August 10, 2009
ROBERT LEARY, JR., PLAINTIFF-APPELLANT,
PEPPERIDGE FARM, INC., A CORPORATION OF THE STATE OF CONNECTICUT, AND MICHAEL REILLY, INDIVIDUALLY, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1049-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: February 4, 2009
Before Judges Cuff, Fisher and Baxter.
Plaintiff Robert Leary, Jr., and defendant Michael Reilly are distributors of the biscuit product line of Pepperidge Farm, Inc. (Pepperidge Farm). They are governed by Pepperidge Farm's standard consignment agreement, and each agreement contains a detailed description of their exclusive service territory. Plaintiff's relationship with Pepperidge Farm commenced in 1985; Reilly's in 1998.
This case centers on three stores in a shopping center on the north side of Route 22 on the border of Somerset and Union Counties. Plaintiff began servicing the first two, but Pepperidge Farm assigned the third to Reilly, who thought that the first two should also have been assigned to him. Plaintiff complained that Pepperidge Farm unfairly assigned the third store to Reilly by applying definitions of key contractual terms that it invented long after plaintiff executed his agreement, while Reilly agreed with Pepperidge Farm that those definitions had always been applied because they were unambiguous and necessary.
Plaintiff brought this action for a declaration of his exclusive right to service the third store and for injunctive relief.*fn1 Reilly responded with a damage claim against plaintiff and Pepperidge Farm for the income he should have earned from servicing the first two stores. Pepperidge Farm asserted that the terms in the agreement were unambiguous, and its assignment of the third store to Reilly was consistent with those terms.
Pepperidge Farm moved for summary judgment against both plaintiff and Reilly, and plaintiff cross-moved for summary judgment. Reilly settled his damage claim against Pepperidge Farm and joined its motion against plaintiff. The court granted Pepperidge Farm's motion and then modified its opinion to add that it was also granting Reilly an enforceable exclusive right from that time forward to service the first two stores. Plaintiff appeals the grant of Pepperidge Farm's motion, as well as the affirmative relief to Reilly. We reverse.
Pepperidge Farm has nearly 3000 distributors for its "biscuit" products, and a separate set of distributors for its "bakery" products. Each distributor has an exclusive service territory in their individual consignment agreements. Disputes over which distributor may service a particular store near the border of two territories, like the three stores at issue here, arise because their contracts include, not only the geographical delineation of their territories, but also functional tests that can outweigh the delineation for such stores.
On March 25, 1985, plaintiff entered into a consignment agreement with Pepperidge Farm. It conferred on plaintiff the exclusive right to distribute Pepperidge Farm's biscuit products to retailers and other facilities located "within the territory" defined in Schedule A. There was no term, and plaintiff could terminate on thirty days' written notice. Pepperidge Farm could terminate without cause, but it would have to pay plaintiff 125% of "the fair market value of this franchise on the termination date" to be determined by mutual agreement or arbitration. An integration clause prevented the agreement from being "amended orally or by custom or conduct" in the absence of a writing executed by both parties. Another clause provided that "any ambiguities shall be construed and any inconsistencies shall be reconciled" so as to "effect [the agreement's] true intent and meaning."
Schedule A to plaintiff's agreement is the "description of territory." It commences with a "note" then provides the geographic delineation of the territory's boundary (the Note). The Note contained the agreement's first references to "route customers" and "fronting," without defining either term:
NOTE: Route customer's [sic] establishments fronting on any thoroughfare or boundary described herein (unless specified otherwise) are deemed to belong to this franchised territory.
Schedule A sets forth in detail the perimeter of plaintiff's territory. The portion implicated by this case is the northern boundary, which is a segment of Route 22 approximately seven miles long, running east from Somerset Street in Plainfield to Springfield Avenue in Springfield. Schedule A named numerous other streets, political borders, and geographical features as forming the border of plaintiff's territory, and it used the phrase "excluding all route customers" after three of them, but not for any part of Route 22.
On June 29, 1998, Reilly and Pepperidge Farm entered into a consignment agreement that had the same provisions as plaintiff's. Reilly's agreement contained its own Schedule A titled "description of territory," and the description was preceded by the same "note" as in plaintiff's agreement, except for the addition of quotation marks around the word "fronting."
Reilly's territory was north of plaintiff's territory, and a portion of its southern boarder was formed by the same segment of Route 22 named in plaintiff's agreement. The words "excluding all route customers" came immediately after the naming of Route 22 as the border, as follows: "thence southwest along the northwesterly side of U.S. Route #22, excluding all route customers, to the intersection with Mountain Avenue in the Township of Bridgewater."*fn2
On June 13, 1996, Pepperidge Farm issued an inter-office memo to its field sales directors explaining the term "fronting" as used in consignment agreements.
We have recently had a number of problems with respect to territorial descriptions resulting from a misunderstanding of the meaning of the term "fronting" in our territorial descriptions.
The term "fronting," as used in our Consignment Agreements means quite simply "facing." A store is "fronting" on the road which its primary entrance is facing. The street address of that store, while relevant, is not determinative of the road on which it is "fronting."
Thus, for example, a store which is located on the corner of Broad and Market Streets which has its primary entrance facing Market Street is "fronting" on Market Street, even if it has a Broad Street address.
Similarly, if a store is part of a Shopping Center, the determinative issue is the direction that the main entrance of the store is facing. The direction that the main entrance of the Shopping Center is facing and the address of the store and/or the Shopping Center are relevant, but not determinative. Thus, if there is a grocery store in an "L" shaped Shopping Center at the corner of Broad and Market Streets and the main entrance of the grocery store is facing Market Street, then that store is "fronting" on Market Street even if other stores are facing Broad Street and even if the main entrance of the Shopping Center is facing Broad Street and the address of both the Shopping Center and the store are Broad Street.
To avoid future problems, please be certain, at your next DSM [district sales manager] meeting to make sure that each DSM understands this distinction. Issues of this type are complicated and important, so please encourage your DSM's to get in touch with the Legal Department in the event of any ambiguity or doubt.
This memo instructed the field sales directors to make sure that each district sales manager understands these issues, and to encourage them to contact Pepperidge Farm's legal department "in the event of any ambiguity or doubt." The record does not indicate that plaintiff received a copy of this memo or attended a meeting that related its contents.
On August 2, 2001, Pepperidge Farm sent an inter-office memo to its "customer vice presidents" about "fronting." It deleted the word "relevant" from the phrase "relevant but not determinative" to indicate more clearly that the factors that were "not determinative" were actually completely irrelevant.
More important, while this memo maintained the prior memo's insistence that "fronting" simply meant "facing," it also mentioned an additional element, namely, the provision that a building facing a street did not "front" on that street if there was an "intervening" structure:
[A] store is "fronting" on the road which its primary entrance is facing, provided that there is no building or other real estate between the store and the road. . . .
Thus, for example, a store which is located on the corner of Broad and Market Streets which has its primary entrance facing Market Street, with no building or other property between the store and the road, is "fronting" on Market Street, even if it has a Broad Street address. . . . .
Finally, if a store is set back from, but facing towards a road, but there is some other building, edifice or property between the store and the road, then the store is "fronting" on the intervening building edifice or other property, not the road.
This memo similarly instructed the customer vice presidents to ensure that "each DSM understands these issues" and to feel free to consult Pepperidge Farm's legal department about "any ambiguity or doubt." Again, the record does not indicate that plaintiff received a copy of this memo or attended a meeting that related its contents.
Plaintiff certified that he had been a distributor for Pepperidge Farm for twenty years, that "the common determination of the location of a store was based solely on the address of the store," and that Pepperidge Farm never "discussed or defined" the term "fronting." Reilly asserted that plaintiff, "as well as almost all New Jersey Pepperidge Farm distributors[,] are aware of" the dispute between other distributors over the assignment of a store in Edison that Pepperidge Farm settled by applying its fronting methodology. However, Reilly did not indicate when that dispute occurred or how it would have come to the attention of a distributor who was not involved in the dispute.
The three disputed stores are Wal-Mart, Target and Stop & Shop. The three stores for which plaintiff and Reilly disputed the servicing rights are located in the unenclosed Watchung Square Mall (the mall). The mall is on the north side of Route 22 and therefore within the geographic bounds of Reilly's territory.
Route 22 provides the only access to the mall's main entrance, as well as to the adjacent side streets that lead to the main parking areas, which are behind a row of other stores closest to the highway. Wal-Mart is located to the side of those parking areas and thus is not directly behind that first row of stores; its entrance faces the direction opposite from Route 22. Target and Stop & Shop are behind the parking areas and directly behind the first row of stores; their entrances face Route 22. All three stores have a Route 22 mailing address. Target opened in October 2001, Stop & Shop opened in May 2002, and Wal-Mart opened in January 2004.
Plaintiff certified that he started servicing Target and Stop & Shop when they opened, but only after Pepperidge Farm assigned them to him. The week before they opened, "my district sales manager called me and told me the stores were mine and I should 'go fill them up.'" Pepperidge Farm also programmed those stores into plaintiff's handheld inventory-tracking computer.
On February 10, 2004, Pepperidge Farm responded to plaintiff's inquiry about Wal-Mart by explaining that the store failed to satisfy the criteria for "fronting" on Route 22:
The term "fronting" as used in a Description of Territory has been consistently interpreted by Pepperidge Farm to have the same meaning as "facing." The mailing address of the retail store is not determinative of the road on which it is "fronting." If a retail store's primary entrance is facing away from a road, then the store is deemed to be "fronting" in that direction and not on the road.
With respect to the Wal-Mart in question, the primary entrance of the store is facing north towards the parking lot and not towards Route 22. Applying the above methodology, the store would not be included in your territory. The store is deemed to be included in the territory of the SDA*fn3 who covers the area north of Route 22.
That same day, Pepperidge Farm sent an identical letter to Gilbert Mahler, a distributor of Pepperidge Farm's bakery products, in response to his inquiry about the same store. The portion of Route 22 that is the northern boundary of plaintiff's territory is also the northern border of Mahler's, although their remaining borders are not exactly the same.
In the certification Pepperidge Farm submitted in support of its motion for summary judgment, James A. Ruddy, Pepperidge Farm Director of Retail Operations for the Mid-Atlantic Sales Region, acknowledged plaintiff openly serviced the Target and Stop & Shop stores. Ruddy explained that once a distributor commences to service an account, Pepperidge Farm will not interfere, even if the stores are not in the distributor's territory, unless another distributor submits a complaint to it. Ruddy confirmed that Reilly did not object for over two years about plaintiff's service of the Stop & Shop and Target accounts.
Ruddy also explained the methodology for account assignment when the border between adjacent territories is a roadway. The consignment agreements for those territories sometimes gave one of the distributors the right "to service certain customers along both sides" of the roadway, and that such customers were called "route customers."
Ruddy related that Pepperidge Farm had developed "an objective 'fronting' methodology whereby it determines which customers are 'route customers.'" Without stating when Pepperidge Farm developed the methodology, he declared that it had long interpreted the term "fronting" as used in consignment agreements "to have the same meaning as 'facing,'" and he gave the same definition as in Pepperidge Farm's 1996 and 2001 internal memos. Without indicating who would make the initial determination about assignment of a new customer located near a boundary road, Ruddy said that Pepperidge Farm depended on the distributor who objected to the determination "to give it notice that he or she believes the store is not a route customer," after which Pepperidge Farm's employees would visit the site and make a definitive determination.
Ruddy declared that Wal-Mart would be a "route customer" of plaintiff's under plaintiff's agreement only if its entrance faced Route 22, and noted that Wal-Mart's entrance instead faced in the opposite direction. While the Target and Stop & Shop entrances face Route 22, those stores are not fronting on it due to the "intervening buildings" between them and the road. Ruddy admitted that Pepperidge Farm had inadvertently "treated" Target and Stop & Shop as plaintiff's route customers, but he asserted that Reilly should have known that plaintiff was openly servicing them.
Plaintiff responded by certifying that Pepperidge Farm "confirmed that the Stop & Shop and Target stores were included in my exclusive franchise territory when those stores opened." Pepperidge Farm, as it always had, "acted consistent with the interpretation that any and all establishments located on U.S. Route 22 between Somerset Street and Springfield Avenue were included as part of my exclusive franchise territory." Pepperidge Farm's first failure to act in that manner occurred later in 2003, when it "informed" him that Wal-Mart "would be assigned to" Reilly.
In further support of his argument that the term "fronting" is ambiguous, not uniformly applied, and a policy adopted following execution of his agreement, plaintiff referred to a ShopRite supermarket and a BJ's Wholesale Club (BJ's) on the north side of Route 22 that Pepperidge Farm continues to treat as route customers of his. He included a photograph of BJ's that showed other stores between it and the road, implying that they were "intervening" stores under Pepperidge Farm's "fronting" methodology. He did not indicate why ShopRite failed to satisfy that test, and his photograph of the store showed its entrance facing the road, with one other building that was closer to the road, but far enough to the side so that no portion of ShopRite was directly behind it.
Ruddy explained that ShopRite and BJ's qualified as plaintiff's route customers under Pepperidge Farm's fronting methodology because ShopRite faced Route 22 with no intervening structures, as BJ's did when it opened. Sometime later, a restaurant was built between BJ's and Route 22, but Pepperidge Farm's policy was not to change a store's designation as "a 'fronting' route customer" when an intervening structure was built after a distributor had begun to service that customer.
Reilly then certified that his family's experience as distributors for Pepperidge Farm since the 1950s was his basis for asserting that the distributors in general have "always" understood "fronting" exactly as Pepperidge Farm was describing it. He had declined to challenge the assignment of Target and Stop & Shop to plaintiff out of deference to his "longstanding relationship with" Pepperidge Farm, but plaintiff's refusal to negotiate with him and Pepperidge Farm compelled him to assert his contractual right to service all stores in his territory that were not properly viewed as plaintiff's route customers.
Turning to the contractual language, plaintiff asserted that a "route customer" was "nothing more than any customer located on a distributor's route," and that the definition was "common knowledge among [Pepperidge Farm's] distributors." He insisted that Pepperidge Farm had never "discussed or defined" the term "fronting" for as long as he had been a distributor, and that "the common determination of the location of a store was based solely on the address of the store."
Mahler certified that he similarly believed the term "route customer" to mean all the customers anywhere along a distributor's service route, inside the territory or on the boundary. It had no special definition, and especially no definition that depended on a contrived concept of "fronting."
Mahler had been a distributor of Pepperidge Farm's bakery products for more than sixteen years, and in December 2002, he had purchased his current territory from another distributor. From that time through the September 2005 date of his certification, Mahler serviced Target and Stop & Shop, which Pepperidge Farm's district sales manager assigned to him under the "distribution system" that Pepperidge Farm used for chain store.*fn4 At the time Mahler bought that territory, he "was aware" that the distributor of Pepperidge Farm's bakery products in the territory north of Route 22 had complained to Pepperidge Farm that those stores should have been assigned to him, but Pepperidge Farm "never took any action."
However, Pepperidge Farm did not assign Wal-Mart to Mahler, and when he protested to Pepperidge Farm, it sent him a letter that explained that "fronting" meant "facing" a roadway. Pepperidge Farm refuted Mahler's account by representing that its legal department was unable to locate any indication of a complaint about Target and Stop & Shop by the neighboring distributor.
The motion judge held that the agreements governing plaintiff's and Reilly's routes were unambiguous. He further concluded that the Note's condition of "fronting on any thoroughfare or boundary" had only "one reasonable interpretation," namely, Pepperidge Farm's interpretation that any customer's building located on a thoroughfare also be "facing" that thoroughfare. The judge added that such an interpretation of "fronting" was "in accordance with the ordinary meaning associated with the common usage and understanding of that word." The judge did not say why alternative interpretations, such as the interpretation offered by plaintiff, were unreasonable, and he did not cite any authority or trade custom as support for Pepperidge Farm's interpretation. In addition, the judge found that the history of dealings between plaintiff and Pepperidge Farm was incapable of indicating any other meaning for the term "fronting," because other than the three stores at issue, plaintiff did not have customers whose buildings failed to satisfy Pepperidge Farm's fronting methodology at the time he began to serve them.
The motion judge further observed that the three stores were indisputably located within the geographical bounds of Reilly's territory, but that they were located on a segment of Route 22 for which plaintiff's agreement "does not exclude route customers." For that reason, plaintiff's agreement would have given him the right to service the three stores as long as they satisfied Pepperidge Farm's definition of "fronting" on that thoroughfare, which they did not. The judge rejected plaintiff's approach, which he characterized as limiting the analysis to the failure of his territory description to exclude route customers on Route 22 and which rendered the Note and term "fronting" surplusage. Furthermore, while the judge acknowledged that Reilly's agreement excluded "all route customers along" Route 22, he reasoned the exclusion applied only to stores that actually qualified as plaintiff's route customers, so it had no effect here.
Plaintiff claims that the motion judge erred by granting summary judgment to Pepperidge Farm and Reilly. He argues that the Note on Schedule A assigned him the right to service route customers' establishments fronting on any thoroughfare named as part of his territory's boundary unless the territory description specified otherwise, which it did not do for Route 22. Nothing in his agreement defined either "route customer" or "fronting," so the court should have followed the terms' ordinary meanings, with "route customer" meaning any customer on the routes he traveled to service all of his customers, and "fronting" simply meaning located on those streets. Reilly's agreement recognized the assignment to plaintiff of all customers fronting on either side of plaintiff's northern boundary, because when it stated the relevant segment of Route 22 to be the southern boundary of Reilly's territory, it expressly excluded all "route customers" on that segment, not just those route customers "fronting" on it. Indeed, Reilly's territory description twice used the word "along" rather than "fronting" to indicate a customer located on a particular street.
Plaintiff argues further that Pepperidge Farm acted consistently with this understanding of the agreements when it assigned Target and Stop & Shop to him, in recognition that they were located in a shopping mall fronting on Route 22. Thus, plaintiff contends the motion judge incorrectly disregarded this strong evidence of the agreements' unambiguous meaning, and disregarded the agreements' integration clauses as well, by imposing a fronting methodology, which plaintiff's agreement did not contain and which Pepperidge Farm would not even devise until several years after executing that agreement, in violation of its integration clause and prohibition of unilateral modification.
Summary judgment must be denied if "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party in consideration of the applicable evidentiary standard, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). However, the court may not make an inference by deciding a credibility issue. Id. at 540; Tannenbaum & Milask, Inc. v. Mazzola, 309 N.J. Super. 88, 93-94 (App. Div. 1998). An appellate court reviews a grant or denial of summary judgment de novo under the same standards that governed the trial court. Turner v. Wong, 363 N.J. Super. 186, 198-99 (App. Div. 2003).
An appellate court's review of a contract is not bounded by the lower court's reading of it, because the interpretation of a contract "is a matter of law for the court subject to de novo review." Fastenberg v. Prudential Ins. Co., 309 N.J. Super. 415, 420 (App. Div. 1998). Appellate courts decide such purely legal questions without deferring to lower courts' "'interpretations of the law and the legal consequences that flow from established facts.'" State v. Harris, 181 N.J. 391, 419 (2004) (quoting Manalapan Realty v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)), cert. denied, 545 U.S. 1145, 125 S.Ct. 2973, 162 L.Ed. 2d 898 (2005).
Contractual language "is to be interpreted by its effect upon an ordinary mind," with the words to "be given their usual and natural meaning." Middlesex County Sewerage Auth. v. Borough of Middlesex, 74 N.J. Super. 591, 604 (Law Div. 1962), aff'd o.b., 79 N.J. Super. 24 (App. Div.), certif. denied, 40 N.J. 501 (1963). A court may not adopt "an interpretation contrary to the . . . plain meaning" of the contract's wording, because "[a] party that uses unambiguous terms in a contract cannot be relieved from the language simply because it had a secret unexpressed intent" to a different effect. Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div. 2002).
Contracts are also to be interpreted in accordance with the parties' intent, with due regard for the contractual purpose and the "surrounding circumstances." Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993); Nitta v. Yamamoto, 31 N.J. Super. 578, 580 (App. Div. 1954); Regan v. Regan, 246 N.J. Super. 473, 478 (Ch. Div. 1990). "It has been decided many times and in many cases that the court will not make a different or a better contract than the parties themselves have seen fit to enter into." Washington Constr. Co. v. Spinella, 8 N.J. 212, 217 (1951). "We are not at liberty to introduce and effectuate some supposed unrevealed intention. The actual intent of the parties is ineffective unless made known in some way in the writing." Newark Publishers' Ass'n v. Newark Typographical Union, 22 N.J. 419, 427 (1956). It is "the intent expressed or apparent in the writing that controls," and not some putative "real" intent that the writing does not express. Ibid.
To those ends, New Jersey courts endeavor to give effect to all of a contract's provisions. Goldberg v. Commercial Union Ins. Co. of N.Y., 78 N.J. Super. 183, 190 (App. Div. 1963). Such an interpretation "will be preferred to one which leaves a portion of the writing useless or inexplicable." Prather v. Am. Motorists Ins. Co., 2 N.J. 496, 502 (1949); Goldberg, supra, 78 N.J. Super. at 190. Our courts will not place "[d]isproportionate emphasis upon a word or clause or a single provision" in order to disfavor the "probable intent and purpose" that animated "the contractual scheme as a whole." Newark Publishers' Ass'n, supra, 22 N.J. at 426. See also Schenck v. HJI Assocs., 295 N.J. Super. 445, 452-53 (App. Div. 1996) (court must give priority to the reason and spirit of the whole of the contract assessed in relation to the parties' situation and objectives), certif. denied, 149 N.J. 35 (1997).
A contract is ambiguous if its terms can support alternative interpretations. Schor, supra, 357 N.J. Super. at 191. The determination that a contractual provision is clear or ambiguous is itself a matter of law, Cooper River Plaza East, L.L.C. v. Briad Group, 359 N.J. Super. 518, 528 (App. Div. 2003); Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997), because it is an assessment of whether the provision's meaning can be determined without a need to resolve "conflicting testimony," Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). An appellate court would review such a determination de novo, with the same absence of deference shown to any lower court ruling on the law or on the legal effect of particular facts. Harris, supra, 181 N.J. at 419.
If "the context of the document itself and the transaction to which it pertains" create a doubt about the meaning of nominally unambiguous contract language, the court may consider "proof of extrinsic circumstances bearing on the alleged proper interpretation of the language used." Schor, supra, 357 N.J. Super. at 192. However, it is still "the intent expressed or apparent in the writing that controls." Friedman v. Tappan Dev. Corp., 22 N.J. 523, 530-31 (1956). An intention that is "apparent in the writing" is one that would not necessarily be inconsistent with the term in question. In other words, as the Court explained in Newark Publishers' Association, supra, 22 N.J. at 427 (emphasis added), parol evidence is admissible to establish an intention as long as the intention is not "wholly unexpressed" in the writing.
When the meaning of an ambiguous contractual provision depends on the implications of parol evidence, the provision's meaning must be determined by a jury. Michaels v. Brookchester, Inc., 26 N.J. 379, 387 (1958); Great Atl. & Pac. Tea Co. v. Checchio, 335 N.J. Super. 495, 502 (App. Div. 2000).
"The word 'frontage' in its common and legal accepted meaning has reference to the frontage of any premises on a public street or highway, and not to the frontage of the buildings erected thereon. It is also construed to mean the space available for the erection of buildings." State v. Zeus, 56 N.J. Super. 323, 326 (Law Div. 1959) (citing 17A Words and Phrases 418 (West)); Ballantine's Law Dictionary 533 (2d ed. 1948); Black's Law Dictionary 797 (4th ed. 1951)).
New Jersey case law typically uses "fronting" to indicate that a lot is adjacent to a road, with no regard to the orientation of the building on that lot. See, e.g., Urban v. Planning Bd. of Manasquan, 238 N.J. Super. 105, 113-14 (App. Div. 1990), aff'd as modified on other grounds, 124 N.J. 651 (1991); Cicchino v. Twp. of Berkeley Heights Planning Bd., 237 N.J. Super. 175, 178 (App. Div. 1989); Engleside at W. Condo. Ass'n v. Land Use Bd. of Beach Haven, 301 N.J. Super. 628, 632 (Law Div. 1997); Pullen v. S. Plainfield Planning Bd., 291 N.J. Super. 303, 316 (Law Div. 1995). If "fronting" instead referred to building orientation, a corner lot could never be described as "fronting" on both adjacent streets. See, e.g., Urban, supra, 238 N.J. Super. at 113-14 (using "fronting" in that way).
The motion judge here simply declared that the term "fronting" in plaintiff's agreement meant "facing," without explaining why the actual contract language was not equally susceptible of the typical case law usage that plaintiff asserted. It found that Pepperidge Farm's interpretation comported with ordinary usage without citing any authority, much less attempting to distinguish the usage in cases like those cited above. The motion judge failed to consider the authority lending support to plaintiff's interpretation and the absence of New Jersey authority supporting Pepperidge Farm's interpretation as significant indications that the term "fronting" was ambiguous.*fn5
The motion judge recognized the need to determine the existence of any ambiguity in light of the context and purpose of the agreement. Certainly one purpose of the agreement is to ensure that every customer is within the service territory of only one distributor; however, that purpose does not prevent use of an unambiguous term.
Compared to plaintiff's understanding, Pepperidge Farm's methodology did not necessarily represent a significant reduction in the need to exercise subjective judgment when determining to which distributor any particular store should be assigned. Ruddy's objection about the vagueness of "fronting" if equated with the word "along," could just as well be applied to the way that Pepperidge Farm's methodology relies on whether a building "faces" the road without an "intervening" structure. Ruddy was correct about the absence of a bright-line answer for when a store is set back a substantial distance from the road. That is, there is no bright-line rule to determine how far removed from the road a building may be and still be located "along" it. However, there is similarly no bright-line answer for how many degrees away from parallel with the road that the entrance of a store may be rotated and still be "facing" it.
The history of dealings between plaintiff and Pepperidge Farm over ShopRite and BJ's is incapable of illuminating the meaning of "fronting," because those stores satisfy both plaintiff's and Pepperidge Farm's interpretations. The record suggests, however, an adjustment or modification in the application of the "fronting" methodology was required when a store, restaurant or other commercial establishment was constructed between the road and a store that had been assigned to a distributor like plaintiff. In other words, Pepperidge Farm freely modified or interpreted its fronting methodology to account for subsequent events.
Moreover, if Pepperidge Farm actively assigned Target and Stop & Shop to plaintiff as he alleged, that would have been an act of partial performance under his agreement, and the motion judge should have considered the allegation as parol evidence of its meaning. "Where the parties to a contract have given it a practical construction by their conduct, as by acts in partial performance, such construction is entitled to great if not controlling weight in determining its proper interpretation." Washington Constr. Co. v. Spinella, 13 N.J. Super. 139, 142 (App. Div.) (quoting 9 Williston on Contracts § 46 at 64 (Rev. ed.)), aff'd, 8 N.J. 212 (1951).
Instead, the motion judge simply dismissed plaintiff's certifications as insubstantial, when plaintiff's assertion, if true, could have been dispositive. Plaintiff was describing Pepperidge Farm's conduct from his personal knowledge of it, so his representations about it were not hearsay. Bilotti v. Accurate Forming Corp., 39 N.J. 184, 206 (1963); Baldyga v. Oldman, 261 N.J. Super. 259, 265 (App. Div. 1993).
By disregarding plaintiff's representations, the motion judge may have relied on Pepperidge Farm's denial of having actively assigned the stores to plaintiff, and Pepperidge Farm's representation that it instead let plaintiff service them because it allowed distributors to make such determinations in the first instance. That would have been an implicit finding that Pepperidge Farm was more credible than plaintiff, and a motion judge is not to make credibility determinations on summary judgment. Brill, supra, 142 N.J. at 540; see also Conrad v. Michelle & John, Inc., 394 N.J. Super. 1, 13 (App. Div. 2007) ("In the context of a summary judgment motion, the judge does not weigh the evidence, or resolve credibility disputes. These functions are uniquely and exclusively performed by a jury."); Tannenbaum & Milask, supra, 309 N.J. Super. at 93-94 (same).
The motion judge also ignored the 1996 and 2001 memos issued by Pepperidge Farm that were designed to settle disputes that had arisen from "a misunderstanding of the meaning of the term 'fronting' in our territorial description." The existence of disagreements is not determinative that the term is ambiguous, but it is a strong indicator that the term is susceptible to more than one meaning. Moreover, when confronted with agreements in effect for two decades, the motion judge should have recognized that the fronting methodology developed by Pepperidge Farm may be its response to evolving commercial development patterns which may also effect a unilateral modification of its distributor agreements.
The language, context, and purpose of the consignment agreements did not provide an adequate basis for the motion judge to infer that parties who were dealing with the assignment of customers near a territory boundary road would naturally or necessarily focus on the orientation of the customers' entrances rather than on whether the customers' lots were adjacent to the road. The absence of documentary evidence defining Pepperidge Farm's "fronting" methodology prior to the execution of plaintiff's agreement, together with the absence of plaintiff's subsequent written assent to it, created a material dispute about whether Pepperidge Farm was imposing it unilaterally in violation of the agreement's provision against such modification. The motion judge should not have disregarded the material, non-hearsay evidence that Pepperidge Farm had affirmatively assigned Target and Stop & Shop to plaintiff contrary to the fronting methodology that it was urging the court to apply.
In short, we conclude that the term fronting is ambiguous, and summary judgment in favor of Pepperidge Farm and Reilly should not have been granted.