LVP ASSOCIATES, L.L.C. v. BERNIER LAUREDAN, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1942-05T11942-05T1

LVP ASSOCIATES, L.L.C.,

Plaintiff-Respondent,

v.

BERNIER LAUREDAN, M.D., P.A.,

and BERNIER LAUREDAN, Individually,

Defendants-Appellants.

______________________________________

 

Argued November 9, 2006 - Decided November 30, 2006

Before Judges Wefing and C.S. Fisher.

On appeal from a final judgment of the Superior Court of New Jersey, Law Division, Essex County, Docket No. ESX-L-8647-04.

Thomas Kamvosoulis argued the cause for appellants (Wolf, Block, Schorr & Solis-Cohen, attorneys; Charles X. Gormally, of counsel; Mr. Gormally and Mr. Kamvosoulis, on the brief).

Marc J. Gross argued the cause for respondent (Greenbaum, Rowe, Smith & Davis, attorneys; Mr. Gross, of counsel; Robert S. Underhill, on the brief).

PER CURIAM

In this appeal, we conclude that the trial judge accurately construed the parties' settlement agreement, properly found defendants in default in the obligations imposed by that agreement, and correctly entered judgment in favor of plaintiff in the amount of $125,000.

The circumstances that preceded the formation of the settlement agreement are relatively simple. Defendants Bernier Lauredan, M.D., P.A., and Bernier Lauredan (collectively "Lauredan") entered into an agreement to lease commercial premises from plaintiff LVP Associates, LLC. Alleging Lauredan's failure to timely and fully pay rent due and owing pursuant to the lease agreement, plaintiff filed suit seeking damages. Having invoked the lease's acceleration clause, plaintiff claimed it was entitled to more than $500,000 in damages from Lauredan.

Plaintiff's motion for partial summary judgment on the issue of liability was granted on April 26, 2005. On June 29, 2005, the first day of the damages trial, the parties reached a settlement, which was then described in open court.

The settlement agreement required that Lauredan pay plaintiff $70,500 in monthly installments commencing on July 8, 2005; that the first payment of $7,500 would be payable on July 8, 2005; that Lauredan deliver the remaining nine monthly installment payments by providing post-dated checks for each payment by July 8, 2005; that the post-dated checks would be payable on the eighth day of each following month; and that Lauredan would execute and deliver a confession of judgment in the amount of $125,000 and a mortgage on his home in that same amount, both of which would be held in escrow to be released upon Lauredan's default in the settlement's terms.

An additional term called for Lauredan's sale of his medical practice, which he conducted at the leased premises. It was agreed that the $30,000 anticipated consideration for the sale would be applied against the final $30,000 due on the $70,500 obligation. In setting forth the terms of the agreement on June 29, 2005, plaintiff's counsel stated that, in the event the sale of the practice did not occur within thirty days, "we will be back here before your Honor to try this case" and that the checks negotiated by that point would constitute "a setoff" against any damages awarded.

Following counsel's description of the agreement, Judge John C. Kennedy carefully questioned Lauredan about whether he understood and was voluntarily entering into the agreement. After further explanation by the judge, Lauredan stated that his "only question" related to the fact that he did not have complete control over the sale of the practice, i.e., the purchaser might change her mind. Judge Kennedy then questioned plaintiff's counsel about what would occur in that event, to which plaintiff's counsel responded: "We'll come back to court, your Honor, and we'll try the case and the payments he has made [will be offset against what is determined to be] due to the landlord."

When Lauredan continued to express uncertainty in this regard, the judge said, "if she elects not to buy your practice, this settlement is out the window and we're back here then and we're going to try this case as to how much you owe and the amount of money that you paid thus far will be applied to any judgment that's entered against you." Lauredan persisted in expressing his concern about his lack of control over this event, and was repeatedly given the same description of what would then occur, culminating in the following colloquy:

THE COURT: Suppose you make ever[y] effort and she doesn't buy it, what happens then?

DR. LAUREDAN: I don't know.

THE COURT: Yeah, I'll tell you what will happen. You will all be back here and we're going to try the case, okay?

DR. LAUREDAN: I guess.

THE COURT: Do you agree to that?

DR. LAUREDAN: I -- I thought that was the settlement for me, just agree to sell . . . the practice and not for no more than $30,000 and if she doesn't buy it, I don't have any control over it.

THE COURT: I understand that and if the person elects not to buy it, then we have no settlement, okay. Do you understand that?

DR. LAUREDAN: I do.

THE COURT: Okay. Have I accurately set forth the settlement on the record for you, sir?

DR. LAUREDAN: Yes, I understand.

Plaintiff's representatives thereafter set forth on the record that they understood and agreed with the terms of the settlement agreement.

When Lauredan's first check was returned for insufficient funds and when Lauredan failed to provide the confession of judgment and mortgage required by the settlement agreement, plaintiff moved to enforce the settlement. For reasons unclear in the record on appeal, the motion was heard by a different judge, who denied the motion on September 9, 2005 and set the matter down for trial.

Plaintiff moved for reconsideration. This motion was heard by Judge Kennedy. Lauredan asserted that the anticipated sale of his practice had not occurred and, as a result, he felt he was no longer obligated to comply with the settlement agreement and sought the relisting of the matter for a damages trial. Judge Kennedy rejected this, concluding that Lauredan's failure to comply with the requirements of the settlement agreement required the entry of judgment in favor of plaintiff. He held that Lauredan's inability to sell the medical practice was best understood as triggering an option by which plaintiff could either retain any payments already made and proceed to a trial on damages, or simply request a $125,000 judgment. Plaintiff's motion revealed that plaintiff opted to seek judgment and to waive its right to proceed to the damages trial mentioned in the June 29, 2005 colloquy quoted earlier. As a result of that waiver, on November 14, 2005, Judge Kennedy entered judgment in favor of plaintiff in the amount of $125,000, together with a direction that Lauredan provide the mortgage referred to in the settlement agreement within ten days.

Lauredan appealed, arguing that Judge Kennedy erred (1) by reconsidering the other judge's denial of the motion for enforcement of the settlement agreement, (2) by concluding that Lauredan was in default in performing the settlement agreement, and (3) by rejecting his argument that the sale of the medical practice was a condition precedent to his performance of the settlement agreement. We reject Lauredan's contentions and affirm.

First, Judge Kennedy acted properly in reconsidering the other judge's denial of the enforcement motion. Since the September 9, 2005 order setting the matter down for a damages trial was an interlocutory order and, thus, subject to revision at any time prior to the entry of final judgment in the interest of justice, R. 4:42-2, we see no impediment to the entertaining of the reconsideration motion. Lauredan's reliance upon R. 4:49-2 in arguing that reconsideration was inappropriate was mistaken, since that rule applies only to final judgments and orders, not interlocutory orders. See Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988); Pressler, Current N.J. Court Rules, comment on R. 4:49-2 (2006). In addition, we see no harm in it being Judge Kennedy who revisited the order. See Gonzalez v. Ideal Tile Importing Co., 371 N.J. Super. 349, 355-56 (App. Div. 2004), aff'd, 184 N.J. 425 (2005), cert. denied sub nom., Gonzalez v. Komatsu Forklift U.S.A., Inc., __ U.S. __, 126 S. Ct. 1042, 163 L. Ed. 2d 857 (2006); McBride v. Minstar, Inc., 283 N.J. Super. 471, 481 (Law Div. 1994), aff'd o.b., 283 N.J. Super. 422 (App. Div.), certif. denied, 143 N.J. 319 (1995). Judge Kennedy was more familiar with the matter since it was he who presided when the parties described and consented to the settlement agreement on June 29, 2005. He was in the better position to consider any issues regarding the meaning and enforcement of the settlement agreement. Moreover, we observe that Lauredan did not object in the trial court to Judge Kennedy being the jurist who ruled on the motion for reconsideration, instead he raised this point for the first time on appeal. Brock v. Public Serv. Elec. & Gas Co., 149 N.J. 378, 391 (1997); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

Second, we also agree with plaintiff that Lauredan defaulted in performing the settlement agreement. The initial payment required by the settlement was returned as the result of there being insufficient funds in Lauredan's bank account to cover the amount of the check. Lauredan argued that the available funds were short by only $149.53, which occurred only as a result of his secretary's bookkeeping mistake. That may be true, but the tenor of the settlement agreement revealed that plaintiff was willing to settle for less than what it believed was owed in exchange for plaintiff's strict compliance with the letter of his obligations. Lauredan argues that there was an implicit grace period in the payment schedule, but the settlement agreement neither reveals nor suggests anything of the sort. Lauredan promised to pay $7,500 by July 8, 2005. His failure to strictly comply constituted a default in the terms of the agreement. See, e.g., Willow Brook Recreation Center, Inc. v. Selle, 96 N.J. Super. 358, 363 (App. Div. 1967), certif. denied, 51 N.J. 187 (1968). And, even if we were to agree with Lauredan's position that the return of the first check was a technical or immaterial default, we would also agree with Judge Kennedy's determination that Lauredan's failure to provide the confession of judgment and mortgage was a material breach and represented a default that permitted entry of a $125,000 judgment.

Third, despite some of the comments made during the description of the settlement agreement that would appear to support Lauredan's position, we agree with Judge Kennedy's interpretation that Lauredan's potential inability to sell the medical practice did not represent a basis for Lauredan's avoidance of all the obligations he undertook in entering into the settlement. The statements made by the judge and plaintiff's counsel on June 29, 2005 -- which indicated that, if the doctor did not purchase Lauredan's practice, the parties would return to court for a damages trial -- can only sensibly be interpreted as giving plaintiff the option to proceed to a damages trial. This contractual provision, it is important to observe, only had real value to plaintiff. For Lauredan, whether he sold the practice or not, he was still obligated to plaintiff for the same amount; for plaintiff, however, the sale of the practice had the additional benefit of providing a tenant for the premises. Accordingly, we agree with Judge Kennedy's assessment that the failure of this occurrence gave plaintiff -- and not Lauredan -- the option to negate the settlement and return to court to pursue a damage award. Considering plaintiff's willingness to accept less than it believed was owed by Lauredan on the condition that timely installment payments would be made through post-dated checks, and secured by a confession of judgment and a mortgage, it would make no sense for plaintiff to simultaneously provide Lauredan with the means for escaping those obligations. Like Judge Kennedy, we do not discern from the settlement agreement, despite Lauredan's forceful contentions, an intention to allow Lauredan the right to rescind the settlement agreement because of his inability to sell the practice.

Moreover, even if this were not so, we conclude that Lauredan's inability to sell the practice became of no consequence since, by that time, Lauredan had already defaulted. As indicated above, before the time for the sale of the medical practice had elapsed, Lauredan had provided a bad check for the initial installment and failed to comply with his promise to provide a confession of judgment and mortgage. Lauredan's prior material breach negated his right to rely upon this alleged condition and relieved plaintiff of its promise to accept the funds derived from the sale of the practice or any rights Lauredan may have had as a result. See Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); Frank Stamato & Co. v. Bor. of Lodi, 4 N.J. 14, 21 (1950). As a result, the non-occurrence of the sale of the practice was rendered irrelevant by the time plaintiff moved for the entry of judgment.

 
Affirmed.

(continued)

(continued)

11

A-1942-05T1

November 30, 2006