RICHARD FUND v. GAIL P. FUND, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4503-04T14503-04T1

RICHARD FUND,

Plaintiff-Appellant,

v.

GAIL P. FUND, individually

and as Executrix of the Estate

of Eleanor Fund, deceased;

NTN, LLC; MARK NEMERY and

BARBARA NEMERY,

Defendants-Respondents,

and

ROBERT C. FUND, JR.; RHONDA

FUND; DENNISE RENZULLI,

designated in the LW&T as

Dennise Mahan; FARMBROOK

REALTY and RE/MAX VILLAGE

SQUARE,

Defendants.

_______________________________________

 

Argued March 13, 2006 - Decided April 12, 2006

Before Judges Fall, C. S. Fisher and Yannotti.

On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket Nos. MRS-P-0220-98 and FM-16-1468-98.

Joseph E. Fund argued the cause for appellant Richard Fund.

Robert W. Mayer argued the cause for respondent Gail P. Fund, individually and as Executrix of the Estate of Eleanor Fund, deceased.

Jack Jay Wind argued the cause for respondents NTN, LLC; Mark Nemery and Barbara Nemery (Margulies, Wind & Herrington, attorneys; Mr. Wind, on the brief).

PER CURIAM

Plaintiff Richard Fund (Fund) appeals from an order entered on March 22, 2005 denying his motion to declare a contract for the sale of certain real property void and unenforceable. Fund also appeals from an order entered March 23, 2005 directing that he execute all documents required to effectuate the sale of the property and pay certain monies for the environmental remediation of the property. We reverse and remand for further proceedings consistent with this opinion.

I.

Richard Fund and Eleanor Fund were the owners as tenants in common of real property located at 554 Valley Road in Montclair, New Jersey. A portion of property was being used as an auto body repair and painting shop and had been leased to Greg Kolomatis (Kolomatis). Eleanor Fund died in 1998 and the Estate of Eleanor Fund (the Estate) succeeded to Eleanor's interest in the property. Sometime in 2000, the Estate decided to sell the property.

On August 12, 2000, a judgment was entered by the court in MRS-P-0220-98 which required that the Estate obtain an appraisal for the property and an opinion "as to the highest and best use of same." Counsel for the Estate was directed to contact "and deal with" Fund as owner of a one-half interest in the property. The order provided that if counsel could not "obtain a commitment or cooperation" from Fund in respect of the valuing and listing the property for sale, the Estate was to return to court and request relief "to effectuate the sale of said property."

On March 30, 2002, defendants Mark Nemery and Barbara Nemery (the Nemerys) tendered a contract to the Estate for the purchase of the property. The agreement identifies the Estate as seller. The purchase price was $468,000. Section 3(C) of the agreement provides the buyers would apply immediately for a mortgage loan in the amount of $351,000. This section further provides:

IF THE MORTGAGE LOAN HAS NOT BEEN ARRANGED, OR IF THE BUYER HAS NOT NOTIFIED SELLER OF BUYER'S DECISION TO COMPLETE THE TRANSACTION WITHOUT OBTAINING A MORTGAGE COMMITMENT, ON OR BEFORE APRIL 15, 2002 (DATE) THEN EITHER BUYER OR SELLER MAY VOID THIS AGREEMENT BY WRITTEN NOTICE TO THE OTHER PARTY. The method of notifying the other party shall be in accordance with Section 21 of the Agreement.

In addition, section 21 states that all notices required by the contract shall be in writing, and must be sent "by certified mail, by telegram, telefax or by delivering it personally."

Counsel for the purchasers wrote to the Estate's attorney and Fund's attorney on May 22, 2002 and set forth certain amendments to the contract. In the amendments, the buyer was changed to NTN, LLC (NTN). Fund was added as a seller of the property. The purchase price was increased to $485,000. The sellers represented among other things that, to the best of their knowledge, there was no underground waste, oil or petroleum product storage tanks on the property; they had no knowledge of any hazardous material on the property; and they had not received any notice of violations or requests for information concerning the "storage, disposal, discharge or release of any [h]azardous [m]aterial." Furthermore, the amendments included an extension of time for the buyer to obtain a written mortgage commitment to February 21, 2003.

By letter dated October 14, 2002, the buyer advised the Estate and Fund that they were willing to increase the purchase price to $560,000, and the initial deposit was increased to $56,000. The mortgage amount was changed to $392,000. The Estate agreed to the new terms but Fund refused to sign the contract.

On application by the Estate, the judge entered an order on January 25, 2003, memorializing the court's ruling at a hearing held on January 10, 2003, directing Fund to execute the contract on or before January 13, 2003. Fund signed the agreement on January 30, 2003. The buyer tendered the deposit of $56,000 on March 7, 2003.

It appears that the sale of the property was held up due to certain environmental concerns. On September 12, 2003, counsel for the Estate provided buyer's counsel with a copy of a "rudimentary" site plan, which identified the locations of contamination, along with the nature and amount of the contamination. The Estate's attorney said that the environmental consultant had to undertake additional test borings.

The tenant of the subject property, Kolomatis, apparently did not cooperate with the consultants and demanded $100 per hour to move vehicles on the premises so that the test borings could be made. In a letter dated October 10, 2003, counsel for the Estate advised Kolomatis' attorney that he had been authorized to terminate the tenancy if Kolomatis did not cooperate.

The test borings were made in December 2003. Along with a letter dated March 29, 2004, Fund's attorney provided the buyer's counsel with copies of the environmental report. Counsel stated that the estimated cost to clean up the property was $67,500. On March 30, 2004, counsel for the Estate notified Kolomatis that his lease was terminated as of May 31, 2004 and Kolomatis was told to vacate the premises by that date. Fund's attorney wrote to the Estate's attorney on May 5, 2004 and advised that his client did not consent to Kolomatis' eviction. Fund's counsel also requested a copy of the purchaser's mortgage commitment.

By letter dated July 13, 2004, Fund's attorney informed buyer's counsel that the contract was "terminated and voided." Counsel for the buyer replied in a letter dated July 15, 2004. He stated that the buyer did not require a mortgage to proceed with the transaction and the purchase was an "all cash deal." He also stated that he had informed the Estate's attorney "about this development a number of months ago." Counsel rejected Fund's attempt to terminate the contract.

The Estate thereupon secured the entry on June 22, 2004 of an order requiring Fund and Kolomatis to show cause why an order should not be entered: 1) directing the issuance of a warrant for Kolomatis' removal from the premises; 2) compelling Fund to comply and cooperate with the sale of the property; 3) requiring Fund to pay retainer monies to the consultants so that the environmental remediation could begin; and 4) requiring Fund to pay reasonable attorneys' fees.

In a supporting certification, counsel for the Estate stated that Fund "has attempted to ruin this deal from the beginning and continues to attempt to ruin this deal." Counsel stated that the Estate had given Fund an opportunity to purchase the property and he refused. Counsel also noted that there were environmental problems with the property, which required a $70,000 clean up. The environmental consultant required a retainer of $10,000 but Fund had refused to pay his share, thereby holding up remediation efforts. Counsel asked that Fund be ordered to pay $5,000 to start the clean up process. Counsel added:

We are attempting to resolve all these issues because the sellers will close on this matter when Mr. Kolomatis is out and before the remediation is completed. All monies would be held in escrow. The estate is very anxious to conclude this transaction and Richard Fund has attempted to ruin this transaction at every turn.

The parties appeared before the court on July 22, 2004, and the judge gave the parties additional time to resolve their dispute before ruling on the application.

On August 3, 2004, Fund filed a verified complaint for declaratory judgment and partition. Fund alleged therein that the agreement required the buyer to obtain a mortgage commitment by February 21, 2003. Fund asserted that the buyer had not obtained such a commitment and, as a consequence, on July 13, 2004, he had declared the contract null and void. Fund also stated that the July 15, 2004 letter from buyer's attorney indicating that this was an "all cash deal" was the first time he had been informed that the buyer had verbally informed the Estate that a mortgage loan was not required. Fund alleged that the contract expressly requires written notice of the mortgage commitment or the buyer's waiver of the mortgage contingency. Fund demanded a declaration that the contract was null and void.

Fund also sought partition of the property by sale. He asserted that the property could not by physically partitioned. Fund alleged that the value of the property was $500,000 "as is." Fund sought appointment of an independent appraiser to ascertain and report on the market value of the property.

On December 3, 2004, the judge entered an order in FM-16-1468-98, requiring the parties to appear and show cause why an order should not be entered granting the relief sought in the complaint. On December 21, 2004, the Estate filed a motion under both docket numbers seeking the relief it had originally sought in its June 2004 application.

On January 31, 2005, the Nemerys filed a certification in opposition to Fund's application and in support of the Estate's motion, on behalf of themselves and NTN, LLC. The Nemerys stated that Fund had endeavored to block the transaction by failing to promptly provide the environmental reports, refusing to pay his share of the remediation costs and supporting Kolomatis' refusal to provide access to the home inspector, the appraiser and the surveyor. The Nemerys asserted that, because there were environmental problems with the property, they could not obtain the mortgage commitment using the property as security. The Nemerys elected to forgo a mortgage loan on the subject property and secured the purchase money by re-financing the mortgage on their residence. They completed this transaction in May 2004. The Nemerys stated that they had the money on hand to close.

The Nemerys also disputed Fund's assertion that the contract was void because they had failed to obtain the mortgage commitment by the date specified in the contract. They asserted that they had not receive a fully-signed copy of the agreement until February 26, 2003, which was after the February 21, 2003 date in the contract for obtaining the mortgage commitment. The Nemerys stated in paragraph 43 of their certification:

Richard Fund knew full well when he initialed the rider that the time for us to obtain the mortgage commitment had passed or would pass within days. Yet, he made no objection in this regard until July 2004, over 15 months later. Clearly, he also knew that obtaining financing would obviously have to wait until the environmental risks had been fully assessed.

The Nemerys added that any delay in completing the transaction was due to the actions of Kolomatis and Fund, who placed "roadblock after roadblock in [their] paths" and "delayed this matter literally for years."

Fund replied in a certification dated February 10, 2005. Fund asserted that he had not acted with any intent to deter the sale of the property. He insisted that he was an owner of the property and the Nemerys had never contacted him or his attorney to notify him of their intent to waive the mortgage contingency. Fund also said he had not worked with Kolomatis to delay the transaction. Fund asserted in paragraph 5 of his certification:

The simple truth is that I do not want to evict a long standing and good paying tenant while these contract purchasers meander through the closing process. Not until such time as I know there is a firm contract with a satisfied mortgage contingency [, did I] want to abandon collection of rent. I had already been forced to sell a property I have owned for over forty years (the Estate - only for a few years) against my wishes. I was not willing to lose a steady monthly income as well.

[Emphasis in original.]

Fund further stated that he had not been consulted regarding the eviction of the tenants, nor had he been consulted with regard to the posting of an escrow for remediation of the environmental contamination of the property.

The judge entered an order on March 22, 2005, under both docket numbers, denying Fund's application to declare the contract null and void. In a written decision accompanying the order, the judge stated that Fund did not have standing to assert any rights under the contract because he had not shown a substantial likelihood of harm necessary to maintain his action. The judge wrote:

Richard Fund details several types of harm that a written mortgage waiver could prevent, such as future litigation concerning the validity of the contract. This clause can protect either party from uncertainty and litigation, but neither seems likely in the present case. Whether or not the purchaser has since produced a written confirmation, the Estate has not objected to the lack of a writing and might even be foreclosed from taking such a position given the time that has elapsed since the writing was to be provided. Fund is at no risk in this transaction and expended no time or effort negotiating the contract. He has been ordered to comply with the sale of the property, and equity will not allow him to subvert that order now.

The judge also addressed Fund's demand for partition of the property by sale:

Richard Fund seeks to have the property appraised and sold at auction with each co-tenant entitled to bid on the property. The rationale for this course of action is unclear. The Estate already offered Fund the opportunity to purchase the property, and he declined to do so. Further, proceeds of sale under the existing contract will be distributed to Fund and the Estate pro rata, effecting the separation of interests. Also, there is no evidence that the price reached with the current buyer is somehow unfair. It is impressive that any buyer has held on through this tortuous litigation, despite the environmental remediation required at the site. Finally, the time to raise the partition issue has long since passed.

On March 23, 2005, the judge entered another order requiring Fund pay his portion of the retainer to the environmental consultants so that remediation of the property could begin. This appeal followed.

II.

Fund argues that the judge erred in concluding that he did not have standing in the matter. We agree. New Jersey takes a "liberal approach" to standing and that approach "is less rigorous that the federal standing requirements." In re Camden County, 170 N.J. 439, 448 (2002)(citing Crescent Park Tenants Ass'n v. Realty Equities Corp., 58 N.J. 98, 107-08 (1971)). The New Jersey courts will not entertain actions by "mere intermeddlers" or persons who are "strangers to" a dispute. Id. at 449 (quoting Crescent Park, supra, 58 N.J. at 108). "To possess standing in a case, a party must present a sufficient stake in the outcome of the litigation, a real adverseness with respect to the subject matter, and a substantial likelihood that the party will suffer harm in the event of an unfavorable decision." Ibid. (citing New Jersey State Chamber of Commerce v. New Jersey Election Law Enforcement Comm'n, 82 N.J. 57, 67-69 (1980)).

We are convinced that Fund has standing to bring an action to seek a declaration that the contract is void and unenforceable. Fund is a 50% owner of the subject property. He signed the contract to sell the property to NTN. That agreement expressly required the buyer to obtain a mortgage commitment by February 21, 2003. The agreement further provided that, in the event that the buyer did not obtain mortgage financing or provide notice to the sellers of its intent to proceed with the transaction without mortgage financing, either party could void the agreement. Here, Fund has alleged that because NTN did not obtain mortgage financing, and failed to provide him with written notice of its intent to proceed without mortgage financing, he has a right under the contract to terminate. Whether that claim is meritorious or not, surely Fund has standing to pursue an action in court to advance the claim.

We reject the assertion that Fund did not face a substantial likelihood of harm in the event in the event the sale of the property is completed pursuant to the terms of the contract. The record shows that the parties agreed to sell the property for $485,000, with the sellers assuming the obligation to clean up the environmental contamination on the site at a cost of about $70,000. Fund has alleged that the property could be sold for $500,000 "as is." Moreover, in the event that the sale to NTN is cancelled, the owners will be able to continue to collect rents from Kolomatis until a new sales agreement is reached and the closing takes place.

We are also convinced that Fund has standing to assert a claim to partition the property by sale. In his written decision, the judge stated that the Estate was already moving to sell the property and the proceeds of sale will be divided pro rate between the Estate and Fund. However, as we understand Fund's allegations, he does not object to a sale but he objects to the sale on the terms previously agreed to and believes that the property could be sold on more favorable terms. The claim may or may not be meritorious but, as owner of the property, Fund clearly has standing to seek partition by sale.

We reject the assertion that the court's order of January 25, 2003 precludes Fund from seeking to enforce the terms of the contract. As we pointed out previously, the court authorized the Estate to sell the property but recognized that Fund's agreement and cooperation was necessary because he had a 50% ownership interest in the property. When Fund balked, the Estate obtained an order requiring Fund to cooperate in the sale and execute the contract. However, the order requiring Fund to cooperate and sign the contract does not preclude Fund from asserting his rights as seller under the agreement.

The buyers assert that the orders of March 22, 2005 and March 23, 2005 nevertheless should be affirmed because Fund's effort to cancel the contract is spurious. The buyers contend that the contract does not require that they provide written notice to the sellers of their determination to proceed without mortgage financing. According to the buyers, the contract merely requires that notice of cancellation be given in writing.

The buyers further argue that before Fund attempted to void the contract on July 13, 2004, they had verbally waived the necessity of a mortgage commitment through counsel. They assert that they obtained alternative financing and were ready to close without a mortgage. They contend that, in the circumstances, they satisfied the essential terms of the agreement and there was no valid basis upon which Fund could cancel the contract.

The buyers additionally argue that Fund should be barred from canceling the contract by application of the equitable doctrine of laches. The buyers contend that Fund was well aware that they had not obtained a mortgage commitment within the time prescribed by February 21, 2003, as required by the contract. They say that they did not even receive a signed copy of the agreement until February 26, 2003. Moreover, the buyers assert that Fund waited over a year to inquire about the mortgage contingency and exercise his right to cancel the contract. The Nemerys argue that, in that time, they continued to take steps in furtherance of the agreement, specifically with regard to the environmental cleanup. The buyers allege that Fund and his counsel were aware of their efforts. They claim that they incurred expense in doing so, while Fund "sat back and watched."

We decline to resolve these issues in the context of this appeal. The judge did not address these issues. He merely determined that Fund did not have standing, a conclusion that was mistaken. We are convinced that these unresolved issues should be considered in the first instance by the trial judge on remand. Moreover, the complaint filed by Fund should be assigned a separate docket number, and the implications of any orders or judgments that may have been entered in the matrimonial action under docket number FM-16-1468-98 with respect to the subject property should also be considered.

 
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

Judge Fall was not present at oral argument. The argument was recorded. Judge Fall listened to the tape and has participated in the disposition of the appeal.

This docket number has been incorrectly recited throughout the record as "FM-1600-1468-98." Since Morris County is Vicinage 16, we have utilized the correct prefix to this docket number throughout.

Although it seems clear that Richard and Eleanor Fund had been previously involved in matrimonial litigation in the Family Part, Morris County, under docket number FM-16-1468-98, the record on appeal does not disclose whether that litigation had resulted in a final judgment of divorce, or whether there was a property settlement agreement or an adjudication concerning equitable distribution of the 554 Valley Road property.

The Nemerys and Paul Thompson are members of the limited liability corporation.

The January 25, 2003 order was captioned "In the Matter of the Estate of ELEANOR FUND, Deceased," yet bore docket number FM-16-1468-98, the matrimonial docket number.

This order, entitled "In the Matter of the Estate of Eleanor Fund, Deceased," bore both docket numbers FM-16-1468-98 and MRS-P-0220-98.

The complaint, which bears the caption of this opinion, was filed under docket number FM-16-1468-98 and, for reasons that are not apparent, was not assigned a separate docket number in the Chancery Division.

Again, we find it unusual and confusing that Fund's complaint was docketed under an old, existing matrimonial docket number, as opposed to being assigned a new docket number in the Chancery Division.

(continued)

(continued)

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A-4503-04T1

April 12, 2006