SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO S . A

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- 18T4 LAMBS LANE REALTY, LLC , LAWRENCE FEROLIE, JR., and ELIA BORELLI FEROLIE , Plaintiff s - Appellant s ,

v. LAKELAND BANK , Defendant

- Respondent

.
LAKELAND BANK, Plaintiff

- Respondent,

v. LAMBS LANE REALTY, L LC, LAWRENCE FEROLIE, JR., and ELLA BORELLI FEROLIE ,

Defendant s - Appellant s , and NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet , this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36

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STATE OF NEW JERSEY , Defendant.

LAKELAND BANK, Plaintiff

- Respondent,

v. LAMBS LANE REALTY, LLC, LAWRENCE FEROLIE, JR., and ELIA BORELLI FEROLIE , Defendants

- Appellants

. Argued March 6, 2019

– Decided April 4, 2019 Before Judges Koblitz , Currier and Mayer. On appeal from Superior Cou rt of New Jersey, Chancery Division , Bergen County, Docket No s . C

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- 17 and F

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- 17 ; and Law Division, Passaic County , Docket No. L

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. Arthur L. Porter, Jr. argued the cause for appellant s ( Fischer Porter & Thomas, PC, attorneys ; Ar thur L. Porter, Jr., of counsel ; Aaron E. Albert, on the brief s ). Michael P. Crowley argued the cause for respondent ( Riker Danzig Scherer Hyland & Perretti, LLP, attorneys; Michael R. O'Donnell, of counsel and on the brief s ; Michael P. Crowley, on the brief s ).
PER CURIAM3 A

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Appellants 1 Lambs Lane Realty, LLC (Lambs Lane), Lawrence Ferolie,
Jr. , an d Elia Bore l li Ferolie (Ferolie s ) appeal from the following: a February 21, 2017 order granting a motion filed by respondent Lakeland Bank (Bank) dismissing appellants' claims in the Chancery Division, Bergen County, Docket
No. C

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- 17 ( Chancery action); a September 29, 2017 order granting summary judgment in favor of the Bank in a foreclosure action filed in the Chancery Division, B erge n County, Docket No. F

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- 17 (foreclosure action) ; and a June 22 , 2018 order granting reconsideration and summary judgm ent in favor of the Bank in the Law Division, Passaic County , Docket No.
L

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- 17 ( action on the note )

. W e affirm all three orders. We summarize the facts pertinent to the three actions. In May 2007, the Bank issued a commitment letter to appellants for a $3 million loan. Appellants intended to use $1.5 million to construct a ho me on 22 Lambs Lane. On June
26 , 2007, prior to executing any loan documents, the Bank provided appellants

1 B ecause Lambs Lane and the Ferolies were both plaintiffs and defendants in the various action s, we refer to them as appellants although we traditionally denote the parties by their status before the trial court. The corporate entity, Lambs L ane, owned vacant property at 22 Lambs Lane. The Ferolies owned a home located at 20 Lambs Lane.4 A

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with appraisals for the collateralized properties. 2 The appraisal for 20 Lambs Lane estimated the value of the land with the existing structure at $1.5 million. The appraisal s for 22 Lambs Lane estimate the value of the land as vacant at $650 ,000 and the value with a newly constructed home at $2 million

. The loan closed in November 20 0 7 . Due to various construction delays, appellants requested and received multiple extensions of the loan's original maturity date

. 3 On March 1, 2012, the part ies agreed to restructure the 2007 loan. Appellants signed a note promising to repay the loan by March 15, 2013

. Appellants also executed a mortgage in favor of the Bank, "covering premises at 22 Lambs Lane [

. ] " The Ferolies executed a guaranty, assuring the financial obligations under the note and mortgage. In accordance with the terms of the rest ru ctured loan, the failure to pay all sums due by March 15, 2013 constituted an event of default. The parties

e xtended the maturity date on the restructured loan eight times, with the last extension requiring full payment by June 15, 2016. Each signed loan extension

2 The collateralized properties included 20 Lambs Lane, the lot with an existing home occupied by the Ferolies, and 22 Lambs Lane, the lot on which a new home would be built

.
3 The origin al maturity date was June 1, 200 9.5 A

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agreement required appellants to release any claims against the Bank. B efore signing each loan extension agreement, Mr. Ferolie testified he read the
document and obtained legal advice from counsel

. Appellants defaulted on June 15, 2016, and the Bank sent a notice of intention to foreclose on November 17, 2016. T he reafter, the parties attempted
to negotiate a forbearance agreement but they were unable to agree on material
terms to execute a forbearance agreement

. Knowing a foreclosure action w as likely to be filed by the Bank, appellants preemptively filed the Chancery action. In that action, a pp ellants sued the Bank, asserting breach of contract and breach of the covenant of good faith and fair dealing . In addition , appellants demanded injunctive relief to bar the filing of a foreclosure action by the Bank. A ppellants also requested the parties be compelled to participate in mediation to achieve a forbearance agreement

. A fter appellants instituted the Chancery action, the Bank filed the foreclosure action and the action on the note

. T he Bank also moved to dismiss the Chancery action . The B ank contended appellants' claims in the Chancery action could and should be raised in the foreclosure action. The Chancery judge agreed and issued a February 21, 2017 order dismissing the Chancery action without prejudice

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T he judge found appellants' cl aims in the Chancery action were germane to the foreclosure action. The judge concluded that if he were "to refrain from dismissing [appellants'] complaint, the entire controversy doctrine would likely bar [appellants] from raising their claims in the for eclosure action." The judge also rejected appellants' request to consolidate the Chancery action with the foreclosure action, finding appellants failed "to explain the need for the continued existence of [the Chancery action] in addition to the foreclosur e action where [appellants] may raise all their claims." The judge held "it is inconsistent with the policies underlying the entire controversy doctrine to allow [appellants] to proceed with this duplicative litigation. The subject matter of the dispute between the parties involves an already

- begun foreclosure proceeding, where [appellants'] claims may be fully and fairly litigated." After the exchange of discovery in the foreclosure action , the Bank moved for summary judgment , which appellants opposed

. Appellants argued the Bank 's 2007 app raisals hid the true value of the properties . According to appellants , the Bank's appraisals overvalued the properties and induced them to borrow more than the properties were worth

. A ppellants also claimed the parties entered into a binding forbearance agreement in December 2016 , precluding foreclosure by the Bank

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On September 29, 2017 , the foreclosure judge issued a written opi nion , dismiss ing appellants ' answer and counterclaim and deeming the foreclosu re action uncontested . The judge rejected appellants' claim that the loan extensions were unconscionable or constituted economic duress

. T he judge noted Mr. Ferolie "testified that he read the provision of the agreements before signing and
that he was re presented by counsel when he executed each of the eight extensions." The judge also rejected appellants' argument that the default was caused by the Bank's wrongful conduct

. Relying on United Jersey Bank v. Kensey , 306 N.J. Super. 5 40 , 558 (App. Div. 1997), the judge concluded the B ank owed no duty to disclose to appellant s how it internally analyzed and underwrote the loan in determining the amo unt the Bank was willing to lend

. T he judge found appellants had the ability to obtain their ow n valuation of the propert ies

. He further noted appellants were represented by counsel when the loan extension agreements were executed and could have challenged the Bank ' s appraisals or the loan agreement instead of signing the extension agreements.
T h e judge also fou nd the parties failed to reach an agreement as to the essential terms of a forbearance agreement. Based on the parties' emails and drafts of the forbearance agreement, the judge determined there was no meeting8 A

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of the minds on an agreement. The judge explained there were essential terms require d by the Bank as part of a for bearance agreement , including a deed in
lieu of foreclosure and appellants' waiver of all claims , and appellants never agreed to those terms.
I n dismissing appellants ' counterclaim against the Bank for breach of contract of good faith and fair dealing , the judge explained there was "insufficient evidence to substantiate these claims." He concluded appellants were "represented by counsel , . . . had the appraisal as earl y as 2007 but did not challe nge [the Bank's] loan agreement, " and "signed eight extensions of the loan agreement, each of which released the [Bank] from any and all claims relating to the loan." Thereafter , t he Bank applied for the entry of a final judgm ent of
foreclosure , which appellants did not oppose

. The final judgment of foreclosure was entered on December 20, 2017. While the foreclosure action was pending in Bergen C ounty , the parties litigated the action on the note in Passaic County. In Novem ber 2017, the Bank moved for summary judgment in th at matter . In opposing the motion, appellants argued the Bank was not entitled to foreclose because the parties reached a forbearance agreement in December 2016 . In addition, appellants claimed the9 A

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Bank concealed its overvaluation of the collateralized pro p erties in the 2007 appraisals. These were the same arguments raised by appellants and dismissed in the foreclosure action. On December 14, 2017, t he judge in the action on the note heard argument

on the Bank's motion. Five months later, i n a May 16, 2018 order and accompanying written decision, the judge denied the motion . The judge determined the Bank's law suit to collect on the note was barred by res judicata, ho ld ing : the summary judgment opinio n from the foreclosure

action dealt with the same causes of action and claims at issue before this court in the present action. These issues include: unconscionable loan extensions, deceitful behavior, contracts of adhesion, the existence of a forbearance agreement, breach of contract, breach of the covenant of good faith and fair dealing and rescission. Thus, all three elements of res judicata have been met. First, a valid final judgment was entered in an action prior to the one before this court. Seco nd, all the parties in the current action were also parties to the foreclosure action in Bergen County. Third, the action pending before the Passaic County Law Division stems from the same transaction or occur rence and has the same claims as the foreclosu re action in Bergen County. The Bank filed a motion for reconsideration, clarifying that it p revailed in the foreclosure action and explaining all of the issues identified by the judge had been resolved in the foreclosure action but a final judgment of foreclosure had10 A

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not been issued when the parties argued the motion in December 2017. 4 Therefore, the Bank argued it was entitled to summary judgment on res judicata grounds because the same issues involving the same parties were resolved in its favor in the foreclosure action

. During argument on the reconsideration motion , the judge acknowledged
his error concerning t he procedural posture of the case. The judge explained,

" [i] t didn't strike me that this was actually the action on the not e . . . and I guess I should have known [

. ] " The judge reviewed the rulings made by the Bergen County judge who handled the foreclosure action and relied on those rulings in granting the Bank's motion for reconsideration and summary judgment in the action on the note

. He concluded the only issue not decided by the foreclosure judge was the amount due to the Bank under the note and guaranty. T he judge found appellants did not dispute the amount due on the note and the only outstanding issue was the amount of attorneys' fees allowable under the guaranty. By order dated June 22, 2018 , the judge granted the Bank's motion for summary judgment in the amount of $1,597,649.36

. The order allowed the Bank

4 The final judgment in the foreclosure action was issued six days after oral argument on the Bank' s summary judgment motion in the action on the note

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to submit a certification seeking at torneys' fees

. In a September 10, 2018 amended order , the judge award ed the Bank the sum of $1,885,190.95 , inclusive
of atto rneys' fees

. Appellants appeal ed the final orders from the Chancery action, the foreclosure action, and the action on the note. In their appeal regarding the Chancery action, appellants assert the trial judge a bused his discretion in dismissing their claims

. A ppellants also contend their claim s in that action were adequately pled. Because appellants' claims in the Chancery act ion were fully litigated and addressed in the foreclosure action, we find the arguments on appeal related to the Chancery action are without sufficient merit to warrant discussion in a written opinion. See R. 2:11

- 3(e)(1)(E). In the appeal related to the foreclosure action, 5 appellants argue summary judgment should not have been granted because: (1) the Bank included unconscionable provisions in the loan extension agreements; (2) the default on the loan was attributable to th e Bank 's bad faith conduct ; and (3) the Bank breached the forbearance agreement

.

5 Appellants are not challenging the Bank's right to file a foreclosure action.12 A

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In the appeal from the final judgment in the action on the note, appellants argue: (1) there were genuine material factual disputes precluding summary judg ment ; (2) the Bank's conduct caused appellan ts to default; (3) the Bank conceal ed its mistake in calculating the loan

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- value assessment for the properties; (4) the Bank violated its fiduciary duty to appellants as well as the covenant of good faith and fair dealing; (5) the release language in th e loan extension agreements w as unconscionable and rendered the agreements void; and (6) the parties agreed to the essential terms of a forbearance agreement.
We review a grant of summary judgment de novo, applying the same standard as the trial court. T emplo Fuente De Vida Corp. v. Nat ' l Union Fire Ins. Co. of Pittsburgh , 224 N.J. 189, 199 (2016). Summar y judgment may be granted when " the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, sho w that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgme nt or order as a matter of law." R. 4:46

– 2(c). In determining whether there is a genuine issue of material fact, court s

" consider 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

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moving party." Brill v. Guardian Life Ins. Co. of Am. , 142 N.J. 520, 540 (1995 ). If the evidence presented " show[s] that there is no real material issue, then

summ ary judgment should be granted ." Walker v. Atl. Chrysler Plymouth, Inc. , 216 N.J. Super. 255, 258 (App. Div. 1987). We first review appellants' argument that the loan extension agreements
are unconscionable and thus void. Appellants based their unconscionab i lity claim on the follow ing: the Bank 's requirement in the loan extension agreement s that appellants waive all claim s against the Bank; the Bank took advantage of appellants' legal naivety; and the loan extension agreements were contracts of adhesion. To successfully plead u nconscionability as a defense , a de fendant must
prove the contract " terms are manifestly unfair or oppressive and a re dictated by a dominant party

. " Howard v. Diolosa , 241 N.J. Super. 222, 230 (App. Div. 1990). A d e fendant m ust demonstrate " some overreac hing or imposition resulting from a bargaining disparity between the parties, or such patent unfairness in the contract that no reasonable person not acting under compulsion or out of ne cessity would accept its terms." Ibid.

" There is of course an eleme nt of compulsion anytime a creditor asks a debtor in default to agree to anything; the creditor holds the upper hand. "14 A

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Glenfed Fin. Corp

. v . Penick Corp. , 27 6 N.J. Super. 163, 174 (App. Div. 1994)

. However, requiring a debtor to agree to changes in the agreement when the creditor exercises its right "to declare a loan in default or to forbear from taking such action " is not " ' wrongful conduct ' . . . [and] does not constitute economic duress ." Ibid. Here, app ellants admit borrowing the money, executing the loan documents, defaulting on the loan , and asking the Bank , on eight separate occasions , for extensions of time to repay the loan. The loan extensions were granted by the Bank to allow appellants to pay t he loan and avoid foreclosure.
This case reflects a traditional relationship between a lender and a borrow er . Based on that relationship, t here is nothing unfair or oppressive in the Bank's request that appellants waive any claims against it in return for the numerous loan extensions

. A ppellants have also failed to demonstrate how the waiver of their claims against the Bank under these circumstances was patently unfai r or unconscionable. The Bank had th e legal right to de clare appellants in default under the loan documents and had no obligation to agree to any loan extension s . Moreover, Mr. Ferolie testified he read the provisions in the loan extension15 A

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agreement s and sought the advice of legal counsel b efore signing each extension agreement. We next consider appellants ' contention that the loan extension agreements are contracts of adhesion and therefore unenforceable

. A contract of adhesion "is a contract 'presented on a take

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a standardized printed form, without opportunity of the "adhering" party to negotiate except perhaps on a few particulars. ' " Martindale v. Sandivik, Inc. , 173 N.J. 76, 8 9 (2002) ( quoting Rudbar t v. N. Jersey Dist. Water Supply
Comm'n , 127 N.J. 344, 353 (1992) ). Even if an agreement constitutes a contract of adhesion, the contract is not automatically void. See Rodriguez v. Raymours Furniture Co., Inc. , 225 N.J. 343, 36 6

- 6 7 (2016 ). When considering whether to enforce the provisions in a contra ct of adhesion,

courts must look not only to the standardized nature of the contract, 'but also to the subject matter of the contract, the parties' relative bargaining positions, the degree of economic compulsion motivating the

" adhering " party, and the pu blic inte rests affected by the contract. ' [ Martindale , 173 N.J. at 90 (quoting Rudbar t , 127 N.J. at 356 )

. ] In this case, a ppellants were not coerced into signing the eight loan
extension agreement s. T he Bank agreed to delay declaring default of the loan16 A

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and to the loan extension agreement s so appellants could sell the newly constructed home and pay the loan obligation

. Both parties benefited from the
loan extension agreement s. Appellants bargained for and received additional time to pay their financial obligations in return for the Bank's agreement to delay declaring default and filing for foreclosure. Appellants present no evidence that

e nforcement of the lo an extension agreem ents implicate s a matter of public policy. In addition, appellants had legal counsel when Mr. Ferolie signed the loan extension agreements. Under the circumstances , we are satisfied the loan extension agreements were enforceable.
We next consider appellants' argument that th e Bank acted in bad faith. Appellants claim the Bank caused the m to default by purposely overvaluing the properties when it extended the loan , thus inducing appellants to borrow more money than the properties were worth. The foreclosure judge rejected this argument, relying on the United Jersey Bank v

. Kensey , 306 N.J. Super. 540 (App. Div. 1997)

. In Kensey , the defendant challenged a foreclosure action, arguing the b ank breached its duty by failing to share an appraisal , estimating the value of the pledged property to be substantially lower than the loan amount. Id

. at 544, 549. We held "[t]he law ' imposes no duty on banks to disclose to the borrower the17 A

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manner in which the lender internally a nalyzes and underwrites a l oan.'" Id. at 558 ( quoting N. Trust Co. v. VIII S. Mich. Assoc s . , 276 Ill App. 3d. 355, 364 (Ill. App. Ct. 1995) ). "[A] financial institution, acting within its conventional role as a lender of money, owes no duty of care to the borrower when preparing an appraisal of the borrower's collateral. " Kensey , 306 N.J. Super. at 5 5 8

. This is especially true because the relatio nship between a borrower and a lender is based on each party acting in their own interest and conducting themselves in

an arms - length manner. Id. at 553

. Here, the Bank disclose d the appraisal information to appellants p rior to
execution of the loan do cuments. U nlike the defendants in Kensey , a ppellants failed to demonstrate t he Bank encouraged them to rely on the appraisal s or concealed any self

- interest in processing the loan . The Bank was not required to send the appraisal information on which it based the amount it was willing to lend to appellants

. Appellants had ample opportunity to obtain their own appraisals but did not do so. In addition, a ppellants failed to review the appraisals until 2014, well after the loan documents and a ll eight loan ext ension agreements were signed. Considering these facts , we discern no basis to disturb the judge's rejection of appellants' bad faith claim against the Bank.18 A

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We next address appellants' argument that the Bank entered into a binding forbe arance agreement and breached that agreement by attempting to add unreasonable terms. Contract law requires " an ' offer and acceptance ' by the parties, and t he terms of the agreement must 'be sufficiently definite [so] that the performance to be rendered by each party can be ascertained with reasonable certainty

. ' " GMAC Mortg

. , LLC v. Willoughby , 230 N.J. 172 , 185 (2017) (quoting Weichert Co. Realtors v. Ryan , 128 N.J. 427 , 435 (1992)) . Fo r a contract to be formed, the parties must "agree on essential ter ms and manifest an intention to be bound by those terms [

. ] " Weichert , 128 N.J. at 435. Here, no agreement on the essential terms of the forbearance agreement existed. T he parties disagreed on several material terms, including the length of the forbear ance period , the interest rate during the forbearance period , admission by appellants of a default under the loan, and execution of full releases in favor of the Bank

. A ppellants were also un willing to grant a deed in lieu of foreclosure

or provide a confession of judgment as part of the forbearance agreement. Because the parties were unable to agree to material and essential terms , there

was no meeting of the mind s on a forbearance agreement. Finally, we review appellants' contention that the judge handling the action on the note erred in reconsidering summary judgment in favor of the19 A

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Bank. Appellants for the first time claim there were material factual disputes that precluded summary judgment. However, appellants never raised this argument to the motion judge

. We need not consider arguments not properly presented t o the trial court when an opportunity for such a presentation is available absent the matter going to the jurisdiction of the trial court or a concern of great public interest

. See Nied er v. Royal Indem. Ins. Co. , 62 N.J. 229, 234 (1973); R. 2:10

- 2. Even if appellants had raised such an argument, we reject the contention that reconsideration was improper. Reconsideration is "designed to seek review of an order based on the evidence before the court on the initial motion" and "is only to point out 'th e matters or controlling decisions which counsel believes the court has overlooked or to which it has erred.'" Capital Fin. Co. of Del

. Valley v. Asterbadi , 398 N.J. Super. 299, 310 (App. Div. 2008) ( quoting R. 4:49

- 2 ). In this case, the Bank filed a mo tion for reconsideration based on an apparent error by the motion judge. The judge applied the doctrine of res judicata but was unaware at the time of the original decision that the matter involved a suit on the note and guaranty and not a second foreclos ure action by the Bank. The Bank did not seek reconsideration to introduce new evidence or

cure a n inadequacy in the record. Rather, the Bank sought to address an issue20 A

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because the Bank believed the motion judge erred . Here, reconsideration was appropri ate to correct a misperception by the motion judge in his original
decision

. R es judicata is applicable to actions based on notes and guarantees where a final judgment has been entered in a foreclosure action involving the same
issues and the same parties. See Cent

. Penn Nat'l. Bank v. Stonebridge, Ltd. , 185 N.J. Super. 289, 302

- 03 (Ch. Div. 1982). T he judge in the foreclosure action dismissed the same defenses and claims raised by appellants in the action on the
note. Therefore, the Bank was ent itled to summary judgment in the action on
the note based on the doctrine of res judicata. Having reviewed the record, we are satisfied the orders entered in favor of the Bank in the Chancery action, the foreclosure act ion, and the action on the
note were warranted. Affirmed.