NLH-SHORT HILLS, LTD., INC. v. TRUMP TAJ MAHAL ASSOCIATES, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5461-04T35461-04T2

NLH-SHORT HILLS, LTD., INC.,

Plaintiff-Appellant,

v.

TRUMP TAJ MAHAL ASSOCIATES d/b/a

TRUMP TAJ MAHAL CASINO RESORT;

TRUMP PLAZA ASSOCIATES d/b/a

TRUMP PLAZA HOTEL CASINO;

TRUMP'S CASTLE ASSOCIATES, L.P.

d/b/a TRUMP MARINA HOTEL CASINO;

and DONALD TRUMP,

Defendants-Respondents.

__________________________________________________________

 

Argued September 26, 2006 - Decided April 26, 2007

Before Judges Axelrad, R. B. Coleman and Gilroy.

On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, C-60-01E.

Salvatore Perillo argued the cause for appellant (Perskie Nehmad & Perillo, attorneys; Mr. Perillo, of counsel and on the brief; Elias T. Manos, on the brief).

Gerard W. Quinn argued the cause for respondents (Cooper Levenson April Niedelman & Wagenheim, attorneys; Mr. Quinn, on the brief).

PER CURIAM

Plaintiff, NLH-Short Hills, Ltd., Inc., (NLH) appeals from two orders of the Chancery Division, Atlantic County. The first order entered on September 29, 2004, following a bench trial conducted over several non-consecutive days, denied NLH's order to show cause why a Stipulation of Settlement should not be enforced to permit NLH to construct two kiosks in the Taj Mahal Casino. The second order, entered on June 1, 2005, denied NLH's motion for reconsideration. We affirm both orders.

Plaintiff, NLH, and The Hyman Companies, Inc., a related entity, operate high-end costume jewelry and accessory kiosks throughout the country. In or about June 2000, NLH, through its principal, Nat L. Hyman (Hyman), entered into several license agreements with defendant, Trump Taj Mahal Associates, d/b/a Trump Taj Mahal Casino Resort, and other Trump entities operating in Atlantic City (collectively referred to as Trump) for the installation of six kiosks in the three Trump Atlantic City properties. After a dispute arose concerning the installation of certain of the kiosks, defendant Trump purported to declare default under the license agreements between the parties, and plaintiff NLH instituted a suit by verified complaint in the Chancery Division, Atlantic County, on May 9, 2001, to enforce its asserted rights.

On December 18, 2001, the parties entered into a Stipulation of Settlement, pursuant to which they agreed that NLH would be entitled to install five kiosks - two in the Taj Mahal (the Regent and Landau units), one in the Trump Plaza Casino and two units in the Trump Marina Casino. Under the terms of the Stipulation, the parties agreed that, with respect to each kiosk, Trump was to obtain and deliver to NLH all regulatory approvals necessary for the construction of each kiosk for which NLH had submitted construction plans and would do so within ninety days of its approval of those plans. More particularly, the Stipulation, at paragraph 4, provided:

4. Taj Mahal shall be responsible for obtaining all regulatory approvals for the Taj Units (such as the approval required to be obtained from the Department of [Community] Affairs), and will diligently pursue the same. Taj Mahal shall obtain and deliver to [NLH] formal regulatory approvals for each of the Taj Units within 90 days from the date that [NLH] submits to Taj Mahal the initial shop drawings for each Unit (even if those initial drawings are later required to be revised). In the event that it takes longer than 90 days for a formal approval to be delivered to [NLH] for any Unit, then the deadline referenced in Paragraph 21 below [i.e., the December 31, 2002 deadline] will be extended as provided therein.

NLH, in turn, was required to complete construction of each kiosk by December 31, 2002; and if it failed to do so, the Stipulation provided that the license agreement for that unit only would become null and void with respect to that unit and the License Agreement shall be terminated with respect to that unit. The Stipulation, in paragraph 21, specified the circumstances under which the time for NLH to complete construction could be extended:

Notwithstanding any provision of this Stipulation of Settlement . . . to the contrary, if [NLH] shall not complete the installation of any Unit that is the subject of this Stipulation of Settlement by December 31, 2002, then any and all rights and obligations of [NLH] and [Trump] pursuant to the License Agreement for that Unit (only) shall be null and void with respect to that Unit and that License Agreement shall be terminated with respect to that Unit (only). . . . If any Unit that is the subject of this Stipulation of Settlement is not installed by December 31, 2002, [NLH] shall forever be precluded from installing that Unit. However, for each Unit in question, in the event that it takes longer than 90 days for [Trump] to obtain and deliver to [NLH] the regulatory approvals for that Unit . . . the December 31, 2002 deadline referenced in this Paragraph shall be extended one day for each day in excess of the 90 days that it takes for [Trump] to obtain and deliver the approvals in question to [NLH].

(Emphasis added.)

NLH completed timely installation of two of the contemplated kiosks, but failed to install the Regent and Landau units in the Taj Mahal and one unit at the Trump Marina by the deadline date of December 31, 2002. On or about April 15, 2003, Trump's Vice President of Legal Affairs and General Counsel issued a letter to Hyman, asserting that NLH's rights under the Stipulation had expired. That letter prompted NLH to file a complaint and order to show cause, seeking to construct the three remaining kiosks, pursuant to the terms of the Stipulation.

Based on his consideration of the trial testimony, exhibits and arguments of trial counsel, Judge George L. Seltzer determined that Trump had not acted in a timely manner in approving NLH's plans for the Trump Marina kiosk. Accordingly, the judge ruled that NLH could still proceed with the unit at Trump Marina, provided that the Trump Marina kiosk was completed no more than forty-five days after Trump's delivery of all necessary regulatory approvals to NLH. The court concluded, however, that NLH had failed, without justification or excuse, to install the two remaining kiosks at the Taj Mahal before December 31, 2002, and consequently, its rights under the licensing agreement were null and void as to those two kiosks.

NLH had hired Artisan Display, Inc. (Artisan), with whom it had worked on dozens of projects, to design and install the units at the Taj Mahal and the Trump Marina. The units were to be fabricated offsite and thereafter installed at the site. Trump received the plans and obtained DCA approval for the Taj Regent unit on March 7, 2002. Robert Freda, the Manager of Construction at Taj Mahal, testified that he communicated that approval to Mike Sarno, Artisan's lead person on the job. However, NLH maintains that Sarno was an independent contractor and not its agent, and NLH insists that DCA approval was never delivered to it as required by the Stipulation.

Similarly, Freda testified that he received the Taj Landau plans from Sarno on January 31, 2002, that DCA approval for that unit was obtained on March 21, 2002, and that he communicated the approval to Sarno on March 27, 2002. As is the case with the Regent unit, NLH does not dispute that such communications were made to Sarno, but it insists that Trump did not comply with the Stipulation because it never delivered any DCA approval to NLH and never applied for, received or delivered any building permits to NLH.

In his written opinion, dated September 20, 2004, Judge Seltzer found that, at least by May 1, 2006, NLH was aware, by virtue of a bill for the permits, that DCA approval and building permits had been obtained and that it could install the units. The judge found that "[t]here is no doubt that Mr. Hyman, plaintiff's representative, received this bill [from M.B. Markland Contracting Co. (Markland) for securing a building permit] prior to May 1, 2002." Based on that finding, the judge reasoned:

plaintiff knew (1) that Department of Community Affairs approval (without which the building permit could not issue) had been obtained, (2) that a building permit was available (or had been issued) for each of the kiosks, and (3) that Trump either had not been asked to obtain the permits or had determined not to obtain them. . . . Once plaintiff was aware that the approvals had been obtained, the substance of the contractual obligation for delivery had been met.

Thus, the judge concluded, "In short, by May 1, 2002, plaintiff knew it could begin constructing the units that were to be done eight months later but did nothing other than declare that it was not pursuing the projects; it certainly did not assert that defendant had violated any of the terms of the settlement." The judge noted that NLH did submit revised plans after Markland obtained the building permits, but those submissions did not alter or affect his conclusion that plaintiff knew there could have been construction any time after May 1, 2002.

On appeal, NLH contends the trial judge erred in failing to extend the December 31, 2002 deadline for the Taj Mahal kiosks. It argues that (a) Trump failed to obtain and deliver all of the necessary regulatory approvals required under the Stipulation; and (b) the court's finding, that NLH had knowledge that the building permits had been obtained, did not put NLH on notice that it was permitted to proceed with the units in the Taj Mahal. NLH also contends the court should have applied the doctrine of equitable estoppel against Trump and it should have considered evidence of Trump's breach of the covenant of good faith and fair dealing, based on prior dealings with and statements allegedly made by Trump.

"Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). In Rova, the Court acknowledged the limited function of an appellate court when it is reviewing the findings of a trial judge:

[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.

[Ibid. (quoting Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)).]

In this case, we are not convinced that the trial judge's findings and legal conclusions are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice. To the contrary, we are satisfied that Judge Seltzer's findings and conclusions are amply supported by substantial credible evidence in the record.

Freda's testimony that he communicated the DCA approvals to Sarno is uncontroverted. Sarno was the key individual acting for Artisan, the entity that NLH engaged to design and install the units. If it was reasonable for Trump to recognize Sarno's authority to submit the designs for its approval, it was reasonable for it to assume that the communication of necessary governmental or regulatory approvals to Sarno was appropriate, and that notice of the receipt of such approvals would be relayed to NLH. At a minimum, the circumstances support the inference of NLH's knowledge drawn by the trial judge.

As noted, NLH denies that Sarno or Artisan was its agent and, as to that issue, the trial court found that it was not necessary to determine the exact nature of the relationship between NLH and Artisan. In the trial judge's view, a view with which we concur, that relationship is not critical, or it certainly is of less importance "once plaintiff was aware that the approvals had been obtained, [because then] the substance of the contractual obligation for delivery had been met."

NLH argues, however, that because Trump did not itself obtain and deliver the approvals to it, the trial court should have applied the doctrines of equitable estoppel and breach of an implied covenant of good faith and fair dealing to prevent Trump from claiming that NLH's rights under the Stipulation lapsed on December 31, 2002. We disagree and find those arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We, nevertheless, add the following comments.

NLH's primary argument centers on its assertion that, although DCA approval for the two Taj Mahal kiosks was obtained, it was obtained by its subcontractor. Hence, it continues, Trump did not fulfill its obligation under the Stipulation to obtain and deliver all regulatory approval. No one seriously contests that the DCA approvals were obtained or that the building permits were obtained, albeit by Markland. Whether the procurement by Markland was due to confusion among the parties or was due to their general unfamiliarity with the approval process, or occurred "for whatever reason," as the trial judge wrote, the objective of the Stipulation to procure the requisite approvals was fulfilled in fact well in advance of the stipulated installation deadline.

After Markland billed NLH for the costs it incurred in procuring the permits, Hyman and NLH refused to pay, insisting that the procurement of the permits was Trump's obligation. As Judge Seltzer concluded, NLH knew at that juncture or it should have known, that it could proceed with the installation. Significantly, Hyman did not complain or make inquiry to Trump. He did not demand that Trump pay Markland, and he did not direct Markland to submit its bill to Trump. Instead, Hyman sent a May 1, 2002 letter to Roy Aungst, of Markland, stating that NLH did not intend to proceed with the two kiosks at the Taj Mahal. Trump was not copied on that letter and Hyman contends that letter was sent as a favor to Sarno, so that Sarno could save face with Markland because Hyman had been so upset with Sarno for contracting with Markland without being authorized to do so. Notwithstanding that letter, NLH argues that it is Trump that should be estopped from relying on any prior approvals because Trump thereafter accepted and purported to act, or was slow to act, on revised plans submitted by Sarno for the Taj Mahal Regent unit to Paul Ryan, then Executive Vice President of Food and Beverage Operations at the Taj Mahal.

"Estoppel is an equitable doctrine, founded in the fundamental duty of fair dealing imposed by law." Knorr v. Smeal, 178 N.J. 169, 178 (2003); Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1989). "The doctrine is designed to prevent injustice by not permitting a party to repudiate a course of action on which another party has relied to his detriment." Knorr, supra, 178 N.J. at 178. Thus, in order to establish equitable estoppel, a party "must show that [another party] engaged in conduct, either intentionally or under circumstances that induced reliance, and [the relying party] acted or changed their position to their detriment." Ibid.

The revised plans for the Regent units were submitted to Paul Ryan, who apparently did not respond to Hyman, which prompted Hyman to write to Ryan on July 30, 2002, the following letter:

Dear Paul:

I have written and called you many times regarding your approval of the revised plans for the above-referenced unit.

As months have been lost, unless I hear from you to the contrary by the end of August, I shall assume that you approve of this design in its entirety and that we may begin construction.

Sincerely yours,

THE HYMAN COMPANIES, INC.

Nat L. Hyman

President

During this relevant timeframe, Ryan's job responsibilities were changed, and he was succeeded by Paul Burst, who was serving as the Taj Mahal Executive Director of Facilities during the latter part of 2002. Burst testified at trial that he reviewed NLH's revised plans and replied to Hyman by fax dated November 8, 2002. In that fax, he expressed concerns regarding NLH's revised plans: (1) the rear wall filler pieces were not shown as in the previous drawing and needed to be included in actual construction; (2) the drawings did not indicate that it was made with fire retardant wood; and (3) whether the new design had a electrical load that exceeded the original plans.

Burst and Hyman also spoke by telephone on November 11. According to Burst, during that telephone conversation, he explained to Hyman that amelioration of the three concerns in the November 8 fax might trigger a need to do an amended submission to the DCA. Hyman assured him the necessary changes would not require resubmission, that he would check to make sure, and Hyman told Burst he would get back to him. Burst testified that after the November 11, 2002 phone conversation, Hyman never got back to Burst until after the December 31, 2002 deadline.

NLH cites defendant's inaction in the face of its submission of revised plan for the requisite showing of reliance. NLH advances that Hyman made clear in his testimony that if he had been advised by Trump subsequent to the resubmission of the plans for the Taj Mahal units that he was not permitted to build a redesigned unit, or that he had to install the units as they were originally submitted, he would have done so. Those assertions do not establish induced reliance.

According to Hyman's testimony, the offsite fabrication was ninety percent completed as far back as May or June 2002. Following Hyman's communications with Burst in early November 2002, NLH still had a month and a half to address the three concerns contained in the November 8 fax from Burst. As important, there is no evidence that Ryan or Burst or anyone else at Trump ever told Hyman or anyone affiliated with or acting on behalf of NLH that Trump would extend the deadline, and although Burst expressed concern that revisions suggested by NLH might necessitate a resubmission for DCA, there is no evidence that a resubmission was required or that Hyman believed a resubmission was required. In fact, under Paragraph 4 of the Stipulation, the obligation of Trump to obtain approvals within ninety days of submission of the designs was measured from the submission of initial shop drawing, even if those initial drawings were later required to be revised. In Fall 2002, Burst was the primary contact at the Taj Mahal regarding installation of the kiosks, and he claimed not to have heard from Hyman until after the deadline. Under such circumstances, we perceive no basis to disturb the lower court's decision based on equitable grounds.

Hyman's letter of July 30, 2002, tends to negate any claim of detrimental reliance after the revised plans were submitted, and, regardless of what happened during the summer of 2002, the November 8 fax and testimony regarding the November 11 conversation reflect defendant's willingness to permit NLH to complete the installation. We are satisfied there is substantial credible evidence in the record to support the conclusion that NLH simply failed to have the kiosks in the casino by the deadline, without induced reliance on any representation that the deadline would be extended.

Finally, as NLH urges, every party to a contract is bound by a duty of good faith and fair dealing in the performance and enforcement of the contract. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr., Assocs., 182 N.J. 210, 224 (2005); Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001); Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420-21 (1997). "The party claiming a breach of the covenant of good faith and fair dealing 'must provide evidence sufficient to support a conclusion that the party alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the bargain originally intended by the parties.'" Brunswick Hills Racquet Club, Inc., supra, 182 N.J. at 225 (quoting 23 Williston on Contracts 63:22 at 513-14 (Lord ed. 2002)). Each case is, however, fact sensitive.

Here, in spite of evidence of tension between the principals of plaintiff and defendant, the trial judge found no evidence of bad faith performance on the part of Trump. Rather, on NLH's motion for reconsideration, the judge reiterated that he "remain[ed] satisfied that the plaintiff had actual knowledge that it could build, and that meets the requirements of the . . . settlement agreement." Based on our independent review of the record, we perceive no conduct on Trump's part that had "'the effect of destroying or injuring the right of the other party to receive' the benefits of the contract." Id. at 225 (quoting Palisades Props. Inc. v. Brunetti, 44 N.J. 117, 130 (1965)).

Affirmed.

 

The parenthetical example within this paragraph of the Stipulation refers to approvals from the Department of Consumer Affairs. The approvals in the record were actually issued by the Department of Community Affairs, and we assume all references to DCA are intended to refer to the Department of Community Affairs.

That ruling is not contested in this appeal.

According to NLH, Sarno, of Artisan, retained Markland because Freda instructed Sarno that a licensed contractor had to be hired to apply for and receive the city building permits. Markland did apply for and it received the permits. It then forwarded the bill for that activity to Hyman, who refused to pay it because procurement of all necessary approvals was the responsibility of Trump.

No revised plans were submitted for the Landau units.

(continued)

(continued)

17

A-5461-04T3

RECORD IMPOUNDED

April 26, 2007