January 5, 2011
EDWARD FEHR, PLAINTIFF-RESPONDENT,
GEORGE E. ALGARD, JR., CATHY ALGARD, STERLING HARBOR MOTEL & MARINA, INC. T/A STERLING HARBOR BAIT & TACKLE, STERLING HARBOR DUKE OF FLUKE TOURNAMENT, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket Nos. L-104-07 and L-106-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 6, 2010 - Decided Before Judges Axelrad and Lihotz.
Defendant Cathy Algard is the owner of defendant Sterling Harbor Motel & Marina Inc. (SHM), trading as Sterling Harbor Bait & Tackle, which is the sponsor of the Sterling Harbor Duke of Fluke Tournament (Tournament). She, along with her husband George E. Algard, Jr., appeals from an order granting plaintiff, the late Edward Fehr,*fn1 partial summary judgment on his breach of contract claim. After reviewing the parties' cross-motions for summary judgment, the court accepted plaintiff's interpretation of the rules governing the competitive fishing contest and set aside plaintiff's disqualification for "cheating" after he was accused of entering fish not caught on the day of the Tournament. The court's determination crowned plaintiff the 2007 "Duke of Fluke" and awarded damages. On all other claims raised in plaintiff's complaint, summary judgment was awarded to defendants.
On appeal, defendants argue the Law Division judge erred in granting summary judgment on plaintiff's contract claim because the Tournament rules could reasonably be read to grant the judges the authority to disqualify plaintiff due to his dishonest conduct and also included an implied covenant of good faith performance and fair dealing, which means participants must not cheat. Defendants seek reversal of the order and an opportunity to prove their claim that plaintiff's deception warranted disqualification. We reverse and remand.
The facts, viewed in a light most favorable to defendants, are taken from the summary judgment record. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Each year, SHM sponsors the Tournament, which attracts more than one-hundred contestants. A number of cash prizes in various categories are awarded. The description of the prize awards and the contest rules are contained in the Tournament tri-fold brochure, which includes the entry application. This controversy entails two of those prize awards. The first, the "single heaviest fluke prize," given to the contestant who catches the heaviest live flounder, and the second, the "five heaviest fluke prize," given to the boat catching the five flounder with the greatest combined weight. For these categories, SHM provided a fixed cash prize and significant additional winnings were garnered through contestant-contributed funds in a process labeled "calcutta."
The contest rules listed in the Tournament brochure are few. In addition to a hold harmless agreement, the rules include a prohibition against any boat approaching another vessel, land or a structure; the designated deadline for registration; the amount of the entrance fee; the start time, place and designated fishing areas, along with the time for the final weigh-in. The rules also add requirements directly related to winning prizes. These include: a fish must be caught on a rod and reel, one rod per angler and four anglers per boat; entrants for the combined weight category may include fish caught by all contestants on a boat; entrants for the heaviest single fluke must be alive at weigh-in, although fish submitted for the other categories, including the five heaviest fluke need not be living at weigh-in; any fish submitted for consideration in the heaviest fluke category may not also be entered in the five-heaviest-fluke category. Finally, Rule 12 states:
All fish will be subject to examinations externally and/or internally, or as any judge deems necessary. Any fish entered in the contest is subject to disqualification if a judge decides it bears suspicious marks or characteristics. All decisions by the judges are final.
The rules brochure also includes the registration portion. Appearing directly below a registrant's information and above the space provided for the captain's signature, is the following statement:
The Captain of said vessel has read the Rules and Regulations of the Sterling Harbor Duke of Fluke Tournament and understands and agrees with them. The Captain of said vessel has also reviewed the rules and regulations with all of the fisherman participating on the said vessel in the tournament. Anyone who is found to have provided false information is subject to immediate disqualification including the rest of the anglers aboard said vessel with no refund. Sterling Harbor reserves the right to refuse entry to any person for any reason whatsoever.
The 2007 Tournament was held in Wildwood on July 14, 2007, and monitored by three judges: George and Cathy Algard, and Kenneth Greenling. Plaintiff's boat, the Gina Ariella, was registered for the Tournament by Jack Aydelotte.
During weigh-in, Aydelotte, on behalf of the Gina Ariella, presented the fish to be considered for prizes. First, he offered a six-pound, four-ounce flounder for the single heaviest fluke award. The fish was tagged and placed in a cooler. Next, Aydelotte presented a fish for the "Duchess Award,"*fn2 but changed his mind and submitted the fish along with four others for consideration for the heaviest five fluke award.
As Aydelotte placed the fish in the weigh-in tray, Algard was the first judge to see them. He stated:
[Aydelotte] went and put that [fish] and four other fish in our tray for weigh-in, and two of the fish were so bad that -- I've seen a lot of bad fish over the years and they were two of the worst fish I've ever seen.
They were milky white, off-color, tan, sunken eyes, the worst looking gills I've ever seen in a fish unless it came out of a dumpster somewhere. They were just bad fish.
I've seen a lot of fish. I haven't seen many of them in that bad a shape, so I don't know if they laid in water for days, I don't know if they were frozen, I don't know if they ran out of ice in the cooler that they kept the fish from, [sic] I don't know, but those fish were not caught that day because I don't know [of] anything that you can do to make a fish look that bad in eight hours.
Greenling next looked at the fish presented by Aydelotte. He refused to complete the weigh-in, disallowed all five fish and dumped them onto the asphalt parking lot. Along with a few choice words, Algard told Aydelotte "you are disqualified. Don't ever come back here again."
Aydelotte argued with the judges' determinations, asserting the fish were caught that day. He offered no explanation for their condition.
At the conclusion of the weigh-in, the three judges met to determine the award winners. According to Algard, he and the other judges completely disqualified plaintiff and his entire boat because Aydelotte attempted "to cheat or weigh-in bad fish[.]" Algard stated that "you can't cheat in one category and win in another. You cheat, you cheat; you're done." Cathy Algard affirmed this position stating that Aydelotte's attempt to cheat caused complete disqualification because "[h]e broke the standard code of ethics to [sic] a fisherman." Consequently, although plaintiff actually reeled the heaviest fluke that day, the single-heaviest fluke award was given to another.
Plaintiff sued alleging, among other things, breach of contract. Our review is limited to the trial court's determination on that claim.
Defendants moved for summary judgment asserting plaintiff's contract claim must be dismissed because the law defers to the contest judges' reasonable interpretation of the contest rules. Plaintiff opposed defendants' motion and filed a cross-motion for summary judgment arguing his rights were governed by the written terms of the Tournament brochure, which he had fully fulfilled by catching the heaviest live flounder on the day of the Tournament.
In a written opinion, the trial court determined Rule 12 disqualified the "bad fish" but did not support the disqualification of plaintiff and his boat. The court determined plaintiff caught the heaviest fluke, and therefore, must be awarded the prize money and the right to assume the title: "2007 Duke of Fluke."
In this appeal, the parties agree their dispute is governed by contract law. See Brown v. Morrisey & Walker, 106 N.J.L. 307, 312 (E. & A. 1930) (holding that "[t]he offer of a prize may mature into a binding contract in favor of a successful contestant who has complied with the terms of the offer"); see also Robertson v. U.S., 343 U.S. 711, 713, 72 S. Ct. 994, 996, 96 L.Ed. 1237, 1240 (1952) ("The acceptance by the contestants of the offer tendered by the sponsor of the contest creates an enforceable contract."); 6 Corbin on Contracts, § 1489 (same); Annotation, "Private Contest and Lotteries: Entrants' Rights and Remedies," 64 A.L.R.4th 1021, 1045-52 (1988) (stating the promoter of a contest makes an offer by making public the conditions and rules of the contest). At issue then is whether plaintiff complied with all Tournament rules, representing the terms of defendants' offer, entitling him to receipt of an award.
The question regarding the interpretation or construction of a contract is usually a legal one, which may be suitable for a decision on a motion for summary judgment. Driscoll Const. Co., Inc. v. N.J. Dept. of Transp., 371 N.J. Super. 304, 313 (App. Div. 2004); see also Celanese Ltd. v. Essex Cnty. Improvement Auth., 404 N.J. Super. 514, 528 (App. Div. 2009) (holding that "unless the meaning is both unclear and dependent on conflicting testimony[,]" the court interprets the terms of a contract as a matter of law) (citations omitted). We note, however, that a motion for summary judgment should be granted only when the moving party establishes the absence of any genuine issue as to a material fact. Brill, supra, 142 N.J. at 539-40.
Here, in granting summary judgment, the trial judge found the terms of the contract were unambiguous. Our review of that legal question is plenary, with no special deference to the trial judge's interpretation of the law and the legal consequences that flow from the established facts. Zabilowicz v. Kelsey, 200 N.J. 507, 512-13 (2009); Manalapan Realty L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995).
In interpreting a contract we are guided by established principles. "A basic principle of contract interpretation is to read the document as a whole in a fair and common sense manner." Hardy ex. rel. Dowdell v. Abdul-Matin, 198 N.J. 95, 103 (2009). "We do not supply terms to contracts that are plain and unambiguous, nor do we make a better contract for either of the parties than the one which the parties themselves have created." Maglies v. Estate of Guy, 193 N.J. 108, 143 (2007); Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999).
So too, we enforce the contract as written. The parties are bound by the contracts they make for themselves, with the understanding that "a meeting of the minds is an essential element to the valid consummation" of any agreement. Center 48 Ltd. P'ship v. May Dept. Stores Co., 355 N.J. Super. 390, 406 (App. Div. 2002). Accordingly, in interpreting an agreement, we "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, supra, 404 N.J. Super. at 528 (citing Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 183-84 (1981)).
In our examination, if we find "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), giving them "their plain, ordinary meaning." Pizzullo v. New Jersey Mfrs. Ins. Co., 196 N.J. 251, 270 (2008). See also Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). However, "[i]f the terms of the contract are susceptible to at least two reasonable alternative interpretations, an ambiguity exists. In that case, a court may look to extrinsic evidence as an aid to interpretation." Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008).
One additional principle of contract law, cast by defendants as applicable, addresses the implied covenant of good faith and fair dealing, a principle inherent in every contract in New Jersey. Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349, 366 (2010); Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001). "[G]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party." Wilson, supra, 168 N.J. at 245 (quoting Restatement (Second) of Contracts § 205 comment a (1981)). A breach of the covenant of good faith and fair dealing necessarily requires "[b]ad motive or intention" on the part of the breaching party." Id. at 251 (quoting Original Great Am. Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 280 (7th Cir. 1992)).
With the foregoing concepts in mind, we tackle our review of defendants' request for reversal of the trial judge's judgment for plaintiff. The parties view the issues for review differently.
Plaintiff rejects the need for testimony, arguing there is no ambiguity in the contract. Anchoring his position to the trial judge's finding that Rule 12 addresses cheating, plaintiff asserts the trial court correctly found the rule allows the rejection of "suspicious" fish with a concomitant remedy of disallowing the fish for prize contention. Plaintiff reminds us he first offered his heaviest fluke, which was not rejected, but in fact was weighed and retained by the judges. Viewing this event in isolation, plaintiff appears to have met all requirements of the Tournament rules and defendants' failure to pay was a breach of contract.
Conversely, defendants contend the contest rules along with the affirmation appearing above the captain's signature together form its offer. Defendants argue that Rule 12 in conjunction with the "false information" provision of the affirmation clause, although read one way by the motion judge, could also reasonably be understood to provide that cheating is a basis for disqualification and release from the Tournament, netting a dispute of material facts, which obviates summary judgment. Thus, the determination of whether the contract was breached and, if so, by whom must be left to the fact finder.
Further, defendants disagree with the trial court's rigid interpretation that the rules limit the Tournament judges to the disqualification of fish not fisherman. Defendants assert the rules allow the judges to uphold the Tournament's integrity by ejecting suspected cheats, thus enforcing the implied obligation to compete fairly. By hooking cheating to a breach of the implied covenant of good faith performance and fair dealing among the fisherman in the competition, defendants posit plaintiff's disqualification from consideration for prize awards was proper.
We agree with defendants that the parties' intentions in respect of the terms of the contract governing the competition require review of the Tournament rules in conjunction with the registration clause executed by a captain who registers his vessel. See Celanese Ltd., supra, 404 N.J. Super. at 528 (stating in contract interpretation "court must try to ascertain the intention of the parties as revealed by the language used"). We reject the motion judge's segregation of the Tournament rules from the captain's registration confirmation. The document in fact is an integrated one. Therefore, the provisions must be read as one to glean the parties' intent. See Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001) ("The settled primary standard of interpretation of an integrated agreement is the meaning that would be ascribed to it by a reasonably intelligent person who was acquainted with all the operative usages and circumstances surrounding the making of the writing." (quoting Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 149 (App. Div. 1960))), certif. denied, 34 N.J. 66 (1961).
The rules and the registration form require Tournament participants to compete honestly. Not only do Rules 12 and 13 identify possible scenarios for rejection of suspicious fish or disqualification of a boat for leaving the waterways, but also the affirmation clause provides for disqualification of a captain and his crew for submitting false information. By its terms, the registration form requires every captain to attest he and his crew have read and will abide by the Tournament rules. Further, it informs registrants that immediate disqualification will result for giving false information. The phrase "submitting false information" could reasonably include a contestant's false assertion to abide by all Tournament rules.
We also depart company with the motion judge's determination that Rule 12 expressly governs the dispute. Even though Rule 12 mandates the rejection of suspicious fish, it is arguable whether it specifically addresses plaintiff's attempt to win the Tournament by using fish brought onto his boat that were not caught in the Tournament. As explained in deposition testimony, Rule 12 was adopted to reject fish possibly caught in a cage in contravention of Rule 3, which requires fish be caught on a rod and reel. Neither the specific language of Rule 12, nor any other rule, addresses the remedy imposed when a party is suspected of submitting day-old or frozen fish to win prize money. In all the years of the Tournament's operation, this circumstance had never been confronted.
Absent an express contract term governing the issue, extrinsic evidence may be used to support defendants' interpretation that the judges could disqualify someone who so flaunted the rules. Chubb Custom Ins., supra, 195 N.J. at 238. It seems axiomatic that one cannot conduct a valid competition if participants cheat so that to allowing plaintiff to "win" after he "cheated" flies in the face of the defendants' offer of competition. Plaintiff's suggestion that the failure to include a rule specifically stating this obvious requirement lures sharks and swindlers to undermine the competition, unnecessarily turning a traditional social competition into a battle between barristers.
Defendants may provide testimonial evidence showing the parties' understanding regarding the consequence of a flagrant abrogation of acceptable competition conduct as the law allows extrinsic evidence to show "[a]rrangements embodied in a contract . . . such that the parties have impliedly agreed to certain terms and conditions which have not been expressly stated in the written document." Onderdonk, supra, 85 N.J. at 182.
"[E]vidence of the circumstances is always admissible in aid of the interpretation of an integrated agreement. This is so even when the contract on its face is free from ambiguity. The polestar of construction is the intention of the parties to the contract as revealed by the language used, taken as an entirety; and, in the quest for intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded." [Ibid. (quoting Atlantic No. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953)).]
Following our review, we conclude there is enough of an ambiguity in the document forming the parties' agreement to overcome summary judgment and to allow the fact-finder to decide whether the terms of the contract were breached.
Finally, we note good faith performance is always an inherent quality of any contract. "Every party to a contract . . . is bound by a duty of good faith and fair dealing in both the performance and enforcement of the contract." Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 224 (2005). This requires that "'neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract[.]'" Kalogeras, supra, 202 N.J. at 366 (quoting Palisades Properties, Inc. v. Brunetti, 44 N.J. 117, 130 (1965)). See also Restatement (Second) of Contracts § 205 (1981) ("Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.").
The Supreme Court has defined good faith performance in this way:
Good faith conduct is conduct that does not violate community standards of decency, fairness or reasonableness. Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party. The covenant of good faith and fair dealing calls for parties to a contract to refrain from doing anything which will have the effect of destroying or injuring the right of the other party to receive the benefits of the contract.
As a general rule, subterfuges and evasions in the performance of a contract violate the covenant of good faith and fair dealing "even though the actor believes his conduct to be justified. [Brunswick Hills Racquet Club, supra, 182 N.J. at 224-25 (internal quotations and citations omitted).]
Plaintiff had an obligation to compete to win the Tournament honestly in accordance with the terms and conditions of the offer. If plaintiff's conduct were fraudulent, upholding his actions as legitimate undermines the sponsor's intent in conducting the Tournament. Additionally, it deprives defendants of the benefit of the bargain as it signals to other contenders, who entered the contest in good faith, abided by the Tournament terms and paid into the calcutta, that they might expect to see the promised awards carried off by a person who submitted fish he brought, rather than caught in competition.
We reject plaintiff's suggestion that defendants' position allows the judges to change the rules of the Tournament. Here, the facts, when viewed most indulgently to defendants, demonstrate plaintiff's conduct attempted to dupe the judges. The order of plaintiff's submissions for prizes should not allow the first fish to be considered for an award, if, in fact, he then tried to weigh-in day old fish. Therefore, a determination of whether plaintiff complied with the Tournament rules and the implied covenant of good faith and fair dealing requires resolution by a fact finder, which is inappropriate for summary judgment.
We additionally note that any evaluation of whether the contest judges exercised good faith within the contract terms by ordering disqualification once suspecting plaintiff of cheating is a question to be answered by the fact finder. If the judges are found to have acted in bad faith and exceeded the rules in making a decision, plaintiff may prevail.
We reverse the grant of summary judgment to plaintiff and remand for further proceedings.