                NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-5225-12T2
                                                 A-1893-13T3
                                                 A-2109-13T3



BRUNSWICK BANK & TRUST,
                                        APPROVED FOR PUBLICATION
         Plaintiff-Respondent,
                                             March 17, 2015
    v.
                                          APPELLATE DIVISION
AFFILIATED BUILDING CORP.,

          Defendant-Appellant.
_________________________________

BRUNSWICK BANK & TRUST,

         Plaintiff-Respondent,

    v.

HELN MANAGEMENT, LLC,

          Defendant-Appellant.
__________________________________

BRUNSWICK BANK & TRUST,

         Plaintiff-Respondent,

    v.

HELN MANAGEMENT, LLC, and AFFILIATED
BUILDING CORP.,

          Defendants-Appellants.
_________________________________________________
            Argued January 6, 2015 – Decided March 17, 2015

            Before Judges Fisher, Nugent and Manahan.

            On appeal from the Superior Court of New
            Jersey, Chancery Division, Middlesex County,
            Docket   Nos.  F-30990-10   (A-5225-12)  and
            F-21231-13 (A-2109-13) and Monmouth County,
            Docket No. F-26278-10 (A-1893-13).

            Philip R. Kaufman     argued   the     cause   for
            appellants.

            Anthony B. Vignuolo argued the cause for
            respondent (Borrus, Goldin, Foley, Vignuolo,
            Hyman & Stahl, P.C., attorneys; Mr. Vignuolo
            and Anthony T. Betta, on the brief).

     The opinion of the court was delivered by

FISHER, P.J.A.D.

     In these three appeals of orders entered in three separate

foreclosure actions, we consider, among other things, the impact

caused by the plaintiff-lender having first sought and obtained

a   money   judgment   in   the   Law   Division    –   before   seeking

foreclosure – for the purpose of determining whether plaintiff

has been fully compensated.        Because we can draw no certain

conclusions from the convoluted and unsettled factual record, we

remand.


                                   I

     The record generated in these cases reveals that between

September 2007 and July 2009, plaintiff Brunswick Bank & Trust

made five construction and development loans to defendants Heln



                                   2                             A-5225-12T2
Management,        LLC,      and    Affiliated     Building         Corp.,    that      were

guaranteed by Jeffrey Miller, a principal of both entities, and

his   daughter       Melanie       Miller.       Each       loan    was   secured       by   a

mortgage on one of four properties, which we will refer to as

Matthew Manor, Beacon Hill, Loren Terrace and Baldwin Street.1                               A

table identifying the five loans is set forth below.2

      In     May     2010,    plaintiff      filed      a    complaint       in   the    Law

Division against Heln, Affiliated, and the two guarantors, on

four of the five loans.3              On August 18, 2010, the Clerk of the

Court      entered    a   default     judgment     in       favor    of   plaintiff      and

against Heln for $1,884,141.84, against Affiliated for $175,000,


1
 To be more specific, Matthew Manor consists of seven lots in
East Brunswick; Beacon Hill, Loren Terrace and Baldwin Street
consist of single lots in Marlboro, East Brunswick and New
Brunswick, respectively.
      2



          Borrower                 Loan Date         Loan Amount                Loan
                                                                            Security
           Heln               Sept. 18, 2007         $1,500,000              Matthew
                                                                               Manor
           Heln                May 22, 2008             $289,900           Beacon Hill
           Heln               Sept. 10, 2008            $100,000               Loren
                                                                             Terrace
           Heln               April 20, 2009            $300,000             Baldwin
                                                                              Street
      Affiliated              July 28, 2009             $175,000             Baldwin
                                                                              Street


3
 The complaint did not seek relief on the $300,000 loan                                      to
Affiliated that was secured by a mortgage on Baldwin Street.



                                             3                                    A-5225-12T2
and   against       the   guarantors    for         the   entire   amount         of    the

indebtedness, $2,059,141.84.              The judgment also declared that

plaintiff     was     entitled     to   "post-judgment         interest"          and     an

attorney fee.

      After filing the Law Division complaint, but a few months

before default judgment was entered, plaintiff commenced three

foreclosure     actions;     a   fourth       was    filed    three    years       later.

Specifically, plaintiff filed a complaint in Monmouth County on

May 10, 2010, against Heln seeking foreclosure on Beacon Hill,

and two foreclosure complaints in Middlesex County on June 8,

2010 – one against Heln seeking foreclosure on Matthew Manor and

the   other   against      Affiliated     seeking         foreclosure       on    Baldwin

Street.     The fourth complaint was filed in Middlesex County on

June 19, 2013, against Heln and Affiliated seeking foreclosure

on Loren Terrace.

      Defendants4 did not respond to the first three foreclosure

complaints, and judgments were entered foreclosing on Matthew

Manor,    Beacon      Hill   and    Baldwin          Street   on      May    2,        2012,

September 5, 2012, and February 22, 2013; the judgments set the




4
 For clarity's sake, we refer to all defendants either
individually or collectively as "defendants" even though not
every proceeding involved all defendants.




                                          4                                      A-5225-12T2
redemption           amounts        at    $1,679,400.19,             $297,590.10,        and

$330,777.83, respectively.5

       In    July     2012,      after   entry    of    the    foreclosure        judgment

regarding Matthew Manor, defendants applied for a stay of the

sheriff's sale scheduled for certain lots within Matthew Manor.

In     his   supporting          certification,        guarantor        Jeffrey     Miller

asserted       that       Heln     had   contracted       to    sell     one      lot    for

$1,000,000,          which     would     result   in     a     $500,000     payment          to

plaintiff, and that Heln had also contracted to sell another lot

for $1,735,000.           In September 2012, the Chancery judge permitted

the    sales    to       continue    with   respect      to    all    the   lots    within

Matthew Manor except the lot for which there was an existing

contract; as to this excepted lot, the judge ordered the sale to

go forward if a closing did not occur by the end of October

2012.

       Later, the judge considered defendants' application for a

stay    of     all       further    foreclosure        proceedings       based     on    the

contention that the loans were "over-collateralized."                               In his

written decision, the Chancery judge recognized he was empowered

to    "prevent       a    potential      double   recovery       or     windfall        to   a

judgment creditor," MMU of N.Y., Inc. v. Gieser, 415 N.J. Super.


5
 These sums included awards of counsel fees of $7,500, $3,094.95,
and $3,434.43, respectively.



                                             5                                     A-5225-12T2
37, 40 (App. Div. 2010), but he found the matter too muddled by

the other pending matters and recognized the exercise of his

power    to    prevent   a   windfall   had          to    wait   until   "a   full     and

complete       factual   record    [could]       be       established."        Later,   by

order entered on March 6, 2013, the Chancery judge denied a

motion to vacate or stay the pending sheriff sales but the right

of redemption was extended until March 1, 2013.6                        The judge also

denied a request to consolidate the various lawsuits.

       Defendants thereafter moved for an order declaring the Law

Division judgment satisfied.                Defendants argued plaintiff had

received $2,517,063.01 – consisting of $1,217,063.01 in cash7 and

$1,300,000 in property – which exceeded the amount due on the

money judgment even when interest of $113,534.88, running from

August 18, 2010, to March 1, 2013, was added.                         On July 1, 2013,

the Chancery judge discharged8 the Law Division judgment "without

prejudice to the legal rights and position of the parties as

have    been    asserted     or   remain"       in    the    Beacon    Hill    and   Loren

Terrace foreclosure actions.

6
 The final date for redemption is inexplicable in light of the
date of the order, but we assume the order memorialized an
earlier oral decision.
7
 Defendants allege that plaintiff was paid $717,063.01 in 2011
and received another $500,000 upon sale of a Matthew Manor lot.
8
 The order was entered in both the Law Division action and the
Matthew Manor foreclosure action.



                                            6                                    A-5225-12T2
    No appeal was filed regarding any of these orders.                           Those

circumstances, however, set the stage for entry of the orders

under review in these three appeals.


                                       II

    A.    The    first    appeal.     Prior         to    his   disposition   of    the

motion that led to the July 1, 2013 order described above, the

Chancery judge heard argument on defendants' motion for a stay

of a sheriff's sale of Baldwin Street.                      A temporary stay was

granted   to    allow     the    parties       to    be    heard     on   defendants'

contention      that     the    $175,000       Baldwin      Street    mortgage      was

subsumed within the Law Division judgment and had therefore been

satisfied and, also, with regard to defendants' assertion that

they had found a buyer for the property that would generate

$335,000, which would more than satisfy the mortgage.                      Plaintiff

responded that the contract price would not satisfy the amount

still owed as reflected by the foreclosure judgment.                          Without

conducting an evidentiary hearing to resolve this dispute, the

judge denied the motion for a stay of the sheriff's sale.

    Defendants' notice of appeal in A-5225-12 seeks review of

the May 21, 2013 order that memorializes the judge's ruling.

    B. The second appeal.            In November 2013, defendants moved

for a stay of a sheriff's sale of Beacon Hill in the one matter

pending in another vicinage.           In adhering to the approach taken



                                           7                                  A-5225-12T2
in the other matters, the judge in the Beacon Hill matter denied

defendants' application by order entered on November 22, 2013,

and plaintiff purchased Beacon Hill at the sheriff's sale that

followed.          Consequently, defendants filed their second appeal

(A-1893-13).

       C.        The     third     appeal.    As      noted       earlier,     plaintiff's

foreclosure            complaint    regarding       Loren     Terrace   was     not    filed

until June 19, 2013.                 Defendants responded to that complaint,

asserting among other things that the underlying debt had been

satisfied and plaintiff was otherwise estopped from foreclosing

on the mortgage.

       Defendants moved for dismissal, and plaintiff cross-moved

for summary judgment.               On November 18, 2013, after hearing oral

argument,          the     Chancery       judge     granted        plaintiff's    summary

judgment motion and struck defendant's answer to the foreclosure

complaint;         the    order,     however,       also    declared    that    its    entry

"will       be    without        prejudice    to    [d]efendants'       right     to    seek

damages in the event of a reversal of this decision by the

Appellate Division."                In addition, the order directed that the

case    would           thereafter        proceed     on     an    uncontested         basis.

Defendants, however, filed their third notice of appeal (A-2109-

13)    on    January       2,     2014,    before     a    final    judgment     could    be

entered.




                                               8                                  A-5225-12T2
     A few months later, when the property was sold by mutual

agreement    of   the   parties   –   and    with   defendants'       payment     to

plaintiff of the proceeds under protest – the judge entered an

order, declaring that "subject to the appeal of the order . . .

striking the [a]nswer of [d]efendants [] the within matter be

and hereby is dismissed with prejudice" but that "this dismissal

shall be without prejudice to the issues now on appeal."                        The

order additionally declared that "in the event [d]efendant[s]

shall prevail on appeal, then [their] remedy shall be limited to

money damages."9


                                      III

     Defendants present the same three arguments in all three

appeals, namely: (1) whether plaintiff, by filing suit for a

money judgment prior to seeking foreclosure, is bound by the

money judgment as to the amount due on the underlying notes; (2)

whether   the     mortgages   were    satisfied     by   the    payment   of    the

underlying      obligation,    and     (3)    whether,     in     a   commercial

transaction, mortgagors are entitled to a fair market credit for

property taken in foreclosure.




9
 Our disposition of these appeals makes unnecessary our
determination of whether defendants mistakenly filed a notice of
appeal before finality was achieved in this matter in the trial
court.



                                       9                                  A-5225-12T2
       We commence our examination of these issues by mentioning a

few    legal   principles     that   illuminate         the    way.        To   start,    a

mortgage is simply a form of "security for the payment of a

debt," J.W. Pierson Co. v. Freeman, 113 N.J. Eq. 268, 271 (E. &

A. 1933), and full payment of the underlying debt, by operation

of law, will extinguish a mortgage, Valley Nat'l Bank v. Meier,

437 N.J. Super. 401, 404-05 (App. Div. 2014), certif. denied, __

N.J. __ (2015); see also Shields v. Lozear, 34 N.J.L. 496, 503

(E. & A. 1869) (holding that a mortgage "is annihilated by the

extinguishment of the debt secured by it").                           Furthermore, a

"mortgagee is not entitled to recover more than full amount of

[the] mortgage debt."         79-83 Thirteenth Ave., Ltd. v. De Marco,

79 N.J. Super. 47, 54 (Law Div. 1963), aff’d, 83 N.J. Super. 497

(App. Div. 1964), aff’d, 44 N.J 525 (1965).                        In addition, we

have    held   that,   even    in    a   commercial        setting,        courts    have

"inherent      equitable    authority         to   allow   a   fair    market       value

credit   in    order   to   prevent      a    double    recovery      by    a   judgment

creditor against a judgment debtor."                   MMU of N.Y., Inc., supra,

415 N.J. Super. at 40.           In that case, the plaintiff purchased

the defendant's property at a sheriff's sale for nominal value

and then quickly sold it for approximately $1,200,000.                            Id. at

41.     We affirmed the trial court's ruling that the defendant,

who owed the plaintiff $1,600,000 on a Law Division judgment,




                                             10                                  A-5225-12T2
was entitled to a credit based on the property's fair market

value.       Id. at 41-43.       What these authorities illustrate is that

plaintiff was entitled only to recover the amount of its loan –

together with accruing interest and other damages permitted by

the loan agreements – and defendants were entitled to a fair

market credit for any property acquired by plaintiff in the

collection of its debt.

       Of further interest is that the "foreclosure first" rule,

N.J.S.A. 2A:50-2, which acts to avoid the type of convoluted

circumstances         presented     here,    requires           that    foreclosure      be

sought first when collecting on a debt secured by a mortgage.

Only    if    the    eventual     disposition      of     the    foreclosed     property

fails    to    "bring       an   amount   sufficient       to     satisfy      the   debt,

interest, and costs," may the lender commence an action on the

deficiency.         Ibid.

       Although      the     "foreclosure        first"    rule        was   intended    to

prevent the possibility of multiple actions for the recovery of

such a debt, Light v. Granatell, 171 N.J. Super. 557, 561 (App.

Div. 1979), the Legislature created exceptions and determined –

for    reasons      apparently     "based    on    efficiency          and   respect    for

arms-length business transactions," Bus. Loan Ctr., L.L.C. v.

Nischal, 331 F. Supp. 2d 301, 309 (D.N.J. 2004) – that when the

debt is secured "for a business or commercial purpose," such as




                                            11                                   A-5225-12T2
here, the lender is not obligated to foreclose first.                           N.J.S.A.

2A:50-2.3(a).    As we have seen, plaintiff chose the alternative

route   permitted     by    this    exception,        thereby         convoluting     the

circumstances now before us.10

      In any event, as made clear by First Union Bank v. Penn

Salem Marina, 190 N.J. 342, 344-45 (2007), by fixing in the Law

Division the amount due on four of the loans, plaintiff is now

estopped from claiming a greater amount was due on the same

items of damages then adjudicated.                   As the First Union Court

held, "[e]xcept for amounts accruing after the first judgment

and   for   different      categories      of   damages,        the    amount    of   the

judgment    entered   in    [both    the     Law    Division      and    foreclosure]

action[s] should be identical."            Id. at 345.

      Because of the lack of clarity in the record as to how the

application of these principles impact the parties' rights and

obligations, we remand for further proceedings.                           Despite the

Chancery    judge's   accurate      comment        early   in    these    proceedings

regarding    defendants'      claims    of      "over-collateralization"              and

overpayment of the debt – that "a full and complete factual

10
 A further complication arises from the fact that the Law
Division action sought a money judgment on only four of the five
loans.   Plaintiff's rights and remedies regarding that fifth
loan are, therefore, not capped by the Law Division judgment
except to the extent plaintiff may have already collected more
than owed on the total of all five loans as a result of its
efforts on the first four loans.



                                        12                                      A-5225-12T2
record" was required – uncertainty and unresolved fact disputes

continue to plague an understanding of the parties' rights.                          The

parties are entitled to a consideration of these issues after

the creation of "a full and complete factual record."

       We note that certain pieces of the puzzle are already in

place.      First, the Law Division judgment fixed the total amount

of    the   principal   indebtedness    on    four       of    the    five   loans   at

$2,059,141.84, as of August 18, 2010, the date judgment was

entered; the certification submitted by plaintiff in support of

the entry of that default judgment designates – and caps – the

amount due on each of the four loans involved.                         That default

judgment also awarded plaintiff post-judgment interest on the

adjudicated principal, thus fixing the accrual of interest on

any    unpaid   portion   of   that   judgment       –    for    however     long    it

remained unpaid – at the rule-based interest rate contained in

Rule    4:42-11(a).11     Those   determinations          in    the    Law   Division

precluded the awarding of additional damages on those categories

in    the   later   Chancery   Division      actions.          First    Union    Bank,

11
 The judgment also found defendants liable for an "attorney
fee," but no amount was fixed.      The judge should determine
whether plaintiff's failure to quantify its attorney's fees when
applying for the default judgment in the Law Division
constituted a waiver of that category of damages in the Chancery
Division matters or whether it is more equitable to permit the
later determinations in the foreclosure judgments to constitute
awards for the unspecified attorney fee permitted by the Law
Division judgment.



                                       13                                     A-5225-12T2
supra, 190 N.J. at 355.          On the other hand, plaintiff's right to

seek relief on the fifth loan was not so limited.

      We further observe that a certification, which was filed in

support   of    defendants'      motion         to       dismiss     the       Loren    Terrace

foreclosure action, asserted that plaintiff was paid $717,063.01

"[b]etween March 30, 2011 and December 28, 2011," and another

$500,000 was paid to plaintiff on or about January 21, 2013.                                   It

is not clear from the record whether plaintiff disputes these

payments.      If so, then there must be an evidentiary hearing to

resolve that dispute; if not, then the amount due on the Law

Division judgment should have been reduced and the amount of

interest accruing on the remainder should have been adjusted

accordingly.      In addition, defendants contend plaintiff received

property through sheriff's sales that would further reduce – or,

if   defendants      are   correct        as    to       the   property's        fair     market

value,    fully      satisfy     –    the       amount         due   on    the     judgment.

Defendants     are    entitled       to   a     credit         against    the    outstanding

indebtedness for the fair market value of the property obtained

by   plaintiff.        And     plaintiff            is     entitled       to    recover       any

reasonable     sums    for     expenditures              properly     incurred         but    not

adjudicated by way of the Law Division action, such as – if

applicable or permitted by the loan agreements – real estate

taxes, insurance or property preservation.




                                               14                                       A-5225-12T2
         In short, the questions posed in these appeals cannot be

properly or clearly answered without a full accounting of the

cash and property collected by plaintiff applied against the

amount     of   the   Law   Division    judgment      and    the   interest      that

accrued on that judgment, as well as expenditures in "different

categories of [permissible] damages" not adjudicated in the Law

Division action.        First Union Bank, supra, 190 N.J. at 345.

         Although we are unsure of the practical effect of reversing

the orders under review in A-5225-12 and A-1893-13,12 we reverse

those orders as well as the order granting summary judgment in

favor of plaintiff under review in A-2109-13.                      And, we remand

for further proceedings in conformity with this opinion.                       These

proceedings      should     be   conducted     by    the    Chancery     judge     who

presided over most of these lawsuits even though one of the

matters – that which is before us in A-1893-13 – was adjudicated

in   a    neighboring     vicinage;    to    avoid   inconsistent        rulings    or

further delay, the matter requires a global resolution by a

single judge.

         Reversed and remanded.       We do not retain jurisdiction.




12
 Those orders denied defendants' applications                      for    stays    of
sheriff's sales that eventually went forward.



                                        15                                  A-5225-12T2
