Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.



November 30, 2010


On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0068-07.

Per curiam.


Argued November 4, 2010 - Decided

Before Judges R. B. Coleman, Lihotz, and

J. N. Harris.

This is a breach of contract action involving the development of real property in the municipalities of Hamburg and Hardyston. The parties' agreement provided that defendant, Toll Brothers, Inc. (Toll), would acquire in contemplation of construction, nearly all of the residential lots owned by plaintiff, The Bluffs at Ballyowen, LLC (The Bluffs), after a number of sequenced closings. Toll also agreed that it would construct so-called common improvements on the premises, including a clubhouse and a pool. At issue in this appeal is Toll's contractual duty to build such common improvements after bowing out of the agreement prior to the first scheduled closing.

After a bench trial, and notwithstanding its concession that it breached the agreement, Toll contends on appeal that the Law Division erred in molding an overly-broad remedy relating to the common improvements that was beyond the contemplation of the contracting partners. Toll also takes issue with the court's award of a judgment to The Bluffs for compensatory damages, interest, costs, and attorneys' fees in the aggregate amount of $2,505,706.40. Because we share Toll's concern that the Law Division did not impose a remedy consonant with the parties' intention, we reverse and remand for a limited proceeding -- with or without testimony, and subject to the managerial control of the Law Division -- for a consideration of the appropriate remedy, if any, to now be imposed for Toll's breach of the contractual duty to construct the common improvements.


In June 2004, The Bluffs acquired undeveloped land in Hamburg and Hardyston that had previously been approved for residential development. The Bluffs intended to use the property to build a sixty-seven unit, age-restricted condominium development, along with shared amenities including a clubhouse and a pool. After obtaining amendments to the preliminary major site plan approval, The Bluffs began construction of ten "spec homes."

In late summer 2005, The Bluffs began discussions with Toll about its possible acquisition of the property. In early October 2005, Toll presented a letter of intent to The Bluffs containing the initial profile of Toll's proposal, including reference to the construction of the common improvements as a condition of sale. Soon thereafter, the parties agreed to move forward with contract drafting without finalizing the letter of intent.

A final agreement between The Bluffs and Toll was executed on December 14, 2005. The agreement provided that Toll would purchase the entire property -- contemplated at that time to include sixty-seven residential units -- at a price of $14,740,000. The purchase price was based upon an allocation of $220,000 per residential unit, and was to be paid at two closings.*fn1 The agreement required Toll to make an initial deposit of $250,000, to be held in escrow, followed by an additional deposit of $400,000 at the conclusion of a sixty-day due diligence period. The first closing was scheduled to occur "on the later of (a) the date which is twenty (20) days after the expiration of the Due Diligence Period, and (b) the date Seller is in receipt of all governmental permits and approvals for the First Closing Units."

The parties' agreement regarding the common improvements was addressed in several paragraphs of the agreement. Paragraph 16, entitled "Operations Pending Settlement," set forth the respective responsibilities of Toll and The Bluffs as the property entered various stages of development. In general, the duty to maintain the property, any units under construction, and common improvements "between the Effective Date and the First Closing," belonged to The Bluffs, after which point Toll would obtain sole and exclusive control over both the first closing units and the common improvements.*fn2 The Bluffs would retain maintenance duties and control over the second closing units until the second closing.

Paragraph 16(h) specifically addressed the construction of the common improvements, which were defined to include the pool and clubhouse; sidewalks; landscaping; signage; street lights posts; grading and seeding; the main gas, electric, cable, phone lines; and the top course of paving on the roads. The paragraph further stated,

After the First Closing, Buyer, at its sole cost and expense, shall be responsible for the construction of the amenities for the Project, such as the clubhouse and pool

and shall be responsible for all other improvements not yet built which are required by the Final Plan[.]

The paragraph obligated Toll to present The Bluffs with a construction schedule for the common improvements at least ten days prior to the expiration of the Due Diligence Period, "time being of the essence," with a completion date no later than seven months after issuance of the building permit for such common improvements.

Upon Toll's purchase of the first closing units, it agreed that it would "use commercially diligent efforts to apply for the building permits for the [c]ommon [i]mprovements on the earliest possible date." If after sixty days following the first closing, "time being of the essence," Toll failed to acquire building permits for the common improvements, The Bluffs was permitted to apply for the permits and charge Toll with all "out of pocket costs in connection therewith."

Lastly, paragraph 16 stipulated that in the event The Bluffs was required in connection with governmental approvals to complete any of the common improvements prior to the first closing, Toll would be obliged to reimburse The Bluffs for the actual cost of same at the first closing.

Paragraph 8 of the agreement, captioned "Buyer's Default," provided that in the event Toll defaulted, and after providing an opportunity to cure, The Bluffs, "as its sole and exclusive remedy, may terminate this Agreement on written notice to Buyer and retain the Deposit for such breach as liquidated damages." The paragraph further provided, however, in the event that Buyer fails to construct the [c]ommon [i]mprovements in accordance with the Common Improvements Construction Schedule . . . Seller may, . . . in addition to the right to retain the Deposit as described in the preceding sentence, bring an action for specific performance against Buyer.

Additionally, if The Bluffs "commences an action for specific performance and . . . ultimately prevails," it would be entitled to receive attorneys' fees and out-of-pocket litigation costs from Toll. The agreement also noted that the remedies described "are a material inducement to Seller . . . [which] would not have entered into this Agreement without such remedy."

The "Survival" provision of the agreement, paragraph 18, stated:

Notwithstanding anything in this Agreement to the contrary, Buyer's obligation to construct the [c]ommon [i]mprovements shall survive Closing and any breach or termination of this Agreement.

Paragraph 24, governing the Public Offering Statement for the development, contained similar language, stating that at the expiration of the due diligence period, Toll would amend the Public Offering Statement through the New Jersey Department of Community Affairs (DCA), as required by law, to reflect Toll's sole responsibility, at its sole cost and expense, for the construction of the common improvements of the project. This provision was to survive closing or any termination of the agreement.

Finally, Toll was permitted to withdraw from the agreement for any reason within sixty days of its effective date upon written notice to The Bluffs. This event would trigger The Bluff's duty to refund the deposit. However, "the failure to notify Seller in writing prior to the expiration of the Due Diligence Period shall act as Buyer's election to waive this contingency."

During the due diligence period in early 2006, as the real estate market began to erode, the parties agreed to amend their contract. The February 15, 2006, amendments held Toll responsible for fifty-seven units only, leaving the ten units initiated by The Bluffs under its ownership. The amended agreement also modified the acquisition schedule from two to three closings, for the conveyance of fourteen, ten, and thirty-three units respectively. Lastly, the price per unit was reduced from $220,000 to $170,000 for a total price of $9,690,000 for all fifty-seven units.

Within a week of the amendments, Toll fulfilled its obligation to create a construction schedule for the pool and clubhouse. The subsequent few months were spent obtaining additional construction approvals due to differences in design between the units The Bluffs had planned to build and those that Toll intended to build. The disclosures that had been previously approved by the DCA were also revised to reflect Toll's new role in the project. During this time, The Bluffs sent Toll a letter requesting reimbursement of $373,344.58 for site improvement costs it had furnished. The parties subsequently met to discuss the numerous invoices and agreed that Toll would reimburse The Bluffs approximately $136,000 for the common improvements installed up to that point or which seller intended to finish.

As it continued to monitor the economic realities of the transaction, and aware that The Bluffs had sold only a single unit over the course of one year of marketing, Toll began to question whether the project was still financially viable due to declining market conditions in the northeastern United States. Toll submitted a proposed second amendment to the agreement for The Bluffs' review in September 2006, seeking to increase the number of closings; reduce the number of units conveyed at each closing; and thereby extend further into the future Toll's full absorption of units.

Without additional negotiations on the proposed second amendment, The Bluffs sent Toll a "time of the essence" letter scheduling the first closing for October 6, 2006, at Toll's Horsham, Pennsylvania offices. Toll informed The Bluffs that it would "hold off responding" to this letter until the parties could resolve the proposed second amendment. Although discussions between Toll and The Bluffs continued over the following days, The Bluffs' representatives arrived at Toll's office on October 6, 2006, expecting to close on the first set of units. Settlement did not take place, leaving the parties to face the consequences.

Three weeks later, on October 26, 2006, The Bluffs filed a four-count complaint in the Chancery Division primarily seeking specific performance of the putative obligations to acquire fifty-seven units and construct the common improvements. In the alternative, the complaint sought "money damages" (as well as punitive damages) pursuant to theories of breach of contract and breach of the implied covenant of good faith and fair dealing.

Even before Toll filed its answer, the Chancery court -- on its own motion -- entered an order dated December 26, 2006, which transferred venue to Sussex vicinage, and explicitly indicated that further proceedings would be in "Sussex County, Chancery Division." The parties and the court treated the transfer order as moving the case to the Law Division, but that is not what its plain language provided. However, a scant few weeks later on January 24, 2007, plaintiff's attorney confirmed in correspondence that The Bluffs had withdrawn its request for specific performance,*fn3 but "[t]he cause of action will proceed on all other issues."

Approximately one month afterwards, the parties entered into a written stipulation of partial dismissal whereby, among other things, The Bluffs expressly dismissed its first count, relating to the acquisition of fifty-seven units, and Toll abandoned its counterclaim that sought compensatory damages for breach of contract and breach of the implied covenant of good faith and fair dealing.*fn4 What was left in the litigation was The Bluffs' right to pursue, and Toll's right to defend against, claims for specific performance of the obligation to construct the common elements or, alternatively, money damages for the cost of construction of those common improvements, and reimbursement of the costs for those common improvements already incurred by The Bluffs.

Between July 8 and July 22, 2009, the matter was tried without a jury in the Law Division. On September 2, 2009, the trial court issued an oral opinion and provisional judgment in favor of The Bluffs, awarding it $1,775,698*fn5 for "the cost of completion," together with prejudgment interest, litigation costs, and attorney's fees to be determined at a later hearing.

In reaching its conclusion, the trial court noted that "this was an arm's length business transaction by experienced business people who had their own independent [c]counsel on staff who --- who had done this before." The court disagreed with Toll's line of reasoning that it was not obliged to build the common improvements until after a first closing, holding that the provision negotiated in the contract for the construction of the amenities was an integral part of this contract. It is a provision that was a deal breaker. In other words, if Toll Brothers had not agreed to build the common improvements and the amenities, this deal would not have been entered into by [T]he Bluffs.

Fortifying this determination was the trial court's repetitive conclusion that as a matter of fact, . . . the material inducement for [T]he Bluffs to enter into this agreement was for the Toll Brothers to construct and complete the common improvements in the site plan, including the club house, pool, sidewalks, landscaping, signage, sign posts, grading and seeding, certain road paving, and installation of gas, electric, cable and phone lines.

The trial court focused on the agreement's survival clause, paragraph 18, finding that Toll's obligation to construct the common improvements would survive "not only any closing but also any breach or termination of [the] agreement." It further held that "in conjunction with the other provisions of [the] contract, this interpretation supported the contractual intent [of] the parties."

In awarding damages in lieu of specific performance, the court's stated rationale was the following:

[The Chancery Judge] made a determination that damages was the appropriate remedy at law. And having now heard this case, I conclude based on what's transpired, that damages is the only effective way to restore [The Bluffs] to the place that [it was] in at the time [it] negotiated this contract.

The fact that the contract allows for specific performance as a remedy does not compel the conclusion that in the face of a judicial determination some years ago that that was not the appropriate remedy, that [The Bluffs] is foreclosed from seeking damages in this case.

Without further explanation, the court stated that "implied under paragraph eight[*fn6 ] . . . [was] the right of the aggrieved Plaintiff to proceed with a damage claim" since plaintiff had first filed in the Chancery Division only to have its civil action transferred to the Law Division.

On November 4, 2009, after the trial court's exposition and filing of the provisional judgment, but before the final judgment was entered in this case, and allegedly unbeknownst to Toll or the Law Division, The Bluffs executed deeds in lieu of foreclosure for the property at issue. When the trial court heard argument about the amount and reasonableness of prejudgment interest, litigation costs, and attorney's fees on November 13, 2009, the transfer of the property was not disclosed. We elect to take judicial notice of those deeds for purposes of this appeal pursuant to N.J.R.E. 201(b)(3) and N.J.R.E. 202(b).

Finally, on February 2, 2010, the trial court issued an "Amended Final Judgment," awarding The Bluffs prejudgment interest ($344,898.92), attorneys' fees ($363,333), and litigation costs ($21,806.52) in addition to compensatory damages in the amount of $1,775,698.00, for a total of $2,505,706.40. This appeal followed.


An appellate court interprets a contract "as a matter of law," absent patent ambiguity or conflicting testimony. Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). Because the parties dispute only the meaning of the language as written, this court reviews the trial court's decision de novo. Ibid.; Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 190 (App. Div.), certif. denied 196 N.J. 85 (2008).

"In interpreting a contract, 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 Cnty. Improvement. Auth., 404 N.J. Super. 514, 528 (App. Div. 2009). If "the terms . . . are clear and unambiguous, there is no room for construction and the court must enforce those terms as written." Watson v. City of E. Orange, 175 N.J. 442, 447 (2003); accord CSFB 2001-CP-4 Princeton Park Corp. Ctr., LLC v. SB Rental I, LLC, 410 N.J. Super. 114, 120 (App. Div. 2009). Words will be given their ordinary meaning absent an "explicit indication" to the contrary. In re Schedule of Rates for Barnert Mem'l Hosp., 92 N.J. 31, 40 (1983); Flanigan v. Munson, 175 N.J. 597, 606 (2003); Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 150 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961). Moreover, a court is not entitled to revise an agreement, "to make a better contract for either of the parties." Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960). Nor can the unexpressed intentions of a party later serve to alter the express terms of a written agreement. Domanske v. Rapid-Am. Corp., 330 N.J. Super. 241, 246 (App. Div. 2000).

The duty of a court is simply to deduce the intent of the parties by "resort to surrounding and antecedent circumstances and negotiations for light as to the meaning of the words used." Garden State Plaza Corp. v. S. S. Kresge Co., 78 N.J. Super. 485, 496 (App. Div.), certif. denied, 40 N.J. 226 (1963). Such a use of extrinsic facts and circumstances is permitted to evaluate a conceivable interpretation of the words and should be distinguished from "the forbidden use of parol evidence" to alter the meaning of an integrated contract. Id. at 497; Great Atl. & Pac. Tea. Co. v. Checchio, 335 N.J. Super. 495, 501 (App. Div. 2000) ("Even when the contract on its face is free from ambiguity, evidence of the situation of the parties and the surrounding circumstances and conditions is admissible in aid of interpretation.").


Toll contends that its obligation to construct the common improvements was contingent upon it taking an ownership interest in the development, which would not occur until the first closing. In support of this contention, Toll relies on Paragraph 16(h), which states, "[a]fter the First Closing, Buyer, at its sole cost and expense, shall be responsible for [the common improvements]." Toll also points to the fact that it was not required to obtain building permits until after it purchased the first closing units. Consequently, Toll asserts that the remedies for failing to do so could only "be invoked . . . after the First Closing," an event that both sides agree never occurred.

Toll erroneously conflates its physical obligation to commence construction with its contractual promise to construct the common improvements at some time in the future. There is a difference between language that governs when a duty to perform is triggered and when the actual promises to perform are exchanged and take effect. An example is found in In re Fairfield General Corp. v. Presley, 75 N.J. 398 (1978), where the Supreme Court considered a contingency clause in the context of a judicial sale, which stipulated that the final sale and transfer of a plane in the possession of a receiver was subject to court approval and that the agreement would not be binding until said approval. Id. at 403-04. Defendant buyer argued that the clause gave him the right to withdraw from the contract up until court approval. Id. at 405-06. The court held that the clause was "intended to mean that neither party had a duty to perform until court approval," not that defendant could escape liability up until that point. Id. at 414.

The contract between The Bluffs and Toll took effect on December 14, 2005. When viewed in its totality, the plain language of the agreement provides that Toll agreed to construct the common improvements as of this date. It was permitted -- for due diligence reasons -- to withdraw from its contractual entanglement within sixty days, and was not obligated to start performance until after the first closing, but its duty inhered on the date the agreement became effective. After amendments to the agreement, the due diligence period was ultimately scheduled to terminate on March 3, 2006, but Toll did not withdraw itself until October, seven months later, well after the expiration of the due diligence period. By that date, Toll's contractual duty to construct the common improvements was firmly established.

Toll suggests that it would have been commercially unreasonable for it to agree to construct the common improvements before acquiring an ownership interest in the property. Toll describes the trial court's "[assumption] [that] a real estate developer would have accepted an enforceable obligation (by way of specific performance) to build . . . a development [in] which it would have no ownership interest or continuing role" as "untethered to the realities of real estate transactions."

This advocacy is unconvincing. To accept it would require us to unduly elevate the promises regarding the common improvements to a level beyond the rest of the contract's terms. This would ignore the totality of the circumstances and rend the comprehensive fabric of the agreement. As of December 14, 2005, both parties were contractually bound by a mutuality of obligation. Without a material alteration to the common improvements obligation, The Bluffs and Toll later agreed in the first amendment to the purchase of fifty-seven residential units, in exchange for $170,000 per unit, and Toll's commitment to build the common improvements continued. Furthermore, Toll's compulsion to obtain building permits only after the first closing, does not indicate that its obligation to construct the common improvements would not be binding until that time. In fact, other portions of the agreement equally obliged Toll to take actions prior to the first closing. For instance, the agreement states that "upon expiration of the Due Diligence Period, Buyer . . . shall immediately apply to the New Jersey Department of Community Affairs ("DCA") to allow for multiple sponsors of the project, either through an amendment to the Public Offering Statement . . . or a separate registration by Buyer."

Toll further asserts that paragraph 18 -- the survival clause -- supports its position that the duty to construct the common improvements was a post-closing obligation. Specifically, Toll claims that the survival clause was intended to preserve its obligation only after being triggered by the first closing, which never took place, not to create a pre-closing obligation. As for its obligation surviving "any breach or termination of this agreement," Toll claims that this referred to any default on the second closing, not any default whatsoever. Although we do not necessarily agree with the Law Division that paragraph 18 is the linchpin of Toll's duty, it nevertheless fortifies the overall plain reading of the agreement regarding the common improvements obligation.

Lastly, Toll argues that the agreement's drafting history reinforces its contention that it was not bound to construct the common improvements until after the first closing. We disagree. Even if the contractual terms were deemed ambiguous, rendering parol evidence an important facet of our analysis, the negotiating history of the parties does not produce a different result.

From the beginning, Toll's major role in the project was to construct the common improvements on the property, without which the development would be virtually unmarketable. One of the first points of negotiation between the parties was the amount of the deposit by Toll. In response to a first draft of the agreement prepared by Toll, The Bluffs had sought to increase Toll's initial deposit from $250,000 to $1.25 million in an effort to ensure that Toll would have an incentive to consummate the transaction. The Bluffs' general counsel testified that as it compromised on the deposit, "the issue of the construction of the common improvements" took on greater importance. According to Richard Weissman, a principal of The Bluffs, Toll's obligation to construct the common improvements was "based on the purchase price they were paying for the project," including the size of the deposit. Robert Parahus, a Toll Regional President, acknowledged the importance of the common improvements but insisted that they were intended as a form of security on the second group of lots, not the first.

The Law Division found both parties' witnesses to be credible, but ultimately it held in favor of The Bluffs on the question of when Toll's duty to perform arose. Our agreement with that reading of the contract is based upon our independent review, but bolstered by the trial court's findings. We recognize that without being a rubber stamp, it is imperative for an appellate court to give appropriate deference to a trial court's findings of fact, especially on issues of credibility. McElwee v. Borough of Fieldsboro, 400 N.J. Super. 388, 397 (App. Div. 2008) (noting that an appellate court must give "deference to the findings of the trial judge . . . where . . . the findings are 'substantially influenced by [the judge's] opportunity to hear and see the witnesses and to have the 'feel' of the case, which a reviewing court cannot enjoy.'"). However, findings by a trial judge should be supported "by adequate, substantial and credible evidence." See also Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). We are satisfied that on the critical question of duty, there was ample support in the record to justify the Law Division's interpretation of the contract. We do not, however, share the trial court's view of the appropriate remedy, in light of the contract itself.


Without conceding that it was obligated to construct the common improvements as determined by the Law Division, Toll asserts that the trial court erred as well in reforming the agreement to allow for monetary damages not contemplated by the parties. Notably, Toll does not argue that specific performance was the appropriate remedy either, stating that "[b]y the time of trial . . . the remedy of specific performance was no longer in the case," having been transferred from the Chancery Division to the Law Division. Rather, Toll asserts that the compensatory damage award constituted a windfall because The Bluffs has since transferred the property in lieu of foreclosure.

The assumption that once the case was transferred to the Law Division, specific performance was foreclosed as a remedy is incorrect. The Law Division "has ample jurisdiction to give all parties in interest complete relief," including equitable relief. Carton v. Borden, 8 N.J. 352, 358 (1951); Ward v. Merrimack Mut. Fire Ins. Co., 312 N.J. Super. 162, 169-70 (App. Div. 1998). The pertinent issue then, is whether a court may properly reform a contract, where the parties have previously bargained for a particular equitable remedy for breach, as here.

Paragraph 8 of the agreement carefully crafted what would happen if Toll defaulted. With precision and purposefulness, the agreement highlighted The Bluffs' rights if Toll failed to construct the common improvements: in the event that [Toll] fails to construct the [c]ommon [i]mprovements . . . [The Bluffs] may, after fifteen days written notice . . . with opportunity to cure, in addition to the right to retain the Deposit as described in the preceding sentence, bring an action for specific performance against [Toll].

The paragraph emphasized the material inducement that the construction of the common improvements played in the making of the contract. Lastly, paragraph 8 noted Toll's waiver of a challenge to the "enforceability" of the paragraph or to its "reasonability." No other terms, express or implied, are fairly embraced within paragraph 8's specific wordsmithing.

Notwithstanding this unambiguous choice of a single equitable remedy -- memorialized by a written agreement and not abrogated by the actions of the court or the parties -- the Law Division provided something different. Although noting that "[The Bluffs] here [is] entitled to nothing more, nothing less than that which they have bargained for under the contract," the Law Division held that "some judicial reformation of the contract is warranted, in terms of the interpretation of the remedies available to the parties." Its sole explanation for performing this judicial plastic surgery was the following:

I'm satisfied here that implied under paragraph eight, the right of the aggrieved Plaintiff to proceed with a damage claim in lieu of specific performance, where [it] actually did file an action seeking specific performance in the Chancery Division, results in my conclusion that [it is] entitled to seek the monetary damages which [it] sought as a result of what I consider to be an egregious breach of contract by the Defendant.

Because we are unaware of any provenance in the law for this proposition, we cannot agree with the Law Division's approach to the remedy.

Reformation is an equitable remedy available to rectify "[a] mutual mistake or unilateral mistake by one party and fraud or unconscionable conduct by the other." Dugan Constr. Co. v. N.J. Turnpike Auth., 398 N.J. Super. 229, 242-243 (App. Div. 2008); see also St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 577 (1982). "Reformation presupposes that a valid contract between the parties was created but, for some reason, was not properly reflected in the instrument that memorializes the agreement." Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J. Super. 324, 345 (App. Div.), certif. denied, 188 N.J. 353 (2006). Thus, as a general rule, for a court to reform a validly-entered contract, there must be "clear and convincing" evidence that the reformed version reflects the parties' actual intent at the time it was entered into. Cent. State Bank v. Hudik-Ross Co., 164 N.J. Super. 317, 323 (App. Div. 1978).

Here, the contract explicitly defined what remedies would be available to the non-breaching party. With regard to the common improvements, the subject of the instant litigation, The Bluffs was entitled to bring an action for specific performance.

Although The Bluffs sought damages in the alternative, it contractually bound itself to specific performance in the first instance, as called for by contract.

Mutual mistake, one of the circumstances in which reformation may be appropriate, occurs when both parties are operating under the same mistaken belief as to a material fact. Marino v. Marino, 200 N.J. 315, 343 (2009). Here, there is insufficient evidence in the record to support the view that the agreement failed to express the parties' mutual intent as to remedy. See St. Pius X House of Retreats, supra, 88 N.J. at 579. Additionally, there is no indication of a unilateral mistake by one party. Thus, reformation was inappropriate on these grounds.*fn7

At the time the Law Division rendered its decision, The Bluffs was the owner of a seemingly developable project, presumably capable of facilitating Toll's actual construction of the common improvements. Nothing in the record suggested the impossibility or impracticability of ordering the very remedy The Bluffs had bargained for. Nevertheless, at present, that may no longer be the case.

The question becomes whether specific performance remains a plausible remedy in light of recent events. The Bluffs does not dispute transferring title to the property after the provisional judgment was entered, but before the amended judgment. If, as the deeds in lieu of foreclosure suggest, The Bluffs no longer has title to the property, specific performance would appear to be a futile remedy. See Marioni, 374 N.J. Super. at 616; Robinson-Shore Dev. Co. v. Gallagher, 26 N.J. 59, 72 (1958) ("[A] court of equity will not compel a party to a contract to perform that which is impossible."). Nonetheless, recognizing that a trial court enjoys "the broadest equitable power to grant the appropriate relief," we remand the case for a hearing on the legal status of the property and reconsideration of specific performance as a possible remedy. See Cooper v. Nutley Sun Printing Co., 36 N.J. 189, 199 (1961); Marioni, supra, 374 N.J. Super. at 616.

If the trial court finds that the specific performance remedy is impossible or impracticable at this point in time, reformation may be equitably appropriate based upon changed circumstances. We will not catalog the potential permutations that such reconsideration may take. Certainly, if reformation is then found to be appropriate, an award of monetary damages should be reconsidered, ensuring that the "damages awarded 'encompass no more than the amount that will make the plaintiff whole, that is, the actual loss,'" Ming Yu He v. Miller, 411 N.J. Super. 15, 26 (App. Div. 2009) (quoting Caldwell v. Haynes, 136 N.J. 422, 433 (1994)), certif. granted, 201 N.J. 446 (2010), and that represent "a reasonably certain consequence of the breach." Totaro, Duffy, Cannova & Co. v. Lane, Middleton & Co., 191 N.J. 1, 15 (2007) (internal quotations omitted).


Because of the remand, we need not dwell long upon Toll's argument that the award of prejudgment interest "lack[s] any reasonable justification and constitutes a manifest denial of justice." In particular, Toll urges that because the awarded construction costs were estimated in current dollars, prejudgment interest was unwarranted.

We note that the award of prejudgment interest in a contract dispute rests on "'equitable principles'" and is within the "sound discretion of the trial court." Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 390 (2009) (quoting Cnty. of Essex v. First Union Nat'l Bank, 186 N.J. 46, 61 (2006)). We vacate the award of prejudgment interest without prejudice to the Law Division's consideration of same at the conclusion of its determination of whether any remedy is appropriate, and if so, its amount.

In like vein, we vacate the award of attorneys' fees and order that they abide the final determination under the contract. Toll contested the reasonableness of The Bluffs' claim for attorneys' fees, charging that The Bluffs' proofs evidenced a "pattern of overbilling by [p]laintiff's counsel," challenged various time entries, and disputed The Bluffs' right to fees given the fact that The Bluffs was awarded money damages in lieu of specific performance.

In the event that the Law Division, on reconsideration, decides to reallocate attorneys' fees it must "'state clearly its factual findings and correlate them with the relevant legal conclusions.'" Kas Oriental Rugs, Inc. v. Ellman, 407 N.J. Super. 538, 562 (App. Div.) (quoting Curtis v. Finneran, 83 N.J. 563, 570 (1980)), certif. denied, 200 N.J. 476 (2009); see also R. 1:7-4. This will ensure confidence in its ultimate determination because this court will not disturb the amount of a trial court's award of fees absent a "clear abuse of discretion." See Litton Indus., supra, 200 N.J. at 386; United Consumer Fin. Servs. Co. v. Carbo, 410 N.J. Super. 280, 310-11 (App. Div. 2009).


In summary, we are satisfied that the Law Division correctly determined that Toll breached its contractual duty to construct the common improvements. We are not so sanguine about the court's conclusion regarding the appropriate remedy for that breach. Therefore, we vacate the amended judgment dated February 2, 2010, and remand for reconsideration -- under the lens of current circumstances then apparent to the court -- of the proper remedy and ancillary consequences, if any, that flow from Toll's breach.

Affirmed in part; reversed in part; and remanded for further proceedings in accordance with this opinion. We do not retain jurisdiction.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.