KRONER, INC. VS. M&B 21 HARRISON GROUP, LLCÂ (F-11141-13, HUDSON COUNTY AND STATEWIDE)
A-4774-14T2
N.J. Super. Ct. App. Div.Jun 16, 2017Background
- In Dec. 2007 M&B executed a $1,956,000 promissory note to Kroner secured by a mortgage on 21 condominium units; note matured Jan. 1, 2009.
- Kroner filed foreclosure in Mar. 2013 alleging M&B failed to repay at maturity; defendants included M&B, Stuart and Alisa Adler, and later guarantors (added by amendment).
- Kroner moved for summary judgment; the Chancery Division granted Kroner’s motion on Apr. 11, 2014 and later entered final judgment in May 2015 for $1,300,173.41 plus costs and directed a sheriff’s sale.
- M&B filed Chapter 11 bankruptcy in June 2014 and later sued in bankruptcy court alleging misconduct by M&B members; that bankruptcy case was dismissed with prejudice.
- Defendants unsuccessfully moved to vacate the foreclosure judgment; sheriff’s sale occurred Sept. 24, 2015 with Kroner purchasing the property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment on foreclosure was appropriate | Kroner: note matured; default occurred and it is entitled to judgment as a matter of law | Defs: factual disputes (payments made upon unit sales), estoppel, and alleged misconduct by M&B members justify denial | Affirmed: no genuine issue of material fact; Kroner entitled to judgment |
| Whether Kroner was estopped from foreclosing because it accepted payments inconsistent with the note | Kroner: Note preserved lender’s rights; acceptance of partial/late payments does not waive remedies | Defs: course of conduct (payments on unit sale) should prevent foreclosure on estoppel grounds | Rejected: note’s express nonwaiver clause defeats estoppel argument |
| Whether undisclosed conflict (Daniel Bodner’s marriage to Kroner managing partner) created a duty to disclose or a fiduciary breach preventing foreclosure | Kroner: creditor-debtor relationship; disclosed affiliated-business relationship; no fiduciary duty to borrower to disclose marital relation | Defs: nondisclosure of marriage created conflict/fiduciary breach warranting equitable relief | Rejected: creditor-debtor relationships rarely create fiduciary duties; disclosure provided was sufficient; no duty shown |
| Whether trial court’s procedural findings (Rule 1:7-4) defects require vacatur | Kroner: legal standard applied correctly; no reversible error | Defs: trial court failed to make required findings | Rejected: no merit; appellate review applies same summary-judgment standard and legal conclusions reviewed de novo |
Key Cases Cited
- Rowe v. Mazel Thirty, LLC, 209 N.J. 35 (2012) (summary-judgment standard — view evidence favorably to non-moving party)
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (1995) (summary-judgment burden and requirements)
- Davis v. Devereux Found., 209 N.J. 269 (2012) (appellate review of legal conclusions)
- Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Group, Inc., 135 N.J. 182 (1994) (duty to disclose is a question of law analyzed under fiduciary/duty principles)
- United Jersey Bank v. Kensey, 306 N.J. Super. 540 (App. Div. 1997) (creditor-debtor relationships and the rarity of fiduciary duties)