ORIGEN CAPITAL, ETC. v. ENVIRO/CONSULTANTS GROUP, LTD (F-019061-19, GLOUCESTER 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NOT FOR PUBLICATION WITHOUT THE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-1354-20
ORIGEN CAPITAL
INVESTMENTS II, LLC,
Plaintiff-Appellant,
v.
ENVIRO/CONSULTANTS
GROUP, LTD, THOMAS J.P.
HUGUES, COMMONWEALTH
CAPITAL, LLC, and KEYSTONE
BUSINESS CREDIT,
Defendants-Respondents,
and
WACHOVIA BANK NATIONAL
ASSOCIATION, and STATE OF
NEW JERSEY,
Defendants.
______________________________
Argued February 1, 2022 – Decided February 14, 2022
Before Judges Fisher and DeAlmeida.
On appeal from the Superior Court of New Jersey,
Chancery Division, Gloucester County, Docket No.
F-019061-19.
Mark Pfeiffer argued the cause for appellant (Buchanan
Ingersoll & Rooney, PC, attorneys; Mark Pfeiffer, of
counsel and on the briefs).
Barry J. Muller argued the cause for respondent
Thomas J.P. Hugues (Fox Rothschild, LLP, attorneys;
Barry J. Muller, of counsel and on the brief).
Paige M. Bellino argued the cause for respondents
Commonwealth Capital, LLC, and Keystone Business
Credit (Chiumento McNally, LLC, attorneys; Paige M.
Bellino, on the brief).
PER CURIAM
Plaintiff Origen Capital Investments II, LLC, appeals a summary
judgment dismissing its complaint, which sought to foreclose on a commercial
mortgage held on property in Clayton. Because we find the record is not
sufficiently clear to permit summary judgment on whether the mortgage should
have been previously discharged, we reverse and remand for further
proceedings.
In 1998, Enemute Oduaran purchased the Clayton property in the name of
his business, Enviro/Consultants Group, LTD. At the same time, two mortgages
were placed on the property in favor of Mellon Bank, N.A.; one secured
repayment of a $200,000 term note and the other secured repayment of a
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$125,000 line of credit. After the purchase, Enviro merged into ECG Industries
Inc.
Two years later, Oduaran agreed to sell the Clayton property to LJL
Properties LLC. Apparently in response to inquiries relevant to that transaction,
Mellon Bank wrote to Oduaran on April 18, 2000, stating its agreement
to release all of its security interest in [the Clayton
property] which relate to both the term loan and line of
credit, upon receiving full payment which fully satisfies
Enviro['s] loan No. 101-302-0002188.[1]
This letter also provided a pay-off figure that was "good until April 18, 2000."
The sale of the property to LJL closed in July 2000. Mellon apparently
authorized a discharge of the term-loan mortgage but not the line-of-credit
mortgage.
On April 25, 2003, defendant Thomas J.P. Hugues purchased the property
from LJL. A title search did not reveal the presence of the line-of-credit
mortgage, although there is no dispute that it remains of record in the county
clerk's office. Soon after Hugues's purchase, the line of credit matured and
became immediately due and payable but was not paid.
1
The account number refers to the term loan, not the line of credit.
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Two years later, Citizens Bank, which had been assigned Mellon Bank's
interest in the line of credit, wrote to Hugues to advise of the default and
claiming the line-of-credit mortgage remained a valid lien on the property.
Hugues disputed this and asserted, as noted above, that in April 2000 Mellon
Bank represented it would release the line-of-credit mortgage. Citizens Bank
took no further immediate action against Hugues; it did, however, sue Oduaran
and Enviro in Delaware, and, in 2009, obtained a money judgment against
Oduaran.
In 2014, Hugues refinanced the property with defendants Commonwealth
Capital, LLC, and Keystone Business Credit. A title search apparently did not
reveal the existence of the line-of-credit mortgage, and the transaction with
Commonwealth and Keystone was consummated.
Plaintiff Origen purchased Citizens Bank's interest in the line-of-credit
mortgage in December 2015 and, four years later, filed this foreclosure action.
Hugues moved for summary judgment; Commonwealth and Keystone joined in
the motion, which was granted for reasons expressed by the trial judge in an oral
decision on October 30, 2020. The judge found that whether Mellon Bank agreed
to discharge the line-of-credit mortgage in 2000 was not genuinely disputed, that
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Origen had not made a prima facie case for foreclosure, and that the doctrine of
laches barred Origen's claim.
Origen appeals, arguing that the judge erred in concluding that Mellon
Bank agreed to remove the line-of-credit mortgage and that the doctrine of
laches was erroneously utilized to dismiss the action. We agree the factual
record is simply too murky to warrant entry of summary judgment.
It is certainly true that Origen's rights rise no higher than its predecessors.
And it is true that the record before us reveals Mellon Bank's intent in April
2000 to release both the term mortgage and the line-of-credit mortgage so long
as, in selling the Clayton property, Hugues's predecessor paid off the term
mortgage. But there is no clear evidence – only inferences – to suggest that the
term mortgage was paid off or that Mellon Bank may not have altered its position
by the time of the July 2000 closing. There are only pieces of information about
whether Hugues's predecessor complied with any conditions for a release of the
line-of-credit mortgage, assuming Mellon Bank was still willing to do so by the
time of the closing. And while there is fragmentary evidential material that
might suggest Mellon Bank had agreed at that time to accept substitute collateral
in place of the line-of-credit mortgage, there is nothing so clear or certain in the
record as to permit summary judgment on the issue. Of the same value is other
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information that might suggest Citizens Bank, which acquired Mellon Bank's
interest in the line of credit, did not believe the mortgage had been paid off.
In short, to ascertain an accurate understanding of the transactions
preceding the commencement of this foreclosure action from the few written
communications offered in support of and in opposition to the motion is like
calculating the size of an iceberg by measuring only that part visible above the
water's surface. As the opponent of the summary judgment motion, Origen was
entitled to an assumption of the truth of its allegations and the reasonable
inferences to be drawn from the evidence. Brill v. Guardian Life Ins. Co. of Am.,
142 N.J. 520, 540 (1995). Instead, it seems as if, contrary to this principle, the
movants were mistakenly given the benefit of the inferences suggested by the
fragmentary evidence. 2 Although the revelation of other information in the
future might give rise to the entry of summary judgment on behalf of one side
or the other, the record currently lacks the clarity necessary to support summary
judgment. See, e.g., Higgins v. Thurber, 413 N.J. Super. 1, 24 (App. Div. 2010)
(recognizing how "the summary judgment framework [is] too fragile" to support
2
Contrary to what was argued here in support of the judge's ruling, it does not
matter that the motion judge will likely be the trier of fact. The principles
applicable to summary judgment motions are unaltered by that circumstance.
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a final disposition when evidential materials lack clarity), aff’d o.b., 205 N.J.
227 (2011).3
Reversed and remanded for further proceedings. We do not retain
jurisdiction.
3
We lastly add that even if the doctrine of laches has some bearing here, and
even if the timeliness of a suit to foreclose a commercial mortgage should not
be governed by the twenty-year time-bar described in Security National Partners
Ltd. Partnership v. Mahler, 336 N.J. Super. 101, 106-08 (App. Div. 2000) – a
matter we need not decide – the record does not yield any clearer answers about
the elements of laches than it does about the merits.
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