AMBOY BANK v. OAKSHIRE GROUP

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

AMBOY BANK F/K/A

AMBOY NATIONAL BANK,

Plaintiff-Respondent,

v.

OAKSHIRE GROUP, LLC, ROYAL BANK

AMERICA, RALPH CLAYTON & SONS,

L&W SUPPLY CORPORATION A/K/A

L&W SUPPLY CORPORATION T/D/B/A

BUILDING SPECIALTIES, CARY

INSULATION & BUILDING PRODUCTS,

A MASCO COMPANY, RJB PLUMBING AND

HEATING, INC., SAMUEL M. JENKINS,

INC., PARAMOUNT PAINTING CO., INC.,

JERSEY CARPET & TILE, INC.,

LAWRENCE BEGLIN, LAURA BEGLIN,

JOSEPH BUCKELEW, KEVIN SHULMAN,

GINA SHULMAN, ANTHONY MIJARES, JR.,

LAURIE MIJARES, HENRY DABROWSKI,

IRENE DABROWSKI, RAY CARPENTER,

JULIE CARPENTER, PATRICK CAMPBELL,

DEBBIE CAMPBELL, ROBERT MCGIRR,

COAST BATH RESURFACING LLC,

THYSSENKRUP ELEVATOR CORP.,

AMERICAN GRANITE DESIGNS, INC.,

PRIMITIVE TITLE, INC., and 2-PAINT

CORPORATION BY HUGO BALVIN, and

CJ CONTRACTORS NJ, INC.,

Defendants,

and

JOSEPH ROSELLE and ANITA ROSELLE,

Defendants-Appellants.

March 4, 2015

Before Judges Alvarez, Maven, and Carroll.

On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-26204-07.

Robert S. Moraff argued the cause for appellants (Foster & Mazzie, LLC, attorneys; Mr. Moraff, on the brief).

Michael Kahme argued the cause for respondent (Hill Wallack, LLP, attorneys; Mr. Kahme and Eric P. Kelner, of counsel and on the brief).

PER CURIAM

Amboy National Bank (Amboy) was granted a judgment in foreclosure against defendants Joseph and Anita Roselle (the Roselles),1 the prospective purchasers of Unit 421, a condominium in "The Monmouth," an age-restricted luxury project. The Chancery judge, after a nine-day trial, also dismissed defendants' counterclaim with prejudice. The Roselles, who had paid $660,000 towards the $1.1 million purchase price of the unit, were refunded only $100,000 of their down payment. We affirm.

I

On October 4, 2007, Amboy instituted its foreclosure action against the developer, defendant Oakshire Group, LLC (Oakshire), and seven contract purchasers, not including the Roselles, of other units in the building. On January 29, 2008, Amboy obtained an order appointing a custodial receiver for the property and authorizing the sale of the units free and clear of all liens and encumbrances, including vendees' liens.

The next day, Amboy amended its complaint to add the Roselles as defendants, seeking to foreclose on their interest, as had occurred with other prospective purchasers. When partial summary judgment was granted to Amboy against the Roselles on September 25, 2008, we reversed in part, remanding for the completion of discovery. Amboy Nat'l Bank v. Oakshire Group, LLC, No. A-0491-09 (App. Div. May 13, 2011). The trial followed extensive discovery.

II

A. Background

Oakshire was formed in September 2002 for the purpose of developing the luxury condominium complex at issue. Oakshire was represented by Bathgate, Wegener, & Wolf, P.C. (BWW) since its formation.

On January 30, 2004, Oakshire borrowed $25,980,0002 from Amboy to finance the construction of the condominium project. James Bell, Oakshire's Managing Member, and Lawrence Bathgate II, BWW's principal attorney, signed the construction loan as guarantors. At no time was Bathgate a member of Oakshire.

In addition to the construction loan, Amboy issued Oakshire a $10,000,000 letter of credit, to the benefit of BWW in its capacity as Oakshire's escrow agent. The escrow agreement contemplated that half of any down payment would be transferred to Oakshire's operating account. Thus in the event a prospective buyer was entitled to a refund of his deposit, BWW could return half from the escrow account and draw upon the letter of credit to return the other half. BWW was the only beneficiary under the letter of credit and there is no evidence that anyone other than BWW was ever intended to be a beneficiary under the letter of credit.

After closing on the construction loan with Amboy, Jan Wouters, a partner at BWW, sent the Department of Community Affairs (DCA) a copy of the letter of credit and escrow agreement. After a conversation with Keith Costill from the DCA, Wouters mistakenly concluded the letter of credit was approved. It was not until after January 31, 2008, that he learned the letter of credit had not been formally approved. Similarly, Amboy did not learn that the letter of credit had not been formally approved by the DCA until May 2008.

At a meeting in November 2006, Amboy was informed for the first time that a few contract purchase down payments had been deposited directly into Oakshire's operating account. Amboy never monitored the activity in Oakshire's operating account, as such a practice would violate the bank's privacy policy.

In April 2007, Bell died. Shortly thereafter on May 17, 2007, Oakshire defaulted under its loan agreement with Amboy. Amboy continued to pay sums against the letter of credit until January 30, 2008, when it terminated the letter of credit.

On October 4, 2007, Amboy filed a complaint to foreclose on seventy-six units at The Monmouth. After filing the original complaint, Amboy filed an amended complaint adding the Roselles as defendants in the action. The Roselles were named as defendants because they had entered into a purchase agreement with Oakshire for Unit 421, one of the units on which Amboy sought to foreclose.

The Roselles were introduced to The Monmouth through Bathgate, their close friend, in early 2004. Bathgate's involvement in the condominium project influenced the Roselles' decision to purchase a unit in the complex. In fact, Anita was under the mistaken impression at the time that Bathgate was Bell's partner in the project. Joseph too believed that Bathgate was "definitely involved." The Roselles enlisted their longtime attorney and friend, David Haber, to represent them in their purchase of a unit at The Monmouth. The Roselles ultimately entered into three separate purchase agreements for three condominium units at The Monmouth, although only Unit 421 is the subject of this appeal. We discuss the circumstances regarding all three in order to place our analysis in proper context.

B. Unit 421

On September 22, 2004, at Bathgate's request, Joseph wrote a check for $200,000 to the BWW attorney trust account as the Roselles' first deposit on Unit 421. On November 23, 2004, the Roselles signed the contract to purchase the unit for $1.1 million.

Joseph did not read the agreement, instead forwarding it to Haber for review. Haber advised Joseph that the contract was a boilerplate agreement and that because of Joseph's longtime friendship with Bathgate, he was not going to read the details. Haber did not comment on the agreement during the attorney review period or conduct any independent investigation of Bell, Oakshire, or The Monmouth. Nor did Haber make any inquiries regarding the contract's proposed use of deposit funds.

Section six of the agreement required Oakshire to maintain all deposits in an escrow account at Amboy managed by BWW. It states

In the event the Seller wants to obtain use of the money being held in escrow prior to closing, the Seller must take certain steps. The Seller must have first posted a letter of credit or other guarantee which has been accepted by the New Jersey Department of Community Affairs. If the letter of credit or other guarantee is posted, the Seller may take the money from the account, but only after the Buyer's right to rescind (cancel) this Agreement has expired. If the Seller is required to return the money to the Buyer and cannot, the letter of credit or other guarantee will insure that the Buyer is repaid.

Section seven of the contract, captioned "Condition of Title to the Property," subsection (f), provided that the buyer's rights were "subject and subordinate to the lien (legal claim) of any construction mortgage now or hereafter made by the Seller, and any advance made under any such mortgage, without the necessity of the buyer signing any further document." It went on: "The lender's rights under the mortgage, to the extent it has loaned money to the Seller, will be superior to the rights of the Buyer under this Agreement. This means that if the lender forecloses its mortgage, it may terminate the Buyer's rights under this Agreement."

On December 8, 2004, the Roselles' $200,000 check was deposited into the BWW attorney trust account. BWW then drew a check from its attorney trust account in that amount and deposited it into the project's escrow account at Amboy. Half, or $100,000, was transferred from the escrow account to Oakshire's operating account.

In early 2005, the Roselles were approached about a penthouse unit, Unit 441, by Bell and the sales manager of the project. The Roselles decided to purchase Unit 441, but keep Unit 421 as an investment. The Roselles agreed that Oakshire could sell Unit 421 for them and that all proceeds generated above the contract price by a sale to another buyer would be paid to them along with the return of their initial deposit.

Joseph did not ask Oakshire to terminate the contract for Unit 421 because he was buying Unit 441. The new agreement regarding the resale of Unit 421 was not reduced to writing. Joseph did not discuss this verbal agreement with his attorney, Bathgate, or Wouters.

On June 17, 2005, Oakshire advised the Roselles that the second deposit on Unit 421 was due by check made payable to BWW by July 8. Eight months later, on February 17, 2006, Joseph signed a check for the second deposit on Unit 421 payable to "Oakshire, LLC" for $460,000. He gave the check to Bell, who deposited it directly into Oakshire's operating account. Joseph did not notify Haber, Bathgate, or Wouters of the second deposit. Also on February 17, Bell presented Joseph with a letter advising him that no further payments were due on Unit 421 until Oakshire sold the unit.

After Bell's death in April 2007, Joseph requested that Haber schedule a closing for Unit 421 through BWW. After unsuccessful attempts to schedule the closing, Haber made no further efforts to contact BWW. Haber did not terminate the contract for Unit 421 nor discuss the right to do so with the Roselles.

The Roselles never closed on Unit 421 and BWW did not draw under the letter of credit for any monies due to the Roselles for that unit. Bathgate testified at trial that because the Roselles' $460,000 deposit for Unit 421 was placed into Oakshire's operating account, it was not subject to the letter of credit.

Some time after the letter of credit expired, the Roselles terminated the contract for Unit 421 and received $100,000 from the Oakshire escrow account as a return of fifty percent of their initial $200,000 deposit. The Roselles have not been paid the other half of their first initial payment nor any portion of their second payment on Unit 421.

C. Unit 441

On March 30, 2005, the Roselles and Oakshire entered into a contract to purchase Unit 441 at The Monmouth for $1.3 million. The written contract for Unit 441 was identical to the one drawn for Unit 421, except for unit-specific information. The Roselles issued two checks made payable to BWW, comprising the initial deposit for Unit 441. On July 8, 2005, the Roselles issued a check to the BWW attorney trust account for $550,000 as their second deposit on the unit. On December 21, 2005, the Roselles closed on Unit 441 and received the appropriate credit against the purchase price for their payments.

D. Unit 1641

In December 2007, Haber terminated the written contract for Unit 1641, the Roselles' third proposed purchase at The Monmouth. On January 3, 2008, BWW drew $137,500 under the letter of credit to return 50% of the Roselles' deposit for Unit 1641. The other half of the Roselles' deposit, held in the BWW escrow account, was also paid to them. Thus BWW returned a total of $275,000 to the Roselles, representing their full advances towards the purchase of Unit 1641.

E. DCA Action

By May 2008, the DCA received complaints from other Monmouth contract purchasers who were experiencing difficulties in obtaining the return of their down payments. When they demanded return of the funds held in escrow, supposedly secured by the letter of credit, they learned from Amboy that the letter of credit had expired in January 2008. Those purchasers then contacted another DCA manager, to determine whether the letter of credit had been approved by the DCA as required by N.J.A.C. 5:26-6.4 and the purchase contract. It was then that the DCA discovered that no letter of credit was ever formally approved.

The DCA also found that Oakshire had committed several violations under the Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.A.C. 5:26-1.1 to -56. The violations included Oakshire's failure to deposit all down payments in the escrow account, and its failure to hold the monies in the escrow account until a DCA-approved letter of credit was provided. Additionally, Oakshire failed to submit timely annual reports, conduct audits, or submit current budgets.

On the basis of those findings, the DCA ordered Oakshire to cease and desist from "all sales activity with regard to [The Monmouth], including, but not limited to, entering into contracts, taking of deposits, closing of units and conveying units to third parties . . . until this matter [was] resolved to the satisfaction of the [DCA]." The DCA also levied various penalties on Oakshire for its PREDFDA infractions.

F. The Trial

The trial court, in addition to finding as the relevant facts the circumstances we have described, concluded that the Roselles' close relationship with Bathgate and Bell, and the verbal agreement to resell Unit 421 as an investment, significantly contributed to the loss of funds. The Roselles' own attorney, believing the language in the agreements of sale was merely unobjectionable and unremarkable boilerplate, acknowledged assuring Joseph that nothing in the agreements was unusual. Furthermore, it was undisputed that Joseph wrote the $460,000 check directly to Oakshire, in furtherance of his joint venture to resell Unit 421 for a profit, despite the fact that all the other checks he wrote for his purchases were written to the escrow account at BWW.

The judge also found that the subordination clause in the agreement of sale for Unit 421 was not confusing, nor included "anything but standard language." He observed that the Roselles had been victimized in "that they lost a deposit in a situation where they obtained, essentially, nothing for the deposit, other than the promise that the builder would attempt, and sell the unit[.]" He further opined that it was Oakshire, Bell, and the escrow agent who were responsible for deposit funds and that the issue of their responsibility was not before the court. In his view, the only issues before the court were whether Amboy was entitled to its foreclosure judgment and whether the Roselles were entitled to any relief under their counterclaim against the bank.

Addressing the fact that the DCA had not approved the letter of credit, the court noted that it was not until May 2008, after Bell's death, that the DCA discovered Oakshire was in violation of PREDFDA. Although the court agreed the Roselles had a legitimate vendees' lien, "there was a recorded mortgage on behalf of [Amboy], and that was only for the [$]25,980,000, but it was still recorded prior to the contract signed by the Roselles, and prior to the creat[ion] of a vendees' lien." The court cited to Cox v. RKA Corp., 164 N.J. 487 (2000), in support of his conclusion that Amboy's construction mortgage took priority over the Roselles' vendees' lien.

The judge further found that Amboy had no duty, on behalf of third-party contract purchasers, to monitor Oakshire's management of deposits. In reaching that conclusion, he relied on Amboy's expert's testimony. The duty to do so rested upon the developer and the escrow agent, in other words, Oakshire or BWW. The judge ruled, however, that the Roselles' expert's testimony regarding Amboy's moral responsibility to oversee the funds was nothing more than a net opinion, which he rejected.

Lastly, the judge considered Joseph's issuance of the check for $460,000 directly to the developer, bypassing his own attorney, BWW, and the escrow account, to be very consequential. Whether Joseph filled out the check himself or not, he signed it, delivered it, and allowed it to go directly into the developer's hands, thus obviating any opportunity for the escrow agent or Amboy to become involved in the process. There was no practical means by which Amboy would have known that the funds were earmarked by the issuer of the check for anything but Oakshire's operating account. Having concluded that there was no "rational nexus to extend responsibility to [Amboy]," the judge entered a judgment in the bank's favor and dismissed the Roselles' counterclaim.

On appeal, the Roselles raise the following points of error for our consideration

POINT I

THE TRIAL COURT ERRED IN ITS INTERPRETATION OF THE LEGAL PRINCIPLES AND CONSEQUENCES OF THE ACTIONS AND INACTIONS OF AMBOY.

A. AMBOY CREATED A SPECIAL RELATIONSHIP WITH ROSELLE BY ITS PAR[TICIP]ATION WITH OAKSHIRE IN THE ACCESS AND BENEFITS OF ROSELLE'S DEPOSITS.

B. THE FACTS IN THIS CASE JUS[TI]FY THE FINDING OF A DUTY TO DISCLOSE THE TERMINATION OF THE LC.

POINT II

THE SUBORDINATION PROVISIONS ARE UNENFORCEABLE AND VIOLATE PUBLIC POLICY TO THE EXTENT THE PROVISIONS WERE USED TO CAUSE A FORFEITURE OF ROSELLE'S CONTRACT PAYMENTS.

POINT III

THE COURT IGNORED THE LIMITATIONS OF RIGHTS OF THIRD PARTY BENEFICIARIES IN REJECTING ROSELLE'S ASSERTION OF AMBOY'S LIABILITY FOR THE WRONGS OF OAKSHIRE, BWW[,] AND BATHGATE.

POINT IV

BWW WAS THE AGENT OF AMBOY AND IS LIABLE FOR BWW'S ACTS[,] OMISSIONS[,] AND CONFLICT OF INTEREST.

POINT V

THE TRIAL COURT IMPLICITLY APPLIED THE DOCTRINE OF WAIVER AS A BAR TO GRANTING MONETARY OR EQUITABLE RELIEF TO ROSELLE.

POINT VI

IT WAS AN ABUSE OF DISCRETION AND MANIFESTLY UNJUST FOR AMBOY TO RETAIN BOTH THE UNIT AND THE BENEFITS FROM UNLAWFUL USE AND RETENTION OF ROSELLE'S $560,000.3

III

"[A]ppellate review is limited by well-settled, controlling principles." Saffos v. Avaya Inc., 419 N.J. Super. 244, 259 (App. Div. 2011) (citing Sebring Assocs. v. Coyle, 347 N.J. Super. 414, 424 (App. Div.), certif. denied, 172 N.J. 355 (2002)). We do "not [] review the record from the point of view of how we would have decided the matter if we were the court of first instance." Ibid. (internal citations and quotations omitted). "'Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence.'" Ibid. (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).

"'While we will defer to the trial court's factual findings so long as they are supported by sufficient, credible evidence in the record, [] review of the trial court's legal conclusions is de novo.'" Id. at 259-60 (quoting 30 River Court E. Urban Renewal Co. v. Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006) (internal citations and quotations omitted)); Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

A.

We first address the Roselles' contention that Amboy's conduct created a special relationship making it liable for repayment of the deposit funds. We agree with the Roselles' premise that "[i]n general, courts have recognized tort liability of a financial institution where a special relationship has been established from which a duty can be deemed to flow." City Check Cashing v. Mfrs. Hanover Trust Co., 166 N.J. 49, 59 (2001). "Absent a special relationship, courts will typically bar claims of non-customers against banks." Id. at 60. But in order for such a special relationship to arise, there must be either an "agreement, undertaking[,] or contact that gives rise to a duty . . . ." Id. at 62. The Court further explained that

Agreement, undertaking[,] and contact are distinct concepts. An agreement is essentially a meeting of the minds between two or more parties on a given proposition. An undertaking is the willing assumption of an obligation by one party with respect to another or a pledge to take or refrain from taking particular action. A contact is the loosest of the three terms, defined as the "establishment of communication with someone." Both an agreement and an under-taking will give rise to a duty with respect to the subject agreed upon or undertaken. Whether a contact creates a duty is determined by its nature and surrounding circumstances.

[Ibid. (citations omitted).]

The Court in City Check cited to Pennsylvania National Turf Club v. Bank of West Jersey, 158 N.J. Super. 196 (App. Div.), certif. denied, 77 N.J. 506 (1978), as an example. In that case, a non-customer plaintiff sued a bank because it permitted a depositor to overdraw his account by substantial margins. Penn. Nat'l, supra, 158 N.J. Super. at 201. The court found that regardless of the manner in which the depositor's accounts were handled, it owed no duty to the plaintiff giving rise to a cause of action sounding in negligence. Id. at 203. Ultimately, as the Court reiterated in City Check, "[t]he question of whether a duty exists is a matter of law to be decided by the court." City Check, supra, 166 N.J. at 59 (internal citations omitted).

In the process of making that determination, a court weighs "the relationship of the parties, the nature of the risk, and the public interest in the proposed solution." Ibid. (internal citations and quotations omitted). Where the claim arises from alleged nonfeasance by the bank, "it is necessary to find some definite relation between the parties, of such a character that social policy justifies the imposition of a duty to act." Ibid. (internal citations and quotations omitted).

Moreover, a duty may be imposed where "good faith and common decency require it." Id. at 60. But such an obligation is not imposed lightly. In City Check, the plaintiff, a noncustomer check-cashing service, cashed a substantial check drawn on the defendant bank. Id. at 55. Earlier in the day, a checkcashing service employee had contacted the bank with inquiries regarding the check's validity, and had faxed a request for authentication to the bank at its instruction. Id. at 53-54. The bank made no representations regarding the check. Id. at 54. Assuming from the bank's silence after the fax transmission that there was no problem with the account, the service cashed the check. Id. at 55. The bank dishonored the check because the account could not be located and the drawer, the bank customer, had disappeared. Id. at 55-56.

Not surprisingly, the Court found no agreement between the bank and the check-cashing service which established an obligation for the bank to immediately respond to the request. Id. at 63. The check-cashing service was a noncustomer calling a customer service line merely seeking to verify whether a check in its possession was valid. Ibid. That set of facts did not establish the special relationship that would enable the checkcashing service to successfully demand reimbursement. Ibid. The bank employee did not indicate that she would respond, or that if she did not respond, the service should assume from the bank's silence that the check was legitimate. Ibid.

In this case, the Roselles were entirely unknown to Amboy. They had no agreement or undertaking with the institution. There was no contact whatsoever between Amboy and the Roselles, and in fact, the Roselles' down payment on Unit 1641 was returned in the ordinary course only because it was paid into the escrow account and the return was requested before the letter of credit expired. It is not reasonable to allege, as the Roselles do, that the bank was responsible for oversight of the escrow account merely because it was aware that some down payments were being deposited into the operating account, or because it had issued a letter of credit to protect BWW. Neither suffices to create the type of special relationship that would make Amboy liable to repay the sums the Roselles lost.

Nor did Amboy have a duty to notify contract purchasers of withdrawals on the letter of credit, as that agreement was negotiated between Oakshire and BWW. Amboy, just like Wouters, assumed the DCA had approved the letter of credit. Even that false assumption is ultimately irrelevant, as the DCA's failure to approve the letter of credit did not affect Amboy's payments against it or BWW's demands upon it. Amboy made payments as called for under the letter of credit until the letter was withdrawn.

The Roselles' support for their position that Amboy benefitted from the misdeposit of escrow funds into Oakshire's operating account may be literally correct. Nonetheless, given that Amboy had no knowledge of whose funds were deposited in the operating account, or that the funds were even a deposit towards a later purchase, that benefit did not establish a basis to impose liability for a return of the Roselles' funds.

The Roselles acknowledge their cancellation of their contract for Unit 1641 and the refund of their $275,000 check on January 3, 2008. But the record does not disclose why no additional request was made as to Unit 421. Thus, we agree with the trial judge that the Roselles' problems were self-created as between them and Amboy. No demands were made for the return of their $200,000 and $460,000 deposits before the letter of credit terminated on January 30, 2008. Joseph improperly issued his $460,000 check to Oakshire instead of BWW. Therefore, the judge's conclusion that no special relationship existed creating tort liability has support both in fact and in law and was not error.

B.

Next, the Roselles contend that the subordination provisions are unenforceable and violate public policy "to the extent the provisions were used to cause a forfeiture of Roselles' contract statements." On this point, we again agree with the trial court.

There was nothing about the subordination clause language that was unusual. It was not particularly difficult to understand, and stated in straightforward language that "[t]he Lender's rights under the mortgage . . . will be superior to the rights of the Buyer under this Agreement."

In support of their argument that there is, nonetheless, an equitable claim against Amboy, the Roselles' rely upon dicta from our prior decision in which we said that the issue should be resolved after discovery because it was possible that some other basis for a refund to the Roselles might develop. Amboy Nat'l Bank, supra, (slip op. at 23). After voluminous discovery, many days of trial, and the submissions of thousands of pages of exhibits, the Roselles were unable to demonstrate any basis requiring Amboy to return the deposit money. To the extent we relied upon Cambridge Acceptance Corp. v. Hockstein, 102 N.J. Super. 435 (App. Div.), certif. denied, 53 N.J. 81 (1968), for the proposition that equity may require the return of the Roselles' deposit, it now appears that nothing takes the Roselles' claim out of the usual situation in which a prospective purchaser agrees to subordinate his or her interest to a prior construction mortgage.

In Cambridge, the mortgage in question, although labeled a construction mortgage for the purpose of gaining a priority interest, was actually a general mortgage that should not have had, and did not have, priority against a vendee's lien. Id. at 440-41. This case is entirely different, and the record is entirely devoid of any bad faith by Amboy.

Moreover, the trial court found several facts that weighed in Amboy's favor in terms of assessing whether Amboy acted in bad faith. These findings include: that the bank entered into the loan agreement and letter of credit arrangements after BWW applied to the DCA for approval; that BWW forwarded a draft escrow document from the DCA to the bank; the recordation of the mortgage some eight or nine months prior to the Roselles' agreement with Oakshire; and the fact that Joseph personally delivered the $460,000 check made payable to Oakshire directly to the developer, bypassing both BWW and the Roselles' own attorney.

The Roselles simply have no factual or legal support for this claim against Amboy. The trial court did not err in concluding that the subordination provisions were enforceable and did not violate public policy, even if the result was the Roselles' unfortunate loss of their substantial down payment funds.

C.

"The standard applied by courts in determining third-party beneficiary status is whether the contracting parties intended that a third party should receive a benefit which might be enforced in the courts[.]" Rieder Cmtys., Inc. v. N. Brunswick, 227 N.J. Super. 214, 222 (App. Div.) (internal citation and quotation omitted), certif. denied, 113 N.J. 638 (1988). In this case, no facts suggest, much less prove, that Amboy intended to make prospective purchasers of condominium units third-party beneficiaries. The Roselles offer no law in support of that contention, or even in support of the contention that Amboy's duty of good faith and fair dealing in some fashion extended to prospective purchasers of the condominium units. Amboy was not a contracting party with those prospective purchasers, was unaware of their identity, and had no obligation in law or fact as a result of its extension of a construction mortgage to the developer.

In Rieder, the township and defendant, a design engineer, entered into a contract for the construction of a sewer extension. Id. at 218. There were delays, and the landowners and builders sued. Id. at 220-21. The court found that the contract was entered into long before the plaintiffs became property owners, and though the property owners benefitted from the contractual arrangement, they were merely "incidental beneficiaries." Id. at 222. The court could "discern nothing in the agreement nor in the surrounding circumstances to indicate that such . . . property owners were intended to have the right to enforce the obligations of the contract or to sue for damages allegedly arising from a breach of the contract." Id. at 222-23.

The Roselles have proffered nothing which establishes them as third-party beneficiaries to whom Amboy owes a particular duty. See Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 225 (2004) ("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."). The trial judge therefore did not err in finding that Amboy was not liable for the conduct of Oakshire, BWW, or Bathgate.

D.

We briefly address the Roselles' remaining contentions of error, as they do not warrant extended discussion. R. 2:113(e)(1)(E). The Roselles allege that BWW acted as Amboy's agent, and that as a result Amboy is liable for BWW's acts, omissions, and any conflicts of interest. Nothing in the record supports the relationship between BWW and Amboy as being one between principal and agent.

The Roselles also assert the judge misapplied the law regarding waivers, without identifying any fact or precedent to support their argument. The judge said

There's no doubt in my mind that Mr. Bell, and Oakshire are responsible [to] the Roselles for the way that the -- the deposit was depleted and utilized, but that issue is not before me, and that issue would have to be taken up in the Law Division, against the Estate of Mr. Bell, Oakshire, and for that matter the escrow agent, or whomever else the Roselles wish to sue.

I don't want this record to embody the thought, or have someone read it, and believe that it embodies the thought that I'm insensitive to the fact that the Roselles lost a substantial amount of money in a situation which doesn't seem fair.

The question in this case has always been the same. Everyone acknowledges that Oakshire is responsible, and that Mr. Bell is responsible.

The problem is whether or not the ability to foreclose, even with the subordination in hand is somehow, or has somehow been waived, or given away by Amboy as a result of [its] relationship with Oakshire and the release of the deposits. That is the step that the Roselles have to overcome.

Lastly, the Roselles state in general terms that the judge abused his discretion in deciding the case against them. We disagree.

Affirmed.

1 On occasion we refer to the Roselles individually by their first name when necessary, and intend no disrespect by the practice.

2 This loan was later refinanced to $48,607,200 on September 27, 2006, due to increased construction costs. Bathgate and Bell were the guarantors on that loan as well.

3 To the extent new issues were raised in the Roselles' reply brief, they will not be considered. See Goldsmith v. Camden Cnty. Surrogate's Office, 408 N.J. Super. 376, 387 (App. Div.) ("Raising an issue for the first time in a reply brief is improper") (internal citation omitted), certif. denied, 200 N.J. 502 (2009).