Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

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 served on defendants on February 2, 2006. No amended sheriff's deed was sought or issued.

On February 24, 2006, plaintiffs' attorney sent another Time of the Essence Letter to counsel for Son Valley. That letter demanded that the parties close on the property on or before March 13, 2006. The letter stated in full:

As per your previous correspondence, you stated that your client could not close until the foreclosure matter was resolved.

Several weeks ago, you received the amended final judgment of foreclosure dated January 30, 2006; yet, you have not scheduled a closing date.

You are hereby given fifteen (15) days TIME OF THE ESSENCE to close on or before March 13, 2006. Should your client fail to close within the said timeframe, he shall forfeit all his rights.

Be guided accordingly.

By letter dated March 8, 2006, Son Valley challenged the validity of this Time of the Essence notification, citing a number of defects. Among other things, Son Valley took the position that it had previously submitted a notice of its intention to exercise the option in September 2004, at which time it had a binding purchase money mortgage loan, which was lost. Son Valley noted that its lender required, as a condition of closing, a title insurance commitment insuring the full purchase price. Son Valley also asserted that it reserved the right to exercise the option under the eighteen-month option period in Section 1.3 of the Option Agreement following proof that there has been a perfection of title. Son Valley did not appear to close on March 13, 2006.

Accordingly, on March 15, 2006, plaintiff Four Winds filed a verified complaint in this action seeking a declaratory judgment that the option of defendants Son Valley and Courtet to purchase the property had expired. Four Winds simultaneously filed a motion to proceed on a summary basis to determine when/if the option to purchase had been exercised. On May 12, 2006, the trial court granted plaintiff's motion to proceed summarily on that limited issue, and it set a timetable for pleadings and discovery based on the summary proceedings. Thereafter, on June 1, 2006, Four Winds filed an amended complaint that added Clearly Tropical, Inc. and The Removal Process Inc. as plaintiffs and Riverview Jefferson Associates as a defendant. On July 10, 2006, defendants filed their Answer, Counterclaims and Third Party Complaint.

On September 7, 2006, plaintiffs moved for summary judgment, and defendants then cross-moved for summary judgment. On October 20, 2006, the trial court heard oral argument on the motion and cross-motion. Afterwards, the court filed its October 24, 2006, order granting the plaintiff's motion for summary judgment and dismissing defendants' counterclaims and third-party complaint. A brief statement of the court's reasons for the decision was attached to the order. That statement was as follows:

There is no factual question that defendant failed to exercise the option. The only argument offered is that plaintiff could not produce marketable title. First an option to buy must be exercised, and only then under the "Closing of Title" paragraph 2 of the Option Agreement, should the issue of marketable title ever be raised. The seller has to produce marketable title at closing, and the parties never got to that point because the option was never exercised.

On December 8, 2006, defendants filed their notice of appeal from the October 24, 2006 order. Defendants now advance the following arguments on appeal:













Based on the plain meaning of the language of the Option Agreement and the Perfection of Title Agreement, and substantially for the reasons stated by the trial court, we affirm.

On a motion for summary judgment, this court applies a de novo standard of review. Trinity Church v. Atkin Olshin Lawson-Bell, 394 N.J. Super. 159, 166 (App. Div. 2007); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), cert. denied, 154 N.J. 608, 713 (1998). In making a determination, the court must weigh "'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Liberty Surplus Ins. Corp. Inc. v. Amoroso, P.A., 189 N.J. 436, 445-46 (2007) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995)).

The judgment or order sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged.

[R. 4:46-2(c).]

Here, defendants contend that the terms of the option agreement were ambiguous because the agreements did not clearly state the date on which the option term would begin to run and that there is a genuine issue of material fact as to the triggering date of the option period. In essence, they argue that there are three preconditions that plaintiffs had to meet before the Option Period would run: (1) the receipt of a sheriff's deed, (2) the resignation of Courtet as receiver and (3) the delivery of a discharge and release from Clearly Tropical to Courtet for all actions taken by him as receiver. According to defendants, the option period could not run until plaintiffs acquired a "valid" sheriff's deed. They contend the April 29, 2004 sheriff's deed was not valid and that the eighteen-month option period was not triggered until the court entered the amended final judgment of foreclosure on January 30, 2006.

By contrast, plaintiffs argue that the sheriff's deed issued on April 29, 2004, commenced the eighteen-month option period pursuant to which defendants had the sole and exclusive right to purchase the property. They further argue that the option period expired on October 29, 2005, subject only to the extensions afforded by the Time of the Essence letters that extended the option period, first, to December 5, 2005 and, then, to March 13, 2006. Plaintiffs contend that defendants only belatedly raise the resignation of Courtet and the delivery of a discharge and release as prerequisites to the commencement of the option period. They charge that defendants are estopped and barred from denying that the option period commenced upon receipt of the sheriff's deed and subsequently expired.

The approach to be utilized for contract interpretation is well-established. In order to consider evidence outside the corners of the contract, the contract language itself must be found to be ambiguous; the court must make the determination as to a term's ambiguity. Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div. 2002).

"An ambiguity in a contract exists if the terms of the contract are susceptible to at least two reasonable alternative interpretations[.] To determine the meaning of the terms of an agreement by objective manifestations of the parties' intent, the terms of the contract must be given their 'plain and ordinary meaning.'" [Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div 1997)] (quoting Kaufman [v. Provident Life and Cas. Ins. Co.], 828 F. Supp. [275,] 283 [(D. N.J 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)]). The Court should examine the document as a whole and the "court should not torture the language of [a contract] to create ambiguity." Ibid. (quoting Stiefel v. Bayly, Martin & Fay, Inc., 242 N.J. Super. 643, 651, 577 A.2d 1303 (App. Div. 1990)). [Schor, supra, 357 N.J. Super. at 191.]

If found to be unambiguous, the court must enforce the terms as written. Ibid.

The documents involved in this case were prepared jointly by counsel for both parties. Hence, the rule that directs construction of language against the interest of the drafter has no application. In re Miller, 90 N.J. 210, 221 (1982). Moreover, while we acknowledge that "crossmotions for summary judgment do not preclude the existence of fact issues[,]" The Great Atl. & Pac. Tea Co. v. Checchio, 335 N.J. Super. 495, 498 (App. Div. 2000), we find, as the motion judge did, that no ambiguity exists in the contract language. The Option Agreement states that the eighteen-month option period begins on the perfection date. The perfection date is defined in the Perfection of Title Agreement as the date of receipt of the sheriff's deed. By characterizing the sheriff's deed as "invalid" and by insisting that certain additional criteria must be met, defendants essentially seek to impose conditions that are not explicit and that are not necessary to the creation of rights and obligations under the agreements.

"Parties to a contract are at liberty to agree on one or more conditions precedent upon which their liability will depend." State Farm Mut. Auto. Ins. co. v. Anderson, 70 N.J. Super. 520, 527 (App. Div. 1961). "However, condition precedents are 'disfavored by the courts.'" Liberty Mut. Ins. Co. v. President Container, Inc., 297 N.J. Super. 24, 34 (App. Div. 1997) (quoting Marsa v. Metrobank For Savings, F.S.B., 825 F. Supp. 658, 664 (D.N.J. 1993), aff'd, 26 F.3d 122 (3d Cir. 1994)). "[A] condition precedent 'must be expressed in clear language or it will be construed as a promise.'" Ibid. The provisions that call for the resignation of Courtet and the delivery of the discharge and release are, therefore, enforceable as promises. They are not conditions of the contracts.

Further, options are to be construed strictly in accordance with any stated terms and time limitations:

In a real estate transaction, an option contract is a unilateral agreement requiring a party to convey property at a specified price, provided the option holder exercises the option "in strict accordance" with the terms of time requirements of the contract. State By and Through Adams v. New Jersey Zinc. Co., 40 N.J. 560, 576, 193 A.2d 244 (1963) (citing Schlein v. Gairoard, 127 N.J.L. 358, 359-360, 22 A.2d 539 (E. & A. 1941); see also Brick Plaza, Inc. v. Humble Oil & Refining Co., 218 N.J. Super. 101, 104, 526 A.2d 1139 (App. Div. 1987) (observing that "[t]he general rule is that in an option contract, time is of the essence"). Within the terms and time limitations of the option contract, the property owner is bound by an irrevocable offer to sell the property, while the option holder is under no obligation to act. Adams, supra, 40 N.J. at 576, 193 A.2d 244. Because the property owner cannot withdraw the offer, we require the option holder, who is "free to accept or reject," to adhere strictly to the terms of the contract. Goodyear Tire and Rubber Co. v. Kin Props., Inc., 276 N.J. Super. 96, 105, 647 A.2d 478 (App. Div.) (internal quotations omitted), certif. denied, 139 N.J. 290, 654 A.2d 470 (1994). [Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., LP, 182 N.J. 210, 223 (2005).]

Plaintiffs do not dispute that Courtet would have been required to resign and that a discharge and release would have been required. Those are enforceable obligations, but they were not prerequisites that prevented the triggering of the option period by the delivery of the sheriff's deed. Similarly, plaintiffs do not dispute that if this transaction had proceeded to a closing, they would have been obligated to provide marketable title. Once defendants exercised the option, plaintiffs had to clear any title defects. If they did not, the closing would not occur, and they might incur damages for breach of contract. However, prior to the date of closing, the obligation to provide clear title was inchoate.

We are satisfied that plaintiffs met the mandates set forth in the Option Agreement and the Perfection of Title Agreement. First, they successfully bid on the tax sale certificate for the property in Son Valley Park. As holders of the certificate, plaintiffs had the following rights:

(1) the right to receive the sum paid for the certificate with interest at the redemption rate for which the property was sold, up to a maximum of 18%, N.J.S.A. 54:5-32, -58; (2) the right to redeem from any other holder a subsequently issued tax sale certificate; and, most importantly, (3) the right to acquire title by foreclosing the equity of redemption of all outstanding debts, including the owner's, N.J.S.A. 54:5-86. [Caput Mortuum, L.L.C. v. S & S Crown Servs., Ltd., 366 N.J. Super. 323, 336 (App. Div. 2004) (citations omitted).]

As contemplated by the terms of their agreements, Clearly Tropical commenced a foreclosure action and Son Valley consented to the judgment in foreclosure.*fn2 Once the judgment of foreclosure was filed, plaintiffs had fee simple ownership of the land as conveyed by a sheriff's deed. "Ownership occurs when a recordable document is delivered." CKC Condo. Ass'n, Inc. v. Summit Bank, 335 N.J. Super. 385, 391 (App. Div. 2000). Therefore, the option period was triggered upon the delivery of the sheriff's deed to plaintiffs.

Under certain circumstances, courts will allow a party to exercise an option even if there is not strict compliance with its terms. However, such equitable relief is limited:

[e]quitable relief is not available merely because enforcement of the contract causes hardship to one of the parties. A court cannot "abrogate the terms of a contract" unless there is a settled equitable principle, such as fraud, mistake, or accident, allowing for such intervention. [Brunswick Hills Racquet Club, Inc., supra, 182 N.J. at 223-24 (citations omitted).]

It is often said, "equity aids the vigilant, not those who sleep on their rights." Brick Plaza, Inc., supra, 218 N.J. Super. at 104. As defendants do not claim fraud, mistake or accident here, we will not address those points.

Defendants rest their claim for relief on the supposed ambiguity of terms and the apparent financial hardship they may have suffered. As we have already noted, we find no ambiguity, and any financial hardship was within the expressed contemplation of the parties and their agreements. The option contract essentially offered defendants a minimum of eighteen-months to organize their financial affairs. In that time period, Son Valley was afforded the exclusive right to reclaim the property if it could acquire the necessary financing. Here, it claims it had financing which it lost and was not able to procure again because of flaws in the judgment of foreclosure.

As noted, flaws in the title might have excused defendants from any obligation to close title, but the claim of irregularity did not expand or enlarge the option period.

This situation is somewhat analogous to Brick Plaza, supra. In Brick Plaza, the plaintiff agreed to lease a property from defendant, while also having the option to buy the property within a certain time frame. Id. at 102-03. There, the plaintiff claimed that it failed to exercise the option within the time period because of an honest mistake; one of the plaintiff's company officers relied on a preliminary draft of the agreement, rather than the final. Id. at 103. The plaintiff had expended a great deal of money to make improvements on the land and claimed there would be a financial hardship and, thus, an inequity if it were not allowed to purchase the property. Ibid. This court ruled that neither the financial hardship or honest mistake was justification for their long delay in exercising the option.

Son Valley may be considered to have similarly made an honest mistake. It unilaterally and unjustifiably interpreted the contract option period to begin upon perfection of marketable title. That interpretation is simply not supported by the plain language of the agreement nor by other circumstances of the case. Accordingly, we discern no principle in equity or law that will save its claim.

Defendants point out that at one point they issued a letter stating their intention to exercise the option, but they concede they later took the position they had not exercised the option. They contend, however, that the option is exercisable even now, more than four years after the sheriff's deed was received. Defendants did not provide the compensation required by the contract, and on the merits, the option was not exercised within the specified eighteen-month period. Defendants have no further right to the property. Cf., State v. N.J. Zinc. Co., 40 N.J. 560, 569, 577-78 (1963) (allowing a party who issued a letter noting its intention to exercise the option along with a check for the requisite contract amount to have successfully acquired the property in question).

Defendants next assert that the timetables fixed in the Time of the Essence letters sent by plaintiffs were unreasonable.

[I]t is a well settled rule in equity, that time is not of the essence of a contract for the sale of lands, but may become of the essence, either by being made so by the contract itself, or by express notice given, requiring the contract to be closed or rescinded at a stated time, which must be reasonable.

[Rose v. Wisniewski, 112 N.J. Eq. 364, 366 (E & A 1933).]

Making time of the essence is an effective, time honored tool of contract administration and enforcement. It provides certainty and objectivity in the definition of rights and obligations between contracting parties, particularly when it has been negotiated between the parties and expressly made a part of their agreement. [Gorrie v. Winters, 214 N.J. Super. 103, 107 (App. Div. 1986).]

Defendants here argue that it should not have been bound by the Time of the Essence letters because plaintiffs unreasonably failed to obtain a valid sheriff's deed.

We reject this point because the parties had an option agreement in place which already included a time limitation term. Defendants' erroneous insistence that the time would not run until plaintiffs held a "valid" deed cannot be used fairly to alter the plain language of the agreement. Each of the Time of the Essence letters gave defendants approximately three weeks to act. Defendants had ample time to exercise the option and to seek alternative remedies. As the trial court appropriately concluded, if the deed had encumbrances or required correction, plaintiffs would have been required to rectify such faults or flaws prior to the transfer of title. Thus, plaintiffs' notices that time was of the essence were not unreasonably short. In fact, those notices expanded defendants' opportunity to exercise the option beyond the time set forth in the agreements. In context, these expansions cannot be viewed as unreasonable.

Finally, defendants contend, that the trial court issued an inadequate written opinion in light of which this court should remand for a more thorough analysis. As defendants observe, on motions for summary judgment, the trial court must make specific findings of fact in accordance with Rule 1:7-4. See R. 4:46-2(c); The Great Atl. & Pac. Tea Co. Inc., supra, 335 N.J. Super. at 498. Rule 1:7-4(a) states:

The court shall, by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon in all actions tried without a jury, on every motion decided by a written order that is appealable as of right . . . .

The reason for this rule is that "[l]itigants and their attorneys are entitled to know the factual and legal basis of the court's determination, and they are disserved if the trial court fails in this obligation." Filippone v. Lee, 304 N.J. Super. 301, 306 (App. Div. 1997).

The court's written decision in this instance was certainly concise, but in our judgment, it was sufficient under the circumstances. The judge concluded:

There is no factual question that defendant failed to exercise the option. The only argument offered is that plaintiff could not produce marketable title. First an option to buy must be exercised, and only then under the "Closing of Title" paragraph 2 of the Option Agreement, should the issue of marketable title ever be raised. The seller has to produce marketable title at closing, and the parties never got to that point because the option was never exercised.

The material terms of the contract were plainly articulated. There was a deadline, and defendants missed it. No genuine issues of material fact exist. Thus, we affirm.

Defendants' assertion that the trial court wrongly dismissed their counterclaims lacks sufficient merit to warrant discussion in a written opinion. See R. 2:11-3(1)(E).


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.