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Garden State Race Track, Inc. v. Greenwood New Jersey

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 31, 2007

GARDEN STATE RACE TRACK, INC., PLAINTIFF-APPELLANT,
v.
GREENWOOD NEW JERSEY, INC., GS PARK RACING, LP, PENNWOOD RACING, INC., GREENWOOD RACING, INC., AND PENN NATIONAL GAMING, INC., DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Chancery Division, Camden County, Docket No. C-7-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted May 8, 2007

Before Judges R. B. Coleman and Gilroy.

Plaintiff Garden State Race Track, Inc., appeals from the June 15, 2006, order of the Chancery Division, dismissing its complaint without prejudice, and from the June 23, 2006, order denying its motion for reconsideration and dismissing the complaint with prejudice. We affirm.

Plaintiff is a New Jersey corporation that previously engaged in the business of conducting thoroughbred and harness racing at Garden State Park (GSP) in Cherry Hill. Plaintiff is a wholly-owned subsidiary of International Thoroughbred Breeders, Inc. (ITB).

On July 2, 1998, plaintiff and several other subsidiaries of ITB, entered into an Asset Purchase Agreement (Agreement) with defendants, Greenwood New Jersey, Inc. (Greenwood); GS Park Racing LP (GS Park); Pennwood Racing, Inc. (Pennwood);*fn1 Greenwood Racing, Inc. (Greenwood Racing);*fn2 and Penn National Gaming, Inc. (Penn National); collectively, the "defendants." Under the Agreement, the ITB subsidiaries agreed to sell certain assets to defendants, with the exception of "the real estate, machinery, equipment and other property used in the operation of [GSP] . . . ." Instead, plaintiff leased GSP to Greenwood. Under the Agreement, the parties agreed to identify a ten-acre parcel at GSP for Greenwood to purchase at a later date for the purpose of establishing an off-track-betting (OTB) facility.

The parties also entered into a First Amendment (Amendment) to the Agreement, which among other things, identified and provided for the transfer of the ten-acre parcel for the OTB facility, subject to several contingencies.

The Amendment included the following provision:

[I]n the event [Greenwood] is required to acquire a liquor license in its name, or the name of its nominee, for the benefit of [Greenwood's] operations at GSP and/or the OTB Facility at GSP, and [Greenwood] elects to have [plaintiff] participate in the acquisition of the liquor license, then [Greenwood] will pay the lesser of $100,000 or the purchase price toward the acquisition of a liquor license for GSP and/or the OTB Facility at GSP, and [plaintiff] will contribute the balance of the cost, if any. Furthermore, if [plaintiff] has participated in the acquisition of the liquor license, and if within three (3) years of the Closing Date, [Greenwood] no longer has a use for the license at GSP and/or the OTB Facility at GSP, [plaintiff] will have the option to acquire the liquor license from [Greenwood] at such time, by reimbursing [Greenwood] the amount [Greenwood] contributed to the acquisition of the liquor license. (emphasis added).

In December 1998, plaintiff entered into an agreement with the concessionaire at GSP to purchase its liquor license. Under the agreement, GSP's concessionaire, Service America Corporation (SAC), agreed to transfer the liquor license to plaintiff or to GS Park if GS Park entered into a lease with plaintiff to operate GSP. Plaintiff leased GSP to GS Park in January 1999, and SAC then transferred the liquor license to GS Park. GS Park operated GSP until it closed in May 2001, and at that time, GS Park discontinued its actual use of the liquor license.

On August 5, 2001, the New Jersey State Legislature approved the "Off-Track and Account Wagering Act," N.J.S.A. 5:5-127 to -160. The Act permits OTB facilities in the State of New Jersey. N.J.S.A. 5:5-128. On November 7, 2001, defendants submitted a land development application for a minor subdivision to the Cherry Hill Township Planning Board, and the Planning Board approved defendants' application on March 4, 2002. On May 6, 2002, a neighbor of GSP filed a lawsuit against the Planning Board, claiming that the Planning Board should have required defendants to have filed a major subdivision plan. On March 12, 2003, an order was entered reversing the Planning Board's approval. In June 2003, defendants filed an application for a major subdivision. On May 12, 2006, the Planning Board approved the application.

Since May 2001, defendants have paid for the annual renewal of the liquor license. On or about June 24, 2003, and on June 23, 2005, the Director of the State Division of Alcoholic Beverage Control issued Special Rulings granting defendants' petitions requesting extensions of the term of the liquor license, N.J.S.A. 33:1-12.39, through the 2005-2006 license term.

In the interim, on January 29, 2002, plaintiff informed defendants that it was exercising its option to purchase the liquor license pursuant to the Amendment because defendants were not currently using the liquor license and had not used the liquor license at GSP since GS Park vacated GSP in May 2001. Defendants refused to sell, asserting that they may have some future use for the liquor license at GSP.

Upon defendants' refusal to sell the liquor license, plaintiff filed a complaint in the Chancery Division for specific performance, or in the alternative, monetary damages as a result of defendants' breach of the Amendment. On May 12, 2006, Judge Vogelson determined that both the Agreement and the Amendment indicated that "the parties contemplated what would happen if an OTB facility was not operating within the three-year period." The judge concluded that the term "use" under the Amendment pertained to the OTB facility, as GSP is no longer in operation. He also disagreed with plaintiff's interpretation of the provision: "It doesn't say that [defendants are] not using the license. It says [defendants] no longer [have] a use for the license . . . . It doesn't say using, it says have a use."

Judge Vogelson also determined that several events that took place before January 28, 2002, created a "use" of the liquor license by defendants:

We have the right of off-track betting established by the Legislature of New Jersey on August 5, 2001, clearly within the three-year period. We have an application for minor subdivision clearly within the three-year period.

Judge Orlando determined that it was a major subdivision. The defendant efficiently moved before the planning board of Cherry Hill for a major subdivision as directed by the Court, which in fact was granted. Thirdly, they have applied to and received from the Director of the Alcoholic Beverage Control Commission in New Jersey a renewal of the license and [have] stated in certifications that they're moving forward.

So clearly pursuant to the language of the contract that, as I read it, the buyer does continue to have a use for the license and is moving forward to make that use a realization.

Accordingly, the judge found that defendants, as of January 28, 2002, continued to "have a use" for the liquor license, and plaintiff's right to purchase it did not vest on that date. The judge entered a confirming order on May 15, 2006, dismissing plaintiff's complaint without prejudice.

Plaintiffs moved for reconsideration, and in the alternative, requested that Judge Vogelson amend his May 15, 2006, order by dismissing the complaint with prejudice for purposes of appeal. On June 23, 2006, the judge denied the motion to reconsider the matter on the merits and dismissed the complaint with prejudice.

On appeal, plaintiff argues:

POINT I

THE TRIAL COURT COMMITTED REVERSIBLE ERROR WHEN IT DISMISSED [PLAINTIFF'S] COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED.

A. THE TRIAL COURT ERRED WHEN IT FAILED TO ACCEPT THE ALLEGATIONS IN [PLAINTIFF'S] COMPLAINT AS TRUE AND WHEN IT FAILED TO AFFORD [PLAINTIFF] ALL REASONABLE INFERENCES REGARDING "USE" UNDER THE AGREEMENT.

B. THE TRIAL COURT COMMITTED ERROR WHEN IT BASED ITS DECISION ON "EVIDENCE" THAT IS IRRELEVANT AS TO THE ISSUE OF DEFENDANTS' "USE" OF THE LIQUOR LICENSE.

C. THE TRIAL COURT COMMITTED ERROR IN ITS INTERPRETATION OF "USE" UNDER THE AMENDMENT.

We have carefully considered plaintiff's arguments in light of the record, the briefs, and the applicable law. We conclude the issues presented are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E). We affirm substantially for the reasons expressed by Judge Vogelson in his decisions of May 12, 2006, and June 23, 2006.

Affirmed.


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