Glukowsky v. Equity One, Inc.

Justice ZAZZALI,

dissenting.

The majority opinion represents a principled treatment of a complex problem. However, I do not believe that the preemption *73doctrine applies. Therefore, I respectfully dissent. I would affirm the judgment of the Appellate Division substantially for the reasons expressed by Judge King in his comprehensive and well-reasoned opinion. Glukowsky v. Equity One, Inc., 360 N.J.Super. 1, 821 A2d 485 (2003).

I write further only to underscore the point that affording lenders protection under the 1996 regulation, which by now has been universally recognized as misguided, becomes especially unjust when viewed in conjunction with the sequence of events relating to the “opt-out” mechanism provided by Congress when it enacted the underlying legislation. Ante at 58-59, 848 A.2d at 752.

In passing the Parity Act, Congress afforded each state three years to assert its right not to be preempted by the federal regulatory scheme. 12 U.S.C.A. § 3804. Congress enacted the law including that provision in 1982, some fourteen years before the suspect 1996 regulation was promulgated. Ante at 58-59, 848 A.2d at 752. During the three-year window from 1982 to 1985, neither the New Jersey Legislature nor that of any other state could predict that the OTS, or any other regulatory agency, someday would turn the salutary congressional goal of ensuring the availability of alternative mortgages on its head by sanctioning what arguably amount to predatory lending practices by state-chartered institutions. As explained by Judge King, the countenance of those practices, by the federal regulators’ own admission, finds no support in the intent manifested by Congress when it enacted the Parity Act. Glukowsky, supra, 360 N.J.Super. at 32-34, 821 A.2d 485. That such an ultra vires regulation came into being only after the states were no longer free to exempt themselves compounds the injustice of allowing such lending practices the safe-haven accorded by preemption in these circumstances.

Finally, by virtue of the rule that a dismissal under Rule 4:6-2(e) is presumptively without prejudice, Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 772, 563 A2d 31 *74(1989), plaintiff might yet find relief by alleging a violation of 12 C.F.R. 591.5(b)(2)(i). As the Appellate Division noted, that regulation prevents lenders from collecting prepayment penalties when they have demanded full payment under a due-on-sale clause. Glukowsky, supra, 860 N.J.Super. at 23-24, 821 A2d 485.

Justice VERNIERO and Justice WALLACE join in this opinion.

For reversal and reinstatement — Chief Justice PORITZ and Justices LONG, LaVECCHIA and ALBIN — 4.

For affirmance — Justices VERNIERO, ZAZZALI and WALLACE — 3.