July 16, 2008
NISSAN PERLA, PLAINTIFF-RESPONDENT,
G. HYUNG K. JUNG & MAN NIM, DEFENDANTS-APPELLANTS.
On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-61-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 14, 2008
Before Judges Collester and C.L. Miniman.
Defendants G.H.K. Jung and Man Nim, husband and wife, appeal the entry of summary judgment in favor of plaintiff Nissan Perla in the amount of $300,000, which represented his initial deposit under a contract for the purchase of real property owned by defendants located at 2169 Lemoine Avenue in the City of Fort Lee.
Plaintiff and defendant had known each other for nearly twenty years through their business dealings in the diamond industry when they entered into negotiations in 2005 for the purchase of defendant's Fort Lee property. Plaintiff's intention was to construct a building with eighty apartment units. However, since the property was zoned as a C-3 Limited Business District that did not permit such a use, re-zoning was essential to plaintiff's plan to develop the property.
During the course of negotiations, plaintiff was represented by New York counsel, Adam B. Bayroff, Esq., and defendants by a mortgage broker named Rodney Hilton Brown. On June 28, 2005, Brown sent Bayroff a letter called a "term sheet" for the purchase of the property for $8 million with $800,000 to be paid as a deposit when the contract was signed. The term sheet also set special conditions for the purchase, stating the sale was to be:
a. As is, where is, but seller will introduce Buyer to Fort Lee Land Use Authority to confirm ability to construct 80 apartment units. Bayroff then prepared a purchase and sale agreement and sent it to Brown on July 8, 2005. The purchase price remained $8 million, but the amount of the deposit and the schedule of payments was changed as follows:
(a) Fifty Thousand and 00/100 Dollars ($50,000.00) (the "Initial Deposit") [to be paid] upon the execution of this Agreement, by delivery of a check, subject to collection, payable to the order of ___________________________ ("Escrow Agent");
(b) One Hundred Thousand and 00/100 Dollars ($100,000.00) (the "Second Deposit") within ten (10) business days after receiving the Apartment Approval (as hereinafter defined), payable to the order of Escrow Agent;
(c) Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00 (the "Third Deposit") after receiving an Acceptable Phase I Report (as hereinafter defined), payable to the Escrow Agent; and
(d) Seven Million Six Hundred Thousand and 00/100 Dollars [($7,600,000.00)] at the Closing.
The draft agreement further added in Article 14.01 the following:
Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall have no force and effect and not be binding on Purchaser unless and until the following conditions (collectively, "Preconditions to Closing") are satisfied:
(i) Purchaser receives in writing from all local, city, borough, state and federal governing authorities including, without limitation, the Fort Lee Land Use Authority, the unequivocal, absolute and unappealable permission and right to construct and sell on the Property not less than 80 residential condominium units (in such size, configuration and bedroom amounts as Purchaser may apply for in Purchaser's sole discretion) with the necessary parking facilities (above or below ground as Purchaser may apply for in Purchaser's sole discretion) for each of said units (the "Apartment Approval"). . . .
(iii) Purchaser receives all required governmental approvals to the Offering Plan and any other documents required for the formation and operation of the condominium regime to be created at the Property.
If any of the Preconditions to Closing do not occur or any item thereof is not satisfactory to Purchaser in his sole judgment, then Purchaser, upon written notice to Seller, may terminate this Agreement and receive the return of the Deposit and the parties hall have no further obligations to each other hereunder.
Defendant later certified that he expressed his "strong displeasure" with changes made from the term sheet. Defendant based his unhappiness on the amount and terms of payment of the deposit to an escrow agent. He also did not approve the precondition to closing that made the sale contingent upon plaintiff receiving approval from the Land Use Authority and all governmental authorities for the construction of eighty apartment units. The agreement was redrafted by Brown at defendant's request and was signed by the parties on July 12, 2005. The revised contract revived the term sheet provision for payment of $800,000 as deposit to defendant on signing the contract and an additional $2,500,000 within forty-five days of execution of the agreement and the balance to be paid at closing. Furthermore, Article 8.01 of the contract specified the following special condition:
8.01. Fort Lee Land Use Authority. Seller will introduce buyer to the Authority to assist Buyer with obtaining the necessary permission to build the aforementioned 80 apartment units.
Article 13 titled "PRECONDITIONS TO CLOSING" read as follows:
13.01 Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall have no force and effect and not be binding on Purchaser unless and until the following conditions (collectively, "Preconditions to Closing") are satisfied.
(i) Seller will introduce Buyer to the Fort Lee Land Use Authority to confirm and verify Buyer obtaining from the Authority the necessary permissions to build the aforementioned 80 apartment units. . . .
If any of the Preconditions to Closing do not occur, then Purchaser, upon written notice to Seller, may terminate this Agreement and receive the return of the Deposit and the parties shall have no further obligations to each other hereunder.
Rather than the $800,000 deposit in the contract, plaintiff paid and defendant accepted $300,000 on July 19, 2005. Meanwhile, defendant and Brown met with Fort Lee borough officials including members of the Land Use Authority on June 1, 2005, July 5, 2005, July 18, 2005 and August 3, 2005 to discuss the plaintiff's proposal to build an apartment building with 80 units. They also delivered plans for the building prepared by plaintiff's architect. However, at some point in mid-August plaintiff learned that Fort Lee refused to rezone the property. On November 3, 2005, defendant's New York counsel wrote to defendant demanding performance of the contract for payment of the remainder of the deposit and to schedule a closing of title.
Plaintiff responded through Bayroff as follows:
[W]e hereby object to your unilateral scheduling of a closing under the Contract. Section 13.01(i) of the Contract states specifically that as a "Precondition to Closing" (the "Precondition"); "Seller will introduce Buyer to the Fort Lee Land Use Authority to confirm and verify Buyer obtaining from the Authority the necessary permission to build the aforementioned 80 apartment units." As of this date, neither the introduction nor the confirmation and verification has occurred (and, in fact, Sellers have verbally confirmed to Purchaser that Sellers' will be unable to arrange for or cause same to occur). Therefore, your scheduling of the closing is premature and without merit.
Furthermore, please take notice that in accordance with the terms of said Section 13.01(i), as the Precondition has not occurred, Purchaser hereby terminates the Contract and makes demand for the immediate return of the initial Deposit (i.e. $300,000.00) by Sellers.
Thereafter, plaintiff filed suit for the $300,000 paid*fn1 and defendant counterclaimed by alleging he was entitled to retain the $300,000 deposit as liquidated damages for plaintiff's breach of contract by refusing to close title.
The motion judge granted summary judgment to plaintiff after determining that the language of the contract clearly and unambiguously stated that approval of re-zoning to permit plaintiff to construct eighty apartment units was a precondition to enforcement of the contract, thereby entitling plaintiff to the return of the $300,000 paid as an initial deposit. The judge said:
There is a lot of verbiage about this contract but the language to me is clear and unambiguous. I didn't choose it; the parties chose it. I don't think the lawyers chose it. Lawyers don't talk about introducing people to a party or confirming and verifying. In fact, it looks to me that the parties deliberating took out the extensive verbiage that did apply to the same concept in an earlier draft, they got rid of that, and instead they agreed that as a precondition to closing, the seller, that would be shorthand I guess Mr. Jung, was going to introduce Perla to the Fort Lee Land Use Authority to confirm and verify buyer obtaining from the Authority the necessary permissions to build the aforesaid 80 apartment units.
I don't need a trial for me to come to the understanding that the parties agreed that the seller will introduce buyer to the Fort Lee Land Use Authority to confirm and verify buyer obtaining from the authority the necessary permission the aforesaid eighty apartment units because that's what the parties agreed to and there is no question that that's what the contract says and there is no question that that's what the contract says and there is no question that that's what the contract means.
There never was any authority granted by any party in Fort Lee. Nobody in authority gave any approval at any stage of the way along the process of trying to get permission to build the aforesaid 80 apartment units. There was some kind of verbal representation made to Mr. Jung regardless of what it might have meant, that was no approval.
However, construing Article 13 of the signed agreement in the context of negotiations and modifications of the earlier draft specifically requiring the written "absolute and unappealable permission and right" to construct the building could lead to a contrary conclusion. That is, securing a municipal approval was not a condition of the executed contract and that wherein defendant was obligated only to "assist" and introduce plaintiff to the municipal officials making the decision on rezoning. We disagree with the determination of the motion judge that the operative contractual language was so clear and unambiguous as to warrant summary judgment. Therefore, we remand for trial on the issue of the intent and understanding of the parties in the context of their discussions and negotiations prior to the final, executed contract.
Reversed and remanded for proceedings consistent with this approval. We do not reserve jurisdiction.