BCB COMMUNITY BANK VS. NICHOLAS CALANDRILLO (L-0151-18, SUSSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-3753-19
BCB COMMUNITY BANK,
Plaintiff-Respondent,
v.
NICHOLAS CALANDRILLO
and PATRICIA M.
CALANDRILLO,
Defendants-Appellants.
_________________________
Submitted April 27, 2021 – Decided June 2, 2021
Before Judges Mawla and Natali.
On appeal from the Superior Court of New Jersey, Law
Division, Sussex County, Docket No. L-0151-18.
James Mahon, attorney for appellants.
Braverman and Lester, attorneys for respondent
(Jeffrey A. Lester and Bert Binder, on the brief).
PER CURIAM
This deficiency action relates to mortgaged property previously owned by
defendants Nicholas and Patricia M. Calandrillo 1 in Andover. Defendants
appeal a May 15, 2019 Law Division order that granted plaintiff BCB
Community Bank partial summary judgment and dismissed defendants'
counterclaims sounding in violations of the Dodd Frank Act (DFA), Truth in
Lending Act (TILA), the New Jersey Home Ownership Security Act of 2002
(HOSA), and Regulation Z, 12 C.F.R. § 226.34(a)(4), 12 C.F.R. § 226.35(a),
(b), and an April 13, 2020 amended order of final judgment awarding plaintiff
$186,438.02. On appeal, defendants argue that the trial court erred by: 1)
dismissing their counterclaims; and 2) failing to conduct a fair market value
hearing with respect to the Andover property. We disagree with all of
defendants' arguments and affirm.
I.
In order to place defendants' appellate arguments, and particularly their
lender liability-based counterclaims in proper context, we discuss at some length
the procedural history and motion record before the court. In 2003, defendants
spoke with their longtime accountant Mark Hogan regarding the purchase of a
1
We utilize the defendants' first names in order to differentiate them because
they share a common surname, intending no disrespect.
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house in Sparta (Sparta property). At that time, Hogan was a member of
plaintiff's board of directors. Plaintiff issued a commitment letter for a mortgage
in the amount of $1,370,000, conditioned on an appraisal valuing the property
for at least $1,712,500.
Jordan Real Estate Group (JRE) appraised the property at approximately
$2,000,000, and plaintiff approved defendants' loan application. On July 16,
2003, defendants closed on the Sparta property for a final purchase price of
$2,100,000. Nicholas testified at deposition that throughout their period of
ownership, defendants made approximately $500,000 worth of improvements to
the property.
In 2011, defendants decided to downsize and discussed applying for a
second loan with plaintiff for the purchase of a residence in Andover. Prior to
submitting a mortgage application, however, defendants entered a contract to
purchase the Andover property for $1,100,000. At the time defendants executed
the contract, approximately $1,209,870 remained on the Sparta mortgage.
Defendants ultimately applied for a mortgage from plaintiff for the
Andover property. At the time of the application, defendants indicated that they
intended to sell the Sparta property and listed the home for a price that would
satisfy the outstanding mortgage balance. As part of the mortgage application
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process, JRE completed an appraisal, and valued the Andover property at
$1,175,000.
On May 20, 2011, Nicholas emailed Hogan and stated "[w]e need a letter
that states that [plaintiff] has preapproved Nicholas and Patricia . . . for a
mortgage of $850,000 for the purchase of the [Andover property]." On June 22,
2011, Gerardo Nestico, an Assistant Vice President for plaintiff, responded to
Hogan:
I just submitted the application . . . . The loan is not
sellable on the secondary market due to [Nicholas']
credit, . . . and that the loan is considered a jumbo. I
will be presenting this loan along with several others at
the next loan committee meeting next week.
I am requesting a rate of 5.75% over . . . [thirty] years.
In addition, [Nicholas] has several large credit cards
that effect his debt to [income] ratio that I will
ask/require to pay at closing. According to his credit,
he pays [approximately] [$]20,000 per month in debt.
I am working on it today, but wanted to keep you in the
loop. [Nicholas] and I have been in touch daily, so I
[am] working on his documents.
That same day, Hogan replied:
I believe the credit cards are all paid by his
business . . . . Also, he will be selling his primary
house in Sparta and obviously will satisfy his current
mortgage with [plaintiff]. This purchase is part of his
downsizing as his kids are grown and he is gearing up
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for retirement. Considering the credit it may be easier
to sell the committee on a rate of [six] percent.
Nestico then emailed a colleague requesting that they "get proof on what credit
cards are paid through [Nicholas'] business" and noted that "the rate will be
5.875% not 5.75%."
Defendants' loan application for the Andover property listed their joint
monthly income at $38,833.33 and valued the Sparta residence at $2,000,000.
Defendants signed the application on June 27, 2011 and initialed each page.
Defendants include in their appendix an additional unsigned and undated loan
application, which they allege was prepared by Hogan, for the Andover
property. This unsigned application lists the value of the Sparta residence at
$3,200,000 and includes a monthly bonus of $16,000, in addition to the
defendants' joint monthly income. As we discuss infra, at pp. 12-13, this
application was not introduced during the summary judgment proceedings, nor
did defendants seek to supplement the appellate record to include this unsigned
application.
On September 16, 2011, defendants executed an $880,000 promissory
note issued by plaintiff and secured by a mortgage on the Andover property.
The note included a 5.875% interest rate and monthly payments of $5,205.53.
In February 2012, defendants sold the Sparta property for approximately
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$2,200,000 and satisfied the outstanding mortgage. From November 11, 2011
through February 2012, defendants made monthly payments on both mortgages.
Defendants continued to make the monthly mortgage payments on the
Andover property until they defaulted in August 2014. Defendants subsequently
requested a loan modification claiming Nicholas' company's largest client filed
for bankruptcy in 2011. In addition, Nicholas informed plaintiff that another
company client, which had been the source of significant income, had been sold
and the successor company no longer required his services.
Nicholas stated that due to the loss of business income, he was forced to
close his company in 2013, had personally been without income for ten months,
and had depleted his savings. Despite these financial setbacks, defendants stated
they were assisting their son in the formation of his own company and that
Patricia had received a teaching position. Nicholas also claimed that he had
listed the Andover residence for sale.
Based on this information, plaintiff granted defendants an eight-month
period of forbearance on their Andover mortgage obligation from August 2014
through March 2015. During this period, defendants were not required to make
principal or interest payments but remained obligated to make escrow payments,
including insurance and tax payments. The terms of the forbearance agreement
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were included in a December 4, 2014 workout agreement, where plaintiff agreed
to reduce the monthly payment of the Andover property mortgage. Part of that
agreement included a provision that defendants agreed to waive "any claims of
bad faith, fraud, duress, lender liability or excess of control" against plaintiff.
In March 2015, Nicholas requested plaintiff forbear on enforcing its rights
under the note and mortgage for an additional six months. He notified plaintiff
that the Andover property had not sold and was still listed for sale. He also
stated that his wife was earning $60,000 a year from her teaching position, "his
son's business had not yet taken off," and he was not receiving any paychecks
from his son for work he performed. Plaintiff granted the forbearance request
consistent with the terms and conditions of the first forbearance, but also
included a balloon payment on the loan's original maturity date for all missed
payments during the forbearance period. 2 On August 30, 2016, defendants
purchased a house in Newton.
Defendants resumed payments on the note after the expiration of the
second forbearance period. Defendants did not sell their Andover residence and
2
The second forbearance agreement is not included in the record. In Judge
David J. Weaver's May 15, 2019 written statement of reasons, however, he noted
that the second forbearance agreement included the same waiver language as
contained in the first agreement.
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continued to make payments on the note until they defaulted again in April 2017.
After defendants failed to make their May 2017 payment, plaintiff sent a notice
of intent to foreclose and commenced foreclosure proceedings on July 25, 2017.
Defendants never answered the foreclosure complaint, nor did they assert any
cross-claim against plaintiff sounding in lender liability or otherwise, and a
default judgment was entered in plaintiff's favor.
On August 21, 2017, Nicholas informed plaintiff that he had found a
purchaser for the Andover residence and requested a pay-off statement. He
further noted that he could no longer make insurance payments for the property
and, consequently, plaintiff was forced to obtain the necessary coverage. In
September 2017, he told plaintiff that he had a contract in place to sell the
Andover residence for $890,000 and sought approval for a short sale. Plaintiff
requested a copy of the contract and forwarded a Housing and Urban
Development form confirming that the sale proceeds would go to plaintiff to
satisfy the existing mortgage.
On November 6, 2017, Nicholas notified plaintiff that the sale fell through
because the home required significant repairs. Thereafter, on November 28,
2017, a judgment of foreclosure was entered in favor of plaintiff for
$895,253.83. A writ of execution was issued, served on defendants, and a notice
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of sale was published. In December 2017, however, despite the final judgment
of foreclosure, plaintiff agreed to a short sale of the property on the following
conditions:
(i) [Plaintiff] be paid $802,000 from the sale proceeds
and that the [defendants] would execute a note for an
additional $34,320.64 to be secured by a first mortgage
on [the Newton property] which mortgage was to [be]
amortized over a term of ten years with interest at [four
percent] annum; [(ii)] Defendants . . . submit current
financials in order to determine their ability to pay and
also provide a current statement from Homebridge
Financial indicating the status of the existing loan;
[(iii)] [plaintiff] . . . waive[s] existing late fees of
$1821.60[.]
After the second sale fell through, on February 26, 2018, the property was
sold at a duly noticed sheriff's sale. Prior to the sale, plaintiff conducted an
appraisal that valued the Andover property at $735,000, which was subsequently
credited to defendants. Plaintiff, as the only bidder, received a sheriff's deed to
the Andover property for $100. The report of sale for the property indicated a
deficiency of $926,338.03, which included the $895,253.83 foreclosure
judgment, $17,241.37 in contract interest, $8,450 in taxed cost, and $572.72 in
sheriff's fees, minus the $100 sale price.
Plaintiff subsequently listed the Andover property, at the recommendation
of its broker, for $825,000. After negotiations with a potential buyer, plaintiff
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agreed to sell the property "as is" for $700,000. On March 28, 2018, plaintiff
filed a deficiency action against defendants for $191,338.03. Defendants filed
an answer and subsequently filed a second amended answer with counterclaims
and a third-party complaint against JRE. Defendants claimed that plaintiff
improperly appraised both the Sparta and Andover properties and violated state
and federal laws when it granted them the loans for those properties.
On February 19, 2019, plaintiff made an offer of judgment to defendants
pursuant to Rule 4:58-1, in the amount of $120,000. After defendants failed to
respond, plaintiff filed a motion for partial summary judgment to dismiss
defendants' counterclaims. After considering the parties' submissions and oral
arguments, Judge Weaver issued an order and written statement of reasons on
May 15, 2019, that granted plaintiff's application and dismissed defendants'
counterclaims with prejudice. 3
Judge Weaver rejected defendants' claim that the plaintiff had violated the
DFA and TILA and noted that defendants' arguments were based on alleged
violations of Regulation Z, and particularly 12 C.F.R. § 226.34(a)(4) and 12
3
Defendants' merits brief does not challenge the court's dismissal of their
HOSA claim. We accordingly do not address the dismissal of this claim, and
deem any challenge waived. Jefferson Loan Co. v. Session, 397 N.J. Super. 520,
525 n.4 (App. Div. 2008); Zavodnick v. Leven, 340 N.J. Super. 94, 103 (App.
Div. 2001).
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C.F.R. § 226.35(a) and (b). Specifically, defendants maintained that plaintiff
violated these federal regulations by granting "a loan that imposed a debt to
income . . . ratio [(DTI)] exceeding [forty-three] percent" and by "failing to
adequately consider [their] ability to repay the [Andover] loan." Plaintiff,
however, asserted that the regulations did not apply to the Sparta or Andover
loans because "they were not enacted until after the loans were issued."
Judge Weaver found that Regulation Z did not apply to the 2003 Sparta
loan because the regulation did not become effective until October 1, 2009. The
judge also determined that Regulation Z's DTI requirement did not apply to the
Andover loan because the rule was not amended to prohibit a DTI exceeding
forty-three percent until 2013. Judge Weaver further concluded that defendants
failed to provide any supporting evidence to establish that plaintiff violated
Regulation Z by failing to adequately consider their ability to repay the Andover
loan.
The judge found unpersuasive defendants' assertion that Nestico testified
regarding his concerns of defendants' bad credit and debt and that they "were
overridden by [Hogan's] representations that [Nicholas'] business . . . paid for
all of [defendants] personal credit cards," because "neither party entered
Nestico's deposition testimony into the record." Nonetheless, Judge Weaver
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found that the email communication between Hogan and Nestico contradicted
defendants' claim in any event. Specifically, the judge found that the email
correspondence indicated that Nestico "did not put his blind faith in Hogan's
statement, but rather sought confirmation on which credit cards were paid for
by [Nicholas'] business."
Judge Weaver also rejected defendants' argument that Hogan "prepared an
unsigned loan application on [d]efendants' behalf that falsely reported that
[Nicholas] received a $16,000 monthly bonus." The judge found that the copy
of the loan submitted by defendants did not report this bonus. In addition, Judge
Weaver noted that "[d]efendants have not submitted a copy of the mortgage
application that was allegedly forged by Hogan, nor have they provided a
transcript of Nestico's deposition testimony that allegedly 'identified' the
application."
Plaintiff also argued that defendants "waived any claims they may have
had" based on the waiver language contained in the two forbearance agreements.
Judge Weaver rejected defendants' contention that enforcement of the waiver
provisions was barred under Gonzalez v. Wilshire Credit Corporation, 207 N.J.
557 (2011). The judge concluded that defendants had "not alleged, much less
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supported, any facts that suggest that the negotiation or execution of the
forbearance agreements [were] in any way unjust."
On October 7, 2019, the parties agreed to a settlement agreement
regarding the deficiency action. At a hearing to discuss the parties' agreement,
Nicholas testified that he understood the settlement, agreed to all of its terms,
and that he was not entering the agreement under duress. In addition, Nicholas
acknowledged that by entering the settlement agreement, he gave "up the right
to have a hearing on fair market value."
On October 21, 2019, Judge Weaver entered an order memorializing the
settlement. The pertinent terms of the settlement included: 1) a reduction in the
$926,438.02 deficiency 4 by the amount of the February 14, 2018 fair market
value of the Andover property; 2) an independent court appointed appraiser
would determine the February 14, 2018 fair market value of the property; and
3) the appraiser would "endeavor to do an on-site inspection of the premises and
toward that, [p]laintiff and its counsel shall cooperate in attempting to arrange
the same."
4
The report of sale listed the deficiency at $926,338.03. Defendants, however,
do not dispute the amount in the settlement agreement.
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On January 3, 2020, the court appointed appraiser issued a report valuing
the Andover property at $740,000. The appraiser noted, however, that he was
unable to gain permission from the current owners to inspect the property despite
efforts made by plaintiff's counsel. Consequently, the appraiser relied upon
"various documents including previous appraisals, photo surveys, and listing
information" to determine the property's fair market value.
On April 13, 2020, Judge Weaver entered an amended order for entry of
final judgment granting plaintiff a deficiency judgment of $186,438.02 , plus
costs of $250. In addition, the judge awarded plaintiff counsel fees in the
amount of $23,607.50. This appeal followed.
II.
Defendants argue in their first point that Judge Weaver erred in granting
plaintiff partial summary judgment and dismissing their counterclaims as there
were genuine issues of material fact warranting a trial. As best we can discern,
defendants assert there were disputed factual issues as to whether plaintiff
falsified information in defendants' mortgage application for the Andover
property. On this point, defendants rely again on the unsigned loan application,
Nestico's deposition testimony, email correspondence between Nestico and
Hogan, and minutes from plaintiff's loan committee meeting as evidence that
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plaintiff misrepresented their income, the value of the Sparta residence, and their
household DTI ratio.
Defendants also argue that Judge Weaver failed to consider plaintiff's
purported violations of federal law and regulations. Defendants appear to
reassert their claim that plaintiff failed to consider defendants' ability to repay
the Andover loan. We find that these arguments are without sufficient merit to
warrant extended discussion in a written opinion, Rule 2:11-3(e)(1)(E) and
affirm substantially for the reasons detailed in Judge Weaver's comprehensive
written statement of reasons. We provide the following comments to amplify
our decision.
We review "an order granting summary judgment in accordance with the
same standard as the motion judge." N.J. Transit Corp. v. Certain Underwriters
at Lloyd's London, 461 N.J. Super. 440, 452 (App. Div. 2019) (quoting Bhagat
v. Bhagat, 217 N.J. 22, 38 (2014)). Rule 4:46-2(c) provides that summary
judgment shall be granted "if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact challenged and that the
moving party is entitled to a judgment or order as a matter of law." Where there
is no issue of material fact and only a question of law remains, we give "no
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special deference to the legal determinations of the trial court." Newton Med.
Ctr. v. D.B., 452 N.J. Super. 615, 620 (App. Div. 2018) (citing Manalapan
Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
Based upon our de novo review of the competent and submitted materials
in the motion record, we likewise conclude, as Judge Weaver found, the motion
record failed to raise a genuine issue of material fact as to any of defendants'
counterclaims. We note, as did Judge Weaver, that defendants failed to submit
the unsigned loan application or Nestico's complete deposition testimony into
the record at the time the summary judgment motion was decided. We note that
defendants, without seeking to supplement the record, see Rule 2:5-5, included
Nestico's deposition testimony in the record on appeal.
Although we do not ordinarily consider evidence that was not part of the
record in the trial court, Liberty Surplus Ins. v. Nowell Amoroso, P.A., 189 N.J.
436, 452 (2007) (citing R. 2:5-4), for the sake of completeness, we find that
Nestico's deposition fails to provide any support that plaintiff falsified
information in defendants' mortgage application. Indeed, when questioned
about the unsigned mortgage application, Nestico merely identified the
information contained in the document. Critically, Nestico did not provide any
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testimony as to who completed the application or whether plaintiff relied on the
document in granting defendants' loan.
In addition, we concur with Judge Weaver that defendants failed to present
evidence which raised "a triable issue of material fact," regarding plaintiff's
violation of federal law, and accordingly, it was entitled to summary judgment
precluding defendants from asserting violations of DFA, TILA, or Regulation
Z. In this regard, defendants have failed to provide any binding or persuasive
authority to support their claim that Judge Weaver erroneously concluded that
plaintiff was not prohibited from issuing a loan with a DTI ratio above forty -
three percent until 2013.
Further, Judge Weaver appropriately determined defendants' claim that
plaintiff failed to consider their ability to repay the Andover loan was
contradicted by Nestico's email indicating he sought confirmation on Nicholas's
ability to pay his credit card debt. The judge also correctly concluded that
defendants failed to provide any support suggesting that the two forbearance
agreements which expressly stated that defendants waived "any claims of bad
faith, fraud, duress, lender liability or excess control against the [l]ender based
upon any events that occurred prior to the execution of this [a]greement ," were
in any way improper in their formation or otherwise unjust.
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Finally, we note that plaintiff also claims that defendants' counterclaims
are barred by the entire controversy doctrine, see Dimitrakopoulos v. Borrus,
Goldin, Foley, Vignuolo, Hyman and Stahl, P.C., 237 N.J. 91, 98 (2019), as they
failed to raise those claims in the underlying foreclosure proceeding. Because
we have concluded that Judge Weaver properly dismissed the counterclaims for
the reasons detailed in his May 15, 2019 opinion, and for those discussed supra,
we do not address this alternative argument.
III.
In their second point, defendants' assert that Judge Weaver erred by not
allowing a hearing to determine the fair market value of the Andover property
and for not requiring an in-home inspection of the property. We disagree.
"A settlement agreement between parties to a lawsuit is a contract." Nolan
v. Lee Ho, 120 N.J. 465, 472 (1990). The construction and interpretation of a
settlement agreement is a matter of law and is subject to de novo review on
appeal. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div.
2009); see also Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 115 (2014)
("When a trial court's decision turns on its construction of a contract, appellate
review of that determination is de novo."). We "give 'no special deference to
the trial court's interpretation and look at the contract with fresh eyes.'"
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Manahawkin Convalescent, 217 N.J. at 115 (quoting Kieffer v. Best Buy, 205
N.J. 213, 222 (2011)).
"[T]he settlement of litigation ranks high in our public policy," and we
"strain to give effect to the terms of a settlement wherever possible." Brundage
v. Est. of Carambio, 195 N.J. 575, 601 (2008) (citations omitted). "Our strong
policy of enforcing settlements is based upon 'the notion that the parties to a
dispute are in the best position to determine how to resolve a contested matter
in a way which is least disadvantageous to everyone.'" Ibid. (quoting Peskin v.
Peskin, 271 N.J. Super. 261, 275 (App. Div. 1994)).
The interpretation of a settlement agreement is "governed by basic
contract principles." Capparelli v. Lopatin, 459 N.J. Super. 584, 603 (App. Div.
2019). "[A]bsent a demonstration of 'fraud or other compelling circumstances,'
a court should enforce a settlement agreement as it would any other contract."
Id. at 603-04 (quoting Jennings v. Reed, 381 N.J. Super. 217, 227 (App. Div.
2005)). "Courts 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, 217 N.J. at 119 (quoting Caruso v.
Ravenswood Devs., Inc., 337 N.J. Super. 499, 506 (App. Div. 2001)). A
reviewing court must consider contractual language "in the context of the
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circumstances at the time of drafting . . . ." In re Cnty. of Atlantic, 230 N.J. 237,
254 (2017) (internal quotation marks and citations omitted). "[W]hen the intent
of the parties is plain and the language is clear and unambiguous, a court must
enforce the agreement as written, unless doing so would lead to an absurd
result." Capparelli, 459 N.J. Super. at 604 (quoting Quinn v. Quinn, 225 N.J.
34, 45 (2016)).
Defendants' argument completely ignores the terms of the parties'
settlement agreement in which they agreed that the fair market value of the
Andover property would be established by a court appointed appraiser. The
agreement further provided that "[t]he independent [c]ourt-appointed appraiser
shall endeavor to do an on-site inspection of the premises and toward that,
[p]laintiff and its counsel shall cooperate in attempting to arrange the same."
Nicholas acknowledged that by agreeing to the settlement, he waived his right
to a hearing on the fair market value.
Here, the appraiser was only required to attempt an on-site appraisal, with
the assistance of plaintiff's counsel. As the record indicates, despite plaintiff's
counsel's best efforts, he was unable to obtain permission to conduct an on -site
appraisal from the current occupants of the Andover property. Accordingly, the
appraiser relied upon "various documents including previous appraisals, photo
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surveys, and listing information" to determine the property's value at $740,000.
We are satisfied that the judge's decision not to conduct a hearing to determine
the fair market value, and his findings supporting the final judgment, are amply
supported by the record. Finally, to the extent we have not addressed any of
defendants' remaining arguments, it is because we have concluded they are of
insufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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