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First Fidelity Realty, LLC and Duraport Realty Iv, LLC v. City of Bayonne and Bayonne Local Redevelopment Authority

July 25, 2011


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-291-09.

Per curiam.


Submitted: June 8, 2011

Before Judges Cuff, Sapp-Peterson and Fasciale.

Plaintiff First Fidelity Realty, LLC (First Fidelity) was the successful bidder at an auction in January 2003 for a parcel of land in the Standard Tank Site (the Site) in Bayonne.

Bidders were informed that the land had environmental constraints and Bayonne offered the land "as is." In January 2009, following remediation of the property and discharge of all liens, First Fidelity filed a complaint alleging Bayonne breached the contract to sell the land and sought specific performance of the contract. Following a trial on a stipulated record, including the record submitted in support of an earlier motion to dismiss, Judge Iglesias held that the closing date in the contract was "of the essence," that First Fidelity refused to accept the tendered quitclaim deed and declined to pay the agreed price. The judge, therefore, dismissed the complaint. We affirm.

On December 18, 2002, the City of Bayonne (the City) passed a resolution authorizing sale by auction of various parcels of land, including the property at issue in this case, block 475, lot 2 (the Property). The Property, along with block 475 lots 3 and 4 and block 359 lot 2, was known as the Site. The Site contained riparian land, "vacant land, an unused building and a pier on the upland portions of the property." At the time the City adopted the resolution, the Site was contaminated and in the course of remediation to allow for commercial and industrial development. The Site encompassed approximately 13.67 acres, six acres of which were developable. The Property comprised 1.13 of those 13.67 acres, had an "irregular" shape, and was "constrained by narrow width, limited frontage and environmental contamination."

The resolution provided that the City intended to sell the Property and other parcels "as is" at an auction on January 28, 2003, and bidding for the Property would start at $136,250. The highest bidder was required to make a 10% deposit and execute an offer to purchase, which would be irrevocable for sixty days. The resolution continued:

c. All bids shall be referred to the Municipal Council for review and approval. The City of Bayonne reserves the right to accept the highest offer or reject any and all bids including the highest bid.

d. Conveyance of title shall be by Quitclaim Deed, subject to the provisions of N.J.S.A. 40A:12-13 and purchasers must be prepared to close title within 90 days from the date of the acceptance of a bid. The City reserves the right to extend this 90 days time frame as necessary. Within 30 days of the City's acceptance of a bid, a successful bidder shall be responsible for providing the City of Bayonne with a last owner and lien search on the property to be purchased. Failure to provide said last owner and lien search within 30 days of the acceptance of the bid may result in the rejection of the bid.

Vincenzo Alessi, owner of First Fidelity and plaintiff Duraport Realty IV, LLC (Duraport), certified that he owned land near the Property and was "well aware that the Property was affected by various liens and encumbrances." Nonetheless, he was interested in purchasing the Property and ordered a title search for it from Chicago Title Insurance Company (Chicago Title).

On December 31, 2002, Chicago Title issued its report showing that the Property was subject to the following encumbrances, which also covered neighboring properties in the Site: (A) a $144,000 federal lien under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C.A. §§ 9601 to 9675, which was acquired in July 1996; (B) two $1 million mortgages held by the New Jersey Redevelopment Authority (NJRA) and created in January and December 2001, respectively; and (C) Internal Revenue Service (IRS) lien.

On January 14 and 23, 2003, the City posted public notice of the December 18, 2002 resolution authorizing the auction. On January 28, 2003, the City held the auction. First Fidelity bid $136,250 on the Property and was the only bidder. It executed an acknowledgement of bid and made a 10% deposit.

First Fidelity was also the highest bidder on two other properties, namely, block 475, lot 1 ($40,500) and block 474.02, lot 4 ($20,000). Duraport was the highest bidder on block 475, lot 7.01 ($168,750). Another company owned by Alessi, 522 Associates, LLC, was the highest bidder on block 190, lot 14 ($15,000). The City accepted these four bids and Alessi submitted the requisite deposits and acknowledgments for the bids.

By resolution dated February 5, 2003, the City accepted First Fidelity's bid on the Property and authorized the sale in accordance with the terms of the December 18, 2002 resolution. With respect to the time of closing, the resolution said:

[I]f a bidder should fail to meet his/her/its obligations with respect to the purchase of a particular property and should fail to perfect the purchase of a particular property within 90 days of the date of this resolution, then the bidder shall forfeit the deposit appurtenant to that property and the property shall be placed up for sale again at the discretion of the Mayor. The aforementioned 90 day time frame may be extended in writing by the Law Department for good cause without the necessity of obtaining Municipal Council approval.

On February 20, 2003, John F. Coffey, II, Acting Law Director for the City, sent Robert V. Priscoe of First Fidelity a copy of the February 5, 2003 resolution, and notified First Fidelity that the City had accepted First Fidelity's bid. Coffey requested that First Fidelity obtain and provide the City a copy of a title search as soon as possible so the City could draft a quitclaim deed.

Shortly thereafter, Alessi and other First Fidelity representatives met with City officials to discuss the encumbrances affecting the Property. The record contains no information providing or suggesting that Alessi or anyone on behalf of First Fidelity posed any objection to the terms of the February 5, 2003 resolution. Alessi certified, "[t]he nature of my discussions and correspondence with Bayonne representatives was to explore the various encumbrances, particularly given that some of the encumbrances, such as the NJRA mortgage liens, extended to other parcels in the [Site]. He provided no additional information on the nature of the discussions.

On March 21, 2003, Victor E. Kinon, attorney for First Fidelity, sent Coffey a copy of Chicago Title's insurance commitment. On March 25, 2003, Coffey notified Alessi that the City would not pay off liens on the Property because the City was selling the Property "as is," as set forth in the offering resolution. On April 2, 2003, Kinon sent Coffey a copy of Chicago Title's title binder and again asked about the status of some encumbrances. On April 8, 2003, Alessi and the City recorded with the Hudson County Register of Deeds a notice of settlement which stated that the Property was under contract of sale. On April 15, 2003, Kinon forwarded to Coffey correspondence from the title company. In a May 1, 2003 ...

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