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Solondz v. Kornmehl

December 10, 1998


Before Judges Baime, Rodr¡guez and Kimmelman.

The opinion of the court was delivered by: Kimmelman, J.A.D.

[9]    Submitted November 18, 1998

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

On the return date of the order to show cause (OTSC) in this case, plaintiff's counsel purposefully eschewed the remedy of rescission or reformation offered to him by Judge Clarkson S. Fisher, Jr. so that the court might reflect on what may have been the true intention of the parties. Instead, counsel insisted that the real estate contract he had drafted was "disgustingly clear" without ambiguity and "admits of only one interpretation." This brief backdrop leads to an understanding of the nature of this controversy and dictates the result.


On September 18, 1997, plaintiff, as seller, and defendant, as buyer, entered into a contract whereby defendant agreed to buy four commercial condominium units for $410,000. On or about November 24, 1997, the parties executed a rider to the contract which reduced the purchase price to $400,000 provided the closing of title took place on or before November 30, 1997. The nub of this controversy centers about a further clause inserted in the rider as paragraph 3 which read as follows:

The parties acknowledge that an integral part of Seller's consideration stated in this Contract is the transfer to Buyer of the outstanding balance due on a certain note dated June 1993 made by GYNE Surgical Associates of Howell, P.A. in favor of Seller. Seller represents that the outstanding balance on this note is now about $69,000.00, and that monthly payments are current. As of the Contract's closing date, the outstanding balance will be $66,918.20. The parties theretofore agree that the consideration to be paid and received for the property shall be calculated by deducting from the price stated in the Contract the outstanding principal amount due on this note. Any accrued interest shall be adjusted between the parties on a per day basis. [Emphasis supplied.]

It appears that the tenant of the condominium units which were contracted to be sold had executed and delivered to plaintiff a promissory note in the original amount of $99,345 to cover the costs of specific capital improvements made to the premises by plaintiff for the tenant. Because the tenant would become the tenant of defendant after the sale of the units took place, it was agreed that defendant would take over the note and be able to collect the installments thereon as the same became due. As provided in the rider, it was represented that the monthly payments under the note were current and that the balance then due was about $69,000.

The closing of title, attended not by the parties but by their counsel, took place on November 26, 1997. At that time, the principal balance due on the note was $67,667.54. In accordance with the rider, $67,667.54 was deducted from $400,000 and was so reflected on the Seller's Reconciliation Statement commonly known as the closing statement prepared by counsel. After other adjustments, defendant paid $324,111.54.

Two weeks later, alleging that the closing statement mistakenly gave defendant an unwarranted credit towards the purchase price, plaintiff instituted this action against defendant demanding judgment in the sum of $67,667.54. The ad damnum clause also requested the relief of specific performance of the contract obviously in a transparent attempt to justify the commencement of this action in the Chancery Division, General Equity.


We briefly digress to express our disapproval of the procedure used. Clearly, plaintiff's primary right or the principal relief sought was not equitable in nature. A money judgment was sought. As a consequence, counsel should have brought the matter in the Law Division. R. 4:3-1(a)(1). While the Chancery Division and the Law Division have concurrent power to afford plenary legal and equitable relief in order that a controversy be fully adjudicated, the appropriate forum for the commencement of a specific claim is established by the Rules of Court. As was said in Government Employees Ins. Co. v. Butler, 128 N.J. Super. 492, 495 (Ch. Div. 1974):

The choice of trial division should represent a responsible exercise of the attorney's judgment in order to obtain for all concerned the obvious advantages to be realized by having particular cases normally tried before Judges who are specialized in either law or equity but who nevertheless have jurisdiction to dispense full and complete relief. See also Boardwalk Properties v. BPHC Acquisition, Inc., 253 N.J. Super. 515, 526-27 (App. Div. 1991).

Furthermore, we must observe for the guidance of the bar that counsel misused the purpose and function of the form of pleading known as the OTSC. An OTSC may properly be utilized where a party seeks some form of emergent, temporary, interlocutory or other form of interim relief such as the preservation of the status quo pending final hearing of the cause. R. 4:52-1; R. 4:52-2; see General Elec. Co. v. Gem Vacuum Stores, 36 N.J. Super. 234, 236-37 (App. Div. 1955). An OTSC may also be used as initial process in those actions in which the court is permitted by statute or rule to proceed in a summary manner. R. 4:67-1(a). Such was not this case. Here, counsel drafted and improperly submitted to the court an OTSC which required defendant to show cause why final judgment in the amount of $67,667.54 should not be entered on the return date. In Chalom v. Benesh, 234 N.J. Super. 248, 254 (Law Div. 1989), the court was properly critical of an OTSC which provided for "instant, complete and final relief" without giving the opposing party an adequate opportunity to present argument. Ibid. Under such circumstances, the court tersely noted that counsel had "plainly violated even the most rudimentary ...

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