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Budge v. E.M.N. Express Mortgage Nationwide, Inc.

A-5592-05T1 (N.J. Super. App. Div. 2008) (Unpublished)

LOANS; FRAUD — Even though a party may not be able to prove an enforceable agreement with a lender who may have promised to make a loan, that party may still have a common law fraud claim against the purported lender.

A buyer sought to purchase a parcel of property. After a number of years, the property’s owner was willing to sell the property at an agreed-upon price. The buyer applied for financing from a lender and paid a commitment fee. A purported investor offered to become a partner with the buyer in the purchase of the property. The buyer declined the offer, but the investor ultimately convinced the buyer to allow him to finance the purchase of the property. The buyer informed the original lender that he would instead obtain financing from the investor. With the exception of an application fee, the deposit it gave to the original lender was returned. The buyer prepared a document that outlined the financing terms, but the investor never signed it. By the time the closing date arrived, the buyer was unable to contact the investor and the property was sold to a friend of the investor’s. The buyer brought an action against the lender and its employees, the investor, and the investor’s friend who purchased the property, claiming that all of the parties participated in a scheme to prevent him from purchasing the property. All of the buyer’s claims were dismissed by the lower court on summary judgment.

On appeal, the Court denied all of the buyer’s claims against the lender and its employees. The Court denied the argument by the investor and his friend that the buyer’s claims were barred by the statute of frauds which prevented the enforcement of certain oral agreements. It pointed out that the buyer’s claim was not based on the enforcement of an oral agreement as the lower court had found, but that the claim was based on common law fraud. The Court found that the investor purposely misled the buyer into believing that he would provide financing so that the buyer would abandon his financing agreement with the lender, which in turn allowed the investor’s friend to purchase the property. It also found that since the matter was decided on summary judgment, the lower court should have given greater deference to the buyer’s assertions that the investor explicitly offered him financing and should have construed the facts in favor of the buyer. The Court also affirmed the lower court’s grant of summary judgment in favor of the lender and its employees and dismissed the buyer’s argument that the lower court improperly denied one of his discovery motions. It, however, reversed and remanded the lower court’s dismissal of claims against the investor and his friend.

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