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Four Winds Plaza Corp. v. Son Valley Developers

August 7, 2008


On appeal from the Superior Court of New Jersey, Law Division, Morris County, L-795-06.

Per curiam.


Argued March 5, 2008

Before Judges Wefing, Parker and R. B. Coleman.

In the declaratory judgment action, defendants Son Valley Developers, LLC (Son Valley), John C. Courtet (Courtet) and Riverview Jefferson Associates, LLC (Riverview) appeal from an October 24, 2006 order granting summary judgment in favor of plaintiffs Four Winds Plaza Corporation (Four Winds), Clearly Tropical, Inc. (Clearly Tropical or Tropical), and The Removal Process, Inc.*fn1 We affirm.

The action for declaratory judgment arose out of a contractual dispute relating to real estate located in Jefferson Township. The lots in question are 2.08, 2.12, 2.16 in Block 270, and Lot 2 in Block 270.01. The subject property is known commonly as Son Valley Park.

The property was acquired in June 1989 by Robert E. Henry, John A. Sierbinski and John H. Courtet. National Westminster Bank, NJ (Natwest) provided a purchase money mortgage of $700,000 to these three men. Upon the death of John H. Courtet, his interest in the property passed to his son, John C. Courtet.

In 1999, Son Valley acquired the rights to the Natwest mortgage and a bundle of other rights to the subject property via an assignment. John C. Courtet was responsible for collecting rent from the entities occupying the property.

Due to a failure to pay municipal property taxes, the Township of Jefferson filed a complaint in the Chancery Division to foreclose on the land in question. While that action was still pending, the Township filed a notice to sell the land at public bid by way of tax sales certificates. The Township scheduled the sale for April 20, 2003. Prior to the sale, Son Valley and Courtet entered into negotiations with Clearly Tropical Inc. and its principal, Joseph Bonanno, and the parties executed an Option Agreement and a Perfection of Title Agreement relating to the property.

According to the terms of the Perfection of Title Agreement, Clearly Tropical agreed to submit a bid for the tax sale certificate in the amount of $518,000. If the bid was successful, "then Tropical [would] take, as soon as legally practicable, all action necessary for Tropical to obtain fee title in the property." The property then was to be resold at a public sale by the Sheriff of Morris County, and Son Valley agreed to enter into a Consent Judgment in the Foreclosure Action. Paragraph 6 of the Perfection of Title Agreement, bearing the title "Assignment of Receivership," provided:

Upon receipt of a Sheriff's Deed for the Property as a result of the Consent Judgment, John C. Courtet shall resign as the receiver for the Property and Tropical shall deliver to John C. Courtet a discharge and release for all actions taken by him as receiver prior to the date Tropical receives the Sheriff's Deed to the Property (the "Perfection Date").

Pursuant to Section 1.2 of the related Option Agreement, Clearly Tropical, as optionor, granted to Son Valley, as optionee, "the sole and exclusive option to purchase the Premises upon the terms and conditions set forth in the Option Agreement (the 'Option')." Among the terms and conditions set forth were the following:

1.3 The Option shall be exercisable by Optionee during the period of time commencing upon the date hereof and terminating at 5:00 p.m. on the corresponding day of the Eighteenth (18th) month following the Perfection Date (the "Option Period") unless otherwise extended by written agreement of the parties. Optionor [sic] shall have the unilateral right to extend the Option Period for up to six (6) calendar months, upon payment of a fee of 1% of the Total Cash Investment as defined by Section 3.3.

1.4 The Option shall be exercised by Optionee by delivering written notice (the "Option Notice") to Optionor during the option Period.

2.5 Title shall be good and marketable, insurable by Optionee's title insurance company at regular rates subject only to its standard printed exceptions.

3.1 The purchase price to be paid by Optionee shall be the sum of 110% of the Total Cash Investment hereinafter defined in

3.3, plus Eighteen Percent (18%) per annum from the date paid.

3.3 The Total Cash Investment shall mean the sum of the following:

(i) All cash sums paid by Optionor for the Tax Sale Certificates.

(ii) $5,000.00 for attorneys' fees required for the perfection of title to the Premises.

(iii) All Sheriff's fees, recording costs and other direct out of pocket expenses not otherwise paid from the operating revenues of the Premises.

On June 18, 2003, Clearly Tropical was, in fact, the successful bidder at the public sale of the tax sale certificate and paid the Township $518,000 for an assignment of the certificate. Courtet signed the Consent Judgment of Foreclosure a month later. On November 5, 2003, Clearly Tropical filed its Motion for Final Judgment of Foreclosure and Writ of Execution in the foreclosure action. That Final Judgment was entered on January 6, 2004. On April 29, 2004, Four Winds, the assignee of Clearly Tropical's interest in the property, received the sheriff's deed.

On September 9, 2004, defendants' title company alerted plaintiffs to certain alleged irregularities in the foreclosure action that might prevent the issuance of clear title insurance for the property. About a year later, on September 29, 2005, defendants' attorney sent a letter to plaintiffs stating that

Son Valley Developers LLC intends to exercise that option and for that purpose, needs the following documentation in order to reinstate its mortgage commitment from Sovereign Bank, which expired last year after a failure of Clearly Tropical, Inc. to perfect title to the property at the defective foreclosure sale.

In response to that letter, plaintiffs sent defendants a Time of the Essence letter dated November 18, 2005, giving formal notice that time was of the essence to close title on the property on or before December 5, 2005. Plaintiffs also obtained a corrected amended Final Judgment of Foreclosure on January 30, 2006, which they ...

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