NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-3096-16T1
WELLS FARGO BANK, N.A.,
Plaintiff-Respondent,
v.
NARESH G. GIDWANI and BINA R. GIDWANI,
Defendants-Appellants. _____________________________
Submitted March 5, 2018 – Decided August 3, 2018
Before Judges Messano and O'Connor.
On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-024030-14.
Law Offices of Joseph A. Chang & Associates, attorneys for appellants (Joseph A. Chang, of counsel; Jeffrey Zajac, on the briefs).
Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Brian P. Matthews, on the brief).
PER CURIAM In this residential mortgage foreclosure action, defendants
Naresh G. Gidwani and Bina R. Gidwani1 appeal from a final
judgment of foreclosure, contending the court erred when it
entered summary judgment for plaintiff Wells Fargo Bank, N.A.
We affirm.
I
We culled the following from the record. In 2004,
defendants were married and owned a home together. Their home
was encumbered by a mortgage and a home equity line of credit.
That year, Naresh lost his job and Bina stopped working for many
months to care for her parents, who were gravely ill. In
October 2005, defendants were still struggling financially and
decided to refinance the mortgage and home equity line of
credit. Defendants believed refinancing and consolidating these
debts would ultimately save them money and improve their
financial condition. At that time, the outstanding principal
balance of these debts totaled $148,726.63.
Defendants obtained a $165,000 refinance mortgage loan
(refinance mortgage) from plaintiff's predecessor, Wachovia
Bank, N.A. (Wachovia), and executed a thirty-year note and a
mortgage against their home. The interest rate on the loan was
1 Because they share the same surname, for clarity and simplicity, we refer to the defendants by their forenames. We do not intend any disrespect by such informality. 2 A-3096-16T1 6.05 percent per annum. The first page of the note states
defendants agreed to pay interest on the unpaid principal
balance, and that "the 6.05 percent interest rate would be
charged at a rate of 1/365th of the rate for each day." The note
also stated the loan would be paid off in thirty years if the
monthly payments were paid on time; otherwise, defendants "may
owe additional and substantial money at the end of the credit
transaction and there may be little or no reduction of
[p]rincipal."
Defendants used the loan proceeds to pay off the previous
mortgage and the home equity line of credit, and retained
$16,000 in cash. Defendants were not charged any fees or costs
to complete the transaction. The monthly mortgage payment was
$996.76; it is not known what defendants paid each month on the
previous mortgage and the home equity line of credit.
Defendants timely made every monthly mortgage payment until
November 2010, when they made their last payment, defaulting on
the loan. In 2014, plaintiff, which had acquired Wachovia in
March 2010, filed a complaint in foreclosure. In their answer,
defendants assert the affirmative defense of recoupment,
claiming plaintiff violated the Consumer Fraud Act (CFA),
N.J.S.A. 56:8-2 to -210, and the Truth in Lending Act (TILA), 15
U.S.C. § 1638. 3 A-3096-16T1 In their brief before us, defendants clarify that the
recoupment claim is premised upon plaintiff violating the CFA by
transgressing "Regulation Z," see 12 C.F.R. § 226.1(b) (2018).
Regulation Z requires a lender to disclose to potential
borrowers certain details about the terms and the costs of a
proposed loan. See ibid. Defendants are not alleging plaintiff
violated any provision in TILA as a discrete claim. They
contend plaintiff engaged in an unconscionable commercial
practice under the CFA, see N.J.S.A. 56:8-2, because, contrary
to Regulation Z, plaintiff failed to disclose that the "daily
simple interest feature" of the refinance mortgage could result
in a borrower paying far more in interest than if the borrower
had a "conventional" mortgage.
Plaintiff moved for summary judgment, asserting it had a
right to foreclose upon the refinance mortgage as a matter of
law given defendants defaulted on the loan. Defendants opposed
the motion, arguing plaintiff had engaged in predatory lending
by issuing the refinance mortgage to them when their combined
annual income was only $12,225 in 2004, and by failing to
disclose the aforementioned terms of the refinance mortgage.
Defendants did not deny executing the note and refinance
mortgage, but they claimed they were not given an opportunity to
read these and related documents before the closing on the 4 A-3096-16T1 refinance mortgage and were never provided a copy of such
documents thereafter.
In support of their contention plaintiff engaged in
predatory lending, defendants submitted an expert's report from
an accountant. The expert noted the refinance mortgage
defendants obtained from plaintiff was of a kind that initially
applies monthly mortgage payments to only the interest owed.
Once the accumulated accrued interest has been paid off, the
monthly payments are then applied to the principal. In a
conventional mortgage, the monthly mortgage payment is applied
to both the interest and principal owed.
The expert noted that if defendants had timely made all
monthly mortgage payments, the mortgage would have been paid off
in full at the expiration of thirty years. However, because
there was a gap in payment, had defendants resumed making the
monthly mortgage payments in 2016, defendants would still owe
$155,192.99 at the time the loan matured in 2035. We note
defendants never resumed paying the mortgage after they
defaulted in 2010 and, therefore, the eventuality envisioned by
the expert did not materialize.
The court granted plaintiff summary judgment. It found
defendants' claim for recoupment unavailing because any action
against plaintiff for recoupment was dependent upon proving 5 A-3096-16T1 plaintiff violated the CFA, and the six year statute of
limitations for CFA claims, see N.J.S.A. 2A:14-1, had expired.
The court otherwise found plaintiff proved it was entitled to
foreclose upon the refinance mortgage. Defendants' motion for
reconsideration of the order granting plaintiff summary judgment
was denied.
The court subsequently entered final judgment foreclosing
the refinance mortgage. The judgment stated $235,915.17 is the
sum "plaintiff is entitled to have[,]" together with counsel
fees of $3,421.15 and interest. Whether defendants will have to
pay plaintiff in accordance with the terms of the final judgment
will depend upon whether plaintiff pursues and prevails in a
deficiency action against them.
II
On appeal, defendants contend the trial court erred when it
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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-3096-16T1
WELLS FARGO BANK, N.A.,
Plaintiff-Respondent,
v.
NARESH G. GIDWANI and BINA R. GIDWANI,
Defendants-Appellants. _____________________________
Submitted March 5, 2018 – Decided August 3, 2018
Before Judges Messano and O'Connor.
On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. F-024030-14.
Law Offices of Joseph A. Chang & Associates, attorneys for appellants (Joseph A. Chang, of counsel; Jeffrey Zajac, on the briefs).
Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Brian P. Matthews, on the brief).
PER CURIAM In this residential mortgage foreclosure action, defendants
Naresh G. Gidwani and Bina R. Gidwani1 appeal from a final
judgment of foreclosure, contending the court erred when it
entered summary judgment for plaintiff Wells Fargo Bank, N.A.
We affirm.
I
We culled the following from the record. In 2004,
defendants were married and owned a home together. Their home
was encumbered by a mortgage and a home equity line of credit.
That year, Naresh lost his job and Bina stopped working for many
months to care for her parents, who were gravely ill. In
October 2005, defendants were still struggling financially and
decided to refinance the mortgage and home equity line of
credit. Defendants believed refinancing and consolidating these
debts would ultimately save them money and improve their
financial condition. At that time, the outstanding principal
balance of these debts totaled $148,726.63.
Defendants obtained a $165,000 refinance mortgage loan
(refinance mortgage) from plaintiff's predecessor, Wachovia
Bank, N.A. (Wachovia), and executed a thirty-year note and a
mortgage against their home. The interest rate on the loan was
1 Because they share the same surname, for clarity and simplicity, we refer to the defendants by their forenames. We do not intend any disrespect by such informality. 2 A-3096-16T1 6.05 percent per annum. The first page of the note states
defendants agreed to pay interest on the unpaid principal
balance, and that "the 6.05 percent interest rate would be
charged at a rate of 1/365th of the rate for each day." The note
also stated the loan would be paid off in thirty years if the
monthly payments were paid on time; otherwise, defendants "may
owe additional and substantial money at the end of the credit
transaction and there may be little or no reduction of
[p]rincipal."
Defendants used the loan proceeds to pay off the previous
mortgage and the home equity line of credit, and retained
$16,000 in cash. Defendants were not charged any fees or costs
to complete the transaction. The monthly mortgage payment was
$996.76; it is not known what defendants paid each month on the
previous mortgage and the home equity line of credit.
Defendants timely made every monthly mortgage payment until
November 2010, when they made their last payment, defaulting on
the loan. In 2014, plaintiff, which had acquired Wachovia in
March 2010, filed a complaint in foreclosure. In their answer,
defendants assert the affirmative defense of recoupment,
claiming plaintiff violated the Consumer Fraud Act (CFA),
N.J.S.A. 56:8-2 to -210, and the Truth in Lending Act (TILA), 15
U.S.C. § 1638. 3 A-3096-16T1 In their brief before us, defendants clarify that the
recoupment claim is premised upon plaintiff violating the CFA by
transgressing "Regulation Z," see 12 C.F.R. § 226.1(b) (2018).
Regulation Z requires a lender to disclose to potential
borrowers certain details about the terms and the costs of a
proposed loan. See ibid. Defendants are not alleging plaintiff
violated any provision in TILA as a discrete claim. They
contend plaintiff engaged in an unconscionable commercial
practice under the CFA, see N.J.S.A. 56:8-2, because, contrary
to Regulation Z, plaintiff failed to disclose that the "daily
simple interest feature" of the refinance mortgage could result
in a borrower paying far more in interest than if the borrower
had a "conventional" mortgage.
Plaintiff moved for summary judgment, asserting it had a
right to foreclose upon the refinance mortgage as a matter of
law given defendants defaulted on the loan. Defendants opposed
the motion, arguing plaintiff had engaged in predatory lending
by issuing the refinance mortgage to them when their combined
annual income was only $12,225 in 2004, and by failing to
disclose the aforementioned terms of the refinance mortgage.
Defendants did not deny executing the note and refinance
mortgage, but they claimed they were not given an opportunity to
read these and related documents before the closing on the 4 A-3096-16T1 refinance mortgage and were never provided a copy of such
documents thereafter.
In support of their contention plaintiff engaged in
predatory lending, defendants submitted an expert's report from
an accountant. The expert noted the refinance mortgage
defendants obtained from plaintiff was of a kind that initially
applies monthly mortgage payments to only the interest owed.
Once the accumulated accrued interest has been paid off, the
monthly payments are then applied to the principal. In a
conventional mortgage, the monthly mortgage payment is applied
to both the interest and principal owed.
The expert noted that if defendants had timely made all
monthly mortgage payments, the mortgage would have been paid off
in full at the expiration of thirty years. However, because
there was a gap in payment, had defendants resumed making the
monthly mortgage payments in 2016, defendants would still owe
$155,192.99 at the time the loan matured in 2035. We note
defendants never resumed paying the mortgage after they
defaulted in 2010 and, therefore, the eventuality envisioned by
the expert did not materialize.
The court granted plaintiff summary judgment. It found
defendants' claim for recoupment unavailing because any action
against plaintiff for recoupment was dependent upon proving 5 A-3096-16T1 plaintiff violated the CFA, and the six year statute of
limitations for CFA claims, see N.J.S.A. 2A:14-1, had expired.
The court otherwise found plaintiff proved it was entitled to
foreclose upon the refinance mortgage. Defendants' motion for
reconsideration of the order granting plaintiff summary judgment
was denied.
The court subsequently entered final judgment foreclosing
the refinance mortgage. The judgment stated $235,915.17 is the
sum "plaintiff is entitled to have[,]" together with counsel
fees of $3,421.15 and interest. Whether defendants will have to
pay plaintiff in accordance with the terms of the final judgment
will depend upon whether plaintiff pursues and prevails in a
deficiency action against them.
II
On appeal, defendants contend the trial court erred when it
granted plaintiff summary judgment. Defendants argue there was
evidence plaintiff engaged in predatory lending because
plaintiff (1) extended a loan to defendants when they were
unemployed and presumably unable to make the monthly mortgage
payments, and (2) did not advise defendants the refinance
mortgage was "an unconventional mortgage product that had the
potential to cost them much more than a standard loan."
6 A-3096-16T1 Defendants also maintain their claim for recoupment was not
barred by any statute of limitations.
We review a trial court's decision on summary judgment "de
novo, employing the same standard used by the trial court."
Tarabokia v. Structure Tone, 429 N.J. Super. 103, 106 (App. Div.
2012) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307
N.J. Super. 162, 167 (App. Div. 1998)). We give "no deference
to the trial judge's conclusions on issues of law." DepoLink
Court Reporting & Litig. Servs. v. Rochman, 430 N.J. Super. 325,
333 (App. Div. 2013) (citing Zabilowicz v. Kelsey, 200 N.J. 507,
512-13 (2009)). Thus, we must also "view the evidence in the
light most favorable to the non-moving party and analyze whether
the moving party was entitled to judgment as a matter of law."
Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 524
(2012) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 523 (1995)).
We agree defendants' recoupment claim was not time barred.
Recoupment "is never barred by the statute of limitations so
long as the main action itself is timely." Beneficial Fin. Co.
v. Swaggerty, 86 N.J. 602, 609 (1981) (quoting Bull v. United
States, 295 U.S. 247, 262 (1935)); see also Assocs. Home Equity
Servs., Inc. v. Troup, 343 N.J. Super. 254, 271-72 (App. Div.
2001) (noting the defendant homeowners in a mortgage foreclosure 7 A-3096-16T1 action were permitted to assert an equitable recoupment defense,
even though a CFA claim against the mortgagee was time barred).
Notwithstanding defendants' recoupment claim is not time-
barred, we question, without deciding, whether under these
particular circumstances plaintiff engaged in an unconscionable
commercial practice because it extended the refinance mortgage
to defendants knowing they were unemployed.
Before acquiring the refinance mortgage, defendants were
already burdened with a primary mortgage and a home equity line
of credit, for which they had to make monthly payments.
Defendants had determined that consolidating and refinancing
such debt was in their best interests. They also assumed their
unemployment was temporary and their ability to make monthly
payments toward the refinance mortgage was feasible. Defendants
wanted to refinance the primary mortgage and home equity line
against their home because it provided relief from their
financial problems.
Second, there is no evidence from an expert supporting
defendants' claim that extending the refinance mortgage to
defendants constituted predatory lending. Further, even if
plaintiff had engaged in the unconscionable commercial practices
alleged by defendants, they did not sustain any damages. To
prove a cause of action under the CFA, a party must not only 8 A-3096-16T1 prove the defendant engaged in conduct that violated the CFA,
but also that such conduct caused the plaintiff to sustain an
ascertainable loss. N.J. Citizen Action v. Schering-Plough
Corp., 367 N.J. Super. 8, 12-13 (App. Div. 2003).
There is no evidence defendants sustained any damages as a
result of refinancing and paying off the primary mortgage and
the home equity line of credit, and retaining $16,000 in cash
from the refinance mortgage. Although defendants' expert states
they would have still owed $155,192.99 in 2035 had they resumed
paying off the refinance mortgage in 2016, defendants did not do
so and this mortgage has now been foreclosed. Thus, there is no
evidence defendants were damaged as a result of being issued
this particular kind of loan.
More important, defendants do not challenge the fact the
final judgment provides that $235,915.17 is the sum they
ostensibly owe plaintiff. Significantly, defendants do not
contend the latter figure would have been less had they been
issued a conventional mortgage.
Because defendants did not sustain an ascertainable loss,
they cannot show plaintiff violated the CFA and, thus,
defendants cannot prevail on a claim for recoupment in the event
plaintiff successfully prevails in a deficiency action against
9 A-3096-16T1 them. The trial court's decision to grant summary judgment to
plaintiff was appropriate.
Affirmed.
10 A-3096-16T1