BRUNSWICK BANK & TRUST v. DOROTHY D. INTRAVATOLA LLC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

BRUNSWICK BANK & TRUST,

Plaintiff-Appellant,

v.

DOROTHY D. INTRAVATOLA, LLC

and DOROTHE INTRAVATOLA,

Defendants-Respondents.

_______________________________

December 30, 2013

Telephonically argued December 17, 2013 Decided

 

Before Judges Ostrer and Carroll.

 

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2540-12.

 

Anthony B. Vignuolo argued the cause for appellant (Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, attorneys; Mr. Vignuolo, of counsel; Anthony T. Betta, on the brief).

 

Jeffrey S. Intravatola argued the cause for respondents (Hoagland, Longo, Moran, Dunst & Doukas, LLP, attorneys; Mr. Intravatola, of counsel and on the brief).

PER CURIAM

Plaintiff Brunswick Bank & Trust (Brunswick) appeals from the trial court's January 25, 2013 order enforcing a purported settlement of Brunswick's claims against defendants Dorothy D. Intravatola, LLC (LLC) and Dorothe Intravatola (Dorothe).1 Having reviewed the record in light of applicable legal principles, we discern genuine issues of material fact pertaining to whether the parties reached a binding settlement as defendants allege. Consequently, we reverse and remand.

I.

Brunswick loaned defendants $308,000, evidenced by a note that was secured by a mortgage on property that LLC owned in Monroe Township. Brunswick also loaned Dorothe $200,000, evidenced by a note secured by a mortgage on property that she owned in Jamesburg Borough. In an April 2012 Law Division complaint, Brunswick alleged the borrowers defaulted in their payment obligations under both notes. Brunswick alleged principal balances due of over $198,000 on the Monroe note, and over $147,000 on the Jamesburg note.

Defendants contended that the parties agreed to a settlement of Brunswick's claims. The alleged agreement initially provided that Brunswick would accept deeds in lieu of foreclosure on both properties, in full satisfaction of the notes. However, defendants claimed that the agreement was then modified, permitting Dorothe to sell the Jamesburg property to a third party and satisfy all liens and the note secured by the property. Under the alleged modification, Brunswick still agreed to accept a deed in lieu of foreclosure in connection with the Monroe property. When Brunswick rejected the Monroe deed, defendants sought an order enforcing the alleged settlement as modified.

In support of their allegations, defendants relied on certifications of their attorney, Jeffrey S. Intravatola (Jeffrey). Jeffrey alleged, "Initially, discussions regarding settlement were had wherein Plaintiff sought to receive Deeds in lieu of foreclosure for the two properties in exchange for releasing the claims against the Defendants and dismissing this case." However, it was discovered that there existed judgments that "needed to be satisfied before the properties could be [d]eeded to the Plaintiff."

Jeffrey wrote to Brunswick's counsel in July 2012 stating he would personally pay the outstanding judgments. He said, "[I]f Brunswick Bank & Trust is willing to settle the case by receiving Deeds to the properties in exchange for a discharge of the notes and mortgages, I think that we could accomplish same." Although Jeffrey's letter appeared to contain only an offer to settle, Brunswick admitted that it accepted the offer, and told Jeffrey it was willing to accept the deeds in lieu of foreclosure under those terms. Brunswick did not set a firm date for receiving the deeds. Brunswick's attorney, Anthony T. Betta, certified that Brunswick was willing to accept the deeds "if the Defendants provided the deeds as soon as possible."

However, soon thereafter, defendants found a buyer for the Jamesburg property. The sale would enable defendants to satisfy all judgments and liens against the property, satisfy the Jamesburg note, and generate a small profit. The parties differ as to what transpired next.

Jeffrey alleged Brunswick permitted the sale, which closed in October 2012. He asserted that he contacted Betta: "I specifically inquired as to whether the Plaintiff would be willing to allow the Defendants to sell the Jamesburg property instead of providing a Deed in Lieu of Foreclosure for that property. Defendants would still produce the Deed in Lieu of Foreclosure for the Monroe Township property." Jeffrey asserts Betta did not object, stating:

At no time was I advised that the Plaintiff was not in agreement with this sale or that the Plaintiff would not settle the remainder of the case by accepting the Deed in Lieu of Foreclosure for the Monroe Township property. In fact, conversations were held regarding the format of the Deed in Lieu of Foreclosure for the Monroe Township property.

 

Jeffrey alleged, "If Plaintiff had indicated that the sale of the Jamesburg property would void any settlement, the Defendants would not have entered into that sale."

Jeffrey stated that after the Jamesburg closing, he forwarded to Brunswick a deed in lieu of foreclosure on the Monroe property "to conclude the settlement." Brunswick rejected the deed. Jeffrey asserted, "I was contacted by Plaintiff's counsel and advised that . . . Plaintiff's management had changed its mind with regard to accepting the Deed in Lieu of Foreclosure" on the Monroe property.

Betta asserted that Brunswick's agreement with defendants was contingent upon defendants promptly providing deeds in lieu of foreclosure for both properties, after all other judgments encumbering title to the properties were satisfied. Betta also alleged Jeffrey advised him that once defendants found a buyer for the Jamesburg property, they "no longer wished to give the Plaintiff a Deed in Lieu for that property."

Betta asserted he explained to Jeffrey that while Brunswick would allow Dorothe to sell the Jamesburg property, it would not necessarily still be willing to accept the deed in lieu of foreclosure on the Monroe property. Betta stated:

[A]s the Defendants were no longer willing to provide deeds in lieu for both properties as had been originally discussed, the Plaintiff believed that there was no settlement in place as the essential terms that the parties ha[d] discussed had changed.

 

Before the sale of the Jamesburg property took place, I advised Mr. Intravatola that the Bank was willing to allow the sale of the Jamesburg property if the loan secured by that property was paid in full.

 

I also advised Mr. Intravatola that the Plaintiff was unsure whether it would still be willing to accept a Deed in Lieu for the Monroe property in satisfaction of the loan secured by that property.

 

I told him that the Plaintiff's Board of Directors would now have to meet to discuss whether Plaintiff would be willing to accept the Deed in Lieu for forgiveness of the amount owed on the original loan.

 

Betta maintained that an essential term of the parties' "proposed settlement" was the provision of deeds in lieu of foreclosure for both properties.

Betta's version of events was confirmed by Brunswick Vice-President Frank Gumina, III. Gumina added that Brunswick's board ultimately decided it did not want to accept a deed in lieu of foreclosure for the Monroe property.

In a brief decision after oral argument, the trial court apparently found that the parties had reached a settlement in which Brunswick agreed to accept deeds in lieu of foreclosure on both properties. The court then found that the sale of the Jamesburg property constituted "substantial compliance with the settlement." The court reasoned:

[W]hat the defendant did with the one property by selling it put the plaintiff in exactly the same position it would have been [in] if it had gotten the deed and that there was there was no evidence of a protest telling the defendant no, we don't want you to go through [with] the settlement, just hand us the deed, we don't care about [the] encumbrances.

 

This appeal followed. Brunswick argues that the parties never reached a binding settlement. Brunswick asserts that it was willing to accept the deeds in lieu of foreclosure for both properties in satisfaction of the notes and other debts owed, but Jeffrey advised that a buyer had been found for the Jamesburg property. Thus, Brunswick argues, a settlement could not be reached because defendants did not provide deeds for both properties. In the alternative, Brunswick asserts there is a genuine issue of material fact regarding whether the parties reached a settlement.

II.

A settlement agreement is a contract. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). Consequently, interpretation of a settlement agreement, like the interpretation of any contract, is subject to an appellate court's de novo review. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div. 2009). The "trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). We recognize that "settlement of litigation ranks high in our public policy." Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961). However, as with any contract, a court may only enforce the agreement that the parties entered, and may not make a new contract or supply additional terms to benefit one party. Karl's Sales & Serv., Inc. v. Gimbel Bros., 249 N.J. Super. 487, 493 (App. Div.), certif. denied, 127 N.J. 548 (1991).

We are unpersuaded by Brunswick's assertion that the parties did not initially agree to settle their dispute. Brunswick's representatives admit that Brunswick accepted Jeffrey's offer to satisfy the judgments that encumbered the properties, and to provide both deeds in lieu of foreclosure. Betta also communicated acceptance. Although he conditioned that acceptance on defendants' submission of the deeds "as soon as possible[,]" the parties nonetheless agreed. Where parties have not fixed a specific time for performance, the court will infer a reasonable time. Borough of W. Caldwell v. Borough of Caldwell, 26 N.J. 9, 29-30 (1958); McGraw v. Johnson, 42 N.J. Super. 267, 273 (App. Div. 1956). What constitutes timely performance is a fact issue. Borough of W. Caldwell, supra, 26 N.J. at 28.

The key issue is whether the parties subsequently modified the settlement contract by agreeing to permit Dorothe to: (a) sell the Jamesburg property, instead of providing the deed in lieu of foreclosure; (b) use part of the sale proceeds to satisfy all amounts owed in connection with the Jamesburg property; and (c) retain the balance of the sale proceeds.

As to the issue of modification, there is a genuine dispute of material fact. Jeffrey asserts that Brunswick orally permitted the sale of the Jamesburg property. Although he does not claim that a Brunswick representative explicitly assured him that Brunswick would still accept the deed on the Monroe property, Jeffrey apparently asserts acceptance of the Monroe deed was implicit. Jeffrey further alleges that he discussed the form of the Monroe deed with Brunswick representatives, which he claims, evidences Brunswick's agreement to accept the Monroe deed after the Jamesburg sale. See Kearny PBA Local #21 v. Town of Kearny, 81 N.J. 208, 221 (1979) (stating that a court, in interpreting contractual language, may consider "the circumstances leading up to the formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties' conduct.").

Conversely, Betta claims he expressly informed Jeffrey that while Brunswick would allow the sale of the Jamesburg property and accept proceeds in satisfaction of any outstanding debt on the property, it would not necessarily accept the deed in lieu of foreclosure on the Monroe property. Thus, Brunswick denies it agreed to the modification claimed by defendants.

The trial court did not resolve this factual issue. Instead, it apparently concluded that the dispute was not material. The court found that satisfying all debt associated with the Jamesburg property after its sale was "substantial compliance" with defendants' initial obligation to provide a deed in lieu of foreclosure.

However, in so holding, the court approved the alteration of an essential term of the agreement. That, it may not do. See, e.g., Impink ex rel. Baldi v. Reynes, 396 N.J. Super. 553, 560, 564 (App. Div. 2007) (reversing trial court's order that changed settlement from a lump sum cash payment to a structured settlement); Midland Funding, L.L.C. v. Giambanco, 422 N.J. Super. 301, 313-14 (App. Div. 2011) (reversing trial court's order that unilaterally struck a provision of a proposed consent judgment as against public policy, and then enforced the judgment as amended).

As the sale of the Jamesburg property demonstrated, the property was worth more than the total debt connected to it. Defendants retained the profit from the sale. However, if the property transferred by deed in lieu of foreclosure, and if Brunswick itself sold the property to a similar buyer, then Brunswick would have kept the profit under the original settlement agreement.2 Thus, selling the Jamesburg property and retiring the associated debt was not equivalent to surrendering the deed in lieu of foreclosure.

Moreover, Brunswick initially agreed to a "package" settlement. Brunswick argued that the value of the Monroe property was less than defendants' indebtedness to Brunswick related to that property. Brunswick asserts that it was willing to accept both deeds in lieu of foreclosure apparently because the excess value of the Jamesburg property would offset at least some of the shortfall related to the Monroe property.

In sum, the trial court must determine whether the parties agreed to modify their agreement to permit sale of the Jamesburg property and payment of the debt, instead of providing the deed in lieu of foreclosure. The issue is material, and based on the competing certifications of counsel, it is disputed. We therefore remand for the court to permit the parties to conduct discovery, and if necessary, to conduct a plenary hearing if a genuine issue of fact still remains. See Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474-75 (App. Div. 1997) (stating that on a disputed motion to enforce a settlement, the court shall hold a hearing to establish facts if a genuine issue of material fact exists).3

Reversed and remanded. We do not retain jurisdiction.

1 For convenience, we utilize first names and mean no disrespect in doing so.

2 At oral argument, defendants' counsel stated that the sale of the Jamesburg property yielded a $20,000 net return to Dorothe after payment of all outstanding debt, penalties and fees to Brunswick.

3 The record before us does not clearly indicate whether the loans were made primarily for personal, family or household purposes, although we note they were also secured by assignments of rents, which may indicate the transactions involved commercial rental properties. The trial court on remand may deem it appropriate to consider the applicability of the statute of frauds, which applies to agreements to forbear from exercising remedies pursuant to a commercial loan exceeding $100,000. See N.J.S.A. 25:1-5(f), -5(g).