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                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3057-16T2






              Argued January 22, 2018 – Decided February 14, 2018

              Before Judges Sabatino, Ostrer and Rose.

              On appeal from Superior Court of New Jersey,
              Law Division, Essex County, Docket No. L-6932-

              Lawrence S. Lustberg argued the cause for
              appellant (Gibbons, PC, attorneys; Lawrence S.
              Lustberg, Thomas R. Valen, and John D.
              Haggerty, on the briefs).

              Daniel M. Perry (Milbank, Tweed, Hadley &
              McCloy, LLP) of the New York bar, admitted pro
              hac vice, argued the cause for respondents
              (Skoloff & Wolfe, PC and Daniel M. Perry,
              attorneys; Daniel M. Perry, of counsel and on
              the brief; Katrina Voorhees (Milbank, Tweed,
              Hadley & McCloy, LLP) of the New York bar,
           admitted pro hac vice, Jonathan W. Wolfe and
           Jane J. Felton, on the brief).


     This is an interlocutory appeal pursued as of right pursuant

to Rule 2:2-3(a)(3) from the trial court's March 6, 2017 order

denying plaintiff's motion to compel arbitration in accordance

with a contractual arbitration provision.           The trial court denied

the motion.       It did so after determining the parties had not

entered into a binding agreement, and that contract documents

which   had    been     drafted   but    were   never   executed    were     not


     On appeal, plaintiff argues that the trial court erred in its

legal analysis of the documents and the surrounding circumstances,

and that the court should have found that a binding agreement had

been consummated.       In the alternative, plaintiff contends that the

court   should    not   have   ruled    against   plaintiff   without      first

conducting an evidentiary hearing.

     Having      considered    these    and   plaintiff's   other   arguments

following our de novo review of the record in light of the

applicable law, we affirm the trial court's determination.                 We do

so substantially for the sound reasons set forth in Judge Stephanie

A. Mitterhoff's detailed twenty-six-page written opinion dated

March 6, 2017.        We underscore and amplify the judge's analysis,

                                        2                               A-3057-16T2
and address plaintiff's assorted criticisms of her decision, with

the following commentary.


     We need not repeat here at length the underlying factual

chronology detailed in Judge Mitterhoff's opinion.                That factual

chronology is substantially undisputed.             The crux of the dispute

on appeal essentially revolves instead around the judge's legal

conclusions drawn from those facts.

     Briefly stated, the regulatory and business context of this

matter is as follows.     To promote the generation of solar energy,

the State of New Jersey has adopted regulations establishing

Renewable Portfolio Standards.        See N.J.A.C. 14:8-1 and -2.             The

regulations   require   energy    suppliers        to   possess   a    specified

quantity of Solar Renewable Energy Credits ("SRECs"), in order to

induce such suppliers to procure a minimum portion of their energy

sales from facilities that generate electricity from solar panels.

     When a facility generates electricity from solar panels and

meets certain other criteria, SRECs are issued to that facility,

based upon the amount of solar energy generated.                      If energy

suppliers do not have enough SRECs on hand to meet the specified

requirements,   they    must   make   a    Solar    Alternative       Compliance

                                      3                                  A-3057-16T2
Payment to the State.1     SRECs are transferable, and the trading of

SRECs has created a market in which the price of SRECs fluctuates

due to supply and demand.

       Plaintiff, PSEG Energy Resources & Trade, LLC ("PSEG"), is a

Delaware limited liability company with offices in New Jersey.

Plaintiff is the trading arm of PSEG Power LLC, an energy supplier

that is subject to New Jersey's SREC requirements.         Plaintiff buys

and sells SRECs for its affiliated energy suppliers and generators.

       Defendant   Onyx   Renewable   Partners,    L.P.   ("Onyx")     is    a

Delaware limited partnership with offices in New York.                   Onyx

engages in the business of supplying and trading in SRECs.                  In

addition to defendant Onyx, the complaint named as a co-defendant

Blackstone Energy Partners, L.P., a Delaware limited partnership.

The record indicates that another Blackstone entity, Blackstone

Solar HoldCo., L.P., owns an equity interest in Onyx.2

       Before the present circumstances arose, the parties had no

established trading relationship.         Through the efforts of a third-

party brokerage service, on November 12, 2014, PSEG and Onyx

    The compliance payment was $323 per SREC in 2016.
  Defendants' brief asserts that Blackstone Solar HoldCo., L.P.
should be substituted as the proper co-defendant with Onyx in this
case.   The trial court did not reach this question of party
identification and we have no need to resolve it in deciding this

                                      4                              A-3057-16T2
assented to a prospective five-year arrangement for Onyx to sell

20,000 New Jersey SRECs annually to PSEG at a price of $171.00 per

SREC for Energy Years 2016 to 2020.     The total purchase and sale

price for the SREC transaction was $17.1 million, which plaintiff's

brief describes as one of the "very largest" SREC transactions "in

New Jersey's history."       The brokered terms of the arrangement

further specified that "Delivery to be agreed upon in contracting.

Buyer will initiate purchase and sale agreement (PSA).        Trade

subject to mutual contract and credit terms.   This product is Firm

LD."3    (Emphasis added).

        In December 2014, PSEG and Onyx began to exchange drafts of

a proposed contract.     According to Onyx, in March 2015, it made

clear to PSEG that neither Blackstone nor any of the Blackstone

affiliates would provide a guaranty or credit support.          Upon

learning this, PSEG requested in April 2015 that Onyx provide a

  According to plaintiff's brief on appeal, the term "Firm LD"
means that either party would be relieved of its obligations to
sell and deliver or purchase and receive SRECs if such performance
was prevented by force majeure. Plaintiff further contends that,
in the absence of force majeure, the party to whom performance is
owed is entitled to receive payment in the amount representing the
difference between the contract price and the price of a
replacement purchase in an event of a seller failure. We need not
focus upon this point, because plaintiff does not contend that the
November   12,   2014  brokerage   arrangement,   absent   further
negotiation of delivery, credit and other contract terms,
comprised a binding and comprehensive contract.      Instead, the
dispute concerns whether subsequent interactions between the
parties, post-dating November 2014, created a binding contract.

                                  5                         A-3057-16T2
$15 million letter of credit for the transaction.            Onyx demurred,

believing that such a large letter of credit was not sensible

financially.      In September 2015, PSEG backed off its request to

receive a full $15 million letter of credit, but the credit issue

remained unresolved.

     On December 3, 2015, Onyx's Chief Executive Officer, Matthew

Rosenblum, and its chief legal officer, Ryan Marrone, had a

telephone conference call with representatives of PSEG.              During

that conference call, the Onyx representatives proposed that Onyx

would provide to PSEG a letter of credit for the contemplated SREC

transaction in a much-lower sum of $1.25 million.                  The Onyx

representatives also proposed that PSEG delay the SREC delivery

date for Energy Year 2016 from July 2016 to September 2016.

     In    another   telephone   conference     call   the   following   day,

December     4,      representatives       of   PSEG     orally    informed

representatives of Onyx that PSEG was willing to accept Onyx's

oral proposals for both a $1.25 million letter of credit and the

postponement of the initial delivery date to September 2016.             PSEG

incorporated these added terms into a drafted Master Power Purchase

& Sale Agreement (the "Master Agreement") and a drafted Purchase

                                       6                            A-3057-16T2
and   Sale     of   Solar   Renewable   Energy    Credits   Transaction

Confirmation Letter (the "Confirmation Letter").4

      As the trial court aptly recognized, the Confirmation Letter

and proposed Master Agreement both contain important language

reflecting the parties contemplated the contract documents needed

to be executed by duly authorized representatives of both companies

in order to consummate the transaction.          Among other things, we

note in this regard, as did the trial court, that the draft

Confirmation Letter recites:

             This Confirmation Letter, together with the
             General Terms and Conditions, supplements,
             forms part of, and is subject to, the Master
             Power Purchase and Sale Agreement entered into
             by the Parties hereto dated February 1, 2016,
             as it may be amended from time to time . . .
             IN WITNESS THEREOF, and intending to be
             legally bound, the Parties have executed this
             Agreement by their undersigned duly authorized
             representative as of the date below to be
             effective as of the Effective Date hereof.

             [(Emphasis added)].

      As the trial court also pointed out, Section 10.2(ii) of the

draft Master Agreement contains an explicit representation and

warranty that "the execution, delivery and performance of this

  PSEG asserts that the Master Agreement contains several core
terms that are standard within the industry, subject to tailoring
and modification to fit the specific needs of the parties. The
standardized Master Agreement (version 2.1) apparently was issued
in 2000 by the Edison Electric Institute and National Energy
Marketers Association.

                                   7                            A-3057-16T2
Master    Agreement      and    each     [SREC]      Transaction        (including        any

Confirmation accepted in accordance with Section 2.3 [of the Master

Agreement]) are within its powers, have been duly authorized by

all necessary action and do not violate any of the terms and

conditions in its governing documents, any contracts to which it

is a party or any law, rule, regulations, order or like applicable

to it."   (Emphasis added).           In like manner, Section 10.2(iv), also

highlighted        by   the   trial     court,       represents     that       the    Master

Agreement,     each      SREC    transaction,         and   "each       other    document

executed and delivered in accordance with [the] Master Agreement

constitutes its legally valid and binding obligation enforceable

against it in accordance with its terms; subject to any Equitable

Defenses."     (Emphasis added).

      The trial court also found noteworthy that Section 10.8 of

the   Master    Agreement       similarly         emphasizes      the    importance         of

written execution in instances of amendment or modification.                             That

provision states, "Except to the extent herein provided for, no

amendment     or    modification        of    this    Master      Agreement      shall      be

enforceable        unless     reduced    to       writing   and    executed      by      both

Parties."      (Emphasis added).

      The proposed contract documents also included an Addendum

specifically tailored to the proposed PSEG-Onyx transaction.                                As

the   trial    court        noted,    the     Addendum      contained      a    mandatory

                                              8                                      A-3057-16T2
arbitration clause in Section 10.13, requiring the arbitration of

disputes that might arise concerning the transaction.                        Notably,

the Addendum also contains language reiterating that the contract

"can only be modified or amended through a written and fully

executed amendment . . . ."            (Emphasis added).

      The Addendum further specifies in an additional provision,

Section     10.12    ("Authorizations"),         that    either     party     to   the

contract had the right to obtain, among other things, a secretary's

"certificate of corporate resolutions authorizing the execution,

delivery and performance of the [a]greement" and authorizing the

party   "to    execute,      deliver   and     perform   under      any   guaranty."

(Emphasis added).       Section 10.12 also provides either party with

a   right     to   demand    signature    specimens      for     the      "respective

signatories executing this Agreement and any Guaranty on its

behalf."      (Emphasis added).

      In    response        to   PSEG's       transmission     of      the   drafted

Confirmation Letter, Master Agreement, and Addendum, Onyx's chief

counsel Marrone advised PSEG in a December 17, 2015 email that he

had reviewed the drafts, that he still had "one or two" substantive

changes, and that he would advise when he had "clearance to

release" the documents.           Rosenblum, the CEO of Onyx, was copied

on that email.       A few days later, Onyx sent to PSEG a proposed

form for the letter of credit, which PSEG indicated was acceptable.

                                          9                                   A-3057-16T2
Another revision concerning a clarifying phrase was discussed and

resolved by email on January 25, 2016.

       On January 29, 2016, Onyx's counsel Marrone and Luciano

Pisano, PSEG's associate general trading counsel, took part in a

telephone conference call.         Onyx's CEO Rosenblum was not on that

call.    According to Pisano, during that January 29 call Marrone5

allegedly acknowledged that the parties were in agreement as to

"all    terms   and   conditions   for    the   SREC   transaction."       PSEG

thereafter provided Onyx with a full set of the contract documents

for execution.

       It is undisputed that the parties never mutually signed the

contract documents.         It is also undisputed that Onyx did not

deliver a letter of credit to PSEG by the contemplated date in

February 2016.        Consequently, PSEG began buying SRECs from other

sources.   Further negotiations in 2016 between the parties failed.

PSEG took the position that Onyx had bound itself to an enforceable

  Marrone disputes Pisano's characterization and recollection of
precisely what he said during the call. He specifically denies
telling the PSEG representatives on the call that Onyx had agreed
to the drafted contract terms. Marrone also certifies that he did
not represent to PSEG "at any time" that he had the authority to
bind Onyx, and that only Onyx's CEO Rosenblum had such authority.
In any event, for the reasons noted by the trial court we discuss
infra, that difference of recollection is legally inconsequential
to the issues presently on appeal, in light of the legal conclusion
that a fully executed set of written agreements was necessary to
bind these parties.

                                     10                                A-3057-16T2
agreement, while Onyx asserted that no binding obligations existed

because the $17.1 million, five-year contract was never mutually



     In October 2016, PSEG filed a seven-count verified complaint

and Order to Show Cause against Onyx and Blackstone in the Law

Division.    Among   other     things,   the   complaint   asserted     that

defendants are liable based on alternative theories of breach of

contract, breach of the covenant of good faith and fair dealing,

promissory   estoppel,   and    fraud    and   misrepresentation.        The

complaint also alleged that Blackstone is Onyx's alter ego, and

that the corporate veil should be pierced so as to make Blackstone

liable to PSEG for Onyx's alleged obligations.

     Invoking the arbitration clause within the Addendum, PSEG

simultaneously moved in its Order to Show Cause to compel the

dispute to be resolved through binding arbitration. PSEG amplified

its contentions with various supporting certifications.             If the

trial court detected any material disputed factual issues, PSEG

requested that those issues be considered on a summary basis at

an expedited hearing, pursuant to the summary action procedures

of Rule 4:67-5.

     Onyx responded to the complaint and Order to Show Cause with

certifications from Rosenblum and Marrone, along with additional

                                   11                               A-3057-16T2
exhibits and documents.   In essence, Onyx maintained, as it had

previously, that there was no signed enforceable agreement and

thus Onyx had no obligation to perform the alleged contract or to

participate in a compelled arbitration.    Rosenblum explained in

his certification that ultimately he determined that the proposed

transaction was not "consistent with market conditions" and was

"too economically disadvantageous for Onyx to agree to."

     After sifting through these submissions and hearing oral

argument, Judge Mitterhoff issued her detailed written decision

denying plaintiff's motion to compel arbitration.    Fundamentally,

the judge concluded that the record, objectively considered, does

not support PSEG's claim that the parties entered into a binding

agreement, in the absence of fully-executed contract documents for

this large and sophisticated business transaction.

     Among other things, the judge reasoned that PSEG "viewed both

the provision of a letter of credit and an executed contract as

essential to cementing an enforceable agreement," and that the

letter of credit and executed contract were essential to PSEG to

cement the transaction.   In addition, the judge ruled "there are

otherwise insufficient objective indicia of unambiguous assent to

the terms of the agreement for the court to find that a binding

agreement was formed in the absence of a signed contract."       She

noted that there had been no prior dealings between the parties

                               12                           A-3057-16T2
and the transaction was "fraught from its inception by mutual


     Rejecting   PSEG's   arguments    that   the   parties   achieved    a

binding agreement in the December 3 and 4, 2015 phone calls or,

alternatively, in the January 29, 2016 conference call, the judge

particularly noted that: (1) Onyx never delivered a letter of

credit, (2) the parties never signed the agreement, and (3) Marrone

individually lacked the authority to bind Onyx to the transaction.

     The trial judge discerned no need to conduct an evidentiary

hearing to reach or confirm its legal conclusions.             The judge

noted in this regard that the "objective conduct" reflected in the

documentary record was not truly in dispute, and that a plenary

hearing "would not meaningfully add information that would inform

the court's decision."


     Now on appeal, PSEG contends that the trial judge mistakenly

concluded that mutually signed writings were necessary to bind the

parties, and that the oral discussions that took place on December

3 and 4, 2015, and thereafter in the January 29, 2016 conference

call adequately substantiated a mutual and binding agreement.            We

respectfully disagree.

     We recognize that, in some instances, parties may be bound

by the mutual exchange of oral promises with the intention of

                                 13                               A-3057-16T2
later    executing      a    formal     instrument     to   memorialize        their

undertaking, assuming that such an oral commitment does not violate

the statute of frauds.6           See, e.g., Pascarella v. Bruck, 
190 N.J.

Super. 118, 126 (App. Div. 1983).             Nevertheless, the absence of a

fully executed agreement can be a key consideration in determining

whether such a mutual agreement of the parties to be bound actually

existed.    See, e.g., Leodori v. CIGNA Corp., 
175 N.J. 293, 304-05

(2003)   (noting     that    when     one   party   presents     a    contract    for

signature to another party, the omission of the latter's signature

is "a significant factor in determining whether the two parties

mutually have reached an agreement").

     Here, the judge soundly determined from the record – including

the multiple provisions within the drafted Confirmation Letter,

Master     Agreement,       and    Addendum    underscoring          the   important

requirement that the contract documents be "executed" by persons

having authority within these two enterprises – that the parties

each intended that the execution of the contracts was a key

precondition    to    bind    them     to    this   five-year,       $17.1   million

transaction. A fully-executed contract in this setting plainly was

not a mere formality.

  We need not reach Onyx's alternative claim that an oral agreement
of this nature would violate the statute of frauds under New York

                                        14                                   A-3057-16T2
      To the extent PSEG emphasizes attorney Marrone's role in

participating in the parties' negotiations (including the January

29   telephone   conference   that    took    place   without   Onyx's   CEO

Rosenblum on the line), we concur with the trial court that neither

Marrone's actual or apparent authority to bind Onyx is fairly

established by the record.     See LoBiondo v. O'Callaghan, 
357 N.J.

Super. 488, 497 (App. Div. 2003) (noting that "a conclusion that

a party has acted with apparent authority must rest upon the

actions of the principal, not the alleged agent"); Beck v. Edwards

& Lewis, Inc., 
141 N.J. Eq. 326, 332 (Ch.1948) (instructing that

a party dealing with a business enterprise "must inform [itself]

of the powers of the officers or of the agent purporting to act

for it if [it] hopes to effectuate a binding contract").          In fact,

Marrone's email to PSEG following the January 29 conference call

sought a "fully executable" set of documents for CEO Rosenblum to

sign, a phrasing which is consistent with Onyx's position that the

transaction could not be binding until the contract documents were

actually signed by both parties.          Moreover, even if Rosenblum had

provided his personal oral assent to all of the negotiated terms

of the proposed transaction, the language of the drafted contract

documents – which we have already spotlighted – emphasizing the

importance of "execution," defeats PSEG's claim of enforceability.

                                     15                             A-3057-16T2
     We reject PSEG's contention that the trial judge unduly

focused on the parties' post-January 2016 conduct in finding no

binding   agreement         was    present.       We    recognize    that    PSEG     was

entitled, and perhaps even obligated, to reasonably endeavor to

mitigate its damages once it became apparent that Onyx was not

going to perform.           White v. Twp. of North Bergen, 
77 N.J. 538, 546

(1978) (regarding mitigation of damages); Quinlan v. Curtiss-

Wright    Corp.,    425      N.J.    Super.      335,   359-65   (App.    Div.     2012)

(regarding mitigation of damages).                  Further, we appreciate that

the post-January 2016 discussions theoretically could be viewed

as indicative of efforts at re-negotiating an existing contract.

But the more compelling objective evidence in this case indicates

that these additional discussions were merely an attempt to salvage

a deal that never was consummated.

     We    defer       to    the    trial   court's      decision    to     forego      an

evidentiary hearing under Rule 4:67-5.                    For one thing, we have

considerable       doubts      whether      the    testimony     from     both     sides

expounding      upon    the    multiple     certifications       –   with    attendant

direct    and    cross-examination           by    counsel   –   would      have     been

realistically amenable to a summary trial subject to completion

over a day or two.          Moreover, as the judge rightly observed, there

was no necessity here for an evidentiary hearing, given the

                                            16                                   A-3057-16T2
strength of the objective record supporting her findings as to the

absence of a binding agreement.

     For all of these reasons, we therefore affirm the trial

court's interlocutory order denying arbitration and her related

decision rejecting PSEG's contract-based contentions.   Logically,

PSEG's claim of a breach of the covenant of good faith and fair

dealing must also fail.   See Noye v. Hoffmann-La Roche, Inc., 
238 N.J. Super. 430, 434 (App. Div. 1990) (recognizing that, in the

absence of a valid contract, there can be no cause of action for

breach of the implied covenant of good faith and fair dealing).

We assert no views as to whether PSEG's remaining claims of fraud,

promissory estoppel, and piercing the corporate veil survive.      We

defer those unadjudicated questions to the trial court.   See Mita

v. Chubb Computer Services, Inc., 
337 N.J. Super. 517, 529 (App.

Div. 2001) (noting the potential non-viability of non-contract

claims, where they are "derivative" of an untenable contract


  In addressing the discrete issues before us on appeal, we neither
endorse nor criticize Onyx's conduct in refusing to execute the
drafted documents that PSEG presented to it. We simply uphold the
trial court's narrow ruling that the record provides no basis for
a claim of contractual breach.     Among other things, we presume
that on remand the parties and the court will more fully develop
proofs concerning Rosenblum's explanation of why Onyx ultimately
held back on committing to a contract after the parties' lengthy
negotiations. We also presume the remand will explore whether PSEG
reasonably relied to its detriment on any "clear and definite"

                                17                          A-3057-16T2
    Affirmed.   The matter is remanded to the trial court to

adjudicate the open claims.   We do not retain jurisdiction.

promises by Onyx (assuming arguendo such promises justifying
reliance were made independent of an enforceable contract).

                               18                          A-3057-16T2

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