Court Opinion

ID: 4175542
Source: CourtListenerOpinion
Date Created: 2017-06-08 14:12:59.313746+00
Date Added: 2024-06-11T14:39:23.960164
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                   APPROVAL OF THE APPELLATE DIVISION

                                      SUPERIOR COURT OF NEW JERSEY
                                      APPELLATE DIVISION
                                      DOCKET NO. A-4176-15T2

WOODLANDS COMMUNITY
ASSOCIATION, INC.,
                                        APPROVED FOR PUBLICATION
      Plaintiff-Respondent,                   June 6, 2017

v.                                         APPELLATE DIVISION

ADAM T. MITCHELL,

      Defendant,

and

NATIONSTAR MORTGAGE, LLC,
and U.S. BANK, N.A., Successor
Trustee to Bank of America,
N.A. as Successor to LaSalle
Bank, N.A. as Trustee for the
Merrill Lynch First Franklin
Mortgage Loan Trust, Mortgage
Loan Asset-Backed Certificate
Series 2007-3,

     Defendant-Appellant.
________________________________

          Argued April 24, 2017 – Decided June 6, 2017

          Before Judges Sabatino, Currier, and Geiger.

          On appeal from the Superior Court of New
          Jersey, Law Division, Special Civil Part,
          Atlantic County, Docket No. DC-2766-14.

          Kathleen Cavanaugh argued the cause for
          appellant (Sandelands Eyet LLP, attorneys;
          Robert D. Bailey, of counsel and on the
          briefs).
               Tiffany L. Byczkowski argued the cause for
               respondent (McGovern Legal Services, LLC;
               Ms. Byczkowski, on the brief).

       The opinion of the court was delivered by

CURRIER, J.A.D.

       We are asked to determine whether a lender's assignee that

takes possession of a condominium unit when the owner/mortgagor

has defaulted on the loan, and thereafter winterizes the unit

and changes the locks, is considered a "mortgagee in possession"

of that unit, responsible for the payment of condominium fees

and    assessments.       Because      we       conclude   that     those    discrete

actions are not sufficient to render the lender's assignee a

mortgagee in possession of the unit, we reverse the entry of

summary judgment.

       In March 2007, Adam Mitchell purchased a condominium unit

in    a      property   managed   by        plaintiff,      Woodlands        Community

Association,       Inc.   (Association),           and     executed     a    mortgage

encumbering the unit.          After several assignments not pertinent

to    this    matter,   the   mortgage      was    assigned    in     July    2013   to

defendant, Nationstar Mortgage LLC.

                                            2                                 A-4176-15T2
       Mitchell defaulted on his obligations under the mortgage

loan and vacated the unit.1           Mitchell also owed substantial sums

to    the     Association    for    the    unpaid      monthly    fees     and      other

condominium assessments.            Subsequent to his default, Nationstar

replaced the locks on the unit and winterized the property.2

       The Association instituted an action in April 2014 against

Mitchell to recover the monthly maintenance association fees for

general      services   it    had   provided      to    the   property.3         Several

months       later,   plaintiff      amended      its     complaint      to    include

defendant, alleging that the lender's assignee was responsible

for    the     association    fees    as    it    was    in    possession      of    the

property.

       Both plaintiff and defendant moved for summary judgment.

On April 19, 2016, the trial court granted summary judgment in

favor    of    the    Association,    determining         that   defendant        was   a

mortgagee       in    possession,     and        therefore,      liable       for    the

maintenance fees.            The trial judge reasoned that no genuine

issues of material fact existed as "[defendant held] the keys,

1
  Final judgment was entered in the foreclosure action in
December 2015. The parties advised at the time of oral argument
on the appeal that the property had not been listed for sale.
2
  "Winterizing" entails draining the pipes, turning off the water
and setting the thermostat for heat to protect the pipes.
3
    Plaintiff and Mitchell resolved their claims in May 2015.

                                           3                                   A-4176-15T2
and no one else can gain possession of the property without

[defendant's]       consent.        This   constitutes       exclusive        control,

which indicates the status of mortgagee in possession."                             The

judge also awarded attorney's fees.                  This appeal followed.

       On appeal, defendant argues that changing the locks and

winterizing the condominium unit did not render it a mortgagee

in possession of the property.             We agree.

       Our "review of a trial court's grant of summary judgment is

de novo."       Trinity Church v. Lawson-Bell, 394 N.J. Super. 159,

166 (App. Div. 2007).             We must consider whether there are any

material factual disputes and, if not, whether the facts viewed

in the light most favorable to the non-moving party would permit

a decision in that party's favor on the underlying issue.                           See

Brill v. Guardian Life Ins., 142 N.J. 520, 540 (1995).                          "[T]he

legal       conclusions     undergirding        the    summary     judgment    motion

itself [are reviewed] on a plenary de novo basis."                       Estate of

Hanges v. Metro. Prop. & Cas. Ins., 202 N.J. 369, 385 (2010).

       After default by a mortgagor on a property, the lender or

its    assignee     has   "the    right    of    possession,       subject     to   the

mortgagor's equity of redemption."                McCorristin v. Salmon Signs,

244 N.J. Super. 503, 508 (App. Div. 1990) (citing Guttenberg

Sav.    &    Loan   Ass'n    v.    Rivera,      85    N.J.   617    (1981)).        The

mortgagee, however, is not the owner of the property unless

                                           4                                  A-4176-15T2
there   is    a     foreclosure         and   sale       of    the    premises     to    the

mortgagee.        Guttenberg, supra, 85 N.J. at 630.                     If a mortgagee

is determined to be in possession of the property, then the

mortgagee is "liable for delinquent condominium common charges,

which   had     accrued        against    the     property's         legal    owner,     for

services furnished during the mortgagee's possession and control

of the premises."              Woodview Condo. Ass'n, Inc. v. Shanahan,

391 N.J. Super. 170, 173 (App. Div. 2007).

    Whether a mortgagee or its assignee is in possession is

determined on a case-by-case basis.                      "[T]he acts of a mortgagee

under the circumstances, determine whether or not possession and

management        of     the    premises      have       been      undertaken      by    the

mortgagee."       Scott v. Hoboken Bank for Sav., 126 N.J.L. 294, 298

(Sup. Ct. 1941).           In Scott, the bank mortgagee had taken over

the collection of the rents from the tenants and was paying the

bills and making repairs in the building.                            Id. at 296.         The

Court   found      the    bank    had    become      a    mortgagee      in   possession,

stating that when the mortgagee "take[s] out of the hands of the

mortgagor     the      management       and   control         of   the   estate[,]"      the

mortgagee becomes a mortgagee in possession.                         Id. at 298.

    In Woodview, supra, 391 N.J. Super. at 174, the mortgagee

in possession had rented out the units and was collecting rents

on them.      We found the mortgagee to be in control and possession

                                              5                                    A-4176-15T2
of   those       units,      and    therefore,      responsible     for    the   monthly

condominium fees.

       We    must       assess      then     whether    defendant      exercised       the

necessary level of control and management over the property to

deem   it    a       mortgagee     in   possession.       Defendant       here   has   not

occupied the unit, is not collecting rents or any other profits,

nor is it making repairs.                  It cannot be argued that defendant's

actions of winterizing the property and changing the locks were

the equivalent of the multitude of actions and responsibilities

undertaken by the mortgagees in Scott and Woodview.

       Plaintiff contends, however, as did the trial judge, that

the sole act of changing the locks renders defendant a mortgagee

in possession as the action demonstrated that no one else could

enter the unit without the consent of defendant, thus conferring

upon it exclusive control.                 We disagree.

       The   use        of   the     word    "possession"      in   the     designation

"mortgagee in possession" is somewhat misleading.                           See 30 New

Jersey Practice, Mortgages § 21.10, at 132 (Myron C. Weinstein)

(2d ed. 2000) (citing George E. Osborne, Handbook on the Law of

Mortgages        §    162    (2d    ed.    1970))   (stating    that      dominion     and

control are more descriptive of a mortgagee in possession, not

actual possession).                Indicia of control and management include

elements of possession, operation, maintenance, use, repair, and

                                              6                                  A-4176-15T2
control      of    the   property      such    as    paying   bills    or   collecting

rents.    We are satisfied that the minimal efforts taken here by

defendant to secure its interest in the mortgaged property are

not sufficient to convert itself into a mortgagee in possession.

Defendant has not taken over the control and management of the

unit   nor    exercised        the    requisite      dominion   over    the   property

short of securing the unit.

       Upon       Mitchell's    default       on    the   mortgage,    defendant    was

required to protect its collateral, the value of its security.

See N.J.S.A. 46:10B-51 (obligating a lender or its assignee to

maintain a property in foreclosure proceedings "to such standard

or specification as may be required by state law or municipal

ordinance.").         In addition to paying the insurance premiums and

real estate taxes, defendant sought to prevent damage to the

unit by winterizing the property and changing the locks.                             In

this situation, the mortgagee has taken on the costs and borne

the burden of the abandoned property.                     It has not availed itself

of the benefits of the Association, as plaintiff argues, but

rather its actions in protecting its security serve to benefit

the other homeowners.                Incidents of vandalism or an occurrence

of frozen pipes in the vacant unit would likely lead to damage

to adjoining properties.               Defendant here is not benefitting from

                                              7                               A-4176-15T2
the limited actions it has taken to secure its collateral; it is

simply protecting its rights.

       Plaintiff        argues        alternatively            that     defendant        is

responsible for the unpaid assessments under equitable theories.

In    Woodview,      supra,   we   advised       that    equitable      considerations

supported our determination that the mortgagee in possession,

who    was    collecting      rents    on   the     two       properties,      should   be

responsible for the condominium assessments.                      391 N.J. Super. at

178.     We stated: "In our view, having enjoyed the benefit of

these goods and services throughout his possession and control

of the premises, and consistent with the rights and duties of

mortgagees in possession generally, defendant suffers the burden

of their cost."        Ibid. (emphasis added).

       There was no dispute in Woodview as to the designation of

"mortgagee      in     possession."         The        only    issue    presented       for

resolution       was    whether       the       mortgagee       in     possession       was

responsible for the unpaid condominium fees.                          We are satisfied

that our conclusion today is consistent with Woodview as we have

deemed defendant not in possession or control of the property

and not a mortgagee in possession.

       Nor are the equitable doctrines of unjust enrichment and

quantum meruit applicable in these circumstances.                         To establish

unjust       enrichment,      plaintiff         must     show    that     it    expected

                                            8                                    A-4176-15T2
remuneration     from     defendant     at     the    time     it     performed       or

conferred a benefit on defendant and that the retention of that

benefit   without    payment    would     be    unjust.       VRG    Corp.     v.    GKN

Realty Corp., 135 N.J. 539, 554 (1994).

    Recovery      under      quantum    meruit       similarly       rests    on     the

principle that one party should not be allowed to be enriched

unjustly at the expense of another.                  Weichert Co. Realtors v.

Ryan, 128 N.J. 427, 437 (1992).                Recovery under both of these

doctrines requires a determination that defendant has benefitted

from plaintiff's performance.            It is undisputed that there was

no express contract in place between plaintiff and defendant for

the provision of services.             Rather, the services furnished by

the Association are provided for the upkeep of the entirety of

the Association's property.            Defendant was not a member of the

Association, and therefore, plaintiff could not have expected

remuneration     from   it.     Without      defendant       being    designated       a

mortgagee in possession, we fail to see the basis of an implied

contract to satisfy the equitable doctrines. Cf.                     Essex Cleaning

Contractors,     Inc.   v.    Amato,   127     N.J.    Super.    364,    367       (App.

Div.), certif.      denied, 65     N.J.      575     (1974)     (finding      that     a

mortgagee determined to be in possession of the property "may be

liable    for   services rendered       to     him    in   connection        with    the

                                        9                                     A-4176-15T2
property during his occupancy thereof on the basis of an express

or implied contract.").

      We, therefore, conclude that the minimal actions taken by

defendant here in winterizing the unit and changing the locks do

not serve to deem it a mortgagee in possession and do not render

defendant     responsible      for     the        unpaid   condominium        fees   and

assessments.       Although not raised in the argument to the trial

court nor in the appellate briefs, plaintiff suggested to us at

the time of oral argument that we should impose some parameters

on   defendant's      conduct.        For    example,      plaintiff       suggests     a

requirement that the mortgagee must place the defaulted unit up

for sale within a certain timeframe after the entry of a final

judgment of foreclosure.             If a mortgagee is dilatory after the

entry of a final judgment of foreclosure in proceeding to sale

or has refused to go to sale on the unit, that conduct might

result in the imposition of responsibility for the Association

fees.   While these arguments might bear some merit in a future

discussion,     we     decline   the         invitation        to    expand    on    our

conclusion    on     this   record    as     it    is   void   of    any   information

regarding     the      circumstances             surrounding        the    foreclosure

proceeding or any events following the final judgment.                               See

Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011)

("An issue not briefed on appeal is deemed waived.").

                                            10                                 A-4176-15T2
    We   reverse     the    ruling      granting   summary     judgment     to

plaintiff,   and   remand   to   the    trial   court   for   the   entry   of

summary judgment on defendant's motion.

    Reversed and remanded.       We do not retain jurisdiction.

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