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Westmont Development Group, LLC v. Township of Haddon

June 15, 2009

WESTMONT DEVELOPMENT GROUP, LLC PLAINTIFF,
v.
TOWNSHIP OF HADDON, MAYOR RANDALL W. TEAGUE, COMMISSIONER JOHN C. FOLEY, OPINION COMMISSIONER PAUL DOUGHERTY, AND CAMDEN COUNTY IMPROVEMENT AUTHORITY, DEFENDANTS.



The opinion of the court was delivered by: Irenas, Senior District Judge

This is an action by Plaintiff Westmont Development Group ("WDG") alleging Breach of Contract, Breach of the Duty of Good Faith and Fair Dealing, and Negligent Misrepresentation by Defendants Township of Haddon, Mayor Randall W. Teague, Commissioner John C. Foley, Commissioner Paul Dougherty (collectively "Township Defendants"), and Camden County Improvement Authority ("CCIA").

Presently before the Court are Motions for Summary Judgment and to Dissolve Temporary Restraints by the Township Defendants, and a Motion to Dismiss by CCIA. For the reasons stated below, the Court will grant Defendants' Motions.*fn1

I.

The Township of Haddon ("Township") is a municipality in Camden County, New Jersey, governed by a Board of three Commissioners, one of whom is designated as the Mayor. (Pl.'s 56.1 Stmt.*fn2 ¶ 1) The Township also has a Planning Board, which is an independent governmental body from the Township.*fn3 (Twp. Defs.' Ex. 9--- Donald C. Cofsky Dep. 6:19-20)

This litigation pertains to a failed contract between the Township and WDG for the redevelopment of the "Westmont Theater property," - a tract which is part of the physical and emotional "heart" of the Township. (Twp. Defs.' Ex. 1 (Attach. A)---Redevelopment Plan 3, 8-9)

Section I, Part A discusses events preceding the execution of the redevelopment contract by the Township and WDG; Part B focuses on the parameters of that contract, and WDG's performance thereunder; Part C addresses WDG's struggle to obtain adequate parking to support its redevelopment plans; Part D describes the negotiations by WDG and the Township to amend the original redevelopment contract; Part E discusses the change in Township leadership that occurred in May, 2007, and the resultant impact on WDG; and Part F summarizes the procedural history in this matter to date.

A.

The background of this litigation begins with a November, 1998, purchase-leaseback agreement between the Township and the CCIA for the Westmont Theater property.*fn4 (See Twp. Defs.' Ex. 1 (Attach. B)--- Lease Purchase Agreement) Pursuant to that agreement, the Township transferred title to the Westmont Theater property to the CCIA. (See Twp. Defs.' Ex. 1 (Attach. B)--- Deed of Sale, Nov. 17, 1998; Pl.'s Ex. 12--- Catherine M. Ward Dep. 19:2-6) In return, the CCIA provided financing to the Township for improvements on the theater. (Lease Purchase Agreement 1; Ward Dep. 19:6-9) The CCIA funded the project by issuing $700,000 in bonds. (Lease Purchase Agreement 1; see Ward Dep. 19:14-15, 20:6-9) The CCIA leased the property back to the Township, thus the Township retained physical control of the premises. (Ward Dep. 19:9-11) The agreement provided for the Township to repurchase the theater from the CCIA once the bonds were fully repaid. (Lease Purchase Agreement § 5.9; Ward Dep. 19:11-13) For present purposes, the key consequence of the purchase-leaseback agreement is that CCIA currently holds title to the Westmont Theater. (See Pl.'s 56.1 Stmt. ¶ 3)

On November 26, 2002, the Township adopted a "Redevelopment Plan" which called for the redevelopment of an area known as the "Haddon Avenue corridor." (Pl.'s 56.1 Stmt. ¶ 2) Described generally, the Redevelopment Plan was intended to "create and recreate a mix of uses and generalized environment that will encourage . . . the pedestrian shopping, dining and entertainment experience." (Twp. Defs.' Ex. 1 (Attach. A)--- Redevelopment Plan 4) The plan identified three major redevelopment sites as comprising the Haddon Avenue corridor: (1) Parcel "A" - the DyDee Site; (2) Parcel "B" - the Russell Stone property; and (3) Parcel "C" - the Westmont Theater property. (Redev. Plan 7-9) When the Redevelopment Plan was adopted, as now, a vacant theater sat on the Westmont Theater property. (See Redev. Plan 8-9) The plan designated the Township Commissioners as the entity to implement its provisions, and authorized the Township to contract with a redeveloper, if necessary to achieve implementation. (Redev. Plan 13)

In 2003, Joanna Pang, a principal of WDG,*fn5 was seeking a location suitable for opening a new live entertainment venue, and became interested in the Westmont Theater as a potential site for that project. (Pl.'s Ex. 1--- Joanna Pang Dep. 61:15, 63:6-8) Pang was familiar with the entertainment industry from her role as President of Joon Associates, an entity which operated the Trocadero Theater in Philadelphia, Pennsylvania. (See Pang Dep. 23:19-25, 24:14-15, 25:12-25) An "introductory" meeting was arranged between Pang and William Park, then-Mayor of the Township, to gauge the Township's interest in Pang's idea for the theater. (Pang Dep. 61:8-18, 69:2-4) The Township subsequently instructed WDG to submit a formal concept plan for the proposed redevelopment of the Westmont Theater property. (Pang Dep. 74:20-75:4)

Under cover of letter dated December 4, 2003, WDG submitted the requested "concept plan" to the Township.*fn6 (Twp. Defs.' Ex. 1 (Attach. C)--- Concept Plan; Pang Dep. 75:5-6; see Pl.'s Ex. 24--- Township of Haddon Resolution No. 2004-055, May 18, 2004 ("[T]he Redeveloper has proposed improvements to portions of the Redevelopment area . . . as set forth in the concept plan submitted to the Township dated December 4, 2003 . . . .")) WDG was subsequently appointed as the redeveloper for the parcel - a precursor to formal contract negotiations between WDG and the Township. (Resolution No. 2004-055; Pang Dep. 78:3-7)

B.

WDG and the Township entered into a "Redevelopment Agreement" which became effective on May 26, 2004. (Twp. Defs.' Ex. 1--- Redevelopment Agreement) A number of provisions in that contract merit particular attention. First, the contract provided for a sixty day due diligence period, during which WDG was to conduct any inspections necessary to determine whether it wished to proceed forward with the agreement. (Redev. Agreement § 3) If WDG identified an unsatisfactory condition existed during that period, it was permitted to terminate the agreement. (Id.)

Assuming that WDG did not terminate the agreement, it was required to prepare and submit to the Township a proposed "Redevelopment Project Plan" by September 26, 2004. (Redev. Agreement § 4) The term "Redevelopment Project Plan" was defined as follows:

those plans and specifications adequate to enable the Township to understand the scope of the planned Redevelopment and operation of the Westmont Theater as a live entertainment venue and shall include, at a minimum, the following: (i) a detailed Site Plan, as that term is defined in the Zoning Ordinance of Haddon Township; (ii) written description of proposed uses, including various seating capacities and types of entertainment acts to be presented at the Westmont Theater Property, including expected audience capacity for each type of event; (iii) traffic analysis showing adequate parking facilities (either on-site, off-site or both) for maximum seating capacity of the Westmont Theater . . .; and (iv) written description of proposals to minimize impact of light, noise, loitering and off-site parking impacts to the neighboring residential community. The Redevelopment Project Plan shall also identify those lots within the Redevelopment Area, in addition to the Westmont Theater Property, that Redeveloper proposes to acquire and include within the Redevelopment Project . . . . .

(Redev. Agreement § 1(g)) The Township Commissioners were required to review WDG's Redevelopment Project Plan within thirty days of receipt, and either: (1) approve it, in which case WDG would proceed with the redevelopment project or (2) advise WDG of any reasons why the submitted plan was inadequate, and meet with WDG to resolve any differences. (Redev. Agreement § 4)

The Redevelopment Agreement and an "Agreement of Sale" attached thereto established the parameters for the eventual conveyance of title to the Westmont Theater property to WDG. (Redev. Agreement § 2; Twp. Defs.' Ex. 1 (Attach. D)--- Agreement of Sale) Pursuant to the Agreement of Sale, a condition precedent to that conveyance was the "consummation of the transaction contemplated in the Redevelopment Agreement." (Agreement of Sale § 6(b)) In addition, WDG was required to obtain "Preliminary and Final Site Plan Approval" from the Township prior to conveyance of the theater property. (Agreement of Sale § 6(c)) The termination of the Redevelopment Agreement for any reason would result in the simultaneous nullification of the Agreement of Sale. (Agreement of Sale § 6(b))

The redevelopment agreement identified eight events, the occurrence of which would constitute a default by WDG. (Redev. Agreement § 11(a)) Those events included WDG's failure "to adhere to any time schedule or goal . . . unless otherwise extended pursuant to written agreement of the parties[]" or failure "to diligently pursue the redevelopment of the Westmont Theater Property[.]" (Redev. Agreement § 11(a)(2),(3)) The agreement stated that the Township would be in default if it failed "to perform any of its obligations" under the contract. (Redev. Agreement § 11(b))

In the event of a default, the non-defaulting party was required to notify the defaulting party in writing. (Redev. Agreement § 11(c)) Once such a notification was received, the defaulting party was permitted at least thirty days to effect a cure.*fn7 (Id.) In the event of an uncured default, the non-defaulting party was permitted to terminate the Redevelopment Agreement. (Redev. Agreement § 12)

The Redevelopment Agreement provided that any alteration, amendment, or modification thereto was invalid unless memorialized in writing. (Redev. Agreement § 16(b)) Finally, the agreement stated that the failure of either party to insist upon strict performance of any term or obligation under the contract was not to be construed as a waiver or relinquishment of any terms or rights under the agreement. (Id.)

WDG did not exercise its right to terminate the Redevelopment Agreement during the due diligence period. (Pang Dep. 90:1-3, 90:12-14) Thus, WDG was required to submit a Redevelopment Project Plan to the Township by September 26, 2004, but it did not do so.*fn8 (Pang Dep. 152:18-153:4) Although WDG's failure to meet that deadline would constitute a default under the strict terms of the Redevelopment Agreement, the Township did not place WDG on notice of a default. Instead, a practice began that would persist throughout the term of the contract - time frames articulated therein were not adhered to, and the Township liberally granted WDG extensions of contractual deadlines. (See Pang Dep. 98:11-18, 103:17-104:1, 109:5-7, 110:6-9) Those extensions were not memorialized in writing. (Pang Dep. 115:13-16)

Beginning in March, 2005, WDG initiated the process of obtaining a conceptual plan review of its site plans for the Westmont Theater property by the Township Planning Board. (See Pl.'s Ex. 15--- Mem. from Marc Shuster to Planning Board, Mar. 3, 2005) To that end, WDG's engineers - Bach Associates - submitted "conceptual plans, dated March 2005," for review by Marc Shuster, planner for the Township's Planning Board. (Shuster Mem., Mar. 3, 2005) Over the months that followed, correspondence generated by Bach Associates, Shuster, and Martin Sander of Schoor DePalma*fn9 indicated that the following documents were submitted by WDG for consideration by the Planning Board: (1) a "Site Plan Set" consisting of a Cover Sheet, Topographic Survey, Site Plan, Grading Plan, Landscape Lighting Plan, Detail Sheet, Conceptual First, Second, and Third Floor Plans, and Conceptual Front and Rear Elevations; (2) a Traffic Impact Study; and (3) Drainage Calculations. (See Pl.'s Ex. 19--- Ltr. from Martin Sander to Eleanor Connell, May 31, 2005; Pl's Ex. 29--- Mem. from Marc Shuster to Planning Board, Jun. 1, 2005; Pl.'s Ex. 18--- Ltr. from Martin Sander to Eleanor Connell, Jul. 5, 2005) In response to feedback from Shuster and Sander, Bach Associates submitted revisions and additions to a number of those documents.*fn10 (See Pl.'s Ex. 16--- Ltr. from Bach Associates to Marc Shuster, Jun. 24, 2005; Pl.'s Ex. 17--- Ltr. from Bach Associates to Martin Sander, Jun. 24, 2005) No document in the record indicates that the Planning Board ever reached a decision, either way, regarding the merits of WDG's site plan.*fn11

Nor is there any indication that Bach Associates submitted the above-described series of documents to the Township for consideration by the Commissioners. Ultimately, it appears WDG's efforts to provide a putative "Redevelopment Project Plan" to the Township were stymied by WDG's inability to identify an adequate source of parking for the volume of patronage anticipated on the theater property.*fn12

C.

From the inception of the Redevelopment Agreement, both WDG and the Township were aware that obtaining adequate parking for WDG's project posed a challenge. (Pang Dep. 173:12-174:17; Pl.'s Ex. 3--- Kathy Hogan E-mail, May 3, 2006 ("Two years ago, we knew we would have a big problem with parking for any large size plan proposed for the Westmont Theater. Stupidly, we approved the idea for a large size plan anyway, in the complete absence of any such viable parking plan.")) As Pang acknowledged, the Redevelopment Agreement does not list the provision of parking among the Township's responsibilities.*fn13 (Pang Dep. 175:3-7) However, according to Pang, the Township committed to working collaboratively with WDG to address the parking issues attendant to the Westmont Theater redevelopment project.*fn14 (Pang Dep. 174:7-10)

WDG's first idea regarding parking was for theater patrons to use the parking lot of the nearby Westmont PATCO Speedline station, with transportation from that lot to the Westmont Theater property to be provided by shuttle bus. (See Pl.'s 56.1 Stmt. ¶ 36) Pang contacted the Delaware River Port Authority, which operates the PATCO Speedline, to discuss this possibility. (Pang Dep. 188:12-189:11) WDG approached the Township Planning Board to discuss the PATCO parking lot idea, but the Planning Board was not receptive to that plan. (Pang Dep. 190:9-15) As a result, WDG did not contact the Delaware River Port Authority again. (Pang Dep. 190:13-15)

The remainder of WDG's efforts to obtain parking centered on the "Russell Cast" property, identified in the Township's 2002 Redevelopment Plan as Parcel "B" of the Haddon Avenue Corridor redevelopment zone. The complex history of the Russell Cast property predates the contract between WDG and the Township. In 2001, a commercial entity known as Rose Hill Estates, LLC ("Rose Hill") purchased the undeveloped Russell Cast property from the Township.*fn15 Rose Hill Estates v. Twp. of Haddon, 2006 WL 1912778, at *1 (N.J. Super. App. Div. Jul. 13, 2006). Beginning in October, 2002, Rose Hill attempted to develop that tract for residential use, but those efforts were frustrated by municipal ordinances enacted under the administration of then-Mayor Park, resulting in protracted litigation between Rose Hill and the Township.*fn16 See id. at *1-*3.

The Russell Cast property remained undeveloped in 2005, when WDG began to pursue a meeting with Joseph Del Duca, general counsel for Rose Hill. (See Pang Dep. 190:20-191:24) After a "long process of getting ahold of Mr. Del Duca[,]" (Pang Dep. 191:13-14), representatives of WDG and Rose Hill met on February 13, 2006, to discuss an agreement whereby the Russell Cast property would be used to provide parking for the Westmont Theater property. (Pl.'s 56.1 Stmt. ¶ 5; Del Duca Dep. 73:11-20)

Over the weeks and months following the meeting, WDG attempted to obtain either a leasehold or ownership interest in the Russell Cast property via negotiations with Rose Hill, but those efforts were rebuffed and no agreement was reached.*fn17 (See Twp. Defs.' Ex. 13--- E-mail from David Shulick to Joseph Del Duca, Feb. 17, 2006 (proposing short term lease for Russell Cast property pending a permanent solution); Pl.'s Ex. 7 (Attach. Shulick-14)--- E-mail from David Shulick to Joseph Del Duca, Jun. 26, 2005 (proposing independent appraisal of the Russell Cast property, and a subsequent conveyance from Rose Hill to WDG at the appraised amount of the property); Del Duca Dep. 77:13-78:8, 81:12-82:17 (testifying to Rose Hill's lack of interest in WDG's proposals)) On July 24, 2006, Del Duca informed WDG that Rose Hill was in discussions with the Township concerning the possible sale of the Russell Cast property, and requested that WDG direct any further communications regarding the property to the Township, rather than to Rose Hill. (Twp. Defs.' Ex. 16--- E-mail from Joseph Del Duca to David Shulick, Jul. 24, 2006; see Pang Dep. 243:15-17 ("[T]here was a point where [Rose Hill] made it pretty clear that they were not interested . . . in negotiating a deal with [WDG]."))

Notwithstanding WDG's inability to obtain an interest in the Russell Cast property from Rose Hill directly, WDG anticipated that the Township would take steps to procure the property from Rose Hill for public use, including WDG's use. (See Pang Dep. 245:3-10, 257:22-258:4; Shulick Dep. 71:11-21) This belief apparently originated from the Township's completion of a parking study which indicated that the Russell Cast property was the most logical source of additional parking for the Township's downtown district. (Pang Dep. 205:2-5; Pl.'s Ex. 11--- William J. Park Dep. 8:22-10:2) WDG was told that the Township would obtain the Russell Cast land either by purchasing it or the exercise of eminent domain.*fn18 (Pang Dep. 257:22-258:4) However, the Township ultimately did not move forward with the acquisition of the Russell Cast property.

D.

During the time period in 2006 that WDG was struggling to find a solution to its parking needs, representatives of the Township suggested the possibility of amending the Redevelopment Agreement to permit WDG to accomplish the redevelopment in phases. (Ward Dep. 92:20-24; Pang Dep. 106:4-12, 115:16-23) As explained by Pang, the first phase would involve the redevelopment of the property surrounding the theater, and the second phase would be the redevelopment of the Westmont Theater itself. (Pang Dep. 124:23-125:4) Pang testified that there was adequate parking available on the Westmont Theater property to accommodate the needs of the first phase. (Pang Dep. 212:20-23) WDG was hopeful that a solution to the parking needs of the Westmont Theater itself would have been identified prior to beginning the second phase of the redevelopment - Pang thought the Russell Cast property could be the source of that solution. (Pang Dep. 213:3-23)

WDG and the Township reached a verbal agreement in concept as to the contours of the phased redevelopment plan. (Pang Dep. 213:24-214:5; Shulick Dep. 80:24-81:1) A written amendment to the Redevelopment Agreement was prepared, circulated, commented upon, and revised. (Pang Dep. 93:18-24) As of late 2006 or early 2007, it was WDG's understanding that the Township's signature on the written amendment was forthcoming. (Pang Dep. 247:11-17, 252:17-22; Shulick Dep. 89:19-20) However, the Township halted progress on the amendment because an election to choose new Commissioners was to occur in May, 2007. (Pang Dep. 247:16-25) The amendment was never executed.*fn19 (Pang Dep. 106:24-107:2; Shulick Dep. 16:21-23)

E.

While the amendment to the Redevelopment Agreement was on hold, the Township was in the midst of a municipal election cycle that signified a turning point in business relations between the Township, WDG, and Rose Hill. That election occurred in May, 2007, and resulted in the installation of a new municipal government for the Township: Mayor Randall W. Teague, along with Commissioners John C. Foley and Paul Dougherty. (Pl.'s 56.1 Stmt. ¶ 11)

In early 2007, in anticipation of being elected, Teague and Dougherty met with Rose Hill representatives over lunch. (Pl.'s Ex. 6--- Randall W. Teague Dep. (Vol. I) 38:16-39:20, 42:11-20; Del Duca Dep. 39:9-40:3) The purpose of that meeting was for Teague and Dougherty to obtain background information regarding the Russell Cast property, and to determine what Rose Hill intended to do with that land going forward. (Teague Dep. (Vol. I) 45:1-8) Teague learned that Rose Hill wished to develop the property for residential use. (Teague Dep. (Vol. I) 45:9-13) Teague and Dougherty did not invite WDG to meet prior to the May election. (Teague Dep. (Vol. I) 41:15-21)

The sole direct contact between WDG and the new Township administration occurred in July, 2007, at a meeting attended by Joanna Pang, Stephen Pang, Mayor Teague, and former Mayor Park. (Pang Dep. 144:19-145:12) As described by Pang, the focus of the meeting was on "updating [Mayor Teague] on where the project stood and how the project was now being . . . phased." (Pang Dep. 146:12-15) Pang testified that Mayor Teague had little to say during the meeting. (Pang Dep. 147:1-2) Following the meeting, Pang called Mayor Teague numerous times to follow-up, but he never responded. (Pang Dep. 148:4-7, 148:15-18) By that point, WDG was waiting to move forward with the phased version of the redevelopment project, pending approval by the Township. (Pang Dep. 148:7-9)

The Township notified WDG that it was in default of the Redevelopment Agreement via letter dated November 12, 2007. (Twp. Defs.' Ex. 18--- Ltr. from Catherine Ward to Joanna Pang, Nov. 12, 2007) Therein, the Township indicated its "frustrat[ion] with the lack of progress" with the Westmont Theater property redevelopment and noted that "the deadlines set forth in the May 26, 2004 Redevelopment Agreement [had] all expired without an approved redevelopment concept being put into motion." (Id.) The letter placed WDG on formal notice that it was in default of the Redevelopment Agreement, "on the basis that [WDG] has failed to submit a Redevelopment Project Plan as defined in the Agreement." (Id.) Pursuant to the cure provisions of the Redevelopment Agreement, the letter provided WDG with thirty days to submit a Redevelopment Project Plan.*fn20

(Id.)

WDG responded to the default notice via a letter from David Shulick dated December 6, 2007. (Twp. Defs.' Ex. 19--- Ltr. from David Shulick to Catherine Ward, Dec. 6, 2007) Attached to the letter was what Shulick described as a "workable concept for the redevelopment of the Theater." (Id.) That "workable concept" was a re-submission of WDG's proposal to phase the redevelopment project - a document which had been shared with the Township months earlier. (Pang Dep. 105:23-106:1) Pang and Shulick both testified that the phasing plan was acceptable under the circumstances, because it was tailored to what the Township had requested. (Shulick Dep. 91:10-15; Pang Dep. 106:4-12) WDG's response also placed the Township on notice that the Township was itself in default of the Redevelopment Agreement.*fn21 (Shulick Ltr., Dec. 6, 2007)

On December 10, 2007, the Township responded to WDG's correspondence of December 6, 2007. (Twp. Defs.' Ex. 20--- Ltr. from Catherine Ward to David Shulick and Joanna Pang, Dec. 10, 2007) Therein, the Township indicated that the phasing plan replicated a prior submission by WDG, and failed to meet the contractual definition of a Redevelopment Project Plan. (Id.) Via letter dated December 13, 2007, the Township terminated the Redevelopment Agreement with WDG "for failure . . . to cure the default identified in the ...


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