October 8, 2013
FRANK W. JABLONSKI, In his capacity as the Executor of the Estate of Anthony Carreira, Plaintiff-Respondent,
ROBERT FRANCHINI, FRANCHINI CHEVROLET, INC., d/b/a FRANCHINI AUTO PLAZA, LYNN CHEVROLET, INC., PASSAIC REALTY ASSOCIATES, INC., A&R PROPERTY MANAGEMENT, LLC, JULIUS FRANCHINI CHARITABLE REMAINDER TRUST, and HEIDI FRANCHINI, Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 15, 2013.
On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-221-09.
Anthony M. Bedwell argued the cause for appellants (Sokol, Behot & Fiorenzo, attorneys; Joseph B. Fiorenzo of counsel and on the brief; Mr. Bedwell, on the brief).
Michael J. Sprague argued the cause for Respondent.
Before Judges Graves and Guadagno.
Frank W. Jablonski is the executor of the estate of Anthony Carreira (the Estate), who died on May 6, 2006. Carreira and defendant Robert Franchini were business partners and equal owners of two car dealerships and two real estate holding companies. Defendant appeals from a July 18, 2012 post-judgment order that required him to pay the Estate $300, 000 and an order entered the same day that denied his cross-motion. For the reasons that follow, we affirm.
In July 2009, the Estate filed a nineteen-count complaint seeking, among other things, to equitably divide the jointly held business entities and assets. While in court on September 17, 2010, the Estate and defendant reached "an amicable resolution" and entered into a "binding agreement" (the settlement agreement). The terms and conditions of the settlement agreement were set forth on the record.
At the time of the settlement agreement, there was a pending condemnation proceeding initiated by the City of Garfield involving property owned by Passaic Realty Associates, Inc., one of the jointly held business entities. With respect to the proceeds of the condemnation action, the settlement agreement provides as follows:
The parties agree that the Estate will receive the first $300, 000 in net proceeds after litigation costs and expenses from the pending condemnation action. Any net proceeds above that amount shall go to Mr. Franchini.
The Estate will be kept abreast of the progress of the case and any settlement negotiations. Franchini shall have the ability to control the decisions regarding settlement or trial of that dispute. In the event an offer to settle is received which would result in a net settlement value after litigation costs and expenses of $300, 000, which Mr. Franchini, who has control of the litigation, determines not to accept, then in that event the following will occur:
A. Franchini will be responsible for all legal fees and costs incurred from that point forward, with the understanding that the estate will be responsible for all legal fees and costs incurred prior to the occurrence of that event.
And, B. Franchini shall guaranty that the Estate shall receive $300, 000 in net proceeds from either settlement or trial of the condemnation litigation.
Additionally, the settlement agreement provides:
If there are any disputes regarding this when it comes to the final implementation, the parties agree that this shall be binding, and we would agree that [the trial court] can make any determinations concerning language and the like that may occur as a result of the drafting of [this] agreement.
On June 12, 2012, the Estate filed a motion for relief in aid of litigant's rights seeking to enforce the September 17, 2010 settlement agreement. The motion sought to compel payment to the Estate of $300, 000 from the condemnation proceeds. In a supporting certification, Jablonski stated:
At commencement of the condemnation action, the City had paid $650, 000 which was received by Mr. Franchini and utilized solely by him. The Estate did not share in any portion of the City's initial payment. The condemnation commissioners determined the taking to be worth $942, 210. Following that hearing, the City filed a complaint in the Superior Court seeking a bench trial to establish the value of the taking.
At the time of the parties' settlement, the condemnation case was inactive. The parties agreed that the case should be pursued. The City's offer remained at $650, 000. The Estate agreed to cap its recovery at $300, 000 net (after payment of legal fees and costs). It was agreed that Mr. Franchini would be permitted to pursue the action utilizing his counsel.
Therefore, the Estate argued defendant guarantied the Estate "a $300, 000 net payment regardless of the outcome of further settlement discussions or a trial."
In response to the Estate's motion, defendant filed a cross-motion to enforce the settlement agreement. In his cross-motion, defendant claimed the Estate was responsible for legal fees and costs incurred in connection with the condemnation action in the amount of $44, 126.07 and, therefore, the Estate was "only entitled to distribution of $255, 873.93." In a supporting certification, defendant's attorney explained, "As of November 30, 2011, Mr. Franchini had rejected [a] $1.1 million settlement offer. Because of this, pursuant to the provisions of the settlement agreement, the responsibility for payment of further fees and costs shifted to him from that of the Estate."
Following oral argument on July 18, 2012, the court granted the Estate's motion and denied defendant's cross-motion, reasoning as follows:
When you read the transcript the first time over, you're left with the impression that the Estate is going to be net $300, 000; meaning, they're going to get $300, 000 after the litigation fees and expenses were paid. Whoever is responsible for it, they're going to get that $300, 000. That's the first impression you get on just reading the raw transcript. I don't remember even having the discussion about it or listening to it that evening, but reading the whole transcript, that is the impression that is inevitable, really.
[T]here was an offer that was made that would have netted the Estate $300, 000 after extinguishing the attorney's fees that had been paid off, and Mr. Franchini elected not to do that. Apparently it was the smart thing to do. At least that's the impression I got from the file. But, in any event, that was his decision to make. Everybody saw that there was an offer on the table that would have satisfied the attorney's fees that were paid to date and put $300, 000 net in the Estate's pocket and some money over to Mr. Franchini, but he thought he could do better.
At that point, he's guarantying that the Estate is going to receive $300, 000 in net proceeds from either settlement or trial of the condemnation action. And he really does roll the dice at that point, because now what would have given the Estate what they bargained for, which was the attorney's fees are extinguished and $300, 000 in their pocket, has been rejected by Mr. Franchini, who now believes he can get more money, but then he has to guaranty that same result.
I don't see any difference in the course of conduct. . . . I'm not saying that there's not a bona fide dispute here, but I can't redo the agreement. The context of it doesn't refute what the language says. It's not a slip of the tongue to talk about net proceeds after . . . litigation costs and expenses. It is said multiple times in the agreement.
That was the parties' agreement. I can't do anything different about it. That's how I interpret it. That's my decision.
Defendant argues on appeal that the "trial court's ruling must be reversed" because it is "contrary to the parties' settlement agreement." According to defendant, "[t]he only way to harmonize the provisions of the settlement agreement and give effect to every word and phrase therein is to require the Estate to pay the outstanding fees and costs owed at the time the [defendant] rejected Garfield's settlement offer." We do not agree.
"A settlement agreement between parties to a lawsuit is a contract." Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). The interpretation of contract terms "are decided by the court as a matter of law unless the meaning is both unclear and dependent on conflicting testimony." Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J.Super. 78, 92 (App. Div. 2001). "An ambiguity in a contract exists if the terms of the contract are susceptible to at least two reasonable alternative interpretations." Nester v. O'Donnell, 301 N.J.Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life and Cas. Ins. Co., 828 F.Supp. 275, 282 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)). "'If the language is plain and capable of legal construction, the language alone must determine the agreement's force and effect.'" CSFB 2001-CP-4 Princeton Park Corporate Ctr., LLC v. SB Rental I, LLC, 410 N.J.Super. 114, 120 (App. Div. 2009) (quoting FDIC v. Prince George Corp., 58 F.3d 1041, 1046 (4th Cir. 1995)). "[I]t is not the function of the court to make a better contract for the parties, or to supply terms that have not been agreed upon." Graziano v. Grant, 326 N.J.Super. 328, 342 (App. Div. 1999).
Our scope of review is limited. As a general matter, we will not disturb the trial court's factual findings and legal conclusions "'unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J.Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)).
In this case, the record amply supports the trial court's decision. The settlement agreement clearly states: "[T]the Estate shall receive $300, 000 in net proceeds from either settlement or trial of the condemnation litigation." Therefore, the court correctly concluded that the Estate is entitled to $300, 000.