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Patel v. 323 Central Avenue Corp.

March 19, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, C-241-05.

Per curiam.


Argued February 5, 2008

Before Judges Winkelstein and LeWinn.

Plaintiff, Mahesh Patel, is a physician who entered into a lease agreement (the lease) with defendant 323 Central Avenue Corp. (323 Central or the landlord), a New Jersey business corporation, for office space in a building at 203-205 South Essex Avenue in Orange. Defendant Hospital Center at Orange (HCO), is a New Jersey nonprofit corporation. Its sole member is Orange Mountain Healthcare, Inc. (OMH), another New Jersey nonprofit corporation. 323 Central is wholly owned by OMH. Cathedral Healthcare System, Inc. (Cathedral), is also a New Jersey nonprofit corporation. Cathedral, OMH and HCO are in the healthcare industry, and are parties to a November 26, 1997 affiliation agreement to provide "efficient delivery of patient care services to their mutual service areas." The record contains no evidence, aside from the affiliation agreement, of the parties' relationship to one another.

The lease, dated December 17, 1997, and signed by plaintiff on December 19, 1997, was to commence ninety days later, and terminate on March 19, 2005, eighty-four months after the date of commencement. It provided plaintiff with an opportunity to extend the term of the lease, and the right of first opportunity to purchase the property. After plaintiff unsuccessfully attempted to exercise those options, he filed suit against 323 Central and HCO.

In the first count of his amended complaint, plaintiff sought specific performance, to compel HCO to sell the property to him. In count two, he claimed damages against both 323 Central and HCO for breach of the contract of sale. In the third count, plaintiff sought damages against 323 Central for its failure to perform its duties under the lease, and for a breach of the implied covenant of good faith and fair dealing. In counts four through seven, plaintiff claimed 323 Central committed fraud and violated the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -112. In count eight, plaintiff alleged that HCO and/or a fictitious entity became the legal or beneficial owner of the property after the lease had been executed, and breached its duties under the lease to plaintiff. In the ninth count, plaintiff claimed HCO and/or the fictitious entity breached the CFA. He appeals from a summary judgment dismissing all counts of his complaint. We affirm.

The material facts underlying plaintiff's allegations are as follows. On February 3, 2004, plaintiff wrote a letter to Don Daniels, Chairman of the Board of Cathedral, at 219 Chestnut Street, Newark. Plaintiff wrote:

I would like to take this opportunity to bring to your kind attention my interest in buying the entire property at approximately $150,000 (the price being negotiable). Also if you prefer to lease the property as against selling it, I am willing to renew my lease for the next ten (10) years.

On February 20, 2004, HCO's attorney responded to plaintiff that HCO "may" be interested in selling the property, but the property would need to be appraised to determine its fair market value, and that HCO would contact plaintiff after the appraisal was complete. Approximately ten months later, on December 23, 2004, HCO sent an unsigned contract for sale of the property to plaintiff. The cover letter from HCO's counsel stated: "Enclosed please find a Contract between Hospital Center at Orange and Mahesh Patel, M.D. with regard to the above-entitled property. Please have your attorney review same and get back to me with any comments."

The enclosed contract named HCO as the seller. It called for a purchase price of $275,000 and an initial $27,500 deposit to be paid by plaintiff upon signing the contract. The contract provided that closing would take place on January 15, 2005, approximately three weeks after the date of the cover letter. The contract also included the following provision:

This contract is the entire and the only agreement between the Buyer and the Seller.

This contract replaces and cancels any previous agreements between the Buyer and the Seller. This contract can only be changed by an agreement in writing signed by both buyer and seller.

Plaintiff signed and returned the contract on January 18, 2005, three days after the proposed closing date. He made no changes to the contract, and included a cashier's check for $27,500 made payable to HCO. Plaintiff's counsel's cover letter stated:

Enclosed please find cashier's check in the amount of $27,500 representing the second deposit on the above purchase, along with the Contract executed by my client. Also enclosed is copy of title search. Please note title is in the name of 323 Central Avenue Corp. and there are several large judgments against it.

On March 7, 2005, plaintiff's counsel sent a letter to HCO's counsel inquiring as to the status of the sale. On May 4, 2005, HCO responded in a letter from counsel, stating that HCO was "no longer in a position to sell the [property to plaintiff]. In the event of a sale of the property, we will let you know and hope to provide as much advance noticed [sic] as possible so that [plaintiff] can make an orderly transition to new space." On August 3, 2005, HCO sold the property, ...

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