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Boardwalk Properties Inc. v. BPHC Acquisition Inc.

Decided: July 24, 1991.

BOARDWALK PROPERTIES, INC., A NEW JERSEY CORPORATION, AND PENTHOUSE INTERNATIONAL, LTD., A NEW YORK CORPORATION, PLAINTIFFS-RESPONDENTS,
v.
BPHC ACQUISITION, INC., A NEW JERSEY CORPORATION, BPHC PARKING CORP., A NEW JERSEY CORPORATION, AND PRATT HOTEL CORP., A DELAWARE CORPORATION, DEFENDANTS/THIRD-PARTY PLAINTIFFS/APPELLANTS. COLUMBUS PLAZA ASSOCIATES, A/K/A HOLLYWOOD PARKING ASSOCIATES, A NEW JERSEY PARTNERSHIP AND PCPI FUNDING CORP., A DELAWARE CORPORATION, DEFENDANTS, V. DONALD J. TRUMP, TRUMP PLAZA ASSOCIATES, A NEW JERSEY GENERAL PARTNERSHIP, AND ROBERT C. GUCCIONE, THIRD-PARTY DEFENDANTS/RESPONDENTS



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

Antell, O'Brien and Keefe. The opinion of the court was delivered by Keefe, J.A.D.

Keefe

KEEFE, J.A.D.

Defendants/Third-Party plaintiffs, BPHC Acquisition, Inc. and BPHC Parking Corp. (BPHC), appeal from the denial of their motion to have the merits of their counterclaim and third-party claim tried by a jury either in the Chancery Division, where the matter is now pending, or in the Law Division where they sought to have the matter transferred.

Plaintiff Boardwalk Properties, Inc. and Penthouse International, Ltd. (BPI) owned a parcel of land in Atlantic City adjacent to the Trump Plaza Hotel & Casino on which it originally intended to build a casino. That plan was abandoned sometime before August 17, 1987 when BPI and BPHC entered into an agreement (the Agreement) wherein BPHC agreed to purchase the site for $40 million. The Agreement also provided that BPHC would acquire an option held by BPI to purchase a Holiday Inn located on the Boardwalk section of the site for $21 million.

Contemporaneous with the Agreement, the parties also signed an escrow agreement (the Escrow Agreement) under which the Agreement and BPHC's deposit were held in escrow. The purpose of the Escrow Agreement was to permit the parties to negotiate the purchase of the contiguous Bongiovanni Parcel and other "out-parcels" adjacent or proximate to the site that BPHC deemed essential to the transaction and its proposed casino hotel development. The Escrow Agreement provided that the Agreement would be terminated unless BPI immediately contracted to acquire the Bongiovanni Parcel. In October, 1987, Bongiovanni agreed to sell that property to BPI for $1.9 million.

Under a subsequent assignment and repurchase agreement (the Repurchase Agreement), BPI assigned its rights in the Bongiovanni Parcel to BPHC, who then acquired it. The Repurchase Agreement further provided that, if the Agreement was terminated, BPHC would convey the Bongiovanni Parcel to

BPI at a price based on a formula contained in the Repurchase Agreement.

The Agreement provided for a closing date of January 15, 1988. However, BPHC was permitted to extend the closing date twice, until April 29, 1988. Additionally, if on March 14, 1988 the appeal period for certain zoning approvals had not yet expired, or an appeal from the approvals was pending, BPHC would adjourn the closing beyond the April 29th date. The Agreement, however, required BPHC, as a condition for obtaining this final extension, to show that it had a financial source for the full $40 million required by BPHC in order to close. Upon such a showing, the Agreement provided that the closing could be adjourned until December 15, 1988, the latest date provided in the contract for closing of title.

In early 1988, BPHC filed its application for preliminary site plan approval. Opponents of the approvals, including the Trump defendants, focused on traffic impact and the lack of identified parking. The preliminary approval ultimately obtained by BPHC was subject to conditions regarding parking. Thus, BPHC identified a site, known as the Columbus Plaza Site, a group of lots within one block of the main site, as critical to its resolution of the parking problem and to its ability to obtain final site plan approval. Years earlier, BPI had acquired a 25% interest in Columbus Plaza Associates (CPA), a partnership which owned the Columbus Plaza site. In February 1987, an involuntary bankruptcy proceeding was filed against CPA. On October 24, 1988, one day before a scheduled auction sale of the Columbus Plaza site in the CPA bankruptcy proceedings, BPI and BPHC agreed to jointly purchase the Columbus Plaza site so that it could service the parking needs of BPHC's proposed casino.

On November 30, 1988, the parties jointly closed on the Columbus Plaza site and entered into a written Partnership Agreement reconstituting CPA as Hollywood Parking Associates (HPA). That Partnership Agreement provided that if

closing did not occur under the Agreement, for any reason, HPA was to sell the Columbus Plaza site to a third party. A separate letter agreement provided that BPI would be that third party.

In the summer of 1988, BPHC sought to negotiate an extension of the December 15th closing date. There is some dispute in the record as to whether an extension was ever agreed upon. In any event, on December 6, 1988, Donald Trump apparently advised David Myerson, BPI's president and general counsel, that he was interested in acquiring the site if BPHC did not close. Myerson told Trump he was going to give BPHC more time to close. Thereafter, BPI extended the closing date until February 1, 1989, making time of the essence. Its extension letter advised that BPI had another offer that it would look to if BPHC failed to close. No closing occurred by February 1, 1989. By letter dated February 1, 1989, BPI advised BPHC that its contract rights had expired, but that BPI was willing to continue to negotiate although it was no longer contractually bound. BPHC took the position that certain preconditions for a closing date, which were within the control of BPI to perform, had not been met and thus the claimed time of the essence was of no legal effect. BPHC threatened to file suit to enforce its rights under the contract.

On March 19, 1989, BPI and Trump executed their contract and had a simultaneous closing.

With the Agreement terminated, BPI claimed entitlement to conveyance of the Bongiovanni parcel and the Columbus Plaza site. When BPHC refused to comply, BPI instituted this litigation, seeking specific performance regarding those sites. BPHC filed an answer, counterclaim and third-party complaint against Donald J. Trump, Trump Plaza Associates, and Robert C. Guccione as third-party defendants. Its pleading, entitled "Answer, Affirmative Defenses, Counterclaim and Third-Party Complaint", filed by counsel other than counsel now representing

BPHC, demanded "a trial by jury for all issues so triable ...


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