describing it in words at length, or by referring

the reader to some other deed or record containing such a

description." Mitchell v. D'Olier, 68 N.J.L. 375, 383 (E. & A.

1902). When a recorded document "refers to another deed, it has

the effect of incorporating the latter deed in the description,

so that what is therein described will pass." Kaplan v. Bernstein,

2 N.J. Misc. 762, 764 (Ch. Ct. 1924).

Defendants are correct that the numbered pages of the Wachovia

HELOC do not contain a sufficient description of Unit 2, nor do

they reference Schedule A. Based on Cicenia and the Wells Fargo

closing agent's failure to recall Schedule A more than eight years

after the closing, defendants speculate that the document was

11 A-2189-16T4 attached to the Wachovia HELOC after Cicenia signed the mortgage.

Schedule A of the Wachovia HELOC, however, was attached and

recorded, and defendants have not provided evidence that Schedule

A was not, in fact, attached to the Wachovia HELOC at the time of

execution. A failure to recall is not affirmative evidence that

it was not there.

Wells Fargo's obligation to provide a description of Unit 2

sufficient to identify it, N.J.S.A. 25:1-11(a)(1), was fulfilled

by Schedule A's reference to the Cicenia Deed.

III.

Defendants argue that this matter is similar to a case

recently resolved by the New York Appellate Division, Second

Department, Maurice v. Maurice, 131 A.D.3d 454 (N.Y. App. Div.

2015), where that court determined a deed having a deficient

description of the mortgaged property was invalid. Id. at 455-

57. In Maurice, an action to quiet title, the plaintiff submitted

a deed that did not include a property description above his

mother's signature and contained a blank space in the area where

the description of the property was usually set forth. Id. at

455.

Unlike in New Jersey, New York case law states that "a deed

conveying real property must set forth 'a specific grantor, a

specific grantee, a property designation of the property, a recital

12 A-2189-16T4 of the consideration, and . . . technical operative words.'" Id.

at 456 (alteration in original) (quoting Cohen v. Cohen, 188 A.D.

933, 933 (N.Y. App. Div. 1919)). "A deed which contains a blank

space instead of a description when signed is not an instrument

of conveyance." Ibid. (quoting Rekis v. Lake Minnewaska Mountain

Houses, Inc., 170 A.D.2d 124, 127 (N.Y. App. Div. 1991)). Because

the deed did not contain a property description, "it was void for

uncertainty." Ibid. Additionally, a "Schedule A" document, which

contained a metes and bounds description of the property, "and was

allegedly found in the files of the law firm which prepared the

1999 deed, could not serve as a legal property description, as the

1999 deed contained no language incorporating it by reference."

Maurice, 131 A.D.3d at 456. The court thus affirmed the trial

court's ruling that the deed was invalid. Id. at 456-57.

Unlike in Maurice, where the Schedule A was found in the

files of a law firm which had prepared the deed, 131 A.D.3d at

456, the Schedule A document in this matter was recorded as part

of the Wachovia HELOC. We are therefore unpersuaded by this

argument.

IV.

Our recording statutes govern mortgage priorities. N.J.S.A.

46:26A-1 to -12. "Lenders and other parties are generally charged

with constructive notice of instruments that are properly

13 A-2189-16T4 recorded." Sovereign Bank v. Gillis, 432 N.J. Super. 36, 43-44

(App. Div. 2013) (citing Cox v. RKA Corp., 164 N.J. 487, 496

(2000)). "Any recorded document affecting the title to real

property is, from the time of recording, notice to all subsequent

purchasers, mortgagees and judgment creditors of the execution of

the document recorded and its contents." N.J.S.A. 46:26A-12(a).

A party is presumed to be a bona fide purchaser unless proven

otherwise. Reaves v. Egg Harbor Twp., 277 N.J. Super. 360, 366

(Ch. Div. 1994). The burden is on Wells Fargo to show Latef had

either actual, constructive, or inquiry notice of the Wachovia

HELOC. It is "the duty of the purchaser to search the grantor and

other pertinent recording indexes for each holder of record title

for the period during which he [or she] held such title." Garden

of Memories, 109 N.J. Super. at 533.

The Wachovia HELOC with the attached Schedule A was recorded

and indexed by the name of the mortgagor, Cicenia, by the Hudson

County Register's Office. N.J.S.A. 46:26A-8(c). The name was

spelled correctly, thereby allowing for a successful title search.

Manchester Fund, Ltd. v. First Am. Title Ins. Co., 332 N.J. Super.

336, 344 (Law Div. 1999). Schedule A referenced by incorporation

the Cicenia deed, which sufficiently described Unit 2. Therefore,

defendants had record or constructive notice of Wells Fargo's

interest in Unit 2 via the Wachovia HELOC.

14 A-2189-16T4 Affirmed.

15 A-2189-16T4