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Amboy National Bank v. Ahmed

A-4690-05T5 (N.J. Super. App. Div. 2007) (Unpublished)

ATTORNEY’S FEES; FORBEARANCE — Attorneys fees and costs, arising from a breach of forbearance agreements between two contracting parties and awarded pursuant to a final judgment in a mortgage foreclosure action, cannot be sought in a successive action arising from the same transaction.

A lender entered into a revolving credit loan agreement. The borrower granted a mortgage to its lender on the borrower’s commercial real estate. It also signed a revolving credit note. The borrower defaulted and secured a default judgment and a final judgment of foreclosure. Subsequent to the final judgment and before a sheriff’s sale, the parties negotiated a forbearance agreement by which the lender would forbear from proceeding with the sheriff’s sale until after a specific date. This was to give its borrower the opportunity to sell the property privately. When it appeared unlikely that a private sale would occur by the deadline date, the parties negotiated an extension and the borrower was to make monthly payments until the end of the extension period. When the borrower failed to comply with either term, the lender filed a motion to fix the amount of foreclosure judgment.

The Chancery Court ultimately entered a final judgment. It included attorneys’ fees and costs incurred by the lender after breach of the first deadline date. The borrower paid this amount pursuant to the final judgment. The lender then filed a new action arising out of the same transaction. In it, it sought attorney’s fees, interest, and costs. The borrower argued that the Chancery Court had already made a determination of the sum due and owing and that the sum included attorney’s fees and costs. The lower court ruled that no attorney’s fees and costs were due after the date of the Chancery Court’s final judgment. The lender appealed.

In that appeal, the Appellate Division held that the lower court properly interpreted the earlier order as to whether the borrower owed its lender any further legal fee or costs associated with the mortgage foreclosure action. The Court noted that attorney’s fees, under court rule, are limited in calculation and a trial court has no discretion to depart from its strict application. It concluded that the lower court reasoned that the parties, by their contractual agreement, intended that the lender would be entitled to attorney’s fees and costs arising out of the delays associated with the forbearance agreements, and that those fees were clearly included in the final judgment of foreclosure. Therefore, the Court concluded that the current fees and costs sought were barred by the principles of res judicata and collateral estoppel because all fees and costs payable by the borrower had been determined by the earlier final judgment.


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