                                 NOT FOR PUBLICATION WITHOUT THE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-1310-18T3

SAMUEL PAGLIANITE,

          Plaintiff-Respondent,

v.

NARSAN LINGALA,

          Defendant-Appellant,

and

ANJU MEHTA, MOSHE VAKNEEN,
and SAROJA LINGALA, n/k/a
SAROJA ALKANTI,

          Defendant-Respondents,

and

STATE OF NEW JERSEY,

     Defendant.
_________________________________

                   Submitted March 30, 2020 – Decided May 21, 2020

                   Before Judges Ostrer and Vernoia.
            On appeal from the Superior Court of New Jersey,
            Chancery Division, Middlesex County, Docket No. F-
            007616-17.

            Howard A. Gutman, attorney for appellant.

            Graziano & Campi, LLC, attorneys for respondent
            Samuel Paglianite (Kathleen McCormic Campi, on the
            brief).

            Bhavini Tara Shah, attorney for respondent Saroja
            Lingala, n/k/a Saroja Alkanti, joins in the brief of
            respondent Samuel Paglianite.

PER CURIAM

      In this appeal from a foreclosure judgment after a bench trial, defendant

Narsan Lingala challenges the court's finding of an equitable mortgage. Lingala

agreed to purchase the construction firm owned by plaintiff Samuel Paglianite.

After a $25,000 down payment, Paglianite accepted Lingala's promissory note

for the $225,000 balance. The court found the parties also intended to secure

the note with a mortgage on Lingala's interest in his residence.1 But, Lingala

refused to execute the form of mortgage Paglianite proposed.         Instead, he

unilaterally executed and recorded a revised form intended to eliminate




1
   Lingala's former wife, defendant Saroja Alkanti, retained an interest in the
residence with priority over Paglianite's. She does not challenge the trial court
judgment.
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                                       2
Paglianite's right to foreclose if Lingala defaulted. Paglianite discovered the

revisions only after Lingala failed to make the first payment under the note.

      Lingala principally argues the parties never agreed to the mortgage's

essential terms. He asserts his revision was a counter-offer that Paglianite

deemed unacceptable. He contends that absent a meeting of the minds, there

was no legal mortgage, nor were there grounds to impose an equitable mortgage.

Rather, the court should have rescinded the entire transaction, because the

parties' disagreement pertained to an essential element.

      We are unpersuaded. Although Lingala refused to execute Paglianite's

proposed form of mortgage, an equitable mortgage may still be grounded in a

party's promise to provide a mortgage.        Although we discern insufficient

evidence in the record to support the court's finding that Lingala actually agreed

to Paglianite's form, agreement as to the precise form was not necessary, so long

as Lingala agreed in principle to provide a mortgage. However, the trial court

applied the wrong standard of proof in finding an equitable mortgage by a

preponderance of the evidence.      Rather, the clear and convincing standard

applies. Nonetheless, a remand is unnecessary, because we are convinced that

Paglianite retained the right to foreclose, even under the mortgage as modified

by Lingala.


                                                                          A-1310-18T3
                                        3
                                       I.

      Over a period of several months, beginning in late 2015, Paglianite

endeavored to sell his company, Dimensional Dynamics Corp. (Dimensional),

to Lingala.   Lingala was a software engineer by training.       A lawyer who

previously represented Lingala and Mark Emme, a contractor at Dimensional,

in separate legal matters, introduced Lingala to Paglianite. A deal that involved

the lawyer as a co-investor with Lingala eventually fell through. However,

while these efforts to strike a deal proceeded, Paglianite allowed Lingala and

Emme to operate the business and occupy his firm's former offices.

      Lingala teamed up with another investor.2 Lingala ultimately entered a

stock purchase agreement with Paglianite. The $250,000 price represented

$140,000 for the corporation, and $110,000 in credit that was extended to the

buyers.3 On June 17, 2016, Lingala executed the promissory note. He promised

to pay $225,000 at the rate of $25,000 a month, beginning July 1, 2016. No



2
  The investor was defendant Moshe Vakneen, who funded the $25,000 down
payment. Vakneen evidently promised to lend Lingala $100,000, also secured
by a mortgage on Lingala's home. For reasons not essential to this appeal, the
court found that the Lingala-to-Paglianite mortgage took priority over the
Lingala-to-Vakneen mortgage.
3
  Although the agreement was admitted into evidence, neither party included it
in the record on appeal.
                                                                         A-1310-18T3
                                       4
interest would accrue if payments were timely.         In case of default, which

included payments over ten days late, the note entitled Paglianite to accelerate

the debt, and to collect late charges, default interest of twelve percent, and

attorney's fees incurred to enforce collection.

       The note did not refer to a mortgage. Nonetheless, Paglianite testified that

Lingala had agreed to allow him to place a $200,000 lien against his house. 4

       Paglianite asserted that his attorney had negotiated terms of the mortgage

agreeable to Paglianite. He learned from Emme, "Lingala had altered the form

of the mortgage that was agreed upon to be executed."            Yet, Paglianite's

statement did not explicitly say the form was agreed upon by Lingala, as

opposed to Paglianite and his own lawyer.5

       Rather, Paglianite reaffirmed at trial a prior statement that he and Lingala

disputed the form of mortgage. In his verified complaint in his separate breach

of contract action on the note, Paglianite said, "As late as June 20th and June

21, 2016, the parties disagreed about the form of mortgage to be executed and

filed." Paglianite further testified that he and Lingala "[d]isagreed at various



4
  Paglianite did not explain why the lien would be for $25,000 less than the
amount due under the note.
5
    Paglianite did not introduce into evidence his proposed form of mortgage.
                                                                           A-1310-18T3
                                         5
times." He also conceded that competing forms were exchanged on June 20th.

Nonetheless, he testified, "[u]ltimately, it was my understanding that there was

agreement,"     without   explaining    what   prompted    that   understanding.

Conceivably, Paglianite was referring to his understanding – really a

misunderstanding – that Lingala accepted Paglianite's form when Lingala

informed him on June 21 that he had recorded the mortgage, without disclosing

he had modified it.

      On June 21, 2016 – the same day Paglianite admitted the parties still

disagreed – Lingala modified the form of mortgage he received in Word format.

Most significantly, Lingala – acting without legal counsel – modified the form,

to provide that Paglianite could enforce his rights under the mortgage if he

declared a default with Lingala's consent. The modified form stated:

                     Lender's Rights Upon Default. If the Lender
              declares that the Note and this Mortgage are in default
              with my consent, the Lender will have all rights given
              by law or set forth in this Mortgage. This includes the
              right to do any one or more of the following:

                   (a) Manage the Property and get upto [sic] his
              remaining mortgage amount.

Notably, Lingala omitted the right to foreclose. The provision identified no

other recourse upon default. The modifications also defined default as failure



                                                                         A-1310-18T3
                                        6
to make a payment within forty-five days of its due date (contrary to the ten-day

period in the Note).

      However, Lingala did not modify a separate provision that generally

granted Paglianite all rights typically granted mortgagees. The provision stated:

             Rights given to Lender. I mortgage the Property to
             the Lender and assign to the Lender those rights as
             hereinafter set forth. This means that I give the Lender
             those rights stated in this Mortgage and also those
             rights the law gives to lenders who hold mortgages on
             real property.

Lingala's modifications also mischaracterized the Note, stating that the "Note

provides for monthly payments of $10,000 starting October 2016."

      Lingala testified he modified the mortgage because Paglianite's form was

"one-sided"; he discovered irregularities in Dimensional's business; and he

needed to shield his home from foreclosure. He said he would never consent to

a foreclosure. However, Lingala effectively acknowledged that a mortgage on

his home was part of his agreement with Paglianite. He stated, "[T]he mortgage

was only to satisfy the deal, the company sale. And that's what was required by

him, and that's what I [did]." 6




6
   The transcript states the word after "what I" was indiscernible. We presume
it was "did" or something equivalent, based on the context.
                                                                         A-1310-18T3
                                        7
      As noted, Lingala promptly informed Paglianite that he recorded the

mortgage, and sent him a copy. But, neither Paglianite, nor his attorney to whom

he sent a copy, reviewed it until weeks later, after Emme informed Paglianite

that Lingala had modified the mortgage. By that time, Paglianite had transferred

all the Dimensional stock, and Lingala failed to make the July 1 payment.

      Emme testified that he understood Lingala had agreed to pledge his house

as collateral and he believed it was unwise, because they were already finding it

difficult to fund the business's operations. Emme testified, "I didn't approve of

[Lingala] putting his house up as collateral. . . . I still thought it was crazy that

somebody would put their house up, and there were further discussions about

that also." Emme recounted that Lingala called him at home after he recorded

the mortgage to tell him that he modified Paglianite's form without disclosing

that fact. Emme testified that Lingala said, "It looks like everything is going to

come together and the mortgages are going to be accepted." When Emme said

he thought it was unwise for him to put up his house, Lingala replied, "Mark,

relax, you know what I do. You know I altered. They'll never know I altered

the document."

      In his foreclosure complaint, Paglianite sought judgment based on the

recorded mortgage; alternatively, he sought reformation of the mortgage, or


                                                                             A-1310-18T3
                                         8
imposition of an equitable mortgage. At trial, the principal issue was whether

Paglianite had a valid mortgage entitling him to foreclose. After Paglianite,

Emme, and Lingala testified, the court entered judgment based on an equitable

mortgage.

      The judge found that "[b]oth parties testified, and it is undisputed, that the

promissory note would be secured by collateral . . . [the collateral being] the

defendant's residence . . . ." The court also found that, notwithstanding his later

modifications of the form, "defendant had agreed to plaintiff's version of the

mortgage form." The judge relied on her understanding of Paglianite's and

Emme's testimony. The court held that Lingala's version of the mortgage "would

negate the remedies of foreclosure . . . which were negotiated by plaintiff and

agreed to by defendant to secure the note." The court stated it would "not reward

the conduct [of] the defendant in his effort to avoid foreclosure on his property."

The court imposed an equitable mortgage, finding "by a preponderance of the

evidence . . . that plaintiff has established a prima facie case of his right to

foreclose." To the extent the note and recorded mortgage differed, the court

held that the note controlled.     On that basis, the court awarded Paglianite

attorney's fees.




                                                                            A-1310-18T3
                                         9
                                       II.

      We hesitate to disturb the trial court's fact-finding after a bench trial,

particularly given the court's opportunity to assess witnesses' demeanor. See

Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). Yet, we are

not bound to affirm findings that are "so manifestly unsupported by or

inconsistent with the competent, relevant and reasonably credible evidence as to

offend the interests of justice." Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of

Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78

N.J. Super. 154, 155 (App. Div. 1963)). We review legal issues de novo.

Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

That includes interpretation of a mortgage, since it is a contractual undertaking.

See Kieffer v. Best Buy, 205 N.J. 213, 222 (2011) (stating "[t]he interpretation

of a contract is subject to de novo review by an appellate court").

      Having carefully reviewed the trial record, we discern insufficient support

for the trial court's finding, ostensibly based on Paglianite's and Emme's

testimony, that Lingala agreed – orally, we presume – to Paglianite's proposed

form of mortgage. First, Emme simply did not testify that Lingala accepted

Paglianite's form. Second, Paglianite's testimony that it was his understanding

that ultimately, Lingala agreed to his form, makes sense only if it referred to


                                                                          A-1310-18T3
                                       10
Paglianite's misunderstanding that the mortgage Lingala recorded was the one

Paglianite proposed. Paglianite stated in his verified complaint for breach of

contract, and reaffirmed at trial, that he and Lingala were at loggerheads over

the mortgage form as late as June 20 and 21st.

      However, there was ample support for the court's more general conclusion

that Lingala agreed to provide a mortgage against his home, as security for the

note. Paglianite testified that Lingala agreed to do so. So did Emme. Lingala

balked when it came time to execute Paglianite's proposed final form of

mortgage. But, his statement to Emme, after he recorded the modified version,

reflected Lingala's own understanding that a mortgage was an essential element

of the deal.

      Our courts of equity will impose an equitable mortgage to enforce an oral

promise to give a mortgage, where the promisee has partly performed by lending

money in reliance on the promise, and has otherwise relied on the promise.

Cauco v. Galante, 8 N.J. 233 (1951) (affirming judgment enforcing equitable

mortgage based on promise of mortgage); Rutherford Nat'l Bank v. H. R. Bogle

& Co., 114 N.J. Eq. 571, 573-74 (Ch. 1933); Clark v. Van Cleef, 75 N.J. Eq.

152, 154 (Ch. 1908); see generally 29 N.J. Prac., Law of Mortgages § 9.4 (2d

ed. 2019) (discussing promises to mortgage); 4 Powell on Real Property § 37.19


                                                                       A-1310-18T3
                                     11
(2020) (stating "[a]n unperformed agreement to give a mortgage on identified

land invites the help of equity," and "[w]here the parties have intended to create

a security interest, equity decrees the specific lien enforceable by the creditor as

an equitable mortgage").7 "The whole doctrine of equitable liens or mortgages

is founded upon that cardinal maxim of equity which regards as done that which

has been agreed to be, and ought to have been, done." Rutherford Nat'l Bank,

114 N.J. Eq. at 573-74. The terms of the promised mortgage must be sufficiently

definite to be enforced. Cf. Heim v. Shore, 56 N.J. Super. 62, 71 (App. Div.

1959) (declining to enforce oral agreement to sell land upon a "liberal mortgage

plan" without clearly establishing "amount, amortization payments , and interest

rate").




7
   An equitable mortgage may arise under other circumstances, such as where
the legal mortgage suffered some formal defect, see 29 N.J. Prac., Law of
Mortgages §9.1 (2d ed. 2019), or where the parties structured a transaction –
such as a sale and leaseback – that, despite its formal structure, was intended to
create a mortgage, see Zaman v. Felton, 219 N.J. 199, 216-17 (2014) (reviewing
sale-leaseback arrangement as possible equitable mortgage); see also J.W.
Pierson Co. v. Freeman, 113 N.J. Eq. 268, 270 (E. & A. 1933) (stating "[i]f a
transaction resolves itself into a security, whatever may be its form and whatever
name the parties may choose to give it, it is, in equity, a mortgage"); Welsh v.
Griffith-Prideaux, Inc., 60 N.J. Super. 199, 208 (App. Div. 1960); Manfredi v.
Manfredi, 12 N.J. Super. 207 (Ch. Div. 1951). However, we focus here on
equitable enforcement of a promise to give a mortgage.


                                                                            A-1310-18T3
                                        12
      Part performance and reliance takes the promise outside the Statute of

Frauds, which, historically, required a writing to create an enforceable promise

to give a mortgage. See Cauco v. Galante, 6 N.J. 128, 137 (1951); Feldman v.

Warshawsky, 125 N.J. Eq. 19, 20 (E. & A. 1938). Notably, the modern Statute

of Frauds permits enforcement of an oral promise to give a mortgage, if proved

by clear and convincing evidence. N.J.S.A. 25:1-13(b).8

      Here, the promise to provide a mortgage was sufficiently definite, as the

note already provided the repayment terms and the interest rate, which was

chargeable only in the event of default. There was also no dispute that the

amount of the mortgage debt was $200,000.           As for the part performance

requirement, Paglianite not only made the loan; he allowed Lingala to operate

the business before closing; and Paglianite later transferred stock ownership.

Furthermore, Lingala's effort to erase Paglianite's promised security by

modifying the mortgage form did not override his prior promise.

            An equitable lien or mortgage once created is not
            waived, expressly or impliedly, by reason of the
            promisor giving, and the promisee receiving, a formal
            mortgage which, by reason of fraud, mistake, or

8
  The provision states, "An agreement to transfer an interest in real estate . . .
shall not be enforceable unless . . . a description of the real estate sufficient to
identify it, the nature of the interest to be transferred, the existence of the
agreement and the identity of the transferor and the transferee are proved by
clear and convincing evidence."
                                                                            A-1310-18T3
                                        13
            otherwise, is ineffectual in giving the specific lien
            which the former intended to give and the latter
            intended to receive; nor is it merged in any such
            instrument.

            [Rutherford Nat'l Bank, 114 N.J. Eq. at 578.]

      However, the trial court erred in applying the preponderance-of-the-

evidence standard. "In cases where parol evidence is admissible to establish the

existence of an equitable mortgage, the evidence must be clear and convincing."

Estate of Hammerle v. Dir., Div. of Taxation, 22 N.J. Tax 342, 349 (Tax 2005)

(citing Vreeland v. Dawson, 55 N.J. Super. 456, 462 (Ch. Div. 1959)); see also

Aiello v. Knoll Golf Club, 64 N.J. Super. 156, 164 (App. Div. 1960) (stating

that "clear and convincing" standard applies to proof of a promise, conduct and

reliance, to estop party from invoking Statute of Frauds defense).

      Nonetheless, we need not remand for the trial court to apply this more

demanding standard of proof. That is because we are satisfied that the mortgage

that Lingala recorded, despite Lingala's intention to the contrary, granted

Paglianite the right to foreclose.   Lingala's subjective intent to render the

mortgage nugatory is of no consequence in interpreting the mortgage. See

Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956) (stating "[i]t is not the

real intent but the intent expressed or apparent in the writing that controls");



                                                                        A-1310-18T3
                                      14
Heim, 56 N.J. Super. at 72-73 (stating "[p]arties are not bound by what they

think, but rather by what they say").

      We recognize that Lingala attempted to condition the foreclosure upon his

consent. But, we are not satisfied that he accomplished his goal. He altered the

provision addressing remedies in the event of default to state, "If the Lender

declares that the Note and this Mortgage are in default with my consent, the

Lender will have all rights given by law or set forth in this Mortgage." Based

on the placement of the comma, the "with my consent" clause modifies the

lender's declaration of default.    Thus, if Paglianite declared default with

Lingala's consent, then Paglianite would have all rights given by law or set forth

in the mortgage.

      However, that provision did not expressly condition Paglianite's rights on

Lingala's consent; nor was the provision the only one describing Paglianite's

rights. The "Rights given to Lender" provision stated that Lingala gave "the

Lender those rights stated in this Mortgage and also those rights the law gives

to lenders who hold mortgages on real property." Unquestionably, the law

generally entitles mortgage holders the right to foreclose on real property.

Lingala did not condition that right on his consent.




                                                                          A-1310-18T3
                                        15
      In interpreting an agreement, we eschew an interpretation that would

render a provision meaningless. Rather, "'all parts of the writing and every word

of it will, if possible, be given effect.'" Washington Const. Co. v. Spinella, 8

N.J. 212, 217-18 (1951) (quoting 9 Williston on Contracts (Rev. ed.), sec. 46, p.

64). We therefore reject an interpretation that would render the "Rights given

to Lender" meaningless. Rather, we conclude that Lingala's consent was a

sufficient, but not a necessary condition of a default declaration. Therefore,

Paglianite was entitled to foreclose on the basis of the recorded mortgage.

      To the extent not addressed, Lingala's remaining arguments lack sufficient

merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.




                                                                         A-1310-18T3
                                      16
