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Sunoco, Inc v. Estate of Lula M. Crisp

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 11, 2012

SUNOCO, INC., PLAINTIFF-RESPONDENT,
v.
ESTATE OF LULA M. CRISP, DEFENDANT-RESPONDENT, AND ANGELO GEORGETTI, DEFENDANT-APPELLANT.
SUNOCO, INC., PLAINTIFF-APPELLANT,
v.
ESTATE OF LULA M. CRISP; ANGELO GEORGETTI, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-203-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 13, 2011

Before Judges Cuff, Waugh, and St. John.

In separately filed appeals, which were consolidated on November 1, 2010, plaintiff Sunoco, Inc., appeals from the final judgment of the Law Division determining that it did not have the right to purchase commercial property owned by Lula M. Crisp and subsequently by defendant Estate of Lula M. Crisp (Estate). Defendant Angelo Georgetti appeals from those portions of the judgment determining (1) that Georgetti's first agreement with Crisp was unenforceable and (2) that he was not entitled to the return of his deposit in connection with his second agreement to purchase the same property from the Estate.

Because Sunoco subsequently purchased the property at issue from the Estate, we dismiss its appeal as moot. We affirm that portion of the judgment determining that the first agreement between Crisp and Georgetti was unenforceable and reverse that portion of the judgment holding that the deposit paid by Georgetti as part of the second agreement is not refundable. As to the latter issue, we remand for an evidentiary hearing.

I.

Prior to her death in 2007, Crisp owned commercial property in Cinnaminson, on which tenants operated a gas station and a McDonald's restaurant. There was also a defunct car wash on the property. Sunoco, which operated the gas station, entered into a lease with Crisp and her late husband in 1958. Although the lease was amended and extended from time to time, it has always contained a right of first refusal exercisable by Sunoco in the event the Crisps chose to sell the property.

The lease provision at issue provided as follows:

(e) In the event the Lessor desires to sell the within demised premises or other property owned by Lessor of which this is a part at any time during the term hereof or any renewal thereof and receives therefor a bona fide offer of purchase acceptable to Lessor, Lessor shall notify Company in writing of said offer of purchase and Company shall have the right to meet said bona fide offer by giving Lessor notice in writing of its intention so to do within thirty (30) days after receipt of said offer in writing. Upon the payment of said purchase price Lessor shall convey to Company . . . title to said property . . .

At the time of the events that gave rise to this litigation, Georgetti owned commercial property adjacent to the Crisp property. In the fall of 2006, Crisp and Georgetti began discussing the sale of Crisp's property. On February 21, 2007, Crisp and Georgetti signed a memorandum of understanding (MOU) which provided, in part, that Georgetti would purchase the property from Crisp for $950,000, but only after the expiration of the lease between Crisp and Sunoco. Georgetti was required to pay $50,000 "for th[e] exclusive right to purchase."

The MOU acknowledged Sunoco's right of first refusal and provided that Crisp would notify Sunoco that she would not renew the lease, that Crisp and Georgetti would then enter a formal agreement regarding the sale of the property, and that they would close on the property no later than January 1, 2010. Crisp died on April 30, 2007. On June 29, 2007, Sunoco, which had previously learned of the MOU from the Estate, informed the Estate that it was exercising its right of first refusal. It delivered a check for $50,000 to meet the amount initially paid by Georgetti.

On July 9, 2007, the Estate provided Georgetti with written notice that Sunoco had exercised its right to purchase the property. Georgetti, however, refused to release the Estate from the terms of the MOU.

On August 8, 2007, Sunoco requested that Georgetti release his rights under the MOU, but Georgetti denied its request.

Sunoco did not close on the purchase of the property because of Georgetti's refusal.

Sunoco sought an order requiring the Estate to honor its right of first refusal. On March 12, 2008, Sunoco filed a complaint in the General Equity Part, naming Georgetti and the executor of the Estate as defendants. Sunoco filed an amended complaint on March 24, 2008, removing the executor and naming the Estate itself as a defendant. The two defendants filed answers, cross-claims, and counterclaims.

In June 2008, Sunoco moved for summary judgment, and Georgetti subsequently filed a cross-motion for summary judgment. The General Equity judge issued a tentative decision, concluding that the MOU between Crisp and Georgetti was a valid agreement and that it did not trigger Sunoco's right of first refusal.

However, after hearing oral argument, the judge determined that the MOU did trigger Sunoco's right of first refusal. The judge allowed some time for discovery concerning Georgetti's assertion that Sunoco did not give timely notice of its intention to exercise its right of first refusal.

In November 2008, the judge issued another tentative decision, indicating that he was inclined to grant Sunoco's motion for summary judgment and order the Estate to return Georgetti's $50,000 deposit. Although the judge confirmed that decision following oral argument, no order was entered, apparently because Georgetti had moved for reconsideration.

On December 23, 2008, the judge held that, because the MOU was void ab initio, it did not trigger Sunoco's rights. The parties' remaining claims were transferred to the Law Division for disposition. The judge subsequently denied the Estate's motion for reconsideration.

Because the parties and others were engaged in negotiations to reach a "global settlement" involving this dispute and two related matters, a probate action and a condemnation matter, the Law Division judge issued an order of dismissal due to settlement. Although a tentative settlement was reached, the settlement discussions ultimately proved unsuccessful and there was no "global settlement."

During the settlement discussions, Georgetti reached an agreement with the Estate that provided for him to purchase the property and "negotiate and enter into a development agreement" with Cinnaminson. Georgetti and the Estate drafted an agreement for the sale of the property, the first draft of which stated that the sale of the property would not be contingent on Georgetti entering into a redevelopment agreement with Cinnaminson and that failure to reach a global settlement would not be grounds to void the agreement.

After further discussions, the proposed contract was altered. Express language to the effect that the contract was contingent on Georgetti obtaining approval of a redevelopment agreement was added. In addition, the provision providing that failure to enter into the global settlement would not be grounds to void the contract was removed. However, there is language in the revised document that appears to assume that the global settlement had been reached.

In September 2009, Georgetti and the Estate signed the revised contract, which we refer to as "the second agreement."*fn1

It required Georgetti to pay a deposit of $150,000, of which $50,000 was deemed paid based upon the deposit for the MOU. The second agreement provided that the closing on the Crisp property would take place no later than November 2, 2009, and that "said date . . . shall be of the essence."

Georgetti was unable to close on November 2. The Estate extended the closing date to November 30, stating that "time [was] of the essence" with regard to the new closing date. Because Georgetti was unable to conclude a redevelopment agreement with Cinnaminson, he was unable to close on November 30. The Estate did not grant another extension. Georgetti contends that his attorney and Cinnaminson were unable to agree on the terms of a redevelopment agreement because Cinnaminson sought a "substantial fee from . . . Georgetti for the privilege of designating him as the redeveloper."

The Estate moved in the previously dismissed action for removal of a lis pendens filed by Georgetti with respect to the MOU. Georgetti filed a cross-motion seeking the return of the $100,000 deposit paid when the second agreement was signed. Sunoco filed a cross-motion seeking partial summary judgment, arguing that Georgetti's rights under the MOU and the second agreement "had been disclaimed or expired."

On April 16, 2010, following oral argument, the Law Division judge delivered an oral decision and entered an order granting Sunoco's motion for partial summary judgment, concluding that the MOU "remains null and void and . . . remains terminated," and that the second agreement had expired and therefore was "null and void." The judge also discharged Georgetti's lis pendens.

Trial was scheduled for April 26, 2010, but the judge instead heard further oral argument with respect to the viability of Sunoco's right of first refusal and the refundability of Georgetti's $100,000 deposit for the second agreement. On June 24, 2010, the judge entered final judgment, largely incorporating the April 16 order.

The judge declined to revisit the issue of whether the MOU triggered Sunoco's right of first refusal, which had been decided by the General Equity judge. However, she noted that she would have concluded "that Sunoco's right of first refusal was not enforceable once the [MOU] was declared null and void by [the General Equity judge]. That rendered the 'right' void ab initio and thus, unenforceable." Finally, the judge held that Georgetti's deposit for the second agreement with the Estate was non-refundable because that agreement was executed by parties experienced in real estate. The Estate withheld the property from the market for six months. The nonrefundable deposit is a liquidated damages clause; the language of the contract is unambiguous. The court found that the global settlement was not a condition precedent of the deposit . . . .

These appeals followed.

II.

On appeal, Georgetti argues that the General Equity judge erred in voiding the MOU and that the Law Division judge erred in refusing to order the return of the $100,000 deposit for the second agreement.

It is well-established that our review of a trial judge's conclusions of law is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Consequently, we review a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46-2(c). Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 539-40 (1995); Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)).

A.

With respect to the MOU, the essence of that agreement was that Georgetti paid Crisp $50,000 not to renew the lease with Sunoco and to sell him the property at a specific price after the lease containing Sunoco's right of first refusal had expired. The MOU was an effort by Georgetti to induce Crisp to breach the right-of-first-refusal provision contained in the Sunoco lease and, consequently, to violate her implied covenant of good faith and fair dealing with respect to Sunoco. Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001). Clearly, at the time she entered into the MOU, Crisp desired to sell the property for which she had received a bona fide offer to purchase from Georgetti. By entering into a contract requiring Crisp to defer sale of the property until after expiration of Sunoco's lease, Georgetti tortiously interfered with Sunoco's contractual right of first refusal. Nostrame v. Santiago, 420 N.J. Super. 427, 433 (App. Div. 2011) ("One who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract." (quoting Restatement (Second) of Torts § 766 (1979))). The judge's reliance on Wellmore Builders, Inc. v. Wannier, 49 N.J. Super. 456, 467 (App. Div. 1958) to invalidate the MOU was correct because it was inequitable for Crisp to seek to destroy Sunoco's right of first refusal prematurely.*fn2

B.

With respect to the second agreement, Georgetti argues that he is entitled to the return of the $100,000 deposit because he did not breach the contract, which he maintains was contingent on consummation of the proposed global settlement and a redevelopment agreement with Cinnaminson. Because neither contingency event took place, Georgetti argues that he had no obligation to buy the property and his failure to do so was not a default. The Estate disputes that assertion, arguing that the second agreement was not contingent on the global settlement and that Georgetti waived the redevelopment-agreement contingency. The Estate also argues that the deposits were non-refundable under the terms of the second agreement and that, in any event, it was entitled to retain the deposits as liquidated damages after Georgetti's breach.

Paragraph 2.1(b) of the second agreement states that the $100,000 deposit is "non-refundable." Paragraph 5.2 provides as follows:

The purchase of this Property by the Buyer from the Seller is contingent upon the Buyer obtaining approval of any redevelopment agreement with Cinnaminson Township. However, the purchase of this Property by the Buyer from the Seller is not contingent upon the Buyer obtaining approval of any other governmental agency, nor is the purchase of this Property contingent upon Buyer's purchase or sale of any other property (real or otherwise). To the extent that any other portion of this Contract or other written agreement states otherwise, this paragraph shall control. To induce each other to enter into this Agreement, each party hereby represents and warrants to the other that it has been duly authorized and empowered to enter into this Agreement and to perform fully its obligations hereunder, and such obligations constitute the valid and binding obligations of each party, enforceable in accordance with their terms, and that no further consents of any other person, entity, public body or court is required in connection with this Agreement and the performance of all obligations hereunder, with the parties' understanding that the sale of this property has already been negotiated and agreed to by a global settlement between all parties involved in the following lawsuits:

Cinnaminson Twp. v. Lula Crisp -Docket No. BUR-L-388-07 Sunoco Inc. v. Township of Cinnaminson Zoning Board - Docket No. BUR-L-1540-08 Sunoco Inc. v. Georgetti and Estate of Lula Crisp - Docket No. BUR-C-308-08 Estate of Lula Crisp, deceased -Docket No. BUR-P-2007-1252. [(Emphasis added.)]

Finally, paragraph 12.2(1) provides that, in the event of default, the Estate has the right to retain the deposits as liquidated damages.

The rules of contractual interpretation are well-established. The role of the court is to give "juristic effect" to the intention of the parties as expressed in the contract. George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 27-28 (1954) (citing Corn Exch. Nat'l Bank & Trust Co. v. Taubel, 113 N.J.L. 605 (E. & A. 1934)); Domanske v. Rapid-Am. Corp., 330 N.J. Super. 241, 246 (App. Div. 2000). For the purposes of Georgetti's appeal, ascertaining the intent of the parties requires an analysis of the language of the second agreement. Kearny PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 221 (1979) ("The polestar of construction of a contract is to discover the intention of the parties." (citing Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953))); Caruso v. Ravenswood Developers, Inc., 337 N.J. Super. 499, 506 (App. Div. 2001) ("Courts are generally obligated to enforce contracts based on the intent of the parties, the express terms of the contract, surrounding circumstances and the underlying purpose of the contract.").

We start our analysis with the issue of whether there was a default by Georgetti. There is nothing ambiguous with respect to the first sentence of paragraph 5.2. It clearly states that the purchase is "contingent upon [Georgetti] obtaining approval of any redevelopment agreement with Cinnaminson Township." It is undisputed that the redevelopment agreement was never signed, apparently because of the payments and terms insisted upon by Cinnaminson.*fn3 Although the Estate maintains that Georgetti waived the redevelopment agreement as a contingency, there is no substantive support for that assertion in the record.

The Estate relies on statements made by Georgetti's attorney at an oral argument in 2010, several months after the date scheduled for closing. A fair reading of counsel's argument is that, although Georgetti had originally been willing to purchase the property without a redevelopment agreement, Cinnaminson had insisted on one as part of the global settlement, which was to have settled a condemnation case brought by Cinnaminson with respect to part of the Crisp property located in a redevelopment zone. There is nothing in the record, however, to suggest that Georgetti had actually waived the redevelopment-agreement contingency at the time of the closing. Consequently, we are satisfied that Georgetti did not default and, as a result, the default related provisions of paragraph 12.2(1) are not applicable.

In denying Georgetti's application for return of the $100,000 deposit, the Law Division judge relied on the language of paragraph 2.1(b), which described the $100,000 deposit as "non-refundable." Although that would appear to be a clear and unambiguous provision, we have determined that it is ambiguous when read together with two other provisions of the contract. First, if the deposit was non-refundable, there would have been no need for the language in paragraph 12.2(1) providing that the deposits would be retained by the Estate as liquidated damages in the event of Georgetti's default. Second, and more significantly, the language in paragraph 5.2 quoted above states that the sale is contingent on Georgetti's obtaining the redevelopment agreement. It further provides that the provisions of paragraph 5.2 control over any inconsistent provisions elsewhere in the agreement or in other documents. When the three paragraphs are read together, there is an ambiguity as to whether the deposit was non-refundable even if the sale did not take place because Georgetti was unable to obtain the redevelopment agreement. We also note that there is language at the end of paragraph 5.2 that can be read as assuming that the global settlement had been reached.

A contract is ambiguous if it is reasonably susceptible of two interpretations. Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life & Cas. Ins. Co., 828 F. Supp. 275, 283 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)). The issue of ambiguity is one of law. Ibid. (quoting Kaufman, supra, 828 F. Supp. at 282). We conclude that there is an ambiguity for the reasons stated.

As we held in Caruso, supra, 337 N.J. Super. at 506, the "surrounding circumstances and the underlying purpose of the contract" must be considered along with the "express terms" in ascertaining the "intent of the parties." In Conway v. 287 Corporate Center Associates, 187 N.J. 259, 269 (2006), the Supreme Court held that our courts will "consider all of the relevant evidence that will assist [them] in determining the intent and meaning of [a] contract." The Court stated:

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 the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded. . . . The judicial interpretative function is to consider what was written in the context of the circumstances under which it was written, and accord to the language a rational meaning in keeping with the expressed general purpose. [Ibid. (quoting Schwimmer, supra, 12 N.J. at 301-02).]

When examining the extrinsic evidence to interpret a contract, a court may consider "'the particular contractual provision, an overview of all the terms, the circumstances leading up to the formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties' conduct.'" Ibid. (quoting Kearny PBA Local # 21, supra, 81 N.J. at 221). "Semantics cannot be allowed to twist and distort [the words'] obvious meaning in the minds of the parties. Consequently, the words of the contract alone will not always control." Id. at 269-70 (alteration in original) (citation and internal quotation marks omitted).

Nevertheless, once the intent of the parties has been ascertained, "the parol evidence rule comes into play to prohibit the introduction of extrinsic evidence to vary the terms of the contract." Id. at 270 (citing Schwimmer, supra, 12 N.J. at 304). As the Court said in Schwimmer, supra, 12 N.J. at 301-02:

The admission of evidence of extrinsic facts is not for the purpose of changing the writing, but to secure light by which to measure its actual significance. Such evidence is adducible only for the purpose of interpreting the writing-not for the purpose of modifying or enlarging or curtailing its terms, but to aid in determining the meaning of what has been said. So far as the evidence tends to show, not the meaning of the writing, but an intention wholly unexpressed in the writing, it is irrelevant.

Because we have determined that there is an ambiguity with respect to the refundability of the $100,000 deposit in the event the sale did not take place because the redevelopment-agreement contingency was not satisfied, we reverse the Law Division's order holding that the deposit is non-refundable, and remand for a plenary hearing at which the judge shall consider extrinsic evidence to aid in the interpretation of the second agreement on that issue.

III.

In summary, we dismiss Sunoco's appeal as moot. We affirm the judgment on appeal to the extent it holds that the MOU between Crisp and Georgetti was not enforceable. Finally, we reverse the judgment to the extent it found that the $100,000 deposit was non-refundable and remand for further proceedings consistent with this opinion.

Dismissed in part, affirmed in part, reversed and remanded in part.


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