WELLS FARGO BANK, N.A. VS. NARESH G. GIDWANI (F-024030-14, MIDDLESEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-3096-16T1

WELLS FARGO BANK, N.A.,

Plaintiff-Respondent,

v.

NARESH G. GIDWANI and
BINA R. GIDWANI,

Defendants-Appellants.
_____________________________

Submitted March 5, 2018 – Decided August 3, 2018

Before Judges Messano and O'Connor.

On appeal from Superior Court of New Jersey,
Chancery Division, Middlesex County, Docket
No. F-024030-14.

Law Offices of Joseph A. Chang & Associates,
attorneys for appellants (Joseph A. Chang,
of counsel; Jeffrey Zajac, on the briefs).

Reed Smith, LLP, attorneys for respondent
(Henry F. Reichner, of counsel; Brian P.
Matthews, on the brief).

PER CURIAM
 In this residential mortgage foreclosure action, defendants

Naresh G. Gidwani and Bina R. Gidwani1 appeal from a final

judgment of foreclosure, contending the court erred when it

entered summary judgment for plaintiff Wells Fargo Bank, N.A.

We affirm.

I

We culled the following from the record. In 2004,

defendants were married and owned a home together. Their home

was encumbered by a mortgage and a home equity line of credit.

That year, Naresh lost his job and Bina stopped working for many

months to care for her parents, who were gravely ill. In

October 2005, defendants were still struggling financially and

decided to refinance the mortgage and home equity line of

credit. Defendants believed refinancing and consolidating these

debts would ultimately save them money and improve their

financial condition. At that time, the outstanding principal

balance of these debts totaled $148,726.63.

Defendants obtained a $165,000 refinance mortgage loan

(refinance mortgage) from plaintiff's predecessor, Wachovia

Bank, N.A. (Wachovia), and executed a thirty-year note and a

mortgage against their home. The interest rate on the loan was

1
Because they share the same surname, for clarity and
simplicity, we refer to the defendants by their forenames. We
do not intend any disrespect by such informality.
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6.05 percent per annum. The first page of the note states

defendants agreed to pay interest on the unpaid principal

balance, and that "the 6.05 percent interest rate would be

charged at a rate of 1/365th of the rate for each day." The note

also stated the loan would be paid off in thirty years if the

monthly payments were paid on time; otherwise, defendants "may

owe additional and substantial money at the end of the credit

transaction and there may be little or no reduction of

[p]rincipal."

Defendants used the loan proceeds to pay off the previous

mortgage and the home equity line of credit, and retained

$16,000 in cash. Defendants were not charged any fees or costs

to complete the transaction. The monthly mortgage payment was

$996.76; it is not known what defendants paid each month on the

previous mortgage and the home equity line of credit.

Defendants timely made every monthly mortgage payment until

November 2010, when they made their last payment, defaulting on

the loan. In 2014, plaintiff, which had acquired Wachovia in

March 2010, filed a complaint in foreclosure. In their answer,

defendants assert the affirmative defense of recoupment,

claiming plaintiff violated the Consumer Fraud Act (CFA),

N.J.S.A. 56:8-2 to -210, and the Truth in Lending Act (TILA), 15

U.S.C. § 1638.
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 In their brief before us, defendants clarify that the

recoupment claim is premised upon plaintiff violating the CFA by

transgressing "Regulation Z," see 12 C.F.R. § 226.1(b) (2018).

Regulation Z requires a lender to disclose to potential

borrowers certain details about the terms and the costs of a

proposed loan. See ibid. Defendants are not alleging plaintiff

violated any provision in TILA as a discrete claim. They

contend plaintiff engaged in an unconscionable commercial

practice under the CFA, see N.J.S.A. 56:8-2, because, contrary

to Regulation Z, plaintiff failed to disclose that the "daily

simple interest feature" of the refinance mortgage could result

in a borrower paying far more in interest than if the borrower

had a "conventional" mortgage.

Plaintiff moved for summary judgment, asserting it had a

right to foreclose upon the refinance mortgage as a matter of

law given defendants defaulted on the loan. Defendants opposed

the motion, arguing plaintiff had engaged in predatory lending

by issuing the refinance mortgage to them when their combined

annual income was only $12,225 in 2004, and by failing to

disclose the aforementioned terms of the refinance mortgage.

Defendants did not deny executing the note and refinance

mortgage, but they claimed they were not given an opportunity to

read these and related documents before the closing on the
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refinance mortgage and were never provided a copy of such

documents thereafter.

In support of their contention plaintiff engaged in

predatory lending, defendants submitted an expert's report from

an accountant. The expert noted the refinance mortgage

defendants obtained from plaintiff was of a kind that initially

applies monthly mortgage payments to only the interest owed.

Once the accumulated accrued interest has been paid off, the

monthly payments are then applied to the principal. In a

conventional mortgage, the monthly mortgage payment is applied

to both the interest and principal owed.

The expert noted that if defendants had timely made all

monthly mortgage payments, the mortgage would have been paid off

in full at the expiration of thirty years. However, because

there was a gap in payment, had defendants resumed making the

monthly mortgage payments in 2016, defendants would still owe

$155,192.99 at the time the loan matured in 2035. We note

defendants never resumed paying the mortgage after they

defaulted in 2010 and, therefore, the eventuality envisioned by

the expert did not materialize.

The court granted plaintiff summary judgment. It found

defendants' claim for recoupment unavailing because any action

against plaintiff for recoupment was dependent upon proving
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plaintiff violated the CFA, and the six year statute of

limitations for CFA claims, see N.J.S.A. 2A:14-1, had expired.

The court otherwise found plaintiff proved it was entitled to

foreclose upon the refinance mortgage. Defendants' motion for

reconsideration of the order granting plaintiff summary judgment

was denied.

The court subsequently entered final judgment foreclosing

the refinance mortgage. The judgment stated $235,915.17 is the

sum "plaintiff is entitled to have[,]" together with counsel

fees of $3,421.15 and interest. Whether defendants will have to

pay plaintiff in accordance with the terms of the final judgment

will depend upon whether plaintiff pursues and prevails in a

deficiency action against them.

II

On appeal, defendants contend the trial court erred when it

granted plaintiff summary judgment. Defendants argue there was

evidence plaintiff engaged in predatory lending because

plaintiff (1) extended a loan to defendants when they were

unemployed and presumably unable to make the monthly mortgage

payments, and (2) did not advise defendants the refinance

mortgage was "an unconventional mortgage product that had the

potential to cost them much more than a standard loan."

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Defendants also maintain their claim for recoupment was not

barred by any statute of limitations.

We review a trial court's decision on summary judgment "de

novo, employing the same standard used by the trial court."

Tarabokia v. Structure Tone, 429 N.J. Super. 103, 106 (App. Div.

2012) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307

N.J. Super. 162, 167 (App. Div. 1998)). We give "no deference

to the trial judge's conclusions on issues of law." DepoLink

Court Reporting & Litig. Servs. v. Rochman, 430 N.J. Super. 325,

333 (App. Div. 2013) (citing Zabilowicz v. Kelsey, 200 N.J. 507,

512-13 (2009)). Thus, we must also "view the evidence in the

light most favorable to the non-moving party and analyze whether

the moving party was entitled to judgment as a matter of law."

Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 524

(2012) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J.

520, 523 (1995)).

We agree defendants' recoupment claim was not time barred.

Recoupment "is never barred by the statute of limitations so

long as the main action itself is timely." Beneficial Fin. Co.

v. Swaggerty, 86 N.J. 602, 609 (1981) (quoting Bull v. United

States, 295 U.S. 247, 262 (1935)); see also Assocs. Home Equity

Servs., Inc. v. Troup, 343 N.J. Super. 254, 271-72 (App. Div.

2001) (noting the defendant homeowners in a mortgage foreclosure
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action were permitted to assert an equitable recoupment defense,

even though a CFA claim against the mortgagee was time barred).

Notwithstanding defendants' recoupment claim is not time-

barred, we question, without deciding, whether under these

particular circumstances plaintiff engaged in an unconscionable

commercial practice because it extended the refinance mortgage

to defendants knowing they were unemployed.

Before acquiring the refinance mortgage, defendants were

already burdened with a primary mortgage and a home equity line

of credit, for which they had to make monthly payments.

Defendants had determined that consolidating and refinancing

such debt was in their best interests. They also assumed their

unemployment was temporary and their ability to make monthly

payments toward the refinance mortgage was feasible. Defendants

wanted to refinance the primary mortgage and home equity line

against their home because it provided relief from their

financial problems.

Second, there is no evidence from an expert supporting

defendants' claim that extending the refinance mortgage to

defendants constituted predatory lending. Further, even if

plaintiff had engaged in the unconscionable commercial practices

alleged by defendants, they did not sustain any damages. To

prove a cause of action under the CFA, a party must not only
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prove the defendant engaged in conduct that violated the CFA,

but also that such conduct caused the plaintiff to sustain an

ascertainable loss. N.J. Citizen Action v. Schering-Plough

Corp., 367 N.J. Super. 8, 12-13 (App. Div. 2003).

There is no evidence defendants sustained any damages as a

result of refinancing and paying off the primary mortgage and

the home equity line of credit, and retaining $16,000 in cash

from the refinance mortgage. Although defendants' expert states

they would have still owed $155,192.99 in 2035 had they resumed

paying off the refinance mortgage in 2016, defendants did not do

so and this mortgage has now been foreclosed. Thus, there is no

evidence defendants were damaged as a result of being issued

this particular kind of loan.

More important, defendants do not challenge the fact the

final judgment provides that $235,915.17 is the sum they

ostensibly owe plaintiff. Significantly, defendants do not

contend the latter figure would have been less had they been

issued a conventional mortgage.

Because defendants did not sustain an ascertainable loss,

they cannot show plaintiff violated the CFA and, thus,

defendants cannot prevail on a claim for recoupment in the event

plaintiff successfully prevails in a deficiency action against

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them. The trial court's decision to grant summary judgment to

plaintiff was appropriate.

Affirmed.

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