GRAND CENTRAL PROPERTIES, L.L.C. v. SUDLER TINTON FALLS L.P.

NOT FOR PUBLICATION /* /*]]>*/

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4195-11T1

GRAND CENTRAL PROPERTIES, L.L.C.,

a New Jersey Limited Liability

Company,

Plaintiff-Respondent,

v.

SUDLER TINTON FALLS, L.P., a

New Jersey Limited Partnership;

SUDLER MONMOUTH, L.L.C., a New

Jersey Limited Liability Company;

SUDLER MANAGEMENT COMPANY, L.L.C.;

and PETER SUDLER, Individually,

and as Manager of Sudler Monmouth,

L.L.C.,

Defendants-Appellants.

__________________________________

March 11, 2013

 

Argued February 27, 2013 - Decided

 

Before Judges Sapp-Peterson, Nugent and Haas.

 

On appeal from Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-0001-08.

 

Lawrence P. Cohen argued the cause for appellants (Courter, Kobert & Cohen, attorneys; John J. Abromitis, on the brief).

 

Robert A. Wayne argued the cause for respondent (LeClairRyan, attorneys; Mr. Wayne, on the brief).

PER CURIAM

In this partnership dissolution case, defendants Sudler Tinton Falls, L.P.; Sudler Monmouth, L.L.C.; Sudler Management Company, L.L.C.; and Peter Sudler appeal from a March 23, 2012 order of the Chancery Division granting plaintiff Grand Central Properties, L.L.C.'s motion to enforce a settlement agreement between the parties and denying defendants' motion for the return of $37,500 it had previously distributed to plaintiff. We reverse and remand for a plenary hearing.

Plaintiff and defendants were partners in a general partnership known as Mid-Monmouth Realty, which owned and managed numerous income-producing properties. Plaintiff held a twenty-five percent ownership interest in the partnership, with defendants owning the remaining seventy-five percent.

On December 27, 2007, plaintiff filed a complaint against defendants in the Chancery Division. Plaintiff alleged defendants had breached the terms of the partnership agreement and, among other things, it sought damages and an order dissolving the partnership. Defendant filed an answer denying the allegations.

After the completion of discovery, the matter was set down for trial beginning December 1, 2010. On that date, the parties met at the court house and, following a discussion with the trial judge, they advised the court they had reached a settlement resolving the matter. However, the terms of the settlement were not placed upon the record.

Nevertheless, the parties agree the settlement embodied the following key terms. Three properties owned by the partnership, known as 15-17 Park Road, 31 Park Road, and 90 Park Road, in Tinton Falls, would be conveyed to plaintiff. All expenses incurred by the partnership to manage the properties would be paid by defendants, up to and including the closing. All income received in connection with the three properties prior to closing would be retained by defendants. A fourth property, known as One Cold Stream Way, would be conveyed to a new entity, in which plaintiff would own twenty-five percent and defendants would own seventy-five percent. Defendants would retain all the remaining properties held by the partnership. The parties also agreed defendants would be solely responsible for paying an outstanding $300,000 loan.

Plaintiff asserts the parties agreed that the closing on the three properties it was to receive was to be held on either December 30 or 31, 2010. Defendants, on the other hand, contend a specific closing date was never agreed upon by the parties, although they both wanted to have the closing as soon as possible. This factual dispute forms the basis of the current appeal.

The closing did not occur in December 2010. After leaving court on December 1, the parties began to exchange draft settlement agreements. They continued to exchange draft documents into January 2011. Around this time, the parties realized that one of the properties, 15-17 Park Road, had an environmental issue under the Industrial Site Recovery Act (ISRA), N.J.S.A. 13:1K-6 to -13, that required the approval of the State Department of Environmental Protection before closing could occur. In addition, the tenant at the 90 Park Road property refused to cooperate in furnishing the parties with a tenant estoppel certificate.

The parties stopped exchanging draft settlement documents and worked to resolve the issues that were preventing the closing. During the months that followed, defendants continued to manage the three properties, pay all expenses incurred in this management, and retain any profits received.

On August 10, 2011, plaintiff's attorney sent defendants' attorney a letter. Through counsel, plaintiff asserted "the settlement was predicated on a December 31, 2010 Closing Date," and that the parties had believed defendants would only be retaining the profits received on the three properties up to that date, but not thereafter. Plaintiff contended the parties never contemplated that the closing would be delayed as long as it had and that it was unfair for defendants to continue to retain the profits received through their management of the properties under these circumstances. Plaintiff argued defendants had received an unfair "windfall" and demanded an accounting of all the profits received and a share of these proceeds.

Through counsel, defendants responded in an August 16, 2011 letter. Defendants asserted "December 31 was only a target date for a closing," and that both parties knew it was unlikely the closing could occur that quickly. They also claimed the parties specifically bargained for the provision permitting defendants to retain any profits received on the three properties until closing occurred and that, if the properties had lost money in the interim, they would have been solely responsible for that debt. Therefore, defendants refused to give plaintiff any share of the profits they had received from the properties after December 31, 2010.

Plaintiff thereafter filed a motion to enforce the settlement agreement, which defendants opposed. Both parties submitted certifications from counsel repeating the competing factual allegations set forth above.

Without conducting an evidentiary hearing, the judge determined the parties had not contemplated the closing would extend beyond the end of December 2010 or that defendants would be permitted to continue to retain the profits derived from their management of the properties for months thereafter. Because "the Settlement did not address the adjustment of income and expenses and cash on hand if the Settlement was delayed," the judge decided to exercise the equitable powers of the court to supply the "missing term" needed to resolve the matter. The judge's March 23, 2012 order therefore "amended" the parties' settlement agreement to provide that, at closing and subject to certain enumerated credits and debits, defendants would be required to pay plaintiff a twenty-five percent share of all profits derived from defendants' management of the three properties after December 31, 2010. The order also denied defendants' cross-motion which sought to require plaintiff to repay them monies distributed to plaintiffs after December 31. This appeal followed.

On appeal, defendants contend the judge erred by amending the parties' settlement agreement to require them to pay plaintiff a share of the profits they derived after December 31, 2010 from their management of the three properties that would ultimately be conveyed to plaintiff. They assert there was a factual dispute between the parties as to whether there was ever a firm December closing date and, even if there was, whether plaintiff should now be entitled to share in the profits derived from defendants' management of the three properties that ultimately would be conveyed to plaintiff. In this regard, defendants argue the provision that permitted them to retain any profits until the closing occurred was part of an integrated agreement. Defendants assert they would not have taken on the other responsibilities, such as the payment of the outstanding partnership loan, if they were not going to be allowed to retain these profits. Because these factual contentions should not have been resolved on the basis of the parties' competing certifications, we are constrained to reverse the March 23, 2012 order and remand for a plenary hearing.

It is well-settled that a settlement of a legal claim between parties is a contract like any other contract. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). Interpretation and construction of a contract is a matter of law for the trial court, subject to de novo review on appeal. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). When construing a contract, its terms must be given their "plain and ordinary meaning" and the agreement must be interpreted as a whole. Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997)(quotation omitted).

That a settlement agreement is oral, instead of written, is of no consequence. Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983). "Where the parties agree upon the essential terms of a settlement, so that the mechanics can be 'fleshed out' in a writing to be thereafter executed, the settlement will be enforced" even if the promised writing is not thereafter provided. Lahue v. Pio Costa, 263 N.J. Super. 575, 596 (App. Div.), certif. denied, 134 N.J. 477 (1993).

"[W]here the terms of a contract are clear and unambiguous there is no room for interpretation or construction and the courts must enforce those terms as written." Karl's Sales and Service, Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 493 (App. Div.), certif. denied, 127 N.J. 548 (1991). The court has no right "to rewrite the contract merely because one might conclude that it might well have been functionally desirable to draft it differently." Ibid. (citation omitted). Nor may the court make a better contract for the parties than they have seen fit to make, or to alter it for the benefit of one party or the other. Ibid.

At the same time, however, "if the agreement is silent as to a circumstance which thereafter arises, the parties may not be left without an agreement. So long as the parties intended to be bound by their agreement and a court is able to fill any gaps necessary to achieve a fair and just result, the contract may be modified by the addition of reasonable terms." Aarvig v. Aarvig, 248 N.J. Super. 181, 186 (Law Div. 1991) (citation omitted). Before supplying a "missing contract term," however, the court must determine whether "the parties had contemplated the existing situation when the agreement was formed." Ibid. If they did not, the court may supply the omitted term. Sachau v. Sachau, 206 N.J. 1, 9 (2011)(citing Restatement (Second) of Contracts 204(b)(1981)). However, if the parties had contemplated the situation under review and had nevertheless finalized their settlement, a court may not rewrite or amend the contract to include a new term. Karl's Sales, supra, 249 N.J. Super. at 493.

"On a disputed motion to enforce a settlement, as on a motion for summary judgment, a hearing is to be held to establish the facts unless the available competent evidence, considered in a light most favorable to the non-moving party, is insufficient to permit the judge, as a rational factfinder, to resolve the disputed factual issues in favor of the non-moving party." Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474-75 (1997). The disputed facts here are not so one-sided.

The parties plainly dispute whether, when they entered the settlement, they contemplated defendants would be entitled to keep any profits obtained through managing the three properties "until closing" as defendants argue, or whether, as plaintiff alleges, defendants were only permitted to retain the profits received prior to December 31, 2010. On the one hand, plaintiff contends the parties believed the closing would occur prior to the end of 2010 and, therefore, they did not contemplate defendants being able to retain the profits for months thereafter. Defendants, however, argue the parties knew the closing would likely not occur before the end of December and, in return for other concessions embodied in the agreement, they specifically bargained to be able to retain the profits until the closing, regardless of when it occurred.

Considering the evidence in the light most favorable to defendants, this is a material factual dispute which cannot be fairly resolved without a hearing. We conclude that the factual issues surrounding plaintiff's motion to enforce the settlement required the judge to conduct a hearing to ascertain the intent of the parties at the time the settlement was made. We therefore reverse the March 23, 2012 order and remand this matter to the trial court to conduct a plenary hearing.

Reversed and remanded for a plenary hearing. We do not retain jurisdiction.