NOT FOR PUBLICATION WITHOUT THE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. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3058-17T4
PACIFIC UNION FINANCIAL, LLC,
Plaintiff-Respondent,
v.
DOUGLAS CARTER,
Defendant-Appellant.
________________________________
Argued February 25, 2019 – Decided March 11, 2019
Before Judges Sabatino and Haas.
On appeal from Superior Court of New Jersey,
Chancery Division, Ocean County, Docket No. F-
014322-16.
John J. Jacko, III, argued the cause for appellant
(Fellheimer & Eichen, LLP, attorneys; Alan S.
Fellheimer, of counsel and on the briefs; Gleb
Epelbaum and David C. Bennett, on the briefs).
Benjamin S. Noren argued the cause for respondent
(Hinshaw & Culbertson, LLP, attorneys; Benjamin S.
Noren, on the brief).
PER CURIAM
In this residential mortgage foreclosure matter, defendant Douglas Carter
appeals from the February 16, 2018 Chancery Division order denying his motion
to vacate a final default judgment of foreclosure entered against him on April 5,
2017. We affirm substantially for the reasons expressed by Judge Francis R.
Hodgson, Jr. in his thorough February 16, 2018 written decision.
We begin by summarizing the salient facts. On September 5, 2014,
defendant executed a $521,977 note and mortgage to the original lender,
American Neighborhood Mortgage Company, LLC. On September 8, 2014, the
mortgage was recorded in the Office of the Ocean County Clerk. The mortgage
was subsequently assigned to plaintiff Pacific Union Financial, LLC.
Under the terms of the mortgage, defendant was required to make monthly
payments of $2644.78 in principal and interest, plus additional amounts to cover
his escrow obligations.1 The mortgage was for a thirty-year term, which would
1
The exact amount of the monthly escrow payment is not set forth in the record.
Defendant later certified that his total monthly payment, including the escrow,
was "in excess of $4500 per month[,]" which meant he was paying at least $1850
each month toward such items as property taxes, homeowners insurance, and
mortgage insurance. However, other documents in the record, including a
"Statement of Amount Due" attached as an exhibit to plaintiff's February 6, 2017
Certification of Proof of Amount Due and Schedule, indicate that defendant paid
approximately $2200 per month toward his escrow obligations.
A-3058-17T4
2
expire on September 1, 2044, and defendant paid 4.5% annual interest on the
loan.
Fifteen months after securing the loan, defendant defaulted by failing to
pay the December 1, 2015 monthly installment. Plaintiff filed its complaint for
foreclosure on May 23, 2016, and defendant defaulted by failing to answer. On
August 29, 2016, the court entered default against defendant. On April 5, 2017,
the court filed the final judgment of foreclosure. By that time, defendant's
obligation to defendant had grown to $563,323.92, which was $41,346.92 more
than the original amount he borrowed.
Despite the entry of the default, plaintiff maintained the file on a "loss
mitigation hold," and sent a letter to defendant on April 11, 2017 offering him
the opportunity to qualify for a permanent modification of the mortgage. The
letter stated that plaintiff "want[ed] to continue to work with [defendant] to
modify [his] mortgage and help make [his] payments more affordable." It
advised defendant that he "may be eligible for a modification" if he was able "to
make [three,] new affordable payments during a trial period" in a "timely
manner." These monthly Trial Period Plan (TPP) payments were set at
$2247.64.
A-3058-17T4
3
The letter further stated that "[a]fter all trial period payments are timely
made, [defendant's] mortgage will be permanently modified." Significantly,
however, the letter did not provide any information as to the terms of the
"permanent modification" if defendant met the qualifying requirements. Thus,
among other things, the letter did not set forth the principal amount of the new
mortgage, its due date, the interest rate, or any of the other terms of payment.2
Defendant certified that he signed and returned a copy of the letter to
defendant, and made the three TPP payments, together with four additional
payments through November 2017, while waiting for "the final paperwork
setting forth the new terms of the [m]ortgage." Because defendant had
completed the TPP, plaintiff sent him a letter on November 21, 2017, offering
to permanently modify his current mortgage under the terms set forth in the
letter. This letter explained that defendant had "been approved for a[] Home
Affordable Modification." To finalize the modification, defendant had to make
2
Defendant later submitted a certification in support of his motion to vacate the
default judgment in which he stated that he believed the modified mortgage
would provide for "substantially lower monthly [m]ortgage payments compared
to the ones that [he had] paid in the past." He also asserted that his
"understanding based on the [April 11, 2017] [l]etter [was] that, after [he] made
all three [t]rial [p]eriod [p]ayments, the [m]ortgage would be permanently
modified, and [his] new monthly payments would be substantially similar to the
[t]rial [p]eriod [p]ayments." However, as Judge Hodgson found, nothing in the
letter objectively supports this contention.
A-3058-17T4
4
three monthly payments that had "be[en] set at an amount at or around what [his]
monthly payments would be with a permanent modification."
By this time, defendant's outstanding debt to plaintiff had risen over
$94,000 from $521,977 to $616,333.93, due to his non-payment of principal,
interest, and escrow obligations in the months following his default almost two
years earlier in December 2015. Under the proposed permanent modification,
plaintiff agreed to give defendant a new thirty-year term on the mortgage with a
March 1, 2048 maturity date, and lowered his annual interest rate from 4.5% to
4.25%. His new monthly mortgage obligation would be $5076.31, made up of
$2867.58 for principal and interest, and $2208.73 for escrow.
Defendant did not accept the terms of the proposed permanent
modification, and plaintiff lifted the loss mitigation hold on the file. Defendant
then filed a motion to vacate the final judgment of foreclosure under Rule 4:50-
1(e) and (f). Defendant asserted that the mortgage was permanently modified
as soon as he made the three TPP payments, and that his new monthly obligation
going forward should have been in the same amount ($2247.64) as those
payments, even though that sum would barely cover his required monthly
escrow. Defendant argued that because of this alleged modification, he was
entitled to relief under Rule 4:50-1(e), which provides that the court may relieve
A-3058-17T4
5
a party from a final judgment when it is "no longer equitable that the judgment
. . . should have prospective application." He also alleged that his completion
of the TPP represented "exceptional circumstances" which warranted vacating
the foreclosure judgment under Rule 4:50-1(f). In re Estate of Schifftner, 385
N.J. Super. 37, 41 (App. Div. 2006).
In a detailed written decision, Judge Hodgson carefully considered and
rejected defendant's contentions. The judge found that the April 11, 2017 letter
was "sufficiently clear and identifie[d] the offer as a 'trial period' and not a
permanent modification." This conclusion, the judge determined, was further
bolstered by the fact that the letter omitted the "terms necessary to confirm a
final mortgage modification[,]" such as the principal balance, the length of the
modified loan, the interest rate, or the amount of the monthly payments. Judge
Hodgson found that "the absence of these necessary terms [was] fatal to the
agreement as it lack[ed] the necessary indicia of a permanent enforceable
modification agreement."
Thus, as the April 11, 2017 letter stated, defendant had to qualify for a
permanent modification by paying the three TPP payments. Once that occurred,
he was eligible for a permanent modification, and the terms of that modification
were set forth in plaintiff's November 21, 2017 letter. Because defendant
A-3058-17T4
6
refused to accept the proposed terms of the permanent modification, Judge
Hodgson concluded that he was not entitled to relief from the judgment of
foreclosure under Rule 4:50-1(e) or (f). This appeal followed. 3
On appeal, defendant raises the same contentions he unsuccessfully
pressed before Judge Hodgson. He again argues that his mortgage was
automatically modified as soon as he made the three TPP payments, even though
none of the specific terms of the modification were set forth in plaintiff's April
11, 2017 letter, and defendant rejected the new loan provisions plaintiff detailed
in its November 21, 2017 letter. Having considered these contentions in light
of the record and applicable law, we affirm substantially for the reasons set forth
in Judge Hodgson's decision. We add the following comments.
A trial court's decision on a Rule 4:50-1 motion is entitled to "substantial
deference, and should not be reversed unless it results in a clear abuse of
discretion." US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). An
abuse of discretion may be found when a decision lacks a "rational explanation,"
represents an inexplicable "[departure] from established polices," or rests "on
3
Following the denial of defendant's motion to vacate the foreclosure judgment,
the sheriff sold the property at a sale. On May 11, 2018, Judge Hodgson denied
defendant's motion to set aside the sheriff's sale. Defendant does not challenge
that order on appeal.
A-3058-17T4
7
an impermissible basis." Ibid. (quoting Iliadis v. Wal-Mart Stores, Inc., 191
N.J. 88, 123 (2007)).
Applying this standard, we discern no basis for disturbing Judge
Hodgson's well-reasoned decision. As the judge found, the determinative issue
is whether the parties agreed to the terms of an enforceable mortgage
modification by virtue of defendant's payment of the three TPP payments. The
judge properly answered this question in the negative.
It is well established that "[a] contract arises from offer and acceptance,
and must be sufficiently definite 'that the performance to be rendered by each
party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v.
Ryan, 128 N.J. 427, 435 (1992) (quoting West Caldwell v. Caldwell, 26 N.J. 9,
24-25 (1958)). "As a general principle of contract law, there must be a meeting
of the minds for an agreement to exist before enforcement is considered."
Kernahan v. Home Warranty Adm'r of Fla., Inc., ___ N.J. ___, ___ (2019) (slip
op. at 19) (citing Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 538
(1953)).4
4
The issue of whether the parties entered into an enforceable agreement is a
question of law, which we review de novo. Kaur v. Assured Lending Corp., 405
N.J. Super. 468, 474 (App. Div. 2009).
A-3058-17T4
8
In addition, the parties must agree "to the essential terms" of the
agreement. Cumberland Farms, Inc. v. N.J. Dep't of Envtl. Prot., 447 N.J. Super.
423, 438-39 (App. Div. 2016) (quoting Mosley v. Femina Fashions Inc., 356
N.J. Super. 118, 126 (App. Div. 2002)). "Where the parties do not agree to one
or more essential terms, however, courts generally hold that the agreement is
unenforceable." Weichert, 128 N.J. at 435. This is so because "the terms of a
contract must be definite and certain so that a court may order with precision
what the parties must do." Graziano v. Grant, 326 N.J. Super. 328, 339 (App.
Div. 1999) (citing Barry M. Dechtman, Inc. v. Sidpaul Corp., 89 N.J. 547, 552
(1982)).
These well-established principles apply to mortgage agreements. For
example, in Heim v. Shore, the parties' mortgage agreement, as here, did not
include the principal amount of the mortgage, the terms of payment, the due
date, or the interest rate. 56 N.J. Super. 62, 71 (App. Div. 1959). Under those
circumstances, we held "that the terms of the agreement were too uncertain" to
be enforceable. Id. at 70.
On the other hand, in GMAC Mortgage, LLC v. Willoughby, the parties
to a mortgage agreement participated in a court-sanctioned mediation program
after the defendant defaulted on her mortgage. 230 N.J. 172, 175 (2017). The
A-3058-17T4
9
parties executed a memorandum memorializing their agreement that provided,
in pertinent part, that the defendant's mortgage would be permanently modified
if she made a series of trial payments, paid a down payment, and provided
certain, specified documents to the lender. Id. at 186.
Unlike in the present case, however, the memorandum specified "the
precise terms of the [a]greement," including the estimated principal balance of
the loan, the length of the loan, the interest rate, and the estimated monthly
payments. Ibid. Because the terms of the modification were fully set forth and
agreed upon by the parties, our Supreme Court held that the agreement could be
enforced once the defendant made the trial payments and satisfied the other
conditions set forth in the memorandum. Id. at 186-87.
Applying these principles, we are satisfied that plaintiff's April 11, 2017
letter was insufficiently definite to permit it to be enforced as a permanent
modification of defendant's mortgage. As Judge Hodgson found, the letter did
not set forth any of the essential terms of a mortgage agreement because it did
not specify the new principal balance of the loan, the length of the loan, the
interest rate, or the estimated new monthly payments, which would necessarily
include the payment of escrow items such as property taxes and homeowner's
insurance. Although defendant claimed that he believed that the terms of the
A-3058-17T4
10
permanent modification would be the same as the monthly TPP payments, the
letter did not state this either directly or by implication. Instead, plaintiff merely
promised that if defendant could make the three TPP payments, defendant would
be eligible for a permanent modification of the loan on terms to be specified in
a future agreement. Plaintiff complied with this representation when it offered
defendant a permanent modification on the specific terms set forth in its
November 21, 2017 letter. After defendant rejected this offer, there was simply
no basis for vacating the default judgment of foreclosure. 5 Nor are we persuaded
that concepts of "merger" undermine the soundness of the trial court's decision.
Affirmed.
5
In so ruling, we do not mean to suggest that the April 11 letter was a model of
clarity or that it should be viewed by parties in the future as an example to be
used by lenders to propose similar mortgage modifications. All we are saying
in affirming the trial court's decision is that we agree with Judge Hodgson's
conclusion that the letter was "sufficiently clear and identifie[d] the offer as a
'trial period' and not a permanent modification" of defendant's mortgage
obligations.
A-3058-17T4
11