On appeal from the Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-131-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad and Messano.
Defendant property owners appeal from the Chancery Division's September 12, 2006 order, following a bench trial, finding an oral contract for sale of the property and directing specific performance conveying the parcel to plaintiffs, who were longstanding tenants. The trial court stayed its order pending appeal and plaintiffs have continued to occupy the premises under an oral lease agreement. On appeal, defendants contend the court erred in: (1) finding plaintiffs met their burden of establishing the requisite elements of oral contract formation by clear and convincing evidence; (2) finding the existence of an enforceable contract that lacked the requisite element of consideration and in failing to specifically address this argument; and (3) ordering specific performance on the alleged contract despite failure of proof by plaintiffs of an ability to perform under its terms. We are not persuaded by any of these arguments and affirm substantially for the reasons articulated by Judge McVeigh in her August l5, 2006 written opinion.
The following facts were adduced during the six-day trial on plaintiffs' specific performance claim.*fn1 Plaintiffs Heather and Gerald ("Jerry") Loder have been tenants of the residential property owned by defendants, Claus and Grace Neppl, located at 361 Lakeshore Drive, West Milford, since December 24, 1998.*fn2
They initially occupied the premises pursuant to written lease agreements that expired on June 30, 2000, and remained pursuant to an oral month-to-month lease arrangement. Defendants relocated to Arizona in late 2002, and the parties agreed that any necessary repairs to the property would be performed by plaintiffs and deducted from the monthly rental. There was an ongoing dialogue between the parties respecting these and other issues, and the parties enjoyed a friendly relationship until the spring of 2005.
All four parties agreed that from the outset there had been ongoing conversations regarding plaintiffs' purchase of the property when they were financially able. The second written lease included an option to purchase the property and right of first refusal, and defendants never listed the property for sale or showed the home to prospective buyers throughout plaintiffs' tenancy. The critical incident occurred around Memorial Day in 2005. The parties met at the house and all four agreed there was a conversation regarding plaintiffs' purchase of the property. Defendants had flown to New Jersey to visit Michael Neppl, during which they arranged with plaintiffs to visit the property and discuss recurrent problems with the septic system, which defendants agreed needed to be repaired. Claus was unhappy with the condition of the house and, according to both Jerry and Grace, Claus made a comment to the effect that plaintiffs "either had to buy the house or move out."*fn3
Plaintiffs offered one price, which everyone agreed was rejected out of hand.
Plaintiffs testified that Claus responded with a sales price of $150,000 and defendants would repair the septic system;*fn4
Heather asked if they would take back a mortgage, which Claus indicated they would not; and plaintiffs asked for six months to close to give them adequate time to obtain financing. Both plaintiffs unequivocally testified that, in their opinions, when the meeting concluded on a friendly note, with their typical handshaking of Claus and kissing of Grace, they had reached an agreement for defendants to sell and plaintiffs to purchase the home for $150,000, within the six months that defendants allowed them to obtain a mortgage. Heather testified they did not discuss a time frame for the completions to the renovations to the septic system. Heather further testified that this discussion regarding the sale of the home was different than prior ones because the parties had never previously come to an agreement on the purchase price and because plaintiffs were now able to obtain a mortgage as Heather's credit had improved.
Claus denied there was an agreement to sell the property. Claus testified he told Heather the building was not for sale, and after Jerry offered to purchase the property for $150,000 and said he needed defendants to take back a second mortgage, Claus was "outraged" and "refused" the offer. According to Claus, negations ceased and he and Grace immediately left the home, informing plaintiffs they would have to move as soon as possible. Claus emphatically denied he had any conversations with plaintiffs "at [that] time as to what would be terms under which [he] would sell the property to them."
On direct examination Grace mimicked the testimony of her husband in minimizing her relationship with plaintiffs and in describing the events of the Memorial Day meeting. On cross-examination, however, it became clear that she and Heather had established a personal relationship over the years, and that there was more to the meeting than testified to by Claus and that Grace was uncomfortable and guarded in her testimony. Grace corroborated plaintiffs' testimony that Claus "came up with the value" of $150,000, which included defendants repairing the septic system, and that "plaintiffs indicated they would buy the house for [that amount]." Grace further testified that after Claus rejected plaintiffs' request that defendants hold a mortgage, plaintiffs told defendants they needed some time to get their finances in order. She also confirmed plaintiffs' testimony as to their amicable parting.
Under the impression they were purchasing the property, Heather contacted two mortgage companies, one private investor, and an exterminating company within a few days after the meeting. Confirmation documents evidencing the contacts were submitted at trial as proof of plaintiffs' efforts to comply with their obligations under the oral agreement. Heather testified that as a result of being informed by the mortgage company that a written contract of sale was required to obtain a mortgage, she prepared and faxed the following ...