On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-61-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically Argued: August 4, 2010
Before Judges R.B. Coleman and C.L. Miniman.
Defendants G. Hyung K. Jung and Man Nim, husband and wife, appeal from a judgment entered against them and in favor of plaintiff Nissan Perla following a bench trial of disputes arising out of a failed real estate development plan. We affirm.
Defendants, who reside in Manhattan, own Block 5902, Lot 18 on the official tax map of Fort Lee, commonly known as 2169 Lemoine Avenue, Fort Lee. The lot contains about one-half acre and is improved with a two-story retail and residential building. The property is in the C-3 Limited Business District zone close to the George Washington Bridge. This zone does not permit the construction of high-rise apartment buildings.
Perla and Jung had known each other for many years as they were both employed in the diamond industry in New York City. Jung would often purchase diamonds from Perla for resale by Nim. In 2005 Perla and Jung began to negotiate Perla's purchase of defendants' property in Fort Lee. Perla intended to construct an eighty-unit apartment building on the property, which was not a permitted use. Thus, the property would have to be rezoned. In these negotiations, Perla was represented by New York attorneys Adam and Bruce Bayroff, and Jung was represented by a mortgage broker, Rodney Hilton Brown.
The initial "Term Sheet" for the sale of the property was prepared by Brown and was addressed to Bruce Bayroff, Adam's father. The Term Sheet was dated June 28, 2005, and specified a purchase price of $8 million with ten percent to be paid on signing, $2.2 million due within forty-five days thereafter, and the $5 million balance due within 120 days of signing, at which time closing was to occur. There were two special conditions specified in the Term Sheet, one of which was that the sale was to be "[a]s is, where is, but Seller will introduce Buyer to Fort Lee Land Use Authority to confirm ability to construct 80 apartment units."
Adam Bayroff converted the Term Sheet into a formal draft "Agreement of Sale and Purchase" between Jung and Nim, collectively "Seller," and Perla, "Purchaser." The purchase price remained the same, but the schedule of payments was changed: $50,000 was due on signing; $100,000 was due ten days after receiving "Apartment Approval"; $250,000 was due upon receipt of an "Acceptable Phase I Report"; and $7.6 million was due at closing.
Closing was to take place on a mutually agreeable date no earlier than fifteen days after the satisfaction of all "Preconditions to Closing" or one year from the date of the agreement, whichever was later. The Preconditions to Closing were contained in Article 14. The first precondition required that Perla receive all requisite approvals to build at least eighty apartment units on the site. The second precondition required receipt of an acceptable Phase I environmental report. The third precondition was Perla's receipt of "all required governmental approvals to the Offering Plan and any other documents required for the formation and operation of the condominium regime to be created at the Property."
Jung rejected the draft Agreement of Sale and gave it to Brown to revise. The revised Agreement of Sale was executed by Perla, Jung, and Nim on July 13, 2005. The purchase price was $8 million of which $800,000 was to be paid at signing; $2.2 million was to be paid within forty-five days of signing; and the $5 million balance was to be paid at the closing. The parties were to mutually agree on a closing date, which was to be no later than fifteen days after the satisfaction of all Preconditions to Closing or 120 days from the date of the Agreement of Sale, whichever was later.
The authority to build the project was covered in Articles 8.01 and 13, which provided as follows:
8.01 Fort Lee Land Use Authority. Seller will introduce Buyer to the Authority to assist Buyer with obtaining the necessary permissions to build the aforementioned 80 apartment units.
13.01 Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall have no force and effect and not be binding on Purchaser unless and until the following conditions (collectively, "Preconditions to Closing") are satisfied:
(i) Seller will introduce Buyer to the Fort Lee Land Use Authority to confirm and verify Buyer obtaining from the Authority the necessary permissions to build the aforementioned 80 apartment units.
If any of the Preconditions to Closing do not occur, then Purchaser, upon written notice to Seller, may terminate this Agreement and receive the return of the Deposit and the parties shall have no further obligations to each other hereunder.
Perla did not pay defendants $800,000 upon signing. Rather, he paid only $300,000 on or about July 19, 2005, and never paid any additional monies to defendants. Fort Lee never rezoned the property or granted any permission to build the eighty-unit apartment building.
Defendants' New York counsel wrote to Perla on November 3, 2005, demanding payment of the remaining balance of the deposit and scheduling of the closing. Perla's New York counsel responded on November 14, 2005, contending that defendants could not schedule a closing because Precondition to Closing 13.01(i) had not taken place. That is, Jung had not introduced Perla to the Fort Lee Land Use Authority, and there was no confirmation or verification of permission to build eighty apartment units. Perla's attorney terminated the contract and demanded return of the $300,000 deposit.
Defendants did not comply with Perla's demands, and Perla instituted this lawsuit. In his complaint, Perla alleged that he learned in mid-August that Fort Lee refused to approve the request for eighty residential apartment units. He also alleged that the revised Agreement of Sale was contingent on municipal approvals and sought a judgment for the monies tendered to defendants, including $15,000 advanced to Brown at Brown's request, and rescission of the Agreement. In the second count, Perla alleged that there had never been a meeting of the minds respecting the changes defendants made to the revised Agreement of Sale and that he had been coerced into signing it. In the third count, Perla alleged that the preconditions to closing had not occurred because Jung never introduced him to the Fort Lee Land Use Authority and that Jung's efforts to obtain approval were in vain. In the fourth count, Perla alleged that if the language of the contract did not make it clear that government approvals were a ...