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First Union National Bank v. Loeffler’s Provisions, Inc.

A-1474-98T1 (N.J. Super. App. Div. 1999) (Unpublished)

MORTGAGES; FORECLOSURE; ATTORNEYS’ FEES—By suing only on the note, a lender is not limited to the maximum attorneys’ fees permitted under the foreclosure statutes.

A bank successfully sued to collect under the terms of two separate notes. When it filed its collection action, it also filed a foreclosure complaint. Following entry of a judgment by the Law Division in favor of the bank, the borrower paid the amount that was owed and, as a consequence, the foreclosure action was dismissed because the debt had now been paid in full. The bank sought counsel fees in the collection action, but not in the foreclosure action. The borrower objected to the imposition of counsel fees, ultimately contending that the bank should have been limited to the much smaller allowable fees that would have been permitted in the foreclosure action, instead of the very large fees were awarded in the collection action. The Court, however, noted that the Court Rule limiting the amount of attorneys’ fees collectible in a foreclosure action was not applicable to actions on a promissory note. Under the note and mortgage, the borrower had agreed to pay the bank’s attorneys’ fees and costs. The Court held that such a provision was enforceable “under common law principles as a deliberate bargain between private parties” and there was no larger public policy that precluded enforcement of the agreement to pay attorneys’ fees and costs.


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