July 27, 2010
ISMAIL ASANI, PLAINTIFF-APPELLANT,
ABUNDANT LIFE WORSHIP CENTER OF LINCOLN PARK, N.J., INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
NAZMIE ASANI AND MENDI ASANI, THIRD-PARTY DEFENDANTS-APPELLANTS.
On appeal from Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-167-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 9, 2010
Before Judges Grall, Messano and LeWinn.
This appeal is from a judgment entered following a bench trial on competing claims seeking rescission and specific performance of a contract for the sale of approximately six acres of land. The lot was to be subdivided from a larger parcel owned by plaintiff Ismail Asani and his wife, third-party defendant Nazmie Asani (collectively the Asanis). The buyer, defendant/third-party plaintiff Abundant Life Worship Center of Lincoln Park, N.J., Inc. (Abundant), owns land adjacent to the Asanis' property. The contract of sale was negotiated on behalf of the Asanis by their adult son, third-party defendant Mendi Asani (Mendi). It states a purchase price of $350,000.
Alleging that the agreed price was $350,000 per acre, not $350,000 for the entire parcel, Ismail filed a complaint seeking rescission of the contract due to unilateral mistake - his failure to detect the erroneous price stated in the contract. Abundant filed a counterclaim and third-party complaint seeking specific performance by the Asanis. In defense, the Asanis asserted that a grant of specific performance would be improper because the contract price is unconscionable, there is uncertainty about the property line and Abundant did not diligently perform. Abundant also filed a third-party claim against Mendi seeking an award for damages resulting from his misrepresentation of authority to negotiate on behalf of his parents. At the conclusion of trial, judgment was entered dismissing with prejudice plaintiff's claim for rescission and Abundant's claim against Mendi. All other relief requested was denied.
The Asanis appeal.*fn1 Because the judge's factual findings are adequately supported by the record and the Asanis' claims of legal error are not meritorious, we affirm for the reasons stated by the trial judge in her oral decision of January 23, 2009, as supplemented by this opinion.
The property owned by the Asanis is located at 34 Square Place. It consists of approximately sixteen acres that are designated as farmland. The lot includes wetlands and is situated in a flood plain. The Asanis purchased the entire parcel in 1988 for about $360,000. There is a single-family dwelling, a free-standing garage, and two accessory structures. Mendi, his wife and three children live with the Asanis, but Mendi also owns residential properties that he leases and two restaurants that he manages. In 2001, Abundant purchased its five-acre property adjacent to the Asanis' and the house on that property for about $375,000.
The Asanis also have a home in Macedonia. In October of 2006, they went there and stayed until September 2007. While they were away, the president of Abundant's board of trustees, Francine Schornstein, left a letter in the Asanis' mailbox expressing interest in meeting. Mendi did not recall seeing that letter, but he does recall Schornstein approaching him to discuss buying land in the rear area of his parents' house for $300,000 per acre. Mendi informed Ismail, and Mendi received his authorization to accept an offer at $350,000 per acre. According to Schornstein, all of her discussions with Mendi were about a price for the entire parcel. Abundant's trustees initially gave her oral authorization to offer $300,000 and in February 2007 passed a resolution approving the purchase for $350,000.
Mendi's attorney, Bennett Wasserstrum, and Abundant's attorney, Steven C. Schepis, corresponded and exchanged drafts of a contract initially prepared by Schepis. By the end of March 2007, they had a final contract. The property was described as a "[p]ortion of property [owned by the Asanis] approximately 6 [six] acres in overall lot area as depicted on Schedule A annexed hereto." Schedule A was a survey with an approximate boundary line drawn so as to leave the house and garage on the portion of the lot to be retained by the Asanis with a five-foot setback between the rear of the garage and the boundary line. With respect to the purchase price, there was no ambiguity. The contract stated: "The purchase price is $350,000."
The initial contract includes a subdivision site plan contingency; it conditions Abundant's performance on Abundant "securing all necessary governmental approvals so as to adjust the lot line between the subject properties." It further provides that the Asanis' remaining lot will "just meet the minimum zone requirements" and that Abundant would require additional approvals to expand its non-residential use in the residential zone. Abundant was required to "diligently pursue" the approvals "forthwith."
The contract was clarified and modified through an exchange of correspondence between the attorneys. That correspondence along with the contract was signed by Schornstein and by Mendi on behalf of his parents.
In a letter of March 16, 2007, the Asanis proposed and Schornstein agreed to an amendment providing that "all plans [and] site plans" are subject to review and inspection by the Asanis prior to submission. Mendi and Schornstein further agreed that Abundant would assume the obligation to subdivide "so that the remaining parcel owned by the Seller will not subject [sic] to any variances in the event that the Seller seeks to sell or use this remaining property." By letter of March 21, 2007, also signed by Mendi and Schornstein to acknowledge acceptance, the contingency was further clarified. That change provides for the proposed subdivision to leave the Asanis' retained property in conformity with overall lot requirements and consistent with bulk requirements, "apart from items which are presently out of compliance, i.e., side yard setbacks, rear yard setbacks, etc." The agreement is that the "subdivision line will not create any new variances from what already exist."
There were other changes. A closing date no later than July 15, 2007 was promised and subsequently modified to require closing "no later than one year from the date of the signing of the contract." The parties also agreed to an amendment acknowledging that the Asanis were "mak[ing] no representations with respect to the use or the ability to construct any buildings[,] parking lots, etc., as to the remaining property."
Mendi initially signed the contract and the amendatory correspondence on his parents' behalf, but Schornstein asked Mendi to have his parents sign. Neither Mendi nor Wasserstrum sent the contract to the Asanis. Mendi simply faxed his father the signature pages; the sale price is not stated on the signature page of the contract, or discussed in the correspondence. Upon receiving the documents from his son, Ismail signed his name and, with her authorization, his wife's name and returned them to his son. At trial, Nazmie acknowledged that she authorized her husband to sign for her, and both of the Asanis acknowledged that they authorized Mendi to act on their behalf.
On September 26, 2007, Schornstein met with Mendi and his wife. They agreed to a new lot line located one foot behind the Asanis' garage and signed a subdivision plan depicting the boundary. With the exception of one shed, all of the structures remained on the area of the property the Asanis would retain. At trial, Abundant did not rely on the amended lot line and sought specific performance in accordance with the five-foot distance from the garage agreed upon at the time the contract was signed.
Upon returning to New Jersey in October of 2007, Ismail saw the contract. He immediately notified Wasserstrum that a mistake had been made. Although Wasserstrum was certain that he had reviewed the contract price with Mendi, on October 22, 2007 Wasserstrum wrote to Schepis and notified him that the price set forth in the contract was wrong. Abundant wanted to proceed under the contract terms, but Ismail refused.
The Asanis presented evidence to demonstrate that they would not have agreed to the price. Fifteen years earlier, they had listed fifteen acres for sale at a price of $1.5 million. They did not make a sale. They also declined to sell land to their neighbor, Ken VanWingerden, when he offered $750,000 for a five to six acre section of the Asanis' lot in October 2006.
The parties also presented evidence as to the value of the land, which was relevant to the Asanis' claim that the price is unconscionably low. The property was appraised, as is, by Theodore Biczak, a licensed real estate appraiser. In his opinion, the value was $147,000 at $25,000 per acre. Alan Jones, a commercial real estate appraiser, also appraised the property. In his opinion, as of July 2008, the property would have been worth $465,000 per lot. His valuation assumed that necessary approvals for building were granted and that the lots had been developed with the infrastructure needed for building. Jones conceded that infrastructure, or a lack thereof, affects the value.
There was other anecdotal evidence of the value and costs of improving land in this neighborhood. According to VanWingerden, he purchased his land for $53,000 per acre in 2003, and the State had paid him $53,000 per acre to place his land in the Farmlands Preservation Program. Another neighbor of the Asanis sold two of five buildable lots that he had subdivided from his property for $485,000 each. He was able to do that because he was granted a transition easement by the Department of Environmental Protection, and he incurred significant expenses so that he could market the lots as suitable for building. Claude Ballester, a licensed professional engineer and professional planner, also testified about the obstacles and expense entailed in developing the Asani property, which included wetlands and experienced flooding problems. A conservation easement as well as a transition buffer for the wetlands would be required, and it would cost about $350,000 just to build an access road. Joseph S. Manecki, Jr., a licensed professional engineer, who was retained by Abundant as its site engineer in connection with this transaction, discussed the expense and difficulty associated with transforming the Asani land into residential lots. He had advised Abundant that the lot it intended to purchase from the Asanis could be used for the parking lot the church intended to build.
Based on the evidence presented at trial, the judge made these findings of fact. Mendi was authorized to negotiate the contract on behalf of his parents, and the price he negotiated was $350,000 for the entire sale, which is the purchase price Abundant approved. The Asanis, who were overseas when the contract was negotiated, did not review it before signing and failed to promptly detect that the contract reflected a price that did not conform with their understanding of the agreement. There was no evidence of overreaching, misrepresentation or fraud on the part of Abundant because Abundant did not deal with the Asanis, and the Asanis failed to establish that the price was unconscionable or even unreasonable.
On those findings, the judge concluded that the Asanis established a unilateral mistake on their part but did not establish inequity or uncertainty warranting either rescission or avoidance of specific performance. The judgment granting specific performance provides Abundant a reasonable amount of time from the date of judgment "to secure the contemplated government approvals authorizing the lot line adjustment and proceed to closing." It does not modify the provision of the amended contract requiring a subdivision that does not create any new non-conformity in the lot retained by the Asanis.
On appeal the Asanis raise these issues:
I. IN ASSESSING THE UNCONSCIONABILITY OF GRANTING SPECIFIC PERFORMANCE, THE TRIAL COURT FAILED TO CONSIDER THE $750,000 OFFER MADE BY NEIGHBOR [SIC] WHO DESIRED TO KEEP THE PROPERTY UNDEVELOPED.
II. IN ASSESSING THE FAIRNESS OF GRANTING SPECIFIC PERFORMANCE, THE TRIAL COURT INCORRECTLY LIMITED ITS ANALYSIS TO THE MARKET VALUE OF THE PROPERTY RATHER THAN CONSIDERING ALL OF THE CIRCUMSTANCES SURROUNDING THE TRANSACTION.
III. THE TRIAL COURT ERRONEOUSLY FOUND THAT MRS. ASANI EXECUTED THE CONTRACT.
IV. THE TRIAL COURT ERRONEOUSLY GRANTED SPECIFIC PERFORMANCE, DESPITE THE OPEN ISSUE CONCERNING THE LOCATION OF THE SUBDIVISION LINE.
V. THE TRIAL COURT FAILED TO CONSIDER THAT ABUNDANT BREACHED THE CONTRACT BY NOT APPLYING FOR SITE PLAN APPROVAL.
The scope of our review of determinations reached after a bench trial is limited. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). We must defer to findings that involve an assessment of credibility and demeanor and we do not disturb other factual findings, or the legal conclusions based upon them, unless they are so unsupported by or inconsistent with the evidence and law as to result in an injustice. Ibid.; see Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 135 (1997). Moreover, in reviewing a grant of specific performance, this court must recognize the trial court's "responsibility to weigh the equities and to exercise its sound discretion." Barry M. Dechtman, Inc. v. Sidpaul Corp., 89 N.J. 547, 552 (1982). Because the trial court and hears the witnesses, that court is in the best position to assess "the demeanor, good faith and sincerity of the parties." Ibid.
Our courts have recognized that rescission of a contract is a remedy for a unilateral mistake under a narrow class of circumstances. Intertech Assocs., Inc. v. City of Paterson, 255 N.J. Super. 52, 59-60 (App. Div. 1992); Hamel v. Allstate Ins. Co., 233 N.J. Super. 502, 507-509 (App. Div. 1989). The mistake must be of sufficient consequence to make that contract unconscionable, relate to a material feature of the contract and be made by one who has exercised reasonable care. Hamel, supra, 233 N.J. Super. at 507.
When proof essential to warrant rescission is not produced, evidence of a mistake may be offered defensively. Specific performance may be withheld "where the evidence reveals that, through mutual or unilateral mistake, the writing does not give expression to the common intention." Union Fur Shop v. Max Melzer, Inc., 133 N.J. Eq. 416, 420 (E. & A. 1943) (noting that the case did not involve "a party's inadvertent omission to propose an intended provision or stipulation"). In general, our courts recognize that an order compelling specific performance of "a contract for the sale of land" is not appropriate if it "would be harsh, oppressive or manifestly unjust to one of the parties." Panco v. Rogers, 19 N.J. Super. 12, 19 (Ch. Div. 1952). Thus, unless the court is "satisfied that the claim is fair, reasonable and equal in all its parts," the party claiming breach should be left to legal remedies. Id. at 19-20; see Stehr v. Sawyer, 40 N.J. 352, 357 (1963) (noting that the agreement must be sufficiently clear to declare what must be done and that the relief sought cannot be "harsh or oppressive").
The Asanis' arguments in support of the issues they raise are essentially expressions of disagreement with the judge's findings of fact and evaluation of the fairness of the relief Abundant sought. Given the appraised value of the property without improvements and approvals needed for development and the evidence tending to establish the expense and effort that would be required to ready the Asanis' property for the sale as more valuable residential lots, the trial court was not required to accept the neighbor's $750,000 offer as proof sufficient to establish that the price was unconscionable or unfair.
The Asanis contend that the judge erred by failing to consider the relationship between the parties and assert that Nazmie did not sign the contract. Those claims ignore the judge's central factual findings - the Asanis' son acted as their agent and they had no dealings with Abundant. There was no dispute that the Asanis authorized Mendi to act on their behalf and manifested that authorization by permitting him to do so. See generally Estate of Cordero v. Christ Hosp., 403 N.J. Super. 306, 315-16 (App. Div. 2008) (discussing apparent authority and agency).
We do not understand the basis for an objection based on uncertainty about the property line. There was no dispute about the property line stated in the contract. Abundant did not seek to enforce the disputed boundary line - one offset from the rear of the garage by only one foot.
The Asanis' final argument is a claim that the court erred by failing to consider Abundant's breach of its obligation to apply for site plan approval. Although the Asanis withdrew this argument in their reply brief, we note that it lacks support in the record. Through the correspondence amending the contract of sale, that obligation was eliminated. Abundant's only obligation is to obtain a subdivision that avoids creation of any new non-conformity on the lot the Asanis will retain. If Abundant cannot obtain approval for a subdivision that meets that requirement, then the Asanis are not obligated to close.
Given our standard of review and the arguments presented on appeal, we affirm.