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Chaudhry Corporation v. City of Newark

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


December 28, 2011

CHAUDHRY CORPORATION, PLAINTIFF-APPELLANT,
v.
CITY OF NEWARK, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Chancery Division, Docket No. C-32-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Telephonically Argued September 29, 2011- Before Judges Sabatino and Fasciale.

Plaintiff, Chaudhry Corporation, appeals from an August 10, 2010 order issued by the Chancery Division after a one-day bench trial. The order dismissed plaintiff's action for specific performance against defendant, the City of Newark ("the City"). The lawsuit sought to compel the City to convey to plaintiff real estate that it had contracted to purchase twelve years earlier. After hearing the proofs and finding that the testimony of plaintiff's owner lacked credibility in various respects, the Chancery judge ruled that the doctrine of laches barred plaintiff's demand for the equitable relief of specific performance. We affirm.

The proofs at trial revealed the following relevant circumstances and series of events. In essence, as the Chancery judge found, the chronology reflects a situation in which plaintiff did not act with sufficient alacrity to enforce its contractual rights and have the court compel a closing to transfer title to the subject real estate.

The parcel in question ("the property") is located at 184-190 Sixteenth Avenue (Tax Lot 30, Block 309.01) in Newark. The City obtained title to the property through in rem tax foreclosure proceedings in 1993 and 1995.

Plaintiff is a New Jersey corporation that operates a taxi business in Newark. Abaid Chaudhry ("Chaudhry") is the company's president and sole officer.

On February 26, 1998, plaintiff contracted to buy the property from the City at a public auction. Plaintiff intended to use the property in connection with its business.

On March 19, 1998, the City sent a letter to plaintiff, stating that the sale had been approved by the Municipal Council. The letter also stated:

IT IS SUGGESTED THAT YOU OBTAIN A TITLE SEARCH PRIOR TO CLOSING TITLE ON THE PROPERTY (read Condition of Sale #14*fn1 in the auction brochure).

[Y]our closing must be scheduled by appointment, to take place on or before May 18, 1998. If you do not arrange to close by the deadline, you will automatically forfeit your deposit and/or any additional monies paid toward the balance due on the property. [Bold and capitals in original.]

Consequently, on May 27, 1998,*fn2 plaintiff retained Royal Title Services, Inc. ("Royal Title") to perform a title search on the property.

On August 4, 1998, Royal Title ordered a judgment search for "Getty Oil Company" and "Getty Oil Company (Eastern Operations)." The latter entity was the immediate predecessor-in-title to the property, having been previously deeded the property by Getty Oil Company. The Getty companies are distinct legal entities. However, at the time of its judgment search, Royal Title was apparently not aware of or attentive to that distinction. The judgment search revealed judgments against Getty Oil Company, but none against Getty Oil Company (Eastern Operations). Consequently, Royal Title mistakenly determined, at least initially, that title to the property was unmarketable.

Chaudhry testified that he contacted the City when he discovered that there were potential defects in the title. Specifically, Chaudhry testified that he spoke with Delores J. Garrett, who was then employed in the City's Division of Property Management.*fn3 Chaudhry claimed that he thereafter contacted Garrett by phone "every week or fifteen days" to check on the status of the property. He asserted that Garrett had previously helped him close on two other properties that he had acquired from the City.

On August 7, 1998, Johnny A. Jones, the City's Director of Redevelopment, sent plaintiff a letter stating that the property was in default and had therefore been returned to the City. Chaudhry testified that he then brought Jones's letter to Garrett. She allegedly told him that the letter from Jones was incorrect and that plaintiff could not be in default because title was still considered unmarketable. Around that same time, on August 10, 1998, Royal Title sent plaintiff a letter, stating that it still had not found the title to be marketable.

Relying on Royal Title's initial determination that title was unmarketable, the City re-foreclosed on the property in 1999. The City notified Royal Title that it was going to reforeclose and requested information regarding perfection of title.

On March 13, 2000, Garrett sent a letter to Royal Title stating that the re-foreclosure judgment was recorded and a closing "can be scheduled as soon as possible." According to Chaudhry, Garrett told him that she would look into whether title to the property was clear or not, and she ultimately determined that title was still not clear. Chaudhry testified that he did not ask Garrett why the City had apparently reversed its position on the title's marketability. The trial court found that this testimony from Chaudhry was "particularly unpersuasive" and "simply not believable."

On August 9, 2000, the City's Municipal Council passed a resolution rescinding plaintiff's purchase contract. The stated purpose of the resolution was to "amend the sale of certain properties sold at public auction February 26, 1998 [because]

[t]he purchasers failed to close title within the specified time period, thereby forfeiting their deposits[.]"

Thereafter, on December 2, 2002, Royal Title, having realized its prior mistake in treating the Getty entities as synonymous, notified the City that it was removing its exception to title.*fn4 That same day, Diane Patterson, Director of Redevelopment in Newark, sent Chaudhry a letter stating that his property was in default and was being returned to the City's inventory. Garrett apparently drafted the letter.

Chaudhry claimed that he did not receive Patterson's letter because it was addressed to the wrong apartment. He testified that he called Garrett to check on the status of the property.

By that point, Garrett had retired, so Chaudhry went down to City Hall to get information on the status of the property and was given a copy of Patterson's letter. Chaudhry testified that after receiving Patterson's December 2, 2002 letter, he contacted Royal Title. He also claimed that he went to City Hall a "couple of times" to try to obtain the property. Additionally, Chaudhry contacted a City councilman regarding the property. Michael Meyer, the City's Director of Housing and Real Estate for the City, acknowledged in his testimony that Chaudhry and the councilman had come to the Division of Property Management to discuss the property "at least a year ago if not longer."

Meyer testified that in November 2005 a redeveloper submitted a proposal to the City for development encompassing the property at issue in this case. Proposed enactments to convey the land for the redevelopment were then submitted to the Municipal Council, but their passage was delayed when the new Mayor-Elect temporarily suspended all of the City's land sales. Meyer testified that the redeveloper met with the City again in 2007 and submitted a project proposal. Meyer testified that the project contemplated building twenty-two price-controlled housing units. Half of those units were to be built on the subject property.*fn5

It was not until November 24, 2008 that plaintiff filed a complaint in the trial court against the City, seeking to enforce its right to the property. The complaint alleged that plaintiff was the highest bidder for the property at the public auction; that plaintiff had entered into a valid contract with the City to purchase it; and that the City had wrongfully failed to convey title. Plaintiff requested the relief of specific performance. In its answer, the City admitted that plaintiff's bid for the property was the highest offer received at the auction but denied that it had a present duty to convey the property to plaintiff. The City asserted, among other affirmative defenses, the doctrine of laches.

A bench trial was conducted in the Chancery Division on November 9, 2009. Plaintiff's sole witness was Chaudhry, and the City's sole witness was Meyer.

On August 10, 2010, the trial judge issued a twenty-five page written opinion, canvassing the proofs in detail and concluding that plaintiff's claims were barred by the principle of laches. On the same day, the judge issued an order dismissing plaintiff's civil action with prejudice.

In his written analysis, the judge recognized that the parties had entered into an enforceable contract in 1998. Nonetheless, the judge found that plaintiff was not entitled to have the contract enforced because plaintiff had unreasonably delayed in seeking to have the court compel a closing. In particular, the judge underscored that plaintiff had not filed its complaint until November 2008, nearly six years after the exception to title was removed and more than thirty months after Chaudhry had sent certain documents by fascimile to Royal Title regarding the property. The judge noted that Chaudhry was responsible for the unreasonable delay because, until November 2008, "he took no action to schedule a closing, force the City to schedule a closing or bring suit to enforce his rights." In the meantime, the judge noted, the City had made other plans for the redevelopment of the area. Given plaintiff's long delay in seeking to enforce the contract, the judge ruled that "an order of specific performance would be harsh and unfair" and that "[p]ermitting Chaudhry to complete the purchase at this late date would be inequitable and prejudicial to the City."

As we have already mentioned, at several points in his written decision, the trial judge noted that aspects of Chaudhry's testimony were unconvincing, unpersuasive, and not credible. By way of example, the opinion noted that "the court found Chaudhry to be extremely evasive while being questioned about when he received [] documents." In contrast, the judge made no negative credibility findings about Meyer, the City official who testified for the defense. The judge also declined to draw a post-trial adverse inference against the City arising from Garrett's nonappearance as a witness, concluding that the inference was not justified and noting that plaintiff had failed to move for such an adverse inference in a timely manner.

On appeal, plaintiff mainly argues that the trial court's factual findings were "patently erroneous" and contrary to the record. In particular, plaintiff contends that the court failed to appreciate sufficiently that the City had refused to allow a closing to take place once it was finally determined that title was clear. Plaintiff further argues (1) that the court erred in finding Chaudhry's account of his conversations with Garrett not credible; (2) that the City's failure to produce Garrett warranted an adverse inference that her testimony would have been unfavorable to the City; (3) that the doctrine of laches and other equitable principles did not bar plaintiff's claim for specific performance because the City did not show that it had changed its position or was otherwise prejudiced by the delay in closing; (4) that the court erred in finding that the title company's conclusions about the marketability of title were unjustifiable; and (5) that there was no legal or factual basis to conclude that plaintiff unduly delayed in filing its lawsuit.

Having fully considered each of the points raised on appeal, we affirm the trial court's final judgment, substantially for the reasons set forth in the trial court's written opinion of August 10, 2010. The Chancery judge's findings of fact are fundamentally supported by substantial credible evidence in the record. See Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). "Appellate review does not consist of weighing evidence anew and making independent factual findings; rather, our function is to determine whether there is adequate evidence to support the judgment rendered at trial." Cannuscio v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div. 1999).

We particularly give deference to the judge's first-hand observation that the testimony of plaintiff's owner and sole witness was not credible in numerous respects. See also D'Amato by McPherson v. D'Amato, 305 N.J. Super. 109, 115 (App. Div. 1997) (noting that a factfinder "'is free to weigh the evidence and to reject the testimony of a witness, even though not directly contradicted, when it . . . contains inherent improbabilities or contradictions which alone or in connection with other circumstances in evidence excite suspicion as to its truth.'" (quoting In re Perrone, 5 N.J. 514, 521-22 (1950))). Moreover, the judge soundly applied the applicable legal and equitable principles. We only add a few comments.

Specific performance is an equitable remedy that is subject to the court's discretion. Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 599 (App. Div.), certif. denied, 183 N.J. 591 (2005). Specific performance may be granted where: (1) the contract at issue is valid and enforceable, (2) the terms of said contract are sufficiently clear such that the court can determine the duties of each party, and (3) enforcement of the contract would not be "harsh or oppressive." Id. at 598-99.

The trial judge did not misapply his discretion in denying plaintiff specific performance in this case. Although the first two factors weigh in favor of plaintiff here, the third factor does not. The judge had an ample basis to conclude that it would be harsh and oppressive to require the City in 2010 to convey a parcel based upon a 1998 sales contract, in a situation where the purchaser did not take legal action to compel that sale until a decade after the contract was executed and where the City had since made plans to include the parcel in a multi-unit, multi-million-dollar redevelopment project.

Moreover, a litigant that seeks specific performance "'must show himself ready, desirous, prompt, and eager to perform the contract on his part.'" Stamato v. Agamie, 24 N.J. 309, 316 (1957) (quoting Meidling v. Trefz, 48 N.J. Eq. 638 (E. & A. 1891)). Here, the trial court found that Chaudhry's testimony regarding his alleged promptness and eagerness to carry out the contract was "unconvincing." Among other things, the record reflects that Chaudhry provided no explanation for why he did not question Garrett's "virtually overnight change in [her] position on the quality of title." The trial court specifically found Chaudhry's testimony on the subject "evasive."

In declining to order specific performance, the trial judge also properly applied principles of laches, which the City raised as an affirmative defense. Laches is likewise an equitable doctrine that here weighs against plaintiff's claims for equitable relief.

Laches arises from "'the neglect for an unreasonable and unexplained length of time . . . to do what in law should have been done.'" Lavin v. Hackensack Bd. of Educ., 90 N.J. 145, 151 (1982) (quoting Atlantic City v. Civil Serv. Comm'n, 3 N.J. Super. 57, 60 (App. Div. 1949)). The doctrine bars relief when the delaying party had ample opportunity to bring a claim, and the party invoking the doctrine was acting in good faith in believing that the delaying party had given up on its claim. Knorr v. Smeal, 178 N.J. 169, 181 (2003); Lavin, supra, 90 N.J. at 152.

When determining whether the doctrine of laches should be invoked, the court considers: (1) the length of the delay, (2) the reasons for the delay, and (3) how the circumstances of the parties have changed over the course of the delay. Knorr, supra, 178 N.J. at 181. The period of time during which laches can be raised as an equitable defense is flexible, not fixed. Lavin, supra, 90 N.J. at 151.

All three elements support the trial court's finding that the doctrine of laches applies to the instant case.

First, plaintiff entered into a contract to purchase the property in 1998, but did not file a complaint until November 24, 2008, ten years later. The trial court soundly concluded that this extended delay was "unreasonable."

Second, plaintiff's justification for the delay is inadequate. Even if we excuse the initial four-year period from 1998 to 2002 when plaintiff, perhaps justifiably, was relying on Royal Title's*fn6 initial determination that title was unmarketable, plaintiff thereafter still failed to take legal action for over five years. Chaudhry's alleged communications with Garrett and his discussions with a single member of the Municipal Council were too informal and episodic to justify his protracted failure to take the City to court.

Plaintiff criticizes the trial judge's opinion for alluding, in part, to plaintiff's failure to close on the property during the ten-year period before filing suit. We recognize that the Municipal Council rescinded plaintiff's contract in August 2000 because of the delay in closing title and that the City was not likely thereafter to go through with the sale without judicial intervention. Even so, plaintiff did not persuasively account for the failure to seek legal action until 2008, long after that resolution was adopted and long after the perceived title problem had been resolved.

The third element of laches also supports the trial court's decision. Based upon the credible evidence, the judge found that the City had relied on plaintiff's delay in formulating a six-million-dollar redevelopment plan that included the property that the City believed plaintiff had forfeited. The judge also reasonably found that allowing plaintiff to purchase the property in 2010, after those redevelopment plans already had been devised, would be "inequitable and prejudicial" to the City.

Lastly, we note that the trial court was not obligated to make an adverse inference against the City because it had not called Garrett as a witness. When determining whether to make an adverse inference, a court should consider all relevant circumstances including: whether the missing witness is equally available to both parties; whether the witness is physically and practically available; whether the missing witness's testimony will help resolve facts at issue in the case; and whether the missing witness's testimony would be superior to the testimony already provided. State v. Hill, 199 N.J. 545, 561-62 (2009) (citing State v. Hickman, 204 N.J. Super. 409, 414 (App. Div. 1985), certif. denied, 103 N.J. 495 (1986)). A party who wishes to move for an adverse inference should do so at the conclusion of his adversary's case. State v. Clawans, 38 N.J. 162, 172 (1962).*fn7 The moving party should state the name of the missing witness and explain why her testimony would be superior; this gives the adversary a fair opportunity to present the witness or, alternatively, explain why the witness was not called. Ibid. The judge can then determine whether the inference is necessary. Ibid.

Here, the record contains no proof that Garrett, a retired employee, was more available as a potential witness to the City than to plaintiff. Plaintiff failed to produce any evidence that the City had information regarding Garrett's whereabouts.*fn8

Moreover, the trial court's determination that Chaudhry's testimony about his interactions with Garrett was "unconvincing" also weighs against the application of any adverse inference from Garrett's non-appearance. Finally, an adverse inference should not be granted because plaintiff failed to move for the inference at the close of the defense proofs. Plaintiff raised the adverse inference issue in its post-trial brief, but that did not afford the City the opportunity to explain Garrett's absence on the record or, perhaps, to locate her and call her as a witness.

The remainder of plaintiff's arguments lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).

Affirmed.


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