On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-848-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Lisa and Lihotz.
This is an action on a note and an action for breach of a redevelopment agreement. The property was acquired from plaintiff Mercer County Improvement Authority (MCIA), is situated in a redevelopment area, and is subject to numerous conditions calculated to foster redevelopment goals. When defendant Trenton Studios, Inc. (TSI), the property owner, breached its obligations, including failure to pay principal and interest when due and failure to commence construction of designated improvements, MCIA commenced a foreclosure action and a separate breach of contract action. TSI appeals from an order entered in the breach of contract action enforcing the reversion provision of the Redevelopment Agreement between TSI and MCIA. TSI contends that the reversion provision of the Redevelopment Agreement clogs or obstructs the equity of redemption. The trial judge held that the rights TSI had under the mortgage agreement did not prevent MCIA from seeking the remedies it was entitled to under the Redevelopment Agreement, particularly given the strong public interest underlying the redevelopment. We affirm.
The City of Trenton (the City) adopted a redevelopment plan, commonly known as the Roebling Complex Redevelopment Plan (Redevelopment Plan). This Redevelopment Plan included Block 135, Lots 1, 68, and 70, commonly known as 27-21 Clark Street, 10 Elmer Street and Clark Street, or sometimes referred to as 500 East Canal Street in the City (the Property). On December 17, 2002, MCIA adopted Resolution No. 02-128 authorizing the MCIA chairman to enter into an agreement with the County of Mercer, the City, and TSI for the purpose of construction of a movie production facility (the Project) on the Property. In order to effectuate its Redevelopment Plan and the Project, MCIA and TSI entered into several agreements: an Agreement of Sale, a Promissory Note (the Note), a Mortgage and Security Agreement (the Mortgage), a Redevelopment Agreement, and a First Amendment to the Agreement of Sale (the First Amendment).
The Agreement of Sale was executed on December 17, 2002, under which MCIA was to acquire the Property from the City and then sell it to TSI. The purchase price was $2,500,000 with $25,000 to be paid at the execution of the Agreement of Sale, $25,000 to be paid at the closing, and $2,450,000 to be financed by the Note and Mortgage. The Agreement of Sale states that the financing shall be evidenced by the Note, the Mortgage, and the UCC-1 Financing Statements. The Note and the Mortgage were attached as schedules to the Agreement of Sale. More specifically, the Agreement of Sale provides that the financing was to be evidence by the Mortgage "in the principal amount . . . securing the Property, incorporating a security agreement in all fixtures of Borrower located on the Property as of Closing . . . and [TSI's] Redevelopment Rights to the Property."
The Agreement of Sale was contingent upon a number of obligations of both plaintiff and defendant. One of these contingencies was execution of a satisfactory redevelopment agreement within forty-five days from the date of the Agreement of Sale. Failure to do so provided either party with the right to terminate the agreement. With regard to the redevelopment aspect of the Project, the Agreement of Sale states:
2. In accordance with the Redevelopment Plan, [TSI] desires to purchase the Property in order to renovate existing buildings on the Property, construct new facilities on the site, and to provide a location for business operations. It is [TSI's] obligation to redevelop and use the Property in accordance with the Redevelopment Plan set forth in Paragraph 6 herein and in accordance with the project description attached hereto as Schedule D . . . .
MCIA was to act as TSI's redevelopment agent until TSI received final approval to construct any portion of improvements for the Project or three years from the date of closing of title, whichever came first. As redevelopment agent, MCIA was to assist TSI "with any development application for the Property submitted to any board or agency of the City of Trenton or County of Mercer." Additionally, MCIA represented and warranted that TSI's proposed business for the Property was an allowable use pursuant to the Redevelopment Plan.
The Agreement of Sale required MCIA to deliver title to and possession of the Property to TSI. Title to the Property was subject to the regulations and conditions of the Redevelopment Plan.
The Note, dated May 28, 2003, is for a principal amount of $2,450,000. Under the Note, MCIA is the Lender and TSI is the Borrower. TSI was obliged to make interest payments only from July 1, 2003 to June 31, 2005, payable quarterly on the first of April, July, October, and January. On July 1, 2005, quarterly payments of principal and accrued interest began in the amount necessary to amortize the principal balance in equal payments over a thirty-year term. The Note was to mature on July 1, 2009, at which time the entire principal balance, accrued interest and all other sums due and payable under the Note would be payable. A late fee of five percent of the overdue amount would be assessed if the payment was more than fifteen days past its due date.
The Note states that the following occurrences or acts constitute an event of default:
(a) The failure by Borrower to pay all or any part of: (i) any installment of principal or interest, (ii) any other amount coming due under this Promissory Note, or (iii) the principal balance on this Promissory Note, within thirty (30) days of when due; (b) The occurrence of an "Event of Default" under any of the Loan Documents (as same is defined hereafter) between Borrower and Lender . . . .
The Note defines the term "Loan Documents" to include: (i) the Note, (ii) the Mortgage, (iii) the Agreement of Sale, (iv) the Redevelopment Agreement; and (v) the First Amendment.
In an event of default, MCIA could, at its option, demand payment of the entire outstanding principal amount, all accrued unpaid interest, any other sums due, and costs of enforcement. The Note further provides:
No failure or delay on the part of the Lender in exercising any right, power or privilege under this Note and no course of dealing between Borrower and Lender shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise of any right, power or privilege Lender would otherwise have. No notice to, or demand on, Borrower in any case shall entitle Borrower to any or further notice or demand in similar or other circumstances or constitute a waiver of the right of Lender to any other or further action in any circumstances without notice or demand.
The Note was secured by the Mortgage pursuant to which MCIA was given a mortgage security interest in the Property. The Mortgage was signed on the same day as the Note, and MCIA was the Lender and TSI was the Mortgagor. The Mortgage provides that TSI is to pay the indebtedness in accordance with the terms of the Note and "shall comply with the terms and provisions of the Note and all documents evidencing or securing the Loan, or executed in connection with the Loan (collectively, the 'Loan Documents')." This was the most specific definition of Loan Documents within the Mortgage. Throughout the Mortgage, the Loan Documents are referred to separately from the Note, the Agreement of Sale, the First Amendment, the Redevelopment Agreement and the Mortgage. The Mortgage notes that TSI shall be entitled to proceed with all work, construction and property modifications and improvements as set forth in and contemplated by the Agreement of Sale, the First Amendment, and the Redevelopment Agreement.
In section 14 of the Mortgage, the following events are listed as events of default:
(a) The Mortgagor shall default in the payment of any principal, interest or any other amount when due hereunder or under the Note or other Loan Documents;
(b) The Mortgagor shall default in the performance of any of the terms, covenants, conditions or undertakings contained in the Note, this Mortgage or the Loan Documents or an Event of Default as defined in the Loan Documents shall occur;
(c) The Mortgagor shall default in the performance of any of the terms, covenants, conditions or undertakings contained in the Redevelopment Agreement, or an Event of Default as defined in the Redevelopment Agreement shall occur;
(g) The default of the Mortgagor under any other obligation owed to the Lender, or any third party, now existing or hereafter arising;
(i) In the event that proceedings shall have been instituted for foreclosure or collection of any mortgage, judgment, or lien affecting the Property or a default shall occur under any mortgage which is a lien upon the Property;
If an event of default remains uncured for thirty days after notification of such event, MCIA has the following remedies pursuant to section 15 of the Mortgage:
(1) Declare the Loan immediately due and payable . . . together with any and all other sums owing to the Lender pursuant to the ...