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Norwood-Jeb, L.L.C. v. North River Mews Associates

April 15, 2009

NORWOOD-JEB, L.L.C., PLAINTIFF-APPELLANT,
v.
NORTH RIVER MEWS ASSOCIATES, L.L.C., CRESSKILL RESIDENTIAL COMMUNITIES, L.L.C., CRESSKILL RESIDENTIAL COMMUNITIES III, L.L.C., TENAKILL DEVELOPERS, L.L.C., FRED A. DAIBES, AND BOILING SPRINGS SAVINGS BANK, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, No. L-1449-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 27, 2009

Before Judges Wefing, Parker and LeWinn.

Plaintiff Norwood-Jeb, L.L.C. ("Norwood"), sued defendants for damages arising out of a real estate transaction. Its four-count complaint asserted claims for breach of contract, intentional interference with contract, equitable lien and fraud. The trial court eventually granted summary judgment to all named defendants, and plaintiff has appealed. After reviewing the record in light of the contentions advanced on appeal, we affirm in part, reverse in part, and remand for further proceedings.

I.

In September 1999, Norwood and defendant North River Mews Associates, L.L.C. ("North River"), signed a detailed contract under which Norwood agreed to sell to North River more than eighteen acres of land in Cresskill for a stated purchase price of $6,500,000. Article 1 of the contract, headed "Purchase and Sale," had three subparts. Article 1.1 contained the property description while 1.2 set the purchase price at $6,500,000.

Article 1.2 also noted that Cresskill could seek to transfer a certain portion of its fair share responsibility under the New Jersey Fair Housing Act, N.J.S.A. 52:27D-301 to -329, by making an aggregate contribution which would not exceed $520,000. Norwood agreed to pay to or for the benefit of Cresskill an amount not to exceed $150,000 toward Cresskill's contribution.

Article 1.3 of the contract was headed "Additional Purchase Price." It noted that Cresskill had passed an ordinance approving a planned unit residential development on the tract, divided in the following manner: 75 multi-family residential housing units, 18 of which would be designated as low or moderate income units, referred to as Tract I; 125 congregate care residential units and 75 assisted-living units, to be restricted to residents 65 years of age or older, referred to as Tract II; and 60 independent senior citizen housing units, to be restricted to residents 55 years of age or older, referred to as Tract III. This litigation involves Tract III only.

Subsection (b) of 1.3 contained the following representation:

Buyer further represents to Seller that all of the residential units to be constructed . . . will be marketed to the public on a rental basis. Buyer acknowledges that Seller has agreed to the Purchase Price in reliance on the foregoing representation.

The contract further provided that in the event any of four specified "Ownership Events" occurred, the purchase price would be increased by $20,000 times the number of residential units subject to the Ownership Event. The four specified events were the division of the property, or any portion of it, into separate tax lots; recording a master deed creating a horizontal property regime; recording a master deed creating a condominium; or recording a master declaration or master register creating a cooperative.

Article 1.3 also provided Norwood security for the buyer's promise to pay this additional price. The buyer had the option of providing a letter of credit for a term of five years or agreeing to a deed restriction . . . in form and substance satisfactory to Seller in its sole and absolute discretion, which prohibits any event which is deemed to be an Ownership Event hereunder for a period of five (5) years unless Buyer pays to Seller an amount equal to the Aggregate Subsequent Payments. Further, the parties agreed that if the Buyer elected to have a deed restriction in lieu of providing a letter of credit, defendant Fred A. Daibes, a principal of North River, would execute and deliver his personal guaranty of the additional purchase price. Finally, 1.3(g) stated that the terms of 1.3 would survive the closing.

Article 9 of the contract called for North River to apply for preliminary site plan approval for the proposed development to be constructed on the site. It obligated North River to submit to Norwood all the documents in connection with the application for preliminary site plan approval, including all plans and specifications, prior to filing with the applicable authorities. Article 9.1(b) stated that the application, plans and specifications had to be "acceptable to Seller, in its sole and absolute discretion." The obligation to close was contingent upon receipt of this preliminary site plan approval. The Cresskill Planning Board passed a resolution granting such approval on February 22, 2000.

Five days before the closing, Norwood's attorney sent to North River's attorney for his review and comment a copy of the deed which had been prepared in anticipation of the scheduled closing. North River's attorney had no comments or complaints with respect to any provision of the proposed deed.

The closing occurred on May 24, 2000. In advance of the closing, North River, through its managing member Daibes, assigned all of its rights under the contract to defendant Cresskill Residential Communities, L.L.C. ("Residential"). Residential accepted this assignment through its president, Daibes.

At the closing, Norwood delivered, and Residential accepted, the deed to this tract of land. The deed contained the following language with respect to the deed restriction.

(a) In furtherance of the terms of Section 1.3 of that certain Amended and Restated Agreement of Sale dated September 23, 1999 by and between the Grantor, as seller, and North River Mews Associates, L.L.C. (predecessor-in-interest to Grantee), as buyer, the Grantee, its successors and/or assigns, are prohibited from undertaking or causing to be undertaken the following actions (each an "Ownership Event") with respect to Tract I, Tract II and/or Tract III (hereinafter referred to individually as a "Restricted Property" and collectively as the "Restricted Properties") for a period of five (5) years from the date hereof (hereafter referred to as the "Restricted Period") unless the Grantee, its successor and/or assigns, shall pay to the Grantor, its successor and/or assigns, the additional consideration set forth in paragraph (b) below:

(i) subdividing any or all of the Restricted Properties to create separate tax lots for each residential living unit to be constructed thereon;

(ii) recording with the Bergen County Clerk a master deed which creates a horizontal property regime pursuant to N.J.S.A. 46:8A-1 et seq. (or any successor statute) with respect to any or all of the Restricted Properties;

(iii) recording a master deed with the Bergen County Clerk which creates a condominium pursuant to N.J.S.A. 46:8B-1 et seq. (or any successor statute) with respect to any or all of the Restricted Properties;

(iv) recording with the Bergen County Clerk a master declaration and/or master register which creates a cooperative pursuant to N.J.S.A. 46:8D-1 et seq. (or any successor statute) with ...


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