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Hilton Hotels Corp. v. Piper Co.

Decided: October 3, 1986.


Gibson, J.s.c.


[214 NJSuper Page 330] The within action was instituted by Hilton Hotels Corporation seeking a determination of the respective rights and obligations of the parties under a certain letter dated February 28, 1980. In the letter Hilton obligated itself to give defendant 30 days notice if it determined to sell certain property it owned in Brigantine. The letter was subsequently recorded by defendant. Plaintiff has now contracted to sell the premises to a third party and by this action seeks to discharge the letter of record. As part of the initial process, an order to show cause was issued without restraints and, on the return day, this court made preliminary findings that the letter created no equitable rights in the property and ordered its discharge. Shortly before that defendant had filed an answer, counterclaim and a lis pendens. Plaintiff then sought on short notice, to expand its application for interim relief to include the discharge of the lis pendens. Because of the short notice, however, this court declined to rule on the lis pendens and invited further submissions on that issue. Although nothing further was submitted

the issue was argued on September 24, 1986, following which the court reserved decision. The following represents the ruling of the court.

Factual Background.

Plaintiff, Hilton Hotels Corporation ("Hilton") is the owner of certain real estate located in Brigantine, New Jersey on which there is located a motel and pub commonly known as the Sandpiper Motel. Defendant, Piper Company ("Piper") was the former owner of the property and sold it to Hilton in February 1980 for $3,250,000. Although the agreement of sale did not give defendant any right of first or final refusal, option or any other right pursuant to which defendant could compel Hilton to reconvey the premises, a day before the closing, defendant requested that Hilton give notice of any intention it had to sell. Hilton was agreeable so long as the obligation created no rights of first or final refusal or in any way obligated Hilton to sell to Piper.

The result was the letter dated February 28, 1980 which was executed on February 29, 1980 in a recordable form and which reads in pertinent part as follows:

This will acknowledge on behalf of the Hilton Hotels Corporation that in the event Hilton Hotels Corporation shall determine to sell the Sandpiper Motel premises prior to making any change in the premises from the conditions existing as of this date, the Hilton Hotels Corporation will notify you in writing of the possible sale 30 days prior to negotiating for the sale of said premises to anyone else.

Anything hereinabove to the contrary not withstanding, this letter shall not be deemed to create any duty on the part of the Hilton Hotels Corporation to sell or transfer the premises to the Piper Company, or it partners. Furthermore, this letter shall not create rights of first or final refusal in the Piper Company concerning the potential sale of the premises by Hilton Hotels Corporation.

The sale was completed the next day and Hilton took occupancy of the premises. Defendant ultimately recorded the letter on December 18, 1981. Hilton has been in possession of the premises for over six years. Although the exact timing is not clear, sometime this year Hilton successfully negotiated for the sale of the premises to a third party. No notice was given

to defendant before the negotiations but on July 16, 1986 counsel for Hilton advised Piper in writing that the premises were being sold by Hilton on September 15, 1986. A representative of Piper responded July 22, 1986 indicating that it was "most anxious" to discuss this sale and wished to proceed "in accordance with the terms of our letter agreement." Hilton elected to proceed with the sale to the third party and in the face of defendant's refusal to voluntarily discharge of record the February 1980 letter, it instituted this suit on August 25, 1986. Because of the pendency of this application the closing on the sale has been postponed.

Legal Conclusions.

The initial question to be determined involves an interpretation of a recent amendment of the lis pendens statute. N.J.S.A. 2A:15-7; see Fravega v. Security Savings & Loan Association, 192 N.J. Super. 213 (Ch.Div.1983). There are two sections to that statute, one being the so-called "a" portion which relates to actions to enforce or declare rights in or concerning real estate wherein plaintiff's claim arises out of a written instrument which is either executed by defendant and identifies the real estate or appears of record. The second section is the so-called "b" portion and it anticipates settings in which there is no writing but where a lis pendens has been filed as part of a claim purporting to affect real estate. In the latter-type case the party adversely affected by the lis pendens may move before the Superior Court for a determination as to whether there is a "probability that final judgment will be entered in favor of plaintiff sufficient to justify the filing or continuation of the notice of lis pendens." N.J.S.A. 2A:15-7(b); R. 4:6-5. Given the fact that the letter in question identifies the premises, is signed by the party ...

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