WILMINGTON SAVINGS FUND SOCIETY FSB v. OTIENO-NGOJE

Filing 85

OPINION. Signed by Judge William J. Martini on 2/14/20. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
WILMINGTON SAVINGS FUND SOCIETY,
FSB as Trustee of Stanwich Mortgage Loan
Trust A,
Plaintiff,

Civ. No.: 2:16-05631 (WJM)
OPINION

v.
BERYL OTIENO-NGOJE,
Defendant.
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff Wilmington Savings Fund Society (“Wilmington”) brings this action
against Defendant Beryl Otieno-Ngoje, alleging counts of conversion, unjust enrichment,
and fraud, in connection with Defendant’s purported illegal appropriation of insurance
proceeds. This matter comes before the Court on Plaintiff and Defendant’s cross-motions
for summary judgment. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons
set forth below, Plaintiff’s motion for summary judgment, ECF No. 71, is GRANTED and
Defendant’s motion for summary judgment, ECF No. 72, is DENIED.
I.

BACKGROUND

This case is a dispute over the proper owner of insurance proceeds issued in
connection with a residential property damaged by fire. On January 25, 2008, Defendant
Ngoje and her business partner, Auslene Simon, closed on property located at 403
Lawnridge Road, Orange, New Jersey. Pl.’s Mot. Summ. J. Ex. 1, 15:19-24, 16:1-4. GFI
Mortgage, Inc. financed the purchase of the property through a residential mortgage loan
in the amount of $275,400. The residential mortgage loan was secured by a mortgage.
Pl.’s Mot. Summ. J. Ex. 2. The mortgage provided in relevant part:
All insurance policies required by Lender and renewals of such policies shall
be subject to Lender’s right to disapprove such policies, shall include a
standard mortgage clause, and shall name Lender as mortgage as an
additional loss payee. . . . In the event of loss, Borrower shall give prompt
notice to the insurance carrier and Lender. . . . [A]ny insurance proceeds . .
. shall be applied to restoration or repair of the Property, if the restoration or
repair is economically feasible and Lender’s security is not lessened. . . . If
the restoration or repair is not economically feasible or Lender’s security

would be lessened, the insurance proceeds shall be applied to the sums
secured by this Security Instrument, whether or not then due, with the excess,
if any, paid to Borrower.
Borrower shall not destroy, damage, or impair the Property, allow the
Property to deteriorate or commit waste on the Property. Whether or not
Borrower is residing the Property, Borrower shall maintain the Property in
order to prevent the Property from deteriorating or decreasing in value due
to its condition. Unless it is determined pursuant to Section 5 that repair or
restoration is not economically feasible, Borrower shall promptly repair the
Property if damaged to avoid further determination or damage. If insurance
or condemnation proceeds are paid in connection with damage to, or the
taking of, the Property, Borrower shall be responsible for repairing or
restoring the Property . . .
The covenants and agreements of this Security Instrument shall bind (except
as provided in Section 20) and benefit the successors and assigns of Lender.
Id. In 2009, GFI Mortgage, Inc. assigned and sold the Mortgage to Wells Fargo Bank,
N.A. See Pl.’s Mot. Summ. J. Ex. 3. In 2012, Wells Fargo Bank, N.A. sold and assigned
the Mortgage to U.S. Bank National Association as Legal Title Trustee 2012 SC Title
Trust. Pl.’s Mot. Summ. J. Ex. 4. In January 2016, the Mortgage and Note were sold and
assigned to Plaintiff Wilmington. Pl.’s Mot. Summ. J. Ex. 5.
On June 26, 2009, Simon transferred ownership of the property to Ngoje for $1.00.
Id. Ex. 1 at 34, Ex. 6. Defendant Ngoje and her family moved into the property sometime
in 2011, continued to live there until November 2015, but by 2009, stopped making
mortgage payments. Ex, 1 at 36, 44. On April 30, 2011, Ngoje purchased a homeowner’s
insurance policy from Liberty Mutual. Id. Ex. 1 at 52, Ex. 12. The policy provided
insurance coverage for damage to the dwelling and contents caused by a fire at the property.
Id. Ex. 6. The policy names Ngoje as the named insured and Wells Fargo Bank, its
successors and assigns, as the mortgagee. Id. The policy provides that Liberty Mutual
payment for losses will be made jointly to the insured and to the mortgagee, or the
mortgagee’s trustee. Pl.’s Mot. Summ. J. Ex. 7, at 10. Ngoje renewed the insurance policy
each year through 2015. Each successive insurance policy identified Wells Fargo Bank,
its successors and assigns, as the mortgagee and contained an identical mortgagee clause.
Defendant Ngoje contemporaneously received each declarations page identifying Wells
Fargo Bank, its successors and assigns, as the mortgagee, as well as the insurance policy
containing the mortgagee clause.
On November 30, 2015, a fire damaged the property and was henceforth been
uninhabitable. A few weeks after the fire, Wells Fargo Bank, N.A. sold and assigned all
of the rights, title, and interest in the mortgage and property to Plaintiff Wilmington. Id.
Ex. 1 at 60, Ex. 3. Wilmington retained Carrington Mortgage Services, LLC to service the
mortgage loan. At the time of the fire, the sum of $423,896.62 was due and owing on the
mortgage. See id. at Ex. 7. Within days of the fire, Ngoje made a claim against the
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insurance policy, representing to Liberty Mutual that she intended to repair the house with
the insurance proceeds. Id. at Ex. 12.
From December 2015 to July 2016, Liberty Mutual sent Ngoje at least four written
communications advising her that the mortgage company may be listed as a payee on
insurance proceeds checks and directing Ngoje to contact the mortgage company about
processing the insurance proceeds payments: “Your current mortgage company may be
listed as the payee on payment(s) for the covered repairs to your home. If so, you will need
to contact your mortgage company to determine their procedures for processing claims
payments. . . .” Id. Ex 1 at 71-74, 79, 94, Ex. 8.
Liberty Mutual determined that the value of the damage to the property was
$408,554.79 and after accounting for depreciation, agreed to pay $292,658.44 with an
additional amount to be paid upon completion of repairs to the property. Id. Ex. 1 at 81.
Because the insurance policy contained a mortgagee clause, Liberty Mutual asked
Defendant and the public adjuster for the name of the current mortgagee for purpose of
issuing an insurance proceeds check payable jointly to the Defendant and the mortgagee.
Id. Ex. 9. On May 16, 2016, Liberty Mutual issued a check in the amount of $292,658.44
payable to Ngoje, D. Simon & Associates, and Carrington. Ex. 10. Liberty Mutual sent
the check to David Simon. Id. Ex. 9 at 62. Mr. Simon endorsed the check and provided it
to Ngoje with instructions that she contact Carrington to determine how the mortgage
company would like the insurance proceeds handled. Id. Ex. 9 at 65-66. Without
contacting Carrington or Plaintiff Wilmington, Ngoje forged Carrington’s endorsement on
the May check and deposited the entire insurance proceeds check into her personal bank
account at JPMorgan Chase Bank. Id. Ex. 12, ¶¶ 4-8, 10-12. In July 2016, Liberty Mutual
adjusted the value of the damage to the dwelling upward to $470,302.12. Id. Ex. 1 at 93.
Consequently, on July 29, 2016, Liberty Mutual issued a second insurance proceeds check
in the amount of $47,906.19. Id. Ex. 1 at 95-96. Like the first check, the second check
was jointly payable to Ngoje, D. Simon & Associates, and Carrington. Liberty Mutual sent
the check to David Simon, who endorsed it and provided it to Ngoje with instructions that
Ngoje contact Carrington regarding the insurance proceeds. Id. Ex. 9, 71-72. Without
contacting or alerting Carrington about the July check, Ngoje deposited the insurance
proceeds into her personal bank account at JPMorgan Chase Bank. Id. Ex. 12, ¶¶ 13-14,
16-18.
During 2016, Defendant Ngoje used $340,000 of insurance proceeds for a variety
of personal matters such as to support her business by bidding on sheriff’s sale properties,
making repairs to Defendant’s other property in Hillside, New Jersey, and purchasing
goods and shipping those goods overseas in support of Defendant’s husband’s business.
None of the insurance proceeds were used to repair the Property. Id. Ex. 1 at 102, 105, Ex.
12 at ¶ 12.
Plaintiff filed its complaint on September 16, 2016, to recover the Liberty Mutual
insurance proceeds in the amount of $340,000. ECF Nos. 1, 4. Plaintiff Wilmington
asserts claims against Defendant for conversion, unjust enrichment, and fraud. On
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November 17, 2016, the Court granted Plaintiff’s motion and enjoined Defendant from
transferring assets and placing a constructive lien on the sheriff’s sale deposits. Id. Ex. 14.
II.

LEGAL STANDARD

Summary judgment is appropriate if “there is no genuine issue as to any material
fact and . . . the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56. A fact is material if its determination might affect the outcome of the suit under the
applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986).
A dispute is genuine if “a reasonable jury could return a verdict for the nonmoving
party.” Id. To make this determination, the Court views the facts in the light most
favorable to the nonmovant and all reasonable inferences must be drawn in the
nonmovant’s favor. Scott v. Harris, 550 U.S. 372, (2007); Green v. New Jersey State
Police, 246 F. App’x 158, 159 (3d Cir. 2007).
The moving party bears the burden of demonstrating the absence of a genuine
dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant
meets this burden by pointing to an absence of evidence supporting an essential element as
to which the non-moving party will bear the burden of proof at trial. Id. at 325. If the
moving party carries this initial burden, “the nonmoving party must come forward with
specific facts showing that there is a genuine issue for trial.” United States v. Donovan,
661 F.3d 174, 185 (3d Cir. 2011) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586–87 (1986) (internal quotation marks omitted)).
III.

DISCUSSION

Plaintiff Wilmington asserts claims against Defendant for conversion, unjust
enrichment, and fraud. In sum, Plaintiff contends that it is entitled to, the Liberty Mutual
insurance policy proceeds because: (1) the mortgagee clause in the Liberty Mutual
Insurance Policy provides that payment for loss to the Property would be made jointly to
the insured (Defendant Ngoje) and the mortgagee (Plaintiff Wilmington) as their interests
in the Property appear; (2) Plaintiff Wilmington had a first lien security interest in the
Property and in the Policy; (3) the dollar value of Plaintiff Wilmington’s interest at the time
that the loan proceeds were distributed was in excess of the amount of the loan proceeds;
and (4) therefore, Plaintiff Wilmington was legally entitled to the full amount of the Liberty
Mutual Insurance Policy proceeds.
A. Conversion
“Conversion is an intentional exercise of domain or control over a chattel which so
seriously interferes with the right of another to control it that the actor may justly be
required to pay the other the full value of the chattel.” Chicago Title Ins. Co. v. Ellis, 978
A.2d 281, 287 (App. Div. 2009) (quoting Restatement (Second) of Torts § 222A(1)). To
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state a claim for conversion, a plaintiff must establish: (1) the existence of property; (2) the
right to immediate possession of the property; and (3) the wrongful interference by a
defendant.” Corestar Int’l Pte LTD v. LPB Commc’ns, Inc., 513 F. Supp. 2d 107, 127
(D.N.J. 2007). “The crux of conversion is wrongful exercise of dominion or control over
property of another without authorization and to the exclusion of the owner’s rights in that
property. Ellis, 978 A.2d at 288. “Where a sum of money is identifiable, courts look to
the relative rights of each party to possession and use of the money to determine whether
a cause of action lies for conversion.” Id.
1. Plaintiff Wilmington’s Right to the Liberty Mutual Insurance
Proceeds
The Liberty Mutual Insurance Policy contains a mortgage clause which expressly
provides for the named mortgagee (or its successors and its assigns) to receive insurance
proceeds for losses to the insured property to the extent of its interest. Wells Fargo Bank
was the mortgagee named on the Liberty Mutual Insurance Policy. However, at the time
that Liberty Mutual disbursed the insurance proceeds, Wells Fargo Bank had assigned the
mortgage to Plaintiff Wilmington. As the assignee, Wilmington was entitled to the
insurance proceeds to the extent of its insurable interest. See Liberty Mutual Fire Insurance
Company v. Alexander, 864 A.2d 1127 (App. Div. 2005) (“[t]he standard mortgage clause
in the homeowner’s insurance policy is an independent agreement between the insurer and
the mortgagee that entitles the mortgagee to recover the insurance proceeds for damages to
the insured’s property”). If “the property owner remains the title owner of the property, a
mortgagee has the right to apply fire insurance proceeds to the outstanding debt in the
absence of any agreement to the contrary . . . .” Id. at 1133.
The Liberty Mutual Insurance Policy, here, contains a standard mortgage clause
which provides for payment of insurance proceeds to the mortgagee. See Def.’s Mot. Ex.
6. At the time that Liberty Mutual disbursed the insurance proceeds for the fire damages
to the property, Wilmington was the mortgagee on the property. See id. at Ex. 3. In
accordance with the obligations created by the mortgagee clause, Liberty Mutual made the
May check and July check payable to Wilmington’s agent, Carrington Mortgage Services.
Id. at Exs. 10, 11. New Jersey law gives Plaintiff Wilmington the legal right to the
insurance proceeds to apply to the outstanding debt.
2. Defendant Ngoje’s Wrongful Interference with Plaintiff’s Right to
Possession of the Insurance Proceeds
Defendant need not knowingly or intentionally act wrongfully for a conversion to
occur. Ellis, 978 A.2d 281; Delzotti v. Morris, 2015 WL 5306215, *9 (D.N.J. 2015)
(conversion does not require that defendant have an intent to harm the rightful owner, or
know that the money belongs to another). Rather,
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[t]he general rule is that one who exercises unauthorized acts of dominion
over the property of another, in exclusion or denial of his rights or
inconsistent therewith, is guilty of conversion although he acted in good faith
and in ignorance of the rights or title of the owner. The state of knowledge
with respect to the rights of such owner is of no importance, and cannot in
any respect affect the case.
McGlynn v. Schultz, 218 A.2d 408 (Ch. Div. 1966). The repudiation may be manifested in
the injured party’s demand for the funds and the tortfeasor’s refusal to return the money
sought. Bondi v. Citigroup, Inc., 32 A.3d 1158, 1190 (App. Div. 2011).
Defendant Ngoje’s contention that she “reasonably, innocently and honestly
believed the check was hers” is contradicted by Defendant Ngoje’s sworn deposition
testimony, as well as the deposition testimony of Defendant’s public adjuster and the
documents. Both insurance proceeds checks were jointly payable to Carrington on the face
of each check. Defendant admits signing Carrington’s name on the May, 2016 check
without Carrington’s permission. Pl.’s Mot. Ex. 12. At the time that she received the
insurance proceeds checks, Defendant knew that the mortgage company claimed a right to
the insurance proceeds. Id. Ex. 1 at 77-78. David Simon, Defendant’s public adjuster,
gave specific instructions to turn over the insurance proceeds checks to the mortgage
company. Ex. 9 at 65-66. Defendant was aware that Carrington was a joint payee on each
check and that the mortgage company had asserted a right to the insurance proceeds. She
has also been expressly directed by her public adjuster to send the insurance proceeds
checks to the mortgage company. Instead, Defendant made a calculated decision not to
send the insurance proceeds because she did not want to keep the property.
Defendant Ngoje admits that she took the insurance proceeds checks, forged
Carrington’s endorsement on the May check and deposited the checks into her personal
bank accounts. See Def’s Mot. Exs. 1, 12. After taking possession of the insurance
proceeds checks, Defendant Ngoje refused to turn over the insurance proceeds to Plaintiff
Wilmington. Because Plaintiff has a right to the insurance proceeds to pay down the
$443,000 debt owed on the mortgage loan, Defendant Ngoje converted those insurance
proceeds.
B. Unjust Enrichment
In New Jersey, “[t]o establish a claim for unjust enrichment . . . a plaintiff must
show both that the defendant received a benefit and that retention of that benefit without
payment would be unjust.” Stewart v. Beam Global Spirits & Wine, Inc., 877 F. Supp. 2d
192, 196 (D.N.J. 2012). A plaintiff must allege that: (1) at plaintiff’s expense; (2)
defendant received benefit; (3) under circumstances that would make it unjust for
defendant to retain said benefit without paying for it. Maniscalco v. Brother Intern. Corp.
(USA), 627 F. Supp. 2d 494, 505 (D.N.J. 2009).
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Defendant Ngoje was unjustly enriched in the amount of $340,544.65. Defendant
Ngoje deposited into her personal account insurance proceeds to which Plaintiff
Wilmington was entitled. By forging Carrington’s endorsement on the May check and
retaining the funds, Defendant Ngoje was enriched in the amount of $292,638.46. See Ex.
11. By depositing and retaining the funds from the July check, Defendant Ngoje was
enriched by an additional $$47,906.19. See Ex. 12. Plaintiff Wilmington had a right to the
insurance proceeds in order to compensate it for the loss of value to its mortgage interest
caused by near total destruction by fire of the Property. At the time of the fire, the security
interest exceeded $443,000. See Ex.8.
C. Fraud
Under New Jersey law, fraud consists of: “(1) a material misrepresentation of a
presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3)
an intention that the other person rely on it; (4) reasonable reliance thereon by the other
person; and (5) resulting damages.” Gennari v. Weichert Co. Realtors, 691 A.2d 350
(1997).
Defendant Ngoje committed fraud by forging Carrington’s endorsement on the May
check. By depositing and retaining the insurance proceeds, Defendant falsely represented
that she had exclusive right, title and interest to the insurance proceeds. Defendant Ngoje
also committed fraud by omission by failing to disclose to Plaintiff WSFS that she had
received insurance proceeds from Liberty Mutual. Ex. 1 at 98.
Defendant Ngoje intentionally made the aforesaid false representations and
omissions of material fact in order to unlawfully abscond with the insurance proceeds.
Defendant Ngoje further intentionally concealed from Plaintiff WSFS that she received,
deposited and spent the insurance proceeds. Plaintiff WSFS is harmed by Defendant’s
fraud because it was unable to use the proceeds to repair the property thereby decreasing
the value of the property and its mortgage lien.
IV.

CONCLUSION

Accordingly, Plaintiff’s motion for summary judgment, ECF No. 71, is GRANTED
and Defendant’s motion for summary judgment, ECF No. 72, is DENIED. An appropriate
order follows.

Dated: February 14, 2020
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
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