Statute of Limitations in New Jersey

Security National Partners Limited Partnership v. Mahler and Mahler
A-0813-99T12000, WL 1898958 (N.J. Super. App. Div. 2000

December 27, 2000

Spouses Mahler executed a note and mortgage to Colonial Savings Bank. This mortgage was a second mortgage involving their home in New Brunswick. The spouses Mahler defaulted in payment in 1989 and in 1990, Colonial filed a foreclosure complaint against the spouses. The defendant spouses replied and the mortgage was transferred to Resolution Trust Company, thereafter a series of assignments which ended with Security National Partners Limited Partnership. In the series of transfers, the mortgage holder at that time filed a unilateral discontinuance of the pending foreclosure. In 1996, Security National filed foreclosure proceedings. Defendants filed their answer but Plaintiff had the answer stricken out of the record and sought for the grant of summary judgment. The Court granted the motion in 1997.

Defendants on appeal raised the defense that since there was already a unilateral discontinuance of the earlier action therefore plaintiff should be barred from filing the instant proceedings. Moreover, six years already have lapsed from the time of defendants' default and therefore, the instant action is barred by the statute of limitations. In simple terms, the defendants believe that the action filed has already lapsed.

Only the two issues, i.e. unilateral discontinuance and lapse of period based on statute of limitations, were raised for the resolution of the Court. Regarding the unilateral discontinuance, the Court ruled that the complaint can only be dismissed by a stipulation of dismissal and signed by all the parties and upon permission of the court based on R. 4:37- 1(a), a of the Rules Governing the courts of the State e of New Jersey. Since there was no compliance of said Rule, there was no dismissal. On the issue of the statute of limitations, the appellate court ruled that twenty years is the period and therefore the lower court was correct in granting the Plaintiff the summary judgment. It further explained that although the State of New Jersey does not have a statute of limitations, but the appellate court applied the ruling in the cases of Colton v. Depew and Blue v. Everett. Said twenty years shall commence from the time of default. Considering that the period from the time defendants defaulted to the time the instant action was filed, the period is much less than twenty years so the action cannot be dismissed on that ground.

On appeal, Allen raised two issues: a) there was marital discrimination because Prudential and therefore Norwest had asked that his wife be removed as property owner so that it (Prudential) can release the credit; and b) there was violation of the ECOA or the Equal Credit Opportunity Act in that it is unlawful for a creditor to discriminate against any applicant with respect of any credit transaction.

The appellate court ruled that Allen is not the proper party to interpose or use the defense of marital discrimination. It should be the wife considering that she is the party affected and with the duty to prove her injury because of the alleged discrimination. Moreover, the period within which to bring such action has already prescribed and lapsed. On the second issue, the court explained that under the ECOA, Norwest cannot be considered a creditor within its terms. It was not the party with which Allen had a credit transaction. Allen did not deal with Norwest but Prudential. Thus, Norwest cannot be held liable for the acts of another entity. In fact, it did not have constructive notice of what had occurred. The appellate court affirmed the decision of the lower court.

This case was ruled in favor of the plaintiff. At LoanModificationStudio.com, we also bring forth cases in which the banks win so that you may learn from previous defenses.

Lesson Learned:

It is important for both parties to a suit, especially the defendant to be keen and take note of the dates considering that this period set by law is for the aid of the defendant and is based on the principle of equity. The running of the period fixed bars the action of the plaintiff and as such the complaint must be dismissed. Clearly, causes of action can be lost through passage of time.

"Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes."
- John Dewey

Written by Kevin Levonas and Giselle G.