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K. Hovnanian at West Milford, L.L.C. v. Boulder Pond


March 13, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-130-05.

Per curiam.


Argued January 29, 2008

Before Judges Skillman, Yannotti and LeWinn.

Defendant Boulder Pond, L.L.C. appeals from an order entered on May 4, 2006, as amended by an order entered on May 23, 2006, which enforced the terms of a settlement agreement between defendant and plaintiff, K. Hovnanian at West Milford, LLC. For the reasons that follow, the appeal will be dismissed.


The settlement enforced by the trial court arose from a contract for the sale of certain property in West Milford between defendant, as seller, and K. Hovnanian North Central Acquisitions, L.L.C., as buyer. The agreement states that the buyer would construct up to 320 market townhouses on the property. The buyer agreed to pay $18,000 for each approved unit. According to the contract, the purchase of any phase of the property did not obligate the buyer to purchase any additional phases. Closing on the first phase was set for thirty days after either the receipt by the buyer of all approvals that are necessary for the development of at least 288 units or twelve months after the date of the agreement, "but in no event later than 32 months from the date of [the] [a]greement."

The agreement additionally provides that, in the event that the buyer has not received all approvals within twelve months of the date of the agreement, the buyer could purchase four four-month extensions of time. The contract further provides that the:

[t]ime periods in this Agreement shall be extended by the length of time during which any moratorium is in effect as to utility connections or usage, approvals, permits or applications related to the development of the Premises. In no event shall any such time periods be extended or tolled for a period longer than one (1) year from the date(s) upon which Buyer and Seller receive notice as required by applicable law of said litigation, appeal or moratorium, unless such extension is agreed upon, in writing, by Buyer and Seller.

The contract further states that the "[b]uyer may waive the receipt of [a]ll [a]pprovals at any time and proceed to closing of title upon thirty (30) days written notice to [s]eller." After the contract was executed, K. Hovnanian North Central Acquisitions, L.L.C. assigned its rights and obligations under the agreement to plaintiff.

Thereafter, plaintiff purchased four of the extensions as permitted by the agreement. The parties later executed an amendment to the contract dated March 9, 2001, which stated that plaintiff had until January 10, 2002 to obtain all necessary approvals, and could purchase four additional three-month extensions of time, commencing on January 10, 2002. Plaintiff paid for the first of these extensions because it had not yet received a water allocation permit from the New Jersey Department of Environmental Protection (DEP) that was required for the development of the site. On March 11, 2002, the DEP issued an order holding in abeyance all water allocation permits due to a drought emergency.

On January 9, 2003, plaintiff filed a complaint in the Chancery Division seeking a declaratory judgment that the DEP's order constituted a "moratorium" under the agreement and therefore extended the time to close. In the complaint, plaintiff alleged that it had made additional payments for further extensions of the time to close, although it had not been required to do so. Plaintiff sought an order enjoining defendant from entering into a contract with any other party for the sale of the property.

On February 18, 2003, defendant filed an answer and counterclaim in which it alleged that plaintiff failed to seek the water allocation permit in good faith and was estopped by the payments it made pursuant to the contract for further extensions of time. Defendant also alleged that plaintiff breached the contract and therefore defendant was no longer bound by its terms.

Plaintiff filed an amended complaint on July 13, 2004, adding a count for specific performance. Plaintiff alleged that it had endeavored to close on the first phase of the property on November 5, 2003, but defendant had wrongfully refused to close.

The parties subsequently entered into a settlement agreement and on July 29, 2004, placed the terms on the record. The parties thereafter executed a written agreement which provided that: 1) the closing would take place in three phases; 2) there was no guarantee and no remedy for specific performance; 3) the purchase price is $8,835,000, with one-third of the purchase price paid at the closing of each phase; 4) there would be three extensions of time for the initial closing, with the first extending the time to close from July 1, 2004 through September 30, 2004; the second extending the time to close from October 1, 2004 to December 31, 2004; and the third extending the time to close from January 1, 2005 to June 30, 2005; 5) plaintiff would pay $775,000 upon the signing of the settlement agreement; $250,000 for each of the first two extensions; and $500,000 for the last extension; 6) the first closing would occur thirty days after receipt of all approvals; and 7) the water allocation permit was the approval outstanding at the time. The settlement agreement also stated that the Phase I closing "shall take place no later than June 30, 2005."

The DEP's moratorium on water allocation permits had been lifted on January 9, 2003. However, the DEP took no action on plaintiff's application. In April 2005, plaintiff filed a motion for leave to appeal with this court, seeking an order requiring the DEP Commissioner to act on its application.

With the June 30, 2005 contract deadline approaching, and its motion for leave to appeal still pending, plaintiff filed a motion in the trial court on June 8, 2005, seeking to "modify and/or reform" the settlement and promptly appoint a receiver so that the parties could enter into negotiations to extend the time to close title.

On June 27, 2005, the court entered an order appointing a receiver and authorized him to negotiate on behalf of defendant for a further extension of the closing date. The negotiations went forward. However, no settlement was reached in part because defendant's principals could not agree on any of the proposals.

On July 14, 2005, we entered an order granting plaintiff's motion for leave to appeal, and ordered the DEP to render a final decision on plaintiff's application for the water allocation permit within forty-five days of the date of the order, to be followed by the submission of briefs and argument on the appeal.

By letter dated July 15, 2005, plaintiff made an informal request to the trial court to authorize the receiver to act on behalf of defendant. The trial court directed plaintiff to file a motion seeking that relief. Plaintiff advised defendant that it was willing to close under the terms of the settlement agreement and on July 26, 2005, forwarded a master deed to defendant, its attorney, and the receiver.

By letter dated August 3, 2005, defendant rejected the closing date set by plaintiff. Defendant took the position that plaintiff was in default because it had not closed on the first phase of the sale by June 30, 2005. On August 3, 2005, plaintiff sent defendant a "time of the essence" notice. Defendant rejected plaintiff's attempt to schedule a closing date.

On August 22, 2005, plaintiff filed a motion seeking an order mandating specific performance and a closing on Phase I of the sale. Defendant opposed the application, asserting that plaintiff breached the contract because: plaintiff failed to close on Phase I by June 30, 2005, which was a "time of the essence" closing date; plaintiff did not have authority to waive the required approvals because the approvals were for the benefit of both parties; and the proposed master deed did not conform to the agreement.

The court filed a written opinion on October 19, 2005. The judge stated that "equity abhors a forfeiture" and "perhaps" there would be "a significant injustice . . . to both sides" if the transaction did not go forward. The judge stated that it was "clear" that the agreement called for a closing "no later than June 30, 2005" and it was the parties' intention that there would be no further extensions.

Even so, the judge found that plaintiff's attempt to negotiate a further extension of the closing date was not "in any way violative of public policy or law[.]" The judge further found that there was a genuine issue of material fact as to whether the master deed was complete and a hearing was necessary to determine whether it complied with the contract. The judge entered an order denying plaintiff's motion to enforce the settlement, subject to a hearing.

The court heard testimony in the matter on five days in January and February 2006. The judge filed a letter opinion dated May 3, 2006, in which she concluded that the settlement agreement is "extraordinarily clear" that the property would close in three phases, and after closing on the first phase, plaintiff would have no obligation to close on the remaining two phases. The judge noted that plaintiff had made a "significant investment" in the properties. She found that the initial agreement expressly gave plaintiff the right to waive all approvals. The judge additionally found that the master deed "serves the requirements" of the agreement "and is sufficient to move the project forward."

The judge entered an order on May 4, 2006, and an amended order on May 23, 2006, mandating enforcement of the settlement agreement, and instructing the parties to close title on Phase I no later than thirty days after the date of the court's May 3, 2006 opinion. Defendant filed a notice of appeal on June 19, 2006.

The closing did not take place, and plaintiff filed a motion in the trial court to enforce its prior order and require defendant to abandon its appeal so that plaintiff could obtain good and marketable title. The trial judge entered an order on August 31, 2006, granting plaintiff's motion to enforce its order but refused to require defendant to abandon its appeal. Plaintiff filed a notice of appeal from the trial court's August 31, 2006 order.

On July 18, 2006, this court reversed the DEP's denial of plaintiff's application for the water allocation permit. We remanded the matter to the DEP and ordered that all testing required for issuance of the permit be completed and provided to the DEP by September 30, 2006. Plaintiff thereafter requested that defendant allow it access to the property but defendant refused on the ground that the agreement was null and void.

Plaintiff sought an extension of this court's testing deadline, and asked the trial court to order defendant to allow it access to the site for the tests. The trial court declined to resolve the issue until plaintiff obtained the DEP's approval for the testing. On October 27, 2006, plaintiff formally abandoned its pursuit of specific performance of the contract, and asserted that it did so because it was no longer able to benefit from the agreement.

On December 22, 2006, plaintiff moved before us for a limited remand so that it could seek leave to amend the complaint to add claims against defendant for breach of contract and breach of the covenant of good faith and fair dealing. We granted the motion and remanded the matter to the trial court. On March 20, 2007, the trial judge entered an order granting plaintiff's application to amend the complaint.

On March 22, 2007, plaintiff advised this court that it was withdrawing its appeal from the trial court's August 31, 2006 order. Thereafter, plaintiff moved to dismiss defendant's appeal as moot. We entered an order dated July 5, 2007, denying the motion but noted that the appeal may be interlocutory and leave to appeal had not been granted. We directed the parties to submit letters addressing the question of whether the appeal is interlocutory. In their responses, defendant asserted that its appeal was not interlocutory; and plaintiff said that it was.

We advised the parties that the court would defer a determination on this procedural question.


We now consider whether the appeal is interlocutory and, if so, whether leave to appeal should be granted nunc pro tunc.

Our court rules permit appeals to be taken as of right from final judgments of the trial divisions of the Superior Court. R. 2:2-3(a)(1). "To be a final judgment, an order generally must 'dispose of all claims against all parties.'" Janicky v. Point Bay Fuel, Inc., 396 N.J. Super. 545, 549-50 (App. Div. 2007) (quoting S.N. Golden Estates, Inc. v. Cont'l Cas. Co., 317 N.J. Super. 82, 87 (App. Div. 1998)). An order that "'does not finally determine a cause of action but only decides some intervening matter pertaining to the cause, and which requires further steps . . . to enable the court to adjudicate the cause on the merits,' is interlocutory." Moon v. Warren Haven Nursing Home, 182 N.J. 507, 512 (2005) (quoting Black's Law Dictionary 815 (6th ed. 1990)).

Here, defendant appealed from the order entered on May 4, 2006, as amended by the order of May 23, 2006. The orders finally resolved all of the issues pending at the time between the parties in this action. However, the orders could no longer be characterized as "final" after the trial court entered the order on March 20, 2006, which granted plaintiff leave to amend its complaint and assert two new causes of action. As a result, the orders of May 4, 2006 and May 23, 2006 no longer represented a final adjudication of all issues as to all parties in this matter. Therefore, the orders at issue on this appeal are now interlocutory orders.

Furthermore, when the May 4, 2006 and May 23, 2006 orders became interlocutory, defendant could longer maintain an appeal from those orders "as of right" pursuant to Rule 2:2-3(a). To obtain review of the orders, defendant was required to seek leave to appeal pursuant to Rule 2:5-6(a). The motion should have been filed within twenty days after service of the trial court's March 20, 2007 order. Ibid. Because defendant never made such a motion, we must consider whether to grant leave to appeal nunc pro tunc pursuant to Rule 2:4-4(b)(2).

Leave to appeal an interlocutory order of the trial division may be granted in the interest of justice. R. 2:2-4. However, the power to grant leave to appeal is exercised "only sparingly." State v. Reldan, 100 N.J. 187, 205 (1985). This is so because our rules of appellate practice reflect "a judicial policy that favors an uninterrupted proceeding at the trial level with a single and complete review" thereafter. S.N. Golden Estates, supra, 317 N.J. Super. at 88.

We are satisfied that the "interest of justice" does not warrant the grant of leave to appeal at this time. R. 2:2-4. We are not convinced that leave to appeal should be granted merely because the trial court's orders lost their status as final orders while the appeal was pending. Indeed, the procedural posture of this matter presently is no different from any other case in which a trial court has entered an interlocutory order and further proceedings are required before the matter is finally adjudicated.

Moreover, as we have pointed out, the trial court's orders of May 4, 2006, and May 23, 2006 enforced the terms of a settlement agreement between the parties and ordered specific performance of the contract. Plaintiff subsequently decided that it no longer had any interest in specific performance of the contract. In view of plaintiff's decision not to proceed with the contract, there is little urgency in having the issues raised on this appeal decided now rather than after entry of a final judgment by the trial court.

Defendant nevertheless argues that, even though plaintiff has elected not to proceed with the contract, significant issues remain as to: whether the trial judge erred by enforcing the contract despite plaintiff's failure to close title on Phase I by June 30, 2005; whether plaintiff had the authority to waive the receipt of all approvals; and whether plaintiff's master deed conformed to the agreement. Defendant maintains that further trial court proceedings could be obviated if the court were to rule in its favor on one or more of these issues. However, that argument could be made in virtually any case where a party seeks leave to appeal an interlocutory order.

Moreover, the fact that the parties have briefed and argued the issues on appeal does not tip the balance in favor of granting leave to appeal. Parker v. City of Trenton, 382 N.J. Super. 458, 457 (App. Div. 2006). "At a time when this court struggles to decide over 7,000 appeals a year in a timely manner, it should not be presented with piecemeal litigation and should be reviewing interlocutory determinations only when they genuinely warrant pretrial review." Ibid. We are not convinced that the circumstances presented here "genuinely warrant" interlocutory review of the trial court's May 4, 2006 and May 23, 2006 orders.

Therefore, the appeal is dismissed.


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