On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-17-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 5, 2010
Before Judges Carchman, Graves and Messano.
Defendants/third-party plaintiffs David Binet (Binet) and Esther Binet (Esther) appeal from various trial court orders and a judgment entered on February 2, 2009, that (1) awarded plaintiff Maurice Deutsch (Deutsch) damages in the amount of $120,500, together with prejudgment interest; (2) declared Deutsch to be the owner of the property at 208 Imperial Court in Lakewood, New Jersey (the Property); (3) awarded Deutsch any surplus proceeds up to $132,550 in the event of a foreclosure sale of the Property; (4) ordered the Binets to pay Deutsch $2000 per month for the use and occupancy of the Property commencing December 1, 2007; and (5) discharged two lis pendens filed by the Binets in January 2006 and March 2007. We affirm.
In December 2003, Binet signed a contract to purchase a house located at 200 Imperial Court, with an anticipated closing date of June 1, 2004. The contract was subsequently modified for the purchase of the Property, with closing to take place on August 1, 2004. However, Binet's low credit score precluded him from obtaining a mortgage loan to finance the purchase. Therefore, Binet and "a long-time friend," third-party defendant Abraham Censor*fn1 (Censor), entered into an oral agreement under which Censor would purchase the Property in his name for the Binets' use and later transfer it to them in exchange for a cash payment. Pursuant to the agreement, Binet paid Censor between $1000 and $2000, and Censor obtained two mortgage loans from Chase Bank totaling approximately $650,000.*fn2 Binet and his brother provided $160,000 for the down payment on the Property, the legal services rendered in connection with the sale, and closing costs. The transfer took place on September 27, 2004, and Censor's deed was recorded on October 28, 2004. However, Binet's credit score remained low, and he and Esther never refinanced the Censor mortgage.
On January 11, 2006, the Binets filed a complaint against Censor seeking a constructive trust to secure their interest in the Property and an order compelling Censor to execute a deed transferring title to them. They also filed a notice of lis pendens the same day. The next day, January 12, 2006, Censor executed a mortgage and security agreement in the sum of $240,000 in favor of Deutsch. The mortgage was recorded on January 23, 2006.
Approximately two months later, on March 29, 2006, Binet, Censor, and Deutsch signed a four-page settlement agreement (the Settlement Agreement) that purported "to settle the claims and disputes between them" concerning the Property and two loans given to Binet and Censor by Deutsch. Also involved in the negotiations was Benzion Frankel (Frankel), a New York attorney. The Settlement Agreement stated that Binet would pay Deutsch the total sum of $145,500 in eight installments, with the last payment on or before November 1, 2006. Regarding the Property, the contract stated:
2. Deutsch shall execute an Assignment of Mortgage ("Assignment") in recordable form to Binet. The Assignment shall be placed in escrow with Benzion Frankel P.C. pending full performance by Binet under . . . this Agreement. Any assignment by Deutsch, except in [the] event of default by Binet, shall be deemed a breach.
3. Censor shall execute a Deed in recordable form to Binet or an entity to be formed. The Deed . . . shall be placed in escrow with Benzion Frankel P.C. pending full performance by Binet under . . . this Agreement. Any lien or encumbrance executed or allowed by Censor shall be deemed a breach.
4. Binet shall continue paying the existing Mortgages and keep them current. The existing Mortgages will be refinanced and paid off. In no event will the Deed be delivered prior to the closing of the refinance.
5. All actions currently pending with respect to the loans and the [Property] shall be stayed and no new actions shall be commenced.
Under the terms of the Settlement Agreement, Binet was to receive the deed and assignment "[u]pon full performance" of his payment obligations. If Binet breached or defaulted, the escrow agent, Frankel, was authorized to return the deed to Censor and the assignment of mortgage to Deutsch.
Pursuant to the Settlement Agreement, Binet paid a total of $25,000 to Deutsch with the last payment on September 1, 2006. On December 13, 2006, Censor executed a deed granting the Property to Deutsch. The deed was recorded on December 27, 2006.
On January 10, 2007, Deutsch filed a complaint against Binet and his wife, Esther, alleging that Binet had breached the Settlement Agreement. The complaint sought (1) enforcement of the Settlement Agreement; (2) "declaratory judgment . . . that [Binet] breached and [was] in default of the Settlement Agreement"; (3) declaratory judgment that the Binets had no interest in the Property; (4) an order discharging the notice of lis pendens filed by the Binets; (5) declaratory judgment that the Binets had no right of possession or interest in the Property; (6) a writ of possession in favor of Deutsch; (7) judgment against Binet for the balance due under the Settlement Agreement; and (8) interest, counsel fees, and costs of suit.
In their answer, counterclaim, and third-party complaint filed on March 28, 2007, the Binets claimed that they were "no longer bound by the obligations of the Settlement Agreement" because Deutsch and Censor committed a material breach by failing to deposit the executed deed and assignment of mortgage into escrow.*fn3 The counterclaim and third-party complaint sought (1) a determination that the Settlement Agreement and the deed from Censor to Deutsch were both "null and void"; (2) imposition of a constructive trust in favor of the Binets; (3) a judgment quieting title in favor of the Binets and declaring that neither Deutsch nor Censor had any interest in the Property; (4) a determination that the Binets had the sole right of possession to the Property; and (5) damages, counsel fees, and costs.
The court entered a case management order scheduling discovery on March 31, 2008. The order stated that interrogatories were to be served by April 10, 2008, and answered by May 15, 2008, and that all depositions were to be completed by June 1, 2008.
In April 2008, Deutsch filed a motion for summary judgment, ejectment, and sanctions. In a supporting certification, Deutsch stated he was "ready, willing and able" to sign a deed to Binet and to assign the mortgage he was holding on the Property to Binet as soon as he received "all sums due and owing to [him] under the Settlement Agreement." He also certified that his attorney, Frankel, "was never notified as to whom the mortgage should be assigned to." Additionally, Frankel confirmed in his certification that he was unable to prepare a deed and an assignment of the mortgage to be placed in escrow because Binet was either unable or unwilling to identify the entities or the individuals that were to receive the documents. Frankel certified: "Despite several attempts to obtain the information, I was never told to whom I should place title in, nor was I ever told to whom the mortgage of [Deutsch] should be assigned to." The Binets opposed the motion, claiming that "the validity of the [Settlement] Agreement, the circumstances of its execution and the specifics of performance of each party of their respective obligations need[ed] to be developed through the discovery process."
Before the court ruled on Deutsch's motion, Censor filed a motion to dismiss the Binets' third-party complaint. The motion and an accompanying certification by Censor's attorney alleged that the Binets had failed to respond to interrogatories and document requests as required by the court's March 31, 2008 case management order.
The parties appeared for oral argument on May 23, 2008. At that time, the court noted the parties had resorted to self-help rather than seeking judicial enforcement of the Settlement Agreement and that neither party "acted with clean hands."
Nevertheless, it ordered the parties to proceed with depositions and reserved judgment on Deutsch's summary judgment motion. On May 29, 2008, J.P. Morgan Chase Bank commenced foreclosure proceedings on the Property.
Both Frankel and Deutsch were deposed on May 30, 2008. Frankel testified that although he had represented Deutsch "a handful" of times in the past, including a loan to Censor, he acted only as a "facilitator" or "go-between" when the Settlement Agreement was negotiated. Frankel also stated that Binet was represented during the negotiations by Morris Birenbaum. According to Frankel, he waited for Binet "to form an entity" to receive the deed and assignment and had "many, many phone calls" with Birenbaum, but ultimately "was told that Mr. Binet and Mr. Birenbaum did not know where [the documents] would be going" and that he "would be advised."
Deutsch testified Frankel was acting as his attorney during the settlement negotiations. He further testified that he had provided "[m]ore than 15" loans to Censor amounting to "at least" $240,000 by 2006, and that he had loaned Binet $100,000 in "early 2000," which by 2006 had accumulated interest of "somewhere between $75,000 and $90,000." Deutsch stated that since receiving the loan, Binet had avoided him "for years on end," so he was willing to compromise on a reduced sum in exchange for actual payment. Following negotiations, Frankel told Deutsch that he would have to sign an assignment of mortgage "as soon as [Binet] determined who the recipient would be." Deutsch also indicated that after payments from Binet had ceased, he requested a deed to the Property from Censor.
The Binets answered Deutsch's first set of interrogatories on June 4, 2008. Although they did not state whether they had made mortgage payments on the Property, they indicated that they had paid all maintenance and utility costs since October 2004. In addition, the answers stated that Binet had contacted Censor in December 2005 "to notify him that he was prepared to refinance the mortgage" and that Censor responded with "a demand for $10,000.00 in return for executing a Deed." The Binets also indicated that payments under the Settlement Agreement were made as scheduled until July 2006.
Nevertheless, on June 6, 2008, the court dismissed the third-party complaint against Censor pursuant to Rule 4:23-5, citing the Binets' failure to timely respond to Censor's interrogatories and document requests in accordance with the schedule imposed by the March 31, 2008 case management order. On June 13, 2008, the Binets' filed a motion to reinstate the pleading, which was ultimately unsuccessful.
On June 20, 2008, the court heard further arguments on Deutsch's summary judgment motion. Deutsch and Censor essentially argued they were entitled to summary judgment based on the Settlement Agreement, and the Binets asserted this relief would be premature because further discovery was needed. In addition, the Binets' attorney advised the court that they did not have sufficient funds to satisfy the terms of the Settlement Agreement but could obtain the money within sixty to ninety days. The court reserved judgment and ordered all parties and attorneys to appear in person on July 16, 2008.
The next hearing occurred on July 17, 2008. After allowing the attorneys to present additional arguments, the court found that the Settlement Agreement was "clear," "unambiguous," and "enforceable." The court's decision, which was memorialized in a July 25, 2008 order, required (1) Deutsch to execute a deed and assignment of mortgage to the person or entity named by Binet, and (2) Binet to pay Deutsch $25,000 within thirty days after the deed and the assignment of the mortgage were filed with the court. The order also stated that the failure to make the payment would be considered "a material breach of the Settlement Agreement." Deutsch ...