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Advance Residential Communities, L.L.C. v. Hamilton

July 31, 2009

ADVANCE RESIDENTIAL COMMUNITIES, L.L.C., PLAINTIFF-RESPONDENT,
v.
CLARK I. HAMILTON AND CHASE PARTNERS, L.L.C., DEFENDANTS-APPELLANTS, AND ARC CHASE PARTNERS, L.L.C., ARC MORRIS PLAINS, L.L.C. AND ARC UNION, L.L.C., DEFENDANTS.
CLARK I. HAMILTON AND CHASE PARTNERS, L.L.C., THIRD-PARTY PLAINTIFFS,
v.
ADVANCE REALTY GROUP, L.L.C., GREGORY SENKEVITCH, PETER COCOZIELLO, ARG AT MADISON II, L.L.C., ARC HACKENSACK, L.L.C., ADVANCE AT BRANCHBURG II, L.L.C., ADVANCE REALTY DEVELOPMENT, L.L.C., ARC HARRISON, L.L.C., ARC HARRISON II, L.L.C., ADVANCE AT HARRISON, L.L.C. AND ARC CHASE PARTNERS STAMFORD, L.L.C., THIRD-PARTY DEFENDANTS.



On appeal from Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-92-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 10, 2009

Before Judges Skillman, Grall and Ashrafi.

This appeal is from orders enforcing a settlement agreement resolving litigation between real estate developers concerning their numerous joint ventures. The developers, collectively the parties, are plaintiff Advance Residential Communities, L.L.C. (ARC) and its affiliate Advance Realty Group, L.L.C. (ARG) and defendants Chase Partners, L.L.C. (Chase) and its owner and principal Clark I. Hamilton.*fn1 The disputes that led to the initial litigation are not at issue.

Chase and Hamilton appeal from orders entered on May 23 and June 16, 2008. The first directs Hamilton to execute a contract of purchase and sale for property in Union, New Jersey. The Union property is held by ARC and Chase through ARC Union, L.L.C. (Union, L.L.C.), and the contract contemplates a sale by Union, L.L.C. to Avalon Bay Communities, Inc. (Avalon). The second directs amendment of the purchase and sale contract to reference an option to buy granted to Chase by ARC in the settlement agreement.

Chase and Hamilton contend that the trial court's orders are based on an erroneous interpretation of the parties' settlement agreement. We agree.

Since the notice of appeal was filed circumstances have changed. On July 7, 2008, the trial court appointed an attorney to execute the contract of purchase and sale on behalf of Hamilton pursuant to Rule 4:59-2(a). Although Avalon terminated that agreement on August 28, 2008, the parties' disagreements continued. Post-appeal motion practice that is immaterial to the issues raised on this appeal but material to a motion pending before this court is discussed in part IV of this opinion.

I.

This appeal presents a preliminary question of justiciablity. Avalon's termination of the contract of purchase and sale precludes enforcement of the orders and renders them technically moot. Nonetheless, because the orders are based on the trial court's interpretation of the parties' respective obligations under the settlement agreement, this appeal from the trial court's determination presents a controversy cognizable under the Declaratory Judgment Act. N.J.S.A. 2A:16-53; see Twp. of Montclair v. County of Essex, 288 N.J. Super. 568, 571 n.1 (App. Div. 1996) (concluding that a technically moot order premised on the county's authority to issue an estimated tax bill presented a controversy under the Declaratory Judgment Act).

II.

The pertinent facts are not in dispute. The Union property is an 11.5 acre parcel, formerly owned by Red Devil, Inc., and acquired as one of the parties' joint ventures by Union, L.L.C. Hamilton is the managing member of Union, L.L.C., but ownership is divided - twenty-five percent to Chase and seventy-five percent to ARC. Union, L.L.C. acquired the property for a total cost of $7,200,000 in November 2006, the same month in which the settlement agreement was reached. At the time of the settlement, Baker Residential had a pending offer "to be the contract purchaser of the Union Property" at a purchase price of $14,250,000, and Avalon also had expressed its interest in purchasing the property.

Transfer of title to the Union property is one component of an integrated settlement agreement that addresses the parties' numerous joint ventures. Under the terms of the settlement agreement, Chase and ARC will divide the net proceeds from a sale of the Union property in accordance with their respective shares, and, in exchange for assignments and withdrawals involving their other joint ventures, ARC will pay Chase an additional forty percent of the net from its seventy-five percent share. In the end, the settlement agreement contemplates Chase's receipt of sixty-five percent of the net proceeds from a sale of the Union property.

Pending the sale of the Union property, paragraph 1(a)(iii) of the settlement agreement designates Hamilton the "sole manager of Union, LLC." Pursuant to that paragraph, Hamilton has "full and complete authority to act for, manage, control and bind the company and its business, affairs and the Union Property." Hamilton's absolute authority is limited to the extent that specific actions designated in the settlement agreement require "the express written consent" of ARC and ARG. One of the actions that requires agreement is the "[s]elling of any Union, LLC's assets with the exception of the sale of Union, LLC's ...


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