Opinion
DOCKET NO. A-3452-11T1
02-21-2013
SAM YOUNG CORP., Plaintiff-Appellant, v. LYNDHURST GENERAL SERVICES, L.L.C., Defendant-Respondent. LYNDHURST GENERAL SERVICES, L.L.C., Plaintiff-Respondent, v. SAM YOUNG CORP., Defendant-Appellant, and SHINHAN BANK AMERICA, Defendant.
Patrick T. Collins argued the cause for appellant (Franzblau Dratch, attorneys; Mr. Collins, on the brief). Harlan M. Lazarus (Lazarus & Lazarus) of the New York bar, admitted pro hac vice, argued the cause for respondent (Winne, Banta, Hetherington, Basralian & Kahn, P.C. and Mr. Lazarus, attorneys; Gary S. Redish and Mr. Lazarus, of counsel and on the brief; Christine R. Smith, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Espinosa and Guadagno.
On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket Nos. C-184-10 and F-58854-09.
Patrick T. Collins argued the cause for appellant (Franzblau Dratch, attorneys; Mr. Collins, on the brief).
Harlan M. Lazarus (Lazarus & Lazarus) of the New York bar, admitted pro hac vice, argued the cause for respondent (Winne, Banta, Hetherington, Basralian & Kahn, P.C. and Mr. Lazarus, attorneys; Gary S. Redish and Mr. Lazarus, of counsel and on the brief; Christine R. Smith, on the brief). PER CURIAM
Sam Young Corp. (Sam Young), appeals from an order dated October 13, 2011, dismissing one count of its complaint against Lyndhurst General Services, L.L.C. (Lyndhurst), and from an order dated February 3, 2012, dismissing the remaining counts of that complaint and entering a final judgment of foreclosure in favor of Lyndhurst. We affirm.
I.
On January 16, 2007, Lyndhurst entered into a contract for the sale of commercial property located at 738 Schuyler Avenue, Lyndhurst, New Jersey (Property) to Sam Young. The purchase price of $8,600,000 was to be paid with a deposit of $430,000, an additional $3,570,000 at closing. The balance of $4,600,000, was to be paid over the next two years with monthly, interest-only payments of $28,750, followed by a balloon payment of the remaining balance at the end of the two-year period. The closing of the Property occurred on June 14, 2007.
As the Property had a history of soil and ground water contamination, the contract contained the following provision:
The Seller shall obtain for the Purchaser a No Further Action letter from the New Jersey Department of Environmental Protection. To the extent practicable the "No Further Action" Letter shall be provided by the Closing Date; provided however, Seller shall have up to one (1) year from the closing date to provide the "No Further Action" Letter, Purchaser shall cooperate with Seller.A handwritten addendum to the clause appears below the typed contractual language providing "[t]here shall be no default under this paragraph provided seller shall be diligently prosecuting the DEP matter."
A No Further Action (NFA) letter is a "written determination by the [New Jersey Department of Environmental Protection (DEP)] that, based upon an evaluation of the historical use of the industrial establishment and the property . . . there are no discharged hazardous substances or hazardous wastes present at the site of the industrial establishment . . . ." N.J.S.A. 13:1K-8. The NFA letter also provides that "any discharged hazardous substances or hazardous wastes present at the industrial establishment . . . have been remediated in accordance with applicable remediation regulations." Ibid.
The NFA letter was required as the Property had been utilized in the manufacture of specialty machinery from 1950 to 1993, and DEP had been involved in overseeing environmental remediation as far back as January 1988.
In 2005, Lyndhurst hired Environmental Waste Management Associates (EWMA), to conduct soil and ground water samplings, recommend remedial alternatives, and ultimately obtain the NFA letter from DEP. EWMA prepared a report in April 2007, which was provided to Sam Young prior to the closing.
Sam Young began to advertise the Property for sale shortly after the closing but found little interest. Sam Young grew concerned over a perceived lack of progress by Lyndhurst in procuring the NFA letter. On November 9, 2007, counsel for Sam Young sent Lyndhurst a letter inquiring as to the status of the NFA matter. The letter concluded:
If we do not hear satisfactory update on this issue from you or [Lyndhurst] within 10 days from the date of this letter, my client may be forced to undertake the necessary compliance steps as required by DEP at the cost of [Lyndhurst] which will be deducted from the outstanding mortgage payment.When Lyndhurst failed to respond to this letter, Sam Young consulted with its own environmental expert, AccuTech Environmental Services, Inc. (AccuTech), regarding the NFA letter.
In June 2008, Meadowlands Development, LLC (Meadowlands) discussed purchasing the Property, but ended negotiations after learning of the environmental issues and that Sam Young could not provide a NFA letter prior to closing. Unable to sell the Property, Sam Young stopped making the monthly interest payments in October 2008.
On November 12, 2009, Lyndhurst filed a complaint in foreclosure against Sam Young. On June 11, 2010, Sam Young filed a separate complaint against Lyndhurst alleging breach of contract and seeking to enjoin the foreclosure. The actions were consolidated and tried over five days in June 2011. On October 13, 2011, the trial court filed a written decision.
The judge found that the paramount issue was whether Lyndhurst's failure to obtain the NFA letter constituted a breach of the contract. The judge concluded that, while the contract originally contemplated a one-year time period following closing for Lyndhurst to obtain the NFA letter, the parties expressly agreed that Lyndhurst would not be in default, provided that it was diligently pursuing the DEP approval. The judge found that after receipt of the November 9, 2007 letter, Lyndhurst acted under the belief that Sam Young would undertake responsibility to procure the NFA letter and charge the resulting expense to Lyndhurst.
At trial, Sam Young's owner, Young Moon Kim, testified that he did not retain AccuTech's services to actively obtain the NFA letter, but the judge found this testimony "diametrically opposed" to Kim's deposition testimony in which he indicated that AccuTech was retained to obtain the NFA letter. In addition, although Sam Young denied that it retained AccuTech to acquire the NFA letter, Sam Young represented to at least one prospective purchaser, Meadowlands, in June 2008, that "DEP remediation as to some environmental conditions . . . are presently handled by [AccuTech] under the proposed environmental remediation plan . . . ." The judge rejected Sam Young's version of this period of inactivity, finding it to be "less credible and reliable than that of Lyndhurst."
The judge also found that, once Lyndhurst learned that Sam Young had not assumed responsibility to procure the NFA letter, Lyndhurst acted promptly in again retaining EWMA's services to obtain DEP approval. The judge concluded that Lyndhurst's inactivity following the closing was in large part attributable to a misunderstanding or lack of effective communication related to the actions of Sam Young during this period. The judge also found that, even if Lyndhurst was proceeding under the mistaken impression that Sam Young had undertaken responsibility to obtain the NFA letter, much of the intervening delay was attributable not to the absence of its diligent efforts, but rather to the delay inherent in the DEP approval process.
A judgment of foreclosure was not immediately entered. Instead, the judge allowed Sam Young ninety days to bring the monthly interest payments and the real estate taxes current and enjoined Lyndhurst from foreclosing upon the Property as long as Sam Young fulfilled its obligations under the loan documents. If Sam Young failed to bring these payments current within the ninety-day period, Lyndhurst was permitted to strike Sam Young's answer and defenses so that the foreclosure could proceed. After Sam Young failed to meet these conditions, the judge entered a final judgment of foreclosure on February 3, 2012, and dismissed the remaining counts in Sam Young's complaint.
On appeal, the appellant raises the following issues for our consideration:
POINT I
LYNDHURST'S FAILURE TO MAKE ANY EFFORT AT ALL TO SECURE THE NFA LETTER FROM DEP WITHIN THE ONE YEAR PERIOD PROVIDED FOR IN THE CONTRACT CONSTITUTED A BREACH.
POINT II
SAM YOUNG IS ENTITLED TO RECOVER DAMAGES EQUAL TO THE DIFFERENCE BETWEEN THE VALUE OF THE PROPERTY ON JUNE 14, 2008 HAD THERE BEEN AN NFA LETTER AND ITS VALUE ON THE DATE OF TRIAL WITHOUT AN NFA LETTER.
II.
Initially, we note that the findings of a trial judge sitting without a jury are "considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). Under our limited standard of review, "'we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid. (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)). "This is particularly so when, as in this case, the significant evidence is largely testimonial rather than documentary, and the trial court has had the opportunity to observe the witnesses and determine their credibility." Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 607 (1989). We are satisfied that the factual findings of the trial judge, particularly those as to credibility, are amply supported by the record and entitled to our deference.
However, we owe no special deference to the trial judge's "interpretation of the law and the legal consequences that flow from established facts." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Sam Young raises only a question of law in challenging the finding that Lyndhurst did not breach the contract.
As to the provision regarding the NFA letter, Sam Young concedes the following: (1) it sent a letter on November 9, 2007 threatening to "take matters into their own hands" if defendant did not make efforts to obtain a NFA letter; (2) its reference to AccuTech in subsequent contract for sale applications was found by the trial court to show Sam Young's intent to perform the work itself; (3) Lyndhurst is currently working diligently towards obtaining the NFA letter; and (4) Lyndhurst's period of inactivity was caused by miscommunication between the parties and delays at the DEP. Sam Young argues that the trial court erred in finding that these facts did not amount to a breach of contract on the part of Lyndhurst. We disagree.
In order to sustain a breach of contract action, plaintiff had the "burden to show that the parties entered into a valid contract, that the defendant failed to perform [its] obligations under the contract and that the plaintiff sustained damages as a result." Murphy v. Implicito, 392 N.J. Super. 245, 265 (App. Div. 2007). Here, it is undisputed that there was a contract between the parties and Lyndhurst failed to procure the NFA letter at the time of closing or within one year of the closing date. The unresolved issue is whether Lyndhurst was "diligently prosecuting" the attainment of the NFA letter pursuant to the contract.
Lyndhurst hired EWMA in 2005. On April 12, 2007, EWMA produced a remedial investigation report and workplan which it submitted to DEP. The report was provided to Sam Young at closing and included a proposed timeline indicating that the environmental cleanup work required to obtain the NFA letter would not be completed until March of 2010.
The Property closed in June 2007. Five months later, Sam Young sent the November 9, 2007 letter. It was reasonable for Lyndhurst to rely on the plain language of the letter which provided that if Sam Young did not receive a "satisfactory update . . . within 10 days . . . [Sam Young] may be forced to undertake the necessary compliance steps . . . ."
Sam Young argues that prior to November 9, 2007, Lyndhurst was not diligently attempting to obtain the NFA letter. However, at the time the letter was sent, Lyndhurst still had seven months under the terms of the contract to obtain the NFA letter. Moreover, trial testimony indicated that DEP did not formally respond to the April 12, 2007 proposal for more than two years. Finally, a witness called by Sam Young, Dr. Dennis Stainken, who was qualified as an expert in environmental sciences, was unable to conclude that Lyndhurst was not in diligent pursuit of the NFA letter.
We are satisfied that the legal conclusions of the trial court finding that Lyndhurst did not breach the contract are amply supported by the record and are consistent with the controlling legal principles.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION