PARKE BANK v. PAGCO, INC., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5644-04T35644-04T3

PARKE BANK,

Plaintiff-Appellant,

v.

PAGCO, INC., TRIANGLE LAND CO.,

INC., EXECUTIVE ESTATES, INC.,

HEATHERTON COUNTRY ESTATES, INC.,

BRIARWOOD DEVELOPMENT GROUP,

INC., SPECTOR DEVELOPMENT CO.,

INC., and CHARLES M. SPECTOR,

Defendants,

and

RICK LICCIARDELLO and

PATRICIA LICCIARDELLO,

Defendants-Respondents.

_____________________________

RICK LICCIARDELLO and

PATRICIA LICCIARDELLO,

Plaintiffs,

v.

PARKE BANK and CONGRESS

TITLE,

Defendants.

 

 

Submitted June 6, 2006 - Decided August 9, 2006

Before Judges Wefing, Fuentes and Graves

On appeal from Superior Court of New

Jersey, Chancery Division, Gloucester

County, Docket No. F-15461-03.

Cahill, Wilinski, Rhodes & Joyce,

attorneys for appellant Parke Bank

(Douglas M. Joyce, on the brief).

Ballard, Spahr, Andrews & Ingersoll,

attorneys for respondents Rick and

Patricia Licciardello (Michael J. Fekete, on the

brief).

Charles J. Sprigman, attorney for respondents

Rick and Patricia Licciardello.

Parker McCay, attorneys for respondent

Congress Title (Gene R. Mariano, on the brief).

PER CURIAM

Plaintiff Parke Bank appeals from the order of the Chancery Division, General Equity Part, dismissing its complaint for foreclosure and discharging its mortgage on a property owned by defendants Rick and Patricia Licciardello. The property in the foreclosure action had been owned by defendant Pagco, Inc., and pledged as collateral for a separate construction loan that Parke Bank had made to Pagco and the other defendants. After reviewing the record and in light of prevailing legal standards, we reverse the trial court's order granting summary judgment and remand the matter for trial.

The issues raised here came before the trial court on a motion for summary judgment. We will thus summarize the salient facts from this limited record.

I

Defendant Charles M. Spector was the principal shareholder in Pagco and in Triangle Land Co., Executive Estates, Inc., Heatherton Country Estates, Inc., Briarwood Development Group, Inc., and Spector Development Co., the group of entities that initially came together to develop this construction project. On June 13, 2000, Parke Bank gave Spector, Triangle, Executive Estates and Heatherton a $1,448,000 loan to complete the construction of single-family homes on three subdivided parcels of land. The loan had to be repaid in one year.

As collateral, the debtors collectively offered the three subdivided parcels of land and Pagco pledged a separate five-acre vacant and commercially zoned tract, located in the Borough of Swedesboro in Gloucester County. This property was encumbered with a $100,000 first lien mortgage held by Hudson United Bank. Consequently, Parke Bank's lien interest was secondary and subordinate to Hudson United Bank's mortgage.

Spector was unable to honor its payment obligation to Parke Bank, and the loan went into default. This led to negotiations between Parke Bank and Spector to extend the date of repayment, and for additional disbursements to complete the project. Upon reassessing the value of its collateral, Parke Bank agreed to continue funding the project.

As an inducement for this extension of credit, Spector advised Parke Bank that he would bring in Rick Licciardello to assist him in overseeing the construction. According to Vito Pantilione, the President and CEO of Parke Bank, Licciardello had experience in the local construction industry. He was thus expected to be involved in supervising and managing the project, including suggesting revisions to the budget. Based in large part on Licciardello's involvement, the bank continued to finance the construction.

In exchange for Licciardello's services, Spector agreed to convey title of the Pagco property to him. As part of this arrangement, Parke Bank agreed to release its secondary lien on that property in exchange for $50,000. Thus, in addition to this $50,000, Licciardello would also have to pay the balance due on the Hudson United Bank first lien mortgage in order to acquire clear title to the property. According to both Pantilione and Spector, Licciardello also orally agreed to pay Parke Bank an additional $50,000 if there was a shortfall on the loan repayment after the completion of the project.

Licciardello retained Congress Title Company as his closing agent. Congress Title received a letter dated January 29, 2002 by fax providing written confirmation from Pantilione that Parke Bank would discharge its second lien mortgage on the Pagco property in exchange for $50,000. Congress Title also received a payoff letter from Hudson United Bank, indicating that the amount due on the first lien mortgage was $100,775.97. Closing of title took place two days later on January 31, 2002. Thus, in order to acquire clear title to the property, Licciardello was required to bring to the closing a total of $151,281.09 ($100,783.24 for Hudson United Bank and for $50,000 to Parke Bank).

Inexplicably, Licciardello brought only the funds needed to pay off the first lien mortgage. According to Spector, who was present at the closing, Licciardello announced that he had only these funds, then authorized and directed Congress Title to wire the money to Hudson United Bank. Again, without a plausible explanation provided in the record, Congress Title acceded to Licciardello's instructions and later that same day wire transferred $100,793.24 to Hudson United Bank. Despite this glaring shortfall in the funds needed to discharge the known liens, Spector left the fully executed title deed to the Pagco property with Congress Title. In another unexplained twist, the deed was dated September 26, 2001, three months prior to the date of closing, and was not recorded with the Office of the County Register of Deeds and Mortgages until April 26, 2002.

Thereafter, Spector advised Pantilione that the Licciardello closing on the Pagco property had not been completed, but Licciardello had paid off the Hudson United Bank mortgage. In his deposition Pantilione testified that, after Spector's call, he independently verified that the first mortgage had indeed been paid off and discharged.

Both Spector and Pantilione discussed Licciardello's failure to close and pay off Parke Bank. According to Spector, he assumed that Licciardello never returned to Congress Title with the rest of the money. He believed that he was "in no hurry to pay off the Parke Mortgage because Parke Bank was continuing to fund the Project." Thereafter, Pantilione confirmed several times to Spector that the bank had not received any money from Congress Title.

Licciardello did not tender to Congress Title the remaining $51,281, due to Parke Bank, until March 26, 2002. The record before us is devoid of any information that sheds any light as to the reasons why: (1) Licciardello failed to bring sufficient funds to the closing; (2) Congress Title failed to notify Parke Bank of the deficiency; (3) Parke Bank did not take any action inquiring as to the status of the closing or the location of its pay off funds; and (4) Congress Title accepted the deed transferring title to the property despite not having sufficient funds to discharge all known liens.

There is no question, however, that as a result of the "closing," Parke Bank believed it had minimized its risk vis-a- vis the construction loan. This belief became manifest in its decision to continue to disburse funds even in the face of a series of unanticipated construction problems. These problems, including drainage issues and encroachments, caused "substantial overruns" and "a serious delay." The bank nevertheless authorized the release of a "substantial amount of additional funding," without demanding the additional $50,000 allegedly orally pledged by Licciardello. Instead, Pantilione accepted Spector's assurances that Licciardello "was working with him to get out of this mess." Spector also emphasized that, as a result of the discharge of the Hudson United Bank mortgage, Parke Bank now had a first lien interest in the Pagco property.

It soon became clear, however, that the costs to complete the project were going to be far in excess of Licciardello's original estimates. Thus, on or about September 2003, Spector, Pantilione and Licciardello met to discuss the problems with the project. It was at this meeting that Spector and Pantilione first raised the issue of the Pagco property with Licciardello and the bank's first lien position. This prompted Licciardello to disclose that he owned the property.

Immediately following this meeting Parke Bank contacted Congress Title to inquire, for the first time, what had occurred at the closing, since it never received the $50,000. After some investigation, Congress Title's President admitted that a mistake had occurred, and offered to send the $50,000. Parke Bank refused to accept the $50,000. According to Pantilione, the bank was no longer willing to discharge the mortgage due to the cost overruns on the project, which "were far, far in excess of the budgets that [Licciardello] submitted." He emphasized that the bank would not have agreed to the release of its lien, unless it was "confident or at least felt" that it would recoup all of its construction loan payments.

Parke Bank never demanded the additional $50,000 allegedly orally pledged by Licciardello. In fact, according to Pantilione, after the bank refused to accept the $50,000 from Congress Title, Licciardello offered to pay the additional $50,000 in return for the discharge of the lien. The bank declined. The project was ultimately completed with a $400,000 shortfall on the repayment of the construction loan.

II

Parke Bank first contends that the motion judge erred by not characterizing the bank's payoff letter as an offer to enter into a unilateral contract, which contract requires acceptance to be enforced. A "unilateral contract" is one in which: (1) there is a promise on one side only; and (2) consideration on the other side to be executed. Friedman v. Tappan Dev. Corp., 22 N.J. 523, 533 (1956). The offer is "irrevocable for the time limited by its terms. To ripen into a contract, the offer must be accepted within the time so limited and the acceptance must in every respect meet and correspond with the offer. . . ." Willow Brook Recreation Ctr., Inc. v. Selle, 96 N.J. Super. 358, 365 (App. Div. 1967), certif. denied, 51 N.J. 187 (1968).

Parke Bank thus argues that the one-year delay in transmitting the $50,000 authorized the bank to rescind its unilateral offer to release its lien. Although Parke Bank is entitled to make this argument at trial, there are far too many material factual issues in dispute here to adopt or to reject such a disposition as a matter of law.

The agreement between Parke Bank, Spector, and Licciardello required Licciardello to pay $50,000 to the bank at the time of the closing. The facts are clear that when this did not occur, the parties continued their relationship without any apparent interruption. Parke Bank did not make any effort to ascertain the status of the closing, despite being well aware that Licciardello had discharged the Hudson United Bank mortgage, thus elevating the bank's lien position from second to first.

From these facts, a rational factfinder could find that the bank's acquiescence to this situation represented its decision to permit Licciardello to delay the payment of these funds, in return for: (1) the improved lien status; and (2) Licciardello's continued involvement with the construction project. It simply defies common sense that a bank would make the effort to confirm the discharge of the Hudson United Bank mortgage, and, at the same time, make no inquires as to why Licciardello would pay off a mortgage on a property he supposedly did not own.

In light of Parke Bank's pay off letter, however, it is equally incongruous: (1) for Licciardello to have brought to the closing only enough funds to discharge the Hudson United Bank mortgage, thus failing to secure clear title to the property; and (2) for Congress Title not to have informed Parke Bank of this situation, and thereafter, accept Licciardello's check for the full amount of the Parke Bank mortgage almost four months after the closing. Simple negligence does not explain these events.

Summary judgment is appropriate if "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). Without assessing credibility, weighing the evidence, or determining its truth, the motion judge must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

Here, there is a plethora of unanswered questions that can only be answered after a full trial on the merits.

Reversed and remanded for trial.

 

Respondents Licciardellos filed two separate briefs in this appeal. The brief filed by Ballard, Spahr, Andrews & Ingersoll responded to the arguments raised by Parke Bank in its foreclosure action against the Licciardellos. The brief filed by Mr. Sprigman responded to the issues raised by Parke Bank and Congress Title in the action filed by the Licciardellos.

The trial court consolidated and then severed the foreclosure action (Docket No. F-15461-03), with a separate damages action (Docket No. C-74-04) brought by the Licciardellos against Parke Bank and Congress Title.

Briarwood Development Group, Inc, Spector Development Company, Inc., Pagco, Inc., and Charles M. Spector individually gave unconditional guarantees for the loan's repayment.

The property was appraised at $335,000.

The project was completed and all three houses were eventually sold. The net proceeds of the sale were applied by the Parke Bank to pay down the loan, eventually leaving a balance of $400,000.

On May 5, 2003, Congress Title recorded an amended deed listing Licciardello's wife as an additional grantee.

(continued)

(continued)

12

A-5644-04T3

August 9, 2006