these remedies are not available. Id. As such, there is no basis upon which to rescind or reform the lease agreements on the basis of a unilateral mistake.
The Murphys and TML assert that the Fleming defendants fraudulently and intentionally, and in conspiracy, by remaining silent as to the true nature and effect of the terms of the lease agreements, made misrepresentations to the Murphys and TML and led them to believe that the term of the Sublease Agreement was the same as the term of the Build and Lease Agreement. Specifically, the Murphys and TML allege that the Fleming defendants, by their silence, made fraudulent misrepresentations when they "allowed" the Murphys to purchase the fee interest in the premises in 1987 and when they "allowed" the Murphys to spend substantial money improving and renovating the premises beginning in 1989. The Murphys and TML assert that these misrepresentations have ultimately resulted in their detriment.
Under New Jersey law, the essential elements of fraud are (1) a material representation pertaining to a presently existing or past fact; (2) made with knowledge of the falsity of the representation and with an intention that the other party rely on the representation; and, (3) justifiable reliance on the representation which results in actual damage. Jewish Center of Sussex County v. Whale, 86 N.J. 619, 432 A.2d 521 (1981); Nappe v. Anschelewitz, Barr, Ansell & Bonello, 189 N.J. Super. 347, 460 A.2d 161 (App. Div. 1983), rev'd on other grounds, 97 N.J. 37, 477 A.2d 1224 (1984).
One of the essential elements of a cause of action for fraud is reliance and a plaintiff must demonstrate that reliance upon any representation was justified and reasonable. Nappe v. Anschelewitz, Barr, Ansell & Bonello, 460 A.2d at 165. "A party in possession of his mental faculties is not justified in relying on representations made, when he has ample opportunity to ascertain the truth of the representations before he acts. When he is afforded the opportunity of knowing the truth of the representations, he is charged with knowledge. If one does not avail himself of the means of knowledge open to him, he cannot be heard to say he was deceived by misrepresentations." Id.; see also Int'l Minerals & Mining Corp. v. Citicorp North America, Inc., 736 F. Supp. 587, 597-99 (D.N.J. 1990); Jewish Center of Sussex County v. Whale, 86 N.J. 619, 432 A.2d 521 (1981).
As previously discussed supra, prior to executing the various agreements on behalf of TML, Murphy chose not to consult an attorney or to obtain any other type of professional advice regarding the principles and procedures set forth in the Equity Plan Book or regarding the nature and effect of the obligations and rights set forth in the various agreements at issue for the stated reason that he assumed that "everything was the way it should be" and that such measures were not "necessary." Further, in the approximate fifteen year period since these agreements were executed and this litigation was instituted, the Murphys never consulted with an attorney nor had any of the various agreements reviewed by an attorney. They did not consult an attorney or have the agreements reviewed before they chose to buy out Fleming's interest in TML or before they chose to purchase the fee interest in the premises from Floharon or before they chose to cease doing business with Fleming altogether or before they chose to make costly improvements to the premises.
The Murphys were not discouraged or prevented from having the various agreements reviewed by an attorney who presumably would have advised them of the nature and effect of the terms contained therein.
Thus, even assuming that the Fleming defendants, by their silence, in some way misrepresented to the Murphys the nature or effect of the relevant term provisions of the leases, the Murphys' reliance on any such representations was not justified or reasonable since they had ample opportunity to ascertain the truth of any such representations and ample opportunity to ascertain the true nature and effect of the term provisions of the leases. At this point, the Murphys cannot be heard to say they were deceived by any such representations concerning the effective terms of the leases. Nappe v. Anschelewitz, Barr, Ansell & Bonello, 460 A.2d at 165; see Moreira Construction Co. v. Moretrench Corp., 97 N.J. Super. 391, 235 A.2d 211, 213 (App. Div. 1967), aff'd, 51 N.J. 405, 241 A.2d 236 (1968).
The Murphys and TML allege that the actions of the Fleming defendants are unconscionable. Unconscionability is a question of law to be determined by the court. Monsanto Co. v. Alden Leeds, Inc., 130 N.J. Super. 245, 253, 326 A.2d 90 (Law Div. 1974). Where no genuine issue of material fact exists, a court may conclude on a motion for summary judgment that a contract is enforceable despite an allegation of unconscionability Stanley A. Klopp, Inc. v. John Deere Co., 510 F. Supp. 807, 810 (E.D. Pa. 1981), aff'd, 676 F.2d 688 (3d Cir. 1982).
Unconscionability exists where "grossly disproportionate bargaining power" between the parties has resulted in "grossly unfair contractual provisions." Jefferson Loan Co., Inc. v. Livesay, 175 N.J. Super. 470, 479, 419 A.2d 1164, 1169 (1980) (quoting Shell Oil Co. v. Marinello, 63 N.J. 402, 408, 307 A.2d 598, 601 (1973), cert. denied, 415 U.S. 920, 39 L. Ed. 2d 475, 94 S. Ct. 1421 (1974)). Even where there is unequal bargaining power between parties, that alone is not "the decisive consideration." Monsanto Co. v. Alden Leeds, Inc., 326 A.2d at 98. "The effect of the unconscionability rule is not designed to upset the terms of a contract resulting from superior bargaining strength, but to prevent oppression and unfair surprise." Jefferson Loan Co., Inc. v. Livesay, 419 A.2d at 1169 (citation omitted). Furthermore, the fairness of a bargain is to be judged as of the time of its making. Standard Oil Co. of Tex. v. Lopeno Gas Co., 240 F.2d 504, 509 (5th Cir. 1957). Specific performance of a contract, fair when made, will not necessarily be denied because it has become a hard bargain through subsequent events and changed conditions, and it would be error to refuse to grant a decree of specific performance in the absence of circumstances Indicating fraud or bad faith. Id. (citing 49 Am. Jur., Specific Performance, § 49); see also Sinclair Refining Co v. Miller, 106 F. Supp. 881, 885-886 (D. Neb. 1952).
This Court concludes that there is no unconscionability here. Even assuming that Fleming was in the superior bargaining position, the challenged contract provisions were not grossly unfair at the time these lease agreements were entered into by the parties in 1978. Further, there is no evidence of oppression or unfair surprise. While it is entirely possible that Murphy would have successfully negotiated a different sublease term if he had to do it over again, the law of contracts does not act as an insurance policy for parties who later suffer some sort of loss as the result of an undesirable contractual term. The freedom to contract includes the freedom to enter into good or bad deals.
Moreover, the Sublease Agreement does not require that Fleming have cause to terminate. Therefore, even if Fleming chose not to renew the Sublease Agreement for the reason that TML had ceased to do business with it, Fleming was merely exercising the rights provided to it under the Sublease Agreement and was in no way acting unlawfully.
Had TML not chosen to cease doing business with Fleming and to discontinue using the "Thriftway" trade name, then Fleming may not have exercised its right not to renew the Sublease Agreement; however, this consideration is not material to the outcome of this litigation.
The Murphys and TML also claim that the agreements are void or voidable due to breach of fiduciary duties by the Fleming defendants.
The basis of these claims is that Fleming and the individual defendants, as appointed directors of the Board of Directors of TML, caused the Murphys and TML to enter into transactions which were in the best interest of Fleming but against the best interests of the Murphys and TML.
Any breach of fiduciary duty here must have occurred prior to or during 1983 since the Murphys obtained full ownership and control of TML in 1983 and since thereafter the individual defendants ceased to hold any position as an officer or director of TML. Thus, even assuming arguendo that a cognizable claim or claims for breach of fiduciary duty has been asserted here, any such claim is barred by the statute of limitations.
A claim for breach of fiduciary duty, which has a six year statute of limitations, commences to run at the point the plaintiff has actual or constructive knowledge of the breach. Zola v. Gordon, 685 F. Supp. 354, 374 (S.D.N.Y. 1988). A plaintiff has actual or constructive knowledge of a cause of action for breach of fiduciary duty when the plaintiff learns, or reasonably should learn, of the existence of the state of facts which may equate in law with the cause of action. Burd v. New Jersey Tel. Co., 76 N.J. 284, 386 A.2d 1310, 1314 (1978).
Ever since 1983, the year that the Murphys became the sole shareholders of TML, the corporate records have been maintained in their custody. These records memorialize the transactions which the Murphys and TML now seek to challenge.
Thus, the Murphys and TML reasonably should have known at least by 1983 of the state of facts which they allege as a basis for asserting the various breaches of fiduciary duty here. Accordingly, the claims by the Murphys and TML for breach of fiduciary duty are barred by the six year statute of limitations. See Amland Properties Corp. v. Aluminum Co. of America, 808 F. Supp. 1187, 1192-93 (D.N.J. 1992); Tevis v. Tevis, 79 N.J. 422, 400 A.2d 1189, 1195 (1979) (discovery rule applicable only in those circumstances where a plaintiff reasonably could not have been aware of the underlying factual basis for a cause of action).
The Murphys and TML allege that the Fleming defendants breached the Implied duties of good faith and fair dealing. Implicit in every contract there is a covenant of good faith and fair dealing. Initially, the Court notes that the six year statute of limitations set forth by N.J. Stat. Ann. 2A:14--1 applies to claims for breach of contract. See Lavin v. Board of Educ. of City of Hackensack, 90 N.J. 145, 149, 447 A.2d 516, 518 (1982). Notwithstanding the possibility that the claim here for breach of this contractual duty is therefore barred by the six year statute of limitations, the implied duty of good faith and fair dealing does not operate to alter the clear terms of an agreement and may not be invoked to preclude a party from exercising its express rights under such an agreement. Glenfed Financial Corp., Commercial Finance Div. v. Penick Corp., 276 N.J. Super. 163, 647 A.2d 852, 857-58 (App. Div. 1994) (citations omitted). Thus, the Murphys and TML cannot assert this implied duty as a means of precluding Fleming from exercising its express rights under the lease agreements.
The Murphys and TML assert a violation of the New Jersey Franchise Act, N.J. Stat. Ann. 56:10-1 et seq.. However, since the purpose of this Act is to protect franchisees from the wrongful termination of franchises by franchisors and since it is undisputed that the Murphys and TML were the ones who terminated any arguable franchise relationship in 1989, this claim is without merit. See Dunkin' Donuts of America, Inc. v. Middletown Donut Corp., 100 N.J. 166, 495 A.2d 66 (1985).
As for the remaining claims by the Murphys and TML asserting violations of the New Jersey Anti-Trust Act, N.J. Stat. Ann. 56:9-1 et seq., the New Jersey Uniform Securities Law, N.J. Stat. Ann. 49:3-47 et seq., and the New Jersey Consumer Fraud Act, N.J. Stat. Ann. 56:8-1 et seq., there has been no evidence presented to this Court which supports a claim under any of these statutes. Moreover, the statute of limitations has expired for the assertion of these statutory claims: the New Jersey Anti-Trust Act
(four years); the New Jersey Uniform Securities Law
(two years); and the New Jersey Consumer Fraud Act (six years).
Further still, the doctrine of laches, which is defined as neglect, for an unreasonable and unexplained length of time under the circumstances, in asserting a claim, favors disallowing any such claims at this juncture. See Lavin v. Board of Educ. of City of Hackensack, 90 N.J. 145, 447 A.2d 516, 519 (1982). The doctrine of laches has been applied in cases of unreasonable delay to defeat claims despite the fact that the time fixed by the statute of limitations may not have passed. See Patterson v. Hewitt, 195 U.S. 309, 319, 49 L. Ed. 214, 25 S. Ct. 35 (1904).
Accordingly, since the Murphys and TML are unable to demonstrate any basis upon which this Court may deny specific enforcement of the Sublease Agreement and the Build and Lease Agreement, this Court is duty bound to enforce the unambiguous provisions of these lease agreements, and the motion for summary judgment shall be granted.
IT IS therefore on this 2ND day of March, 1995, ORDERED that the motion for summary judgment by Fleming Companies, Inc., G. William Watson, John R. Traub, and Wayne Pendergast is hereby GRANTED.
MARY LITTLE PARELL
United States District Judge