501 JERSEY AVE LLC VS. XXXIII ASSOCIATES/RIVERSIDE CENTER, LLC (C-000148-18, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1660-18T4

501 JERSEY AVE LLC,

Plaintiff-Appellant/
Cross-Respondent,

v.

XXXIII ASSOCIATES/RIVERSIDE
CENTER, LLC,

Defendant-Respondent/
Cross-Appellant.
________________________________

Argued October 10, 2019 – Decided October 31, 2019

Before Judges Fuentes, Haas and Mayer.

On appeal from the Superior Court of New Jersey,
Chancery Division, Monmouth County, Docket No. C-
000148-18.

Brett A. Berman argued the cause for appellant/cross-
respondent (Fox Rothschild LLP, attorneys; Brett A.
Berman, of counsel and on the briefs; Steven J. Link,
on the briefs).

Jerome M. Selvers argued the cause for
respondent/cross-appellant (Sonnenblick Parker &
 Selvers, PC, attorneys; Jerome M. Selvers and Chad
Neal Cagan, on the briefs).

PER CURIAM

Plaintiff 501 Jersey Ave LLC appeals from a November 9, 2018 order

dismissing its complaint pursuant to Rule 4:6-2(e) for failure to state a claim

upon which relief may be granted. Defendant XXXIII Associates/Riverside

Center LLC cross-appeals from that order's denial of attorney's fees and costs.

We affirm.

The relevant facts are straightforward. Defendant owns property in

Millstone, known as "Riverside Center." The property consists of seventeen

separate lots with retail, office, and warehouse spaces. On October 19, 2017,

plaintiff made an initial offer to purchase a portion of defendant's property for

$2,500,000. The offer to purchase was memorialized in a written term sheet ,

which provided the sale of the property could not be finalized without a "fully

. . . executed . . . and . . . mutually exchanged written contract."

Thereafter, the parties exchanged communications related to the purchase

of the property, including a letter of intent (LOI) dated December 26, 2017.

Plaintiff asserted it did not intend to be bound by an executed contract because

the LOI superseded the initial term sheet and provided the parties would

"mutually agree upon [a] contract" without reference to a written agreement .

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However, the LOI acknowledged the document was "not a binding agreement,

but only an outline of terms for discussion and inclusion in a mutually agreed

upon contract." The LOI also provided the terms were "modifications and

additions to be included in a proposed contract for the sale of the property."

After agreeing to the LOI, the parties began negotiating a Purchase and

Sale Agreement ("Agreement"). Counsel for the parties prepared and exchanged

several versions of the Agreement.

On May 18, 2018, plaintiff claimed the only outstanding term was

defendant's payment of the broker's commission. Defendant sent the Agreement

to plaintiff's counsel containing the terms and conditions agreed to by the

parties. According to plaintiff, defendant "demanded" plaintiff sign and return

the final contract. On June 7, 2018, plaintiff signed the Agreement and returned

the document to defendant for signature. Defendant did not sign the Agreement.

On June 22, 2018, plaintiff learned defendant would not be selling the

property. Once the sale of the property fell through, defendant claimed plaintiff

threatened to file suit compelling the sale and embroiling the parties in litigation

for years. Defendant advised that any such litigation would be frivolous and

vigorously contested.

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 Notwithstanding defendant's admonition, plaintiff filed a verified

complaint1 and order to show cause to compel sale of the property and enjoin

defendant from marketing or selling it to a third party. Defendant urged plaintiff

to dismiss the action to avoid imposition of attorney's fees and costs pursuant to

Rule 1:4-8 and N.J.S.A. 2A:15-59.1. Plaintiff declined to withdraw the amended

complaint. In lieu of filing an answer to the amended complaint, defendant

moved to dismiss the action and sought attorney's fees and costs.

The presiding general equity judge, Katie A. Gummer, J.S.C., issued a

comprehensive oral decision granting defendant's motion to dismiss for failure

to state a claim pursuant to Rule 4:6-2(e) and denying its request for attorney's

fees and costs incurred in defending the action. The judge thoroughly reviewed

each of the allegations set forth in plaintiff's amended complaint and provided a

detailed explanation in support of her dismissal of plaintiff's pleading in its

entirety.

On appeal, plaintiff claims the judge erred in finding the parties intended

to be bound by a duly executed contract and no enforceable contract was

reached. Plaintiff also asserts its promissory estoppel claim was improperly

1
Plaintiff filed an amended verified complaint in response to defendant's motion
to dismiss the original verified complaint.
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dismissed because the judge mistakenly concluded the claim was premised on

the existence of an enforceable contract.

On the cross-appeal, defendant contends the judge erred in denying its

request for attorney's fees and costs under Rule 1:4-8 and N.J.S.A. 2A:15-59.1.

Having reviewed the record, we affirm for the reasons set forth in Judge

Gummer's comprehensive decision placed on the record on November 9, 2018.

We add only the following comments.

Plaintiff argued the LOI superseded the initial term sheet and an

enforceable agreement was formed once the parties "mutually agreed upon [a]

contract." Plaintiff contended a signed contract was not required.

"'Interpretation and construction of a contract is a matter of law for the court

subject to de novo review.'" Spring Creek Holding Co. v. Shinnihon U.S.A. Co.,

399 N.J. Super. 158, 190 (App. Div. 2008) (quoting Fastenberg v. Prudential

Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998)).

Having reviewed the LOI, nothing in that document stated the LOI

superseded the initial term sheet, which required a mutually executed written

contract for the sale of the property. The LOI contained several provisions

affirming the parties' agreement to execute a written contract. In addition, the

draft Agreements contained signature lines for plaintiff and defendant, reflecting

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the parties' understanding that there would be a written agreement for the sale

of the property.

We are satisfied that the judge appropriately considered the initial term

sheet and LOI in determining there was no enforceable contract between the

parties absent a signed document. Because there was never a mutually executed

writing for the sale of the property, the judge properly dismissed plaintiff's

pleading.

We briefly address plaintiff's claim that the judge considered documents

outside the pleading and therefore improperly converted defendant's motion to

dismiss into a motion for summary judgment. In accordance with Rule 4:6-2(e),

if material outside the pleading is presented on a motion to dismiss, the motion

is converted into one for summary judgment. Lederman v. Prudential Life Ins.

Co. of America, Inc., 385 N.J. Super. 324, 337 (App. Div. 2006). However, a

motion to dismiss on the pleadings is not converted into a summary judgment

motion when a party attaches an outside document referenced in the original

pleading. Myska v. N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 482 (App. Div.

2015). As explained by our Supreme Court, "[i]n evaluating motions to dismiss,

courts consider 'allegations in the complaint, exhibits attached to the complaint,

matters of public record, and documents that form the basis of a claim.'" Banco

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Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005) (quoting Lum v. Bank of

Am., 361 F.3d. 217, 221 n.3 (3d Cir. 2004)).

Here, paragraphs six, eight, and nine of plaintiff's first amended verified

complaint acknowledged the parties' initial term sheet and conceded the

document "contemplated that a sale of the [p]roperty could not be finalized

absent a 'fully executed . . . and . . . mutually exchanged' written contract."

Because the initial term sheet was referenced in plaintiff's amended complaint,

it was proper for the judge to consider the document in connection with

defendant's motion to dismiss.

On the cross-appeal, defendant argues the judge erred in denying its

motion for attorney's fees and costs.

We review a trial court's grant or denial of sanctions for abuse of

discretion. J.O. v. Twp. of Bedminster, 433 N.J. Super. 199, 221 (App. Div.

2013). An award of attorney's fees under Rule 1:4-8 is inappropriate when there

is "an objectively reasonable belief in the merits of an argument" or where a

"plaintiff is engaged in a legitimate effort to extend the law on a previously

undecided issue." Ibid. "The rule [Rule 1:4-8] and statute [N.J.S.A. 2A:15-

59.1] must both be interpreted strictly against the applicant for an award of fees."

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Tagayun v. AmeriChoice of New Jersey, Inc., 446 N.J. Super. 570, 579 (App.

Div. 2016) (citing LoBiondo v. Schwartz, 199 N.J. 62, 99 (2009)).

Having considered the record, we discern no abuse of discretion in the

denial of defendant's request for attorney's fees and costs. The judge determined

defendant's claim that plaintiff's complaint was frivolous and filed in bad faith

was "insufficiently supported." Other than the self-serving certification of

defendant's general partner, there is no evidence that the complaint lacked a

reasonable basis in law or equity or was filed in bad faith.

Affirmed.

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