On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-318-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Remanded by Supreme Court June 16, 2010
Resubmitted August 2, 2010
Before Judges Yannotti and LeWinn.
The Supreme Court reversed our judgment in this case and remanded the matter to us for consideration of the arguments advanced in the appeal and cross-appeal that had not been addressed in our previous opinion. Kalogeras v. 239 Broad Avenue, L.L.C., 202 N.J. 349 (2010). For the reasons that follow, we affirm the judgment of the Chancery Division.
The following facts are pertinent to our decision. Plaintiff Nicholas Kalogeras and his brother Konstantinos (Gus) Kalogeras were business partners. In 1976, they purchased the Golden Eagle Diner in Palisades Park, New Jersey. Golden Eagle Diner, Inc. (Golden Eagle) owned the diner and its liquor license. Plaintiff and Gus acquired certain property on Brinkerhoff Avenue, which was used as a parking lot for the diner. They thereafter transferred ownership of the real property to defendants 239 Broad Avenue, L.L.C. (239 Broad) and 12 Brinkerhoff, L.L.C. (Brinkerhoff).
By 2002, the relationship between plaintiff and his brother had deteriorated. It appears that, at the time, plaintiff wanted to sell the diner but Gus refused. Consequently, they decided that Gus would purchase plaintiff's interest in the diner and the real property. Through their attorneys, plaintiff and Gus negotiated the terms of the buyout.
In the negotiations, Anthony G. Rathe (Rathe) represented Gus and Socrates Lambrinides (Lambrinides) represented plaintiff. Rathe and Lambrinides negotiated the terms of two agreements, one for the sale of plaintiff's stock in 239 Broad and Brinkerhoff, and the other for the sale of plaintiff's stock in Golden Eagle.
On October 18, 2002, Lambrinides wrote to Rathe and summarized the terms that they had agreed upon. In his letter, Lambrinides stated that the buyout price was $4,000,000, and $1,000,000 was required to pay off creditors and the outstanding mortgages, leaving a balance of $3,000,000. According to Lambrinides, plaintiff would receive half of that amount, with $550,000 being paid in cash at closing and the balance paid in the form of a purchase money mortgage note in the amount of $950,000. The note was payable in monthly installments over a ten-year period, with interest at eight percent per annum.
In his letter, Lambrinides set forth, among other things, the following additional terms:
If [Gus] sells 239 Broad Avenue, L.L.C., 12 Brinkerhoff L.L.C., and/or Golden Eagle, Inc., in excess of $4,000,000.00 within two (2) years of the closing of this transaction, [plaintiff] will be entitled to receive one half of any amount realized from the sale in excess of $4,000,000.00.
So long as [Gus] is obligated on the Note, [plaintiff] shall have a right of first refusal to purchase the above named entities.
Rathe signed the letter on behalf of Gus. Rathe's signature appears beneath the statement that he agreed to the terms set forth in the letter.
On October 24, 2002, Gus and plaintiff signed the buyout agreements; however, the agreements did not include all of the terms in Lambrinides' October 18, 2002 letter, including the right of first refusal (RFR). Furthermore, both agreements stated in pertinent part that:
[t]he within document contains the entire agreement between the parties hereto and supersedes any and all prior agreements or understandings between the parties relating to the subject matter hereof. No oral understandings, statements, promises or inducements contrary to the terms of this Agreement exist. No representations, warranties, covenants or conditions, expressed or implied, other than as set forth herein or made a part hereof, have been made by the parties hereto.
In addition, the agreements did not contain any language stating whether the parties' respective rights could be assigned to a third party.
Plaintiff and Gus closed on the transaction in November 2002. After the closing, Gus was the sole owner of 239 Broad, Brinkerhoff and Golden Eagle. However, at some time thereafter, Gus's son Stellios Kalogeras (Stellios) acquired a twenty or twenty-five percent interest in 239 Broad and Brinkerhoff. Moreover, in December 2002, Gus formed Golden G, Inc. (Golden G), and Golden Eagle transferred ownership of the diner business to that entity while retaining ownership of the liquor license.
In July 2005, Byung Kim offered to purchase the diner, the liquor license and real property. Gus asked Rathe to review the offer. Rathe informed Gus that plaintiff had a RFR under the buyout agreements, and the agreement with Byung Kim would have to acknowledge the RFR. Rathe told Gus not to worry about the RFR. Rathe testified that he suspected plaintiff would not exercise the RFR, based on a conversation with Lambrinides, who asked him whether the closing would take place before December 2005. Lambrinides said that plaintiff had purchased another business and wanted the money to "make a payment."
According to Gus, Rathe had not previously informed him that he had agreed to the RFR as part of the buyout agreements. Gus also said that Rathe had not informed him that the RFR would expire if the purchase money mortgage note issued to plaintiff was fully paid. At the time Gus was negotiating the sale of the diner, monies remained due and owed on the note.
Rathe drafted an agreement that provided for the sale of the diner, liquor license and real property to Byung Kim (the Sales Agreement). Rathe included the following clause in the Sales Agreement:
It . . . has been disclosed to Buyer that a predecessor co-owner of the within property which was sold to Seller herein contains a provision for the Right of First Refusal which must [be] submitted to said predecessor for review. It is understood that the within contract is subject to said option, and if so exercised by predecessor, this contract shall be canceled, and all deposits shall be returned to Buyer.
On July 7, 2005, Rathe sent the draft to Byung Kim's attorney and, in an accompanying letter, Rathe stated that he did not think the RFR would present a problem because plaintiff had purchased a new ...