On appeal from the Superior Court of New Jersey, Chancery Division, Somerset County.
King, Shebell and Keefe. The opinion of the court was delivered by Keefe, J.A.D.
The issues presented on this appeal are: (1) whether there was sufficient evidence to support the trial judge's determination that the defendant Leo Scarano should be estopped from terminating the real estate contract with plaintiff; and (2) whether specific performance in favor of the plaintiff buyer was an appropriate remedy where performance of the conditions precedent necessary to bind the buyer have not been accomplished and their satisfactory completion is in the control of a non-party.
Defendant Scarano appeals from a judgment entered after a plenary trial ordering specific performance of a real estate contract entered into between Scarano, as seller, and plaintiff Ridge Chevrolet-Oldsmobile, Inc. (Ridge), as buyer. The contract involved the sale of a 3.72 acre parcel of land in Bernards Township, New Jersey. Ridge's suit for specific performance was filed in response to Scarano's effort to terminate the contract. The trial judge found that Ridge did not breach the contract, that Scarano was estopped by his conduct from terminating it and granted specific performance to Ridge.
On appeal, Scarano argues that the trial judge erred because the evidence supports his contention that Ridge breached the contract and estoppel cannot be used in favor of one who is in breach. Additionally, Scarano contends that specific performance is an inappropriate remedy where: 1) plaintiff has materially breached the contract; 2) mutuality of the remedy of specific performance does not exist for both parties; and 3) completion of the conditions precedent necessary to bind Ridge under the contract rests in the discretion of a third party uncontrolled by either Scarano or Ridge.
We affirm the trial judge's conclusion that Ridge did not breach the contract and that Scarano was estopped by his conduct from terminating the contract when he did. However, we hold that specific performance is an inappropriate remedy in these circumstances because site plan and variance approval, both conditions precedent to holding Ridge bound under the contract, rest in the discretion of a third party, Bernards Township Board of Adjustment, and Ridge has not waived the performance of those conditions.
These are the essential facts. The contract was executed on June 24, 1986. The price for the property was $690,000 with Ridge paying $5,000 of that amount upon signing the contract. An additional deposit of $25,000 was to be paid within 10 days of its execution. Plaintiff intended to erect an automobile dealership on the land. For that reason, the contract was contingent upon Ridge obtaining site plan approval, wetland approval and necessary variances from the appropriate governmental agencies. The contract required that all approvals be obtained by January 1, 1987, or Scarano had the option of either terminating the contract or extending the deadline. Scarano testified that the January 1, 1987 deadline was critical because the increase in the capital gains tax was to take effect after that date and the contract price took the lower tax rate into consideration.
The additional deposit of $25,000 was never paid by Ridge. There was a factual dispute as to why Scarano never received the money. Ridge's president testified that he was encountering unanticipated expenses and delays because of engineering requirements and studies to delineate wetlands and, because of that, Scarano agreed to waive payment of the $25,000 deposit. Conversely, Scarano asserted that he requested the deposit on many occasions and that Ridge communicated a variety of excuses, all accompanied by promises to pay the deposit shortly thereafter.
Beginning in June, 1986, Ridge proceeded to obtain architectural and engineering plans, studies to delineate wetlands, and expert witnesses for upcoming hearings regarding site plan and variance approval. Ridge spent $37,000 on these matters and by December, 1986 received approval from the United States Army Corps of Engineers to build in the wetlands. Scarano was kept apprised of plaintiff's progress in these matters throughout the period. Scarano did not terminate the contract on January 1, 1987. Further, on June 24, 1987, six months after he had the right to terminate, Scarano signed an Owner's Authorization on the Bernards Township Board of Adjustment application permitting Ridge to appear before the Board for site plan approval and variances.
On October 14, 1987 Ridge's engineering plans were completed. This enabled Ridge to file an application with the Board. The first hearing was on December 9, 1987 and the second was scheduled for early January, 1988. However, on December 21, 1987 Scarano terminated the contract on written notice to Ridge. The termination was allegedly based on Ridge's failure to gain the required municipal approvals by January 1, 1987 and for failure to pay the $25,000 deposit. Scarano returned the initial $5,000 deposit plus one-half of the accrued interest as provided by the contract.
Scarano's argument that Ridge was entitled to no relief because Ridge breached the contract was based on two factual contentions: 1) Ridge never paid the required additional deposit of $25,000, and 2) Ridge did not obtain the necessary wetland approvals, site plan approval, and variances before January 1, 1987 as required by the contract. The judge resolved both of those issues against Scarano. He found that Scarano waived both the payment of the deposit and his right to terminate the contract on January 1, 1987. The judge further found that Scarano's conduct resulted in an extension ...