Paul A. Woodford v. Lori Alexis Lynn-Martinolich ( 2024 )

NOT FOR PUBLICATION WITHOUT THE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-1179-22
PAUL A. WOODFORD,
Plaintiff-Appellant,
v.
LORI ALEXIS LYNN-
MARTINOLICH, previously
known as LORI GARFINKEL,
LORI LYNN GARFINKEL,
LORI L. GARFINKEL, and
LORI LYNN, also known as
LORI LYNN MARTINOLICH,
LORI L. MARTINOLICH,
LORI Z. LYNN-MARTINOLICH,
and LORI ALEXIS MARTINOLICH,
PETER GARFINKEL, UNITED
STATES OF AMERICA, INTERNAL
REVENUE SERVICE, and
CASHA, CASHA & EVANS, LLC,
Defendants,
and
DIVISION OF TAXATION,
DIVISION OF MEDICAID
FRAUD, and FREEDOM
MORTGAGE CORPORATION,1
Defendants-Respondents.
Submitted February 27, 2024 – Decided July 5, 2024
Before Judges Rose and Smith.
On appeal from the Superior Court of New Jersey,
Chancery Division, Essex County, Docket No. C-
000193-21.
Paul A. Woodford, appellant pro se.
Matthew J. Platkin, Attorney General, attorney for
respondent State of New Jersey, Office of the State
Comptroller, Division of Medicaid Fraud (Melissa H.
Raksa, Assistant Attorney General, of counsel; Francis
Xavier Baker, Deputy Attorney General, on the brief).
Brian D. Romanowsky, attorney for respondent
Freedom Mortgage Corporation.
Davison, Eastman, Muñoz, Paone, PA, attorneys for
amicus curiae New Jersey Land Title Association (Alan
Lee Poliner, on the brief).
PER CURIAM
Plaintiff Paul A. Woodford, a self-represented retired attorney, appeals
from companion General Equity Part orders, declaring the priority of liens
among various creditors on residential property located in West Orange and
1
Improperly pled as Freedom Mortgage Company.
A-1179-22
2
owned by defendant Lori Alexis Lynn-Martinolich (debtor).2 The orders were
issued on November 14, 2022, following cross-motions for summary judgment
filed by plaintiff and defendants Freedom Mortgage Corporation (FMC) and
New Jersey Division of Medicaid Fraud (MFD) at the close of discovery. 3 Based
on our de novo review of the limited record, we conclude the motion judge
prematurely granted summary judgment. We therefore vacate both orders under
review, and remand for further proceedings.
I.
We summarize the pertinent facts and procedural history from the motion
record, which primarily consists of documentary evidence. Although plaintiff's
470-page appendix includes debtor's deposition in a prior matter, no depositions
were taken of any witnesses in the present matter; no expert reports were
exchanged among the parties.
In his March 2022 amended complaint, plaintiff asserted debtor was
known as Lori Garfinkel when he represented her during a post-judgment
2
Unless it is necessary to identify defendant Lori Alexis Lynn-Martinolich by
one of her various names, we use "debtor" for ease of reference.
3
MFD does not cross-appeal from the third November 14, 2022 order seeking
a declaration that its lien enjoyed priority status.
A-1179-22
3
custody hearing filed by her ex-husband, defendant Peter Garfinkel. On May
30, 2012, plaintiff obtained a $66,946 judgment, plus costs, against debtor. On
July 23, 2012, the judgment was recorded as a lien against "Lori Garfinkel" by
the Superior Court Clerk in Trenton.
In his March 2022 amended complaint, plaintiff named several creditors
who had docketed judgments against debtor under various names, including:
Lori Alexis Lynn Martinolich, Lori Garfinkel, Lori Lynn Garfinkel, Lori L.
Garfinkel, Lori Lynn, Lori Lynn Martinolich, Lori Z. Lynn-Martinolich, and
Lori Alexis Martinolich.
In essence, plaintiff asserted, unbeknownst to him, debtor changed her
name to Lori Lynn after he recorded his lien in 2012. Debtor then married Paul
William Martinolich, who died in December 2017. The following year, in
August 2018, debtor purchased the West Orange property under the name, Lori
Alexis Lynn-Martinolich, with a purchase money mortgage made by Family
First Funding, LLC. In July 2019, debtor refinanced the West Orange property
with defendant FMC under the name, Lori Alexis Lynn-Martinolich. At some
point, plaintiff discovered FMC recorded its mortgage on August 1, 2019, and
asserted a first lien on the West Orange property.
A-1179-22
4
Accordingly, plaintiff filed the present action to determine the priority of
liens, including the following4:
• April 28, 2011 – New Jersey Division of
Taxation's (NJDOT) $1,257.62 tax lien against
"Lori Garfinkel";
• July 23, 2012 – plaintiff's $66,946 lien against
"Lori Garfinkel" described above;
• February 23, 2017 – NJDOT's $3,571.61 tax lien
against "Lori L. Garfinkel";
• August 1, 2019 – FMC's mortgage against "Lori
Alexis Lynn-Martinolich";
• September 19, 2019 – United States Internal
Revenue Service's (IRS) $17,101.33 tax lien
against "Lori Z. Lynn-Martinolich"; and
• August 19, 2019 – MFD's $627,419 amended
certificate of debt against "Lori Alexis Lynn
Martinolich"; originally entered on August 16,
2018 against "Lori Lynn Garfinkel."
FMC answered the complaint and asserted several defenses including:
"Plaintiff's judgment was not discoverable and was not discovered at th e time
4
According to FMC's case information statement, plaintiff's claims against
debtor, Peter Garfinkel, the IRS, and Casha, Casha & Evans, LLC were
dismissed without prejudice in the trial court for lack of prosecutio n. We glean
from the transcript of oral argument before the motion judge that NJDOT did
not file a brief but joined MFD's motion.
A-1179-22
5
this [d]efendant accepted a mortgage with respect to the [West Orange
property]."
In its answer, MFD joined plaintiff's application for a declaration of the
priority of liens on the West Orange property. MFD asserted, however, "[its]
judgment enjoys priority over other claims."
In his certification supporting his summary judgment motion, plaintiff
annexed documents: provided by FMC, presumably in discovery; obtained from
the New Jersey Courts website; and obtained from "[web]sites operated by the
State of New Jersey." Plaintiff also included an excerpt of debtor's deposition
taken in October 2018 regarding an unspecified lawsuit filed by her against
plaintiff and other attorneys, and "a portion of [debtor's] 2008 tax return
obtained and provided to opposing counsel in [his] representation of her."
Plaintiff asserted while processing debtor's mortgage application, FMC
"obtained copies of [her] 2016 and 2017 tax returns." In her 2017 tax return,
debtor claimed three dependent children, all with the last name, Garfinkel.
However, FMC did not provide "any documentation" confirming debtor was
questioned about "these dependents, that their last name was Garfinkel, or
[whether she was] ever married to any person with the last name of Garfinkel."
Further, the children were included in debtor's 2008 tax return.
A-1179-22
6
Plaintiff also cited a "FraudGuard report,"5 which indicated the address of
the West Orange property was an "Invalid Address according to the USPS," and
the telephone number provided by debtor was assigned to "Lori Lynn Lynn,"
residing at the West Orange property. Further, the credit report received by
FMC revealed, "ADDRESS DISCREPANCY: THERE IS A SUBSTANTIAL
DIFFERENCE BETWEEN THE ADDRESS SUBMITTED IN THE INQUIRY
AND THE ADDRESS(ES) ON FILE."
Regarding debtor's social security number, the credit report indicated:
"INPUT SSN LIKELY NOT ISSUED PRIOR TO JUNE 2011," and "INPUT
SSN ISSUE DATE UNVERIFIED." Similarly, the FraudGuard report
"show[ed] no date or state of issue for [debtor's] social security number."
Plaintiff noted, however, a "photocopy of [debtor]'s social security number
show[ed] a date of issue of March 14, 2016."
Although the FraudGuard report indicated "EMPLOYER INFO 'No match
found,'" in her July 17, 2019 loan application, debtor claimed she was "employed
5
According to its website, "the FraudGuard report helps lenders identify
potential fraud risk and errors in mortgage applications, comply with
regulations, improve the application review process through greater speed and
efficiency, and increase loan quality." First American, FraudGuard,
https://dna.firstam.com/solutions/mortgage-fraud/fraudguard (last visited June
27, 2024).
A-1179-22
7
by Peaceful Healing Inc. for 12 years." Debtor further asserted "there [we]re no
outstanding judgments against her." In a July 8, 2019 letter to the mortgage
broker, debtor "type[d] her name as Lori Lynn." In addition, the "marital history
section of the affidavit of title" was left blank.
During oral argument before the motion judge, plaintiff cited these "red
flags" raised in FMC's FraudGuard and credit reports to support his contention
that FMC was required to pursue a more diligent inquiry of debtor's background
under state and federal law, including the USA Patriot Act of 2001, Pub. L. No.
107-56, 115 Stat. 272. Plaintiff also asserted FMC was required to institute
"anti-fraud policies" to ensure there were no existing judgments affecting the
priority of its lien. MFD argued the law requires lenders to "conduct a
reasonable and diligent search for any outstanding rights or claims," which FMC
failed to do here.
FMC countered it had no obligation to "look beyond the public record"
even assuming certain information "raise[d] red flags." FMC further asserted
the discrepancies noted by plaintiff "d[id] not establish that there [wa]s a lien
on the real property which [wa]s being mortgaged" and, as such, plaintiff's lien
did "not attach" to the West Orange property.
A-1179-22
8
Following oral argument, the judge issued a written statement of reasons
accompanying the three November 14, 2022 orders. Rejecting plaintiff's
argument under the Patriot Act, the judge reasoned:
The Patriot Act's purpose in requiring lenders to verify
the identity of customers opening bank accounts is to
prevent use of the U.S. financial system by enemies of
the United States. The anti-money laundering statute's
purpose is to prevent and detect suspicious financial
activity relating to money[]laundering and terrorist
financing, including predicate offenses such as
securities fraud and market manipulation. Neither of
these regulations is intended to protect judgment
creditors from normal title searches of the public docket
that do not reveal their prior liens because of name
changes.
Citing our decision in Venetsky v. West Essex Building Supply Co., 28
N.J. Super. 178, 190 (App. Div. 1953), however, the judge was persuaded by
FMC's argument "that constructive notice comes from the information entered
onto the public docket, and what a search of the public record would reveal
based on an applicant's name on the [a]ffidavit of [t]itle." The judge concluded
"the case law holds true for any kind of name change, fraudulent or otherwise."
In addition, the judge found MFD and plaintiff "were both in a position to amend
their judgements, which would . . . have avoided any lack of constructive notice
issue." Moreover, movants failed to "articulate[] a standard of diligent inquiry
A-1179-22
9
to be followed if lenders are required to prove they adequately searched outside
of the public record for names and addresses not found in the chain of title."
In the November 14, 2022 order granting FMC's motion, the judge
declared the priority of liens as follows: (1) FMC, "by virtue of its mortgage
recorded August 1, 2019"; (2) MFD, "by virtue of its judgment entered August
16, 2018, amended August 19, 2019, [and] entered against, 'Lori Lynn-
Martinolich'"; and (3) the IRS "by virtue of its judgment filed September 19,
2019." The judge further determined: "The asserted interests of all other
defendants and plaintiff do not attach to the [West Orange p]roperty." This
appeal followed.
On appeal, plaintiff reprises two overlapping arguments. Plaintiff
maintains FMC failed to comply with the Bank Secrecy Act, 31 U.S.C. 5311-
5336, as amended by the Patriot Act, because FMC did not have policies and
procedures in place to verify debtor's identity. Plaintiff further contends FMC
failed to exercise due diligence in ascertaining debtor's true identity and, as such,
FMC cannot rely on a title search of the public record. Although MFD did not
file a cross-appeal, it joins plaintiff's second argument, urging us to reverse the
court's orders.
A-1179-22
10
FMC counters plaintiff lacks standing to enforce the Patriot Act and,
pursuant to the Recording Act, N.J.S.A. 46:26A-1 to -12, FMC was not obligated
"to look beyond the public record to determine" the existence of liens recorded
"in a different name." During the course of briefing on appeal, we permitted the
New Jersey Land Title Association (NJLTA) to appear as amicus curiae.
NJLTA echoes FMC's arguments, supporting the court's orders.
II.
We review the trial court's grant of summary judgment de novo. Conforti
v. County of Ocean, 255 N.J. 142, 162 (2023). Employing the same standard as
the trial court, we review the record to determine whether there are material
factual disputes and, if not, whether the undisputed facts viewed in the light
most favorable to the non-moving party, nonetheless entitle the movant to
judgment as a matter of law. See Samolyk v. Berthe, 251 N.J. 73, 78
(2022); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); see
also R. 4:46-2(c). We focus only on the motion record before the judge. See Ji
v. Palmer, 333 N.J. Super. 451, 463-64 (App. Div. 2000). We owe no deference
to the trial court's legal analysis or interpretation of a statute. Palisades at Fort
Lee Condo. Ass'n v. 100 Old Palisade, LLC, 230 N.J. 427, 442 (2017).
A-1179-22
11
As a threshold matter, we agree with FMC and NJLTA that a private cause
of action is not authorized under the Patriot Act. See e.g., Ray v. First Nat. Bank
of Omaha, 413 F. App'x 427, 430 (3d. Cir. 2011) ("[C]ourts that have considered
the question have concluded that the Patriot Act does not provide for a private
right of action for its enforcement."). In our view, however, plaintiff does not
assert a private cause of action under the Patriot Act. As he clarifies in his reply
brief, plaintiff argues the Patriot Act's due diligence requirements should be
incorporated into a state standard, requiring a lending institution to "ascertain[]
the identity and background of a prospective mortgagor." As MFD asserts, the
due diligence requirement finds support in established legal principles.
"A holder of a docketed judgment has a lien on all real property held by
the judgment debtor in the state." New Brunswick Sav. Bank v. Markouski, 123
N.J. 402, 412 (1991) (citing N.J.S.A. 2A:16-1, 2A:17-17). The Recording Act
provides, in pertinent part:
a. [A]ny 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.
b. A claim under a recorded document affecting the
title to real property shall not be subject to the effect of
a document that was later recorded or was not recorded
A-1179-22
12
unless the claimant was on notice of the later recorded
or unrecorded document.
[N.J.S.A. 46:26A-12(a), (b).]
Therefore, "New Jersey is considered a 'race-notice' jurisdiction, which
means that as between two competing parties the interest of the party who first
records the instrument will prevail so long as that party had no actual knowledge
of the other party's previously-acquired interest." Cox v. RKA Corp., 164 N.J.
487, 496 (2000). However, "[i]n the context of the race[-]notice statute,
constructive notice arises from the obligation of a claimant of a property interest
to make reasonable and diligent inquiry as to existing claims or rights in and to
real estate." Friendship Manor, Inc. v. Greiman, 244 N.J. Super. 104, 108 (App.
Div. 1990) (citing Scult v. Bergen Valley Builders, Inc., 76 N.J. Super. 124, 135
(Ch. Div. 1962), aff'd 82 N.J. Super. 378 (App. Div. 1964)).
A "claimant will be charged with knowledge of whatever such an inquiry
would uncover where facts are brought to his [or her] attention, 'sufficient to
apprise him [or her] of the existence of an outstanding title or claim, or the
surrounding circumstances are suspicious and the party purposefully or
knowingly avoids further inquiry.'" Ibid. (emphasis altered) (citing Scult, 76
N.J. Super. at 135); see also Howard v. Diolosa, 241 N.J. Super. 222, 232 (App.
Div. 1990) ("If a purchaser or lienor is faced with extraordinary, suspicious, and
A-1179-22
13
unusual facts which should prompt an inquiry, it is equivalent to notic e of the
fact in question."). Accordingly, "a party may be charged with inquiry notice
where there are facts or circumstances indicating some outside claim that would
prompt a reasonable purchaser to investigate further." Pearson v. DMH 2 LLC,
449 N.J. Super. 30, 50 (Ch. Div. 2016). Because the doctrine of inquiry notice
is an exception to a system of recorded notice, it is reserved for cases of "unusual
equity." See Friendship Manor, 244 N.J. Super. at 113 ("We have been
cautioned that 'absent any unusual equity' the stability of titles and conveyancing
requires the judiciary to follow that course 'that will best support and maintain
the integrity of the recording system.'") (quoting Palamarg Realty Co. v. Rehac,
80 N.J. 446, 453 (1979)).
"The underlying purpose of the Recording Act is clear." Palamarg Realty,
80 N.J. at 453. The act "was designed to compel the recording of instruments
affecting title, for the ultimate purpose of permitting purchasers to rely upon the
record title and to purchase and hold title to lands within this state with
confidence." Ibid. (emphasis added) (quoting Donald B. Jones, The New Jersey
Recording Act – A Study of its Policy, 12 Rutgers L. Rev. 328, 329-30 (1957)).
Guided by these well-settled principles – and notwithstanding the parties
filed cross-motions seeking a legal determination – based on our de novo review
A-1179-22
14
of the record, we are convinced there existed material questions of fact that
precluded judgment as a matter of law and required a plenary hearing. See
Palmieri v. Palmieri, 388 N.J. Super. 562, 564 (App. Div. 2006) ("When a
genuine issue of material fact exists, a plenary hearing is required."). Indeed,
multiple "red flags" were raised during FMC's processing of debtor's
application, including: debtor's use of various names; her unverifiable social
security numbers; her three children shared the same surname, which differed
from hers; and discrepancies in debtor's address and employment information.
Although these circumstances seem suspicious and may have apprised
FMC of the previously-filed judgments in debtor's former name, the record does
not disclose how, if at all, FMC addressed the flags raised during debtor's
application process. See Friendship Manor, 244 N.J. Super. at 108. Granting
judgment as a matter of law, on the record presented here, permitted FMC to
benefit from its alleged failure to undertake a diligent inquiry as to the
previously filed judgments in debtor's former name. However, additional
information is necessary to determine whether FMC "purposefully or knowingly
avoid[ed] further inquiry." Ibid.A-1179-22
15
We therefore vacate the orders under review and remand for a plenary
hearing, deferring to the motion judge's discretion whether to reopen and permit
limited discovery. Jurisdiction is not retained.
A-1179-22
16