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DWORMAN v. MAYOR & BD. OF ALDERMEN

January 15, 1974

Lester J. DWORMAN, Plaintiff,
v.
The MAYOR AND BOARD OF ALDERMEN, the GOVERNING BODY OF the TOWN OF MORRISTOWN and the Town of Morristown, in the County of Morris, a municipal corporation, Defendant, Third Party Plaintiff, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Third Party Defendant


Lacey, District Judge.


The opinion of the court was delivered by: LACEY

This matter is before this court on plaintiff's motion for summary judgment. Fed. R. Civ. P. 56. Plaintiff, Lester Dworman, is sole owner of the Dworman Company and a citizen of the State of New York. Defendants are the Town of Morristown (the Town), a municipal corporation of the State of New Jersey, and its Mayor and Board of Aldermen. This court's jurisdiction is founded upon diversity of citizenship. 28 U.S.C. § 1332.

Plaintiff's complaint charges that defendants, having failed even to commence construction of an indoor parking facility in Morristown, and to connect the utilities required to operate plaintiff's now partially completed office building therein, have breached their agreement of July 8, 1970 (Agreement). The complaint seeks a declaratory judgment that the Agreement has been breached by defendants, that plaintiff has no duty to perform further thereunder, and damages. By way of alternative relief, plaintiff would have this court enter a decree of specific performance against the defendants, directing them to carry out the terms of the Agreement by constructing the garage and installing the utilities, or to permit plaintiff to perform these tasks for them.

 By this motion, plaintiff now seeks the aforesaid relief, except for a determination of damages.

 FACTUAL BACKGROUND

 In February 1965 the Town embarked upon a federally aided urban renewal project, the Hollow Redevelopment Project; and in March 1966 initiated a similar project, which was thereafter merged with a portion of the first project to create the Speedwell Avenue Urban Renewal Project. The latter, the subject of the dispute herein, was to receive funds promised by the United States Department of Housing and Urban Development (hereinafter HUD). Disputes as to the sufficiency of HUD's financial assistance are the subject of defendants' third-party complaint against it.

 Plaintiff, through a corporation controlled by him, had submitted a proposal to become the redeveloper for the Speedwell Avenue Project. By July 1967 his application had been approved by HUD and the Town, by resolution of its governing body, had designated plaintiff as redeveloper. Plaintiff, the Mayor and Aldermen, acting as the "Local Public Agency," *fn1" (hereinafter Agency), and the Town itself, entered into a preliminary Sponsorship Agreement outlining the general concept of the Speedwell Avenue Project. A parking garage of not more than 3,000 car spaces was to be built and owned by the Town. Atop the garage a concrete slab was to be constructed, upon which plaintiff would in turn construct a retail shopping mall. The Town, with plaintiff's approval, was to select an architect to plan the garage.

 Between 1967 and July 1970 the Town and the Agency apparently fulfilled their obligation to acquire the property, clear the renewal site, and relocate the displaced residents. Plaintiff during this period agreed to construct an additional structure, a ten-story office building, on the project site.

 On July 8, 1970, the Town, the Agency, and the plaintiff entered into the Agreement allegedly breached. Generally, the Agreement provided for the construction of the garage, the retail shops, and the ten-story office building in seven interlocking construction phases. The Agreement consisted of two parts: Part I, setting forth the terms and conditions negotiated by the three parties; and Part II, basically provided by HUD, but amended by the parties, a "Standard Form of Lease of Land for Private Redevelopment." The amendments are reflected in section 14 of the Agreement, entitled "Modifications of Part II."

 Under the Agreement, the Agency was to convey land to the Town for the construction of the garage and lease sufficient surface and air rights to plaintiff to erect the office building and shopping mall. Following the required submission by plaintiff's architects of preliminary and then final plans, and approval thereof by the Agency, the phased construction was to begin.

 Phase I of the plan required plaintiff to commence construction of the office building within five months of the approval of final construction plans and to complete it within 14 months of its commencement. After plaintiff's completion of 30 percent of the office building, the Town was to commence construction of the parking garage (Phase A), and was to have the Phase A section of the Garage completed within six months of the completion of Phase I.

 The lease term, during which plaintiff was to be in possession of the aforementioned air and subsurface rights, was not to commence until the following three events occurred: 1) The Agency approved "Final Construction Plans"; 2) The Agency or the Town provided plaintiff with 300 temporary, but easily accessible parking spaces; and 3) "The Town had been duly authorized to sell parking facility bonds or other bonds necessary to finance construction of Phase A of the Parking Garage." (Section 3). Moreover, Section 3 of the lease also required both a written notice to plaintiff of the above occurrences and the execution of a supplemental agreement, before the 52-year lease term was to begin. There is no evidence before me to indicate occurrence of the conditions to commencement.

 After Phase I was to be completed and Phase A begun, the plaintiff and the Town were to construct under Phases II and III, and Phases B and C respectively. These later phases, however, are not material to the breaches of the Agreement alleged herein.

 Between July 8, 1970 and the commencement of construction by plaintiff in November 1972, several events have, or are alleged to have, occurred. Bernard Shaw, the architect hired by the Town to draw the garage plans, failed to finish the needed plans before he was replaced in that position by Porter and Ripa, Associates, the present architects. Both the Town's architect and officials of the Town itself state that as early as late 1970 the parties expressly agreed that the phasing concept in the written agreement was to be abandoned in favor of a single phase construction approach and that all building plans now in existence have been drafted on that basis. The Town, in fact, passed a resolution in May 1973 requesting its attorneys to negotiate an amendment to the Agreement providing for the elimination of the phasing concept. Defendants claim that the plaintiff's attorneys represented that no amendment was necessary while plaintiff asserts that he merely refused to accept the Town's proposed changes.

 The defendants, in their supporting affidavits, also claim that the plans submitted by plaintiff's architect for the above-garage mall imposed a significantly greater amount of weight upon the parking garage pillars than the 100 pounds per square foot "live weight" contemplated in Paragraph 1.a. of Schedule G of the Agreement. *fn2" More specifically, the affidavits submitted by defendants state that plaintiff's proposed construction plans would require as much as 1,900 pounds per square foot of weight carrying capacity on some portions of the slab. These changes, they assert, would increase the cost of the garage construction by hundreds of thousands of dollars. Moreover, they claim, by way of Alderman Goodman's affidavit, that notice of the changes was not given to defendants until shortly after submission of preliminary plans to the New Jersey Division of Labor and Safety in July of 1972.

 Plaintiff, however, denies the existence of any weight overload and claims that any changes in the plans were so minor that they would create little if any additional expense. The affidavit of plaintiff's construction manager states that the additional weight requirements are only necessary in isolated areas for support of decorations such as fountains; that the required changes should only cost $10,000 (out of $20,000,000 for the project); and that such spot changes are a common occurrence in the industry.

 There is little doubt, however, that the real obstacle to the timely construction of the Speedwell Project is the Town's failure to obtain adequate financing for the construction of the parking garage. During 1971 and 1972, defendants claim, numerous conferences were held for the purpose of devising a satisfactory financing arrangement. Moreover, a so-called "Blue Ribbon Panel," appointed by the then Mayor Cattano, studied the project and recommended alternate means of financing, in particular, the issuance of general obligation bonds by the Town, the issuance of bonds by the Morristown Parking Authority, and a lease-back arrangement whereby plaintiff himself would construct the garage for the Town. None of these plans was adopted.

 According to defendants, the issuance of general obligation bonds was rejected early in the course of discussions. By virtue of N.J.S.A. 40A:2-6 (1973), Morristown, like other municipalities, was and continues to be limited in the amount of indebtedness it may incur without State authorization. Affidavits of Town officials state that at all relevant times this limit had already been reached, and, in fact, greatly exceeded by Morristown. Plaintiff, however, denies that the amounts needed to build Phase A of the garage will cause the Town to exceed this debt limit.

 The second financing alternative, bonds issued by the Parking Authority, apparently appeared equally impracticable to all concerned. Although the Authority was not included in the statutory debt limit provisions, its officers refused to accept the arrangements desired or proposed by the Town. Despite negotiations extending into early 1973, no agreement could be reached.

 Some time before November 1972 the Town and plaintiff also discussed the third alternative arrangement whereby the Town would permit the plaintiff to construct the garage and thereafter lease it back to the Town. Plaintiff asserts that the Town had in fact assured him in the fall of 1972 that the Town would adopt such an arrangement, but that, after the November election, town officials refused to keep their promise. Defendants, however, state that negotiations on such a plan did not culminate in anything firm until December 1972 when plaintiff submitted a proposed lease whereby he would build the garage and re-lease it to the Town for a term of 30 years at an annual rental of $750,000. Town officials apparently supported this arrangement and the Board of Aldermen, in March 1973, passed a resolution authorizing the Town Attorney to aid them in the negotiation of the final arrangements toward that end.

 Before the lease was reduced to writing, however, the Town Attorney advised the Board that a recent New Jersey Superior Court decision, Bulman v. McCrane, 123 N.J. Super. 213, 302 A.2d 163 (Ch. Div. 1973), had voided a similar arrangement and, in light of that decision, it was concluded that the Town was vulnerable to a taxpayer's suit if the new lease were signed. *fn3" On May 14, 1973 the Board embodied the Attorney's suggestion in a resolution abandoning the lease back plan.

 After rejection of the lease back plan, it was resolved that the Town would accept public bids for construction of the garage pursuant to New Jersey's Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq. (Supp. 1973), and obtain financing therefor by issuing general obligation bonds under a statutory exception approved by the State. Toward this end, the Town, by an ordinance introduced in March, and passed in May of 1973, created a "Parking Utility" pursuant to N.J.S.A. 40:60-25.1. The Town asserts that it next began preparation of a formal request to the New Jersey Division of Local Finance for an exception to the debt limit requirement. See N.J.S.A. 40A:2-7. In furtherance of the proposed application, a new feasibility study of the project was prepared and submitted to Town officials on September 10, 1973. It is conceded by Town officials, however, that the method of financing now being pursued by the Town will lead to commencement of construction no sooner than February of 1974.

 The proposed and anticipated federal assistance has also complicated the picture. On February 16, 1973 the Town filed with HUD its "Fourth Amendatory Project NJR-159 Loan and Grant Application" for urban renewal funds. The Town requested over $11 million, a $5.1 million increase over their previous requests, an increase the Town claims is essential to the preparation of the renewal site for construction of the garage.

 While defendants have failed to fulfill their obligation to commence construction, plaintiff has performed his. In November 1972, purportedly relying upon the Town's acceptance of the lease-back arrangement for the garage, plaintiff commenced construction of Phase I, the ten-story office building.

 Moreover, both plaintiff and defendants agree that 30 percent of Phase I has been completed by plaintiff and that notice sufficient to require commencement of construction by the Town was given in March of 1973. Since that date plaintiff, in fact, has completed 85 percent of Phase I, before halting construction.

 On August 6, 1973, plaintiff filed this suit and on September 19, 1973, moved for summary judgment. Defendants answered on September 21, 1973, and, at the same time, counterclaimed for a declaratory judgment as to their rights and obligations under the contract.

 In addition to his claim of breach regarding the failure to construct the parking garage, plaintiff asserts that defendants have further violated the lease agreement by failing to install utility connections accessible to his nearly completed office building. The Town, however, asserts by way of affidavit that temporary sanitary sewers have already been installed and that contracts for the installation of water lines have been signed. Counsel for plaintiff, during oral argument, appeared to be satisfied with the steps taken by the Town and I shall consider that issue resolved.

 I

 Rule 56(c) of the Federal Rules of Civil Procedure sets forth the prerequisites to granting of a motion for summary judgment. It provides:

 
The judgment . . . shall be rendered forthwith 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 and that the moving party is entitled to judgment as a matter of law.

 Thus, the burden upon the movant is not an easy one and the court will not lightly deprive a party of its right to a trial on disputed material factual issues. As the Third Circuit Court of Appeals has noted:

 
. . .. On a motion for summary judgment the Court must take the view of the evidence most favorable to the party against whom the motion is directed, giving to that party the benefit of all favorable inferences that might reasonably be drawn from the evidence, thereby placing the burden of proving the absence of any factual issue on the movant.

 Janek v. Celebrezze, 336 F.2d 828, 834 (3d Cir. 1964). See also Adickes v. Kress & Co., 398 U.S. 144, 147, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); Friedman v. Meyers, 482 F.2d 435 (2d Cir. 1973); Benton-Volvo-Metairie, Inc. v. Volvo Southwest, Inc., 479 F.2d 135 (5th Cir. 1973); Olympic Junior, Inc. v. David Crystal, Inc., 463 F.2d 1141 (3d Cir. 1972); Shaughnessey v. Penn Central Trans. Co., 454 F.2d 1223 (3d Cir. 1972); Kress, Dunlap & Lane, Ltd. v. Downing, 286 F.2d 212 (3d Cir. 1960).

 While this court does not underestimate the burden imposed upon movant herein, neither will it ignore the propriety of a summary judgment on an appropriate set of facts. Particularly since the 1963 amendment to Rule 56, the courts in this Circuit have consistently granted summary judgment on a clear showing, by appropriate documents, that no genuine issue of facts exists and the movant is entitled to prevail as a matter of law. Season-All Industries, Inc. v. Turkiye Sise Ve Cam Fabrikalari, A.S., 425 F.2d 34, 38 (3d Cir. 1970); Lockhart v. Hoenstine, 411 F.2d 455, 458 (3d Cir.), cert. denied, 396 U.S. 941, 90 S. Ct. 378, 24 L. Ed. 2d 244 (1969); Robin Construction Co. v. United States, 345 F.2d 610, 614 (3d Cir. 1965). We must therefore agree with the court in Mintz v. Mathers Fund, Inc., 463 F.2d 495, 498 (7th Cir. 1972) when it found:

 
The primary purpose of a motion for summary judgment is to avoid a useless trial . . . [which] results in delay and expense. . . .
 
Courts should not look the other way to ignore the existence of the genuine issues of material facts, but neither should they strain to find the existence of such genuine issues where none exist.

 With these principles in mind I shall first consider the factual issues raised by defendants and thereafter deal with the purely legal defenses they assert. At the outset I find several extremely significant facts are undisputed. Plaintiff, pursuant to section 5 of the Agreement, commenced construction of Phase I in November of 1972. In early March 1973, pursuant to section 13(f) of said Agreement, he notified the Town that he had completed 30 percent of the Phase I construction, thus obliging the Town to commence construction of the garage. As of now, almost a year later, it has not done so and, further, does not expect to do so before another month, at least. In short, defendants, in effect, admit their failure to perform their promise. Nonetheless they have resourcefully endeavored to present genuine and material factual disputes.

 They first claim that the creation of the Parking Utility by the Town in May 1973 constituted commencement of the garage project under section 13(f) of the Agreement. But the clear language of the Agreement defeats any such claim. Section 13(f) (i) (a) specifically requires "construction to commence," a phrase whose fair import this court cannot reasonably equate with the mere passage of an ordinance. In fact, it appears that the Town cannot either; in paragraph 14 of its answer the Town admits its failure to commence construction.

 The second factual issue raised by defendants also fails to survive analysis. They point to section 3 of the Agreement, discussed supra, providing that the "Lease term" shall not begin until, inter alia, 300 car parking spaces have been provided by the Town and the Town has obtained authorization to issue bonds to finance the garage. Although defendants never directly asserted it in their moving papers, they orally argued that these two conditions somehow postpone their obligation to commence construction. They further contend that an issue of fact exists as to whether those conditions were satisfied and whether the Town was required to construct at all before such satisfaction. Any such conclusion, however, must, as a matter of law, be rejected.

 Disputes involving the interpretation of unambiguous contracts are resolvable as a matter of law and are, therefore, appropriate subjects for summary judgment. Parish v. Howard, 459 F.2d 616, 618 (8th Cir. 1972); New Wrinkle, Inc. v. John L. Armitage & Co., 238 F.2d 753, 757, 112 U.S.P.Q. (BNA) 1 (3d Cir. 1956); R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066, 1069 (S.D. Ga. 1972); United States v. Manufacturers Casualty Ins. Co., 158 F. Supp. 319, 320 (S.D.N.Y. 1957). I find the meaning of "Lease term" in this Agreement not the least bit ambiguous. Article XVII of the Agreement ascribes to the phrase "Lease term," the meaning assigned to it in section 102 of that same document. Section 102, in turn, states:

 
Lease of Property. Subject to all the terms, covenants and conditions of the Agreement, the Agency does hereby demise and lease the Property to the Redeveloper, and the Redeveloper does hereby take and hire the Property from the Agency for the lease term specified in Section 3 of Part I hereof (hereafter called "Lease Term") unless the Lease Term is sooner terminated as herein provided.

 Thus, "Lease Term" specifically refers to the transfer of possession of the "property" and not to any construction obligation. The lease of the property is subject to the other terms of the Agreement, not a condition precedent to them. If there be any reasonable condition precedent to obligations under section 3, it would be the construction by defendants of the above-garage platform slab which plaintiff agreed to lease.

 The independence of section 3 and its conditions from the construction obligations set forth in sections 5 and 13(f) becomes even more apparent upon closer examination of the Agreement. In section 5, entitled "Time for Commencement and Completion of Improvements," no mention whatsoever is made of the "Lease Term," nor is there any cross-reference to any provision of section 3. Moreover, section 5 of the Agreement demands that plaintiff begin construction of Phase I within five months of the approval of final construction plans. If this court is to construe commencement of the lease term as a condition precedent to the construction obligation set forth in section 5, the provision for the approval of plans therein would be totally unnecessary because submission of those plans is already required as a condition precedent to commencement of the lease term by section 3.

 The separability of the two obligations is further supported by a reading of section 5(b) (1). This provision grants plaintiff an extension of time to complete Phase I if the 300 temporary parking spaces are not provided by defendants within 30 days of the expected completion of Phase I. These 300 spaces, as noted above, are also deemed a condition precedent to the commencement of the lease term. Certainly an event that need not take place until 30 days before Phase I is completed cannot be held a condition precedent to construction of a garage required to be started when only 30 percent of Phase I was built. If these conditions controlled the commencement of construction, the extension provision of section 5 would be rendered meaningless.

 Finally, section 13(f) sets out a detailed schedule for commencement and completion of the garage by the Town. Nowhere is the commencement of the lease term, or any of the conditions to it, alluded to or mentioned. Therefore, I find, as the Second Circuit recently found in reversing the denial of summary judgment in a contract action, "in light of the unambiguous language used, [I] see no basis for substituting an unfounded meaning for that plainly evidenced by the writing of the parties." Security Options Corp. v. Devilliers Nuclear Corp., 472 F.2d 844, 846 (2d Cir. 1972).

 Since I have determined that the commencement of the lease term is not a contractual prerequisite to the Town's obligation to construct the garage, several other purportedly material factual disputes lose their significance. Defendants apparently dispute the date upon which the lease term was or is to commence; whether the 300 car parking spaces have, in fact, been provided; what the lease will cover if financing is not found and the extent, if any, of an obligation to pay for the land and air rights which plaintiff now possesses. Some of these issues are, of course, relevant to the requests for declaratory judgment contained in the counterclaim filed by both defendants. However, those claims are not before us on the instant motion for ...


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