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Becker v. Sunrise at Elkridge

Decided: June 30, 1988.

GEORGE H. BECKER, JR. AND PATRICIA F. BECKER, H/W, LLOYD C. NELSON AND ANN NELSON, H/W, HENRY WEBER, THOMAS PIZZO, ANDREW E. MCGUIRE AND JEAN G. MCGUIRE, H/W, LEONARD T. CAMPI AND MARYANNA CAMPI, H/W, INDIVIDUALS, PLAINTIFFS-APPELLANTS,
v.
SUNRISE AT ELKRIDGE, A PARTNERSHIP, A NEW JERSEY GENERAL PARTNERSHIP ("SAE"), AS THE SUCCESSOR DEVELOPER OF A CONDOMINIUM DEVELOPMENT NOW KNOWN AS "SUNRISE AT ELKRIDGE" (HEREINAFTER "SUNRISE AT ELKRIDGE"), ET AL., DEFENDANTS-RESPONDENTS



On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County.

Michels, Shebell and Arnold M. Stein. The opinion of the court was delivered by Shebell, J.A.D.

Shebell

Plaintiffs George H. and Patricia Becker (Becker), Lloyd C. and Ann Nelson (Nelson), Henry Weber, Thomas Pizzo, Andrew E. and Jean C. McGuire (McGuire) and Leonard T. and Maryanna Campi (Campi) appeal from a judgment of the Chancery Division which denied their demands for specific performance of written condominium purchase agreements. Plaintiffs entered into the agreements with defendant Elkridge Realty Associates (ERA) to purchase townhouse condominium units in a project then known as "Elkridge Estates, a Condominium" located in Red Bank, which project was then under development and construction by ERA.

Defendant ERA, after the execution of the purchase agreements, contracted to sell the entire project to defendant Sunrise at Elkridge (SAE), a partnership comprised of two corporations, U.S. Condominium Corp. and Centurian Systems Inc. After title was conveyed to SAE, the project assumed the name "Sunrise at Elkridge, a condominium."

The various purchase agreements were entered into by the plaintiffs and ERA between February 1984 and August 1984. ERA contracted with SAE on March 11, 1986. On May 29, 1986, SAE furnished plaintiffs with notice of the change in ownership and extended a one-time, 10-day offer to plaintiffs to re-contract with SAE to purchase the same townhouse units that each plaintiff had already contracted with ERA to purchase. The new contracts were to be at an increased purchase price of between $47,500 and $85,000 depending upon the model.

SAE has refused to honor the original contracts on the basis of Paragraph 12, contained in each contract, which provides:

12. Default of Seller. If the Seller shall not comply with or render compliance with its obligations under this Agreement for any reason whatsoever, other than the Seller's arbitrary and willful refusal to close title hereunder, the sole obligation of the Seller and the sole right of Purchaser shall be the return of all payments made by the Purchaser hereunder without interest, together with the reasonable cost of title searches and survey, and upon such repayment, this agreement shall be terminated and both parties hereto shall be released from all further obligations arising out of, or in any manner relating to this Agreement; provided, however, that the parties hereto agree that (a) if the satisfaction of the requirements to be satisfied by Seller is prevented or delayed by a national emergency, governmental restrictions, lack of governmental allocations, inclement weather, strikes, lock-outs or other labor disputes affecting Seller or any of Seller's suppliers of material or labor, delay in issuance of permits or mortgage commitments or inspections or any other circumstances beyond Seller's control, Seller shall have the right to postpone the closing date for not more than six (6) months; (b) if such satisfaction is prevented or delayed for any other cause whatsoever and the cause or delay is for reasons outside Sponsor's control, Seller shall have the right to postpone the closing date for not more than three (3) months in addition to those provisions set forth in Paragraph 5 above. If Seller is unable to convey title in accordance with its agreement by such postponed closing date, Seller will refund without interest all money on account by Purchaser; however, Seller shall in addition reimburse to Purchaser all costs of title company regarding searches and all costs of survey.

Certain of the contracts modified Paragraph 12 as follows:

Weber/ERA Agreement -- deleted the original reference to "mortgage commitments" as being a cause of delay under the contract.

Becker/ERA Agreement -- addendum to Paragraph 12:

12. Continuation -- Default of Seller -- In addition, if Seller as the result of a national emergency, government restrictions, lack of government allocations, inclement weather, strikes, walk outs, or other labor disputes, is unable to close on or about December 15, 1984, then Seller shall notify Purchaser in writing of its inability to close on the date set forth herein. Seller further agrees to provide Purchaser with as much advance notice as possible of its inability to perform on the aforesaid closing date.

Nelson/ERA Agreement -- provided more information regarding right of Nelson to cancel in the event of seller's default:

1. Purchaser shall have the right to cancel the within Agreement by furnishing written notice of cancellation to Seller within thirty (30) days after substantial completion of the model for the unit being purchased. Failure of the Purchasers to furnish such written notice of cancellation to the Sellers within the applicable thirty (30) day period shall be deemed a waiver of the within cancellation right.

2. Notwithstanding anything herein or in the subject agreement to the contrary, in the event the model is not completed on or prior to January 1, 1985, the Purchaser shall have the right to cancel the within agreement by furnishing written notice to the Seller.

3. Closing of title shall occur on or about October 1, 1984.

Campi/ERA Agreement -- amended original Paragraph 12 as follows:

3. Paragraph 12 of the initial contract shall be and hereby is amended to reflect the fact that should Seller default, Seller shall return all deposit monies paid hereunder, together with interest thereon together with the reasonable cost of the title searches and survey to the Purchaser, at which time this agreement shall be terminated and both parties hereto shall be released from all further obligations arising out of the Agreement. Paragraph 12 shall also be amended to reflect the fact that the Sellers shall have the right to postpone the closing date for not more than three months rather than the six months provided for under the conditions set forth in Paragraph 12, Section (a).

Plaintiffs' damage claims were ultimately bifurcated and the specific performance issue proceeded to trial. The trial court denied plaintiffs' specific performance claims. The trial judge further ordered that plaintiffs' sole remedy was the return of all contract deposit monies previously paid by plaintiffs, along with prejudgment interest and, where applicable, contractual interests and costs incurred by plaintiffs for title searches and/or survey preparation fees.

From December 28, 1983 until May 27, 1986, ERA undertook construction of the Elkridge Estates project to consist of sixty-eight luxury townhouse condominium units in twelve buildings. ERA entered into written Purchase Agreements with plaintiffs. The seven agreements are summarized as follows:

Total

Date of Unit Purchase Closing Deposit

Name Contract No. Price Date Made

Thomas Pizzo 2/13/84 I-2 $130,000 120 days $13,000

Thomas Pizzo 2/13/84 G-4 $130,000 after binding $13,000

contracts

entered into

for all units

in bldg.

where unit

is located.

Henry Weber 2/16/84 I-4 $150,000 9/15/84 $15,000

George Becker 4/27/84 G-6 $150,000 12/15/84 $15,000

Patricia Becker

Lloyd Nelson 5/21/84 H-1 $175,000 "on or ...


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