CHARLES WRIGHT VS. BANK OF AMERICA, N.A. (L-0433-15, GLOUCESTER COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2358-15T3
CHARLES WRIGHT,
Plaintiff-Appellant, APPROVED FOR PUBLICATION
October 4, 2018
v.
APPELLATE DIVISION
BANK OF AMERICA, N.A., and
BAC HOME LOANS SERVICING,
LP,
Defendants-Respondents.
____________________________________
Argued September 13, 2018 – Decided October 4, 2018
Before Judges Fisher, Hoffman and Firko.
On appeal from Superior Court of New Jersey, Law
Division, Gloucester County, Docket No. L-0433-15.
Lewis G. Adler argued the cause for appellant (Lewis
G. Adler and Law Office of Paul DePetris, attorneys;
Lewis G. Adler and Paul DePetris, of counsel and on
the brief).
Connie Flores Jones (Winston & Strawn, LLP) of the
Texas bar, admitted pro hac vice, argued the cause for
respondents (Winston & Strawn LLP, attorneys;
Stephen J. Steinlight, and Melissa Steedle Bogad, on
the briefs).
The opinion of the court was delivered by
FISHER, P.J.A.D.
Plaintiff Charles Wright filed a complaint that alleged five notices of
intention to foreclose served on him in 2010 by defendant BAC Home Loans
Servicing, LP (BAC) violated the Fair Foreclosure Act (FFA), N.J.S.A. 2A:50-
53 to -68. He asserted that BAC – the alleged servicer of loans made in 2007
when plaintiff purchased his Williamstown residence – neglected to include the
name and address of the lender, defendant Bank of America, N.A. (the bank). 1
Although no foreclosure action followed on the heels of these notices, plaintiff
claims these FFA violations – not actionable on their own – may form the basis
of a claim under the New Jersey Truth-in-Consumer Contract, Warranty and
Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18. Consequently, he argues that
the trial judge erred in dismissing the complaint by applying the litigation
privilege and by holding that the alleged FFA violation cannot support a
TCCWNA claim. We reject the application of the litigation privilege but
because the legal grounds upon which the latter determination was based have
shifted since the trial judge's decision and the perfection of this appeal, see
1
We assume without deciding – because it was not raised in the trial court –
that the bank, and not BAC, is the lender, although the bank and BAC asserted
at oral argument in this court the possibility that BAC actually was the lender at
the time the notices were sent to plaintiff.
A-2358-15T3
2
Spade v. Select Comfort Corp., 232 N.J. 504 (2018), we vacate the order of
dismissal and remand to allow plaintiff an opportunity to file an amended
pleading that expresses the true nature of his damage claim.
In explaining our ruling, we start by recognizing that a lender or its agent
must accurately recite in any notice of intention to foreclose those things the
FFA specifically requires. Our Supreme Court has held – albeit after the alleged
faulty notices were served on plaintiff – that the FFA's command that the lender's
identity and address must be provided, N.J.S.A. 2A:50-56(c)(11), is not satisfied
when only the name and address of the lender's servicing agent is provided. U.S.
Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 474-75 (2012). As mentioned,
plaintiff claims BAC violated the FFA when, in 2010, it served notices that
appeared to lack the lender's information. See n.1, above.
Even though there is no suggestion that the content of the notices was false
or misleading – only that a legal requirement was omitted – we assume this type
of FFA violation may support a TCCWNA claim because, in enacting
TCCWNA, the Legislature "chose expansive language to describe the
consumers and potential consumers whom the statute was enacted to protect."
A-2358-15T3
3
Spade, 232 N.J. at 521. 2 TCCWNA may be triggered by a departure from any
"clearly established legal right" or "responsibility." N.J.S.A. 56:12-15. Such a
departure occurs when a consumer protection statute or regulation prohibited
"the contractual provision or other practice" that is the basis of the claim. Dugan
v. TGI Fridays, Inc., 231 N.J. 24, 69 (2017) (emphasis added). We agree that
the required analysis not only encompasses the content of or omission of
provisions from a loan agreement – the breach of which generated a lender's
right to foreclose – but also FFA violations revealed by a lender's pre-suit notice
of intention to foreclose. The statutorily-required notice of intention to foreclose
is part of the foreclosure "practice" and, thus, a critical element that would fall
within TCCWNA's scope.
That conclusion does not end our analysis. Although viewing expansively
what it means to be a "consumer" when the Legislature declared what a lender
may not do when engaging a "consumer" or "prospective consumer" in N.J.S.A.
56:12-15,3 the Spade Court viewed less expansively what was meant by an
2
We are mindful that the Spade Court did not determine whether an "omission"
of a contractual provision required by law would give rise to a TCCWNA claim.
232 N.J. at 517-18.
3
This statute prohibits a "lender" from offering "to any consumer or prospective
consumer" or from entering into "any written consumer contract" or from giving
or displaying "any written consumer warranty, notice or sign" that includes "any
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4
"aggrieved consumer" when the Legislature fixed the scope of "civil liability"
in N.J.S.A. 56:12-17 (emphasis added) for such a violation.4 The Spade Court
explained that, in enacting N.J.S.A. 56:12-17, the Legislature "chose a more
precise term: 'aggrieved consumer,'" and "clearly intended to differentiate
between 'consumers and prospective consumers' – the broad category of people
whom the Legislature seeks to shield from offending provisions – and 'aggrieved
consumers' entitled to a remedy under the TCCWNA." 232 N.J. at 521-22. In
ascertaining the meaning of these provisions, the Court held that "an 'aggrieved
consumer' is a consumer who has been harmed by a violation of N.J.S.A. 56:12-
15." Id. at 523. The Court – reasoning from TCCWNA's declaration that an
aggrieved consumer may seek actual damages or the statutory penalty –
provision that violates any clearly established legal right of a consumer or
responsibility of a . . . lender . . . as established by State or Federal law at the
time the offer is made or the consumer contract is signed or the warranty, notice
or sign is given or displayed"; those declarations are followed by a sentence that
defines a "consumer" as including one who "borrows . . . any money . . . which
is primarily for personal, family or household purposes." N.J.S.A. 56:12-15
(emphasis added).
4
In N.J.S.A. 56:12-17 (emphasis added), the Legislature declared that "[a]ny
person who violates the provisions of this act shall be liable to the aggrieved
consumer for a civil penalty of not less than $100.00 or for actual damages, or
both at the election of the consumer, together with reasonable attorney's fees
and court costs." The remainder of this statute refers only to "consumers" but it
cannot logically be argued that the remedies provided throughout N.J.S.A.
56:12-17 are available to un-aggrieved consumers.
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concluded that the required harm is not "limited to injury compensable by
monetary damages." Ibid.
In describing a harm that doesn't give rise to compensable damages, the
Court provided the example of a furniture seller whose contract unlawfully
included a "no refunds" provision. The Court held that if the consumer would
have sought a refund but was deterred by the prohibited no-refund language,
"that consumer may be an 'aggrieved consumer' entitled to a civil penalty under
N.J.S.A. 56:12-17." Ibid. The same consumer would be aggrieved if the
untimely delivery and the forbidden language left the consumer "without
furniture needed for a family gathering." Id. at 523-24. But that consumer,
facing the same unlawful no-refund provision, would not be an "aggrieved
consumer" if conforming furniture was delivered on schedule and without any
"adverse consequences." Id. at 524.
In considering whether plaintiff might be an "aggrieved consumer" and
where he might fit in this spectrum of choices described in Spade's example, we
observe that plaintiff acknowledges no foreclosure action was commenced after
he was served with the pre-suit notices in question, so the damage alleged as a
result of the FFA violations is not readily apparent or assumable even from an
expansive view of the complaint's contents. See Seidenberg v. Summit Bank,
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348 N.J. Super. 243, 250 (App. Div. 2002) (recognizing motions to dismiss for
failure to state a claim require "that the pleading be searched in depth and with
liberality to determine whether a cause of action can be gleaned even from an
obscure statement"). The complaint expressly demands only an award of the
statutory $100 penalty for each alleged TCCWNA violation, so it may be that
plaintiff recognizes his inability to show an injury compensable by monetary
damages. But, because the case was dismissed for failure to state a claim upon
which relief may be granted, the factual record is more than a little barren as to
how the alleged injury may have impacted plaintiff. It may be that under Spade's
interpretation of TCCWNA, plaintiff may not even be an aggrieved consumer
entitled to a statutory penalty. Because the matter was dismissed before the
parties and the trial court had the benefit of Spade, the best course calls for a
remand to allow plaintiff to file an amended complaint that would identify the
alleged harm he believes was caused by the pre-suit notices. See Greenbriar
Oceanaire Cmty. Ass'n v. U.S. Home Corp., 452 N.J. Super. 340, 345-46 (App.
Div. 2017).
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We lastly consider, and readily reject, the trial judge's alternative basis for
dismissing the complaint: the litigation privilege. 5 The judge cited and quoted
well-established principles that govern the privilege's application but
misapprehended the fact that the privilege is intended to apply to "statements"
that would otherwise be defamatory. See, e.g., Erickson v. Marsh & McLennan
Co., Inc., 117 N.J. 539, 563 (1990) (recognizing that "[a]lthough defamatory, a
statement will not be actionable if . . . made in the course of judicial,
administrative, or legislative proceedings"). No defamatory or injurious
statement was made here; BAC merely omitted information required by the
FFA. That omission could not be the cause of a defamation action or other
similar tort;6 consequently the rationale for applying the litigation privilege is
absent. Chief Justice Hughes, when a member of this court, elegantly explained
5
The judge cited and substantially relied on an unpublished Law Division
decision contrary to Rule 1:36-3 (declaring that, with few exceptions, "no
unpublished opinion shall be cited by any court"), a rule which seems lately
"more honored in the breach than the observance."
6
We acknowledge, the litigation privilege is not limited to insulating utterances
from subsequent defamation actions. The Supreme Court long ago recognized
the privilege may reach claims asserting other similar tortious conduct. See
Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 563-64 (1955). In
expanding the privilege's scope to a claim for the malicious interference with
one's business, the Court explained that the application of the privilege should
not result from the way a claim is labeled but by the reason for the privilege's
existence. Id. at 564.
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that the attachment of the litigation privilege "is responsive to the superve ning
public policy that persons in such circumstances be permitted to speak and write
freely without the restraint of fear of an ensuing defamation action, this sense of
freedom being indispensable to the due administration of justice." Fenning v.
S.G. Holding Corp., 47 N.J. Super. 110, 117 (App. Div. 1957). See also Hawkins
v. Harris, 141 N.J. 207, 214 (1995). Without that need for protection and without
the benefit derived from protecting a speaker from suit, the litigation privilege
should have no application. Because BAC made no defamatory or arguably
defamatory statement, BAC's alleged failure to identify the lender's name and
address is not worthy of the litigation privilege's protection.7 If applied here, we
would be providing lenders and their representatives with immunity from all
TCCWNA suits, thereby eviscerating TCCWNA's application in this area and
without vindication of the privilege's true intent: to free speakers and writers in
a judicial setting from the fear of an ensuing action based on their utterances,
not from their omissions.
7
Our holding should not be misconstrued as suggesting that an alleged
defamatory statement in a pre-suit notice, such as a notice of intention to
foreclose or a tort claims notice, might not be encompassed by the litigation
privilege. To the contrary, such required notices fall within the requirement that
the insulated statement be made in judicial or quasi-judicial proceedings.
Hawkins, 141 N.J. at 216-17. That does not mean, however, that the sender of
all such notices, when the notice departs from applicable legal requirements,
will also be insulated from a claim in response to that breach.
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The order of dismissal is vacated and the matter remanded. We do not
retain jurisdiction.
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