Impac Funding Corp.

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DOCKET NO. A-4087-12T3 (N.J. Super. App. Div. Jul. 29, 2014)

DOCKET NO. A-4087-12T3


MARIE PAYEN and YVES-CARMES RENELIQUE, Her Heirs, Devisees, and Personal Representatives and Her, Their, or Any of the Successors in Right, Title and Interest, Plaintiffs-Appellants, v. IMPAC FUNDING CORP., d/b/a IMPAC LENDING, and BANK OF AMERICA, N.A., Defendants-Respondents, and PREMIUM CAPITAL FUNDING, d/b/a TOPDOT M, and JAMEL WRIGHT, Defendants.

Joseph A. Chang argued the cause for appellants (Joseph A. Chang & Associates, LLC, attorneys; Mr. Chang, of counsel; Jeffrey Zajac, on the briefs). Aaron M. Bender argued the cause for respondents (Reed Smith LLP, attorneys; Donna M. Bates, on the brief).

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Grall, Nugent and Accurso. On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4418-11. Joseph A. Chang argued the cause for appellants (Joseph A. Chang & Associates, LLC, attorneys; Mr. Chang, of counsel; Jeffrey Zajac, on the briefs). Aaron M. Bender argued the cause for respondents (Reed Smith LLP, attorneys; Donna M. Bates, on the brief). PER CURIAM

Plaintiffs Marie Payen and Yves-Carmes Renelique appeal from the entry of summary judgment dismissing their claims of predatory lending, consumer fraud and breach of the covenant of good faith and fair dealing against their mortgage lender, defendant Impac Funding (Impac) and its servicer, Bank of America (BofA). Because plaintiffs failed to allege facts sufficient to allow a rational factfinder to conclude that the mortgage broker, defaulted defendant Premium Capital Funding, doing business as Topdot M (Topdot) and its employee, Jamel Wright, were agents of Impac and BofA, we affirm.

Plaintiffs' claims under the Truth in Lending Act, 15 U.S.C.A. § 1601, et seq., the Real Estate Settlement and Procedures Act, 12 U.S.C.A. § 2601 to § 2617, the Fair Debt Collection Practices Act, 15 U.S.C.A. § 1692a to -p, and various other common law claims were dismissed as well. Plaintiffs appeal the dismissal of only those claims discussed in the text.

We recount the facts in the light most favorable to plaintiffs. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). Payen is a Haitian woman and native Creole speaker who cannot speak or understand much English. Her niece, Renelique, was also born in Haiti. Although the record suggests she has a better grasp of spoken and written English than her aunt, the use of an interpreter at her deposition leads us to conclude that she is not fluent.

In 2007, Payen was employed full-time, earning approximately $1000 a month after taxes. Wishing to purchase a home to reduce the portion of her monthly budget consumed by rent, Payen was referred to Topdot by her daughter. There she engaged Wright to assist her in obtaining a mortgage loan. Payen found a suitable townhouse in Orange and provided her financial information, including paystubs, to Wright.

Topdot advised Payen that she could qualify for a loan but needed a co-signor. Although Payen was living with her husband and three grown daughters, none of them could provide the needed credit. Payen tuned to her niece, Renelique, who worked at a Cinnabon restaurant in a local mall earning approximately $350 per week after taxes. Although living with her husband and having no intention of living with Payen or assisting to pay her mortgage, Renelique agreed to co-sign the loan.

Plaintiffs signed a loan application, which Wright had prepared, which represented, falsely, that they had a combined income of just under $8000 a month and that they would hold the property as joint tenants for use as their primary residence. Although neither plaintiff could recall signing the document or being aware of its contents, both acknowledged their signatures and the legend just above which stated: "We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of the above facts." Topdot and Wright submitted the application to Impac for the purpose of securing plaintiffs a mortgage loan.

The purchase price of the townhouse was $299,000. Impac made two loans to plaintiffs to fully fund the purchase. Plaintiffs borrowed $224,250 on a thirty-year adjustable rate note at an initial rate of 7.5% interest with a five-year interest-only feature. That loan, on which interest was capped at 13.5%, was secured by a purchase money mortgage. Impac provided a second secured fixed rate loan to plaintiffs in the sum of $74,750, in effect funding the down payment. Plaintiffs signed a fifteen-year balloon note for that loan which bore interest at a rate of 12.59%. No disclosure documents relating to this loan were produced in discovery and none exist to plaintiffs' knowledge. Payen's monthly payments for both loans at inception totaled $2,370.99. She testified at deposition that prior to this purchase, she had been paying $1200 a month in rent. In addition to the two monthly loan payments, plaintiffs were also made responsible for the payment of taxes and insurance which were not included in their monthly payments.

Fees and costs paid by plaintiffs at closing exceeded $12,000. Although they were represented at the closing by a lawyer assigned to them by Topdot, he did not review any of these charges with them, some of which appear exorbitant. In addition, the fees and costs actually charged significantly exceeded those disclosed in Topdot's good faith estimate of settlement costs (required by federal law). The lawyer did not explain any of the documents and did not tell Payen that taxes and insurance were not included in her monthly mortgage payments.

Although Payen apparently managed the monthly payments for a time with the assistance of her husband, she ran into difficulties after he fell ill and ceased working. When she lost her own job, she stopped making payments on both loans and sought a loan modification from BofA. BofA initially denied Payen's request for a modification under the Home Affordable Modification Program (HAMP) because it had not been given the contractual authority to modify the loan by the "investor or group of investors" on whose behalf BofA serviced the loan. Three months later, BofA sent another letter saying the denial was because plaintiffs had not provided all of the documents it deemed necessary in order to consider a modification.

Plaintiffs sued Impac and BofA, as well as Topdot and Wright, alleging that defendants were each other's agents or joint venturers, or that they had aided and abetted or conspired with one another in fraudulently dealing with plaintiffs. Impac and BofA filed a motion to dismiss, which the Law Division denied. As discovery was scheduled to close, Impac and BofA moved for summary judgment. Plaintiffs responded with a motion to extend discovery, which was granted. Plaintiffs then successfully fended off summary judgment on the basis that discovery was still on-going. Discovery was extended a second time on defendants' motion after Renelique failed to appear for deposition. Following the depositions of plaintiffs, Impac and BofA obtained leave to file a counterclaim against them for common law fraud stemming from "their" misrepresentations on the loan application.

Impac and BofA contend that Topdot and Wright were never served. The claims against Topdot and Wright appear to have been administratively dismissed at some point.

At the end of the extended period of discovery, Impac and BofA moved again for summary judgment arguing that plaintiffs had failed to muster any proof of their allegation that Topdot or Wright were agents or employees of Impac or BofA. Plaintiffs countered that documents produced by Impac list it as the broker of the loan and Wright as the contact. Counsel for Impac and BofA pointed to an unrefuted certification by an employee of Impac that Topdot was not affiliated with, nor an agent of, Impac but instead brokered loans to Impac under an independent broker agreement. The same employee certified that Wright was never employed by Impac. The Law Division judge granted summary judgment to Impac and BofA citing plaintiffs' misstatements on their loan application. Impac and BofA subsequently dismissed their counterclaim against plaintiffs. This appeal followed.

Summary judgment is only appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c). We review summary judgment using the same standard that governs the trial court. Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). Thus, we must determine "whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Id. at 532 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).

Relying on our cases, Nowosleska v. Steele, 400 N.J. Super. 297, 304-05 (App. Div. 2008), and Associates Home Equity Services, Inc. v. Troup, 343 N.J. Super. 254, 267 (App. Div. 2001), plaintiffs argue that the mortgage loan extended to them was predatory and unconscionable. Specifically, plaintiffs point to our description of predatory lending as

a mismatch between the needs and capacity of the borrower. . . . In essence, the loan does not fit the borrower, either because the borrower's underlying needs for the loan are not being met or the terms of the loan are so disadvantageous to that particular borrower that there is little likelihood that the borrower has the capacity to repay the loan.

[Troup, supra, 343 N.J. Super. 254, 267 (App. Div. 2001) (quoting Daniel S. Ehrenberg, If the Loan Don't Fit, Don't Take It: Applying the Suitability Doctrine to the Mortgage Industry to Eliminate Predatory Lending, 10 J. Affordable Hous. & Cmty. Dev. L. 117, 119-20 (Winter 2001)).]

Plaintiffs contend that it is this principle on which they rely in arguing that "[d]efendants should never have extended the Mortagage, Adjustable Rate Loan, and Balloon Note to the [p]laintiffs. To fund $299,000 to the Plaintiffs via a mortgage at a 100% loan to value ratio to borrowers making less than $4,000 a month combined was unconscionable on its face."

Plaintiffs may be correct that the loan was unconscionable. The fault underlying their claims, however, is the failure to have developed evidence that Impac and BofA knew the information on which plaintiffs ground their claim of unconscionability, that plaintiffs' combined income was less than $4000 a month. There is no question that Wright and Topdot were aware of plaintiffs' combined income; plaintiffs provided their paystubs to Wright, and it was he who prepared the loan application that falsely inflated their incomes. Plaintiffs' problem is that despite an extended period of discovery, they were not able to produce more than a mere scintilla of evidence that Topdot and Wright were the agents or employees of Impac and BofA.

We accept for purposes of summary judgment plaintiffs' assertion that they were not aware of Wright's misstatement of their incomes. Thus, to the extent the Law Division judge rested his decision on plaintiffs' "unclean hands," we do not rely upon it. See Isko v. Planning Bd. of Twp. of Livingston, 51 N.J. 162, 175 (1968) ("if the order of the lower tribunal is valid, the fact that it was predicated upon an incorrect basis will not stand in the way of its affirmance"), abrogated on other grounds, Commercial Realty & Res. Corp. v. First Atl. Props. Co., 122 N.J. 546 (1991); State v. Maples, 346 N.J. Super. 408, 417 (App. Div. 2002) (noting that an appeal is taken from the court's order rather than the reasons for the order). We are, however, aware of authority that would impute those statements to plaintiffs, given that they signed the documents and engaged Wright. See, e.g., Rudbart v. N. Jersey Dist. Water Supply Comm., 127 N.J. 344, 353, cert. denied sub nom., First Fidelity Bank, N.A. v. Rudbart, 506 U.S. 871, 113 S. Ct. 203, 121 L. Ed. 2d 145 (1992). We need not reach the issue of plaintiffs' knowledge of the misstatements in order to resolve the appeal.

The evidence plaintiffs uncovered that they claim puts in issue whether Wright was an employee or agent of Impac are two Impac documents, entitled "Underwriting Status Notification" which list "Impac Lending Group-OB" as the broker and Jamel Wright as the "contact." Impac and BofA, however, submitted a certification in opposition to the motion averring that Wright was never an employee of Impac, but was instead employed by Topdot. The certification further states that Topdot was not affiliated with Impac, but rather acted as an independent broker on behalf of plaintiffs. Impac documents in the loan file dated nearer to the closing date list Premium Capital Funding, LLC (Topdot) as the broker and Wright as the contact.

These documents appear likely to be the same "screen shot" of one document accessed at two different times.

Plaintiffs did not counter Impac's certification and offer nothing to question the competency of that evidence. As the evidence in the record is insufficient to permit a fair-minded jury to conclude that Topdot or Wright were agents or employees of Impac or BofA, summary judgment was properly granted on plaintiffs' claims of predatory lending and consumer fraud.

Plaintiffs have not briefed the basis of their claim for breach of the covenant of good faith and fair dealing. Their complaint asserts that defendants "fail[ed] to perform loan servicing functions," failed to supervise its agents including collection personnel and foreclosure attorneys, demanded repetitive information from plaintiffs, inaccurately denied a HAMP adjustment, and "unreasonably delay[ed] the extension of offers for permanent modifications" to plaintiffs' loan.

Plaintiffs do not explain why Impac and BofA would be obligated to modify plaintiffs' loan. Federal case law suggests that modifications are not mandatory under HAMP, and that there is no private cause of action for violation of the program's guidelines in any event. See, e.g., Edwards v. Aurora Loan Servs., LLC, 791 F. Supp. 2d 144, 153-56 (D.D.C. 2011). As plaintiffs have failed to provide sufficient evidence to support the claim, no reasonable factfinder could find in their favor and summary judgment was properly entered against them as a matter of law. Brill, supra, 142 N.J. at 532, 536; Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 225 (2005).


I hereby certify that the foregoing is a true copy of the original on file in my office.


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