L. GROUP, INC. v. C.S. BRIDGE FUNDING INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

L. GROUP, INC., L GROUP II, LLC,

MILLENNIUM TOWERS, LLC, GROVE STREET

TWO, LLC, 600-604 LLC, AVENUE A, LLC,

BLOCK 327 II, LLC, BLOCK 328, LLC, BLOCK

327, LLC and LANCE LUCARELLI,

Plaintiffs-Appellants,

v.

C.S. BRIDGE FUNDING, INC., BRIDGE

FUNDING, INC., BFI CAPITAL, LLC, BRIDGE

BLOCK 328, LLC, LAWRENCE I. LINKSMAN and

STEPHEN HYMAN,

Defendants-Respondents.

_________________________________________

October 21, 2015

Submitted September 16, 2015 Decided

Before Judges Sabatino and Accurso.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2650-14.

Law Office of The McKenna Law Firm, LLC, attorneys for appellants (Keith A. McKenna, of counsel and on the brief).

Porzio, Bromberg & Newman, PC, attorneys for respondents (Michael L. Rich and Peter J. Gallagher, of counsel and on the brief).

PER CURIAM

Plaintiffs L. Group, Inc., L Group II, LLC, Millennium Towers, LLC, Grove Street Two, LLC, 600-604 LLC, Avenue A, LLC,

Block 327 II, LLC, Block 328, LLC, Block 327, LLC and Lance Lucarelli appeal from a final order dismissing their complaint against defendants C.S. Bridge Funding, Inc., Bridge

Funding, Inc., BFI Capital, LLC, Bridge Block 328, LLC, Lawrence I. Linksman and Stephen Hyman for failure to state a claim. Because a liberal reading of the complaint suggests viable causes of action, we reverse. See Banco Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005); Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989).

As the case was dismissed at the pleading stage of the litigation, the facts are not well developed. Suffice it to say that defendant C.S. Bridge Funding made two commercial loans to plaintiffs in 2005 secured by mortgages on eight parcels of real estate in Jersey City. Plaintiffs defaulted on the loans and a foreclosure action ensued. In September 2009, the parties entered into a Settlement Agreement and Release in which plaintiffs acknowledged the loan payoff amount of $29,477,043.71 with interest and additional costs incurred for such items as counsel fees and real estate taxes to accrue.

The Settlement Agreement gave plaintiffs the right prior to sheriff's sale to sell the collateral properties to third parties, including those in which plaintiffs would be participating as a joint venture partner, for sums in excess of the release price set for each parcel in the Settlement Agreement. If a parcel was sold for a sum exceeding the release price, any amount above that would be divided twenty-five percent to plaintiffs and seventy-five percent to C.S. Bridge until the outstanding payoff amount was satisfied. Defendants retained sole discretion to approve any sale below the release price. After sheriff's sale, C.S. Bridge had the right to sell the foreclosed properties for any price with the net proceeds paid to C.S. Bridge until the outstanding payoff amount was satisfied. Thereafter, any additional net proceeds were to be split evenly between them.

Plaintiffs in their complaint alleged that they sought to enter a joint venture to purchase one of the collateral properties, at a price exceeding its release price, prior to sheriff's sale and were rebuffed by one of the named defendants. Plaintiffs alleged that defendants thereafter transferred the same parcel for less than full market value while retaining, either directly or indirectly, an equity interest in the parcel. They further alleged that defendants failed to obtain fair market value for the other collateral properties and to transfer them in a commercially reasonable manner. Plaintiffs asserted claims for breach of contract, civil conspiracy, tortious interference with business relations, breach of the implied covenant of good faith and fair dealing, promissory estoppel and equitable estoppel and sought specific performance of the Settlement Agreement and an accounting from defendants of the monies received from the sale of the collateral properties.

Defendants filed a motion to dismiss in lieu of answer pursuant to Rule 4:6-2(e), contending that even assuming everything plaintiffs alleged were true, they would still be unable to state a claim "because everything that [d]efendants did was consistent with the terms of the Settlement Agreement." The Law Division judge agreed, observing the Settlement Agreement defined the parties' rights and obligations "pretty clearly," and that "there is nothing before me . . . to show that the plaintiff[s were] denied any of [their] rights pursuant to the agreement." Finding that "defendants simply did not breach the agreement, and the plaintiff[s] [do] not have the right to bring this action," the judge dismissed plaintiffs' complaint with prejudice and denied their cross-motion to amend.

We apply a plenary standard of review to a trial court's decision to dismiss a complaint for failure to state a claim and owe no deference to the trial court's conclusions. Rezem Family Assocs. LP v. Borough of Millstone, 423 N.J. Super. 103, 114 (App. Div.), certif. denied, 208 N.J. 368 (2011).

Distilled to their essence, plaintiffs' claims all center on their contention that defendants breached the Settlement Agreement when they rebuffed plaintiffs' attempt to transfer the property to a joint venture that would purchase one of the collateral properties prior to sheriff's sale at a price exceeding its release price. Defendants characterize plaintiffs' actions as an attempt to "repurchase" a collateral property for the release price, something "the Settlement Agreement did not give [p]laintiffs the right to do."

The allegations of plaintiffs' complaint, however, are not judged bydefendants' characterization of plaintiffs' claims. Instead, we are required to "examin[e] the legal sufficiency of the facts alleged on the face of the complaint[,]" Printing Mart, supra, 116 N.J. at 746, giving plaintiffs the benefit of "'every reasonable inference of fact' and read[ing] the complaint in the light most favorable to plaintiff." Jenkins v. Region Nine Hous. Corp., 306 N.J. Super. 258, 260 (App. Div. 1997) (quoting Printing Mart, supra, 116 N.J. at 746), certif. denied, 153 N.J. 405 (1998). "The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach." Printing Mart, supra, 116 N.J. at 746.

Applying that standard here, we conclude that plaintiffs have stated a claim for breach of the Settlement Agreement. It is the allegations in a complaint, not the plaintiff's ability to prove them, that are determinative of a motion to dismiss for failure to state a claim. Ibid. Plaintiffs allege they had a joint venture that was prepared to purchase one of the collateral properties prior to sheriff's sale at a price exceeding the release price that defendants thwarted. Plaintiffs have asserted, at the very least, a plausible argument that the Settlement Agreement did not give defendants the right to block the sale described. Leaving aside, as we must, the question of whether plaintiffs can prove their allegations, they have stated a straightforward claim for breach of contract sufficient to survive a motion to dismiss under Rule 4:6-2(e). Because all of plaintiffs' various claims on the complaint are premised on this breach of contract, they likewise survive the motion.

Our disposition of the appeal makes it unnecessary to consider plaintiffs' remaining claim that they should have been granted leave to amend their complaint.

Reversed and remanded for further proceedings not inconsistent with this opinion. We do not retain jurisdiction.