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Seaboard Towers Development Company, LLC v. AC Holding Corp.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 10, 2008

SEABOARD TOWERS DEVELOPMENT COMPANY, LLC, PLAINTIFF-APPELLANT,
v.
AC HOLDING CORP., II, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, C-118-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 21, 2008

Before Judges Lintner, Graves and Sabatino.

Seaboard Towers Development Company, LLC (Seaboard) appeals from a Chancery Division judgment dismissing its complaint for specific performance and damages for breach of contract and the duty of good faith and fair dealing. On February 7, 2007, after eleven days of trial spanning January 3 through January 26, 2007, Judge William C. Todd, III, placed his factual findings and conclusions of law on the record. The dispute centered on Seaboard's $22,000,000 option to purchase a fourteen-plus-acre parcel of undeveloped property located in Atlantic City's marina district and owned by AC Holding Corporation II, a wholly owned subsidiary of MGM Mirage (ACH/MGM), a resort and entertainment company, which owns the Renaissance Point Resort complex also located in the marina district. ACH does not act independently of the MGM Board of Directors (Board) or Management Committee (Committee).*fn1

On appeal, Seaboard contends that Judge Todd erred in finding that there was no binding agreement to extend the option and that ACH/MGM properly terminated the option agreement. Additionally, Seaboard contends that Judge Todd erred in denying its November 1, 2006, recusal motion based on its contention that the judge participated in inappropriate ex parte communications with ACH/MGM's counsel. We reject Seaboard's contentions and affirm.

I.

We first identify the parties' principal representatives. Seaboard is a real estate development company. In March 2004, when the parties entered into the option agreement to purchase the subject property, Seaboard was owned by Mark Robinson and Thomas Scannapieco. One year earlier, Seaboard submitted a proposal, eventually culminating in a successful transaction, to purchase a parcel of property owned by MGM and located on the boardwalk.*fn2 Robinson retained Barbara Casey as transactional counsel to assist in the negotiations of the earlier purchase, as well as the option to purchase the subject property.

During the subject transaction, Terry Lanni was MGM's Chairman and Chief Executive Officer and Gary Jacobs was MGM's Executive Vice President, Corporate Secretary, and General Counsel. Lanni and Jacobs were also members of the Board and Committee. Negotiations and sales details for both the boardwalk property and the subject transaction were handled by MGM's manager, John Redmond, and its Senior Vice-President and Assistant General Counsel, Bryan Wright. Wright and Redmond were assisted by transactional counsel, William Downey, and Atlantic City real estate broker, William Rafferty.

The following relevant facts were developed at trial. While the option-exercise period for the purchase of the boardwalk property was pending, Robinson contacted Rafferty and broached the possibility of Seaboard purchasing the marina property. Toward that end, Robinson had Casey prepare an option contract to purchase the marina property for $16,500,000, which Robinson submitted to Rafferty on January 5, 2004. Rafferty, in turn, sent the proposed agreement to MGM's Redmond for review. Later that same month, Robinson revised his proposal, increasing the purchase price to $22,000,000. Again, Robinson submitted the revised proposal to Rafferty, who passed it on to Redmond. Negotiations followed, with Robinson and Casey acting on behalf of Seaboard and Rafferty, Downey, and Redmond on behalf of ACH/MGM. In early March 2004, the parties entered into the Option Agreement giving Seaboard the option to purchase the marina property from ACH/MGM.

Redmond executed the agreement on behalf of ACH/MGM. However, he overstepped his authority by not obtaining the prior consent of the Board or Committee. Despite Redmond's failure to obtain Board approval and, at some embarrassment to Jacobs and Lanni, the Board ratified and approved the Option Agreement at its meeting on March 16, 2004.

Under the Option Agreement, Seaboard tendered an initial deposit of $250,000 and was given a ninety-day "due diligence period," during which it could conduct environmental and other studies to determine whether it wanted to exercise its option to purchase the marina property for $22,000,000. The due diligence period was to commence on March 22 and end on the "Due Diligence Date" of June 21, 2004, at 5:00 p.m. The Option Agreement provided that Seaboard could cancel the agreement at any time prior to the Due Diligence Date and have its $250,000 deposit returned. If Seaboard did not cancel, then it was required to make an additional payment of $250,000 within three days following the Due Diligence Date and the $500,000 paid would be released immediately to ACH/MGM and be nonrefundable. Seaboard would then have thirty days from the Due Diligence Date to exercise its option to purchase and close on the sale, although the closing date could be extended through Seaboard's purchase of as many as three one-month periods, at a set price for each period.

Significantly, the Option Agreement deemed "[a]ll times, dates and deadlines" in the agreement to be "of the essence." Another provision required that "[t]his Agreement can only be changed by an agreement in writing signed by both Buyer [Seaboard] and Seller [ACH/MGM]."

Following the commencement of the ninety-day due diligence period, Seaboard's investigation uncovered information raising environmental concerns about the marina property. Consequently, on May 25, 2004, Robinson had Casey send a letter to Downey, asking that the Due Diligence Date be extended by three months to September 19, 2004, with closing to occur no later than December 31, 2004. ACH/MGM rejected Seaboard's request for an extension.

Subsequently, out of concern for certain additional environmental, regulatory, and competitive problems, Robinson prepared a letter to Rafferty on June 13, asking that the due diligence period set to end on June 21, 2004, be extended first by 120 days and thereafter, at Seaboard's option, for another sixteen months. He proposed that, at the end of the existing due diligence period, the $250,000 deposit would be released to the seller. He also proposed that if Seaboard exercised its sixteen-month option it would pay an additional $250,000, which would be released to ACH. In his letter, Robinson noted that "[o]ur equity partners have expressed their unwillingness to fund the acquisition of land with such serious threats to its underlying value."

Meanwhile, MGM's upper-management personnel, including Redmond, were in the process of acquiring a multi-billion-dollar company. Consequently, MGM's management was not able to address Robinson's request on behalf of Seaboard at that time.

In response to this timing problem, Redmond approved an extension of the existing, but soon to expire, due diligence period for an additional week so that MGM's management would have the opportunity to properly consider Seaboard's request for an extension. Despite the earlier rebuke for his unauthorized involvement in the Option Agreement, Redmond approved the one-week extension (bridge agreement) of the due diligence period without first obtaining the prior approval of the Board or Committee. He did so because there was a "general consensus" among those he consulted that such a "relatively de [minimis]" bridge agreement did not require approval from upper management.

On June 18, 2004, Downey sent a letter to Wright, noting that Redmond had approved the one-week extension of the due diligence period to "June 28, 2004 for all purposes under the Option Agreement." On June 21, 2004, Wright executed the bridge agreement and returned it to Downey. That same day, Robinson and Downey exchanged countersigned copies of the bridge agreement.

Before executing the bridge agreement on June 21, 2004, Robinson asked Casey, "[d]o we [Seaboard] have to deliver a cancellation notice [pursuant to the option contract] to get the [$250,000 initial payment] money back or is not delivering the rest of the deposit money [the second $250,000 payment due three days after the Due Diligence Date] considered a cancellation?"

Responding to Robinson later that day, Casey advised him that "[y]ou have to deliver a cancellation notice or else the money goes hard.*fn3 You get to go forward [under the option contract] if you pay the extra $[the second $250,000 payment] or else you are in breech [sic] of the [option] agreement." Thus, Robinson was aware that Seaboard's payment of the second $250,000 three days after the end of the due diligence period was necessary in order for Seaboard to avoid breaching the option contract.

On June 24, 2004, Downey sent an e-mail to Casey, outlining "the terms that MGM will offer" to Seaboard concerning an extension of the due diligence period. Downey's e-mail proposed that: (1) Seaboard release the initial $250,000 payment to ACH/ MGM immediately; (2) the due diligence period be extended by about six months to December 31, 2004, for an additional payment by Seaboard to ACH/MGM of $500,000; (3) the closing be held on February 1, 2005, with further provision that Seaboard may extend the closing date for up to three consecutive months at a price of "$125K [for] each" month; (4) Seaboard will "diligently pursue" its environmental and other investigations of the marina property; and (5) "all due diligence materials, plans and permits [are to be] delivered and assigned to MGM if agreement terminates without closing." Downey closed his e-mail by inquiring of Casey whether they "should move to document this."

Early on the next day, June 25, 2004, Casey responded to Downey's e-mail, seeking more information as to whether the extension payments were to be credited to the purchase price, and indicating that she would pass ACH/MGM's proposal on to Robinson. Later that day, Downey provided the requested information to Casey.*fn4 Subsequently, Casey or Robinson requested that Downey "document" ACH/MGM's proposal.

At 3:55 p.m. on June 25, 2004, Downey sent an e-mail to Casey and Robinson that included his "first cut at" a written agreement to amend the Option Agreement by extending the due diligence period until December 31, 2004, and setting the closing date at February 1, 2005. In addition to the provisions previously set out in Downey's e-mail of June 24, 2004, Downey included two new provisions, one would make any wetlands found on the marina property a "Permitted Encumbrance[]" and the other would make Seaboard responsible for certain real estate transfer taxes.

In his e-mail, Downey noted that his "client has not reviewed this document, so I must reserve the right to make such changes as I am directed." In line with that statement, Downey forwarded a copy of the proposed agreement to Redmond and Wright, asking for their comments and noting his perception that Seaboard appeared ready to accept the proposal as written. Later that evening, Casey responded to Downey's e-mail, asserting essentially that the proposed provision concerning real estate transfer taxes was unfair to Seaboard.

Nothing noteworthy concerning contract-modification negotiations occurred over the weekend of June 26-27, 2004, despite the fact that the extended due diligence period was set to expire at 5:00 p.m. on Monday, June 28, 2004.

At some point on June 28, 2004, Robinson and Scannapieco entered into an agreement, by which Robinson agreed to buy out Scannapieco's interest in Seaboard if Robinson was unable to negotiate an extension of the closing date under the proposed amendment to the Option Agreement from February 1 to July l, 2005.

In line with his agreement with Scannapieco, Robinson faxed a letter to Rafferty at 2:33 p.m., on June 28, 2004, requesting that the closing date under the proposed extension agreement be changed to July 1, 2005, and objecting to the provision that Seaboard pay certain real estate transfer taxes. In his letter, Robinson referenced his previous letter of June 13, 2004, and noted his concern for the many obstacles impeding Seaboard's attempt to investigate, analyze, and eventually purchase the marina property. Robinson also indicated that Seaboard anticipated expending $1,000,000 on the transaction by the end of 2004, and was having difficulty with an "equity partner," who was losing interest in the marina property project.

Robinson closed his letter by requesting that, "[i]f [Rafferty's] client finds these terms acceptable, please have Mr. Downey make the necessary changes to the [proposed extension agreement] so that we may execute same by the deadline of '5:00 p.m. Eastern Standard Time,' of this day." Rafferty forwarded Robinson's letter to Redmond, who indicated to Downey a short time later that the real estate transfer tax provision of the proposed amendment could be removed, but that the closing date of February 1, 2005, was firm. Additionally, with an eye toward his earlier rebuke for overstepping his authority in executing the option contract, Redmond insisted that Downey include a provision in the proposed extension agreement requiring approval of the Board.

Accordingly, Downey sent Casey an e-mail at 3:44 p.m. on June 28, 2004, advising her, "Ok on removing the tax language. . . 30 day closing [date of February 1, 2005] . . . has to stay . . . [and m]ust condition deal upon board approval. Not a big deal, but I'll explain later." At that juncture, Downey assumed that any Board approval provision would be "straightforward" and provide for a "window of time" within which the Board could "accept or reject the deal."

Upon receiving Downey's e-mail, Casey forwarded it to Robinson at 3:47 p.m. on June 28, 2004. A short time later, Casey and Downey had a telephone conversation in which Casey decried the purported unfairness of the Board approval provision contemplated by Downey and insisted, instead, that any such provision be crafted so that Seaboard would have an opportunity to close on the deal, even if the Board disapproved of the proposed extension agreement.

In response, at 4:56 p.m. on June 28, 2004, with the bridge agreement's 5:00 p.m. extended Due Diligence Date deadline impending, Downey sent an e-mail to Casey with the proposed extension agreement, explaining, "Here's my cut at it. Let me have your thoughts. Thanks."

According to Downey, it was unlikely that he reviewed the proposed extension agreement with any ACH/MGM manager before submitting it to Casey and Robinson. Downey explained that he did not bother to present the proposal to ACH/MGM because of the time constraints imposed on him by the impending Due Diligence Date deadline and because he wanted to be sure that the terms of the proposed extension were acceptable to Seaboard. He was later confronted with his deposition testimony that indicated that he believed or suspected that he had been given authorization by Redmond to initially float the terms to Robinson.

Under the terms of the final version of the proposed extension agreement, the Due Diligence Date was set at December 31, 2004, with closing to occur on February 1, 2005, and a payment of $500,000 to be made by Seaboard on or before the Due Diligence Date. The proposed extension agreement did not have any provision requiring that Seaboard would be responsible for certain real estate transfer taxes.

Significantly, the proposed extension agreement included a Board approval provision that reflected Casey's input. Under that provision, "the terms of this letter and the amendments to the Option Agreement contemplated hereby are subject to the approval of the Seller's Board of Directors." However, if the Board failed "to approve this letter and the amendments to the Option Agreement . . . by July 26, 2004 at 4:00 p.m., then (1) the amendments to the Option Agreement contemplated hereby shall be of no force or effect, and (2) on or before August 6, 2004 at 4:00 p.m., [Seaboard] may either elect to" deliver the additional $500,000 payment to ACH and close on the deal at an extended closing date of September 6, 2004, or terminate the Option Agreement at that time and receive a refund of its initial $250,000 payment.

Casey forwarded Downey's proposed extension agreement to Robinson for his consideration, following which she contacted Downey and asked that, in the event the Board failed to approve, the provision's closing date of September 6, 2004, be changed to September 8, 2004, because of timing problems with the Labor Day holiday. Downey made the change and sent the proposed extension agreement back to Casey and Robinson at 5:03 p.m. on June 28, 2004.

Robinson determined that the proposed extension agreement was acceptable to Seaboard. He and Casey engaged Downey in a telephone conference on the matter. At trial, Robinson and Casey testified that during that conference Downey indicated that Seaboard and ACH/MGM had a binding agreement to amend the Option Agreement, thus giving Seaboard the elective rights set forth in the document, depending upon whether the Board approved the extension or not. For his part, Downey denied saying that any binding agreement had been reached between the parties.

Following the telephone conference, Robinson signed his copy of the final revision and now partially executed proposed extension agreement and faxed it to Downey at 5:19 p.m. In the accompanying "Facsimile Cover Sheet," Robinson asked that Downey "[p]lease fax [him] the counter signed [sic] copy from MGM." According to Robinson, Downey indicated during the telephone conference that he would provide the countersigned extension agreement to Seaboard "as soon as he could."

Downey forwarded the proposed extension agreement by e-mail to Redmond and Wright. After noting that it was "a revised version of the letter agreement providing the 6-month extension for the Marina parcel deal," Downey indicated that "[i]n this draft, we have deleted any change to the realty transfer fee obligations . . . and added a requirement for Board consent and a discussion of what happens if the Board does not consent within 30 days."

Downey closed his e-mail with, "[i]f the form is acceptable, please execute and return to me via fax asap. I have received the Buyer's executed document and upon receipt of yours, will be in position to release the $250k deposit to you."

According to Downey, that e-mail was the first time he sent a copy of the final draft of the extension agreement to Redmond and Wright for their consideration.

At that juncture, mindful of Redmond's earlier rebuke for overstepping his contract-formation authority, Wright decided to seek the approval of a higher-up at MGM before signing the extension agreement and returning it to Downey for delivery to Robinson. Accordingly, sometime after 5:00 p.m., on June 28, 2004, Wright sent an e-mail, including a copy of Downey's e-mail and the extension agreement, to Jacobs.

In his e-mail, Wright inquired whether Jacobs was "ok with our signing this extension prior to receipt of board/executive committee approval (even though it has a board approval contingency)." However, because Jacobs was in transit to Las Vegas, Nevada, Wright was unable to contact him for his decision on the matter. Further, Wright left his office at that time and would not have been there when Jacobs arrived in Las Vegas. Accordingly, to accommodate Downey's request for the issuance of a signed extension agreement "via fax asap," Wright signed the extension agreement and left it with his secretary, with instructions to send the document to Downey if Jacobs gave his approval of it.

Thus, at 6:30 p.m. on June 28, 2004, Wright sent an e-mail to Downey, indicating that "[Jacobs'] flight was delayed an hour and a half, but he is due back here in another hour or so. Kathy [Wright's secretary] is holding the signed letter [extension agreement]. If [Jacobs] says 'ok,' I'll have her fax it out to you tonight."

Later that evening, Jacobs arrived in Las Vegas, received Wright's e-mail, and contacted Wright to inform him that they were not going forward with the extension agreement without approval of the Board. Jacobs explained that, in contrast to a one-week extension, the period of time involved was much more substantive, and was initiated at the request of Seaboard. Jacobs personally did not want to grant any extension of the option contract's Due Diligence Date and he thought that it should be considered first by the Committee before ACH/MGM agreed to any extension. Jacobs advised Wright that he and Lanni would discuss the matter the next morning when they met, along with Redmond, at a meeting with Boyd to discuss further development at Renaissance Point near the Borgata casino.

The next day, June 29, 2004, Wright sent an e-mail to Downey, informing him about Jacobs' message and about the upcoming meeting among Jacobs, Lanni, and Redmond at Boyd's offices. Wright noted that "[p]er the message, he [Jacobs] and Terry [Lanni] are not clear as to whether we want to grant the extension. As soon as I hear anything, I will let you know."

That same day, Jacobs, Lanni, and Redmond met with representatives of Boyd to discuss a possible joint venture at Renaissance Point, similar to the Borgata Casino venture between Boyd and MGM in the marina district. At some point, either before or after that meeting, Jacobs and Lanni decided that ACH/MGM would not enter into the extension agreement.

Later that day, Jacobs informed Wright that "[ACH/MGM] is not going to agree to any extensions," and Wright directed his secretary to shred the copy of the extension agreement that he had signed on the prior day.

At some point on June 29, 2004, Rafferty contacted Robinson and informed him that "MGM had decided not to go forward with the Extension Agreement." That evening, Robinson consulted with Casey because, in Robinson's view, Seaboard and ACH/MGM had entered into a binding extension agreement on the prior day.

Meanwhile, Downey and Jacobs conferred with each other and crafted a proposal that Downey would later convey to Seaboard on behalf of ACH/MGM. They considered that the negotiations over the proposed extension agreement had taken time and continued past the bridge agreement's extended Due Diligence Date deadline of 5:00 p.m. on June 28, 2004, and Robinson's "wetlands" and financial concerns raised "real doubt" as to whether Seaboard could make the additional $250,000 payment at 5:00 p.m. on July 1, 2004, as required by the bridge agreement. Accordingly, on June 30, 2004, with Jacobs' authorization, Downey faxed a letter to Casey outlining ACH/MGM's proposal to extend the time for Seaboard to make the necessary additional payment.

In his letter, Downey explicitly stated that ACH/MGM "has determined not to proceed with the six (6) month extension of the Option Agreement." Downey further indicated:

While not acknowledging any obligation to do so, my client [ACH/MGM] has authorized me to offer an extension of the time within which your client [Seaboard] must take the prerequisite steps to exercise the Right under the Option Agreement. Specifically, in recognition of the fact that we spent Friday and Monday negotiating an extension, Buyer [Seaboard] would be granted two (2) days within which to provide the Exercise Notice to Seller. The Exercise Notice would be due in my office on July 2, 2004 by 11:59 a.m. The Additional Option Consideration [of $250,000] would then be due in my office on July 6, 2004 by 11:59 a.m. All other times for performance under the Option Agreement would remain the same.

As is apparent, ACH/MGM's proposal would have allowed Seaboard five more days beyond the time set in the Option Agreement, as modified by the bridge agreement, to make the additional $250,000 payment. However, the proposal was at variance with the thirty-day provision in the Option Agreement because it compelled Seaboard to exercise its option by giving the Exercise Notice sooner than one month from the Due Diligence Date. Downey explained that ACH/MGM required that Seaboard provide its Exercise Notice earlier because it wanted to be sure that Seaboard was committed to completing the purchase before it went to the trouble of granting Seaboard additional time to make the required additional payment.

At some point on June 30, 2004, Casey and Downey had a conversation, during which Casey expressed her "bafflement" at ACH/MGM's refusal to be bound by the extension agreement. Casey indicated to Downey that Seaboard would formally respond to ACH/MGM's proposal later.

The next day, at 11:48 a.m., on July 1, 2004, Downey sent an e-mail to Casey, asking for a "guesstimate" as to when Seaboard would respond to ACH/MGM's proposal. Seaboard's response came at 12:43 p.m. in a fax letter from Casey to Downey, in which Seaboard disagreed with ACH/MGM's position that the extension agreement "is not enforceable." According to Casey's letter, the June 28 "Letter Amendment is a binding and enforceable agreement between the parties." She pointed out: "In reliance on the discussions, representations and actions of you and your client, the Letter Amendment was completed and agreed to by all parties." Casey closed by stating that Seaboard intended to institute litigation, if necessary, in order to enforce its rights under the Option Agreement, as modified by the extension agreement. Casey did not address ACH/MGM's extension proposal of June 30, 2004. At some point that same day, Downey and Casey spoke concerning Seaboard's response to ACH/MGM's proposal. According to Downey, Casey indicated that Seaboard's position was that the extension agreement was binding on the parties and that Seaboard would be "moving forward on that basis."

Seaboard did not make the $250,000 payment due by 5:00 p.m. on July 1, 2004, under the terms of the Option Agreement, as modified by the bridge agreement. At 12:01 a.m. on July 2, 2004, Casey sent an e-mail to Downey, proposing, on behalf of Seaboard, to forego any legal action with respect to the June 28 letter amendment, including any for breach of the covenant of good faith and fair dealing in exchange for ACH/MGM's agreement to enter a "new amendment to the Option Agreement" that changes the Due Diligence Date from June 28 to September 8, 2004. Additionally, Seaboard sought to have its initial $250,000 deposit deemed refundable if Seaboard elected not to proceed with the transaction on the new Due Diligence Date. In all other respects, the Option Agreement was to remain unchanged. In her e-mail, Casey again did not address ACH/MGM's extension proposal of June 30, 2004, but instead closed by indicating: "If you want to discuss this further, please call my office. If your client agrees to this resolution, please prepare the amendment and forward it to me for review."

On July 2, 2004, after reviewing Casey's e-mail and discussing it with Jacobs and Wright, Downey advised Casey that ACH/MGM had rejected her proposal. Later that day, at 4:59 p.m., Downey faxed a letter to Casey, in which he wrote:

As we discussed, Seller [ACH/MGM] has considered your counter-offer of today's date rejecting our July 1, 2004 offer, and has determined to reject same. Seller will not make any further offer, thus our discussions have concluded. I again advise you that the Option Agreement has expired. Accordingly, I have enclosed herewith a check in the amount of $250,000.00, which represents the return of the Initial Option Consideration.

With respect to your letter of July 1, 2004 and your e-mail received this morning, please be advised that Seller categorically denies all claims that the form of letter amendment dated June 28, 2004 [the extension contract] is an enforceable agreement. As you know, Seller determined not to enter into the letter amendment, and neither executed nor delivered the form of letter amendment. No actions of Seller could be construed as anything other than engaging in negotiations. The fact that Buyer [Seaboard] determined to take action anticipating Seller's entry into the letter amendment is of no legal consequence. Finally, inasmuch as we have no agreement, any claims of breach of contract or covenants are meritless.

Seaboard filed its complaint on July 15, 2004.

II.

We address Seaboard's contentions seriatim. Seaboard first contends that Judge Todd erred in concluding that the extension agreement was not a binding contract. Seaboard maintains that Downey's fax of June 28, 5:03 p.m., with the attached extension agreement signed by Robinson, was a binding contract because (a) it was an offer that became a contract when it was accepted by Seaboard; (b) it satisfied the Statute of Frauds, specifically N.J.S.A. 25:1-13; and (c) Redmond and Downey had actual or apparent authority to bind ACH/MGM.

Initially, we note that in reaching his decision, Judge Todd credited Downey's testimony over that given by Robinson and Casey respecting the telephone conference the three had at the time that Robinson signed the proposed extension agreement. He found, contrary to Robinson and Casey's testimony, that Downey had not made any comments during the telephone conversation that would cause Robinson and Casey to believe that he had authority to bind ACH/MGM or that the proposed extension agreement was binding. Matters of credibility are within the exclusive dominion of the fact-finder. State v. Butler, 32 N.J. 166, 196, cert. denied, 362 U.S. 984, 80 S.Ct. 1074, 4 L.Ed. 2d 1019 (1960); see also State v. Locurto, 157 N.J. 463, 474 (1999).

Recognizing this elementary principle, Seaboard challenges the judge's findings as legal conclusions reviewable de novo on appeal. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (holding that "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference").

Relying on the Restatement (Second) of Contracts § 24 (1979), Seaboard asserts that the writing signed by Robinson represented an offer because it "manifest[ed] . . . [a] willingness [on the part of ACH/MGM] to enter into a bargain, so made as to justify [Robinson] in understanding that his assent to that bargain is invited and will conclude [the deal]." However, Seaboard mistakenly references the judge's factual finding as concluding that Robinson had every reason to believe that they were going to be able to proceed under the terms of the extension agreement. Instead, Judge Todd pointed out that, although it was entirely possible that after the telephone conversation with Downey, Robinson and Casey thought it was a "done deal," "it's one thing to say that one feels somewhat comfortable that an arrangement will come into effect and it's another thing to say that one understands that the other party has now been legally bound to an agreement."

In positing the argument that the writing represented an offer, Seaboard asserts that ACH/MGM kept secret and undisclosed its intent not to be bound by the extension agreement until Robinson had signed the writing. Seaboard maintains in its brief that the record is clear that if ACH/MGM truly intended not to be bound by the terms of the 5:03 p.m. writing, absent advance Board approval, that intention was not disclosed to Seaboard or otherwise manifested anywhere in the dealings between the parties.

Seaboard's contention is fundamentally flawed. The Option Agreement, which was sought to be amended by the extension agreement, explicitly provided that it "can only be changed by an agreement in writing signed by both Buyer and Seller." Thus, there was no secret or non-disclosure about ACH/MGM's intent concerning the necessity of its signed approval of an extension agreement as a binding amendment of the Option Agreement. Indeed, the bridge agreement, which extended the due diligence period for one week, was signed by both parties. Robinson's facsimile cover sheet, with the signed proposed extension agreement stated, "Bill, Please fax me the counter signed [sic] copy from MGM," and evidenced his awareness that Downey was not authorized to sign the extension agreement on behalf of ACH/MGM. Indicative of Robinson's understanding is the fact that he did not ask Downey to sign it himself and return the extension agreement.

Generally, "[a]n agreement extending the time to exercise an option is equivalent to a grant of a new option for the extended period." Willow Brook Rec. Ctr., Inc. v. Selle, 96 N.J. Super. 358, 365 (App. Div. 1967), certif. denied, 51 N.J. 187 (1968). "When one party, however, presents a contract for signature to another party, the omission of that other party's signature is a significant factor in determining whether the two parties mutually have reached an agreement." Leodori v. Cigna Corp., 175 N.J. 293, 305, cert. denied, 540 U.S. 938, 124 S.Ct. 74, 157 L.Ed. 2d 250 (2003). Thus, Seaboard's reliance on the Restatement is misplaced, as the record before us demonstrates that Robinson could not have been justified in understanding that his signature alone on the extension agreement constituted a binding contract. Beyond that, Downey's e-mail to Wright referring to the extension agreement as a draft supports Judge Todd's credibility findings. In our view, Judge's Todd's decision that Seaboard's proofs failed to establish that ACH/MGM was bound by the extension agreement is unassailable, both legally and factually.

Seaboard next argues that Judge Todd erred in determining that the Statute of Frauds was not applicable to the writing signed by Wright because Wright did not intend his signature to bind ACH/MGM. In reaching his conclusion, Judge Todd reasoned:

The first inquiry into whether the Statute of Frauds applies relates to the question of whether there was a writing signed on the behalf of [ACH/MGM] that would establish the extension agreement. I am satisfied there isn't. One focus of that inquiry obviously is the fact that Mr. Wright did in fact execute the extension agreement as I described before. My view is that for purposes of the Statute of Frauds that's really a nullity. It wasn't intended to bind [ACH/MGM]. It was not communicated to [Seaboard] in any way whatsoever. I accept Mr. Wright's testimony that he signed the extension agreement as an accommodation. I am satisfied it would be a misreading of the Statute of Frauds to suggest that that statute, that that writing or that signature satisfy its terms.

Seaboard argues that the writing qualified under the Statute of Frauds as an enforceable agreement because it identified the property, the transfer, and transferee and was signed by Wright on behalf of ACH/MGM. In its appellate brief, Seaboard challenges the trial court's finding that "the signed writing [was] a 'nullity,'" because the Statute of Frauds does not contain the requirement of intent. It also argues that the judge's determination that the signed writing was not delivered to Seaboard does not necessarily mean that it failed to satisfy the Statute of Frauds. We need not reach the issue of delivery, because we disagree with Seaboard's contention that intent to be bound is not relevant when applying the Statute of Frauds.

N.J.S.A. 25:1-13 states in its entirety:

An agreement to transfer an interest in real estate or to hold an interest in real estate for the benefit of another shall not be enforceable unless:

a. a description of the real estate sufficient to identify it, the nature of the interest to be transferred, the existence of the agreement and the identity of the transferor and transferee are established in a writing signed by or on behalf of the party against whom enforcement is sought; or

b. a description of the real estate sufficient to identify it, the nature of the interest to be transferred, the existence of the agreement and the identity of the transferor and the transferee are proved by clear and convincing evidence. (Emphasis added.)

The Statute of Frauds was amended to add subsection b permitting proof of an oral contract by clear and convincing evidence. Prior to the amendment, the primary purpose of the Statute of Frauds was "'to avoid the hazards attending the use of uncertain, unreliable and perjured oral testimony.'" Carlsen v. Carlsen, 49 N.J. Super. 130, 135 (App. Div. 1958) (quoting Moses v. Moses, 140 N.J. Eq. 575, 584 (E. & A. 1947)). Both subsection a and b require "the existence of the agreement." Thus, "'the focus of inquiry in a situation involving an agreement for the sale of an interest in real estate . . . should be whether an agreement has been made between the parties by which they intend to be bound.'" Morton v. 4 Orchard Land Trust, 180 N.J. 118, 126 (2004) (quoting New Jersey Law Revision Commission, Report and Recommendations Relating to Writing Requirements for Real Estate Transactions, Brokerage Agreements and Suretyship Agreements 2 (1991)) (alteration in original).

Generally, our courts will "consider all of the relevant evidence that will assist [them] in determining the intent and meaning of [a] contract." Conway v. 287 Corp. Ctr. Assocs., 187 N.J. 259, 269 (2006).

"This is so even when the contract on its face is free from ambiguity. The polestar of construction is the intention of the parties to the contract as revealed by the language used, taken as an entirety; and, in the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded." [Ibid. (quoting Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301-02 (1953)).]

When examining the extrinsic evidence to interpret a contract, a court may consider "'the particular contractual provision, an overview of all the terms, the circumstances leading up to the formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties' conduct.'" Ibid. (quoting Kearny PBA Local #21 v. Town of Kearny, 81 N.J. 208, 221 (1979)).

Judge Todd considered and credited the extrinsic evidence, specifically the circumstances of Wright's signature and subsequent direction to his secretary to shred the writing, in determining that the signed writing was not intended to bind ACH/MGM. He accepted as credible Wright's testimony that it is "common practice in commercial transactions due to scheduling and for expediency purposes that a document may be signed and held but not delivered and it's not deemed to be legally effective because it's not delivered." It was in that vein that he addressed subsection a of the Statute of Frauds and determined the extension agreement, as signed by Wright, was "really a nullity" because the proofs failed to demonstrate the existence of the agreement, that is to say, the intent to be bound.

That said, there was also no proof, much less clear and convincing evidence, that the parties intended to enter into an agreement not signed by ACH/MGM. The surrounding circumstances, most poignantly, Robinson's, Casey's, and Downey's e-mails, all reference the need and expectation of a signature on behalf of ACH/MGM, as did the Option Agreement itself and previous dealings. See Morton, supra, 180 N.J. at 130; see also Prant v. Sterling, 332 N.J. Super. 369, 378 (Ch. Div. 1999), aff'd o.b., 332 N.J. Super. 292 (App. Div.), certif. denied, 166 N.J. 606 (2000). Judge Todd correctly noted the lack of such proof, as required by subsection b of the Statute of Frauds, in passing on the issue.

We focus next on Seaboard's third argument that the writing signed by Robinson was a binding contract because Redmond and Downey had actual or apparent authority to bind ACH/MGM. Discussing the concept of actual authority, the Court in Carlson v. Hannah, 6 N.J. 202, 212 (1951), pointed out that an agent's actual authority may be express or implied. Implied authority may be inferred from the nature or extent of the function to be performed, the general course of conducting the business, or from the particular circumstances of the case. Implication is but another term for meaning and intention; express authority given to an agent includes by implication, whether the agency be general or special, unless restricted to the contrary, all such powers as are proper and necessary as a means of effectuating the purposes for which the agency was created.

Thus, for liability to result from an agent's exercise of actual authority on behalf of the principal, the agent must have acted in conformance with powers expressly given to the agent by the principal or in accordance with powers that impliedly flow from the powers so expressly given.

In contrast, "[a]pparent authority imposes liability, not as a result of an actual contractual relationship, but because of actions by a principal which have misled a third party into believing that a relationship of authority does, in fact, exist." Wilzig v. Sisselman, 209 N.J. Super. 25, 35 (App. Div.), certif. denied, 104 N.J. 417 (1986). Thus, "'apparent authority . . . is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.'" Jennings v. Reed, 381 N.J. Super. 217, 231 (App. Div. 2005) (quoting Restatement (Second) of Agency § 27 (1958)) (alteration in original). The "conclusion that a party has acted with apparent authority must rest upon the actions of the principal, not the alleged agent." Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 497 (App. Div.), certif. denied, 177 N.J. 224 (2003). Where parol evidence is used to prove an agent's authority to bind, a plaintiff's evidence must be "'clear and decisive' on the point." Id. at. 496 (quoting O'Reilly v. Keim, 54 N.J. Eq. 418, 422 (E. & A. 1896)).

Judge Todd found that there was nothing in the record to indicate factually that Downey, as outside transactional counsel, had any authority to bind ACH/MGM. As previously noted, he credited Downey's testimony over Robinson's and Casey's respecting the critical telephone call concerning whether or not the writing signed by Robinson was binding without further approval by ACH/MGM. Beyond that, Downey's e-mail responses, specifically, (1) June 14, 2004, to Robinson, indicating that he would "pass it on," referring to Robinson's June 13 letter to Rafferty requesting a 120-day extension, which resulted in the bridge agreement; (2) June 25, 2004, to Casey, stating, "[h]ere's my first cut at it. . . . My client has not reviewed this document, so I must reserve the right to make such changes as I am directed"; and (3) June 28, 2004, to Redmond and Wright, referring to the proposed extension agreement as a "draft" for their review and acceptance, support the judge's findings that Downey was a scrivener/transactional attorney, not a decision maker with either actual or apparent authority. So too, Robinson's June 28, 2004, letters to Rafferty indicating, "[i]f your client finds these terms acceptable, please have Mr. Downey make the necessary changes to the agreement so that we may execute same by the deadline of 5:00," as well as his facsimile cover sheet to Downey asking for a countersigned copy of the extension agreement "from MGM," all support the judge's finding that Seaboard had no reason to believe that Downey had apparent authority to bind ACH/MGM. Accordingly, there was no proof that Downey had either actual or apparent authority.

In recognition that the issue of Redmond's actual and apparent authority was "a harder case," Judge Todd acknowledged that Redmond had signed both the Option Agreement and bridge agreement on behalf of ACH/MGM.*fn5 However, the judge accepted Redmond's testimony concerning the Management Committee's rebuke of his actions in signing the Option Agreement without prior authorization and his explanation of the "de minimis" nature of the one-week bridge agreement to find that he did not have actual authority.

As to the contention that Redmond had apparent authority, Judge Todd found that there was nothing in the record "to suggest that anyone above Redmond . . . did anything to specifically suggest to [Seaboard] . . . that Mr. Redmond would have the authority to bind [ACH/MGM]." After reviewing the record, we are in accord with the judge's findings. Indeed, Downey's 3:44 p.m., June 28 e-mail to Casey advising that any amendment must be approved and indicating that he would "explain later" provides added inferential support to the judge's findings. Seaboard's argument, as enunciated in its appellate brief, that "[n]othing in ACH/MGM's conduct suggest[s] that Redmond and Downey had suddenly lost their authority to negotiate agreements and extend offers" does not address the issue of whether ACH/MGM suggested or misled Seaboard into believing that Redmond could bind it on the extension agreement.

Simply stated, Judge Todd appropriately considered the issues of fact bearing upon the principles of contractual offer and acceptance, the Statute of Frauds, and actual or apparent authority. His determination that the proposed extension agreement was not binding under those theories was supported by sufficient credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).

III.

We next address Seaboard's contention that Judge Todd erred in concluding that ACH/MGM properly terminated the Option Agreement. Seaboard argues: (a) ACH/MGM's justifications for terminating the Option Agreement were false under the Option Agreement, as modified by the bridge agreement, because Seaboard was not required to provide its Exercise Notice until July 28, 2004 (thirty days after the Due Diligence Date); (b) ACH/MGM was equitably estopped from relying on the non-tender of the additional $250,000 as a basis for terminating the Option Agreement; and (c) ACH/MGM's termination of the Option Agreement based on non-tender of the additional $250,000 amounted to a breach of the covenant of good faith and fair dealing.

Seaboard asked in Interrogatory number 33 for ACH/MGM to "[s]et forth the basis of your position in your July 2 letter that the 'Option Agreement has expired.'" In its answer, ACH/MGM provided the following concerning the events that took place following execution of the bridge agreement:

Additional negotiations ensued regarding further amendments to the Option Agreement . . . . Those negotiations did not result in any further agreement. By letter dated June 30, 2004, [Downey] advised Seaboard's attorney . . . that [ACH/MGM] had elected not to proceed with the 6 month extension that the parties had been negotiating. In that letter, Mr. Downey, while noting that [ACH/MGM] was under no obligation to do so, offered an extension of time to [Seaboard] within which it could exercise the right under the Option Agreement until July 2, at 11:59 [a.m.]. [Seaboard] did not accept the offer and failed to deliver the Exercise Notice required under the Option Agreement. Accordingly, the Option Agreement expired.

Seaboard contends that the above purported reason, the failure to deliver the Exercise Notice before the expiration period, is disingenuous because the Option Agreement specified that the Exercise Notice was not due until thirty days after the Due Diligence Date. At oral argument on the parties' cross-motions for summary judgment, the judge pointed out, and counsel for ACH/MGM agreed, that the failure to pay the additional $250,000 within three days following the Due Diligence Date would be a breach of the Option Agreement. In delivering his opinion, Judge Todd pointed out that, although not explicit, Downey's letter of July 2, 2004, conveyed the message that "you are required to pay the $250,000 by July 1st, you didn't do that, that's a material breach, we have a right to terminate and we've terminated."

Seaboard asserts that the judge's finding that the termination was based upon non-payment of the $250,000 is not justified because ACH/MGM's answer to Interrogatory 33 suggests something different. The proof established that the Option Agreement, as modified, extended the Due Diligence Date from June 21 to June 28, which necessitated the additional payment within three days, or by July 1. The Option Agreement, however, also made time of the essence. Although Robinson testified that he really did not understand the term "time of the essence," Judge Todd discredited his remarks, pointing out Robinson's "substantial experience in handling real estate." Moreover, at the time Seaboard entered the bridge agreement, Robinson was advised by his own counsel by e-mail on June 21 that the failure to pay the additional $250,000 due under the Option Agreement in a timely manner would constitute a breach. The letter of July 2 clearly indicated that ACH/MGM considered the Option Agreement terminated.

Downey's letter of June 30 offered an accommodation for payment to July 6, indicating that ACH/MGM had authorized him to "offer an extension of the time within which your client must take the prerequisite steps to exercise the Right under the Option Agreement." Seaboard did not act upon the offer to extend the period of time for payment. Ordinarily, an option holder must exercise the option "'in strict accordance' with the terms and time requirements of the contract." Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 223 (2005) (quoting State By and Through Adams v. N.J. Zinc Co., 40 N.J. 560, 576 (1963)). The deadlines in an option contract are generally subject to "time of the essence." Because the option holder is "free to accept or reject" the property while "the property owner is bound by an irrevocable offer to sell," our Court has required the option holder "to adhere strictly to the terms of the contract." Ibid. (quotations omitted). Thus, if the option holder does "not abide by the strict terms governing the exercise of the option" it is subject to suffering "the consequences of its default." Ibid.

The Option Agreement clearly mandated payment of the additional $250,000 within three days of the Due Diligence Date. Accordingly, Judge Todd appropriately determined that the absence of Seaboard's acceptance of the July 6 offer and the failure to pay the required additional payment amount to a material breach warranting termination of the Option Agreement, notwithstanding Downey's mistaken or inappropriate reference to the delivery of the Exercise Notice.

We move on to Seaboard's contention that ACH/MGM was equitably estopped from relying on the non-tender of the additional $250,000. Seaboard asserts two theories. First, it contends that, by negotiating right through the June 28 Due Diligence Date, ACH/MGM induced it to disregard the July 1 requirement for payment of the additional money, by sending what Seaboard viewed was a valid written extension agreement confirming an August 6, 2004, payment deadline.

The general principles are well settled. "'Estoppel is an equitable doctrine, founded in the fundamental duty of fair dealing imposed by law, that prohibits a party from repudiating a previously taken position when another party has relied on that position to his detriment.'" State v. Kouvatas, 292 N.J. Super. 417, 425 (App. Div. 1996) (quoting Hous. Auth. of Atl. City v. State, 188 N.J. Super. 145, 149 (Ch. Div. 1983), aff'd, 193 N.J. Super. 176 (App. Div. 1984)); see also Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1999). "[O]ne may, by voluntary conduct, be precluded from taking a course of action that would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct." Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493, 503-04 (1955). "The doing or forbearing to do an act induced by the conduct of another may work an estoppel to avoid wrong or injury ensuing from reasonable reliance upon such conduct." Id. at 504.

We dispose of Seaboard's first theory by reiterating what we have already pointed out, specifically, that there was no binding extension agreement and there was a lack of credible evidence establishing that Seaboard believed that ACH/MGM was legally bound until signed by someone with authority. To be sure, Robinson testified that Rafferty informed him on June 29, two days prior to the required due date for the additional payment, that ACH/MGM had decided not to enter the extension agreement. Despite those circumstances, Seaboard proceeded on the basis that the extension agreement was viable as to the required payment. Under those circumstances, there could be no reasonable reliance on the part of Seaboard to induce it to believe that the August 6 date for concluding its due diligence in accordance with the proposed extension agreement was still viable.

Next, Seaboard argues that ACH/MGM is estopped from relying on non-tender of the additional payment in light of its June 30 offer to extend the deadline for payment of the additional $250,000 to July 6, based upon the recognition of the fact that the parties spent Friday and Monday negotiating the unsuccessful extension agreement. It claims that ACH/MGM pulled the rug out, notwithstanding Casey's involvement in settlement discussions on behalf of Seaboard, during which ACH/MGM at no time indicated that Seaboard would not have until July 6 to tender the additional consideration, or make a demand that it pay the consideration be made by the deadline prescribed in the Option Agreement. Seaboard also complains that the June 30 letter did not offer a sufficient accommodation because, in part, it curtailed its right under the Option Agreement by shortening the period under which it had to deliver the Exercise Notice.

Rejecting those same arguments, Judge Todd premised his conclusion primarily on Seaboard's failure to request an accommodation, finding:

One, remember that [Seaboard] contributed to the problem. It was [Seaboard] that requested additional time, first the time from June 21st to June 28, then the request for additional time even through the letter that was sent out on June 28 itself. [Seaboard] didn't have to do that. [Seaboard] could have stood on the option agreement from the very beginning and exercised its rights if it wanted to. So [Seaboard] has a substantial role, one in giving rise to the dispute, and second in giving rise to a dispute that created this need for an accommodation. It was those negotiations that continued through June 28th that gave rise to this. And [Seaboard] has to accept some responsibility for that. Second, [Seaboard], for better or for worse, was sending out all sorts of signals that there were a variety of circumstances which would lead it not to proceed. Those were the things that [Seaboard] decided to do in trying to negotiate the additional extension. So it was giving [ACH/MGM] signals that it might not want to proceed. Just look at Mr. Robinson's letters of June 13th and June 28. Next, both of the parties had experienced transactional counsel.

There is no reason that Ms. Casey would not have been able, if she wanted to focus on the issue, to focus on the question of the ability to proceed under the option agreement itself. It wasn't a particularly difficult problem. Next, this goes back to my reference to the case law dealing with option agreements, there's a recognition that in the terms of the cases time is of the essence. That can be translated into a general recognition that the person that holds the option has some special obligation in terms of insuring that the matter proceeds, which I think translates into[,] in this case[,] suggesting that [Seaboard] is the one that should have requested the accommodation. And finally there's the other circumstance that I've already alluded to which is factually based, and it is that there is simply no indication to me through Ms. Casey's testimony that [Seaboard] ever really considered proceeding on the option agreement alone. Now if that's correct I suppose I could speculate that if [Seaboard] wasn't focusing on that, wasn't intending on proceeding on the option agreement alone[,] the types of reasonable accommodations that I suggested might have been appropriate wouldn't have been acceptable to [Seaboard]. Concentrating on Judge Todd's reference to the nonexistence of any legal framework, Seaboard asserts that the judge fashioned an improper and unprecedented equitable remedy in requiring it to request a reasonable accommodation. However, it is well recognized that "[c]courts of equity are not restricted to issue only known remedies." Banach v. Cannon, 356 N.J. Super. 342, 361 (Ch. Div. 2002). Rather, [e]quitable remedies are distinguished for their flexibility, their unlimited variety, their adaptability to circumstances, and the natural rules which govern their use. There is in fact no limit to their variety and application; the court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every case and the complex relations of all the parties.

A lack of precedent, or mere novelty in incident, is no obstacle to the award of equitable relief, if the case presented is referable to an established head of equity jurisprudence - either of primary right or of remedy merely. [Sears, Roebuck & Co. v. Camp, 124 N.J. Eq. 403, 411-12 (E. & A. 1938) (citations and quotations omitted).]

Judge Todd's finding and legal conclusions comport with the record.

The June 30 rejection of the extension agreement offered to amend the Option Agreement so as to move the Exercise Notice date forward to July 2, 2004, and move back the date for payment of the additional $250,000 to July 6, 2004. Seaboard's assertion that it relied on the offer that it would have until July 6 before having to make payment of the additional $250,000 is not borne out by the record. On cross-examination, Robinson acknowledged that he recognized that Downey's letter was an "offer" and conceded that Casey's response did not address that offer. Moreover, Casey's July 2, 2004, e-mail offer to settle bore no reasonable relationship to ACH/MGM's June 30 proposal. Instead of addressing ACH/MGM's June 30 offer, Casey's response either asserted that the June 28 letter extension was viable and binding, or sought an extension for payment of the additional $250,000 beyond the formerly proposed August 6 date to September 8, the same date previously set in the June 28 letter agreement as the closing date in the event the Board failed to approve the proposed amendment agreement by July 26. On cross-examination, Casey conceded that neither her July 1 fax nor her July 2 e-mail response on behalf of Seaboard addressed, nor was it intended to address, ACH/MGM's June 30 proposal. Indeed, she acknowledged as true her prior deposition testimony that "[i]f there was ever any discussion, it was an instruction by [her] client to not respond to [the June 30] offer."

Robinson testified that he did not believe the Exercise Notice was tied to the letter's proposed July 6 extension date and he knew that the Exercise Notice was not due under the Option Agreement at the time referenced in the letter. Nevertheless, Seaboard did not address the July 6 date nor did it communicate its position that the new Exercise Notice date did not comply with the terms of the Option Agreement. Accordingly, the circumstances belie Seaboard's contention that it relied upon the date of July 6, 2004, set out in Downey's letter, as the date on which Seaboard could make its payment of $250,000. As such, we agree with Judge Todd's conclusion that Seaboard is precluded from benefiting from the application of equitable estoppel.

Likewise, Seaboard's failure to respond to the shortened Exercise Notice provision in the June 30 letter, despite its knowledge that it did not comport with the Option Agreement, negates its assertion that the June 30 letter amounted to an insufficient extension offer. Under the circumstances, Judge Todd appropriately reasoned that the equities required Seaboard to request an accommodation from ACH/MGM. Seaboard could very easily have responded by pointing out that it would not agree to amend the Option Agreement by accepting a shortened Exercise Notice period and, at the same time, accept the July 6 date for payment, subject to further negotiations. It did not. The judge correctly found that ACH/MGM should not be faulted for disregarding the extended payment proposed in its June 30 offer, in view of Seaboard's admitted failure to specifically address, accept, or act upon that offer during the critical period between June 30 and July 2.

Seaboard bases its third and final argument that Judge Todd erred in determining that ACH/MGM properly terminated the Option Agreement for non-tender of the additional $250,000 on the contention that ACH/MGM breached its implied covenant of good-faith dealing. "Every party to a contract, including one with an option provision, is bound by a duty of good faith and fair dealing in both the performance and enforcement of the contract." Brunswick Hills, supra, 182 N.J. at 224. The good-faith covenant "calls for parties to a contract to refrain from doing 'anything which will have the effect of destroying or injuring the right of the other party to receive' the benefits of the contract." Id. at 224-25 (quoting Palisades Props., Inc. v. Brunetti, 44 N.J. 117, 130 (1965)).

Proof of bad motive or intention is vital to an action for breach of the covenant. The party claiming a breach of the covenant of good faith and fair dealing must provide evidence sufficient to support a conclusion that the party alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the bargain originally intended by the parties. As a general rule, subterfuges and evasions in the performance of a contract violate the covenant of good faith and fair dealing, even though the actor believes his conduct to be justified. [Id. at 225 (citations and quotations omitted).]

In his comprehensive decision, Judge Todd determined that ACH/MGM had not engaged in any misleading conduct and had not acted in bad faith or with any improper motive. Seaboard contends that ACH/MGM "terminated the Option [A]greement in bad faith" and that the trial court erred in concluding otherwise. Specifically, Seaboard asserts that the trial court reached the wrong conclusion because it ignored a key, undisputed fact: after the negotiation of the [e]xtension agreement, ACH/MGM never demanded payment of the additional $250,000 consideration. To the contrary, it told Seaboard it had additional time (until at least July 6, if not August 6[, 2004]) to pay the additional money, but then terminated the agreement before that time had passed.

Seaboard's argument is essentially the same as its estoppel argument. It again argues that it was "lulled . . . into believing it was not required under the Option [A]greement to tender an additional $250,000 by July 1, 2004." As we previously pointed out, ACH/MGM was not required to "demand" that Seaboard make the $250,000 payment. Seaboard had an obligation under the Option Agreement to make the payment and had a duty as an option holder to adhere strictly to the payment terms of the contract. Id. at 223.

Moreover, Seaboard was not "told" by ACH/MGM that it had until July 6 or August 6, 2004, to make the additional $250,000 payment. Rather, in Downey's letter of June 30, 2004, ACH/MGM offered to extend the due date until July 6, 2004. However, Seaboard essentially ignored Downey's offer, thus permitting ACH/MGM to impose the Option Agreement deadline. The August 6, 2004, date was explicitly rejected when the Board failed to authorize the extension agreement as advised in Downey's June 30 letter. ACH/MGM did not engage in improper conduct by refusing to recognize a payment-due date set forth in a non-binding agreement.

IV.

Finally, we address Seaboard's contention that Judge Todd erred in denying its motion to recuse himself from the case. During discovery, ACH/MGM withheld revealing Wright's June 28 e-mail (Document 39) to Downey, in which he indicated that his secretary was holding the signed letter until Jacobs gave his approval. ACH/MGM claimed that the e-mail was privileged. In January 2006, Seaboard moved to compel production of certain privileged matters. After conducting his in camera review, Judge Todd wrote to the parties' counsel and advised that he had some concerns over Document 39 as to with the issue of the extent of Downey's authority and whether it was subject to prior discovery. He advised that it would be necessary for him to speak with ACH/MGM's counsel either at argument or in some other confidential setting. He also advised that ACH/MGM's counsel called him regarding another document. During a later telephone conference with both parties' counsel, Judge Todd again raised concern about Document 39 and discussed Seaboard's counsel's request for a discovery master. The judge denied the request.

On January 26, 2006, ACH/MGM sent Judge Todd the first ex parte letter and supporting documents setting forth its contentions regarding the privileged documents. Subsequently, when the parties filed cross-motions for summary judgment, the judge became aware that ACH/MGM's motion papers, indicating it had not executed the extension agreement, were problematic. He advised ACH/MGM's counsel to provide him with another ex parte letter if his client continued to take the position that Document 39 was not discoverable. After reviewing a second ex parte letter, dated March 14, 2006, the judge held a telephone conference with both parties' counsel and ordered ACH/MGM to produce Document 39. We denied ACH/MGM's application for leave to appeal. Later, the judge ordered ACH/MGM's counsel to provide Seaboard's attorney with copies of the two ex parte letters.

On October 10, 2006, Seaboard's counsel sent the judge a letter requesting that he recuse himself, followed by a motion based upon receipt of the ex parte letters of January 26 and March 14. In a comprehensive, well reasoned, forty-eight page decision rendered from the bench, Judge Todd addressed all of Seaboard's contentions respecting his alleged partiality, and denied its motion. We, thereafter, denied Seaboard's application for emergent appeal.

In his opinion, Judge Todd discussed Seaboard's assertion regarding the inappropriateness of ACH/MGM's counsel's two letters as ex parte communications, noting the court's concerns that Wright's e-mail could only be addressed by ACH/MGM's counsel. The judge pointed out that he had tried to elicit that information at an open hearing that included Seaboard's counsel, but the task of keeping the content of the e-mail secret made any meaningful discussion impossible. Additionally, Judge Todd did not believe that the letters were actually ex parte communications because Seaboard had notice that they were being sent.

Judge Todd concluded that he had done nothing inappropriate in requesting and reading counsel's letters in order to obtain the information required to determine whether Wright's e-mail should be disclosed, despite ACH/MGM's claim of attorney-client privilege. He determined that his decision to have the letters sent was justified in order to obtain the information he needed and Seaboard had adequate notice of his determination.

Addressing Seaboard's assertion that the trial court's comment, that Wright's e-mail suggested that Downey did not have any authority to enter into a contract on behalf of ACH/MGM, suggested bias or prejudgment, the judge indicated that he had not made a determination of that issue at that time, but had merely remarked that a reasonable person could have arrived at that conclusion based on the e-mail. The judge explicitly rejected Seaboard's argument that he had fixed his opinion regarding Downey's lack of authority, indicating the comment did not "bear on [his] ability to be impartial" in deciding the case.

Addressing Seaboard's assertion that ACH/MGM's counsel and witnesses had engaged in fraudulent and misleading conduct by indicating repeatedly that the extension agreement had not been signed by any ACH/MGM employee, Judge Todd essentially reasoned that the conduct could well have been the result of innocent misstatements, faulty memories, or an unconscious mental coupling of the necessity for signing and delivering the document. Recognizing that some persons might conclude that ACH/MGM had tried to mislead Seaboard, Judge Todd found that he remained "in an entirely appropriate position to assess those arguments if they're advanced at a trial or for that matter in other proceedings outside the trial."

Addressing Seaboard's concern that he appeared to have contravened judicial ethics requirements because he did not refer ACH/MGM's counsel to an ethics body, Judge Todd reasoned again that counsel's remarks and writings concerning the signing of Wright's e-mail were not necessarily dishonest. Instead, counsel may merely have been mistaken. Thus, there was no need to refer counsel to an ethics body for discipline. He then correctly pointed out that the issue was not whether counsel did anything to mislead him or cause him to refer counsel to the ethics committee, rather the inquiry was whether, based upon what had been presented, he could reasonably be viewed to be less than impartial or fair.

Judge Todd rejected, as completely unfounded and unreasonable, Seaboard's claim that remarks made by him in earlier proceedings were indicative that he somehow participated in what Seaboard asserted were misrepresentations on the part of ACH/MGM's counsel.

Rule 1:12-1(f) provides that a judge shall be disqualified from sitting on a matter if "there is any . . . reason which might preclude a fair and unbiased hearing and judgment, or which might reasonably lead counsel or the parties to believe so." Motions for recusal are entrusted to the sound discretion of the trial judge whose recusal is sought. State v. Marshall, 148 N.J. 89, 275-276, cert. denied, 522 U.S. 850, 118 S.Ct. 140, 139 L.Ed. 2d 88 (1997); Panitch v. Panitch, 339 N.J. Super. 63, 66 (App. Div. 2001). "Moreover, judges are not free to err on the side of caution; it is improper for a court to recuse itself unless the factual bases for its disqualification are shown by the movant to be true or are already known by the court." Marshall, supra, 148 N.J. at 276. In the absence of evidence that the trial judge's continuance might preclude a fair and unbiased hearing or judgment, recusal would be improper. Clawans v. Schakat, 49 N.J. Super. 415, 420 (App. Div.), certif. denied, 27 N.J. 156 (1958).

It is entirely proper for a trial judge to review material in camera, and consider the reasons for advocating the privilege. See Seacoast Builders Corp. v. Rutgers, 358 N.J. Super. 524, 542 (App. Div. 2003). To be sure, a judge is entitled to a factual presentation and legal argument supporting the claim of privilege. Id. at 548. Further, a judge is entirely capable of listening to arguments of counsel without otherwise being influenced in ultimate findings of fact and conclusions of law.

Rule 4:10-2(e)(1) requires that a party asserting a privilege produce a privilege log that is served on adverse counsel without revealing the privileged document. At the point in time that he requested counsel's January and March letters, Judge Todd had already determined that, as Assistant General Counsel, Wright's e-mail was subject to the protection of the attorney-client privilege. His request was aimed at eliciting ACH/MGM's legal position as to why the privilege should not be pierced based upon the existence of the relevant and material issue of whether Wright was authorized to bind his employer. See In re Kozlov, 79 N.J. 232, 243-44 (1979). Under those circumstances, we find no justifiable reason for him have recused himself based upon his in camera reading of either of counsel's letters or, for that matter, his review of Document 39. At the time Seaboard requested a discovery master, it was aware of the limited number of documents claimed to be privileged by ACH/MGM, as well as the judge's need to view them in camera, along with counsel's argument respecting the claimed privilege. Seaboard never objected to the procedure suggested by the judge. Considering the limited number of documents, there was no need for a discovery master. Beyond that, Seaboard ultimately prevailed in obtaining Document 39, as well as counsel's letters.

Finally, our canvassing of the entire record, including both the January 26 and March 14 letters, convinces us that there was no clear factual basis to support Seaboard's request for recusal. Absent such a basis, it cannot be said that Judge Todd abused his discretion by denying Seaboard's recusal motion. Hundred E. Credit Corp. v. Eric Schuster Corp., 212 N.J. Super. 350, 358 (App. Div.), certif. denied, 107 N.J. 60 (1986). We are satisfied that Judge Todd fully and appropriately addressed all the recusal issues raised. We see no reason to intervene.

Affirmed.


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