AARON E. SOME v. AHMED AADEL SHAABAN

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3381-04T53381-04T5

AARON E. SOME,

Plaintiff-Respondent,

v.

AHMED AADEL SHAABAN,

Defendant-Appellant.

______________________________________________

 

Argued March 27, 2006 - Decided April 10, 2006

Before Judges C.S. Fisher and Yannotti.

On appeal from the Superior Court of New Jersey, Chancery Division, Sussex County, Docket No. MRS-C-34-04.

Marianne C. Tolomeo argued the cause for appellant (Podvey, Meanor, Catenacci, Hild-ner, Cocoziello & Chattman, attorneys; Rosaria A. Suriano and Ms. Tolomeo, on the brief).

Lawrence Cooper argued the cause for respon-dent (Danzig Kay Cooper Fiore & Kay, LLP, attorneys; Mr. Cooper, on the brief).

PER CURIAM

In this appeal, we consider whether an order which compelled an owner to transfer his residential property pursuant to a contract of sale should be upheld. Because the contract's ambiguities preclude any certain understanding about its meaning, and because the Chancery judge's declaration of the parties' contractual rights and obligations preceded the parties' opportunity to engage in discovery, we conclude that the order of specific performance was premature, and we reverse and remand for further proceedings.

I

The record indicates that plaintiff Aaron E. Some (buyer) was greatly interested in purchasing residential property owned by defendant Ahmed Aadel Shaaban (seller) in Lake Hopatcong. Finally relenting to buyer's persistence, seller verbally assented and, on May 2, 2004, buyer presented a written contract that the parties then executed. The contract contained a purchase price of $300,000, and, upon its execution, buyer paid $1,000 in earnest money. Buyer thereafter retained counsel, who rejected the contract within the attorney review period and drafted a new contract, which supplanted the old and which was fully executed by May 25, 2004. Buyer placed the additional $29,000 deposit into his own attorney's trust account on June 18, 2004.

The contract set an estimated closing date of July 1, 2004. When seller failed to appear for the closing on that date, buyer served a time of the essence notice, purporting to set a closing date of July 14, 2004. Seller also did not then appear. As a result, buyer commenced this action, seeking specific performance and damages.

Seller moved to dismiss for failure to state a claim upon which relief may be granted, asserting that both parties possessed the right to terminate the contract without cause, a right which he claimed to have properly exercised on July 6, 2004. Buyer cross-moved for partial summary judgment, contending that the seller did not possess a valid reason to cancel the contract and that seller was, thus, obligated to perform. On December 3, 2004, the judge denied seller's motion, granted buyer's, and ordered seller to perform the contract for reasons contained in a written decision.

Seller later moved to alter or amend the December 3, 2004 order. On February 4, 2005, the judge denied that motion, restated seller's obligation to perform the contract, found moot the remaining monetary issues, and stayed enforcement of the December 3, 2004 order pending appeal.

II

Seller appealed, arguing that summary judgment was premature and that the judge had mistakenly interpreted the contract. In addition, seller argued that specific performance represented a harsh and oppressive remedy and, also, that various other factual disputes precluded the entry of summary judgment.

We find those contractual terms that are material to this dispute to be ambiguous. As a result, we agree with seller that the judge (a) prematurely resolved the parties' dispute about the meaning of their contract, (b) mistakenly granted summary judgment despite the presence of a material factual dispute regarding seller's claim that buyer acceded to seller's desire to cancel the contract, and (c) failed to weigh, in determining whether specific performance should be compelled, seller's wife's equitable interest in the property. As a result, we will reverse and remand for the further examination of these issues, as well as others that we need not discuss at this time.

A

In considering the argument that seller had the right to cancel the contract without cause, we focus, first, on the contract's language. Seller contends that he (and buyer) possessed the right to terminate the contract for any or no reason, chiefly relying upon paragraph 11 of the contract's rider, which broadly states that "[i]n the event either party declares this [c]ontract null and void, all deposit monies shall be returned to the [b]uyer." On the other hand, buyer argues that this clause does not expressly permit the termination of the contract without cause. Buyer argues that paragraph 11 possesses a far more narrow scope than claimed by seller -- a fact, buyer claims, that is illuminated by other provisions of the contract, such as paragraph 22 of the contract's main body, which provides:

If this Contract is legally and rightfully cancelled, the Buyer can get the deposit and the parties will be free of liability to each other. However, if the Contract is cancelled in accordance with paragraphs 13, 14, 17, 18 and 19 of this Contract, the Seller will pay the buyer for all title and survey costs.

[Emphasis added.]

We reject buyer's attempt to pour more meaning into these provisions than appears warranted by their plain language. Neither paragraph 22 nor paragraph 11 unambiguously defines the grounds -- if any -- upon which a contracting party could terminate the contract. Indeed, when the contract is examined solely on the basis of its express terms, these provisions appear to declare only the rights of the parties' regarding the deposit monies should there be a termination.

We agree that the most "specific" statement in the contract regarding the rights of either party to terminate is contained in paragraph 22 of the main body of the contract, which indicates that the buyer would be entitled to a return of his deposit if the contract was "legally and rightfully cancelled" -- a phrase that is not otherwise defined by any other provision of the contract. Without the further illumination that extrinsic evidence might provide, we conclude that, like paragraph 11, paragraph 22 only purports to define the grounds upon which the buyer would be entitled to the return of his deposit, and does not appear to erect parameters for ascertaining when a party would or would not be entitled to terminate the contract. Similarly, paragraph 11 of the rider permits the return of the deposit to buyer should "either party declare[] the [c]ontract null and void," without explaining whether the grounds upon which such a termination could be declared were limited. And paragraph 22's reference to the type of cancellations that require seller to pay buyer "for all title and survey costs" -- although perhaps persuasive of the argument that cancellation may occur only in the various ways enumerated within the contract -- does not necessarily demonstrate, without further evidence, that "cause" was required for a termination of the contract by either party.

Since these provisions, unenlightening on their face, do not necessarily demonstrate that the parties intended to preclude a termination of the contract without cause, we conclude that the Chancery judge's finding that termination could only occur for cause was premature. The parties should have been permitted the opportunity to further bolster their positions about the meaning of the contract through the submission of testimony or documentary evidence that might shed light on their intentions. See Communication Workers of Amer., Local 1087 v. Monmouth Cty. Bd. of Soc. Servs., 96 N.J. 442, 452 (1984); Newark Publishers Assoc. v. Newark Typographical Union, 22 N.J. 419, 427 (1956); Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301-04 (1953); The Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335 N.J. Super. 495, 501-02 (App. Div. 2000); Homann v. Torchinsky, 296 N.J. Super. 326, 334-35 (App. Div. 1997).

B

We also conclude that even if the contract was intended to preclude a termination without cause, seller nevertheless created a genuine issue of material fact by asserting, in opposition to buyer's motion for partial summary judgment, that buyer consented to a termination of the contract. In his certification, seller stated that buyer contacted him on July 14, 2004, "and agreed to terminate the [a]greement for a payment of $10,000.00." Seller stated in his certification that he

counter-offered to pay [buyer] $5,000.00, provided he turn over all inspections and documents to me. [Buyer] agreed and requested that I put the agreement in writing and fax it to him that day.

Seller asserted that he telecopied a letter that purported to confirm this telephone conversation and sought buyer's signature to evidence the consent he had allegedly given. According to seller, however, buyer later telephoned seller to advise that he would, instead, "pursue the matter legally."

These factual circumstances, if ultimately determined to be true, could support a finding that the parties mutually consented to a rescission of the contract on the terms indicated. Such an agreement could form the basis for a determination that the parties consented to the contract's termination notwithstanding the possibility that the contract may ultimately be construed to prohibit such a termination. Even if the contract itself precluded the enforceability of oral terminations, such an oral agreement could potentially form the basis for an equitable defense to buyer's claim of specific performance. Cf., Van Dusen Aircraft Supplies, Inc. v. Terminal Const. Corp., 3 N.J. 321, 328 (1949).

C

Lastly, we reject seller's contention that the contract was unenforceable because seller's wife did not execute the contract. The record discloses that the seller's wife did not hold, in whole or in part, legal title to the property and, because there appears to be no dispute that the property was not their primary marital residence, there was no legal impediment to seller's conveyance of the property without his wife's consent. See N.J.S.A. 3B:28-3; Pilone v. Blanda, 226 N.J. Super. 397, 404 (Ch. Div. 1988).

It does not necessarily follow, however, that the Chancery judge need not consider the impact of specific performance on the holder of an equitable interest in the property, such as seller's wife. As a general matter, a court of equity may withhold the remedy of specific performance when it would prove unduly harsh or oppressive. See Stehr v. Sawyer, 40 N.J. 352, 357 (1963); Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 617-18 (App. Div.), certif. denied, 183 N.J. 591 (2005). Once a court finds the presence of a valid and enforceable contract through the application of legal principles, the court must then consider principles of equity, and weigh the conduct and situation of the parties, before exercising the discretion to award specific performance. Friendship Manor, Inc. v. Greiman, 224 N.J. Super. 104, 113 (App. Div. 1990), certif. denied, 126 N.J. 321 (1991). As explained in a leading treatise:

There is no automatic right to specific performance. The court must make a complete evaluation of the claims asserted, the defenses raised, the hardships imposed on both parties, the fairness and reasonable-ness of both parties' conduct, and the availability of other remedies before deter-mining whether to grant equitable relief.

[William Dreier and Paul Rowe, Guidebook to Chancery Practice in New Jersey (4th ed.) at 86.]

Although seller's wife's interest was no bar to the enforcement of the contract at law, we agree with seller that his wife's equitable interest was a factor to be weighed in the discretionary determination to award, or withhold, specific performance. Marioni, supra, 374 N.J. Super. at 618-21. In light of the limited amount of factual information contained in the record, we need not further explore the sufficiency of seller's contentions in this regard. We observe only that the wife's equitable interest was a factor to be considered, and we leave the extent to which it may influence the court's ultimate decision in this matter to further examination on remand.

III

For these reasons, we conclude that the Chancery judge's decision to award specific performance was premature and should await an analysis and weighing of parol evidence regarding the parties' intentions in further proceedings. In addition, we conclude that seller presented a genuine issue of material fact regarding his claim that buyer consented to a termination of the contract as to which the parties should also be permitted further discovery and, if necessary, a plenary hearing. We decline, at this time, to discuss the other issues raised by the parties.

Accordingly, we reverse the order which both granted partial summary judgment and awarded specific performance in favor of buyer, and we remand to the trial court for further proceedings in conformity with this opinion. We do not retain jurisdiction.

 
Reversed and remanded.

Paragraph 22 refers to: (a) paragraph 13, which pertains to compliance with zoning and building laws and states that the buyer may cancel if the seller fails to correct any violation of law; (b) paragraph 14, which provides that the buyer may cancel if the property is in a flood zone; (c) paragraph 17, which provides that if the property does not comply with the provisions of the contract pertaining to property lines and ownership, that the buyer may cancel the contract or give seller more time to comply; (d) paragraph 18, which provides for inspection of the property and states that either party may cancel if the inspection reveals "serious defects" and the parties cannot agree on corrective measures; and (e) paragraph 19, which states that the seller must provide certain information regarding lead paint exposure. Other provisions not incorporated within paragraph 22, also suggest bases upon which cancellation may occur, namely: paragraph 20, which states that the contract was contingent upon a risk assessment and inspection for the presence of lead-based paint; and paragraph 21, which renders seller responsible for any damage to the property except for normal wear and tear, and provides that if there is such damage, buyer could proceed to closing and either require the seller to repair the damage or reduce the purchase price accordingly, and further grants both parties the right to "cancel this contract if the cost of repair is more than 10% of the purchase price."

The seller provided a certification in opposition to summary judgment which stated that the buyer

wanted the ability to walk away from the deal and receive a return of his deposit monies. This request stemmed from the fact that [buyer] was looking at two other properties on the lake near my home and intended to expand this property. If his plans to expand were rejected by his architect, [buyer] intended to terminate the agreement.

Under these circumstances, this type of parol evidence was admissible in order to aid the court in determining the parties' true intent. Moreover, the judge was required to assume the truth of these sworn statements, which, in light of the contract's ambiguity, required a denial of buyer's motion for partial summary judgment.

The parties' contract states that the contract "can only be changed by an agreement in writing" (emphasis added). It does not, however, expressly preclude the enforcement of an oral agreement to terminate the contract.

(continued)

(continued)

12

A-3381-04T5

April 10, 2006