Tahir Zaman v. Barbara Felton (072128)

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
Tahir Zaman v. Barbara Felton (A-60-12) (072128)
Argued March 18, 2014 -- Decided September 9, 2014
PATTERSON, J., writing for a unanimous Court.
This appeal requires the Court to analyze an agreement for the sale of a residential property and a
subsequent lease and repurchase agreement, and to determine whether the transactions collectively gave rise to an
equitable mortgage, violated consumer protection statutes, or contravened this Court’s decision in In re Opinion No.
26 of the Committee on the Unauthorized Practice of Law, 139 N.J. 323 (1995) (In re Opinion No. 26).
In 2007, defendant Barbara Felton, an experienced buyer and seller of real estate, faced imminent
foreclosure proceedings with respect to her unfinished home when she defaulted on a $105,000 construction
mortgage. Felton was aware that no certificate of occupancy was issued with respect to the house, and the house
was uninhabitable. A mutual acquaintance, Joseph Richardson, introduced Felton to Tahir Zaman, a licensed real
estate agent. On June 16, 2007, Felton, Zaman, and Richardson met at the property to discuss its potential sale.
Zaman was unaware that the house lacked a certificate of occupancy and was uninhabitable. Felton requested a
price of $250,000 for the property, and Zaman made a $200,000 counteroffer. Felton wanted to keep the property.
Zaman told Felton that if she accepted his offer of $200,000, he would agree to a buy-back option and would allow
her to remain on the property as a tenant. Felton and Zaman then executed a written land sale agreement with a
purchase price of $200,000, and Richardson signed the agreement as a witness. The agreement provided that each
party had the right to arrange for an attorney to review its terms within three days of its execution, that either party
could cancel the sale during the attorney-review period, and that the agreement would be binding at the conclusion
of that period. The agreement contained no reference to a buy-back or lease provision.
On June 23, 2007, at a closing in which neither party was represented by counsel, Felton and Zaman
entered into two separate agreements: a lease agreement under which Felton agreed to pay $1,000 per month in rent,
and an agreement that gave Felton the option to repurchase the property within three months for $237,000. Felton
signed the deed, an affidavit of title, and the buy-back agreement. The parties did not execute any mortgage
documents. Zaman gave Felton a cashier’s check in the amount of $85,960, the balance after mortgage payoff and
other closing expenses. Neither party exercised the right to cancel the agreement during the three-day attorney
review period. On July 19, 2007, Zaman recorded the deed to the disputed property. For the next seventeen months,
Felton occupied the property, but did not pay rent in accordance with the lease agreement, or exercise her
contractual right to repurchase the property.
In December 2008, Zaman filed the underlying complaint, claiming that he was the purchaser in an
enforceable land sale agreement. Felton filed a counterclaim based on fraud, slander of title, violations of the
Consumer Fraud Act (CFA), violations of the Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-53 to -68, and violations
of the federal Truth in Lending Act (TILA), 15 U.S.C.A. §§ 1601 - 1667. Felton claimed that the parties’
transactions collectively comprised an equitable mortgage and that the transactions were voidable by virtue of an
alleged violation of this Court’s opinion in In re Opinion No. 26. The trial court elected to hold a bifurcated trial. It
assigned to the jury the following questions: whether Zaman had proven by a preponderance of the evidence that
Felton knowingly agreed to sell the property to him, and if not, whether Felton had proven by clear and convincing
evidence that Zaman obtained his deed to the property by “fraudulent actions.” The jury concluded that Zaman had
proven by a preponderance of the evidence that Felton knowingly agreed to sell her property to him. The trial court
then conducted the trial’s second phase, in which the trial judge was the factfinder. After hearing additional
testimony, the trial court dismissed all of Felton’s remaining claims, including her contention that the transactions
gave rise to an equitable mortgage and her allegation premised upon In re Opinion No. 26.
Felton appealed, and the Appellate Division affirmed. Citing the jury’s determination that the property was
1
knowingly sold, the panel concluded that the trial court correctly declined to find an equitable mortgage or a valid
claim under the CFA. In addition, the panel affirmed the trial court’s determination that In re Opinion No. 26 does
not govern this case. The Supreme Court granted Felton’s petition for certification. 213 N.J. 537 (2013).
HELD: The Court affirms the jury’s determination that Felton knowingly sold her property to Zaman. It reverses
the portion of the Appellate Division’s opinion that affirmed the trial court’s dismissal of Felton’s claim that the
parties’ agreements gave rise to an equitable mortgage. The Court remands to the trial court for application of the
eight-factor standard for the determination of an equitable mortgage set forth by the United States Bankruptcy Court
in O’Brien v. Cleveland, 423 B.R. 477, 491 (Bankr. D.N.J. 2010) and, in the event that the trial court concludes that
an equitable mortgage was created by the parties, for the adjudication of two of Felton’s statutory claims based on
alleged violations of consumer lending laws, as well as several other claims not adjudicated by the trial court. The
Court concurs with the trial court and Appellate Division that Felton has no claim under the Consumer Fraud Act,
that this case does not implicate In re Opinion No. 26, and that Felton’s remaining claims were properly dismissed.
1. The Court reviews the jury’s determination – that Zaman had proven by a preponderance of the evidence that
Felton knowingly agreed to sell the property to him – in accordance with a deferential standard. An appellate court
should not disturb the findings of the jury merely because it would have found otherwise upon review of the same
evidence. Carrino v. Novotny, 78 N.J. 355, 360 (1979). Applying that standard, the Court affirms the Appellate
Division panel’s determination insofar as it affirmed the jury’s determination that Zaman had proven by a
preponderance of the evidence that Felton knowingly conveyed her property to him. (pp. 15-18)
2. “New Jersey courts have repeatedly found that sale-leaseback arrangements made to avoid foreclosure are in fact
equitable mortgages.” Johnson v. NovaStar Mortg., Inc., 698 F. Supp. 2d 463, 469 (D.N.J. 2010). It is the trial
court’s task to discern whether the transaction has been labeled as a land sale in order to mask its actual objective: a
mortgage loan secured by a deed to the property at issue. In O’Brien v. Cleveland, 423 B.R. 477 (Bankr. D.N.J.
2010), the Bankruptcy Court identified eight factors to assist trial judges in determining whether a given transaction
gives rise to an equitable mortgage. Under the O’Brien framework, the court considers not only the form of the
transaction itself but circumstances that can motivate a party to disguise a mortgage secured by a property as a sale
of land and indications that both parties intend the seller to retain the land notwithstanding the purported sale. The
Court adopts the O’Brien factors as a comprehensive and practical standard to guide trial courts as they determine
whether a particular transaction, or series of transactions, gives rise to an equitable mortgage, and remands the
matter to permit the trial court to apply the O’Brien test. (pp. 18-24)
3. In In re Opinion No. 26, supra, this Court considered whether real estate brokers commit the unauthorized
practice of law when they conduct residential real estate transactions in which the “sellers and buyers are . . .
unrepresented by counsel.” Id. at 326. The risk that the Court addressed in In re Opinion No. 26 – that a real estate
broker acting in his or her own interest will promote the completion of a real estate transaction to the detriment of
the seller, the buyer, or both – is not raised in the circumstances of this case. Nothing in the trial record suggests
that Zaman purported to provide legal advice to Felton, or that Felton was somehow led to believe that Zaman was
her advocate. Accordingly, the Court concurs with the trial court and the Appellate Division that In re Opinion No.
26 is irrelevant to this case, that Zaman did not violate the principles of that decision, and that the trial court properly
declined to void the parties’ transactions on that ground. (pp. 25-28)
4. The trial court properly dismissed Felton’s Consumer Fraud Act (CFA) claim; the trial court should consider the
merits of Felton’s Fair Foreclosure Act (FFA) claim if it determines on remand that the parties’ agreements gave rise
to an equitable mortgage; and, with the exception of her claim under 15 U.S.C.A. § 1639(h), governed by a three-
year statute of limitations, Felton’s federal Truth in Lending Act (TILA) claims were properly dismissed as time-
barred. On remand, the trial court should ascertain whether any of the remaining claims were raised before it, and if
so, whether such a claim gives rise to a cognizable cause of action in the circumstances of this case. Finally,
Felton’s claim under the Foreclosure Rescue Fraud Prevention Act (FRFPA), not raised before the trial court, was
properly dismissed by the Appellate Division. (pp. 28-36)
The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART, and the
matter is REMANDED to the trial court for proceedings consistent with the Court’s opinion.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, and FERNANDEZ-VINA; and
2
JUDGES RODRÍGUEZ and CUFF (both temporarily assigned) join in JUSTICE PATTERSON’s opinion.
3
SUPREME COURT OF NEW JERSEY
A-60 September Term 2012
072128
TAHIR ZAMAN,
Plaintiff-Respondent,
v.
BARBARA FELTON and MR.
FELTON, her husband,
Defendants-Appellants.
Argued March 18, 2014 – Decided September 9, 2014
On certification to the Superior Court,
Appellate Division.
Robert B. Silverman argued the cause for
appellants.
I. Dominic Simeone argued the cause for
respondent (Simeone & Raynor, attorneys; Mr.
Simeone and Kelly A. Barse, on the briefs).
David G. McMillin argued the cause for
amicus curiae Legal Services of New Jersey
(Melville D. Miller, Jr., President
attorney; Mr. McMillin and Mr. Miller, on
the brief).
Barry S. Goodman argued the cause for amicus
curiae New Jersey Association of Realtors
(Greenbaum, Rowe, Smith and Davis,
attorneys; Mr. Goodman and Steven B. Gladis,
on the brief).
JUSTICE PATTERSON delivered the opinion of the Court.
This appeal requires the Court to analyze an agreement for
the sale of a residential property and a subsequent lease and
1
repurchase agreement, and to determine whether the transactions
collectively gave rise to an equitable mortgage, violated
consumer protection statutes, or contravened this Court’s
decision in In re Opinion No. 26 of the Committee on the
Unauthorized Practice of Law, 139 N.J. 323 (1995).
In 2007, defendant Barbara Felton faced foreclosure
proceedings with respect to her unfinished, uninhabitable home
and the land on which it was situated. Felton and plaintiff
Tahir Zaman, a licensed real estate agent, entered into a
written contract for the sale of the property. A week later, at
a closing in which neither party was represented by counsel,
Felton and Zaman entered into two separate agreements: a lease
agreement under which Felton became the lessee of the property,
and an agreement that gave her the option to repurchase the
property from Zaman at a substantially higher price than the
price for which she sold it. For more than a year, Felton
remained on the property, paying no rent. She did not exercise
her right to repurchase.
Zaman filed this action, claiming that he was the purchaser
in an enforceable land sale agreement, and that he therefore was
entitled to exclusive possession of the property and to damages.
Felton asserted numerous counterclaims, alleging fraud, slander
of title, violations of the Consumer Fraud Act (CFA), N.J.S.A.
56:8-1 to -195, and violations of other federal and state
2
consumer protection statutes. She claimed that the parties’
transactions collectively comprised an equitable mortgage and
constituted a foreclosure scam, entitling her to relief under
several theories. She further contended that the transactions
were voidable by virtue of an alleged violation of this Court’s
opinion in In re Opinion No. 26.
A jury rendered a verdict in Zaman’s favor with respect to
the question of whether Felton knowingly sold her property to
him. The trial court subsequently conducted a bench trial and
rejected Felton’s remaining claims, including her contention
that the transactions gave rise to an equitable mortgage and her
allegation premised upon In re Opinion No. 26. An Appellate
Division panel affirmed the trial court’s judgment.
We affirm in part and reverse in part the Appellate
Division’s determination. We affirm, as adequately supported by
the evidence presented at trial, the jury’s determination that
Felton knowingly sold her property to Zaman. We reverse the
portion of the Appellate Division’s opinion that affirmed the
trial court’s dismissal of Felton’s claim that the parties’
agreements constituted a single transaction that gave rise to an
equitable mortgage. We adopt the eight-factor standard for the
determination of an equitable mortgage set forth by the United
States Bankruptcy Court in O’Brien v. Cleveland, 423 B.R. 477,
491 (Bankr. D.N.J. 2010). We remand to the trial court for
3
application of that standard to this case, and, in the event
that the trial court concludes that an equitable mortgage was
created by the parties, for the adjudication of two of Felton’s
statutory claims based on alleged violations of consumer lending
laws, as well as several other claims not adjudicated by the
trial court. We concur with the trial court and Appellate
Division that Felton has no claim under the CFA, that this case
does not implicate In re Opinion No. 26, and that Felton’s
remaining claims were properly dismissed.
I.
The trial record reveals the following information about
the transactions in dispute in this case.
By 2007, Felton was an experienced buyer and seller of real
estate, who had participated in prior land sales and financing
transactions that involved significant sums of money. In July
1976, Felton purchased the property at issue in this case,
consisting of approximately fifteen acres of land in Plumsted
Township, and commenced construction of a residence on the
property. According to the testimony of a municipal
construction and zoning official, due to structural defects and
building code violations of which Felton was aware, no
certificate of occupancy was issued with respect to the house,
and the house was uninhabitable. As of 2007, a construction
mortgage in the amount of $105,000 obtained by Felton was in
4
default, and Felton confronted the imminent foreclosure of her
unfinished home.
In 2007, Zaman worked primarily as a medical imaging
technologist. He conducted a “side business” in which he would
purchase distressed residential properties, primarily from
sheriffs’ sales, and rehabilitate and sell the homes. Zaman
held a real estate license, which he used primarily to avoid
paying real estate commissions on his purchases and sales. In
ten years as a licensed real estate broker, Zaman acted as a
broker for other parties’ transactions on only two occasions.
Felton was introduced to Zaman by a mutual acquaintance,
Joseph Richardson. According to Zaman, during an initial
telephone call conducted by Zaman, Felton, and Richardson, Zaman
told Felton that his business was to purchase properties, not to
provide mortgages. Zaman disclosed to Felton that he had a real
estate license.
On June 16, 2007, Felton, Zaman, and Richardson met at the
Plumsted Township property to discuss its potential sale. Zaman
inspected the property, but was unaware that the house lacked a
certificate of occupancy and was uninhabitable. Felton
requested a price of $250,000 for the property, and Zaman made a
$200,000 counteroffer. According to the testimony of Zaman,
Felton said that she wanted to keep the property. In response,
Zaman told Felton that if she accepted his offer of $200,000, he
5
would agree to a buy-back option and would allow her to remain
on the property as a tenant.
During the June 16, 2007 meeting, Felton and Zaman executed
a written land sale agreement, and Richardson signed the
agreement as a witness. The agreement, a standard form obtained
by Zaman from the real estate office with which he was
associated, identified Zaman as the buyer and Felton as the
seller. It described the location of the property and set forth
a sale price of $200,000. The agreement provided that each
party had the right to arrange for an attorney to review its
terms within three days of its execution, that either party
could cancel the sale during the attorney-review period, and
that the agreement would be binding at the conclusion of that
period. On its last page, the land sale agreement warned the
buyer and seller about the risks of proceeding without an
attorney, the benefits of retaining an attorney, and the
conflicting interests of the broker and title company with
respect to a real estate sale. The agreement contained no
reference to a buy-back or lease provision.
The closing took place on June 23, 2007, accelerated from a
later date because of Felton’s concern that her property would
be sold at a sheriff’s sale. Felton had not arranged for a deed
6
to be prepared prior to closing. She accepted Zaman’s offer to
have a deed prepared by a local attorney at Felton’s expense.1
On the day of the closing, Felton and Zaman executed
documents in two stages.2 First, at a Bordentown diner, they
signed the lease and a seller’s residency certification, which
were not notarized. After a brief dispute over the terms of the
lease and buy-back agreements, Felton and Zaman agreed that
Felton would pay Zaman $1,000 per month in rent. They also
agreed that Felton would have an option to repurchase her
property within three months for $237,000, which according to
Zaman, would have been extended to one year had Felton requested
an extension.
Later, at the local branch of a bank, Felton signed the
deed, an affidavit of title, and the buy-back agreement.3 Zaman
gave Felton a cashier’s check in the amount of $85,960, which
was calculated by subtracting from the $200,000 purchase price
the amount that Zaman needed to pay off the existing mortgage,
1
It is unclear whether the attorney contacted by Zaman spoke
with Felton before preparing the deed on her behalf.
2
The record contains no evidence that Zaman learned before
closing, or within a reasonable time thereafter, that the
property was uninhabitable.
3
There was conflicting testimony at trial about the execution of
the documents. Felton testified that she was shown only the
signature pages of the documents that she signed. However, the
attending notary testified that his practice is to verify that
each individual who signs a document in his presence understands
the terms of that document and has not been coerced into signing
the document.
7
satisfy outstanding property tax obligations, and pay other
expenses related to the sale. Zaman also paid Richardson
$5,000, which was characterized at trial as a finder’s fee. The
parties did not execute any mortgage documents.
At trial, Zaman maintained that he did not offer a mortgage
to Felton, and that he has never offered a mortgage to anyone.
Felton, in contrast, testified that she understood the parties’
transaction to be a mortgage. By Felton’s account, she thought
that Zaman was loaning her $200,000. She also construed the
$85,960 check issued to her to be the down payment on the loan,
and understood that she would satisfy the terms of the mortgage
loan if she paid Zaman $237,000 within three months of closing.
Felton admitted that she never inquired about the interest rate
applied to the purported mortgage, and that the parties never
discussed any such interest rate.
Neither party exercised the right to cancel the agreement
during the three-day attorney review period. However, one week
after closing, while he was visiting the bank that held the
existing construction loan, Zaman learned that Felton had told
the bank that her transaction with Zaman was a “fraudulent
deal,” and that she had urged the bank to reject any payment
made by Zaman. The mortgagee bank initially refused to suspend
foreclosure proceedings, but reversed its position after Zaman
filed suit to compel it to accept his payment and to cancel the
8
mortgage. Felton also attempted to rescind the sale agreement
by sending a check in the amount of $85,983.65 to Zaman, but
Zaman refused to cash the check. On July 19, 2007, Zaman
recorded the deed to the disputed property.
For the next seventeen months, Felton continued to occupy
the property. She did not pay rent in accordance with the lease
agreement, or exercise her contractual right to repurchase the
property.
II.
In December 2008, Zaman filed a complaint against Felton in
the Law Division. In the complaint, filed pursuant to N.J.S.A.
2A:35-1 to -2, Zaman sought possession of real property and
damages derived from Felton’s allegedly illegal use and
occupancy of the property.4 Felton filed a counterclaim,
asserting claims based on fraud, slander of title, violations of
the CFA, violations of the Fair Foreclosure Act (FFA), N.J.S.A.
2A:50-53 to -68, and violations of the federal Truth in Lending
Act (TILA), 15 U.S.C.A. §§ 1601 - 1667.
As requested by Felton, and by agreement of the parties,
the trial court elected to hold a bifurcated trial. It assigned
to the jury only the issue of fraud and reserved the remaining
issues for a subsequent bench trial. After five trial days, the
4
Felton’s husband, who died in 1991, was also named as a
defendant.
9
jury was charged to determine the following questions: whether
Zaman had proven by a preponderance of the evidence that Felton
knowingly agreed to sell the property to him, and if not,
whether Felton had proven by clear and convincing evidence that
Zaman obtained his deed to the property by “fraudulent actions.”
The trial court instructed the jury that if it answered the
first question in the affirmative, it should not reach the
second question, and that both questions called for “yes or no”
answers. By a vote of six to one, the jury concluded that Zaman
had proven by a preponderance of the evidence that Felton
knowingly agreed to sell her property to him, thus disposing of
the only issue presented in the first phase of the bifurcated
trial. Felton filed a motion for a new trial under Rule 4:49-1,
which the trial court denied.
The trial court then conducted the trial’s second phase, in
which the trial judge was the factfinder. After hearing
additional testimony during a single trial day, the trial court
dismissed all of Felton’s remaining claims. First, the trial
court rejected Felton’s contention that the parties’ agreement
was invalid because Zaman had failed to state in the contract
that he held a real estate license. Second, the trial court
rejected Felton’s argument premised upon In re Opinion No. 26.
The court concluded that the three-day attorney review period
10
and right of rescission had adequately protected Felton, who
chose not to retain counsel or rescind the contract.
Third, the trial court rejected Felton’s contention that
her contract with Zaman was an unconscionable product of
“grossly disproportionate bargaining power,” given Felton’s
experience with prior real estate transactions and her awareness
that the transaction to which she agreed constituted the sale of
her property. Finally, the trial court held that no equitable
mortgage was created by the parties’ agreements. In that
regard, the trial court cited the jury’s finding that Felton
intended to sell her property, as well as evidence that Felton
understood that a sale of her property was her only alternative
to foreclosure. The court held that the subsequent lease and
buy-back provisions were separate agreements that were intended
to protect the seller after closing and permit her to remain on
the property, and that those agreements were not components of
the original sale. The trial court characterized the case as an
example of “[s]eller’s remorse,” and ruled that despite Felton’s
equitable mortgage claim, the parties did not agree upon a loan
secured by a deed of title. In light of that finding, the trial
court did not reach Felton’s remaining arguments and dismissed
her counterclaims.
Felton appealed, and an Appellate Division panel affirmed.
The panel dismissed Felton’s argument that the trial court’s
11
jury instruction incorrectly framed the issue of whether there
was a knowing sale of the property. It rejected, on hearsay
grounds, Felton’s contention that she should have been permitted
to testify about a previous appraisal of her property. Citing
the jury’s determination that the property was knowingly sold,
the panel concluded that the trial court correctly declined to
find an equitable mortgage or a valid claim under the CFA.
Finally, the panel affirmed the trial court’s determination that
In re Opinion No. 26 does not govern this case.
We granted Felton’s petition for certification. 213 N.J.
537 (2013). We also granted the motions of Legal Services of
New Jersey (LSNJ) and New Jersey Association of Realtors (NJAR)
to appear as amici curiae.
III.
Felton contends that she entered into a transaction that
operated as an equitable mortgage and that she was the victim of
a fraudulent mortgage scheme. Felton challenges the jury
verdict that she knowingly entered into an agreement to sell her
property, and that Zaman did not commit a fraud. She contends
that the jury verdict does not preclude the court from
concluding that the parties’ agreements constituted a single
transaction that gave rise to an equitable mortgage. Felton
argues that the Appellate Division panel misapplied this Court’s
opinion in In re Opinion No. 26, and that the parties’
12
agreements should be held void because Zaman violated the
principles of that decision. Felton claims that the trial court
and Appellate Division improperly failed to enforce the CFA, the
FFA, the TILA, the Foreclosure Rescue Fraud Prevention Act
(FRFPA), N.J.S.A. 46:10B-53 to -68, N.J.S.A. 45:15-17(k) and
(q), which authorize the New Jersey Real Estate Commission to
sanction real estate brokers for certain acts in real estate
transactions, and N.J.S.A. 2C:21-19, New Jersey’s criminal usury
law.
Zaman characterizes the parties’ transactions as a
negotiated agreement for the sale of property with subsequent
agreements that did not create an equitable mortgage. In
support of that contention, Zaman cites the jury’s finding that
Felton intended to sell her land, Felton’s inability to make the
low monthly payments on her construction loan, the sequential
rather than simultaneous execution of the parties’ agreements,
Felton’s experience in real estate transactions, her failure to
object to any contract provisions, and the parties’ equivalent
bargaining power. Zaman contends that if the factors set forth
in O’Brien, supra, 423 B.R. at 491, apply, those factors weigh
against a finding of an equitable mortgage in this case. Zaman
argues that In re Opinion No. 26 does not govern the parties’
transaction because he acted as a private investor, not a real
estate broker, in the closing at issue, and that the contract
13
provided sufficient protection for both parties in its provision
authorizing a three-day period of attorney review. Zaman argues
that the CFA does not govern his conduct with respect to this
transaction because he was not a seller, but a consumer, because
he committed no unlawful practice within the meaning of N.J.S.A.
56:8-2, and because it was he, not Felton, who was defrauded in
this case when he was induced to purchase an uninhabitable
residence. He contends that the FRFPA does not apply because no
claim based upon this statute was made before the trial court,
that the FFA is irrelevant because no foreclosure proceedings
were instituted, that the TILA does not govern this case because
there was no mortgage and any TILA claims asserted are time-
barred, and that Felton’s remaining claims are meritless or
time-barred.
Amicus curiae LSNJ urges the Court to apply the factors of
O’Brien, supra, 423 B.R. at 491, and to rule that the parties’
transaction created an equitable mortgage that violated the CFA
and triggered an obligation on Zaman’s part to comply with the
FFA. LSNJ asserts that the trial court and Appellate Division
sanctioned contractual chicanery that undermines the CFA, the
equitable mortgage doctrine, and the FRFPA. LSNJ contends that
Zaman failed to meet the standards of his profession as a real
estate broker, in violation of In re Opinion No. 26, and that
this gave rise to a separate violation of the CFA.
14
Amicus curiae NJAR urges the Court not to expand the reach
of In re Opinion No. 26 to incorporate the transaction in
dispute. NJAR argues that Zaman’s real estate license was
tangential to his role in this case given that he extracted no
commission or fee and the real estate office with which he was
affiliated had no role in this dispute. NJAR contends that In
re Opinion No. 26 should not govern transactions merely where
one of the parties has a real estate license because in such a
setting, the individual with a real estate license is not
providing the other party with assistance that could be mistaken
for legal advice. NJAR further argues that the CFA should not
govern the parties’ agreements because Zaman acted as a private
individual, not as a seller to consumers or a commercial lender.
IV.
A.
We begin our review of this bifurcated case by considering
Felton’s challenge to the verdict rendered by the jury following
the first phase of the trial. At Felton’s request, the trial
court submitted only a limited issue to the jury: whether the
parties’ agreement constituted a fraudulent transfer.5 The jury
responded in the affirmative to a single question: whether
5
This limitation was sought by Felton’s attorney, who requested
prior to trial that the trial court “limit the request for a
jury trial to the issues raised by the Fourth Separate Defense
(Fraud) and the first count of the Counterclaim (Fraud).”
15
Zaman had proven by a preponderance of the evidence that Felton
knowingly agreed to sell the property to him.6 Felton contends
on appeal that the jury’s verdict was against the weight of the
evidence.
We review the jury’s determination in accordance with a
deferential standard. “A jury verdict is entitled to
considerable deference and ‘should not be overthrown except upon
the basis of a carefully reasoned and factually supported (and
articulated) determination, after canvassing the record and
weighing the evidence, that the continued viability of the
judgment would constitute a manifest denial of justice.’” Risko
v. Thompson Muller Auto. Grp., Inc., 206 N.J. 506, 521 (2011)
(quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 597-98
(1977)). A trial court should overturn a jury verdict and grant
a new trial “only where to do otherwise would result in a
miscarriage of justice shocking to the conscience of the court.”
Ibid. (internal quotation marks omitted). A reviewing court
will not reverse a trial court’s denial of a motion for a new
6
Although it appears that Felton preserved her right to
challenge the jury verdict on appeal, the record with respect to
her applications following the verdict is incomplete. The
Appellate Division opinion referred to a motion for a judgment
notwithstanding the verdict, filed by Felton pursuant to Rule
4:40-2, but no such motion appears in the record before this
Court. The record contains a notice of motion for a new trial
filed pursuant to Rule 4:49-1. Because of the deficiencies in
the record, it is unclear what arguments were made by Felton in
support of either motion.
16
trial “unless it clearly appears that there was a miscarriage of
justice under the law.” R. 2:10-1; accord Risko, supra, 206
N.J. at 522. An appellate court should not disturb the findings
of the jury merely because it would have found otherwise upon
review of the same evidence. Carrino v. Novotny, 78 N.J. 355,
360 (1979).
Applying that deferential standard, we reject Felton’s
challenge to the jury verdict. There was more than sufficient
evidence in the trial record to support the jury’s determination
that Zaman proved by a preponderance of the evidence that Felton
knowingly agreed to sell her property to him. On June 16, 2007,
Felton and Zaman executed a written land sale agreement,
entitled “Contract for Sale of a One-to-Four Family Residential
Property.” The agreement described the location of the property
and the negotiated sale price of $200,000. Moreover, the
property was encumbered with a construction mortgage on which
Felton owed approximately $105,000 to the mortgagee bank.
Felton was not able to pay the loan as it came due and was
facing foreclosure. She understood the sale of the property to
be her only means of evading foreclosure. At the June 23, 2007
closing, Zaman took possession of the deed to the property.
Zaman also provided Felton with a cashier’s check for $85,960,
representing the difference between the purchase price and the
amount needed to pay off the mortgage, back taxes, and other
17
expenses associated with the sale. In short, the jury heard
ample evidence that Felton was fully informed about the nature
of the agreements that she signed, and that she knowingly
executed an agreement to sell her property.
Accordingly, we affirm the Appellate Division panel’s
determination insofar as it affirmed the jury’s determination
that Zaman had proven by a preponderance of the evidence that
Felton knowingly conveyed her property to him.
B.
We next review the trial court’s factual findings in the
second phase of the bifurcated trial, in which the trial judge
acted as the factfinder on all issues other than the single
issue considered by the jury. Our inquiry on appeal is limited
to whether there is “substantial, credible evidence to support
the court’s findings.” In re Civil Commitment of J.M.B., 197
N.J. 563, 597, cert. denied, 558 U.S. 999, 130 S. Ct. 509, 175
L. Ed. 2d 361 (2009); see also State v. Johnson, 42 N.J. 146,
162 (1964) (“The aim of the review at the outset is . . . to
determine whether the findings made could reasonably have been
reached on sufficient credible evidence present in the
record.”). Accordingly, deference is given “to the trial
court’s factual findings . . . ‘when supported by adequate,
substantial and credible evidence.’” Toll Bros., Inc. v. Twp.
of W. Windsor, 173 N.J. 502, 549 (2002) (quoting Rova Farms
18
Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484
(1974)). This is especially the case when those findings “are
substantially influenced by [the judge’s] opportunity to hear
and see the witnesses and to have the ‘feel’ of the case, which
a reviewing court cannot enjoy.” Johnson, supra, 42 N.J. at
161.
In contrast, the trial court’s conclusions of law are
reviewed de novo. “A trial court’s interpretation of the law
and the legal consequences that flow from established facts are
not entitled to any special deference.” Manalapan Realty, L.P.
v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). “It is a
well-established principle of appellate review that a reviewing
court is neither bound by, nor required to defer to, the legal
conclusions of a trial or intermediate appellate court.” State
v. Gandhi, 201 N.J. 161, 176 (2010).
We first consider the trial court’s rejection of Felton’s
claim that the parties entered into an equitable mortgage.
Felton claims that although her initial agreement with Zaman was
structured as a sale, the parties’ agreements should be
construed as a single transaction, which was effectively a high
interest loan secured by the deed to her property.
The doctrine of equitable mortgages “is founded upon that
cardinal maxim in equity which regards as done that which has
been agreed to be, and ought to have been, done.” Rutherford
19
Nat’l Bank v. H.R. Bogle & Co., 114 N.J. Eq. 571, 573-74 (N.J.
Ch. 1933); see also Humble Oil & Ref. Co. v. Doerr, 123 N.J.
Super. 530, 551 (Ch. Div. 1973) (stating that in recognizing
equitable mortgage, “[i]t is clear that equity looks to
substance rather than to form, and that a guarantor or surety
who takes property or an interest therein as security for his
guaranty is a mortgagee thereof in equity”). As an Appellate
Division panel observed,
“[i]f a transaction resolves itself into a
security, whatever may be its form and
whatever name the parties may choose to give
it, it is, in equity, a mortgage. If a deed
or contract, lacking the characteristics of
a common law mortgage, is used for the
purpose of pledging real property, or some
interest therein, as security for a debt or
obligation, and with the intention that it
shall have effect as a mortgage, equity will
give effect to the intention of the parties.
Such is an equitable mortgage.”
[Welsh v. Griffith-Prideaux, Inc., 60 N.J.
Super. 199, 208 (App. Div. 1960) (quoting
J.W. Pierson Co. v. Freeman, 113 N.J. Eq.
268, 270-71 (E. & A. 1933)).]
Courts apply principles of equity to “look beyond the plain
terms” of an agreement between the parties, and thereby
determine whether the agreement is in effect a mortgage.
Johnson v. NovaStar Mortg., Inc., 698 F. Supp. 2d 463, 468
(D.N.J. 2010). In that inquiry, the court focuses on the
characteristics of the transaction at its inception:
20
The doctrine has been firmly established
from an early day that when the character of
a mortgage has attached at the commencement
of the transaction, so that the instrument,
whatever be its form, is regarded in equity
as a mortgage, that character of mortgage
must and will always continue. If the
instrument is in its essence a mortgage, the
parties cannot by any stipulations, however
express and positive, render it anything but
a mortgage, or deprive it of the essential
attributes belonging to a mortgage in
equity.
[Humble Oil, supra, 123 N.J. Super. at 544-
45.]
Ordinarily, the conveyance of a property accompanied or
followed by a leaseback transaction is precisely what it
purports to be: a sale in which the parties separately agree
that the seller will become the tenant, and the buyer will
become the landlord, in accordance with the terms of a lease.
However, “New Jersey courts have repeatedly found that sale-
leaseback arrangements made to avoid foreclosure are in fact
equitable mortgages.” Johnson, supra, 698 F. Supp. 2d at 469;
see also James Talcott, Inc. v. Roto Am. Corp., 123 N.J. Super.
183, 202 (Ch. Div. 1973) (noting that “[t]here are numerous
authorities for the proposition that an absolute conveyance
intended as security for an obligation will be treated as a
mortgage”). It is the trial court’s task to discern whether the
transaction has been labeled as a land sale in order to mask its
21
actual objective: a mortgage loan secured by a deed to the
property at issue.
In Johnson, supra, the United States District Court for the
District of New Jersey adopted a standard articulated by the
United States Bankruptcy Court for the District of New Jersey in
O’Brien, supra, 423 B.R. at 491. 698 F. Supp. 2d at 469-70. In
O’Brien, supra, the Bankruptcy Court scrutinized a residential
sale that was conducted under the threat of imminent
foreclosure, in which the parties agreed that the seller would
remain in his home and buy the home back from the buyer in a
series of payments over time. 423 B.R. at 483-86. It
identified eight factors to assist trial judges in determining
whether a given transaction gives rise to an equitable mortgage:
[(1)] Statements by the homeowner or
representations by the purchaser indicating
an intention that the homeowner continue
ownership; [(2)] A substantial disparity
between the value received by the homeowner
and the actual value of the property; [(3)]
Existence of an option to repurchase; [(4)]
The homeowner’s continued possession of the
property; [(5)] The homeowner’s continuing
duty to bear ownership responsibilities,
such as paying real estate taxes or
performing property maintenance; [(6)]
Disparity in bargaining power and
sophistication, including the homeowner’s
lack of representation by counsel; [(7)]
Evidence showing an irregular purchase
process, including the fact that the
property was not listed for sale or that the
parties did not conduct an appraisal or
investigate title; [(8)] Financial distress
of the homeowner, including the imminence of
22
foreclosure and prior unsuccessful attempts
to obtain loans.
[Id. at 491.]
Under the O’Brien framework, the court considers not only
the form of the transaction itself but circumstances that can
motivate a party to disguise a mortgage secured by a property as
a sale of land and indications that both parties intend the
seller to retain the land notwithstanding the purported sale.
We concur with the District Court that the eight factors set
forth in O’Brien are “useful and consistent with New Jersey
equitable mortgage jurisprudence.” Johnson, supra, 698 F. Supp.
2d at 470. We adopt the O’Brien factors as a comprehensive and
practical standard to guide trial courts as they determine
whether a particular transaction, or series of transactions,
gives rise to an equitable mortgage.
We remand the matter to permit the trial court to make
findings addressing each of the eight factors that comprise the
O’Brien test. Because the parties presented extensive evidence
at trial regarding Felton’s financial situation, the parties’
respective experiences with land sale transactions, their
negotiations, their statements about their intent to enter into
the transactions, the terms of each agreement, and the conduct
of each party following closing, the trial court’s findings on
23
remand may be based upon the existing record, without the need
for further testimony.
We note that in ruling that the parties’ transactions did
not give rise to an equitable mortgage, the trial court relied
in part on the jury’s determination that Felton intended to sell
her property, and the absence of any indication in the parties’
agreements that they contemplated a mortgage loan. Consistent
with the limitation of its inquiry to the issue of fraud, the
jury was not instructed on the question of whether the parties
intended to create an equitable mortgage. The jury’s
determination that Felton knowingly sold her property does not
itself resolve the question of whether the parties created an
equitable mortgage. Its finding that Zaman had proven by a
preponderance of the evidence that Felton knowingly entered into
a land sale may, however, be relevant to one or more of the
O’Brien factors in the trial court’s inquiry on remand. Other
considerations cited by the trial court, such as the imminent
foreclosure proceedings, Felton’s inability to obtain a new
mortgage or meet her obligations under her existing loan, and
Felton’s failure to exercise her right of repurchase, may also
be relevant to the trial court’s application of the O’Brien
factors on remand.
C.
24
Affirming the determination of the trial court, the
Appellate Division panel rejected Felton’s claim that Zaman
violated the rule set forth by this Court in In re Opinion No.
26, supra, 139 N.J. 323. We concur with the Appellate
Division’s analysis.
In In re Opinion No. 26, this Court considered whether real
estate brokers commit the unauthorized practice of law when they
conduct residential real estate transactions in which the
“sellers and buyers are . . . unrepresented by counsel.” Id. at
326. The Court analyzed the risks posed to an uncounseled
residential real estate buyer or seller when a real estate
broker, whose commission is contingent on the successful
completion of the transaction, conducts the closing. Id. at
334-35. The Court noted the potential conflict between the
interests of the broker, who may choose the attorney who drafts
the deed, and the interests of the seller, who may be under the
mistaken impression that he or she is receiving independent
legal advice from counsel selected by the broker. Id. at 336-
37. The Court noted that the buyer is similarly unprotected by
legal advice in an uncounseled closing. Id. at 337. It
observed that “[t]he buyer may not know if the description of
the property is precisely that assumed to be the subject of the
purchase,” may be unaware of whether “the title described in the
contract is that with which he would be satisfied,” may
25
misunderstand the seller’s obligations and may lack “fair
comprehension of whether all of the possible and practical
concerns of [the] buyer have been addressed by the contract.”
Id. at 335.
The Court held that although it has the authority to
prohibit residential real estate closings conducted without the
assistance of counsel, “the public interest does not require
such a prohibition.” Id. at 326. Instead, it determined that
if residential buyers and sellers “are informed of the true
interests of the broker and title officer, sometimes in conflict
with their own interests, and of the risks of not having their
own attorney, [they] should be allowed to proceed without
counsel.” Ibid.
To that end, the Court prescribed conditions under which
“those participating in such transactions shall not be deemed
guilty of the unauthorized practice of law.” Ibid. It required
that both sellers and buyers be informed in writing by the real
estate broker about the benefits of seeking the advice of
counsel, the risks associated with proceeding unrepresented, and
the “conflicting interests of brokers and title companies in
these matters.” Id. at 357-59, 362-63. Pending recommendations
from the Civil Practice Committee on “practical methods for
achieving those aims,” the Court mandated a written notice
“attached to the proposed contract of sale as its cover page,”
26
supplemental to the notice required to appear on the first page
of the contract, advising the parties that the contract will be
binding within three business days, that an attorney for either
party may review its terms, and that the agreement may be
cancelled within the attorney review period. Id. at 357-58,
362-63. As drafted on an interim basis by the Court, that
notice provided that the real estate broker represented the
seller and not the buyer, that the title company represented
neither party, that it is in the broker’s financial interest
that the house be sold and the closing completed, that the
broker is neither permitted nor qualified to provide legal
advice, and that there are significant risks to foregoing the
assistance of counsel. Id. at 362-63.
The risk that the Court addressed in In re Opinion No. 26 -
- that a real estate broker acting in his or her own interest
will promote the completion of a real estate transaction to the
detriment of the seller, the buyer, or both –- is not raised in
the circumstances of this case. The Court’s concern in In re
Opinion No. 26 was “unlearned and unskilled” legal advice. Id.
at 341 (internal quotation marks omitted). Its remedy was
premised on a real estate broker’s authority to “guide, control
and handle” a transaction involving unrepresented parties, who
may erroneously believe that they are being advised by counsel.
Id. at 326.
27
Here, in contrast to the setting addressed by the Court in
In re Opinion No. 26, Zaman acted not in his professional
capacity as a broker seeking to promote a successful closing but
on his own behalf as the property’s buyer. Nothing in the trial
record suggests that Zaman purported to provide legal advice to
Felton, or that Felton was somehow led to believe that Zaman was
her advocate. Given the parties’ relationship and Felton’s
experience in real estate transactions, the record reveals no
cause for concern that Zaman’s statements to Felton could have
been misconstrued as the advice of her lawyer. The fact that
Zaman holds a real estate license does not deprive him of the
right to participate in a transaction on his own behalf, or
convert his activities in that regard to the unauthorized
practice of law. See In re Baker, 8 N.J. 321, 346 (1951) (Case,
J., dissenting).
Accordingly, we concur with the trial court and the
Appellate Division that In re Opinion No. 26 is irrelevant to
this case, that Zaman did not violate the principles of that
decision, and that the trial court properly declined to void the
parties’ transactions on that ground.
D.
Finally, we review the trial court’s dismissal of Felton’s
remaining statutory claims.
28
In her counterclaim, Felton asserted a CFA claim premised
upon Zaman’s alleged fraud in connection with the sale or
advertisement of real estate, in violation of N.J.S.A. 56:8-2.
To prevail on a CFA claim, a plaintiff must establish three
elements: “1) unlawful conduct by defendant; 2) an
ascertainable loss by plaintiff; and 3) a causal relationship
between the unlawful conduct and the ascertainable loss.”
Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009); see
also Int’l Union of Operating Eng’rs Local No. 68 Welfare Fund
v. Merck & Co., 192 N.J. 372, 389 (2007). N.J.S.A. 56:8-2
defines an “unlawful practice” to include
any unconscionable commercial practice,
deception, fraud, false pretense, false
promise, misrepresentation, or the knowing,
concealment, suppression, or omission of any
material fact with intent that others rely
upon such concealment, suppression or
omission, in connection with the sale or
advertisement of any merchandise or real
estate, or with the subsequent performance
of such person as aforesaid, whether or not
any person has in fact been misled, deceived
or damaged thereby.
For purposes of determining whether the first element -–
the existence of an unlawful practice -– is established, the CFA
“defines ‘sale’ to include ‘any sale, rental or distribution,
offer for sale, rental or distribution or attempt directly or
indirectly to sell, rent or distribute.’” D’Agostino v.
Maldonado, 216 N.J. 168, 186 (2013) (quoting N.J.S.A. 56:8-
29
1(e)). “Advertisement” is defined to denote “the attempt . . .
to induce directly or indirectly any person to enter or not
enter into any obligation to acquire any title or interest in
any merchandise or to increase the consumption thereof or to
make any loan.” N.J.S.A. 56:8-1(a). As a component of the
definition of “merchandise” in N.J.S.A. 56:8-1(c), “services”
offered to the public may involve an unlawful practice for
purposes of the CFA. See Lemelledo v. Beneficial Mgmt. Corp. of
Am., 150 N.J. 255, 265 (1997) (holding that sale and provision
of consumer credit constitutes “merchandise” under N.J.S.A.
56:8-1(c)); Quigley v. Esquire Deposition Serv., LLC, 400 N.J.
Super. 494, 505-06 (App. Div. 2008) (recognizing shorthand
reporting services and sale of deposition transcripts as
“merchandise” under CFA).
Notwithstanding these broad definitions, New Jersey
appellate courts have adopted “a limited construction of the
[CFA]’s applicability to real estate transactions.” 539 Absecon
Blvd., L.L.C. v. Shan Enters. Ltd., 406 N.J. Super. 242, 274
(App. Div. 2009). Consistent with the CFA’s limitation to
“fraudulent, deceptive or other similar kind of selling or
advertising practices,” Daaleman v. Elizabethtown Gas Co., 77
N.J. 267, 271 (1978), our courts have declined to impose the CFA
remedies upon the non-professional, casual seller of real
estate, see Strawn v. Canuso, 140 N.J. 43, 59 (1995) (limiting
30
“holding to professional sellers of residential housing (persons
engaged in the business of building or developing residential
housing) and the brokers representing them”); Byrne v. Weichert
Realtors, 290 N.J. Super. 126, 134 (App. Div.) (“The provision
does not apply, however, to non-professional sellers of real
estate, i.e. to the homeowner who sells a house in the normal
course of events.”), certif. denied, 147 N.J. 259 (1996).
Indeed, this Court has never applied the CFA against a non-
professional, who does not advertise real estate services to the
public, based upon his or her purchase of residential real
estate for personal use or as an investment.
In D’Agostino, supra, the Court held that a foreclosure
rescue scheme that was advertised to the public and involved the
payment of a fee gave rise to a cognizable claim under the CFA.
216 N.J. at 186-88. The circumstances of this case differ
significantly from those of D’Agostino. There, the plaintiffs
were prompted to contact the defendant about a foreclosure
rescue after seeing an advertisement of the defendant’s real
estate services on his vehicle. Id. at 176, 187. Moreover, the
defendant in D’Agostino demanded and collected a fee for his
real estate services. Id. at 187-88. By virtue of the five
separate agreements that the defendant prepared for the
plaintiff’s signature, the defendant obtained the plaintiff’s
31
property, valued at $480,000, for $10 -– a result never
contemplated by the plaintiff. Id. at 177, 190.
In contrast, Zaman did not advertise real estate services
to the public, initiate contact with Felton, or demand a fee for
real estate services. There is no evidence that Zaman
represented himself to the public as a source of mortgage loans,
or that Felton was deceived with respect to the terms or
consequences of the parties’ agreements. The considerations
that prompted this Court to recognize a CFA claim in D’Agostino
are not presented by this case.
Accordingly, regardless of whether the trial court
determines on remand that the parties’ transactions created an
equitable mortgage, we hold that the record does not support a
finding that Zaman committed an “unconscionable commercial
practice” within the meaning of N.J.S.A. 56:8-2. Accordingly,
the trial court properly dismissed Felton’s CFA claim.
Felton’s FFA claim, premised upon a contention that Zaman’s
action for possession of the property was not accompanied by the
“notice of intention to take action” mandated by N.J.S.A. 2A:50-
56, is contingent upon a finding that the parties’ transactions
gave rise to an equitable mortgage. N.J.S.A. 2A:50-56 mandates
that, prior to taking any “legal action to take possession of
[a] residential property which is the subject of [a] mortgage,
[a] residential mortgage lender [must] give the residential
32
mortgage debtor notice of such intention at least 30 days in
advance of such action.” Accordingly, if the trial court
determines on remand that there was no equitable mortgage in
this case, it need not further consider Felton’s FFA claim. If
it determines that the parties’ agreements gave rise to an
equitable mortgage, the trial court should consider the merits
of Felton’s FFA claim.
With the exception of one claim, we agree with the trial
court and Appellate Division that Felton’s TILA claims were
properly dismissed as time-barred. Pursuant to 15 U.S.C.A. §
1640, a TILA action
may be brought in any United States district
court, or in any other court of competent
jurisdiction, within one year from the date
of the occurrence of the violation . . . .
Any action under this section with respect
to any violation of [15 U.S.C.A. § 1639,
1639b, or 1639c] may be brought in any
United States district court, or in any
other court of competent jurisdiction,
before the end of the 3-year period
beginning on the date of the occurrence of
the violation.
[15 U.S.C.A. § 1640(e) (emphasis added).]
“The violation ‘occurs’ when the transaction is
consummated. Nondisclosure is not a continuing violation for
purposes of the statute of limitations.” In re Smith, 737 F.2d
1549, 1552 (11th Cir. 1984) (internal citation omitted). “The
credit transaction is consummated when ‘a contractual
33
relationship is created between [a creditor and consumer].’”
Williams v. Countrywide Home Loans, Inc., 504 F. Supp. 2d 176,
186 (S.D. Tex. 2007) (alteration in original) (quoting Bourgeois
v. Haynes Constr. Co., 728 F.2d 719, 720 (5th Cir. 1984)),
aff’d, 269 F. App’x 523 (5th Cir. 2008).
Here, the last of the transactions giving rise to Felton’s
TILA allegation occurred on June 23, 2007. Even if the claims
set forth in Felton’s amended counterclaim relate back to prior
pleadings in accordance with Rule 4:7-1, most of her TILA claims
are barred by the one-year statute of limitations prescribed by
15 U.S.C.A. § 1640(e).
One of Felton’s TILA allegations, her claim that Zaman
engaged “in a pattern and practice of extending credit to
consumers under mortgages . . . based on the consumers’
collateral without regard to the consumers’ repayment ability”
in violation of 15 U.S.C.A. § 1639(h), is not governed by the
one-year statute of limitations, but by a three-year statute of
limitations. 15 U.S.C.A. § 1640(e). Accordingly, Felton’s
claim based on that provision was timely filed. If the trial
court determines on remand that no equitable mortgage was
created in this case, Felton’s claim under 15 U.S.C.A. §
1639(h), predicated on an alleged extension of credit in
connection with a mortgage, fails as a matter of law. If,
however, the trial court finds on remand that the parties
34
created an equitable mortgage, it should determine the merits of
Felton’s claim under 15 U.S.C.A. § 1639(h).
We briefly address Felton’s remaining claims. On appeal,
Felton asserts four claims that were not pled in her original or
amended counterclaim: first, that Zaman violated New Jersey’s
criminal usury statute, N.J.S.A. 2C:21-19(a); second, that he
violated N.J.S.A. 45:15-17(k), for paying compensation or
commission to a person who does not possess a real estate
license; third, that he violated N.J.S.A. 45:15-17(q), for
failing to disclose his status as a real estate agent, and
fourth, that the terms of the parties’ agreement were
unconscionable pursuant to the Appellate Division’s holding in
Howard v. Diolosa, 241 N.J. Super. 222 (App. Div.), certif.
denied, 122 N.J. 414 (1990). The record does not indicate
whether Felton properly raised these claims before the trial
court. Neither the trial court nor the Appellate Division
addressed the merits of those claims. Accordingly, on remand,
the trial court should ascertain whether any of those four
claims were raised before it, and if so, whether such a claim
gives rise to a cognizable cause of action in the circumstances
of this case.7
7
If the trial court determines that there was no equitable
mortgage, Felton’s claim under N.J.S.A. 2C:21-19(a) should be
dismissed, even if it was properly raised below.
35
Felton’s claim under the FRFPA was not raised before the
trial court and, accordingly, was properly dismissed by the
Appellate Division. See State v. Robinson, 200 N.J. 1, 20
(2009) (“‘[I]t is a well-settled principle that our appellate
courts will decline to consider questions or issues not properly
presented to the trial court when an opportunity for such a
presentation is available unless the questions so raised on
appeal go to the jurisdiction of the trial court or concern
matters of great public interest.’” (quoting Nieder v. Royal
Indem. Ins. Co., 62 N.J. 229, 234 (1973))).
V.
The judgment of the Appellate Division is affirmed in part
and reversed in part, and the matter is remanded to the trial
court for proceedings consistent with this opinion. We do not
retain jurisdiction.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, and
FERNANDEZ-VINA; and JUDGES RODRÍGUEZ and CUFF (both temporarily
assigned) join in JUSTICE PATTERSON’s opinion.
36
SUPREME COURT OF NEW JERSEY
NO. A-60 SEPTEMBER TERM 2012
ON CERTIFICATION TO Appellate Division, Superior Court
TAHIR ZAMAN,
Plaintiff-Respondent,
v.
BARBARA FELTON and MR.
FELTON, her husband,
Defendants-Appellants.
DECIDED September 9, 2014
Chief Justice Rabner PRESIDING
OPINION BY Justice Patterson
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
AFFIRM IN PART/
REVERSE IN
CHECKLIST
PART/
REMAND
CHIEF JUSTICE RABNER X
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUSTICE FERNANDEZ-VINA X
JUDGE RODRÍGUEZ (t/a) X
JUDGE CUFF (t/a) X
TOTALS 7
1