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Doughty Road, LLC v. A.E. Stone

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


November 17, 2009

DOUGHTY ROAD, LLC, STEPHEN A. GROSS AND MARTHA I. GROSS, PLAINTIFFS-APPELLANTS,
v.
A.E. STONE, INC. AND THOMAS K. RITTER, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. C-138-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 7, 2009

Before Judges Graves, Sabatino and J. N. Harris.

Doughty Road, LLC ("Doughty Road"), Stephen A. Gross and Martha I. Gross (collectively "plaintiffs"), appeal the Chancery Division's order dated August 14, 2008, which followed several days of evidential hearings. The order permits A.E. Stone, Inc. ("Stone") and Thomas K. Ritter ("Ritter") (collectively "defendants") to "stack" or "stage"*fn1 railroad cars temporarily across plaintiffs' property for the purpose of allowing those cars to be unloaded upon defendants' property and then backed up, in succession, onto plaintiffs' property. The Chancery judge's decision was partly based upon a 2000 deed authorizing an easement across the plaintiffs' property for "railroad service" purposes, and predominantly based upon the terms of a 2005 agreement (the "Settlement Agreement") between the parties, which granted defendants "full and uninterrupted rail service into and out of [plaintiffs'] and [defendants'] property."

Plaintiffs maintained at trial, and reiterate on appeal, that the "staging" process substantially and wrongfully interferes with their business operations. They argue that such staging was not contemplated in either the deed or in the later Settlement Agreement, and that the trial court misinterpreted those documents in finding such an implied right of staging.

Because we are satisfied that the Chancery judge's contractual interpretation is reasonably supported by the evidence at trial and is consistent with applicable law, we affirm the order.

I.

A.

Stone is in the business of manufacturing hot-mix asphalt. It operates on a parcel of property that straddles the boundary line between Pleasantville and Egg Harbor Township. The Stone property abuts plaintiffs' property, which they acquired from Stone.

As part of its manufacturing process, Stone receives approximately four hundred truck deliveries of crushed stone and concrete directly to its facility each week. Additional crushed stone is delivered by rail to a nearby lumberyard leased by Stone. Trucks then transport that additional material to Stone's facility. The deliveries from the rail services to the lumberyard arrive on twenty-five car trains.

To reduce the extensive trucking needed for its business, Stone contracted with Pennoni Associates ("Pennoni"), an engineering firm, in the mid-1990s, to design a railroad spur. The design generated by the firm is referred to in the record as the "Pennoni Plan."

In July 1996, Stone obtained a CAFRA permit from the New Jersey Department of Environmental Protection ("DEP") authorizing the construction of the rail spur. The permit referenced the design of the Pennoni Plan, which was a basis for the DEP's approval.

Meanwhile, Doughty Road, through its principal, Mr. Gross, entered into discussions with Stone's principal, Ritter, to acquire a portion of Stone's property. Mr. Gross hoped to expand his existing building supply business, Tri-County Building Supplies ("Tri-County"), by moving to a site that had railroad access.

Eventually, in 1999, Mr. Gross agreed to purchase a parcel of the Stone property on the Pleasantville side of the municipal border for $255,000. An agreement of sale was signed in August 1999, and Mr. Gross closed on the parcel on October 18, 1999.

In September 2000, Mr. and Mrs. Gross signed an agreement to purchase more adjoining parcels of property from Stone for $82,500. This second purchase was for two lots in Pleasantville and four lots on the Egg Harbor side of the municipal border. It was contemplated that these additional lots would support the rail line.

The closing of the second acquisition took place on December 28, 2000. The deed associated with that purchase contained the following language, which later became relevant to this litigation:

It is the intention of the Grantor [Stone] and Grantee [Mr. and Mrs. Gross] that a railroad line will be constructed across a portion of the [p]roperty to provide railroad service to [Stone's] adjacent property in Egg Harbor Township . . . and Grantee's adjacent properties. . . . The specific location of the railroad has yet to be determined and will be subject to the reasonable consent of both parties. The

[p]roperty herein conveyed shall be subject to an irrevocable and permanent easement to [Stone] and for the benefit of [Stone's] property, for the construction of such railroad to provide railroad service to and from [Stone's] [p]roperty. [(Emphasis added).]

Over the next few years, Mr. and Mrs. Gross proceeded to obtain the necessary governmental approvals for construction of the new Tri-County facility. In addition, the parties jointly pursued the extension of the rail line onto their respective properties. As proposed, the rail line needed to cross Washington Avenue (also known as County Route 608) in Pleasantville, a highway under the jurisdiction of Atlantic County.

To address the rail crossing issues, an on-site diagnostic team meeting was convened on October 2, 2003, by the New Jersey Department of Transportation ("DOT"). The meeting was attended by, among others, DOT representatives; Mr. Gross; Thomas C. Roesch, a project engineer hired by Mr. and Mrs. Gross; Steven Kurtz, Stone's vice-president of operations; and Thomas Collard, the Vice-President of the Southern Railroad Company of New Jersey ("SRNJ").*fn2 During that meeting, Collard allegedly described for the DOT representatives how close the "stacked" railroad cars servicing Stone's property would be expected to come to the Washington Avenue intersection.

Following the October 2003 meeting, the DOT issued a "Memorandum of Record" on December 11, 2003, which summarized the meeting. Among other things, the DOT's memorandum noted that the persons in attendance had been "briefed [as to] the proposed at-grade crossing project, and the proposed train activity." The memo further stated that "[t]he new rail line will be established to provide service to Tri-County Building Suppl[ies] and the A.E. Stone asphalt plant." Additionally, the memo indicated that "[t]he lumber train is estimated to be 4 cars and the stone train will consist of 25 cars."

Eight months later, the Commissioner of the DOT approved the proposed rail line. The approved rail line, designated as the "Cambria Industrial Track," was partially funded by public funds. It was to be constructed by SRNJ.

In late 2004, litigation ensued between Stone and Ritter, on one side, and Mr. and Mrs. Gross, Doughty Road and Tri- County, on the other, relating to certain environmental and drainage issues affecting their respective properties. That litigation was settled between the parties on July 18, 2005, when they entered into the Settlement Agreement. The Settlement Agreement provides at Paragraph 5(a) that:

[All parties] shall proceed, promptly, diligently, and cooperatively, using their best efforts, to facilitate the implementation of full and uninterrupted rail services into and out of the[ir respective] property as referenced in the CAFRA permits[.] [(Emphasis added).]

Paragraph 5(b) of the Settlement Agreement further provides that:

[All parties] shall enter into all agreements that may be reasonably requested or necessary to implement such rail service; those agreements include, but are not intended to be limited to, an easement for the rail line to run across Gross'[s] property to provide rail service into Stone's property, which easement agreement shall be entered into by [all parties] within thirty days of receipt of metes and bounds descriptions. [(Emphasis added).]

Paragraph 8(c) also provides:

Notwithstanding anything to the contrary in this Agreement, Gross's development plans and street vacations shall in no way interfere with the immediate development and uninterrupted implementation of the rail service extending into and out of the Stone property[.] [(Emphasis added).]

Notably, the previously-issued CAFRA permit referenced in Paragraph 5(a) of the Settlement Agreement provided, in relevant part:

5. Prior to construction the applicant [Stone] must obtain all necessary easements as required by the project. Copies of the executed easements must be submitted to the Land Use Regulation Program. [(Emphasis added).]

Another section of the CAFRA permit recites that "[t]he proposed 2,676 linear foot railroad siding will service the existing A.

E. Stone bituminous concrete manufacturing facility in Egg Harbor Township . . . [.]" (Emphasis added).

Prior to and during the pendency of this litigation, Doughty Road applied to the Egg Harbor Township Planning Board ("the Board") for site plan approval of the Tri-County facility. The Board's Technical Review Committee ("TRC") considered the project at a series of meetings. During the January 6, 2006 TRC meeting Mr. Gross acknowledged that the train service to Stone's property would bifurcate plaintiffs' property, but that the bifurcation would not pose a problem because the rear portion of the property supposedly would only be used for long-term storage.

On March 20, 2006, the Board approved Doughty Road's site plan application. There is no mention of "stacking" of rail cars in either the Board's resolution or in the transcripts of the hearings. Following the Board's approval, construction began and the Tri-County building was completed and opened for business in early 2008.

Before the Tri-County construction was completed, defendants and plaintiffs attempted to draft the easement called for by their Settlement Agreement. To that end, plaintiff's attorney, Phillip Perskie, prepared a series of draft easements. During the drafting process, however, the parties disputed the intensity and terms by which Stone would utilize the portion of the railroad tracks located on plaintiffs' property. Accordingly, in November 2007, Mr. Gross met with Kurtz in an effort to resolve the dispute. As a result of those conversations, Mr. Gross had Perskie prepare a draft easement, which included a limitation that Stone would only "stack" train cars on plaintiffs' property at times when Tri-County was not open. However, Kurtz refused to sign the document.

Despite the parties' impasse, Mr. Gross signed and recorded an easement agreement with JP Rail on January 8, 2008, containing the time restrictions that Kurtz had rejected. The easement was recorded with the Atlantic County Clerk on January 23, 2008.

B.

On March 18, 2008, upon learning that an easement had been entered into between plaintiffs and JP Rail, Stone filed a motion to enforce litigant's rights with the Chancery Division, pursuant to Rule 1:10-3. Stone sought: (1) to have Doughty Road "immediately discharge of record that certain [e]asement

[a]greement entered into by it with JP Rail"; (2) "to compel Doughty Road and [JP Rail] to immediately rescind any and all provisions in the . . . [e]asement" that "restrict" and concern the manner in which the rail spur services Stone's property; (3) to compel Doughty Road to provide Stone with "an irrevocable and permanent easement agreement for the benefit of Stone across [Doughty Road's property];" and (4) attorney's fees.

Thereafter, plaintiffs filed a cross-motion to enforce their rights under the Settlement Agreement, seeking to compel Stone to construct a "stormwater management basin." The Chancery judge scheduled an evidentiary hearing to address the disputed issues.

The judge heard six days of testimony provided by ten witnesses. Defendants called Ritter, Kurtz, Roesch, Collard, Stephen Kerr, the Operations Manager for SRNJ, and Peter J. Miller, Township Administrator for Egg Harbor Township. Plaintiffs called four witnesses: Stephen R. Nehmad, Doughty Road's attorney in the site plan approval proceedings; Perskie; Mr. Gross; and Joseph Petaccio, Jr., SRNJ's owner.

Plaintiffs and defendants advanced conflicting positions during the hearings as to the intended meaning of the applicable provisions in the 2000 deed and the Settlement Agreement.

Defendants' first witness was Ritter. He testified that Stone had specifically entered into the Settlement Agreement in 2005 to secure the right to stage cars across plaintiffs' property during the unloading process. He did not perceive that plaintiffs ever understood differently. Ritter stated that, as a practical matter, Stone would be unable to accept deliveries if it were bound by the restrictions in the easement that was entered into between plaintiffs and JP Rail.

Ritter conceded that the Pennoni Plan did not specifically mention the staging or stacking of rail cars. He also conceded that although the CAFRA permit mentioned that rail cars would be coming to and leaving from plaintiffs' property, the CAFRA permit application did not specifically identify the number of cars.

Kurtz testified about the initial development of the rail line, including the work of Pennoni Associates early on in the process. Kurtz indicated that from the very outset the plan was for the rail spur to split once it reached the Stone property and accommodate twenty-five cars on each track.

According to Kurtz, he had as many as six conversations with Mr. Gross regarding the unloading process. Kurtz recalled that, even prior to plaintiffs' acquisition of the property, he and Mr. Gross discussed the location and "curvature of the track" in relation to what is now plaintiffs' property. After the track split, railroad cars would run on both sides of an unloading pit. Kurtz added that, after each car unloaded its material, the car would then move back towards plaintiffs' property.

Kurtz remembered two meetings that he attended with Mr. Gross and the rail contractor, at which Stone's unloading process had been discussed. Specifically, he recalled discussion that each "leg" of the cars would "pull[] towards [the] Tri-County property and Washington Avenue during the unloading process."

Kurtz also recalled the DOT diagnostic team meeting in the fall of 2003, which took place on the Tri-County property. According to Kurtz, Todd R. Hirt, the Diagnostic Team Leader with the DOT; Roesch; Collard; and Mr. Gross were all present at that meeting. Kurtz testified that concerns were expressed at the meeting over Washington Avenue being blocked during the unloading process. To help resolve these concerns, Kurtz recalled showing the Pennoni Plan to all in attendance and discussing how the trains would be unloaded. Kurtz also explained why he later refused to sign the easement drafted by Perskie imposing time restrictions on stacking.

Roesch, who took over the engineering duties for the project from Pennoni Associates, testified that the purpose of the secondary access provided by Washington Avenue was to ensure access to the rear of plaintiffs' property when the train blocks the tracks. In that respect, Roesch's testimony confirmed an earlier representation that he had made at the site plan application hearing.

Collard, the former SRNJ official, testified that he had been involved with the construction and implementation of the railroad spur. He recalled that he had discussed the stacking issue with Mr. Gross on two occasions. The first such alleged discussion occurred prior to plaintiffs' acquisition of the lots on the Egg Harbor side of the municipal border. Collard specifically recalled telling Mr. Gross at that time that rail cars would be "across [his] property for some period of time."

According to Collard, a second discussion occurred in October 2003, during the on-site diagnostic team meeting with DOT representatives. That meeting addressed the impact of the rail service on the surrounding roadways and, specifically, safety considerations at the proposed crossing at Washington Avenue. Collard recalled discussing the Stone unloading process at that meeting.*fn3

Kerr, who had been employed for twelve years with SRNJ, testified about his knowledge of the rail spur running through the parties' land. Kerr echoed Ritter's testimony about the lack of feasibility of delivering supplies by rail to the Stone property if the easement is restricted to hours when Tri-County was not open for business. Kerr stated that SRNJ could not guarantee deliveries if the easement were so restricted.

Miller, the administrator for Egg Harbor Township, recalled dealing with Ritter about these staging issues. Miller testified that in the late 1990s, Ritter described to him the unloading operations, specifically, that at least twenty-five cars would be unloaded at his site. The cars would all be unloaded and, as each car as emptied, the entire train would move "back towards Washington Avenue."

Miller explained that the Township's preference was to have rail deliveries take place during normal business hours, given the presence of a residential neighborhood in the area. In that regard, Miller recalled a meeting in or around 2001, at which plaintiffs' representatives were present, and during which the Township expressed its desire to have Stone's deliveries take place during the daytime. Miller recalled that at a later TRC meeting he asked Mr. Gross how this daytime restriction would affect his operations. According to Miller, Mr. Gross responded that customers would not be in the area of the property bifurcated by the train, and so no secondary access to the road was needed. Miller, however, insisted that there be secondary access to plaintiffs' property from Washington Avenue.

Plaintiffs' witnesses offered a substantially different perspective. Nehmad represented Doughty Road with respect to the land use approvals for the Tri-County site. He also had monitored the CAFRA application. In his testimony, Nehmad recalled discussing the rail line with Miller at a TRC meeting. He recalled that Miller did not discuss at the meeting the process of unloading cars at the Stone site, only the unloading at the Tri-County site. Nehmad did not specifically recall, however, the need for vehicular access that required the Washington Avenue access road.

Perskie, who has represented Mr. Gross in a variety of matters, also testified for plaintiffs. One of those matters was the purchase of property from Stone. Despite being involved in the acquisition, Perskie did not recall any specific discussions about Stone's use of the property through an easement. He also did not recall the stacking of rail cars ever being discussed. Perskie did contend, however, that if any of these issues had been discussed, he would have remembered such discussions because it "would have been an impediment" to plaintiffs' use of the property. He also indicated that it was never his understanding in negotiations for an easement that the phase "full and uninterrupted rail service", as used in the Settlement Agreement, was to encompass "stacking." Perskie acknowledged, however, that he had not drafted the Settlement Agreement.

Mr. Gross testified at length. He stated that he was aware that Ritter was attempting to get a railroad connection line to the Stone property as early as 1998. He rejected defendants' contention that he had seen the Pennoni Plan early on, or that he had ever spoken to Kurtz or Collard about that plan. Mr. Gross maintained that the trains servicing his own property do not completely block access to the rear of his premises.

According to Mr. Gross, at the time the agreement of sale was drafted for each property, Ritter never informed him of any anticipated stacking of trains. He insisted that he would never have agreed to allow such a stacking process. However, Gross conceded on cross-examination that the term railroad "service," as used in the Settlement Agreement, likely means something more than "access."

Mr. Gross could not explain what Roesch meant when he told the Planning Board that secondary access would be provided to plaintiffs' property in the event the trains blocked the tracks. Gross did assert that such blockage would be an "unusual circumstance."

Mr. Gross also could not recall Miller expressing concerns at the Board's meetings about secondary access to plaintiffs' property, in the event a train was blocking such access. Mr. Gross stated such blocking of the roadway was not a significant issue, because customers do not go onto the Egg Harbor portion of his property, the portion that would be bifurcated if a train were on the tracks. Mr. Gross indicated that customers are, however, permitted to access that rear portion of his premises.

According to Mr. Gross, the first time he was aware that Stone intended to stack railroad cars on his property was some time in 2007. Once he became aware of Stone's desires, Mr. Gross recalled that he met with Kurtz, and allegedly the two men reached an agreement that Stone would limit stacking to times when Tri-County was not open for business. Mr. Gross testified that he later received a written response from Kurtz, in which Kurtz had crossed out proposed language in the easement agreement, and had written instead "no time restriction."

Petaccio, the owner of SRNJ, briefly testified. He stated that his intention with respect to the easement agreement with Mr. Gross was for the sole purpose of delivering goods to plaintiffs' property. He recalled a meeting he had with Kurtz and Mr. Gross in September 2007. He remembered that there was an "accord" following that meeting, but could not describe the details of that accord.

The Chancery judge also considered a transcript of the deposition of Hirt, the DOT's Diagnostic Team Leader. Hirt, who did not testify at trial, was a key participant in the diagnostic team meeting with Mr. Gross, his representatives, and Kurtz. Hirt stated that he was responsible for providing recommendations about this matter to the Commissioner of the DOT. He noted that he first became involved with the project in 2003, and at the time understood that the rail line at Washington Avenue would serve both Stone and Tri-County.

Hirt recalled a diagnostic team meeting on October 2, 2003 on plaintiffs' property. He remembered saying to the individuals in attendance at the meeting: that A.E. Stone was going to receive stone in hopper cars. There was going to be 50 cars. They were going [to] break train on the main line, 25 cars, and they would be bringing 25 cars at a time across Washington Avenue. There was no set schedule for any of that operation.

In addition, Hirt recalled discussions about stacking on plaintiffs' property:

The cars that were going to be disconnected on [Stone's] property, there was going to have to be -- there was 25 cars coming across, and they were going to break train. So obviously once you break train, there would be cars without a locomotive. Therefore, they will be stacked there [on plaintiffs' property]. The actual railroad terminology is "spotted." [(Emphasis added).]

C.

After considering these extensive proofs, the Chancery judge issued a detailed oral opinion, adopting Stone's interpretation of the Settlement Agreement and the easement language in the 2000 deed. The judge specifically found that Stone is entitled to stack railroad cars on plaintiffs' property to accommodate the loading and unloading process, irrespective of whether that stacking occurs during Tri-County's business hours.

As a preliminary matter, the judge noted that the Settlement Agreement is an integrated document, and that it does not explicitly mention staging or stacking. Even so, the judge was persuaded that the Settlement Agreement was ambiguous "as to this issue of staging."

Having found the agreement ambiguous on its face, the judge turned to the extrinsic proofs emerging from the chronology and the testimony. The judge first noted the series of discussions concerning the easement, which dated back to the late 1990s. In that regard, the judge highlighted a handwritten note from Stone's records. The note provided what the judge termed a "fair inference" that Mr. Gross had obtained a copy of the Pennoni Plan in May 1998, before the purchase agreement was executed.

The judge specifically found that "[t]here are some events that occurred[,] even before the discussions between plaintiff[s] and defendant[s][,] that evidence Stone's concern with staging from the very beginning." (Emphasis added). In particular, the judge cited a prior railroad siding easement agreement Stone had with South Jersey Publishing, another neighboring property, dating back to 1995; a railroad crossing impact study prepared by a consultant in February 1997, which "references the 25-car trains and a concern about queuing and staging, at least with reference to Washington Avenue[;]" and a "staging plan" apparently prepared for Stone in May 1996.

The judge also noted the alleged discussion between Collard and Mr. Gross "about the impact staging would have on [plaintiffs'] property;" the correspondence from plaintiffs' engineer to DOT in May 2003 referring to (as the judge paraphrased it) the railroad "blocking access from the eastern side of the [plaintiffs'] property"; and the interactions between plaintiffs' engineers and DEP representatives concerning the CAFRA permit that partially addressed the rail access issues.

The judge highlighted the diagnostic team meetings with DOT in 2003, as to which defendants "offered proofs indicating that there was specific reference to the staging issue with Mr. Gross and others being present[.]" This proof suggested to the judge that Gross had actual knowledge of the stacking issue, or at least should have been more attentive during the meetings.

The judge also took note of a December 2005 traffic engineering report prepared in support of plaintiffs' land use application. That report states that the Washington Avenue entrance "will be gated and utilized only in the event that [the] storage area to the west of the tracks is blocked due to a train delivery." (Emphasis added).

The judge found particularly significant the technical review meetings and the hearings on plaintiffs' site plan application before the Planning Board. As the judge noted, several witnesses contended that those sessions addressed access issues relating to the rail operation. The parties disputed, however, whether the access issues raised at those sessions solely concerned the unloading of rail cars making deliveries to plaintiffs, or whether they also concerned the staging of rail cars on plaintiffs' property for Stone's benefit.

Referring to the prospect of a train blocking a portion of plaintiffs' property, the judge noted that:

[on] March 20, 2006, [plaintiffs'] application for site plan approval is presented to the Egg Harbor Township Planning Board. [Roesch], who is [plaintiffs'] engineer, makes a specific reference to plans for the secondary entrance on Washington [Avenue] as being primarily there in the event a train on the tracks loading and unloading prevents access to Doughty Road. That reference is clear in the transcript. [(Emphasis added).]

With respect to the easement Gross ultimately entered into with the railroad, the judge also noted:

It's ultimately reviewed by [Kurtz], he faxes it back to Mr. Gross with comments that[,] if accepted at face value[,] would indicate that [Kurtz], who was a participant in the [Board] meeting, did not anticipate there was going to be any limitation on staging.

The judge then traced the efforts by the parties following the Settlement Agreement to draft a more specific easement agreement. The judge described the impasse between the parties that ensued concerning time restrictions for staging. In that respect, the judge observed that "the railroad itself is not promoting any particular [time] restrictions[,]" and thus the dispute over time restrictions was one that exclusively involved the parties, not the railroad.

Having carefully described this series of events, the judge then made several pivotal credibility findings. First, he found Ritter to be "generally credible," and that Ritter had credibly advanced Stone's position that it always had intended to be stacking cars on Gross's property. The judge found that Roesch, Kerr, Kurtz, and Perskie were all credible witnesses.

Notably, the judge found two witnesses to be "particularly credible[,] given their roles," neither of whom was affiliated with either party: Collard, SRNJ's main representative, and Miller, the Township administrator. Recognizing that neither Collard nor Miller had any reason to favor one party over another in this case, the judge observed that "[t]hey both seemed to be particularly genuine." Each of them, according to the judge, "offered very specific testimony regarding discussions with Mr. Gross that, if accepted, would establish that . . . Mr. Gross at least had notice of Stone's intentions in one way or another."

Specifically, the judge found credible Collard's testimony that discussions about staging had indeed taken place at the October 2003 DOT diagnostic team meeting when Mr. Gross was present, regardless of whether Gross had heard and understood those comments.

Additionally, the judge found "credible and convincing" Miller's testimony that he had raised at the Board's technical review meeting in early 2006 "the issue of how Mr. Gross was going to get access to the rear of [his] property when Stone's trains were unloading[.]" The judge found Miller's narrative on this point "particularly credible," even though Mr. Gross's former attorney, Nehmad, had a contrary recollection. The judge concluded "from all the circumstances" that Nehmad's recollection "just must be faulty." The judge observed that Nehmad's version "just doesn't seem to fit because Mr. Gross's trains aren't as long as the Stone trains and wouldn't generally give rise to the type of concern about access being blocked that [Miller] recalls being discussed." "[I]n the end," concluded the judge, "Miller's testimony had that ring of truth about it."

The judge was less sanguine about the credibility of Mr. Gross's testimony. The judge acknowledged that Mr. Gross's manner and tone was appropriate, and that his version of events was internally consistent. In fact, the judge "had no sense from observing [Mr. Gross] that he was trying to deceive [the court]." Even so, the judge recognized that Mr. Gross's account was "in direct contradiction" to testimony provided by Collard and Miller, whom the judge regarded as especially credible.

As we have already noted, the judge specifically rejected Mr. Gross's denial that he had picked up the Pennoni Plan prior to acquiring the adjacent property from Stone. The judge also found Gross's present assertion that his customers need access to the rear portion of his property inconsistent with earlier statements made by Roesch, his own engineer, in 2003 and 2006.

On the whole, the judge perceived "substantial issues" concerning Mr. Gross's testimony. The judge concluded that Mr. Gross "must have been aware of the staging that was being proposed and its impact on the property back in 2000 and 2003 . . . well prior to the execution of the Settlement Agreement[.]" By the judge's assessment, Mr. Gross also "must have understood that [staging need] based on the discussion at the [Board's] Technical Review Committee meeting in 2006." The judge was satisfied that Mr. Gross was aware of these matters, even though the judge was unsure whether Mr. Gross had "focused on that issue" or whether he had "specifically intended the July 2005 Settlement Agreement to permit staging."

Although the judge did not find by a preponderance of the evidence that Mr. Gross had specifically intended the Settlement Agreement to authorize the stacking of railroad cars on plaintiffs' property, the judge recognized that other contextual factors supported Stone's interpretation of the ambiguous term of that agreement.

Among other things, the judge noted that the staging process was "essential" to Stone's operations. He also determined that Stone "has always been intent on staging," without any time limitations on that activity. The judge found Stone's actual intent in this respect to be "clear." The judge was satisfied that Kurtz did not agree on Stone's behalf to any time limitations when the post-settlement easement was being negotiated. The judge further observed that the record was barren of any evidence that staging the unloaded railroad cars on Stone's property, rather than on plaintiffs' property, would be "a practical possibility."

Given these predicate findings, the judge was ultimately persuaded that "at the very least Mr. Gross had reason to know of the meaning that was attached to the term ['full and uninterrupted rail service'] by Stone at the time that the Settlement Agreement was executed in July of 2005." The judge was satisfied that a "hypothetical reasonably intelligent person with familiarity with all the circumstances that have been described would understand that the [contract] term[s] referenced staging on the [plaintiffs'] property without a time limitation[.]" Such a conclusion is warranted, the judge observed, whether the court applies a so-called "objective" analysis of contract law to the circumstances, or a "subjective" analysis. Consequently, the judge ruled that "[Mr.] Gross is bound by that [contract] term and may not, therefore, restrict the operation of the railroad[,] including the staging operation[,] to particular times of the day."

The judge subsequently entered an order reflecting his disposition, and also ordered Stone to create a stormwater management basin on its property as contemplated by the Settlement Agreement. The judge declined to award counsel fees.

This appeal by plaintiffs ensued. We were advised at oral argument that the railroad spur has since been built, and that staging and stacking activities have been underway on plaintiffs' premises for several months.

II.

On appeal, plaintiffs argue that the Chancery judge erred in construing the Settlement Agreement to permit the unrestricted stacking of railroad cars from Stone on their property. They contend that the Settlement Agreement is not ambiguous, and that the plain meaning of it--and of the documents from which it is derived--is that Stone is only entitled to an "access easement" across their property. Even if the court chooses to consider the extrinsic circumstances, plaintiffs maintain that the Settlement Agreement cannot reasonably be read to permit such stacking. If this court is persuaded otherwise, plaintiffs urge that, at a minimum, we set aside the Settlement Agreement, because the parties failed to agree on the meaning of an essential term.

We review plaintiffs' contentions with a recognition that the scope of our undertaking on appeal has certain limitations. To the extent that the Chancery judge's decision implicates legal principles, we independently evaluate those legal assessments de novo. See 612 Assocs., L.L.C. v. North Bergen Mun. Utils. Auth., 404 N.J. Super. 531, 536 (App. Div.), certif. granted, 199 N.J. 540 (2009); Finderne Mgmt. Co., Inc. v. Barrett, 402 N.J. Super. 546, 573 (App. Div. 2008), certif. denied, 199 N.J. 542 (2009).

However, with respect to the judge's findings of fact and his specific determinations about the credibility of the witnesses in this non-jury case, we owe him substantial deference. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). "We must give deference to the trial court's feel of the case as to matters such as the demeanor and credibility of witnesses[.]" D.G. ex rel. J.G. v. North Plainfield Bd. of Educ., 400 N.J. Super. 1, 26 (App. Div.), certif. denied, 196 N.J. 346, cert. denied, __ U.S. __, 129 S.Ct. 776, 172 L.Ed. 2d 756 (2008). Appellate courts should only reverse a trial judge's factual determinations if they lack substantial and credible support in the record as a whole. Rova Farms, supra, 65 N.J. at 484. We do not "engage in an independent assessment of the evidence as if [we] were the court of first instance." State v. Locurto, 157 N.J. 463, 471 (1999).

Applying these well-established standards of review, we are satisfied that the Chancery judge's findings of fact are reasonably supported by this record, and that his legal conclusions are sound. Consequently, we affirm the order appealed from, substantially for the reasons expressed in Judge William Todd's extensive bench opinion of August 13, 2008. We only amplify his analysis in a few respects.

First, we concur with Judge Todd that the Settlement Agreement and, for that matter, the 2000 Deed that preceded it, are ambiguous as to the question of whether unrestricted staging or stacking was authorized by the parties on plaintiffs' property. "In interpreting [an agreement], a court must try to ascertain the intention of the parties as revealed by the language used, the situation of the parties, the attendant circumstances, and the objects the parties were striving to attain." Celanese Ltd. v. Essex County Imp. Auth., 404 N.J. Super. 514, 528 (App. Div. 2009). "'An ambiguity in [an agreement] exists if [its terms] are susceptible to at least two reasonable alternative interpretations.'" Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life and Cas. Ins. CO., 828 F. Supp. 275, 283 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)). Where such ambiguity is present, the court should undertake "a thorough examination of extrinsic evidence" to derive the most probable meaning intended by the contract language. Conway v. 287 Corporate Ctr. Assocs., 187 N.J. 259, 269 (2006).

We are mindful that the Deed and the Settlement Agreement do not explicitly make clear whether staging or stacking on plaintiffs' property was allowed. The easement language in the Deed manifests the parties' mutual intention to have a railroad line to be "constructed across a portion of the [p]roperty to provide railroad service to Grantor's [Stone's] adjacent property in Egg Harbor Township[.]" (Emphasis added). The Deed also reaffirms that the conveyed property "shall be subject to an irrevocable and permanent easement to Grantor [Stone] and for the benefit of Grantor's [Stone's] property, for the construction of such railroad to provide railroad service to and from the Grantor's [Stone's] property." (Emphasis added).

The Deed does not define "railroad service," or what rights of access or usage it contemplates. In fact, as the Deed reflects, the specific location of the railroad spur had yet to be determined at that time.

The ensuing July 2005 Settlement Agreement, which principally resolved unrelated issues of drainage, is only slightly more informative about the nature of the rights associated with the railroad service on the spur that was going to be built across plaintiffs' property. The Settlement Agreement broadly speaks of "full and uninterrupted rail service into and out of [both parties'] property as referenced in the CAFRA permit . . . [.]" (Emphasis added). The Settlement further assures that plaintiffs' plans to develop his property for his own business "shall in no way interfere with the immediate development and uninterrupted implementation of the rail service extending into and out of the Stone property[.]" (Emphasis added). Like the Deed, the Settlement Agreement does not delineate what exactly is meant by "rail service."

Stone argues that the term "rail service," as used in these instruments, connotes the right to stack railroad cars temporarily onto plaintiffs' property while they are being unloaded on Stone's property. Plaintiffs, conversely, insist that the phrase means no such thing, and that it only gives Stone the right to have railroad cars pass across plaintiffs' property while coming to and from its facility, and not be backed up onto that property during the unloading process. On the face of the contract documents, both of these positions are "reasonable alternative interpretations." Nester, supra, 301 N.J. Super. at 210. The Chancery judge reasonably found an ambiguity here, and he thus was entirely justified in considering extrinsic proofs to aid in the interpretation of the contractual text. Conway, supra, 187 N.J. at 269.

In his oral opinion, the judge impressively catalogued the proofs regarding the surrounding context of the parties' agreement. He carefully assessed the credibility of each witness who testified, and closely scrutinized the relevant series of events, including the various sessions and communications about the railroad spur involving the DOT, the DEP, and the Township Planning Board. The judge also considered the details contained in the Pennoni Plan, a document that he found that Mr. Gross specifically had obtained prior to acquiring the parcels from Stone.

Significantly, the judge found Mr. Gross's factual account to be less credible than that of the other witnesses. As we have noted, the judge found especially credible the testimony of the two neutral witnesses, Collard from SRNJ, and Miller from Egg Harbor Township, who corroborated that stacking was discussed in Mr. Gross's presence on several occasions before the Settlement Agreement was drafted. We do not disturb these pivotal credibility assessments, which are supported by substantial credible evidence.

We are mindful that it has been held that, in general, "[a] right-of-way appurtenant to a dominant tenement can be used only for the purpose of passing to or from that tenement." United States Pipe-Line Co. v. Del., Lackawanna & W. R.R. Co., 62 N.J.L. 254, 281 (1898). However, in the particular context of "limited fee" right-of-ways for railway purposes, case law traditionally has recognized that such conveyances provide railroads with "all surface rights to the right of way and all rights incident to a use for railroad purposes," although not sub-surface mineral rights. United States v. Union Pac. R.R., 353 U.S. 112, 119, 77 S.Ct. 685, 689, l L.Ed. 2d 693, 698 (1957). Although defendants here are not a railroad, but instead operate a business making use of a dedicated railroad spur, we believe that the Chancery judge reasonably concluded that their easement rights necessarily and logically included "rights incident to" their use of the railroad tracks constructed for their benefit.

Given the surrounding context and the many discussions that transpired with Mr. Gross or his representatives present, the judge had ample grounds to reject plaintiffs' position that the phrase "full and uninterrupted rail service" provided Stone only with the simple right to have trains run back and forth on the tracks, without the incidental right to have the rail cars making deliveries be backed up in an efficient manner onto plaintiffs' property. This is not a rail station operated on a generic schedule for random passengers. Instead, it is a dedicated rail spur for particular users with particular needs. In that discrete context, the trial court's conclusion is logical and is well supported by the record.*fn4

That being said, it is unnecessary for us to resolve whether the agreement here is best analyzed by a so-called "objective" approach looking to the meaning that would be associated to the agreement by a fully-informed reasonably-intelligent person, see Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 149 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961), or by a so-called "subjective approach" suggested, at least in part, by Section 201 of the Restatement (Second) of Contracts (1981), which looks to the meaning of the ambiguous term subjectively attached by one of the contracting parties under certain conditions. Whether an objective or subjective approach is employed, the same result here is achieved: a finding that the Deed and Settlement Agreement should be read to allow Stone to engage in staging and stacking on plaintiffs' property.

In sum, the Chancery judge's detailed analysis is amply supported by the record proofs and is consistent with the law. Although we recognize that the stacking of rail cars will have an impact on plaintiffs' business operations, the Settlement Agreement was reasonably interpreted, in light of the surrounding context and the trial testimony, to authorize such stacking activities.

Affirmed.


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