CHARLES BRESSMAN, Plaintiff–Respondent/ Cross–Appellant, v. J & J SPECIALIZED, LLC, Defendant–Appellant/ Cross–Respondent.
The instant appeal and cross-appeal arise out of a dispute between two adjacent landowners, plaintiff and defendant, over an excess parcel of land that the State of New Jersey sold at auction to defendant. After a non-jury trial, the court granted plaintiff specific performance of a written agreement for defendant to convey a portion of the auctioned parcel in anticipation of its subdivision. The court fashioned that equitable remedy, even though it did not find that either party had breached the contract. The final judgment directed the parties to meet with a designated engineer “to discuss and approve” a drawing of the subdivision line.
Defendant appeals, arguing that the parties' written agreement was too indefinite to enforce; that plaintiff himself materially breached the agreement as to an escrow provision; that there was no basis to award specific performance; that plaintiff's claim of an oral agreement between the parties to not bid against one another at the State auction was illegal and contrary to public policy; and other contentions.
Plaintiff has cross-appealed the trial court's denial of counsel fees. Plaintiff argues that the written agreement mandates fee-shifting in favor of it, as the alleged “non-defaulting” party.
For the reasons that follow, we remand this matter for further consideration by the trial court. On remand, the trial court shall make specific findings as to several critical issues, which include (1) whether either party breached and, if so, the nature of the breach; (2) which of the parties' competing maps showing an approximated subdivision line was intended to be “Exhibit A” to the written agreement; (3) if the true or intended Exhibit A cannot be ascertained, whether the agreement is consequently too indefinite to be enforced; (4) whether plaintiff materially breached the written agreement with respect to its release from escrow; (5) whether the alleged oral agreement to avoid a “bidding war” at an auction of State land was illegal and against public policy, and if so, what remedy flows from such impropriety; and (6) whether plaintiff is a non-defaulting party entitled to counsel fees.
Plaintiff Charles Bressman is the managing partner of a limited liability company that owns certain commercial retail property near the intersection of Route 46 and Riverview Drive in Totowa. Defendant J & J Specialized, LLC (“J & J”) owns a commercial property near that same intersection. The managing partner of J & J is Brian Hamilton.
Between Bressman's and J & J's properties lies a roughly 54,500 square-foot parcel of undeveloped land, at the corner of Route 46 and Riverview Drive. The dispute in this litigation revolves around the disposition of this corner parcel.
The Alleged Oral Agreement and the State Auction
The State of New Jersey, through its Department of Transportation (the “DOT”), owned the corner parcel. The State had apparently acquired the land through eminent domain for highway purposes. When it became apparent in late 2009 that the State no longer needed it, the DOT placed the corner parcel up for public auction. Bressman and Hamilton (on behalf of J & J) each expressed an interest in acquiring a portion of the corner parcel to expand their respective businesses.
Bressman contends that prior to the auction, he and Hamilton had orally entered into a non-compete agreement (the alleged “oral agreement”) in order to avoid a “bidding war” over the corner parcel and thereby obtain it from the State for the minimum bid price of $110,000. To that end, the two men supposedly agreed that J & J would appear at the auction and place a bid on their behalf. Once J & J succeeded in buying the parcel, it would retain a portion of it for itself, and convey the remaining portion to Bressman for his company 1 through a written Agreement of Sale. Although Bressman and J & J apparently were the only parties specifically invited to the DOT auction, J & J brought extra funds just in case Bressman made a surprise appearance to place a higher bid.
During his direct examination at trial, Bressman contended that he spoke with a DOT employee named James Darrar before the auction. According to Bressman, Darrar did not object when Bressman disclosed to him the supposed joint arrangement through which the parties intended to submit a single bid for the corner parcel. The record contains no written substantiation of this assertion, nor does it contain any proof that Darrar, whose title with the DOT was not disclosed, had the authority to approve the bidding arrangement on behalf of the State.
The auction took place in late December 2009, during which time J & J successfully bid on the property for the minimum bid price of $110,000.
Contract Negotiations and the Agreement of Sale
Around the time of the auction, the parties and their respective counsel had several back-and-forth written communications in negotiating the terms of the Agreement of Sale. Through those negotiations, the parties tried to agree upon the location of the boundary line that would subdivide the corner parcel, subject to municipal approval, into two portions. Bressman asserted that a previous survey map was to furnish the approximate placement of that boundary line. Hamilton disagreed, and asserted that the line ought to be drawn to grant J & J a larger portion than depicted on Bressman's proffered survey.
Apparently, Anthony Fiorello, J & J's transactional lawyer, had drawn in by hand a dotted line on the survey map to depict his client's preference. Fiorello sent that depiction with his hand-drawn addition to Bruce Rigg, the parties' mutually-designated project engineer. Fiorello claimed that he also sent the depiction to Bressman's counsel, David Zolotorofe. However, in his own testimony, Zolotorofe denied ever receiving Fiorello's depiction.
The parties continued to disagree over the appropriate depiction for the subdivision line. Nevertheless, on March 30, 2010, J & J and Bressman executed an Agreement of Sale that was intended to memorialize the parties' intentions with respect to the corner parcel's subdivision following the State auction.
The Agreement of Sale contained several elements pertinent to this case. First, Section 2.2.1 required Bressman to submit a deposit of $1,000 to J & J as security for the Agreement of Sale. It is undisputed that Bressman paid the $1,000.
Second, the seventh “Whereas” clause within the preamble of the Agreement of Sale indicated that a supposed attachment, “Exhibit A,” depicted the approximate square footage of the corner parcel's apportionment. That “Whereas” clause read in full:
WHEREAS, it is the intention of the parties that upon Seller acquiring title to the Parcel, Buyer will undertake and make an application to the appropriate zoning board in the Borough of Totowa to obtain the Approvals (as hereafter defined) for (i) the subdivision of the Parcel into two (2) separate lots containing approximately 18,000 square feet (the “Seller Lot”) and approximately 38,904 square feet (the “Buyer Lot”), as depicted in Exhibit “A” annexed hereto, and (ii) for site plan approval for the Buyer Lot, and (iii) for use approvals for the Seller Lot (as such Approvals are further defined hereafter)[.]
[ (Emphasis added).]
By this nomenclature, J & J was to retain the smaller “Seller Lot,” and Bressman would acquire the larger “Buyer Lot.”
Another significant aspect of the Agreement of Sale was Section 1.4.2, which read in relevant part:
It is the intention of the parties that the Buyer Lot be sufficient in size to obtain Site Plan Approval for a retail building containing not less than 5,000 square feet of ground floor retail space, together with sufficient parking spaces, ingress, egress and other appurtenances required by the Agencies to grant the Subdivision Approval and Site Plan Approval. The exact dimension, size, scope design and layout of the Buyer Lot shall be reasonably determined by the parties and the project engineer in order to obtain the Subdivision Approval and Site Plan Approval to accommodate Buyer's proposed 5,000 square foot retail building. It is understood and agreed that Exhibit “A” attached hereto is a depiction of the approximate location of the subdivision line of the Parcel and the general layout of the Buyer lot. Exhibit “A” will be replaced with the revised plan for the Approvals once finalized.
[ (Emphasis added).]
Despite this language referring to “Exhibit A” within both the seventh “Whereas” clause and Section 1.4.2, the parties have hotly disputed the contents of that Exhibit, and even whether it was ever attached to the signed Agreement.
Fiorello testified at trial that the Agreement of Sale was to be held in escrow. Zolotorofe testified that he had exchanged several written communications with Fiorello regarding the status of the escrow. In particular, J & J submitted into evidence a letter dated March 11, 2010 from Fiorello to Zolotorofe, which stated that
[the Agreement] is sent to you [Zolotorofe] on two conditions and you are to hold the Agreement in escrow pending a resolution of those conditions. Firstly, we had discussed payment of the costs of legal fees for the acquisitions of the property. It was to be predicated on the percentages set forth in Paragraph 2.1. We discussed this but I [Fiorello] find nothing in the Agreement that addresses it. Secondly, we had discussed that I would be the attorney going forward to obtain the sub-division and site plan approvals.
[ (Emphasis added).]
Both parties signed an Addendum to Agreement of Sale (the “Addendum”) dated April 12, 2010 that memorialized these two conditions. Section 3 of the Addendum specified that “the Buyer [Bressman] will pay its proportionate share of such reasonable legal fees in accordance with Section 2.1 of the Agreement, upon the purchase of the Buyer's lot.” Section 5 of the Addendum required that “[t]he parties agree that they will retain the legal services of Anthony Fiorello, Esq ․ as their zoning attorney to obtain the Subdivision Approval, Site Plan Approval and Use Approval (as each term is defined in Section 1.4.2 of the Agreement).”
On the next day, April 13, 2010, Fiorello sent a letter to Zolotorofe, which stated the following:
I received your letter of April 9, 2010 and the fully executed Addendum. I will proceed to deposit the [$1,000] deposit check in my trust account. The last time we spoke you were going to confer with your client as to his availability to meet with Mr. Rigg. Perhaps we can confer with respect to his availability or how we will proceed with respect to Mr. Rigg.
[ (Emphasis added).]
The record reflects that the parties never jointly met with Rigg to finalize the location of the subdivision line. Their negotiations through counsel failed. Consequently, at the time the appeal was briefed, no portion of the corner parcel has been conveyed to Bressman, and title in that entire lot has remained with J & J. Subdivision approval from the municipality for the corner lot has yet to be obtained.
In January 2011, Bressman filed a complaint in the Chancery Division against J & J seeking specific performance of the contract to compel the conveyance to him of the portion of the corner parcel. J & J filed an answer denying liability as well as a counterclaim.
In August 2011, J & J moved to amend its pleadings to add an affirmative defense asserting that the non-compete agreement between Bressman and J & J was illegal and in violation of public policy. The trial court denied the motion to amend, but did so “without prejudice subject to proofs and legal arguments at trial.” 2
The non-jury trial occurred over several intermittent days from January through April 2012. The court heard testimony from Bressman, his attorney Zolotorofe, Hamilton, and JJ's attorney Fiorello. The court also heard testimony from Rigg, the project engineer. The parties placed into evidence numerous exhibits and maps.
The Trial Court's Decision
On May 31, 2012, the trial court issued a letter opinion and a related Final Judgment that enforced the Agreement of Sale “as written” and compelled specific performance of its terms. To that end, the court found that the Agreement of Sale contained all of the necessary terms of an enforceable contract. The court also specifically found that each of the parties who testified was “credible.”
The fundamental problem, as the court perceived it, was that the parties had never met to define the specifics of the boundary line map, as the Agreement had contemplated. Even so, the court explicitly found “there [was] insufficient proof that the failure to meet was an intentional breach by either party, such as to void this agreement.” Rather, the court found that the “failure to meet appear[ed] to be [the] result of two very capable attorneys attempting to solve the problems of theirs without involving their clients in an actual meeting.”
Given that Bressman had evidently relied on acquiring a share of the corner lot, the court found that it would be unjust for J & J to keep the whole parcel. Consequently, it granted specific performance and ordered the engineer to prepare a subdivision map to accommodate an application that conveyed to Bressman “approximately 38,000 square feet.” The Final Judgment further directed the parties to “discuss and approve” a drawing of the subdivision line.
The court denied counsel fees and costs to Bressman, despite Bressman's invocation of a fee-shifting provision in the Agreement of Sale. The record does not explain why it denied those requested sums.
This appeal on the merits by J & J ensued, along with a cross-appeal by Bressman on the fee issue.
On appeal, J & J raises several arguments. It contends that there was no definite contract for the court to enforce. Alternatively, it argues, even if the contract were deemed enforceable, Bressman was not entitled to specific performance due to his own material breach, and J & J was entitled to rescission. J & J further contends that the trial court impermissibly imposed its own terms upon the parties. It also maintains that Bressman's claims for enforcement are barred because the parties' oral agreement to refrain from a bidding war is illegal and in violation of public policy.
Bressman's cross-appeal argues that the court erred in denying his claim for counsel fees. He contends that he was the “non-defaulting party” under the Agreement of Sale's fee-shifting provision. J & J counters that Bressman is not entitled to fees because the court did not find that any party had breached or defaulted, and also notes that Bressman's counsel did not submit a timely affidavit of services.
Although we have a sense of the equitable underpinnings of the trial court's decision, we are not prepared to rule on the merits of the appeals. That is so because, as we previewed at the outset of this opinion, there are several critical aspects of this case warranting a remand for further consideration by the trial court. More specifically, those critical items relate to (1) the presence or absence of a breach; (2) the proper contents of Exhibit A; (3) the escrow provision; (4) illegality and public policy; and (5) counsel fees.
We now offer some preliminary comments about each of these open items, with reference to the applicable law.
The remedy of specific performance is generally not imposed unless the party seeking that remedy has proven that the defendant breached the contract. See, e.g., Stopford v. Boonton Molding Co., 56 N.J. 169, 186 (1970) (discussing the antecedent question of breach before discussing the availability of equitable remedies); Fleischer v. James Drug Stores, Inc., 1 N.J. 138, 147–48 (1948) (considering the adequacy of specific performance in a situation where the defendant breached the terms of a commercial contract). Numerous cases have held that where there had been no proven breach of a contract, specific performance was unavailable.3
Here, each party alleges that the other party breached the terms of the Agreement of Sale. J & J contends that Bressman breached the contract because he “unilaterally set the [boundary] line with the engineer and would not meet to permit Hamilton to have input on the situs for the line.” J & J also maintains that Bressman breached the agreement by prematurely releasing it from escrow. On the other hand, Bressman argues that J & J breached the agreement by, among other things, failing to meet with both him and Riggs to establish a boundary line.
There is some evidential support in the record to support the alternative conclusions that (1) Bressman, or (2) J & J, or (3) both parties breached the agreement. The problem is that the trial court did not make any finding of a breach by anyone. Instead, as we have already noted, the court explicitly found that “there [was] insufficient proof that the failure to meet was an intentional breach by either party, such as to void this agreement. Rather, the failure to meet appears to be [the] result of two very capable attorneys attempting to solve the problems of theirs without involving their clients in an actual meeting.”
Notably, the court also found that all of the parties were credible in their testimony. Bressman and Hamilton each presented a blameless version of their own conduct. Hence, the court's across-the-board credibility endorsement could logically signify that it felt that all of the parties behaved properly and that no one breached the contract.
We recognize in the court's statement that there was insufficient proof of an “intentional” breach of contract leaves open the theoretical possibility that the court nevertheless perceived an “unintentional” breach. Rather than speculate about that possibility ourselves, it is best to remand this question to the trial court, which can clarify what was meant. If, on remand, the court finds that there was no breach, then it should explain the legal basis for ordering specific performance in the absence of such a finding, as an alternative basis is not clear from the court's opinion.4
A remand is also warranted to clarify the true content of Exhibit A, and for the court to determine whether that exhibit had, in fact, been appended to the Agreement of Sale.
There is no doubt that Exhibit A, as alluded to in the Agreement of Sale, was a material term of the contract. Exhibit A presumably would have conveyed specific information about where and how the parties generally envisioned the subdivision line to be drawn. For example, was the line to be drawn running east to west, north to south, or diagonally? Was it to be drawn in an irregular pattern, rather than a straight line, so as to accommodate certain objectives? Which of the parties would have ingress and egress through the corner parcel to Route 46, and which to River View Drive? Moreover, how that line was drawn would have other implications that the parties would reasonably deem significant (e.g., tax assessments, frontage, and the layout of future structures and improvements in conformity with zoning regulations). No other part of the Agreement of Sale addresses these concerns.
Here again, the difficulty is that the trial court did not reconcile the parties' competing positions concerning the true Exhibit A, and the exact location of the subdivision line. Instead, the court deemed it sufficient that the Agreement referred to an approximation of the line. The final judgment left it to the parties to discuss and approve a boundary line when meeting with the engineer, but provided no indication of what the consequence would be if the parties failed to reach a mutual consensus at that meeting. In general, the law treats an agreement to agree upon material terms at a future time as an unenforceable indefinite promise. 1 Williston on Contracts 4:29 (Lord ed. 2007) ( [I]f an essential element is reserved for the future agreement of both parties, as a general rule, the promise can give rise to no legal obligation until such future agreement.).
It is well settled that [a] contract arises from offer and acceptance, and must be sufficiently definite ‘that the performance to be rendered by each party can be ascertained with reasonable certainty.’ Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting West Caldwell v. Caldwell, 26 N.J. 9, 24–25 (1958)); Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956). To that end, parties' obligations to a contract must be specifically described in order to enable a court or a trier of fact to ascertain what it was the promissor undertook to do. Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat'l Bank, 163 N.J.Super. 463, 474 (App.Div.1978), certif. denied, 79 N.J. 488 (1979) (citing 1 Williston on Contracts 24 (Jaeger ed.1957)); see also Heim v. Shore, 56 N.J.Super. 62, 7273 (App.Div.1959) ( [T]he recipe for the making of a binding contract requires if not absolute definiteness and certainty on essential terms, at least expressions of assent sufficient to permit reasonable implications to be drawn as to the perform to be rendered.). Notably, [e]quity requires a greater degree of certainty in the terms of an agreement submitted for specific performance than is necessary to sustain an action at law for damages. Alnor Constr. Co. v. Herchet, 10 N.J. 246, 250 (1952). As the Herchet court explained,
An action at law is founded upon the mere nonperformance by the defendant, and this negative conclusion can often be established without determining all the terms of the agreement with exactness. The suit in equity is wholly an affirmative proceeding. The mere fact of nonperformance is not enough; its object is to procure a performance by the defendant, and this demands a clear, definite, and precise understanding of all the terms; they must be exactly ascertained before their performance can be enforced.
[Id. at 250–51 (internal citation omitted).]
Given the critical importance of clear and definite terms concerning the subdivision line, it is important that the identity and contents of Exhibit A be judicially ascertained in this matter. We cannot tell for sure from the trial court's decision whether it endorsed plaintiff's proposed map, or defendant's dotted line version, or neither. Without such a definitive finding, the remedy of specific performance could be ineffective. We therefore remand these questions surrounding the intended version of Exhibit A to the trial court for further consideration and a clearer decision.
JJ has separately argued that Bressman is disentitled to relief because either he or his counsel released the Agreement of Sale from escrow prematurely. The trial court made no finding on this claim. We therefore remand this open issue.
The trial court also did not rule upon JJ's argument that the parties' supposed oral agreement to not bid against one another at the auction sale was illegal and violated public policy. In essence, JJ argues that such an alleged agreement, which is a facet of Bressman's equitable claim to a share of the corner parcel, amounts to collusion and is against the public's interest in receiving the maximum value for auctioned State lands. Bressman, meanwhile, contends that the joint bidding arrangement was lawful 5 and was fully disclosed to a DOT official involved in the auction. He argues in the alternative that if this court were to deem the oral agreement improper, JJ should not keep the entire parcel to Bressman's detriment because it took equal part in that impropriety. See Loew's Inc. v. Somerville Drive–In Theatre Corp., 54 N.J.Super. 224 (App.Div.1959) (entertaining a defendant's affirmative defense that a commercial contract to which it was a party was illegal); McCabe v. Kupper, 4 N.J.Super. 178 (App.Div.1949) (involving a defendant's assertion of illegality of a contract for services in which he agreed to do engineering work for the plaintiff).
Generally, “to establish a right to the remedy of specific performance, a plaintiff must demonstrate that the contract in question is valid and enforceable at law.” Marioni v. 94 Broadway, Inc., 374 N.J.Super. 588, 598 (App.Div.), certif. denied, 183 N.J. 591 (2005) (citing Jackson v. Manasquan Sav. Bank, 271 N.J.Super. 136, 144 n.8 (Law Div.1993); 25 Williston on Contracts § 67:2 (Lord ed.2002)). New Jersey statutes and certain DOT publications outline procedures that the agency must undertake in conjunction with any public sale of excess lands. See, e.g., N.J.S.A. 52:31–1.1 (requiring a public auction for any sale of excess lands); N.J.S.A. 52:31–1.4 (specifying the right of first refusal as a prerequisite); N.J.S.A. 52:31–1.8 (outlining notification requirements).6 However, the briefs provided to us and our own research have not identified any statute or regulation that specifically details whether joint bids are allowed at a public auction for the sale of surplus State land. Although Bressman alleges that a DOT employee acquiesced to the joint bidding arrangement here, it is unclear whether that employee had the authority to provide the State's approval to such an arrangement.
Given these uncertainties, we remand the issues of alleged illegality and public policy violation to the trial court for disposition. Within ten days, counsel for JJ shall give written notice of the pendency of the issue and a copy of this opinion to the Attorney General, in his capacity as the State's sole legal advisor. N.J.S.A. 52:17A–4(e). The Attorney General then shall advise the trial court within twenty days as to whether his office intends to participate in the remand proceedings concerning this public bidding issue.
If, hypothetically, the trial court concludes that the oral agreement that allegedly led to JJ's successful bid was illegal or against public policy, the court shall fashion an appropriate remedy. The remedy conceivably may include a new public auction, with appropriate credits or offsets provided to JJ if the parcel is obtained by a higher bid from Bressman or from a third party, if such third party is allowed to participate. Other remedies may well exist, which we defer to the trial court in the first instance.
We briefly turn to Bressman's cross-appeal, in which he argues that he is entitled to counsel fees and costs under the provision in the Agreement of Sale allowing fee-shifting in favor of the non-defaulting party. Because the outcome of the remand is not certain, we reserve this fee issue for the trial court's renewed consideration.
The matter is remanded to the trial court for further consideration of the issues that we have identified. The court should conduct a case management conference within thirty days of our opinion, with notice to the Attorney General, to determine if any further submissions or oral argument is warranted. The court shall thereafter issue amplified findings and, if necessary, an amended final judgment at the conclusion of the remand. If either party is aggrieved by the court's post-remand ruling, that party may file a new appeal with this court.
Remanded. We do not retain jurisdiction.
1. FN1. Because Bressman and his company are essentially treated as one and the same in the record, we hereafter use the word “Bressman” to refer to either him individually or his company.
2. FN2. As we have already noted, the court heard brief testimony from Bressman at trial recounting his discussion with the DOT employee, James Darrar, about the bidding arrangement.
3. FN3. See, e.g., Benihana of Tokyo, Inc. v. Benihana, Inc., 828 F.Supp.2d 720, 727 (D.Del.2011) (“Defendants argue that ‘specific performance is inappropriate where there is no breach.’ ․ The court agrees. Specific performance is a remedy sought for breach of contract, and not a cause of action in and of itself.”); Am. Paper Recycling Corp. v. IHC Corp., 775 F.Supp.2d 322, 330 (D.Mass.2011) (“Specific performance is awarded only where there is a breach of a contract [.]”); Mansouri v. Superior Court, 181 Cal.App. 4th 633, 642 (Cal.App.3d Dist.2010) (“Without a breach, there is no cause of action for specific performance[.]”); In re Columbus Plaza, Inc., 79 B.R. 710, 715 (Bankr.S.D.Ohio 1987) (“Without a breach, specific performance is inappropriate.”).
4. FN4. Conceivably, the trial court might have been attempting to apply equitable principles of unjust enrichment, although the opinion does not refer to that concept specifically.
5. FN5. Although the argument is not developed before us, it is conceivable that the public may be better off receiving a joint bid than no bid at all, if the minimum price is too high to be of interest to the joint bidders individually.
6. FN6. The New Jersey DOT publishes on its webpage a Right of Way Acquisition Manual that summarizes the pertinent procedures in public auctions for excess lands. New Jersey Dep't of Transportation, Right of Way Acquisition Manual § 4.23 (2012), available at http://www.state.nj.us// eng/documents///.pdf; see, e.g., id. § 4.23.5 (outlining procedures for the public auction process); Id. § 4:23.1 (mandating requirements for the auction). The manual does not, however, address the propriety of either joint bids or non-compete agreements involving public bidding on auctioned State property.