CHARLES URBAN v. COMMERCE BANCORP., INC., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3594-04T13594-04T1

CHARLES URBAN,

Plaintiff-Appellant,

v.

COMMERCE BANCORP., INC. and

MAPLE PROPERTIES, INC.,

Defendants-Respondents.

______________________________________________________

 

Submitted April 3, 2006 - Decided April 25, 2006

Before Judges Fall and C.S. Fisher.

On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. HNT-L-424-03.

Benbrook & Benbrook, attorneys for appellant (Kevin P. Benbrook, on the letter brief).

Madden, Madden & DelDuca, attorneys for re-spondents (Patrick J. Madden, on the brief).

PER CURIAM

The trial judge resolved the parties' dispute about the requirements of a commercial contract for the sale of land, and the parties' competing claims to deposited funds, by way of summary judgment. Because the contract unambiguously permitted plaintiff Charles Urban (seller) to retain $20,000 of the deposit, but required his return of the remaining $72,450 to defendants Commerce Bancorp., Inc. and Maple Properties, Inc. (buyer), we affirm.

I

In resolving the parties' disputes by way of their cross-motions for summary judgment, Judge Robert B. Reed correctly observed that the following facts and circumstances were undisputed.

The parties entered into a contract on July 1, 2000 for buyer's purchase of seller's real property in Clinton for $944,500. A deposit of $20,000 was paid. Of importance to the issues presented are a series of provisions that governed the buyer's application for planning board approval.

Paragraph 12.1 of the contract made performance contingent upon the buyer, at its own expense, obtaining by June 1, 2001 the necessary approvals to construct a 4,000 square foot structure to house a bank on the property. Paragraph 12.2 required that buyer file a complete application for preliminary and final major site plan approval with the planning board by September 30, 2000. Paragraph 12.3 stated that both parties had the right to cancel the contract upon written notice if the contingency was not satisfied or if the application was not made within the time frames provided. The contract also provided for the disposition of the deposit upon a cancellation of the contract by either party pursuant to paragraph 12.3 in the following way:

In the event this [c]ontract is cancelled by [b]uyer or [s]eller pursuant to 12.3 . . . then in that event, all deposit monies shall be returned to [b]uyer and this [c]ontract shall be deemed null and void.

In addition, paragraph 12.5 granted the buyer the right to one sixty-day extension of the June 1, 2001 deadline contained in paragraph 12.1 upon written request, and stated that, in the event any approval contemplated in paragraph 12.1 was not obtained within the sixty-day extension, either party could cancel the contract "with the return of all deposit monies."

The return of the deposited funds permitted by paragraph 12.5 related only to a termination of the contract as permitted by paragraph 12.3. If, on the other hand, the buyer breached the contract, paragraph 16 permitted a different disposition; paragraph 16 stated that in the event closing of title could not be effectuated "because of [b]uyer's breach of its obligation and/or duties as set forth in this agreement," then the seller would have sustained damages and, because of the difficulty, if not impossibility, of quantifying those damages, the buyer's breach would entitle seller to liquidated damages in the amount of the contract deposit. The liquidated damages clause also stated that upon payment "of the deposit as liquidated damages, [b]uyer shall have no further liability with respect to this [c]ontract."

Buyer did not file a complete application for preliminary and final site plan approval with the planning board by September 30, 2000, the deadline imposed by paragraph 12.2. On February 15, 2001, pursuant to paragraph 12.3, seller "exercis[ed] his right to cancel the [c]ontract and . . . declare[d] the same to be null and void and of no further force and effect." At the same time, however, the seller presented the following offer:

If you would like to discuss retaining the [c]ontract, [seller] will require that the initial $20,000 deposit be released to him, which said deposit shall become non-refundable and shall not be credited toward the purchase price. In addition, given that application has not yet been made to the [p]lanning [b]oard, the June 1, 2001, deadline for obtaining approvals cannot realistically be satisfied. Therefore, the reinstated [c]ontract would have to include a new approval deadline, a new estimated closing date and will require an additional deposit equivalent to a standard 10% deposit. This deposit shall be held in my escrow account until closing of title and transfer of deed. In the event that your client does not have the approvals on or before the revised deadline for obtaining the same, your client can terminate in accordance with 12.3 or make written request for an extension pursuant to 12.5. However, the exercise of the extension will require the release of the deposit monies to [seller], which said monies will be credited to the purchase price provided [b]uyer closes title pursuant to the [c]ontract.

Buyer expressed an interest in further pursuing the transaction, and the parties amended the contract. Their addendum required seller to provide an additional $72,450 deposit; estimated that the new closing date would be 46 days "subsequent to buyer obtaining [an] un-appealable, preliminary and final site plan approval or February 15, 2002, whichever is sooner"; extended the deadline for obtaining approvals to December 17, 2001; stated that buyer would have until April 1, 2001 to submit a complete application for preliminary and final major site plan approval; and provided buyer with the right to a single sixty-day extension of the December 17, 2001 deadline "on the condition that buyer authorize the release of all deposit monies to [s]eller with a credit for the same against the purchase price in the event that [b]uyer proceeds to closing of title." The addendum also stated that, upon the buyer's breach, the liquidated damages referred to in paragraph 16 of the original contract would consist of the $20,000 deposit as well as buyer's obligation to turnover to seller all engineering and other data prepared on buyer's behalf.

Buyer provided the additional $72,450 deposit. In an April 10, 2001 resolution, the planning board deemed complete buyer's preliminary and final site plan application.

On August 6, 2001, seller's counsel asserted there was "a default in the April 1, 2001, time of the essence deadline for submitting a complete application," and that "pursuant to [the addendum], based upon the default and the failure to pursue the timely site plan of the property, my client is entitled to declare the [c]ontract null and void, and retain the $20,000 deposit together with all engineering data prepared on [buyer's] behalf." Notwithstanding, counsel for seller also then stated:

If the [buyer] is desirous of continuing under the contract, my client requests the release of the [$72,450 deposit]. This sum will be credited to the buyer in the event there is a closing of title. If the [buyer] is no longer interested in proceeding with the purchase of the property, my client will seek the $20,000 held in escrow . . . as liquidated damages and consider the contract null and void.

[Emphasis added.]

In response, the buyer denied that any default had occurred, asserting that a timely complete application had been submitted, as evidenced by the planning board's April 10, 2001 resolution.

The buyer's attempt to gain governmental approval for its project was further complicated by a dispute that arose between the buyer and the planning board. The buyer claimed that its application should be deemed approved because the planning board failed to grant or deny the application within the statutory time period. In October 2001, an action in lieu of prerogative writs was brought against the planning board.

Because the prerogative writ action suggested that the buyer was continuing to pursue the application for approvals, seller's counsel wrote on January 25, 2002, asserting that the buyer had "made a de facto decision to exercise the extension" provided in the addendum, and that "the deposit monies should be released to [seller] at this time." Buyer's counsel responded by letter dated January 31, 2002, demanding that seller not release the deposit monies "until you are authorized to do so" to which seller acceded, responding that he would maintain the deposit monies "as requested."

In a March 19, 2002 letter, seller's attorney asserted that "the December 17, 2001 contract deadline for obtaining development has come and gone with no communication whatsoever from the buyer . . . concerning an extension of the same." He also stated that the seller was reserving his right to "terminate the contract and/or declare a breach of the same and pursue all rights and remedies available at law or in equity." In a letter dated April 15, 2002, seller's attorney asserted that because the contract deadlines "have come and gone," that

it seems to me that what is required prior to there being any further discussions between the parties is an acknowledgement on the part of [buyer] that they no longer have any contractual rights in the property and an accompanying proposal for reviving and extending the existing [c]ontract or terminating the same with no further obligation of the parties. My client has been careful not to exercise his right to terminate the contract as of yet, however, it will be my recommendation that he do so unless there is some concrete proposal from your client.

In response, the buyer's attorney acknowledged that the contract deadlines had expired and asserted that buyer "is entitled to the release of the deposit monies in consideration of the now expired extension of the contract, and is under no further contractual obligation." In furtherance of that position, the buyer entered into a consent order which dismissed with prejudice the action that had been commenced against the planning board.

The parties exchanged additional correspondence concerning both the initial $20,000 deposit and the $72,450 deposit required by the addendum. When no amicable resolution could be reached, seller filed its complaint and buyer filed a counterclaim. By cross-motions for summary judgment, as explained in his written decision, Judge Reed determined that the buyer had breached the contract, that seller was entitled to liquidated damages, and that the contract limited liquidated damages to the initial $20,000 deposit and a turnover of the engineering materials prepared on seller's behalf. The judge entered an order on February 8, 2005 which memorialized these determinations. Seller appealed, arguing he was also entitled to the $72,450 deposit, and buyer cross-appealed, arguing he was not only entitled to the return of the $72,450 deposit, as the trial judge held, but the return of the $20,000 deposit as well.

II

The record reveals and the parties acknowledge that there were no material factual disputes and that their respective claims to the deposit funds turned on the contract's requirements. As Judge Reed correctly recognized, the proper construction of a contract is entirely a question of law. See Ingersoll-Rand Financial Corp. v. Anderson, 921 F.2d 497, 499 (3rd Cir. 1990); Kaufman v. Provident Life and Cas. Ins. Co., 828 F. Supp. 275, 282-83 (D.N.J. 1992), aff'd, 993 F.2d 877 (3rd Cir. 1993). Thus, absent a determination that the relevant contract provisions suggest more than one plausible interpretation, Schor v. FMS Financial Corp., 357 N.J. Super. 185, 191 (App. Div. 2002), a court is bound to the terms of the contract as written, Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960). Because the contract is clear and its meaning unmistakable, we agree with the trial judge that the legal dispute regarding its construction was ripe for disposition by way of summary judgment.

The trial judge correctly recognized that the disposition of the deposit funds turned on whether the contract had been terminated as permitted or whether the buyer had breached the contract. In his written opinion, Judge Reed cogently explained why the buyer had breached the contract:

This leads us to the issue of whether [b]uyer's inaction in pursuing the approval from the [planning board], constituted proper cancellation of the [c]ontract, or whether this is to be considered a breach of the [c]ontract. 12.3 states that either party has the right to cancel the [c]ontract upon written notice to the other party, if, for any reason, [b]uyer could not retain an approval as provided by 12.1. This [c]ourt finds that [b]uyer's decision to terminate communication with [s]eller regarding its pursuit of the approval was not a proper termination of the [c]ontract on notice. This [c]ourt finds that this was a breach by [b]uyer of the [c]ontract. Seller was entitled to notice of [b]uyer's intent, and had reason to rely on [b]uyer continuing with seeking the approval and purchase of the property due to [b]uyer's conduct. Buyer did have the right to terminate the [c]ontract by written notice, but failed to do so. Therefore, [b]uyer did breach the [c]ontract.

We agree with this analysis of the parties' actions. The buyer failed to terminate the contract in the manner required by its provisions and, therefore, breached the contract in the manner described by the trial judge. In light of that determination, Judge Reed correctly held that seller was entitled to liquidated damages.

In that regard, seller claimed he was entitled to both the initial $20,000 deposit as well as the subsequent $72,450 deposit. We agree with the trial judge that both the original contract and the addendum are clear and unambiguous as to the liquidated damages to which seller is entitled. Paragraph 16 of the original contract succinctly stated that, upon buyer's breach, the quantification of damages would be difficult and impracticable. Accordingly, the parties stipulated that seller's retention of the $20,000 deposit would adequately compensate seller and, upon its retention, buyer would have no further liability. It is true that the circumstances were altered by the events that led to the formation of the addendum, but the addendum also clearly and unambiguously expressed the parties' intentions upon buyer's breach. A new provision inserted into the addendum expressly referenced paragraph 16 of the original contract and stated that

in the event [b]uyer does not perform any of its obligations as set forth herein it is understood that the [s]eller shall sustain damages, which said damages shall be liquidated in conformance with [p]aragraph 16 of the contract by the release of the $20,000.00 deposit . . . to the [s]eller and [by] [b]uyer assigning all engineering and other data to [s]eller in accordance with [p]aragraph 18.8. Upon release of the deposit and assignment and delivery of the engineering, the contract shall be declared null and void and of no further force and effect.

This provision unmistakably limited buyer's liability, upon a breach of the contract, to the forfeiting of the original $20,000 deposit and a turnover to seller of the engineering materials produced during buyer's pursuit of governmental approvals, as the judge accurately determined and ordered.

As a result, we conclude that Judge Reed correctly resolved the issues in his thorough and well-reasoned written decision, and we affirm substantially for those reasons.

Affirmed.

 

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A-3594-04T1

April 25, 2006