Adelman v. BSI Fin. Servs., Inc.
179 A.3d 431
N.J. Super. Ct. App. Div.2018Background
- Wells Fargo made a mortgage loan to Norman Adelman in 2006; the loan defaulted on January 1, 2009 and foreclosure was filed; default judgment was entered in November 2009 and final foreclosure judgment entered December 14, 2010.
- Norman submitted loan-modification paperwork in 2010, paid an initial sum and signed modification documents; Wells Fargo’s representative signed but did not deliver an executed modification and later declined to proceed because of title liens and missed payments.
- Norman did not contest entry of final judgment in the foreclosure action and did not move to vacate it; the sheriff sold the property in May 2012 and Wells Fargo moved for possession in the foreclosure action, which was granted in October 2013.
- After the foreclosure judgment (but before opposing the possession motion and while an appeal in foreclosure was pending or later withdrawn), Norman and plaintiff (later plaintiff individually and as executrix) filed a separate Law Division complaint alleging breach of contract, Consumer Fraud Act violations, and intentional infliction of emotional distress based on the asserted loan modification.
- The trial court dismissed plaintiff’s individual breach and CFA claims for failure to be a party to the mortgage/modification and lack of ascertainable loss, then granted summary judgment on remaining claims on grounds including the entire controversy doctrine, res judicata, and collateral estoppel; plaintiff appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff can litigate in a separate Law Division action the same loan-modification defense that was or could have been raised in the prior foreclosure action | Adelman contends Wells Fargo foreclosed despite a valid 2010 loan modification and may sue separately for breach/CFA based on that conduct | Wells Fargo argues the loan-modification defense was germane to the foreclosure and should have been raised there; doctrines of entire controversy, res judicata, and collateral estoppel bar relitigation | Court held plaintiff’s claims are precluded: the loan-modification issue was germane and should have been raised in foreclosure; summary judgment affirmed |
| Whether plaintiff (individually) has standing to assert breach of contract and CFA claims arising from the mortgage/modification | Adelman asserted individual claims for breach and CFA based on conduct surrounding the loan modification | Wells Fargo argued plaintiff was not a party to the mortgage, note, or modification and thus cannot show an ascertainable loss | Court dismissed individual breach and CFA claims for lack of privity/party status and failure to show ascertainable loss |
| Whether collateral estoppel/issue preclusion bars relitigation of the loan-modification issue | Adelman argued the issue was not fully litigated in foreclosure and therefore not precluded | Wells Fargo argued the elements of collateral estoppel are satisfied (identical issue, prior final judgment, parties the same) | Court found the elements met and held collateral estoppel bars the claims |
| Whether the intentional infliction of emotional distress claim survives | Adelman claimed extreme or outrageous conduct by Wells Fargo in pursuing foreclosure despite the modification | Wells Fargo argued its conduct was not sufficiently extreme or outrageous to state the tort | Court held plaintiff failed to show outrageous conduct; IIED claim dismissed |
Key Cases Cited
- Conley v. Guerrero, 228 N.J. 339 (standard of review for summary judgment)
- DiTrolio v. Antiles, 142 N.J. 253 (purposes of the entire controversy doctrine)
- First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342 (res judicata promotes finality and prevents needless litigation)
- Highland Lakes Country Club & Cmty. Ass'n v. Nicastro, 201 N.J. 123 (entire controversy doctrine requires related claims and defenses be presented in one litigation)
- Allen v. V & A Bros., Inc., 208 N.J. 114 (elements of collateral estoppel/issue preclusion)
- Parklane Hosiery Co. v. Shore, 439 U.S. 322 (use of collateral estoppel and balancing economy and fairness)
- Allesandra v. Gross, 187 N.J. Super. 96 (judgment by default/consent does not involve issues actually litigated)
- Leisure Tech.-Ne., Inc. v. Klingbeil Holding Co., 137 N.J. Super. 353 (liberal approach to determining whether counterclaims are germane)