STEPHEN SAMOST v. Respondents, (2014)

Plaintiff Medford Village East Associates (MVE) owns property in Medford, the development of which has been the subject of litigation since 1996.   The history of that litigation and the facts relevant to this appeal are set forth at length in the written opinion of Judge Michael J. Haas issued in conjunction with his decision on the motions that are the subjects of this appeal and need not be repeated at length here.

In 2005, a Stipulation of Settlement was reached by plaintiffs (MVE, Branin Farms, Medcon Farms, Bran–Eayres Associates, and Stephen D. Samost), and defendants Township of Medford and Medford Township Planning Board (collectively, Medford) regarding the development of the sites then known as Medford Crossings North (MC North) and Medford Crossings South (MC South).   Two “interested parties” also entered the settlement.   One was appellant, Pulte Homes of New Jersey, LP (Pulte).   The other was “the proposed developer” of the MC North and MC South developments.   This proposed developer actually consisted of two limited liability corporations, Medford Crossings North, LLC, and Medford Crossings South, LLC. However, the proposed developer in the Stipulation of Settlement is referred to as “Freeco,” which is no more than a shorthand reference the parties used to describe companies owned by Carl Freedman and Mitchell Cohen.

The terms of the settlement were set forth in a Memorandum of Understanding and provided that, subject to compliance with applicable statutory requirements, the property would be designated as an area in need of redevelopment.   It was intended that “Freeco” would be the redeveloper of the commercial component of the project and that Pulte would be the residential redeveloper of the project.   It was also agreed that the redevelopers would pay $60 million to plaintiffs for the property, broken down into payments of $20 million to close on MC North (the First Closing) and $40 million for the subsequent closing on MC South (the Second Closing).   In order to secure tax savings and benefits for plaintiffs and Medford, the redevelopers were to pay this sum to Medford, which in turn would immediately turn the money over to plaintiffs.   The First Closing was to occur no later than August 28, 2006 and the Second Closing was to occur no later than fifteen months after the First Closing.

“Freeco” failed to close on the MC North property by the August 2006 deadline.   In June 2007, both Medford and plaintiffs filed motions seeking specific performance from “Freeco.”   By order dated October 5, 2007, this motion was granted and “Freeco” was ordered, in part, “to consummate at least the First Closing” by October 31, 2007, and “to include the necessary funding of its entities to consummate the settlement.”   The form of order was prepared by plaintiff Samost.   Oddly, the introductory paragraph described the collective term “Freeco” as including the “affiliates and principals” of corporate entities, specifically naming persons who had never been defendants in this litigation, i.e., Carl Freedman, Mitchell R. Cohen, Chris Conlon, Peter Ripka and Todd Cooper.   However, any doubt as to whether this order imposed an obligation on those persons individually was removed by the following language in the order, “All claims for damages against Freeco, as well as claims as to personal liability of the principals of Freeco, are reserved.”  (Emphasis added).   In addition, it is noteworthy that plaintiffs did not seek specific performance from Medford.

Prior to the October 31 deadline, Medford Crossings North, LLC, Medford Crossings South, LLC, and related entities filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C.A. §§ 101–1532.   However, the bankruptcy petitioners ultimately pursued a liquidation plan, which was confirmed by the Bankruptcy Court in August 2011.

As counsel for MVE so cogently stated at oral argument, the issue presented by the motions that followed and this appeal is who bears the risk that the redeveloper did not perform.   Plaintiffs and Pulte have attempted mightily to impose that risk upon Medford and individuals who were never named as parties in this litigation.   Those efforts included plaintiffs' motion to file a third amended complaint (to add a new plaintiff and name Freedman Cohen Development, LLC, Mitchell Cohen, Carl Freedman, Chris Conlon, Peter Ripka, Todd Cooper, and Ripco Ventures, Inc., as defendants), and a motion to “enforce” the October 5, 2007 Order, compelling specific performance and directing Medford to consummate the Agreement of Sale.

These motions were opposed.   In addition, Medford filed a motion to dismiss plaintiffs' complaint or, in the alternative, for summary judgment.   Motions were filed by Ripka, Conlon, Cooper, Freedman Cohen Development, LLC, Freedman, and Cohen to dismiss plaintiffs' “Second, Second Amended Complaint” ¹ and to vacate certain orders as those orders apply to them.   In an extensive, well-reasoned written opinion, Judge Haas provided his reasons for denying plaintiffs' motions and granting the motions of Medford, Ripka, Conlon, Cooper, Freedman Cohen Development, LLC, Freedman and Cohen.²

Plaintiffs and Pulte filed notices of appeal from these orders.   The appeals were calendared back to back;  we now consolidate the appeals and decide them by way of this single opinion.

In Docket No. A–3308–11, MVE and Samost ³ present the following issues for our consideration:

POINT I

PLAINTIFFS' EFFORTS TO ENFORCE ITS RIGHTS AGAINST THE TOWNSHIP UNDER THE 2005 SETTLEMENT WERE IMPROPERLY DISMISSED AS MOOT.

A. Plaintiff Has Been Improperly Denied the Fruits of a Settlement Approved by the Court.

1. Plaintiffs are Entitled to Relief as a Result of the Township's Breach of the Condemnation Agreement.

a. The Township Breached its Obligation to Close Under the Condemnation Agreement.

b. The Township Breached its Obligation to Compel Compliance by Freeco with its Obligations Under the Transaction Agreements.

c. The Township Breached its Representation, Covenant and Warranty to Use its Best Efforts to Consummate the Transaction.

d. The Township Breached the Condemnation Agreement Provisions Relating to Ingerman.

2. Either through Condemnation, Inverse Condemnation, or Partial Performance, Plaintiffs are Entitled to Compensation and Other Relief.

B. THE CONDEMNATION AGREEMENT WAS NOT TERMINATED.

C. THE DISPUTE BETWEEN PLAINTIFFS AND THE TOWNSHIP IS NOT MOOT.

D. THE ORDER OF DISMISSAL AND/OR SUMMARY JUDGMENT IN FAVOR OF THE TOWNSHIP WAS ERRONEOUS AND IMPROPER.

POINT II

THE DENIAL OF PLAINTIFFS' REQUEST TO AMEND THEIR PLEADINGS WAS IMPROPER AND IN ERROR.

POINT III

THE AGREED UPON [ALTERNATE SUMMARY DISPUTE RESOLUTION (ASDR) ] PROCEDURES AND NON–APPEALABILITY PROVISIONS WERE VALID AND BINDING ON ALL OF THE PARTIES TO THIS APPEAL.[4]

A. THE ASDR PROCEDURES AND NON–APPEALABILITY PROVISIONS SHOULD HAVE BEEN ENFORCED.

B. THE RULINGS AND ORDERS ISSUED PURSUANT TO THE ASDR PROCEDURES AND NON–APPEALABILITY PROVISIONS WERE FINAL RULINGS AND ORDERS.

POINT IV

THE MOTION JUDGE ERRED IN VACATING THE OCTOBER 5, 2007 ORDER WITH RESPECT TO THE FREECO PRINCIPALS AND ENTITIES.

POINT V

THE MOTION JUDGE ERRED IN VACATING THE OCTOBER 23, 2007 AMENDED ORDER TO SHOW CAUSE, AND DISMISSING THE VERIFIED SECOND AMENDED COMPLAINT THAT ACCOMPANIED THE OCTOBER 17, 2007 ORDER TO SHOW CAUSE.

In Docket No. A–3469–11, Pulte argues the following:

POINT I

THE ORDER OF DISMISSAL WITH RESPECT TO THE SEPTEMBER 28, 2007 AND THE OCTOBER 5, 2007 ORDERS IS UNSUPPORTED BY THE RECORD AND IS INCONSISTENT WITH COMMON LAW AND ACCEPTED ASDR PROCEDURES THEREBY CONSTITUTING REVERSIBLE ERROR.

A. The Order Of Dismissal With Respect To Freedman–Cohen and Messrs.   Freedman and Cohen Is Erroneous And Improper Because That Entity and Those Individuals Were Parties To The ASDR Proceedings And The Settlement As Well As The Direct Subjects Of The Court Opinions And Orders Entered By Judge Sweeney.

1. Freedman–Cohen And Messrs.   Freedman And Cohen Actively Participated In The ASDR Proceedings.

2. The Facts In The Record Are Sufficient To Pierce The Corporate Veils Of MCS, MCN And PT.

B. The Agreed Upon ASDR Procedures And Non–Appealability Provisions Employed During The ASDR Proceedings Are Valid And Binding On All Interested Parties.

C. The Rulings And Orders Issued Pursuant The ASDR Procedures And Non–Appealability Provisions Are Final.

D. Decisions Rendered Through Agreed–Upon ASDR Proceedings Should Be Honored By The Court.

After reviewing the arguments of appellants in light of the record and applicable legal principles, we conclude that none of the arguments have merit and affirm substantially for the reasons set forth in the written opinion of Judge Haas.

Affirmed.

FOOTNOTES

FN1. Plaintiffs acknowledge they cannot represent that this pleading, dated October 17, 2007, which sought to assert claims against the principals, was ever served..  FN1. Plaintiffs acknowledge they cannot represent that this pleading, dated October 17, 2007, which sought to assert claims against the principals, was ever served.

FN2. The court also entered a stipulation of dismissal of claims against the Burlington County Planning Board, which is not challenged in this appeal..  FN2. The court also entered a stipulation of dismissal of claims against the Burlington County Planning Board, which is not challenged in this appeal.

FN3. Samost filed a letter brief in which he adopted the arguments set forth by MVE in its brief..  FN3. Samost filed a letter brief in which he adopted the arguments set forth by MVE in its brief.

FN4. Paragraph 21 of the Stipulation of Settlement reached in 2005 provided in part:any and all disputes relating in any way to this Stipulation of Settlement or any documents or agreements entered into pursuant hereto or attached as exhibits ․ shall be resolved in a summary fashion by application to the Honorable John A. Sweeney, A.J.S.C., or in the event of unavailability, to the Honorable Ronald E. Bookbinder, J.S.C., whose decision in any such matter shall be based on the express terms of the documents and shall be final and unappealable.Plaintiffs contend this provision should apply to persons who were not parties to the Stipulation of Settlement and that it deprived Judge Haas of the authority to vacate any portion of an order entered by Judge Sweeney pursuant to this paragraph.   We disagree..  FN4. Paragraph 21 of the Stipulation of Settlement reached in 2005 provided in part:any and all disputes relating in any way to this Stipulation of Settlement or any documents or agreements entered into pursuant hereto or attached as exhibits ․ shall be resolved in a summary fashion by application to the Honorable John A. Sweeney, A.J.S.C., or in the event of unavailability, to the Honorable Ronald E. Bookbinder, J.S.C., whose decision in any such matter shall be based on the express terms of the documents and shall be final and unappealable.Plaintiffs contend this provision should apply to persons who were not parties to the Stipulation of Settlement and that it deprived Judge Haas of the authority to vacate any portion of an order entered by Judge Sweeney pursuant to this paragraph.   We disagree.

PER CURIAM