NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5225-12T2

 A-1893-13T3

 A-2109-13T3

BRUNSWICK BANK & TRUST,

Plaintiff-Respondent,

v.

AFFILIATED BUILDING CORP.,

Defendant-Appellant.

_________________________________

BRUNSWICK BANK & TRUST,

Plaintiff-Respondent,

v.

HELN MANAGEMENT, LLC,

Defendant-Appellant.

__________________________________

BRUNSWICK BANK & TRUST,

Plaintiff-Respondent,

v.

HELN MANAGEMENT, LLC, and AFFILIATED

BUILDING CORP.,

Defendants-Appellants.

_________________________________________________

APPROVED FOR PUBLICATION

March 17, 2015

APPELLATE DIVISION
2 A-5225-12T2

Argued January 6, 2015 – Decided

Before Judges Fisher, Nugent and Manahan.

On appeal from the Superior Court of New 

Jersey, Chancery Division, Middlesex County, 

Docket Nos. F-30990-10 (A-5225-12) and 

F-21231-13 (A-2109-13) and Monmouth County, 

Docket No. F-26278-10 (A-1893-13).

Philip R. Kaufman argued the cause for 

appellants.

Anthony B. Vignuolo argued the cause for 

respondent (Borrus, Goldin, Foley, Vignuolo, 

Hyman & Stahl, P.C., attorneys; Mr. Vignuolo 

and Anthony T. Betta, on the brief).

The opinion of the court was delivered by

FISHER, P.J.A.D.

In these three appeals of orders entered in three separate 

foreclosure actions, we consider, among other things, the impact 

caused by the plaintiff-lender having first sought and obtained

a money judgment in the Law Division – before seeking 

foreclosure – for the purpose of determining whether plaintiff 

has been fully compensated. Because we can draw no certain 

conclusions from the convoluted and unsettled factual record, we 

remand.

I

The record generated in these cases reveals that between 

September 2007 and July 2009, plaintiff Brunswick Bank & Trust 

made five construction and development loans to defendants Heln 

March 17, 2015
3 A-5225-12T2

Management, LLC, and Affiliated Building Corp., that were 

guaranteed by Jeffrey Miller, a principal of both entities, and 

his daughter Melanie Miller. Each loan was secured by a 

mortgage on one of four properties, which we will refer to as 

Matthew Manor, Beacon Hill, Loren Terrace and Baldwin Street.1 A 

table identifying the five loans is set forth below.2

In May 2010, plaintiff filed a complaint in the Law 

Division against Heln, Affiliated, and the two guarantors, on

four of the five loans.3 On August 18, 2010, the Clerk of the 

Court entered a default judgment in favor of plaintiff and 

against Heln for $1,884,141.84, against Affiliated for $175,000,

 

1To be more specific, Matthew Manor consists of seven lots in 

East Brunswick; Beacon Hill, Loren Terrace and Baldwin Street 

consist of single lots in Marlboro, East Brunswick and New 

Brunswick, respectively.

2

Borrower Loan Date Loan Amount Loan 

Security

 Heln Sept. 18, 2007 $1,500,000 Matthew 

Manor

 Heln May 22, 2008 $289,900 Beacon Hill

 Heln Sept. 10, 2008 $100,000 Loren 

Terrace

 Heln April 20, 2009 $300,000 Baldwin

Street

Affiliated July 28, 2009 $175,000 Baldwin

Street

3The complaint did not seek relief on the $300,000 loan to 

Affiliated that was secured by a mortgage on Baldwin Street.
4 A-5225-12T2

and against the guarantors for the entire amount of the 

indebtedness, $2,059,141.84. The judgment also declared that 

plaintiff was entitled to "post-judgment interest" and an 

attorney fee.

After filing the Law Division complaint, but a few months 

before default judgment was entered, plaintiff commenced three 

foreclosure actions; a fourth was filed three years later. 

Specifically, plaintiff filed a complaint in Monmouth County on 

May 10, 2010, against Heln seeking foreclosure on Beacon Hill, 

and two foreclosure complaints in Middlesex County on June 8, 

2010 – one against Heln seeking foreclosure on Matthew Manor and 

the other against Affiliated seeking foreclosure on Baldwin 

Street. The fourth complaint was filed in Middlesex County on 

June 19, 2013, against Heln and Affiliated seeking foreclosure 

on Loren Terrace.

Defendants4 did not respond to the first three foreclosure 

complaints, and judgments were entered foreclosing on Matthew 

Manor, Beacon Hill and Baldwin Street on May 2, 2012, 

September 5, 2012, and February 22, 2013; the judgments set the 

 

4For clarity's sake, we refer to all defendants either 

individually or collectively as "defendants" even though not 

every proceeding involved all defendants.
5 A-5225-12T2

redemption amounts at $1,679,400.19, $297,590.10, and 

$330,777.83, respectively.5

In July 2012, after entry of the foreclosure judgment 

regarding Matthew Manor, defendants applied for a stay of the 

sheriff's sale scheduled for certain lots within Matthew Manor. 

In his supporting certification, guarantor Jeffrey Miller 

asserted that Heln had contracted to sell one lot for 

$1,000,000, which would result in a $500,000 payment to 

plaintiff, and that Heln had also contracted to sell another lot 

for $1,735,000. In September 2012, the Chancery judge permitted 

the sales to continue with respect to all the lots within 

Matthew Manor except the lot for which there was an existing 

contract; as to this excepted lot, the judge ordered the sale to 

go forward if a closing did not occur by the end of October 

2012.

Later, the judge considered defendants' application for a 

stay of all further foreclosure proceedings based on the 

contention that the loans were "over-collateralized." In his 

written decision, the Chancery judge recognized he was empowered 

to "prevent a potential double recovery or windfall to a 

judgment creditor," MMU of N.Y., Inc. v. Grieser, 415 N.J. 

 

5These sums included awards of counsel fees of $7,500, $3,094.95, 

and $3,434.43, respectively.
6 A-5225-12T2

Super. 37, 40 (App. Div. 2010), but he found the matter too 

muddled by the other pending matters and recognized the exercise 

of his power to prevent a windfall had to wait until "a full and 

complete factual record [could] be established." Later, by 

order entered on March 6, 2013, the Chancery judge denied a 

motion to vacate or stay the pending sheriff sales but the right 

of redemption was extended until March 1, 2013.6 The judge also 

denied a request to consolidate the various lawsuits.

Defendants thereafter moved for an order declaring the Law 

Division judgment satisfied. Defendants argued plaintiff had 

received $2,517,063.01 – consisting of $1,217,063.01 in cash7 and 

$1,300,000 in property – which exceeded the amount due on the 

money judgment even when interest of $113,534.88, running from 

August 18, 2010, to March 1, 2013, was added. On July 1, 2013, 

the Chancery judge discharged8 the Law Division judgment "without 

prejudice to the legal rights and position of the parties as 

have been asserted or remain" in the Beacon Hill and Loren 

Terrace foreclosure actions.

 

6The final date for redemption is inexplicable in light of the 

date of the order, but we assume the order memorialized an 

earlier oral decision.

7Defendants allege that plaintiff was paid $717,063.01 in 2011 

and received another $500,000 upon sale of a Matthew Manor lot.

8The order was entered in both the Law Division action and the 

Matthew Manor foreclosure action.
7 A-5225-12T2

No appeal was filed regarding any of these orders. Those 

circumstances, however, set the stage for entry of the orders 

under review in these three appeals.

II

A. The first appeal. Prior to his disposition of the 

motion that led to the July 1, 2013 order described above, the 

Chancery judge heard argument on defendants' motion for a stay 

of a sheriff's sale of Baldwin Street. A temporary stay was 

granted to allow the parties to be heard on defendants' 

contention that the $175,000 Baldwin Street mortgage was 

subsumed within the Law Division judgment and had therefore been 

satisfied and, also, with regard to defendants' assertion that 

they had found a buyer for the property that would generate 

$335,000, which would more than satisfy the mortgage. Plaintiff 

responded that the contract price would not satisfy the amount 

still owed as reflected by the foreclosure judgment. Without 

conducting an evidentiary hearing to resolve this dispute, the 

judge denied the motion for a stay of the sheriff's sale.

Defendants' notice of appeal in A-5225-12 seeks review of 

the May 21, 2013 order that memorializes the judge's ruling.

B. The second appeal. In November 2013, defendants moved 

for a stay of a sheriff's sale of Beacon Hill in the one matter 

pending in another vicinage. In adhering to the approach taken 
8 A-5225-12T2

in the other matters, the judge in the Beacon Hill matter denied 

defendants' application by order entered on November 22, 2013, 

and plaintiff purchased Beacon Hill at the sheriff's sale that 

followed. Consequently, defendants filed their second appeal 

(A-1893-13).

C. The third appeal. As noted earlier, plaintiff's 

foreclosure complaint regarding Loren Terrace was not filed 

until June 19, 2013. Defendants responded to that complaint, 

asserting among other things that the underlying debt had been 

satisfied and plaintiff was otherwise estopped from foreclosing 

on the mortgage.

Defendants moved for dismissal, and plaintiff cross-moved 

for summary judgment. On November 18, 2013, after hearing oral 

argument, the Chancery judge granted plaintiff's summary 

judgment motion and struck defendant's answer to the foreclosure 

complaint; the order, however, also declared that its entry 

"will be without prejudice to [d]efendants' right to seek 

damages in the event of a reversal of this decision by the 

Appellate Division." In addition, the order directed that the 

case would thereafter proceed on an uncontested basis. 

Defendants, however, filed their third notice of appeal (A-2109-

13) on January 2, 2014, before a final judgment could be 

entered.
9 A-5225-12T2

A few months later, when the property was sold by mutual 

agreement of the parties – and with defendants' payment to 

plaintiff of the proceeds under protest – the judge entered an 

order, declaring that "subject to the appeal of the order . . . 

striking the [a]nswer of [d]efendants [] the within matter be 

and hereby is dismissed with prejudice" but that "this dismissal 

shall be without prejudice to the issues now on appeal." The 

order additionally declared that "in the event [d]efendant[s]

shall prevail on appeal, then [their] remedy shall be limited to 

money damages."9

III

Defendants present the same three arguments in all three 

appeals, namely: (1) whether plaintiff, by filing suit for a 

money judgment prior to seeking foreclosure, is bound by the 

money judgment as to the amount due on the underlying notes; (2) 

whether the mortgages were satisfied by the payment of the 

underlying obligation, and (3) whether, in a commercial 

transaction, mortgagors are entitled to a fair market credit for

property taken in foreclosure.

 

9Our disposition of these appeals makes unnecessary our 

determination of whether defendants mistakenly filed a notice of 

appeal before finality was achieved in this matter in the trial 

court.
10 A-5225-12T2

We commence our examination of these issues by mentioning a 

few legal principles that illuminate the way. To start, a 

mortgage is simply a form of "security for the payment of a 

debt," J.W. Pierson Co. v. Freeman, 113 N.J. Eq. 268, 271 (E. & 

A. 1933), and full payment of the underlying debt, by operation 

of law, will extinguish a mortgage, Valley Nat'l Bank v. Meier, 

437 N.J. Super. 401, 404-05 (App. Div. 2014), certif. denied, __ 

N.J. __ (2015); see also Shields v. Lozear, 34 N.J.L. 496, 503 

(E. & A. 1869) (holding that a mortgage "is annihilated by the 

extinguishment of the debt secured by it"). Furthermore, a 

"mortgagee is not entitled to recover more than full amount of 

[the] mortgage debt." 79-83 Thirteenth Ave., Ltd. v. De Marco, 

79 N.J. Super. 47, 54 (Law Div. 1963), aff’d, 83 N.J. Super. 497 

(App. Div. 1964), aff’d, 44 N.J 525 (1965). In addition, we 

have held that, even in a commercial setting, courts have 

"inherent equitable authority to allow a fair market value 

credit in order to prevent a double recovery by a judgment 

creditor against a judgment debtor." MMU of N.Y., Inc., supra, 

415 N.J. Super. at 40. In that case, the plaintiff purchased 

the defendant's property at a sheriff's sale for nominal value

and then quickly sold it for approximately $1,200,000. Id. at 

41. We affirmed the trial court's ruling that the defendant, 

who owed the plaintiff $1,600,000 on a Law Division judgment, 
11 A-5225-12T2

was entitled to a credit based on the property's fair market 

value. Id. at 41-43. What these authorities illustrate is that 

plaintiff was entitled only to recover the amount of its loan –

together with accruing interest and other damages permitted by 

the loan agreements – and defendants were entitled to a fair 

market credit for any property acquired by plaintiff in the 

collection of its debt.

Of further interest is that the "foreclosure first" rule, 

N.J.S.A. 2A:50-2, which acts to avoid the type of convoluted 

circumstances presented here, requires that foreclosure be 

sought first when collecting on a debt secured by a mortgage. 

Only if the eventual disposition of the foreclosed property 

fails to "bring an amount sufficient to satisfy the debt, 

interest, and costs," may the lender commence an action on the 

deficiency. Ibid. 

Although the "foreclosure first" rule was intended to 

prevent the possibility of multiple actions for the recovery of 

such a debt, Light v. Granatell, 171 N.J. Super. 557, 561 (App. 

Div. 1979), the Legislature created exceptions and determined –

for reasons apparently "based on efficiency and respect for 

arms-length business transactions," Bus. Loan Ctr., L.L.C. v. 

Nischal, 331 F. Supp. 2d 301, 309 (D.N.J. 2004) – that when the 

debt is secured "for a business or commercial purpose," such as 
12 A-5225-12T2

here, the lender is not obligated to foreclose first. N.J.S.A.

2A:50-2.3(a). As we have seen, plaintiff chose the alternative 

route permitted by this exception, thereby convoluting the

circumstances now before us.10

In any event, as made clear by First Union Bank v. Penn 

Salem Marina, 190 N.J. 342, 344-45 (2007), by fixing in the Law 

Division the amount due on four of the loans, plaintiff is now 

estopped from claiming a greater amount was due on the same 

items of damages then adjudicated. As the First Union Court 

held, "[e]xcept for amounts accruing after the first judgment 

and for different categories of damages, the amount of the 

judgment entered in [both the Law Division and foreclosure] 

action[s] should be identical." Id. at 345.

Because of the lack of clarity in the record as to how the 

application of these principles impact the parties' rights and 

obligations, we remand for further proceedings. Despite the 

Chancery judge's accurate comment early in these proceedings 

regarding defendants' claims of "over-collateralization" and 

overpayment of the debt – that "a full and complete factual 

 

10A further complication arises from the fact that the Law 

Division action sought a money judgment on only four of the five 

loans. Plaintiff's rights and remedies regarding that fifth 

loan are, therefore, not capped by the Law Division judgment 

except to the extent plaintiff may have already collected more 

than owed on the total of all five loans as a result of its 

efforts on the first four loans.
13 A-5225-12T2

record" was required – uncertainty and unresolved fact disputes 

continue to plague an understanding of the parties' rights. The

parties are entitled to a consideration of these issues after 

the creation of "a full and complete factual record."

We note that certain pieces of the puzzle are already in 

place. First, the Law Division judgment fixed the total amount 

of the principal indebtedness on four of the five loans at 

$2,059,141.84, as of August 18, 2010, the date judgment was 

entered; the certification submitted by plaintiff in support of 

the entry of that default judgment designates – and caps – the 

amount due on each of the four loans involved. That default 

judgment also awarded plaintiff post-judgment interest on the 

adjudicated principal, thus fixing the accrual of interest on 

any unpaid portion of that judgment – for however long it 

remained unpaid – at the rule-based interest rate contained in 

Rule 4:42-11(a).

11 Those determinations in the Law Division 

precluded the awarding of additional damages on those categories 

in the later Chancery Division actions. First Union Bank, 

 

11The judgment also found defendants liable for an "attorney

fee," but no amount was fixed. The judge should determine 

whether plaintiff's failure to quantify its attorney's fees when 

applying for the default judgment in the Law Division 

constituted a waiver of that category of damages in the Chancery 

Division matters or whether it is more equitable to permit the 

later determinations in the foreclosure judgments to constitute 

awards for the unspecified attorney fee permitted by the Law 

Division judgment.
14 A-5225-12T2

supra, 190 N.J. at 355. On the other hand, plaintiff's right to 

seek relief on the fifth loan was not so limited.

We further observe that a certification, which was filed in 

support of defendants' motion to dismiss the Loren Terrace 

foreclosure action, asserted that plaintiff was paid $717,063.01 

"[b]etween March 30, 2011 and December 28, 2011," and another 

$500,000 was paid to plaintiff on or about January 21, 2013. It 

is not clear from the record whether plaintiff disputes these

payments. If so, then there must be an evidentiary hearing to 

resolve that dispute; if not, then the amount due on the Law 

Division judgment should have been reduced and the amount of 

interest accruing on the remainder should have been adjusted

accordingly. In addition, defendants contend plaintiff received 

property through sheriff's sales that would further reduce – or, 

if defendants are correct as to the property's fair market 

value, fully satisfy – the amount due on the judgment. 

Defendants are entitled to a credit against the outstanding 

indebtedness for the fair market value of the property obtained

by plaintiff. And plaintiff is entitled to recover any 

reasonable sums for expenditures properly incurred but not 

adjudicated by way of the Law Division action, such as – if 

applicable or permitted by the loan agreements – real estate 

taxes, insurance or property preservation.
15 A-5225-12T2

In short, the questions posed in these appeals cannot be 

properly or clearly answered without a full accounting of the 

cash and property collected by plaintiff applied against the 

amount of the Law Division judgment and the interest that 

accrued on that judgment, as well as expenditures in "different 

categories of [permissible] damages" not adjudicated in the Law 

Division action. First Union Bank, supra, 190 N.J. at 345.

Although we are unsure of the practical effect of reversing 

the orders under review in A-5225-12 and A-1893-13,12 we reverse 

those orders as well as the order granting summary judgment in 

favor of plaintiff under review in A-2109-13. And, we remand 

for further proceedings in conformity with this opinion. These 

proceedings should be conducted by the Chancery judge who 

presided over most of these lawsuits even though one of the 

matters – that which is before us in A-1893-13 – was adjudicated 

in a neighboring vicinage; to avoid inconsistent rulings or 

further delay, the matter requires a global resolution by a 

single judge.

Reversed and remanded. We do not retain jurisdiction.

 

12Those orders denied defendants' applications for stays of 

sheriff's sales that eventually went forward.