KAPIL GOEL VS. NEW JERSEY DEPARTMENT OF CORRECTIONS (NEW JERSEY DEPARTMENT OF CORRECTIONS)

NOT FOR PUBLICATION WITHOUT THE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-1523-15T2

ANTHONY CZYZ and
CATHERINE CZYZ,

Plaintiffs-Appellants,

v.

CARRINGTON MORTGAGE
SERVICES, LLC,

Defendant-Respondent.
______________________________________________

Submitted March 28, 2017 – Decided May 2, 2017

Before Judges Yannotti and Gilson.

On appeal from Superior Court of New Jersey,
Law Division, Passaic County, Docket No. L-
1391-15.

Anthony Czyz and Catherine Czyz, appellants
pro se.

McCabe, Weisberg & Conway, P.C., attorneys for
respondent (Joseph F. Riga, on the brief).

PER CURIAM

Plaintiffs Anthony Czyz and Catherine Czyz appeal from an

order of the Law Division, dated November 6, 2015, which dismissed
their claims against defendant Carrington Mortgage Services, LLC.

We affirm.

I.

This appeal arises from the following facts. Mr. Czyz is the

owner of real property in Bloomingdale, New Jersey. On October 7,

2005, Mr. Czyz borrowed $408,000 from New Century Mortgage

Corporation (New Century), the repayment of which was secured by

a mortgage on the Bloomingdale property. The loan had an adjustable

interest rate with an initial rate of 7.95%. Thereafter, New

Century transferred the loan to defendant. In 2007, defendant

refused to approve a so-called short sale of the property from Mr.

Czyz to Catherine Caucci, who became Catherine Czyz when plaintiffs

married.1

Mr. Czyz defaulted on the loan and on August 5, 2008, he

entered into a loan modification agreement with defendant, in

which all amounts due were capitalized into a new loan having a

principal balance of $458,659.40, with interest at a fixed rate

of 6.75%. Mr. Czyz defaulted on the modified loan agreement.

According to plaintiffs, on February 9, 2009, defendant's

1 According to defendant, a short sale is sometimes offered by a
lender when a borrower owes more than the value of the collateral
property securing the loan. A short sale is usually an arm's length
transaction that establishes the market value of the collateral.
The lender agrees to accept the sale proceeds as full payment of
the loan.

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employees entered the home to winterize it and allegedly damaged

the pipes. Plaintiffs claimed that because of the negligent

winterization, the pipes burst and the home sustained water damage.

In March 2009, Mr. Czyz filed an action against defendant in

the Florida courts. Apparently at that time, plaintiffs were

residing in Florida. They asserted fraud claims arising from

defendant's alleged refusal to permit a short sale of the

Bloomingdale, New Jersey property from Mr. Czyz to Ms. Czyz (then

Ms. Caucci), and the loan modification agreement. The Florida

trial court granted summary judgment in favor of defendant, and

Mr. Czyz's appeal was not successful.

In 2012, plaintiffs filed an action in the Law Division,

asserting the same claims that Mr. Czyz raised in the Florida

action. They also asserted claims for property damage,

misapplication of casualty insurance proceeds, and a violation of

the federal Truth in Lending Act (TILA), 15 U.S.C.A. §§ 1601 to

1693. This action also was unsuccessful.

In April 2015, plaintiffs filed this action against

defendant. In their complaint, plaintiffs asserted a claim for

negligence, alleging that defendant's employees had entered the

home in February 2009 without permission. Plaintiffs claimed that

several days later as a result of defendant's negligence, the

pipes burst and flooded the home. Plaintiffs further alleged that

3 A-1523-15T2
the pipes burst again in December 2011, and caused additional

damage. Plaintiffs claimed that in 2009 and 2011, they paid to

repair the damage to the home.

Plaintiffs also allege that after the pipes in the home burst

in December 2011, they submitted a claim to an insurance company

to compensate them for the loss. According to plaintiffs, defendant

directed the insurance company to make the check for the damage

payable to defendant. Plaintiffs claim that defendant fraudulently

cashed the check and refused to tender any payment to them.

Plaintiffs also asserted a claim of fraud with regard to the

original loan. Plaintiffs allege that the loan agreement was void

or voidable. Plaintiffs claim that at the time Mr. Czyz entered

into the original loan agreement, he was mentally and physically

impaired as a result of having been struck by a cement truck in

2002. Plaintiffs allege that New Century falsely represented that

the loan was a sound agreement, and that Mr. Czyz would be able

to keep his home. Plaintiffs assert that Mr. Czyz relied to his

detriment upon these false representations.

In addition, plaintiffs asserted a claim of fraud regarding

the modified loan agreement; a claim that the original loan

violated the TILA; a claim that defendant and New Century

fraudulently failed to disclose certain material terms of the

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original loan; and a claim that defendant breached the covenant

of good faith and fair dealing with regard to the original loan.

In lieu of an answer, defendant filed a motion to dismiss the

complaint pursuant to Rule 4:6-2(e). Defendant argued that the

claims regarding the alleged negligent winterization of the home

and all claims related to the original loan were barred by the

applicable statute of limitations. Defendant further argued that

claims relating to the alleged flooding of the home in December

2011 were not properly pled as tort claims since they are contract-

based claims. In addition, defendant asserted that Ms. Czyz's

claims should be dismissed because she did not have standing to

pursue any of the claims in the complaint.

The trial court entered an order dated September 11, 2015,

which denied the motion without prejudice, because the motion

papers had not been served upon Ms. Czyz in the manner required

by the court rules. On October 19, 2015, defendant re-filed its

motion. The court entered an order dated November 6, 2015, which

granted defendant's motion to dismiss Ms. Czyz's claims because

she lacked standing. The order also dismissed the complaint because

it did not assert any claim upon which relief could be granted.

This appeal followed.

On appeal, plaintiffs argue that the trial court erred by

finding that Ms. Czyz lacked standing to pursue the claims in the

5 A-1523-15T2
complaint. They also argue that the court erred by dismissing

their claims.

II.

We first consider plaintiffs' contention that Ms. Czyz had

standing to assert the claims in the complaint. Plaintiffs contend

that Ms. Czyz became an owner of the mortgaged property on April

27, 2007, when she married Mr. Czyz. Plaintiffs therefore argue

that Ms. Czyz had standing to assert the claims.

Here, the trial court correctly found that Ms. Czyz did not

have standing to assert the claims in the complaint. The claims

are tort claims, but relate to and arise from the original

note/mortgage and the loan modification agreement. It is

undisputed that Ms. Czyz is not a party to those agreements. Ms.

Czyz cannot assert claims based on those agreements.

The test for determining whether a third-party may bring an

action under a contract is whether the parties to the agreement

intended that a third-party "should receive a benefit that might

be enforced in court." GE Capital Mortg. Servs., Inc. v. Privetera,

346 N.J. Super. 424, 434 (App. Div. 2002). "The contractual intent

to recognize a right to performance in the third person is the

key." Ibid. (quoting Broadway Maint. Corp. v. Rutgers, The State

Univ., 90 N.J. 253, 259 (1982)).

6 A-1523-15T2
 In this case, there is no allegation that when Mr. Czyz

entered into the subject agreements, he and the other parties to

the agreements intended to confer some benefit upon Ms. Czyz that

could be enforced in court. Since Ms. Czyz does not have the right

to pursue any contract-based claims against defendant, she also

does not have the right to assert tort claims related to the making

and performance of those agreements.

Moreover, Ms. Czyz did not have an interest in the property

that would give her standing to pursue the claims in the complaint.

Ms. Czyz alleges she became an owner of the property based upon a

quitclaim deed in which Mr. Czyz transferred the property to her.

The deed includes a certification from a notary, which stated that

Mr. Czyz signed and delivered the deed on April 18, 2011.

However, in the original note/mortgage, Mr. Czyz agreed that

he would not transfer any interest in the collateral property

without the lender's prior consent. Plaintiffs do not claim that

defendant ever consented to the transfer of the property to Ms.

Czyz. Indeed, plaintiffs have acknowledged that in 2007, defendant

refused to approve a short sale of the property from Mr. Czyz to

Ms. Czyz (then Ms. Caucci).

Furthermore, although plaintiffs apparently were married in

April 2007, the marriage did not give Ms. Czyz standing to assert

the claims in the complaint. Under N.J.S.A. 3B:28-3, a spouse has

7 A-1523-15T2
a right of joint possession to the principal marital residence.

However, that right is subject to the lien of a mortgage, if placed

on the residence before the marriage. N.J.S.A. 3B:28-3.1; see also

Wamco XV Ltd. v. Farrell, 301 N.J. Super. 73, 79 (App. Div. 1997)

(noting that under N.J.S.A. 3B:28-3.1, in order to avoid the

spouse's right to joint possession, the encumbrance must be placed

on the property before the marriage).

Ms. Czyz may have a right of joint possession to the marital

residence. However, such a right of possession does not give her

standing to assert claims arising from the original loan and loan

modification agreements.

III.

Next, we consider plaintiffs' contention that the trial court

erred by dismissing their claims. Plaintiffs contend defendant's

motion was procedurally defective; defendant waived the grounds

upon which it sought dismissal; the claims were not time-barred

because they allegedly relate back to earlier-filed litigation;

the claims arising in 2011 were properly pled; and defendant's

motion to dismiss should have been denied based on considerations

of equity and public policy.

We are convinced that these arguments are without sufficient

merit to warrant discussion. R. 2:11-3(e)(1)(E). However, we add

the following comments.

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 Here, defendant moved to dismiss plaintiffs' claims pursuant

to Rule 4:6-2(e), arguing that in their complaint, plaintiffs

failed to assert claims upon which relief can be granted. In

reviewing a motion to dismiss under Rule 4:6-2(e), the court must

determine if a cause of action is suggested by the facts alleged.

Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739,

746 (1989) (citing Velantzas v. Colgate-Palmolive Co., 109 N.J.

189, 192 (1988)). Generally, the "inquiry is limited to examining

the legal sufficiency of the facts alleged on the face of the

complaint." Ibid. (citing Rieder v. Dep't of Transp., 221 N.J.

Super. 547, 552 (App. Div. 1987)).

We reject plaintiffs' contention that defendant's motion was

procedurally defective because defendant did not submit a

certification or affidavit in support of its motion. In the motion,

defendant relied upon the facts as alleged in the complaint, as

well as the documents referred to in the pleadings. See Myska v.

N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 482 (App. Div.) (noting

that in ruling on a Rule 4:6-2(e) motion to dismiss, the court may

consider documents referred to in the pleadings), appeal

dismissed, 224 N.J. 523 (2016). Therefore, defendant was not

required to submit a certification or affidavit to establish any

relevant facts.

9 A-1523-15T2
 We also reject plaintiffs' argument that the trial court

erred by finding that their claims were barred by the applicable

statutes of limitation. Here, plaintiffs asserted a claim of

negligence, based upon damage defendant's employees allegedly

caused to the pipes in the mortgaged property. According to the

complaint, defendant's employees damaged the pipes on February 9,

2009, when they entered the home to winterize it.

A claim for tortious injury to real property must be filed

within six years after the cause of action has accrued. N.J.S.A.

2A:14—1. Although plaintiffs claim that due to the negligence of

defendant's employees, the house sustained damage in 2009 and

2011, the cause of action accrued at the time of the alleged

negligent act, which plaintiffs claim occurred on February 9,

2009. The trial court correctly found that the negligence claim

was not timely filed.

Plaintiffs also asserted claims of fraud with regard to the

original note dated October 7, 2005, and the loan modification

agreement dated August 5, 2008. A cause of action for fraud also

is subject to N.J.S.A. 2A:14-1, and must be filed within six years

after the cause of action has accrued.

In this case, plaintiffs claim that when Mr. Czyz made the

original loan, New Century represented to him that the mortgage

was "a normal enforceable mortgage" with a non-usurious rate of

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interest, and that he would be able to "keep his home." As noted,

plaintiffs claim that New Century knew these representations were

false, and Mr. Czyz relied upon them to his detriment.

However, Mr. Czyz obviously knew about the rate of interest

on the loan when he made the original loan. Moreover, Mr. Czyz

knew or should have known of any alleged misrepresentations at

least by 2007 when he went into default. The trial court correctly

determined that plaintiffs did not file the fraud claims regarding

the original loan within the time required by N.J.S.A. 2A:14-1.

Plaintiffs also alleged that Mr. Czyz was under duress and/or

undue influence of highly intoxicating medications when he entered

into the loan modification agreement. He claims that defendant

made certain false representations at that time. Specifically, Mr.

Czyz alleges that defendant falsely claimed it had a valid

foreclosure action on the property; it would approve a short sale

of the property; and the refinancing was the only way to avoid the

sheriff's sale.

As noted, Mr. Czyz executed the loan modification agreement

on August 5, 2008. The fraud claims regarding the loan modification

argument accrued at that time, or when Mr. Czyz defaulted on the

modified agreement, which was sometime before February 2009. The

trial court correctly determined that these claims were not filed

11 A-1523-15T2
within six years of their accrual, as required by N.J.S.A. 2A:14-

1.

In addition, plaintiffs asserted a claim under the TILA, with

regard to New Century's alleged failure to make required

disclosures in connection with the original loan. A claim for

money damages under the TILA must be asserted within one year

after the date upon which the loan is closed. 15 U.S.C.A. §

1640(e). The original loan closed on October 7, 2005. Plaintiffs'

TILA claim was not filed within one year of that date, as required

by 15 U.S.C.A. § 1640(e).

Plaintiffs also asserted a claim for breach of the implied

covenant of good faith and fair dealing, which is subject to the

six-year limitations period in N.J.S.A. 2A:14-1. The claim

pertains to the alleged false and misleading disclosures made in

October 2005, when the original loan was made. The trial court

correctly found that this claim was not asserted within the time

required by N.J.S.A. 2A:14-1.

We find no merit in plaintiffs' contention that the relevant

statutes of limitations did not bar their claims because they

filed lawsuits in 2009 and 2012, which raised the same or similar

claims. The relation-back doctrine in Rule 4:9-3 applies when a

pleading is amended and adds a claim that "arose out of the

conduct, transaction or occurrence" asserted in the original

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complaint. The rule does not, however, apply to earlier-filed

complaints in other actions.

In their complaint, plaintiffs also claimed that defendant

fraudulently retained insurance proceeds that were paid as a result

of damage to the property sustained in 2009 and/or 2011. Even if

this claim had been timely filed, the facts as alleged do not

support a claim of fraud. The record indicates that at the time

of the alleged improper diversion of funds, Mr. Czyz was in

default, and the subject agreements did not preclude defendant

from retaining the insurance proceeds and applying them to the

amounts that Mr. Czyz owed.

Affirmed.

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