Borrower Cannot Abandon Germane Defense To Foreclosure And Later Sue For Damages Based On That Defense

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Foreclosure (PD)
It is always helpful when a court lets you know up front what its decision is all about. This was the case in Adelman v. BSI Financial Services, Inc., where the Appellate Division began its decision as follows: "A defendant in a foreclosure case may not fail to diligently pursue a germane defense and then pursue a civil case against the lender alleging fraud by foreclosure." Definitely not burying the lede (or is it burying the "lead"?).

In Adelman, plaintiff was the executrix of the estate of her deceased husband, Norman. Before they were married, Norman entered into a loan with his lender that was secured by a mortgage on his home. Three years later, the loan went into default, and six months after that, the lender filed a foreclosure complaint. Norman offered no defense to the complaint, and default was entered. Three months after that, he began discussing the possibility of a loan modification with the lender. However, Norman's chances for a successful modification ended when he could not make the first payment under the proposed modification and when a title search revealed five other liens on the property. 

Months later, final judgment of foreclosure was entered. Norman did not object to the entry of final judgment. One year after that, the property was sold at sheriff's sale, and nine months after the sale, the lender filed a motion to remove Norman from the property. Only then, for the first time, did Norman argue, in a motion to stay his removal from the property, that the foreclosure was improper because the loan modification cured the default. The court denied this motion. Plaintiff appealed but then withdrew the appeal. Ultimately, shortly after Norman passed, and more than five years after the loan went into default, plaintiff vacated the property. 

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Legal Fees Incurred Defending Against Counterclaim Recoverable Under New Jersey Consumer Fraud Act

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

FireplacePerhaps no three letters strike fear in the heart of New Jersey defense attorneys more than C-F-A. It is the common abbreviation for the New Jersey Consumer Fraud Act, a consumer protection statute that, among other things, allows successful plaintiffs to recover their attorney's fees. Until recently, however, it was not clear whether the fees incurred in defense of a counterclaim raised in response to a CFA lawsuit, as opposed to fees incurred in prosecuting the affirmative CFA claim, were recoverable. In Garmeaux v. DNV Concepts, Inc., a case of first impression, the Appellate Division held that they are, provided that the counterclaim is "inextricably caught up with" the CFA claim.

Plaintiffs in Garmeaux visited a store named The Bright Acre (operated by defendant, DNV Concepts Inc t/a The Bright Acre) for the purpose of replacing their gas fireplace which had been damaged in a storm. The store manager agreed to sell them a new fireplace and help them file an insurance claim for the costs associated with the purchase and installation. During the visit, Plaintiffs met defendant, James Risa, who the manager introduced as "[plaintiffs'] installer Jim." What plaintiffs did not know at the time, however, was that Risa owned and operated an independent fireplace installation company — defendant, Professional Fireplace Services — and that Bright Acre had a practice of referring installation work to its own employees who, like Risa, owned installation service companies. In other words, Risa would be installing the fireplace in his capacity as the owner of Professional Fireplace Services, not as an employee of Bright Acre.

Shortly after their visit to the store, plaintiffs received a proposal from Risa for the installation. They accepted and made the first installment payment. Unfortunately, not long after he began the installation, plaintiffs became dissatisfied with Risa's work habits — they alleged that he "kept an unpredictable schedule" — and the quality of his workmanship. Around the same time, they also learned that he was performing the installation in his capacity as owner of Professional Fireplace Services, not Bright Acre. After several calls to Bright Acre to attempt to resolve their issues were ignored, plaintiffs sued. 

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