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Stewart Title Guaranty Co. v. Greenlands Realty

May 12, 1999


The opinion of the court was delivered by: Stephen M. Orlofsky United States District Judge




ORLOFSKY, District Judge

This case requires me to examine the issue of marketability of title, a legal concept frequently tested on law school and bar examinations, but infrequently considered in judicial opinions. As a consequence of its rare appearance in recent published opinions, I must recede into the annals of the history of New Jersey property law, to apply an ancient doctrine to a modern day commercial dispute.

The dispute between the parties in this case arises out of an "Agreement to Sell and to Buy Real Estate" ("Agreement of Sale" or "Agreement"), by which Greenlands intended to convey title to 1315 Boardwalk ("1315 Boardwalk" or the "Property"), located in Atlantic City, New Jersey, to Sun. Sun terminated the Agreement, claiming that Greenlands did not possess marketable title at the time of the closing. Greenlands argues that it did have marketable title and, therefore, Sun breached the Agreement.

At the close of oral argument on August 3, 1998, the Court issued a bench opinion, *fn1 concluding that the issue of marketability of title is one for the court and not the jury. See Tr., dated Aug. 3, 1998, at 48-49 (citing Thomas v. Sun Realty, Inc., 158 N.J. Super. 257, 262 (N.J. Super. Ct. App. Div. 1978) and Herman v. Most, 125 N.J.L. 563, 565 (1941)). As a result, the Court directed Additional Counterclaim Defendant, Sun International of North America, Inc. ("Sun"), and Defendant, Greenlands Realty, L.L.C. ("Greenlands"), to file dispositive motions on the issue of marketability of title. See Order, filed Aug. 3, 1998, at 2. In accordance with the Court's instructions, on November 19, 1998, Greenlands and Sun each filed a motion for partial summary judgment, addressing solely the issue of marketability of title.

In its motion for summary judgment and in opposition to Greenlands's motion for summary judgment, Sun argues that, at the time of closing, Greenlands did not possess marketable title, because Boardwalk Realty Company ("Boardwalk"), a now defunct corporation, held the title to part of the Property. Greenlands, in its motion for summary judgment and opposition to Sun's motion for summary judgment, takes the opposite position and argues that, at the time of closing, it possessed marketable title, because Boardwalk had conveyed all of its interest in the Property.

For the reasons set forth below, I find that Boardwalk did convey all of its title in the Property and, therefore, at the time of closing, Greenlands's title to the Property was marketable. Accordingly, I will grant Greenlands's motion for summary judgment and deny Sun's motion for summary judgment.


The convoluted facts giving rise to this dispute are as follows. On July 5, 1996, Joseph Zoll ("Zoll") purchased property, located at and known as 1315 Boardwalk, in Atlantic City, which consisted of two parcels, the "main parcel" and the "strip," a three-foot wide segment of land running from the main parcel to the street, from F.W. Woolworth's, for $1,100,000. See Affidavit of Joseph Zoll in Support of Defendant/Counterclaim Plaintiff Greeland[s] Realty, L.L.C.'s Motion for Summary Judgment ("Zoll Cert."), filed Nov. 19, 1998, ¶ 2; Certification of William P. Fitzgerald, dated Nov. 17, 1998 ("Fitzgerald Cert. II"), Ex. B (Ponzio Survery showing map of the property). *fn2 The main parcel fronts on the boardwalk and the strip connects the back of the main parcel with South Carolina Avenue, which is 110 feet from the western edge of the main parcel. See Fitzgerald Cert. II, Ex.B (Ponzio Survey).

After Zoll signed the contract to purchase 1315 Boardwalk, "Greenlands Realty, L.L.C.[, of which Zoll is] a managing member[,] was formed and [Zoll] assigned [his] rights under the Woolworth agreement to Greenlands which then exercised those rights by purchasing the property." Zoll Cert. ¶ 3. Greenlands purchased a title insurance policy from Additional Counterclaim Defendant, Title Company of New Jersey, which was underwritten by Plaintiff and Additional Counterclaim Defendant, Stewart Title Guaranty Co., to cover the Property. See Fitzgerald Cert. I, Ex. K (Insurance Policy).

"Even before the closing between Greenlands and Woolworth was completed, [Zoll] was approached by the representative of an undisclosed principal who inquired as to whether Greenlands would sell the Property it was buying from Woolworth." Zoll Cert. ¶ 3. "As a result of that inquiry, negotiations began and those negotiations resulted in a September 4, 1997, Agreement of Sale wherein Griffin Gaming and Entertainment, Inc. ("Griffin") agreed to pay the sum of Five Million ($5,000,000.00) Dollars for the Property." Id.; see also id., Ex. A-1 (Agreement of Sale). "In the period between the execution of the Griffin Agreement and the scheduled closing, Griffin merged into a subsidiary of Sun International, Inc., with Sun emerging as the surviving corporation." Statement of Undisputed Facts of Defendant/Counterclaim Plaintiff Greenlands[] Realty L.L.C. in Support of Motion for Summary Judgment as to Count I ("Greenlands's Statement"), filed Nov. 19, 1998, ¶ 39; Sun's Statement of Disputed Facts as to Greenlands'[s] Statement of Undisputed Facts in Support of Motion for Summary Judgment as to Count I, filed Nov. 19, 1998, ¶ 39 ("Agreed."). "Sun succeeded to Griffin's rights and obligations under the Griffin Agreement." Greenlands's Statement ¶ 39.

Under the Agreement of Sale, "[t]he Closing of the purchase and sale of the Property [was to] take place at 10:00 a.m. on July 3, 1997." Id. (Agreement of Sale ¶ 6). The Agreement also provided that "[t]ime is of the essence." Id. The Agreement further provided that:

At the Closing, title to the Property shall be good and marketable and free of all liens, mortgages, encumbrances and any and all rights of others and/or other title objections or matter affecting title, except (a) utility easements and other recorded agreements which do not (i) materially adversely limit the use of the Property, (ii) provide that the Property would be forfeited if they were violated, or limit the use of the Property for any purpose allowed by applicable zoning district in which the Property is located; and (b) those matters, if any, shown as exceptions to title in Seller's title insurance policy dated June 28, 1996. Id. (Agreement of Sale ¶ 7).

On June 26, 1997, Sun sent a letter to Greenlands, stating that the strip "appears to be a part of Lot 161, Block 20 on the official Tax Map of Atlantic City" and, as a result, "title to the Property does not appear to be marketable or insurable." Id., Ex. A-2 (letter from Arthur E. Sklar, Esq., to Greenlands Realty, L.L.C., dated June 26, 1997). Sun had discovered that title to the strip may not have passed through the same series of conveyances as had the main parcel. Specifically, Boardwalk Realty Company ("Boardwalk") obtained title to the main parcel in 1910 and to the strip in 1912. See Fitzgerald Cert. I, Exs. A-1 (1910 Deed) & A-2 (1912 Deed). In 1970, Boardwalk sold the property to William B. Colsey, III, and Bruce A. Mahon (collectively, "Colsey and Mahon"), however, the new deed only made reference to the property that Boardwalk acquired in 1910 and not the strip, which was acquired through the 1912 Deed. See id., Ex. A-3 (1970 Deed). As a result, Sun believed that title to the strip remained with Boardwalk, while title to the main parcel passed to Colsey and Mahon and then to a series of other owners. See Fitzgerald Cert. II, Ex. A (chronology of owners of the property described in the 1910 and 1912 Deeds); Fitzgerald Cert. I, Exs. A-3 to A-6 (subsequent deeds).

Uncontroverted evidence in the summary judgment record, however, reveals that Boardwalk intended to convey both the main parcel and the strip to Colsey and Mahon. For example, Ralph Sitley stated, based on his first-hand knowledge as an employee of Boardwalk and through conversations with his mother, a former shareholder of Boardwalk and president of Boardwalk at the time of the conveyance, "that Boardwalk Realty Company intended to sell its entire interest in 1315 Boardwalk and did not intend to keep any part of the property for itself." Verification of Ralph Sitley ("Sitley Ver."), dated Nov. 17, 1998, ΒΆ 5. Further, ...

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