NJ Decision on Default & Note Interpretation

We are excited to share a recent decision of a case handled by Friedman Vartolo, LLP. In US Bank Trust, National Association, as trustee for Bluewater Investment Trust 2018-1 v. Robert A. Bard, et al. Superior Court of New Jersey, Appellate Division, 04/28/2020, 2020 WL 2036643, Friedman Vartolo LLP successfully defended the appeal of a summary judgment award to the foreclosing lender.  New Jersey’s Appellate Division rejected defendant-borrower Robert A. Bard’s arguments, including that the subject mortgage loan did not require defendants to make monthly loan payments. 

This appeal follows the foreclosure of a 2008 mortgage loan granted to defendants Robert and Eleanor Bard in the amount of $634,000. The loan was modified in 2014 and the modification agreement was recorded in 2015. Defendants defaulted on their loan payments in September 2017. 

In December 2018, plaintiff moved for summary judgment and to strike defendants’ answer. In their opposition to the summary judgment motion/cross-motion to dismiss the complaint, Defendants alleged, most notably, that they never defaulted under the terms of the subject promissory note because their modified loan allegedly provided them the option to forego monthly installment payments in favor of a lump sum payment at the loan’s maturity in 2054.

In granting summary judgment, the trial court ruled that Plaintiff established its prima facie right to foreclose by showing, among other things, that Defendants borrowed the sums alleged and defaulted in their repayment of the loan.  “The defendant has acknowledged failure to pay, although he has asserted that he believed in his interpretation of the note that he could just wait and pay it all at the maturity date. The [c]ourt is satisfied in reading the note that that is not an option…the note generally provides for monthly payments and provides for a default upon failing to make the monthly [payment].  [T]he note [clearly] contemplated that monthly payments would be made.” US Bank Trust, Nat’l Assoc., as Trustee for Bluewater Investment Trust 2018-1 v. Robert A. Bard, et al., No. A-4371-18T4, 2020 WL 2036643, at *1-2 (N.J. Super. Ct. App. Div. Apr. 28, 2020)

On appeal, defendant argued that the trial court erred in granting summary judgment because there existed a material dispute of fact as to whether defendants defaulted. The Appellate Division

affirmed the trial court’s decision, rejecting Defendant’s argument that no payment was due until 2054.  “As the trial judge noted, the plain language of the note and the modification agreement provided no support for defendants’ theory, clearly required regular monthly payments, and set a fifteen-day deadline before defendants were considered in default. Defendants’ unsupported theory did not create a material dispute in fact thwarting the entry of summary judgment.” Id at *2-3.

The Appellate Division also rejected Defendants’ arguments concerning Plaintiff’s proof of compliance with the notice requirements of TILA and New Jersey’s Fair Foreclosure Act.  The court ruled that these arguments were either improperly before the court, to the extent they were not raised to the trial court, or unsupported by the record of the case. 

A fantastic job by Michael Eskenazi, Esq. of our firm. For more information regarding this case, please contact Deborah Gallo, Director of Operations at dgallo@friedmanvartolo.com.