December 10, 2007
JOHN HOPKA AND IRENE HOPKA, PLAINTIFFS-APPELLANTS,
JEAN M. BERGEN, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, C-236-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 13, 2007
Before Judges S.L. Reisner and Gilroy.
Plaintiffs John and Irene Hopka appeal from a January 11, 2007 trial court order granting summary judgment dismissing their claim for specific performance of a contract to purchase property owned by defendant Jean Bergen, and a February 16, 2007 order directing plaintiffs to discharge their lis pendens and denying their motion for a stay. We affirm both orders.*fn1
The following facts are drawn from those set forth and admitted in the parties' respective statements of material facts filed on the summary judgment motion. Defendant, then an 81-year old woman, owned a piece of land in Holgate. In 2004, plaintiffs made an unsolicited request to view the property. In response to that unsolicited request, defendant's daughter showed them the property. During that visit, she told plaintiffs that "we own to the water," in other words, that the property extended to the bay behind it. Plaintiffs never spoke with defendant.
After the parties retained counsel to negotiate a sale, a contract was drawn up providing for a sale price of $700,000. On October 7, 2004, plaintiffs' attorney sent defendant's attorney a letter asking that the contract "include a representation that . . . the seller has riparian rights. . . . The seller advised the purchaser that she had 'water rights.' I am making the assumption that those are riparian rights. If this is incorrect we, obviously, need to review this issue. . . ."
In response, defendant's attorney advised plaintiffs' counsel by faxed letter dated October 7, 2004, that defendant "would convey all rights she has to the property but would make no representations as to riparian rights." Plaintiffs' counsel replied by letter that "their investigation disclosed that there did not appear to be any riparian rights to the property, but that the sellers were prepared to go forward with the transaction." The contract was finalized on October 19, 2004.
A dispute arose when plaintiffs' contended that defendant's property extended beyond the boundaries described in her deed, contended that the State was asserting a tidelands claim to that 600 square foot section of land adjacent to the water behind the property, and demanded that defendant clear title to that section so that she could convey to them clear title to waterfront land. Plaintiffs claimed that the tax map, referenced in the contract of sale, described defendant's land as including the disputed strip. Plaintiffs theorized that the additional land had been created by accretion, i.e., the natural deposit of sand by the water, and therefore it belonged to defendant. See Panetta v. Equity One, Inc., 190 N.J. 307, 321 n.3 (2007) (describing "alluvion" or deposits dropped by running water, which result in an addition to the owner's land).
According to defendant's expert, this theory was not likely to be upheld in court and in any event it would likely cost hundreds of thousands of dollars to vindicate such a claim.
It is undisputed that defendant's deed to the property "makes no mention of waterfront property, riparian rights, tidal rights or claims." Plaintiffs admitted that "there exists no tidelands claim on the property identified in Defendant's deed." However, plaintiffs also asserted that "the property which contained a tidelands claim was not adjacent to, but part thereof." In other words, plaintiffs claimed that defendant's property included riparian land not described in her deed, that the State was asserting a tidelands claim against that riparian land, and that plaintiff should be required to clear the State's tidelands claim from that land even though it was not included in her deed. In a letter from plaintiffs' counsel dated June 28, 2005, plaintiffs contended that the seller led them to believe that they were buying "waterfront" property and that was what they expected to receive. On August 8, 2005, defendant tendered a return of plaintiffs' deposit, but plaintiffs refused to accept it. Plaintiffs then filed suit for specific performance, seeking to require defendant to pay for the process of obtaining clear title to the property.
In an oral opinion placed on the record on December 15, 2006, Judge Grasso concluded that both parties initially believed that defendant owned all the land up to the water line, i.e., that her parcel was waterfront property. Relying on Beachcomber Coins, Inc. v. Boskett, 166 N.J. Super. 442 (App. Div. 1979), the judge concluded that the doctrine of mutual mistake applied to this situation. Based on the undisputed evidence from defendant's expert that it would cost "in the range of three hundred to five hundred thousand dollars" to clear the title to the disputed strip of land, the judge concluded that ordering specific performance "would have the effect of eviscerating the bargain reached between these parties in good faith and it would be . . . unfair and unjust to enforce [the contract]." The judge subsequently denied plaintiffs' motion for a stay pending appeal.
On this appeal, plaintiffs raise the following issues for our consideration:
POINT I: DEFENDANT'S ARGUMENT THAT THE CONTRACT SHOULD BE DECLARED NULL AND VOID AS A RESULT OF MUTUAL MISTAKE OF FACT IS IMPROPER, AS ONLY DEFENDANT ERRED IN FAILING TO INVESTIGATE TITLE TO HER PROPERTY.
POINT II: DEFENDANT'S PROPERTY OWNERSHIP IS CONTROLLED BOTH BY HER DEED AND THE RESULTS OF A SURVEY OF THE PROPERTY.
POINT III: THERE IS NO GENUINE ISSUE OF MATERIAL FACT AND PLAINTIFF IS ENTITLED TO JUDGMENT AS A MATTER OF LAW.
POINT IV: DEFENDANT HAS ACQUIRED TITLE BY ACCRETION TO WHICH A TIDELAND CLAIM EXISTS ACCORDING TO THE STATE OF NEW JERSEY, A TITLE DEFECT, OF WHICH DEFENDANT NEEDS TO PROPERLY CLEAR TO PROCEED TO CLOSING.
POINT V: SPECIFIC PERFORMANCE, AN EQUITABLE REMEDY WITHIN THE DISCRETION OF THE COURT, SHOULD BE GRANTED IN FAVOR OF PLAINTIFF AND DEFENDANT MUST CONVEY THE PROPERTY AND BEAR THE COSTS OF CLEARING THE TITLE TO THE PROPERTY.
POINT VI. DEFENDANT'S FAVORABLE RULING IN THE LOWER COURT SHOULD BE STAYED PENDING APPEAL IN ORDER TO PREVENT IRREPARABLE INJURY, DAMAGE AND HARDSHIP TO THE PLAINTIFFS.
Having reviewed the record, we conclude that plaintiffs' contentions are all without merit, R. 2:11-3(e)(1)(E), and we affirm substantially for the reasons stated in Judge Grasso's cogent oral opinion. We add the following comments.
Our review of a trial court's decision to grant summary judgment is de novo. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). That is, we employ the same standard used by the trial court in determining whether the matter was ripe for summary judgment (i.e., that there were no material facts in dispute) and whether the moving party was entitled to judgment on the strength of those undisputed facts. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (1995). Having reviewed the record, we agree with the trial judge that the case was ripe for summary judgment, because the material facts were undisputed.
Turning to the substance of the judge's decision based on those undisputed facts, we acknowledge that specific performance is an equitable remedy, and we will not disturb the General Equity judge's decision on that issue absent an abuse of discretion. Stehr v. Sawyer, 40 N.J. 352, 357 (1963). As the Stehr Court held:
Such remedy is a discretionary one, resting in equitable principles. This means, among other things, that the party asking the aid of the court must stand in conscientious relation to his adversary; his conduct in the matter must have been fair, just and equitable, not sharp or aiming at unfair advantage. The relief itself must not be harsh or oppressive. In short, it must be very plain that his claim is an equitable one. [Ibid. (citations omitted).]
We find no abuse of discretion here. In this case, as in Stehr, plaintiffs were aware before they finalized the contract that there might be a title issue affecting the disputed strip of land. The October 7, 2004 letter from defendant's counsel had put them on notice that defendant was not claiming title to any land beyond that described in her deed and that she would not represent that she had any riparian rights. Moreover, the remedy they sought -- requiring defendant to spend $300,000 to $500,000 to clear title to land for which plaintiffs proposed to pay her $700,000 -- was oppressive in the extreme. We find no error in the trial court's decision to deny plaintiffs' claim for specific performance.
We also find no error in applying the doctrine of mutual mistake in defendant's favor. The doctrine of mutual mistake is defined in the Restatement (Second) of Contracts § 152 as follows:
(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.
In turn, section 154(b) of the Restatement provides that a party bears the risk of mistake when "he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient." That principle applies here because plaintiffs were aware of a possible issue concerning title to the strip of land, even if they believed that defendant owned all the land down to the waterline. Further, as we recognized in Wallace v. Summerhill Nursing Home, 380 N.J. Super. 507, 510 (App. Div. 2005), where parties enter into a contract based on a mutual factual mistake "it is voidable by either party if enforcement of it would be materially more onerous to him than it would have been had the fact been as the parties believed it to be." See also Beachcomber, supra, 166 N.J. Super. at 445. That is clearly the case here, since, as Judge Grasso correctly concluded, enforcing the contract against defendant would eviscerate its value to her.
In light of our conclusion on the equitable issues, we need not address plaintiffs' contentions concerning whether defendant in fact might have a claim of ownership of the disputed strip of land. We also find no error in the trial court's decision to deny a stay. In this case, plaintiffs attempted to require defendant to assert a claim to land not included in her deed which she contended she did not own. If plaintiffs believed that a successful claim might have been asserted to the disputed strip, they could have consummated the purchase from defendant and proceeded to assert the claim themselves against the State.