explaining that an A-3404-22 16 issue is moot "when the decision sought in a matter, when rendered, can have no practical effect on the existing controversy"
How later courts described this case
- explaining that an A-3404-22 16 issue is moot "when the decision sought in a matter, when rendered, can have no practical effect on the existing controversy"
- holding no abuse of discretion in denying late motion to add new claims and parties
Written by the judges who cited it.
The 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NOT FOR PUBLICATION WITHOUT THE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-3404-22
WELLS FARGO BANK, NA, AS
TRUSTEE FOR PARK PLACE
SECURITIES, INC., ASSET-BACKED
PASS-THROUGH CERTIFICATES
SERIES 2004-WHQ2,
Plaintiff-Respondent,
v.
RALPH SCHIANO and
ELEANOR SCHIANO,
Defendants/Third-Party
Plaintiffs-Appellants,
v.
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,
Third-Party Defendant,
and
PHH MORTGAGE CORPORATION,
SUBSIDIARY OF OCWEN FINANCIAL
CORPORATION, AND SUCCESSOR
TO OCWEN LOAN SERVICING, LLC,
Third-Party Defendant-
Respondent.
___________________________________
Argued March 5, 2025 – Decided July 21, 2025
Before Judges Marczyk, Paganelli, and Torregrossa-
O'Connor.
On appeal from the Superior Court of New Jersey,
Chancery and Law Divisions, Passaic County, Docket
Nos. C-000079-19 and L-1884-22.
Michael Confusione argued the cause for appellants
(Hegge & Confusione, LLC, attorneys; Michael
Confusione, of counsel and on the briefs).
Brian Pantaleo argued the cause for respondents
(Greenberg Traurig, LLP, attorneys; Brian Pantaleo, on
the brief).
PER CURIAM
Plaintiff Wells Fargo Bank, NA, as Trustee for Park Place Securities, Inc.,
Asset-Backed Pass-Through Certificates Series 2004-WHQ2 (the trust), filed a
complaint against defendants Ralph and Eleanor Schiano 1 to reinstate
defendants' mortgage, which plaintiff owned and claimed had been inadvertently
discharged. In response, defendants argued plaintiff never validly owned the
1
Because defendants share the same last name, we refer to them by their first
names to avoid confusion. We intend no disrespect in doing so.
A-3404-22
2
mortgage, and counterclaimed seeking to quiet title and asserting claims for
mortgage fraud, slander of title, and intentional infliction of emotional distress.
The Chancery Division initially reinstated the mortgage and later
determined that plaintiff was the legal owner of the loan and dismissed
defendants' quiet title claim. The matter was then transferred to the Law
Division, which granted plaintiff's motion for summary judgment, dismissed
defendants' counterclaims, and awarded plaintiff attorney's fees.
Defendants appeal from the Chancery Division orders reinstating
plaintiff's mortgage nunc pro tunc and dismissing their quiet title action. They
also appeal the Chancery Division's order denying their motion for
reconsideration. They further challenge the Law Division's order granting
plaintiff's summary judgment motion dismissing their counterclaims. Next, they
contest the Law Division's decision to deny both their motion to file an amended
pleading and motion for reconsideration as to the dismissal of their
counterclaims. Finally, defendants challenge the Law Division's award of
contractual attorney's fees. Following our review of the record and the
applicable legal principles, we affirm.
I.
Defendants purchased a home in Wayne in 1987, securing the property
A-3404-22
3
with a note and mortgage. In October 2004, they refinanced the mortgage,
executing a note in the amount of $353,000 in favor of Argent Mortgage
Company, LLC (Argent). Argent secured the note with a mortgage. Section 9
of the mortgage agreement entitled the lender to attorney's fees in the event of
litigation to protect the lender's interest in the property. Argent later assigned
the loan to Ameriquest Mortgage Company (Ameriquest), and thereafter,
Ameriquest assigned the loan to plaintiff in late 2004. Plaintiff's loan servicer
subsequently mistakenly discharged the mortgage, and the Passaic County Clerk
recorded the discharge in June 2019.
In July 2019, plaintiff filed a complaint against defendants seeking
reinstatement nunc pro tunc of defendants' mortgage, alleging it had been
mistakenly discharged. Defendants filed an answer, counterclaim, and third-
party complaint against JPMorgan Chase Bank, NA, (Chase Bank) 2 and PHH
Mortgage Corporation (PHH), which included a quiet title claim. Plaintiff filed
an answer and crossclaim for attorney's fees pursuant to the mortgage
agreement.
2
Defendants alleged Chase Bank was the custodian/collateral holder of their
loan since 2000. Chase Bank was dismissed from the case in April 2021 and is
not participating in this appeal.
A-3404-22
4
In April 2021, the Chancery Division granted plaintiff's motion for
summary judgment and reinstated the mortgage nunc pro tunc. During a
conference that preceded the quiet title trial, Eleanor testified that plaintiff did
not own the loan, that she and Ralph had made numerous phone calls to Wells
Fargo over the years, and that Wells Fargo did not have any knowledge of their
loan. She stated defendants wanted to know who the mortgagee was so that they
could refinance. However, she also testified "[t]here's no mortgage to pay off."
The Chancery Division later noted it found Eleanor credible and that she wanted
to know what entity owned the loan so she could refinance it.
In July 2022, the Chancery Division conducted a bench trial regarding
defendants' quiet title claim. Plaintiff alleged that it was the current owner of
the mortgage. William Fay, an employee of Computer Share Trust Company
(CSTC), the current agent for Wells Fargo, testified that Wells Fargo was the
trustee of the investor trust. Fay had previously worked for Wells Fargo as a
special account consultant before CSTC became Wells Fargo's agent. Fay
testified that the original loan had been an Argent loan and that Argent had
transferred the note and the mortgage to Ameriquest, which, in turn, transferred
the note and mortgage into the trust in 2004. He testified plaintiff owned the
loan.
A-3404-22
5
Regarding loan payments, Fay testified the accounts receivable ledger
reflected that defendants made every payment on their loan. He also testified
the subsequent assignment of the mortgage to plaintiff was the last recorded
assignment and that plaintiff was the entity entitled to receive payments under
the loan. Plaintiff entered the recorded assignment into evidence, including the
assignment from Ameriquest to plaintiff.
Plaintiff's next witness, Benjamin Verdooren, an employee of PHH's
parent company, Ocwen Financial Corporation, provided supporting testimony
that Argent serviced the loan from its origination until December 2004 .
Verdooren testified further that defendants' loan had been in litigation since
2009, and stated that PHH currently serviced defendants' loan, accepting
payments on behalf of the trust, the owner of the loan. The loan was previously
serviced by Ocwen Loan Servicing, which was merged into PHH. He testified
the loan was not in default while Ocwen was servicing the loan.
Verdooren also provided details as to the location of the physical note,
explaining that over the course of the loan, the original note might be held by
the loan servicing company or by attorneys representing the investor trust during
litigation. He also stated that as of the trial date, PHH was working to rescind
the recorded discharge of defendants' loan, and the loan could not be refinanced
A-3404-22
6
as long as it was discharged. Verdooren testified that while it usually took about
a month to address a mistakenly filed discharge, defendants opposed the motion
for summary judgment to have the mortgage reinstated, and it had been about
three to four years without correction as of the time of trial.
Plaintiff's attorney presented the court with the original October 4, 2004
note of $353,000 bearing Ralph's endorsement and maintained that the original
note had been held by the trust since the end of 2004. Verdooren emphasized
that the original note was transferred into the trust, thereby transferring
ownership of the note to the trust and giving the trust the right to enforce the
mortgage loan.
Defendants argued there was no legal holder of their mortgage, that the
trust was not a legal trust and could not own the loan, and that they were
prepared to present testimony from their prior attorney, David Wigfield, that
Wells Fargo could not find any record of the mortgage. They alleged their loan
was falsely notated as in default, despite having never missed a loan payment,
and that this wrongful default status clouded the title and prevented them from
refinancing the loan on numerous occasions. They sought a declaratory
judgment that they were the true and rightful title owners of the property and
were never in default on any loan. They also sought return of all loan payments
A-3404-22
7
from 2000 to the present.
The Chancery Division found plaintiff's witnesses to be credible. It
determined plaintiff was the last recorded assignee of the mortgage and note,
that there were no other owners of the mortgage and note, and plaintiff,
therefore, was the lawful owner of defendants' mortgage. It found the trust was
legally valid and capable of owning, enforcing, and discharging mortgage loans .
Additionally, the court found that plaintiff had not placed defendants' loan in
default and ruled that plaintiff had proved its possession of the original note .
Accordingly, the court dismissed the quiet title action with prejudice.
The court then ordered the transfer of plaintiff's claim for attorney's fees,
as well as defendants' remaining counterclaims from the Chancery Division to
the Law Division. On November 9, 2022, the Law Division subsequently
granted plaintiff's summary judgment motion dismissing defendants'
counterclaims for mortgage fraud, slander of title, and intentional infliction of
emotional distress. The court also denied defendants' motion to amend their
third-party complaint. Defendants' motion for reconsideration of the motion to
amend was also denied. On June 22, 2023, the court awarded plaintiff $188,029
in attorney's fees, citing what it deemed unambiguous terms in the mortgage
agreement.
A-3404-22
8
II.
A.
On appeal, defendants argue the Chancery Division erred by not allowing
them to proceed first on their quiet title claim. They also assert the court violated
their right to present their own evidence and testimony in support of their claim .
As a result, they contend the court erred in dismissing their quiet title claim and
finding that plaintiff was the legal owner of the loan.
The purpose of a quiet title action is to formally address ownership
disputes between competing credible claims. Friedman v. Monaco & Brown
Corp., 258 N.J. Super. 539, 543 (App. Div. 1992) (citing N.J.S.A. 2A:62-1).
Under N.J.S.A. 2A:62-1,
[a]ny person in the peaceable possession of lands in this
state and claiming ownership thereof, may, when his
title thereto, or any part thereof, is denied or disputed,
or any other person claims or is claimed to own the
same, or any part thereof or interest therein, or to hold
a lien or encumbrance thereon, and when no action is
pending to enforce or test the validity of such title,
claim or encumbrance, maintain an action in the
superior court to settle the title to such lands and to
clear up all doubts and disputes concerning the same.
In asserting a quiet title claim, the claimant has the burden of establishing
"the peaceable possession and claim of ownership which the law requires before
he [or she] can call upon the defendant to show the validity of his [or her] claim,
A-3404-22
9
and when so established the burden falls upon the defendant to make out his [or
her] adverse claim." Ocean View Land Co. v. Loudenslager, 78 N.J. Eq. 571,
574 (E. & A. 1911). If an answering defendant has established proof of title,
the claimant "must disclose [the claimant's own] title and show it to be a better
title than that of the defendant[]." Ward v. Tallman, 65 N.J. Eq. 310, 315 (Ch.
1903).
After a bench trial, this court's scope of review is limited.
Accounteks.Net, Inc. v. CKR Law, LLP, 475 N.J. Super. 493, 503 (App. Div.
2023) (citing Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)).
"The trial court's factual findings are entitled to deference on appeal so long as
they are supported by sufficient credible evidence in the record." Ibid. Indeed,
this court will not "disturb the factual findings and legal conclusions of the trial
judge unless . . . convinced that they are so manifestly unsupported by or
inconsistent with the competent, relevant and reasonably credible evidence as to
offend the interests of justice." Seidman, 205 N.J. at 169 (quoting In re Tr.
Created by Agreement Dated Dec. 20, 1961, ex rel. Johnson, 194 N.J. 276, 284
(2008)).
Moreover, this court will review the ultimate decision in a quiet title
action for an abuse of discretion. Sears Mortg. Corp. v. Rose, 134 N.J. 326, 354
A-3404-22
10
(1993). "In fashioning relief, the [c]hancery judge has broad discretionary
power to adapt equitable remedies to the particular circumstances of a given
case." Marioni v. Roxy Garments Delivery Co., 417 N.J. Super. 269, 275 (App.
Div. 2010) (citing Salorio v. Glaser, 93 N.J. 447, 469 (1983)). An abuse of
discretion occurs when a court's decision was "without a rational explanation,
inexplicably departed from established policies, or rested on an impermissible
basis." US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467-68 (2012) (quoting
Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).
Defendants argue the Chancery Division erred when it did not allow them
to proceed first on their quiet title claim, and therefore, the Chancery Division's
July 21, 2022 judgment was invalid. Generally, a trial court is "vested with
broad discretion in . . . matters affecting the conduct and proceedings in a trial."
Barber v. Shop-Rite of Englewood & Assocs., 393 N.J. Super. 292, 298 (App.
Div. 2007). As for the appropriate conduct of the proceedings here, according
to the court in Warner v. Smith,
Where, under a bill to quiet title, complainant has
established that he is in peaceable possession of the
land in question, claiming to own the same, and that his
title is denied or disputed, and no suit is pending to
settle the validity of such hostile claim, the burden of
establishing such adverse claim is on the person setting
it up.
A-3404-22
11
[115 N.J. Eq. 572, 573 (E. & A. 1934) (quoting Moore
Securities Co. v. Schaffer, 97 N.J. Eq. 296 (E. & A.
1925)).]
The issue before the court in a quiet title action is determining ownership
of the property. Friedman, 258 N.J. Super. at 543. The Chancery Division
needed to determine if plaintiff owned the note and had a secured interest in the
property, as they were in the process of reinstating the accidentally discharged
mortgage. Defendants, through the testimony of Eleanor at a prior conference,
had already established they had been living peaceably on the property and
claimed that plaintiff did not own their mortgage. Accordingly, once that prima
facie case was established, the burden of proof shifted to the party, here plaintiff,
challenging defendants' ownership of the property. Warner, 115 N.J. Eq. at 573.
In following that framework here, the Chancery Division permitted
plaintiff to present its witnesses first, and subsequently provided defendants the
opportunity to cross-examine those witnesses. Plaintiff had the burden to prove
that it did in fact own the mortgage and did so by presenting proof of the original
note. Therefore, although defendants' testimony was taken at an earlier hearing,
we determine the court did not err in the order that it conducted the quiet title
proceeding.
Ultimately, the procedural decisions the court made were consistent with
A-3404-22
12
the established legal principles for equitable remedies and did not violate
defendants' rights. For these reasons, the court did not misapply its discretion
by permitting plaintiff to proceed first in the quiet title action, as defendants had
already established their possession of the property and claimed ownership
under N.J.S.A. 2A:62-1. Additionally, as discussed below, none of the evidence
defendants claim they intended to present to the court would have refuted
plaintiff's ownership of the mortgage; therefore, any such error would have been
harmless.
Next, defendants assert that the July 21, 2022 judgment was invalid
because the court did not consider all of the evidence they provided, including
testimony from their prior attorney. N.J.R.E. 401 defines relevant evidence as
evidence "having a tendency in reason to prove or disprove any fact of
consequence to the determination of the action." Griffin v. City of E. Orange,
225 N.J. 400, 413 (2016) (quoting N.J.R.E. 401). A trial court determines
whether evidence is relevant by maintaining "focus on 'the logical connection
between the proffered evidence and a fact in issue,'" or "the tendency of evidence
to establish the proposition that it is offered to prove." Ibid. (quoting Green v.
N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999)). "Pursuant to N.J.R.E. 402, all
relevant evidence is admissible, except as otherwise provided by the Rules of
A-3404-22
13
Evidence or by law." Hrymoc v. Ethicon, Inc., 254 N.J. 446, 464 (2023).
N.J.R.E 403 allows a trial court to exclude relevant evidence if its probative
value is significantly outweighed by the risks of undue prejudice, confusion of
issues, or misleading the jury. Griffin, 225 N.J. at 420.
A trial court's determination to admit or exclude evidence is "entitled to
deference absent a showing of an abuse of discretion, i.e., [that] there has been
a clear error of judgment." Rowe v. Bell & Gossett Co., 239 N.J. 531, 551
(2019) (alteration in original) (quoting Griffin, 225 N.J. at 413).
On the last day of trial, defendants asked the court if their prior real estate
attorney, Wigfield, could testify regarding whether the lenders would accept the
court's anticipated order to enable them to refinance their loan. A person marked
"unidentified" in the transcript, but apparently Wigfield, interjected that he
could not speak for the lender, but that the order should be sufficient. The court
did not explicitly deny or approve defendants' request, but seemingly considered
Wigfield's only statement at trial in its decision.
Defendants had already presented information regarding foreclosure-
related fees and the mistaken default during the prior hearing and again at trial
in the Chancery Division. Moreover, with regard to the mistaken default, the
Chancery Division found that defendants were not in default and that their
A-3404-22
14
mortgage loan had never been in default. The court stated at trial that it would
give defendants clear title and the opportunity to finally refinance their loan and
subsequently embodied the ruling in an order.
Defendants allege they were precluded from recounting "critical facts"
that the court did not address, including the decade-long history of their inability
to refinance, false declarations of default, and proof about wrongful default and
foreclosure fees.
Defendants' arguments are unpersuasive. Notably, none of the evidence
defendants claim the court failed to consider included defendants' proof of
ownership of the property, and the court did not have to consider any additional
proffered documents to reach its decision on the quiet title issue. The evidence
defendants sought to offer was related to their counterclaims that were
transferred to the Law Division. The documents were not relevant to the quiet
title issue because they did not prove defendants' ownership of the property and
could not disprove plaintiff's ownership of the note, which was the central issue
in the quiet title claim. Therefore, the court did not err in excluding this
evidence.
Defendants next argue that the Chancery Division decision should be
reversed because the court did not allow Wigfield to testify. They allege that
A-3404-22
15
Wigfield was prepared to testify that Wells Fargo had no record of the loan and
that defendants were precluded from refinancing their mortgage. As with the
evidence concerning defendants' counterclaims, this testimony was irrelevant to
the quiet title claim; it did not prove that defendants owned the property.
Moreover, the Chancery Division issued a comprehensive decision detailing the
testimony and documentary evidence it relied upon in concluding plaintiff was
the last recorded assignee of the note and mortgage and there were no other
owners of defendants' mortgage. Therefore, the court did not abuse its discretion
when it declined to hear Wigfield's testimony.
Finally, defendants argue the Chancery Division precluded them from
introducing evidence that the trust was an illegal trust, and that plaintiff could
not own the loan. They contend that "without a legally formed trust, there can
be no legal holder trustee." However, they fail to adequately explain how that
evidence, including a tax filing submitted to the court as an exhibit to their
motion for reconsideration, would have defeated plaintiff's claim to ownership
of the mortgage. In any event, the issue is moot because defendants have already
refinanced their mortgage, and plaintiff no longer owns the loan. See Betancourt
v. Trinitas Hosp., 415 N.J. Super. 301, 311 (App. Div. 2010) (explaining that an
A-3404-22
16
issue is moot "when the decision sought in a matter, when rendered, can have
no practical effect on the existing controversy").
In short, defendants failed to demonstrate the Chancery Division's factual
findings were manifestly unsupported by competent relevant evidence. As a
result, the court did not misapply its discretion in conducting the proceedings or
finding that plaintiff owned the mortgage. Accordingly, we affirm the Chancery
Division's judgment.
B.
Defendants argue the Law Division erred in granting plaintiff's motion for
summary judgment, thereby dismissing their claims for mortgage fraud, slander
of title, and intentional infliction of emotional distress. They further argue the
court erred in denying their subsequent motion for reconsideration.
Where a trial court has granted a summary judgment motion, this court
will review the decision de novo while applying the same standard. Branch v.
Cream-O-Land Dairy, 459 N.J. Super. 529, 540-41 (App. Div. 2019) (citing
Henry v. N.J. Dep't of Hum. Servs., 204 N.J. 320, 330 (2010)). It is for this
court to determine "whether 'the competent evidential materials presented, when
viewed in the light most favorable to the non-moving party, are sufficient to
permit a rational factfinder to resolve the alleged disputed issue in favor of the
A-3404-22
17
non-moving party.'" Ibid. (quoting Brill v. Guardian Life Ins. Co. of Am., 142
N.J. 520, 540 (1995)).
To establish the elements of common law fraud, a plaintiff must
demonstrate "(1) a material misrepresentation of a presently existing or past fact;
(2) knowledge or belief by the defendant of its falsity; (3) an intention that the
other person rely on it; (4) reasonable reliance thereon by the other person; and
(5) resulting damages." Port Liberte Homeowners Ass'n v. Sordoni Constr. Co.,
393 N.J. Super. 492, 507 (App. Div. 2007) (quoting Gennari v. Weichert
Realtors, 148 N.J. 582, 610 (1997)). Additionally, "[f]raud requires clear and
convincing proof." McConkey v. AON Corp., 354 N.J. Super. 25, 45-46 (App.
Div. 2002) (quoting Fox v. Mercedes-Benz Credit Corp., 281 N.J. Super. 476,
484 (App. Div. 1995)).
The court dismissed plaintiff's claims for mortgage fraud after finding that
the Chancery Division's holding "prevent[ed] defendants from proving a fraud
claim by clear and convincing evidence." Specifically, the Law Division found
that plaintiff demonstrated, by presenting the accounts receivable ledger, which
detailed every payment made on the loan, that it had never placed defendants'
loan in default.
Defendants argue the court erred in dismissing their claims on summary
A-3404-22
18
judgment because plaintiff knew about the default/foreclosure assignment but
did nothing to remove it. Defendants contend that plaintiff's wrongful notation
that their loan was in default prevented them from refinancing their loan .
Specifically, defendants claim that the 2009 assignment of their loan to a trust
indicated to potential lenders that there was a foreclosure, even though one did
not occur. Defendants maintain they were denied refinancing on their loan by
Wells Fargo in 2013 and 2014, and by other entities in 2013, 2015, and 2017,
due to the erroneous default notation.
The court did not err in dismissing the claim for mortgage fraud because
defendants did not show they were harmed by plaintiff making a
misrepresentation that defendants, themselves, relied upon. The "standard for
reliance, even indirect reliance, requires that the [party asserting the claim] have
actually relied on the misstatement." Kaufman v. i-Stat Corp., 165 N.J. 94, 109
(2000). However, defendants were not the individuals who relied on the
information they allege was misrepresented. Defendants stated that several
banks had denied their refinance applications. Therefore, even if defendants can
establish there was a misrepresentation, they failed to demonstrate their
reasonable reliance on it, as it would have been the potential lenders that relied
on any representations plaintiff made. More fundamentally, as the Chancery
A-3404-22
19
Division determined, plaintiff provided clear evidence of the loan's chain of
assignment, and there is no indication that plaintiff made any willful attempts to
prevent defendants from learning the identity of the mortgage owner. Moreover,
the Chancery Division found defendants' loan was never placed in default. As
a result, the claim for mortgage fraud was properly dismissed.
Defendants' claim for slander of title was also properly dismissed. "[T]he
tort of slander of title requires a [claimant] to establish that defendant falsely
published an assertion concerning [claimant]'s title which caused special
damages to the [claimant] and that defendant acted out of malice, which was
express or implied." Lone v. Brown, 199 N.J. Super. 420, 426 (App. Div. 1985).
"Malice is defined as the intentional commission of a wrongful act without just
cause or excuse." Ibid. (citing Mayflower Indus. v. Thor Corp., 15 N.J. Super.
139, 152 (Ch. Div. 1951)).
The court found defendants failed to state a claim for slander of title
because plaintiff was able to prove in the Chancery Division that its statements
that it owned the mortgage were true. The court explained that plaintiff was a
valid investor trust and owned the loan since 2004, and further noted that
plaintiff was the "last assignee in the public record."
A-3404-22
20
Defendants contend that plaintiff was liable for slander of title by falsely
reporting a default, concealing the true owner of the mortgage, and ultimately
preventing them from refinancing because of plaintiff's inaction on the mistaken
default status.
Defendants' claim for slander of title could have succeeded only if they
demonstrated that plaintiff made a false claim to a third party that caused them
to suffer damages. Critically, even if defendants demonstrated that plaintiff
made a false claim, they failed to establish that plaintiff acted with malice and
that its actions were intentional. There was no indication that plaintiff
intentionally misrepresented the status of the title to the banks with which
defendants sought to refinance, and defendants provided no such evidence.
Although the title issue was complicated by the mistaken discharge, plaintiff
sought to reinstate the loan after learning of the discharge. Plaintiff's subsequent
effort to reinstate the loan was intended to clarify title rather than make false
claims about it.
Moreover, a significant aspect of defendants' quiet title claim was their
assertion that there was no legal or identified holder of their loan . When the
Chancery Division found that plaintiff was the lawful owner of the loan, that
precluded any claims that plaintiff misrepresented facts as it related to its
A-3404-22
21
ownership of the loan. The quiet title action required plaintiff to furnish proof
as to all claims it made regarding its ownership of the loan, which it did
successfully.
With respect to defendants' intentional infliction of emotional distress
claim, they must demonstrate that
(1) [plaintiff] acted intentionally; (2) [plaintiff]'s
conduct was "so outrageous in character, and so
extreme in degree, as to go beyond all possible bounds
of decency, and to be regarded as atrocious, and utterly
intolerable in a civilized community;" (3) [plaintiff]'s
actions proximately caused [them] emotional distress;
and (4) the emotional distress was "so severe that no
reasonable [person] could be expected to endure it."
[Segal v. Lynch, 413 N.J. Super. 171, 191 (App. Div.
2010) (fourth alteration in original) (quoting Buckley
v. Trenton Saving Fund Soc'y, 111 N.J. 355, 366
(1988)).]
The court found that because the Chancery Division's findings and
conclusions undermined defendants' claims of fraud and slander of title,
defendants could not then maintain that those same allegations amounted to
extreme and outrageous conduct, particularly with respect to PHH's decision not
to temporarily modify the loan during the quiet title claim.
Defendants argue they established a prima facie case of intentional
infliction of emotional distress because plaintiff's actions in repeatedly failing
A-3404-22
22
to rectify the wrongful default/foreclosure assignment was a malicious act that
caused defendants serious emotional stress and that no medical proof was
required to support the claim. They contend that plaintiff's failure to modify the
loan while they asserted a quiet title claim constituted extreme and outrageous
conduct that caused Ralph emotional distress, and that their involvement "in
litigation over these and related issues for nearly twenty years . . . sp[oke] to the
severity and substantial distress caused to them." Thus, defendants contend that
the court erred in granting plaintiff summary judgment.
Defendants have not shown that plaintiff's conduct in allegedly mistakenly
reporting their loan in default was intentional or amounted to extreme and
outrageous conduct. Additionally, while defendants argue that plaintiff's failure
to modify the loan during the claim for quiet title was outrageous conduct,
plaintiff's witness testified that the loan could not be refinanced as long as it was
discharged. Thus, defendants' own actions in opposing the reinstatement of the
loan and subsequent claim to quiet title contributed to the delay in their ability
to refinance. Given the circumstances surrounding defendants' inability to
refinance, namely the mistaken discharge, plaintiff's conduct could not be
regarded as intentional or "so outrageous in character, and so extreme in degree,
as to go beyond all possible bounds of decency, and to be regarded as atrocious,
A-3404-22
23
and utterly intolerable in a civilized community." Moreover, defendants' claim
was partially based on their assertion that plaintiff misrepresented the true owner
of the loan; however, the Chancery Division made several factual findings and
determined that plaintiff was the legal owner of the loan.
We further determine the court did not err in denying defendants' motion
for reconsideration. Pursuant to Rule 4:49-2, a motion for "[r]econsideration is
a matter within the sound discretion of the [c]ourt, to be exercised in the interest
of justice." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (first
alteration in original) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.
Div. 1990)). Reconsideration is reserved for cases that fall within a narrow
scope "in which either 1) the [c]ourt has expressed its decision based upon a
palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either
did not consider, or failed to appreciate the significance of probative, competent
evidence." Ibid. (quoting D'Atria, 242 N.J. Super. at 401-02). Furthermore,
"[r]econsideration cannot be used to expand the record and reargue a motion.
Reconsideration is only to point out 'the matters or controlling decisions which
counsel believes the court has overlooked or as to which it has erred.'" Cap. Fin.
Co. of Del. Valley v. Asterbadi, 398 N.J. Super. 299, 310 (App. Div. 2008)
(quoting R. 4:49-2). The trial court's denial of a motion for reconsideration is
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reviewed for an abuse of discretion. Cummings, 295 N.J. Super. at 389 (citing
CNF Constructors, Inc. v. Donohoe Constr. Co., 57 F.3d 395, 401 (4th Cir.
1995)).
At the reconsideration hearing, the judge denied the motion because there
was no evidence presented that it failed to consider, and there was no basis to
change its decision. Defendants argue the court erred in denying their motion
for reconsideration to reinstate their claims but do not contend that the court
abused its discretion. Rather, defendants repeat the same arguments here they
made in the trial court.
Given that a motion for reconsideration does not serve as an opportunity
for defendants to relitigate the same issues in the hope of a better outcome, and
since defendants did not establish the Law Division expressed its decision based
upon a palpably incorrect or irrational basis, we likewise discern no reason to
disturb the court's denial of the reconsideration motion.
In sum, the court neither erred in granting plaintiff summary judgment nor
abused its discretion in denying reconsideration.
C.
Defendants next argue the Law Division erred in denying their motion to
amend their counterclaim and third-party complaint to add Wells Fargo as a
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25
third-party defendant. They argue that new evidence from one of plaintiff's
witnesses during the Chancery Division trial indicated that plaintiff had no
knowledge of defendants' refinance denials and that only Wells Fargo, not its
trustee department, could deny an application to refinance.
The amendment of a pleading "is allowed only 'by leave of court which
shall be freely given in the interest of justice.'" Notte v. Merchs. Mut. Ins. Co.,
185 N.J. 490, 500-01 (2006) (quoting R. 4:9-1). The decision to grant "a motion
to file an amended complaint always rests in the court's sound discretion." Id.
at 501 (quoting Kernan v. One Wash. Park Urb. Renewal Assocs., 154 N.J. 437,
456-57 (1998)). A court that is tasked with exercising this discretion must
engage in a two-step process that examines "whether the non-moving party will
be prejudiced, and whether granting the amendment would nonetheless be
futile." Ibid.
Although motions to amend "are ordinarily afforded liberal treatment, the
factual situation in each case must guide the court's discretion, particularly
where the motion is to add new claims or new parties late in the litigation."
Bonczek v. Carter-Wallace, Inc., 304 N.J. Super. 593, 602 (App. Div. 1997).
The denial of such a motion is "sustainable when made on the eve of trial,
particularly if the motion seeks to add new parties." Pressler, Current N.J. Court
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26
Rules, cmt 2.2.2 on R. 4:9-1 (2024). See Fisher v. Yates, 270 N.J. Super. 458,
467 (App. Div. 1994) (holding no abuse of discretion in denying late motion to
add new claims and parties).
A trial court's exercise of discretion must amount to a clear abuse of that
discretion before it will be disturbed on appeal. Franklin Med. Assocs. v.
Newark Pub. Schs., 362 N.J. Super. 494, 506 (App. Div. 2003).
The court denied defendants' motion to amend their counterclaim and
third-party complaint to add Wells Fargo as a third-party defendant because it
found the proposed amended pleading did not "substantially change
[defendants]' factual allegations." The court explained that the proposed
amendment would be futile because it could not survive a summary judgment
motion, the discovery end date had passed, and the quiet title claims had already
been tried. It explained that the Chancery Division's "findings and conclusions
[made] it impossible for [the] amendment to survive summary judgment ."
Moreover, the court noted the late attempt to amend would be prejudicial to
plaintiff.
To permit a late amendment, defendants needed to show there were factual
grounds to hold Wells Fargo liable. The four counts pled in the first amended
third-party complaint remained almost entirely the same as to the quiet title,
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mortgage fraud, slander of title, and the intentional infliction of emotional
distress claims. Given the Chancery Division's decision on the quiet title claim,
the Law Division noted defendants failed to demonstrate why adding Wells
Fargo as a party would enable them to overcome a summary judgment motion.
Moreover, the court expressed concern about the attempt to amend on the eve of
trial after the close of discovery. We discern, under the facts presented here, the
court did not misapply its discretion in denying defendants' leave to amend the
third-party complaint.
D.
Defendants further argue the Law Division erred in entering a judgment
in favor of plaintiff on its claim for contractual litigation fees .
Generally, "New Jersey disfavors the shifting of attorneys' fees." Litton
Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385 (2009) (citing N. Bergen Rex
Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999)). However, a
party that prevails on its claim can recover attorney's fees if "they are expressly
provided for by statute, court rule, or contract." Ibid. (quoting Packard-
Bamberger & Co. v. Collier, 167 N.J. 427, 440 (2001)). Nevertheless, even
where fee shifting is addressed by a contractual provision, "the provision should
be strictly construed in light of our general policy disfavoring the award of
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28
attorneys' fees." Ibid. (citing N. Bergen Rex Transp., Inc., 158 N.J. at 570).
A trial court's award of attorney's fees will be disturbed on appeal only in
the rarest of occasions and, in such circumstances, only when there is a clear
abuse of discretion. See id. at 386. That said, if a party's entitlement to a fee
award is dependent on contractual interpretation, the court will "enforce
contracts 'based on the intent of the parties, the express terms of the contract,
surrounding circumstances and the underlying purpose of the contract. '"
Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 118 (2014) (quoting Caruso
v. Ravenswood Devs., Inc., 337 N.J. Super. 499, 506 (App. Div. 2001)). Where
"there are no material factual disputes, 'the interpretation of a contract is subject
to de novo review by an appellate court.'" In re Cnty. of Atl., 230 N.J. 237, 255
(2017) (quoting Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011)).
Here, Section 9 of the mortgage agreement stated in pertinent part:
If . . . (b) there is a legal proceeding that might
significantly affect Lender's interest in the Property
and/or rights under this Security Instrument (such as a
proceeding in bankruptcy, probate, for condemnation or
forfeiture, for enforcement of a lien which may attain
priority over this Security Instrument or to enforce laws
or regulations) . . . then Lender may do and pay for
whatever is reasonable or appropriate to protect
Lender's interest in the Property and rights under this
Security Instrument, including protecting and/or
assessing the value of the Property, and securing and/or
repairing the Property. Lender's actions can include,
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but are not limited to . . . (b) appearing in court; and (c)
paying reasonable attorneys' fees to protect its interest
in the Property and/or rights under this Security
Instrument, including its secured position in a
bankruptcy proceeding. . . .
Any amounts disbursed by Lender under this
Section 9 shall become additional debt of Borrower
secured by this Security Instrument. These amounts
shall bear interest at the Note rate from the date of
disbursement and shall be payable, with such interest,
upon notice from Lender to Borrower requesting
payment.
Defendants argue their counterclaims for mortgage fraud, slander of title,
and emotional distress were not the type of legal proceeding that Section 9
identified as matters in which the lender could add reasonable attorney's fees to
the secured debt. They also maintain that an action to reinstate the mistakenly
discharged mortgage was not a proceeding that the mortgage agreement
identified as triggering the lender's right to attorney's fees. They further contend
that plaintiff no longer had a remedy to obtain a money judgment against them
because once they refinanced the loan, their debt secured by the security
instrument no longer existed.
Plaintiff counters that the Law Division correctly awarded them attorney's
fees. They assert that defendants' counterclaim, which contested plaintiff's
attempt to correct a mistaken discharge, was a qualifying proceeding under
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30
Section 9 of the contract, as plaintiff incurred attorney's fees to protect its
secured interest. Plaintiff relies on 79-83 Thirteenth Avenue, Ltd. v. De Marco,
44 N.J. 525, 532 (1965), to argue that defendants' refinance and subsequent
removal of the security did not extinguish plaintiff's pending legal claim for fees
at law, maintaining that "[a] mortgagee can recover a borrower's debt both in
equity and at law." Similarly, plaintiff cites our opinion in Hatch v. T & L
Associates, 319 N.J. Super. 644, 647 (App. Div. 1999), arguing that our holding
established its right to recover attorney's fees under a "customary attorney-fee
clause in a promissory note." Plaintiff asserts that after the June 2022 hearing,
its request for attorney's fees was transferred to the Law Division to be
adjudicated with other money damage claims, thereby permitting it to pursue
these claims at law in accordance with the Chancery Division's decision.
The Law Division noted that defendants filed a counterclaim against
plaintiff and its loan servicer, asserting that "plaintiff did not and could not own
[defendants'] mortgage loan." The court further indicated "[t]his clearly was an
attack on plaintiff's security interest." The court recounted that the Chancery
Division had determined there were no other owners of defendants' loan and
that, "[f]or whatever the reason [defendants] have never been able to accept this
fact. This may be the reason that they have been persiste[nt] in this lengthy and
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31
protracted litigation forcing plaintiff to have to respond to their various litigation
moves in order to protect it[]s secured interest."
The court recognized that an exception to the American Rule includes
contractual provisions that govern fee shifting. It noted that Section 9 of the
mortgage, which included an attorney's fees clause, was "clear and
unambiguous." The court stated, under the plain language of Section 9,
defendants' claim that plaintiff did not own and could not enforce its security
interest in their property constituted a legal proceeding impacting plaintiff's
interests under the security instrument, and "plaintiff [wa]s entitled to
reasonable attorney's fees for protecting it[]s secured interest."
The court proceeded to calculate plaintiff's reasonable attorney's fees. 3
The court observed the litigation, which began in 2019 and proceeded through
2023, included extensive motion practice, discovery, and a trial in the Chancery
Division. The court noted plaintiff's actions were necessitated by defendants'
attempt to "extinguish plaintiff's $200,000 plus mortgage." The court ultimately
awarded plaintiff $188,029 in fees.
The language of Section 9 indicates that fee shifting is implicated in legal
3
Defendants only challenge plaintiff's entitlement to attorney's fees. They do
not challenge the amount of the award.
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32
proceedings that "might significantly affect [plaintiff]'s interest in the
[p]roperty" or rights under the security instrument. Specifically, the provision
includes proceedings such as "bankruptcy, probate, for condemnation or
forfeiture, [or] for enforcement of a lien which may attain priority over this
[s]ecurity [i]nstrument or to enforce laws or regulations."
We recognize plaintiff's suit to reinstate the mistaken discharge was not
the type of proceeding that Section 9 contemplated, since defendants were not
responsible for the accidental discharge that necessitated the action to reinstate
the mortgage. However, defendants' counterclaims for mortgage fraud and
slander of title do fall within the categories of proceedings that Section 9
contemplated, as they asserted these claims to challenge plaintiff's interest in the
property. Therefore, the claims at issue constituted "a legal proceeding that
might significantly affect" plaintiff's interest in the property under its "[s]ecurity
[i]nstrument" and also involved plaintiff's "enforcement of a lien." Defendants'
opposition to the mortgage reinstatement can be viewed as a challenge to
plaintiff's secured interest in the property. Similarly, defendants' subsequent
quiet title claim was a direct challenge to plaintiff's secured interest in the
property, and fell within the scope of proceedings envisioned by Section 9.
We turn to whether plaintiff may still recover its fees since defendants
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33
refinanced the mortgage prior to the Law Division awarding fees. Section 9
states that "[a]ny amounts disbursed by Lender under this Section 9 shall become
additional debt of Borrower secured by this Security Instrument." Moreover,
Section 9 provides this debt "shall be payable . . . upon notice from Lender to
Borrower requesting payment." Defendants refinanced their loan with Valley
Bank in October 2022, following the Chancery Division trial and transfer of the
attorney's fee claims to the Law Division. The Law Division denied defendants'
motion to dismiss the claim for attorney's fees in November 2022 and ultimately
awarded the fees in June 2023.
To accept defendants' argument that plaintiff could no longer recover
attorney's fees because the mortgage was satisfied when they refinanced with
another lender would ignore the reality of this protracted litigation and the fact
that the Chancery Division could have addressed the attorney's fee issues, but
instead transferred the claims to the Law Division for disposition. In doing so,
the Chancery Division did not expect or intend that plaintiff's claims would be
extinguished based on the quiet title action and defendants' ability to thereafter
refinance the previously contested mortgage. That defendants refinanced the
property during the litigation did not impact plaintiff's ability to recoup
attorney's fees. Plaintiff should not be penalized because the Chancery Division
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34
opted to bifurcate the quiet title action from defendants' counterclaims and
plaintiff's contractual attorney's fee claim, thereby allowing time for defendants
to satisfy plaintiff's mortgage. Plaintiff should not be prejudiced because
defendants were fortuitously able to refinance in October 2022 prior to the Law
Division ultimately ruling on the attorney's fee application. If the Chancery
Division had addressed all of the claims, defendants would not have been able
to argue that plaintiff must forego its attorney's fee application.
Furthermore, although Section 9 provides the attorney's fees "shall
become additional debt" secured by the security interest, the provision is
designed to protect the lender by securing the debt with the existing security
instrument, not to limit the lender's ability to collect attorney's fees under these
circumstances. We do not view the provision as limiting a lender's recovery of
attorney's fees only where a security interest exists, as the following sentence of
the agreement provides, "these amounts" shall be "payable" on notice from the
lender requesting payment, notwithstanding the existence of a security interest.
The Chancery Division expected that the Law Division would address
defendants' counterclaims and plaintiff's attorney's fee application. The
Chancery Division found that defendants had clean title and thus could refinance
at some point. However, there was no suggestion that if the refinancing occurred
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35
during the course of active litigation, plaintiff would be precluded from pursuing
its attorney's fee application. Rather, the court preserved the claim because it
was bifurcated from the quiet title claim with the expectation that it would be
adjudicated, along with defendants' counterclaims, in the Law Division, given
that plaintiff had an interest in the property when the fees initially arose .
Defendants could not circumvent the attorney's fee claim under the
circumstances here, where litigation was ongoing.
To the extent we have not addressed any other arguments raised by
defendants, we are satisfied they are without sufficient merit to warrant further
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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