On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2878-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Espinosa and Kennedy.
Plaintiffs Ciro Mederos, Eugene Vasquez, Cesar Ramos and Juan Castillo entered into a contract of sale with H&C Development Corp., Marshall Weisman, Hudson 3312 LLC, Palisades Realty Holdings, LLC, and Cantello, LLC (collectively, defendants or the Weisman defendants) in April 2006 for the purchase of certain real property by defendants in Union City known as the Italian Community Center (ICC). Plaintiffs filed an action against defendants, seeking monetary damages based upon six causes of actions.*fn1 The parties resolved their dispute in September 2008, continued negotiations through May 2009 and entered into a written Settlement Agreement (the Agreement).
The terms of the Agreement included: a confession of judgment by defendants in the amount of $4.9 million, allocated between plaintiffs and the defendants/intervenors (¶ 1); a second mortgage on the ICC property in the amount of $4.9 million (¶ 1.b); and a collateral mortgage for $4.9 million on certain property in Union City known as The Thread, to be held in escrow by plaintiffs' attorney, and released "only as permitted under paragraphs 4, 8, 10, 19 and 22 herein." (¶¶ 1.c, 2).
The Weisman defendants were required to make certain
payments pursuant to the terms of the Agreement and, inter alia, were required to apply to the Union City Redevelopment Agency and/or any other appropriate agency for approvals relating to the inclusion of the ICC property into the Swiss Town Redevelopment Area ("STRA") in Union City. In the event the Weisman defendants failed to make such application within forty-five days, Paragraph 4 of the Agreement provided that upon notice,
Plaintiffs' attorney may release from escrow the Confession of Judgment and the mortgage on The Thread . . ., may cause this mortgage to be recorded, and may enter judgment against the Weisman Defendants in accordance with the Confession of Judgment.
Paragraph 1B of the Agreement required the Weisman defendants to promptly furnish copies of tax bills for the ICC and Thread properties to plaintiffs but also stated,
However, the Weisman Defendants in their sole discretion shall decide when and in what amounts to pay any such taxes so long as their actions do not prejudice obtaining the Approvals referenced in paragraph 3 or the Construction Approval referenced in paragraph 7, as the case may be.
Plaintiffs deemed defendants to be in breach of their obligations under the Agreement. They brought a motion, returnable in January 2011, for damages and specific performance of allegedly unperformed conditions under the contract. The trial court denied the motion without prejudice, finding that defendants had substantially complied with the essential terms of the contract.
Plaintiffs filed a second motion in or about May 2011, to enter an order finding defendants had breached the settlement agreement; entering judgment against defendants jointly and severally in the sum of $4,340,000; and to permit plaintiffs to record the mortgage on "the Thread property."
Oral argument was held on this motion on June 24, 2011. The court noted that defendants met all of their payment obligations under the Agreement. The court did not find any basis to depart from its earlier finding that defendants had not breached its obligations under the Agreement for the reasons previously advanced by plaintiffs. However, the court noted that plaintiffs had raised a new issue, that "'[t]he ICC property may be lost to foreclosure' for defendant's failure to pay taxes on the subject property." The court concluded that defendants had breached the covenant of good faith and fair dealing and, thus, the Agreement, by failing to pay taxes and exposing the property to possible ...