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LaCorte Agency, LLC v. C&L Developers


July 3, 2008


On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-3712-06.

Per curiam.


Submitted April 2, 2008

Before Judges Wefing and R. B. Coleman.

Defendants third-party plaintiffs C&L Developers, Inc. (C&L) and Sal Catania (Catania)*fn1 appeal from a February 16, 2007 order of the Superior Court, Law Division, Passaic County, denying their motion for the release of funds placed in escrow pursuant to an agreement between defendants and plaintiff LaCorte Agency, LLC (LaCorte), as assignee of Mike LaCorte Agency. After reviewing the record in light of the contentions advanced on appeal, we reverse.

C&L is a developer that built eight houses on a tract of land in Clifton. In July 2002, C&L entered into an exclusive listing agreement with LaCorte, a company engaged in the business of selling real properties. In accordance with the agreement, LaCorte sold seven of the eight homes and received a commission for each sale. In May 2006, C&L entered into a listing agreement with Weichert Realtors (Weichert) for the marketing and sale of the remaining house. The last house went under contract in August 2006 and title closed in December 2006. LaCorte did not receive a commission. This prompted LaCorte to file a lis pendens and a complaint, alleging that C&L breached the parties' contract, C&L was unjustly enriched and that Catania maliciously interfered with LaCorte's contractual rights. On October 2, 2006, C&L filed a counterclaim against LaCorte and a third-party complaint against Mike LaCorte, individually.

On November 10, 2006, C&L and LaCorte entered into an agreement (the Agreement) for LaCorte's discharge of the lis pendens in consideration for a portion of the proceeds of the sale of the property to be held in escrow, pending litigation concerning the entitlement to the commission. Specifically, the Agreement provided:

2. Deposit of Funds. In accordance with the terms of the Agreement between the parties, commensurate with the closing of title, the sum of Thirty-Five Thousand Dollars ($35,000.00) shall be deposited with the Escrow Agent to serve as security for the payment of any sales commission or other fees and costs ultimately found to be due to plaintiff on the complaint.

3. Termination of Escrow. The escrow shall terminate in full upon payment of any settlement or judgment or pursuant to an order of a court of competent jurisdiction. The Escrow Agent shall thereafter forthwith deliver to defendants [C&L and Catania], their designee, or in the case of a court order, to the party therein specified, all sums held in escrow.

On November 29, 2006, LaCorte, as a third-party defendant and plaintiff, filed a fourth-party complaint against Weichert and an entity named Gi Li. In an order dated December 1, 2006, the court instructed LaCorte to discharge the lis pendens, awarded counsel fees to defendants for having to make a motion to discharge the lis pendens and dismissed LaCorte's complaint as to Catania, individually.

Thereafter, C&L moved for the release of the escrowed funds. On February 16, 2007, the court entered an order denying LaCorte's motion, citing paragraphs 2 and 3 of the Agreement. On April 24, 2007, the court entered an order granting C&L's motion for summary judgment, dismissing the remaining counts of LaCorte's original complaint. In the same order, the court again denied C&L's request that the escrowed funds be released. This order was accompanied by a letter opinion of the same date.

On May 1, 2007, C&L filed a motion for reconsideration of the April 24, 2007 order. That motion, though unopposed, was denied. Thereafter, we granted C&L's motion for leave to appeal.

On appeal, C&L contends that either: (1) the trial judge wrongfully denied the motion because he did not realize that the case against Catania had been denied by a separate motion the previous year, and he believed that the case against Catania was still viable; or (2) the trial judge erred by wrongfully interpreting the Agreement as establishing a general fund for the satisfaction of any judgment obtained by C&L against any party to the litigation. LaCorte, Weichert and Gi Li have not submitted briefs on appeal.

"Interpretation and construction of a contract is a matter of law for the court subject to de novo review." Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998); see also Bradford v. Kupper Assoc., 283 N.J. Super. 556, 583 (App. Div. 1995), certif. denied, 144 N.J. 586 (1996) ("The construction of a contract such as the one before us is a matter of law.").

"Our obligation when interpreting contractual provisions is clear. First and foremost, 'fundamental canons of contract construction require that we examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and surrounding circumstances.'" State Troopers Fraternal Ass'n v. New Jersey, 149 N.J. 38, 47 (1997).

"Generally, [a court] determine[s] a written agreement's validity by considering the intentions of the parties as reflected in the four corners of the written instrument." Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003). "It is not the real intent but the intent expressed or apparent in the writing that controls." Id. at 300 (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 135 (2001)). "[I]t is not the function of the court to make a better contract for the parties, or to supply terms that have not been agreed upon." Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999).

Applying these general principles of contract interpretation to the Agreement, we discern that the purpose of the Agreement was to provide C&L, and C&L only, with security in lieu of the lis pendens. First, the Agreement was negotiated and entered into by and between LaCorte and C&L only. The consideration exchanged in the Agreement, discharge of the lis pendens in return for proceeds in escrow, is unique to the two parties that consummated the contract: LaCorte and C&L.

The plain language of the Agreement supports such a conclusion: "Thirty-Five Thousand Dollars [] shall be deposited . . . to serve as security for the payment of any sales commission . . . ultimately found to be due to plaintiff [LaCorte] on the complaint." The plain language of the contract also reinforces this interpretation and makes it unrealistic for us to find that LaCorte or C&L contemplated that the Agreement was for the benefit of potential litigants that were not parties to the Agreement. The complaint referred to in Paragraph 2 of the Agreement can only be the complaint filed by LaCorte against C&L. It is a separate and distinct pleading from the subsequent third-party complaint filed by LaCorte against Weichert and Gi Li, which did not exist at the time the parties entered the Agreement. Thus, the Agreement is not meant to satisfy any ultimate judgment; instead, it was intended only as security for the discharge and replacement of the lis pendens.

The surrounding circumstances at the time the parties entered the contract further support our determination that the Agreement was not intended to benefit anyone other than the parties to the contract. When LaCorte and C&L signed the Agreement, they were the only two parties to the litigation. The pleading against Weichert and Gi Li had not yet been filed. Thus, those newly added parties to the litigation were not parties to the escrow agreement.

Finally, and perhaps the most significant reason that the funds should be released, is the absence of any opposition. LaCorte, Weichert and Gi Li all declined or failed to submit briefs to this court. LaCorte's indifference to this matter strongly suggests that the Agreement was in fact made solely in connection with the litigation between it and C&L. Similarly, Weichert's and Gi Li's decisions not to submit briefs in opposition to the appeal reflect their belief that they do not have a claim or right to the escrowed funds.

Putting it all together, the Agreement was not for the satisfaction of the ultimate judgment but rather for the benefit of LaCorte and C&L. The complaint against LaCorte has been dismissed in its entirety and the lis pendens has been discharged. Therefore, the trial erred when it refused to release the escrowed funds. The trial court's order is reversed and the matter is remanded for the entry of an order releasing the escrow deposit to C&L.

Reversed and remanded.

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