715 Partners, LLC v. GS Assignment, LLC, DOCKET NO. A-2527-15T3

715 PARTNERS, LLC,A New Jersey Limited Liability Company, Plaintiff-Appellant, v. GS ASSIGNMENT, LLC,715 GRAND REALTY LLC, and GERARD STEIGLITZ, Defendants-Respondents,and715 GRAND STREET LLC and DIMITRI PAPAGANNAKIS, Defendants.

DOCKET NO. A-2527-15T3

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued July 18, 2017

May 25, 2018

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

Before Judges Ostrer and Leone.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2687-14.

Gary D. Grant argued the cause for appellant (Grant Law Group, LLC, attorneys; Gary D. Grant and Janet S. Del Gaizo, on the briefs).

Andrew J. Karas argued the cause for respondents (Fox Rothschild, LLP, attorneys; Andrew J. Karas, on the brief).

The opinion of the court was delivered by

LEONE, J.A.D.

Plaintiff 715 Partners, LLC, appeals from a December 28, 2015 order granting summary judgment to defendants GS Assignment, LLC, Grand 715 Realty, LLC (improperly pled as 715 Grand Realty LLC), and Gerard Steiglitz (collectively "defendants").¹ We affirm.

I.

The following undisputed facts are derived from the parties' statements of material facts and the pertinent documents.

In an Agreement of Sale (Agreement) dated May 16, 2012 (the Effective Date), 715 Grand Street LLC (Seller) agreed to sell to plaintiff a property on Grand Street in Hoboken (the Property). The purchase price was $3.2 million, which plaintiff agreed to pay as follows in the Agreement's Section 2: (a) a $50,000 initial deposit within ten business days of the Effective Date; (b) a $50,000 second deposit within five business days after the expiration of the due diligence period; (c) a $150,000 third deposit within five business days after the Hoboken zoning boardgranted final site plan approval; and (d) $2,950,000 closing payment upon closing.

Plaintiff did not have available funds to pay any of the deposits required under the Agreement. Plaintiff made the initial $50,000 deposit by borrowing the money from Edwin Torres, who had earmarked the money to pay a tax sale certificate on a Newark property.

Section 3.01 of the Agreement allowed plaintiff to survey the Property and examine the title, and to "notify Seller by the end of the 'Due Diligence Period' (as defined in Section 3.02) . . . specifying any respects in which it appears from record title or from such survey that Seller is unable to" provide marketable, insurable title "free and clear of all liens and encumbrances."

Section 3.03 of the Agreement provided:

Purchaser shall have the right to terminate this Agreement on or prior to the end of the Due Diligence period for any or no reason, in Purchaser's sole and absolute discretion. Purchaser shall be deemed to have terminated this Agreement if Purchaser does not provide Seller with written notice prior to the end of the Due Diligence Period that Purchaser waives it[s] right to terminate this Agreement in accordance with this Section. If Purchaser terminates this Agreement, or is deemed to have terminated, as provided above, Purchaser shall immediately receive back the Deposit, and the parties hereto shall have no further obligations under this Agreement . . . .

[(emphasis added).]

Section 3.02 of the Agreement defined "Due Diligence Period" as "the period of time commencing on the first day after the date of this Agreement, and expiring at 5:00 p.m. forty-five (45) business days after (and excluding) the Effective Date." As the Effective Date was May 16, the due diligence period would end at 5:00 p.m. on July 18.

On July 17, Seller agreed to extend the due diligence period until July 31. On August 1, plaintiff requested "a one day extension of the Due Diligence — until 5:00 p.m., August 2, 2012." The Seller confirmed it had extended the due diligence period until August 2. No written notice waiving the right to terminate the Agreement was sent prior to 5:00 p.m. on August 2.

On August 2, plaintiff entered into an assignment, which plaintiff terms the Flip Contract. The Flip Contract assigned plaintiff's rights under the Agreement to GS Assignments, LLC (GS), of which Steiglitz was the managing member. The Flip Contract provided GS would reimburse plaintiff for the $50,000 initial deposit, "pay[] when due the second deposit under paragraph 2(b) of the [Agreement]" and make the third deposit of $150,000. The Flip Contract also provided that GS would pay plaintiff $250,000 at the closing under the Agreement, and give it 10% of the profits from the development of the Property.

The Flip Contract had no due diligence period. Plaintiff represented that it knew of no undisclosed facts "which might have a material adverse affect on the transaction."

GS's attorney Richard W. Mackiewicz, Jr. sent an August 2 letter (Mackiewicz letter) to Seller. The letter confirmed the Agreement "has been assigned" to GS. The letter stated it was "written in connection with Section 3.03" of the Agreement. The letter referenced the purchaser's opportunity to notify Seller of issues with title during the due diligence period under Section 3.01. The letter contended there was both a mortgage on the Property and a restriction imposing a setback requirement which was uninsurable. The letter objected to the title's marketability, asked Seller to clear the title, and stated: "Assuming that the Seller is capable of clearing these title issues then the purchaser, in accordance with Section 3.03 of the Contract advises that it waives any other right to terminate the agreement."

The Mackiewicz letter said GS "will be forwarding a check" for $100,000, and asked Seller to return the initial $50,000 deposit to plaintiff. Steiglitz had the assets to cover the $100,000 and to consummate the deal. The $100,000 payment was never made.

On August 20, 2012, Seller's counsel sent a letter to plaintiff's counsel citing Sections 3.02 and 3.03 and stating:

After the seller granted the purchaser with several extensions to the due diligence period, it ultimately expired to on or about August 2, 2012 [sic]. Having not received the required notice from the purchaser that waives its right to terminate the contract of sale, the agreement is now deemed terminated. As such, I have enclosed a check for your client's deposit. The agreement is now null and void.

In February 2013, Seller entered into a new agreement selling the Property to Grand 715 Realty, LLC (Grand), of which Steiglitz was the managing member. The purchase price was $3.5 million.

In June 2014, plaintiff filed a complaint against defendants, with counts claiming consumer fraud, common law fraud and conspiracy, breach of contract, breach of the implied duty of good faith and fair dealing, tortious interference, and unjust enrichment, and seeking a constructive trust and to pierce the LLC veil.² After defendants filed an answer, plaintiff moved for summary judgment. Defendants filed a cross-motion for summary judgment.

After hearing argument, the trial court issued an order and a written opinion on December 28, 2015, denying summary judgment to plaintiff, granting summary judgment to defendants, and dismissing plaintiff's claims with prejudice. In granting summary judgment on plaintiff's counts alleging breach of contract andbreach of the implied duty, the trial court noted it was undisputed that on August 20, Seller advised plaintiff that the Agreement terminated on August 2, due to plaintiff's failure to provide written notice to Seller before the end of the due diligence period that plaintiff was waiving its rights to terminate the Agreement pursuant to Section 3.03. The court emphasized that "[e]ven after the due diligence period was extended to August 2, 2012, the Plaintiff failed to issue the waiver."

II.

Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). The court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). "[T]he court must accept as true all the evidence which supports the position of the party defending against the motion and must accord [that party] the benefit of alllegitimate inferences which can be deduced therefrom[.]" Id. at 535 (citation omitted).

An appellate court "review[s] the trial court's grant of summary judgment de novo under the same standard as the trial court." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189, 199 (2016). We must hew to that standard of review.

III.

On appeal, plaintiff contends there was a genuine issue of material fact regarding whether the Flip Contract was signed, and the Mackiewicz letter was delivered to Seller, before the expiration of the due diligence period at 5:00 p.m. on August 2. Plaintiff also contends the Mackiewicz letter satisfied plaintiff's obligation to produce a written waiver. Plaintiff's contentions fail because it took the opposite positions in the trial court.

Plaintiff supported its motion for summary judgment with a statement of material facts that stated "the Due diligence period in the Agreement of Sale had expired prior to the Flip Contract being signed." Also, in opposition to defendants' cross-motion for summary judgment, plaintiff filed a certification by George Daley, its managing member. Daley similarly certified that when plaintiff assigned its rights to GS, "[t]he Due...