                        NOT FOR PUBLICATION WITHOUT THE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-0249-16T2

THE BANK OF NEW YORK MELLON
f/k/a THE BANK OF NEW YORK,
AS TRUSTEE FOR THE
CERTIFICATEHOLDERS OF THE
CWALT, INC., ALTERNATIVE
LOAN TRUST 2007-24 MORTGAGE
PASS-THROUGH CERTIFICATES,
SERVICES 2007-24,

              Plaintiff-Respondent,

v.

JOHN KINGSBURY, his heirs,
devisees and personal
representatives and his, her, or
any of their successors in right,
title, and interest; GLENN MICHAEL
KINGSBURY; MRS. GLENN MICHAEL
KINGSBURY, his wife; MRS. JOHN
KINGSBURY, his wife; SUSAN E.
KINGSBURY, n/k/a SUSAN E. DANSON,

                 Defendants-Appellants,

and

STATE OF NEW JERSEY; UNITED STATES
OF AMERICA,

            Defendants.
____________________________________________

              Argued May 1, 2018 – Decided July 13, 2018
          Before Judges Hoffman and Mitterhoff.

          On appeal from Superior Court New Jersey,
          Chancery Division, Ocean County, Docket No.
          F-012351-15.

          Mark G. Schwartz argued the cause for
          appellants (Cooper Levenson, PA, attorneys;
          Howard E. Drucks and Jennifer B. Swift, on the
          briefs).

          Eugene R. Mariano      argued the cause for
          respondent (Parker     McCay, PA, attorneys;
          Eugene R. Mariano,     of counsel and on the
          brief).

PER CURIAM

     In   this   mortgage   foreclosure   action,   defendant     Glenn

Kingsbury1 appeals from an August 5, 2016 final judgment entered

by the Chancery Division, following the court's grant of summary

judgment in favor of plaintiff, The Bank of New York Mellon, on

April 29, 2016.2 On appeal, defendant challenges the trial court's



1
   On February 5, 2012, the mortgagor, John Kingsbury (decedent),
passed away.   On June 22, 2012, the Atlantic County Surrogate
issued Letters Testamentary to defendant, decedent's son,
confirming his appointment and qualification as executor of his
father's estate. For ease of reference, we refer to John Kingsbury
as decedent and his son, Glenn Kingsbury, as defendant.
2
   The notice of appeal refers only to the August 5, 2016 final
judgment.   However, defendant's Appellate Division Civil Case
Information Statement identifies the underlying summary judgment
order as the order he seeks to appeal. Both parties have fully
briefed the court's decision granting summary judgment. In the
interest of justice, we deem the appeal properly taken from the
summary judgment order.

                                  2                             A-0249-16T2
rejection of his claim that decedent was the victim of predatory

lending, in violation of the New Jersey Consumer Fraud Act (CFA),

N.J.S.A. 56:8-1 to -210.          For the following reasons, we reverse

and remand.

                                      I

       On March 20, 2007, decedent, then seventy-two years old,

executed a Real Estate Contract (Contract) for the purchase of a

beachfront home in Beach Haven.        The Contract provided for a sale

price of $1,775,000, a deposit of $1000, an additional deposit of

$126,500 within ten days of the signing of the Contract, and a

contingency of buyer obtaining a mortgage of $1,597,500.                   The

Contract did not reference a second mortgage.

       The record indicates the closing for the purchase took place

on June 8, 2007.       On that date, decedent executed an Interest Only

Fixed Rate Note (Note) in favor of Countrywide Home Loans, Inc.

(Countrywide) for $1,420,000, along with a corresponding mortgage.

The Note provided for a thirty-year term, with monthly payments

of $9319 for the first 120 months and $11,767 thereafter. Decedent

also   executed    a    Uniform   Residential   Loan    Application     (Loan

Application) on the same day. The Loan Application states decedent

was the self-employed owner of Cheer Tech for ten years and two

months and had a monthly income of $30,000, composed of a base

income of $25,000 and a pension of $5000.              It further listed a

                                      3                               A-0249-16T2
contract    sales    price    of   $1,775,000,    subordinate      financing      of

$177,500,    earnest    money      of   $177,500,    and   a    loan   amount     of

$1,420,000.     Also on June 8, 2007, decedent executed a HUD-1

Uniform    Settlement       Statement,    which   listed    earnest      money    of

$177,500, a principal loan amount of $1,420,000, and a second

mortgage of $177,050.

     Plaintiff's file regarding decedent's loan contained two

additional documents.        First was an April 30, 2007 letter decedent

allegedly    wrote    "to    explain     inquiries   on    my   credit   report";

apparently, "[d]ue to the size of the mortgage," decedent had

contacted other lenders.           Decedent also allegedly wrote, "I am

retired," but "bought into the business Cheer Tech in 1997 . . . ."

Second was a May 14, 2007 letter from an employee of H&R Block

stating, decedent "has filed as owner of Cheer Tech . . . since

1997.   I have been preparing his taxes for the last twelve years."

     On September 1, 2010, decedent stopped making the monthly

mortgage payments, constituting a default that he never cured.                    On

June 1, 2011, Mortgage Electronic Registration Systems, Inc., as

nominee for Countrywide, assigned the mortgage to plaintiff.                      As

noted, decedent passed away on February 5, 2012.                 A title search




                                          4                                A-0249-16T2
revealed a second mortgage for $177,5003 in favor of Countrywide

that was discharged on September 26, 2012.

     On August 22, 2014, plaintiff sent a notice of intent to

foreclose    to    decedent's   estate.      Plaintiff   filed      an   amended

foreclosure complaint on June 30, 2015 against decedent's estate

and heirs.    Defendant answered on September 9, 2015, alleging the

CFA barred plaintiff's claims due to Countrywide's fraudulent

actions, including material misrepresentation of decedent's income

on the loan application.

     On February 18, 2016, plaintiff filed a motion for summary

judgment.     On April 27, 2016, defendant filed opposition to

plaintiff's       motion,   arguing   the   court   should   hold    plaintiff

responsible for Countrywide's fraudulent actions in issuing the

loan.   Defendant also asserted plaintiff frustrated his right to

conduct meaningful discovery.

     On April 29, 2016, the trial court heard oral argument on

plaintiff's motion for summary judgment.              The court initially

noted that plaintiff is not a holder in due course because the

assignment of the note and mortgage to plaintiff occurred after

the loan went into default; as a result, plaintiff is "subject to


3
    We assume this second mortgage represents the same second
mortgage reflected on the settlement sheet, which lists a second
mortgage of $177,050. This discrepancy constitutes another issue
for the parties to address when they complete discovery.

                                       5                                 A-0249-16T2
the defenses that are relevant."        Plaintiff's counsel did not

dispute this point.      Defendant requested further discovery and

argued Countrywide defrauded decedent.        Plaintiff argued it met

the standard for summary judgment because decedent signed all of

the loan documents and defendant failed to establish fraud or

other wrongful conduct by Countrywide.

     The motion court found plaintiff established a prima facie

right to foreclose, concluding defendant failed to raise any

genuine issues of material fact.        The court specifically found

defendant's fraud claim "untenable."         The court also noted the

statute of limitations barred defendant from asserting a fraud

claim.   Furthermore, the court found decedent's failure to raise

a fraud claim at the time of the transaction, and the loan payments

he made for the next three years, ratified the note and mortgage.

The court further found the opposing certification of defendant

"unpersuasive,"   dismissing      it    as    "clearly   hearsay     and

speculation."     The    court   then   granted   plaintiff's   motion,

concluding defendant had "not met [his] burden for opposing . . .

summary judgment . . . ."

     On appeal, defendant argues the motion court erred in failing

to allow discovery, and in denying "the right to seek equitable

remedies."   We agree.



                                   6                            A-0249-16T2
                                    II

       We review a grant of summary judgment de novo, applying the

same standard as the trial court.         Henry v. N.J. Dep't of Human

Servs., 204 N.J. 320, 330 (2010). Summary judgment must be granted

if "the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact challenged

and that the moving party is entitled to a judgment or order as a

matter   of   law."     R.   4:46-2(c).    Without   making   credibility

determinations, the court considers the evidence "in the light

most favorable to the non-moving party" and determines whether it

would be "sufficient to permit a rational factfinder to resolve

the alleged disputed issue in favor of the non-moving party."

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

       The CFA authorizes a suit by "[a]ny person who suffers any

ascertainable loss of moneys or property, real or personal, as a

result of the use or employment by another person of any method,

act,   or   practice   declared   unlawful   under   this   act   . . . ."

N.J.S.A. 56:8-19.      Thus, "[t]o prevail on a CFA claim, a plaintiff

must establish three elements: '1) unlawful conduct by defendant;

2) an ascertainable loss by plaintiff; and 3) a causal relationship

between the unlawful conduct and the ascertainable loss.'"           Zaman



                                     7                             A-0249-16T2
v. Felton, 219 N.J. 199, 222 (2014) (quoting Bosland v. Warnock

Dodge, Inc., 197 N.J. 543, 557 (2009)).

       The CFA defines an "unlawful practice" as "any unconscionable

commercial    practice,    deception,   fraud,   false   pretense,     false

promise,     misrepresentation,    or    the     knowing,   concealment,

suppression, or omission of any material fact with intent that

others rely upon such concealment, suppression or omission, in

connection with the sale or advertisement of any merchandise or

real   estate   . . . ."     N.J.S.A.   56:8-2.     An   "unconscionable

commercial practice" suggests a standard of conduct lacking in

"good faith, honesty in fact and observance of fair dealing."             Cox

v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994) (quoting Kugler v.

Romain, 58 N.J. 522, 544 (1971)).

       Predatory lending may constitute unconscionable commercial

practice under the CFA.      See Assocs. Home Equity Servs., Inc. v.

Troup, 343 N.J. Super. 254, 278-79 (App. Div. 2001).           Predatory

lending is:

            a mismatch between the needs and capacity of
            the borrower . . . .    In essence, the loan
            does not fit the borrower, either because the
            borrower's underlying needs for the loan are
            not being met or the terms of the loan are so
            disadvantageous to that particular borrower
            that there is little likelihood that the
            borrower has the capability to repay the loan.




                                    8                                A-0249-16T2
             [Nowosleska v. Steele, 400 N.J. Super. 297,
             305 (App. Div. 2008) (alteration in original)
             (quoting Troup, 343 N.J. Super. at 267).]

       Here, whether decedent's loan application contained material

false information, and if so, Countrywide's complicity in creating

and approving such a fraudulent application, constitute material

facts in dispute.        Defendant contends: decedent never owned or

worked     for   Cheer   Tech,     rather     defendant   owns   the   business;

decedent's monthly income at the time of loan origination was

approximately       $1500,   not   $30,000;     the   April   30,   2007    letter

regarding decedent's credit report contains a forged signature;4

and H&R Block never filed Cheer Tech's tax returns.                    Defendant

submitted a certification attesting to those facts.                 Viewed in the

light most favorable to defendant, those facts clearly establish

a material dispute as to whether Countrywide engaged in unlawful

conduct proscribed by the CFA.              See Brill, 142 N.J. at 540.           We

discern no basis for the motion court's rejection of defendant's

certification as "clearly hearsay and speculation."

       Furthermore, defendant contends Countrywide misrepresented

decedent as providing earnest money, when the money actually came

from   a   second    mortgage      from   Countrywide;    inexplicably,        this



4
    The signature on the April 30, 2007 letter does appear
substantially different from the signature on the Note, the
mortgage, the Loan Application, and the Settlement Statement.

                                          9                                A-0249-16T2
mortgage was discharged shortly after decedent's death.                         We also

question whether the loan application decedent allegedly signed

on the date of settlement was the same application he signed when

he applied for the loan.             The application signed on the date of

closing listed as an asset his "DOWNPAYMENT" of $177,500, but did

not list any liabilities, except for an unpaid credit card balance

of $29.     Since Countrywide provided almost the entire amount of

the down payment via a second mortgage, it obviously knew the

application submitted to decedent at closing contained material

false    information.        Allowing      defendant       to   complete       discovery

should yield a full explanation of the facts and circumstances

surrounding the second mortgage, its discharge, and the degree of

Countrywide's      involvement        in    the    creation     or    submission        of

falsified documents.

      Accordingly, we find the trial court erred when it determined

the     record   showed   no    material          facts    in   dispute        regarding

Countrywide's      conduct     and    whether      it     engaged    in   an   unlawful

practice in violation of the CFA.               We therefore reverse the grant

of summary judgment and remand to allow the parties to complete

discovery.       Because the court entered its final judgment based

upon the order granting summary judgment, we also vacate the final

judgment.



                                           10                                    A-0249-16T2
                                III

     The trial court also found the statute of limitations bars

defendant's   CFA   defense.   However,   we   find   the   doctrine    of

equitable recoupment saves the defense.

     We agree the statute of limitations bars defendant from

pursuing an action under the CFA.     The statute of limitations for

the CFA is six years.   N.J.S.A. 2A:14-1; Trinity Church v. Lawson-

Bell, 394 N.J. Super. 159, 170 (App. Div. 2007) (citing Mirra v.

Holland Am. Line, 331 N.J. Super. 86, 90-91 (App. Div. 2000)).

Decedent signed the note and mortgage on June 8, 2007.         Assuming

decedent knew of the fraud at that time, the statute of limitations

began to run.   Defendant asserted a claim of fraud in his answer

to plaintiff's complaint on September 9, 2015, more than eight

years after the loan origination.     However, defendant asserted the

claim as a defense, not as a counterclaim.            The doctrine of

equitable recoupment permits a defendant to assert an otherwise

stale claim and     avoid the statute of limitations, where the

defendant uses the claim as a shield instead of a sword.          Nester

v. O'Donnell, 301 N.J. Super. 198, 208 (App. Div. 1997) (citing

Midlantic Nat'l Bank v. Georgian Ltd., 233 N.J. Super. 621, 625

(Law Div. 1989)).

     A defendant may raise an equitable recoupment defense in

order to reduce the plaintiff's recovery in a foreclosure action

                                11                               A-0249-16T2
when the defendant claims fraud arising from the loan origination.

Troup, 343 N.J. Super. at 271 (citing Beneficial Fin. Co. of Atl.

City v. Swaggerty, 86 N.J. 602, 611 (1981)).             "[J]udges invented

the doctrine of equitable recoupment in order to avoid an unusually

harsh or egregious result from a strict application of a statute

of limitations."     Ibid. (quoting Georgian Ltd., 233 N.J. Super.

at 625-26). Therefore, "the defense of recoupment 'is never barred

by the statute of limitations so long as the main action itself

is timely.'"     Ibid. (quoting Nester, 301 N.J. Super. at 208).

     Here,   plaintiff   argues     the   statute   of    limitations     bars

defendant's CFA defense.      However, a strict application of the

statute of limitations on the CFA defense would result in a gross

injustice if Countrywide engaged in unlawful practices to defraud

decedent during the loan process. We note the equitable recoupment

defense does not invalidate the debt; it merely reduces the amount

of plaintiff's recovery.      Id. at 272.     While plaintiff may still

be entitled to foreclose, equitable recoupment may limit the

recovery to the amount of the foreclosure sale and preclude any

deficiency judgment against defendant.           We remand to the trial

court to allow the parties to complete discovery and determine an

equitable result.

     Reversed,     vacated,   and    remanded.      We     do   not    retain

jurisdiction.

                                    12                                A-0249-16T2
