DEBORAH BURKE VS. FRANKE M. DONLON, III(L-0707-14, MORRIS COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-3802-15T2
DEBORAH BURKE1
and ERIK KORNACKI,
Plaintiffs-Respondents,
v.
FRANKE M. DONLON, III,2
Defendant-Appellant,
and
ANNE D. MORRISON, ESQ.,
WEICHERT REALTORS and ITS AGENT
SERVANT, JENNIFER FONDONTS,
Defendants.
_______________________________
Argued May 24, 2017 – Decided August 11, 2017
Before Judges Simonelli, Gooden Brown and
Farrington.
On appeal from the Superior Court of New
Jersey, Law Division, Morris County, Docket
No. L-0707-14.
Justin H. Scheier argued the cause for
appellant.
1
Improperly pled as Debra Burke.
2
Improperly pled as Frank Donalon, III.
John P. Dell'Italia argued the cause for
respondents (Dell'Italia & Santola,
attorneys; Mr. Dell'Italia, on the brief).
PER CURIAM
In this real estate matter, defendant Franke M. Donlon, III
appeals from the February 25, 2016 Law Division order, which
entered judgment in favor of plaintiffs Deborah Burke and Erik
Kornacki following a bench trial. For the following reasons, we
affirm in part, reverse in part, and remand for entry of an amended
final judgment.
We derive the following facts from the record. On August 10,
2010, the parties executed a contract of sale regarding defendant's
property in Randolph with an estimated closing date of October 15,
2010. The transaction was a short sale subject to the approval
of defendant's two mortgage lenders, IndyMac Mortgage Services
(IndyMac) and Green Tree. When the approvals were not obtained
by October 13, 2010, the parties executed a use and occupancy
agreement (U&O), and plaintiffs moved into the property on November
1, 2010.
The U&O required no rent payments from plaintiffs, but
required them to pay for all utilities, lawn care, snow removal,
maintenance, and repairs. Paragraph nine of the U&O provided:
This [U&O] shall extend only to that date when
Seller's lender accepts or rejects in writing
Buyer's contractual offer to purchase. Should
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Seller's lender reject Buyer's offer to
purchase (or otherwise deny Seller's short
sale application, or accept such application
subject to conditions unacceptable to Seller
including non-release[sic] of Seller by lender
or any lienholder), Buyer shall have the
option to (a) increase its offer to Lender's
minimum price if applicable, (b) begin a three
month occupancy agreement with Seller at
$2,300 per month to enable Buyer the time to
locate new housing, or (c) vacate the Premises
within 7 days of receipt of written notice
from Seller of such rejection, denial or
imposition of conditions from Seller. In the
event Buyer seeks to increase the purchase
price under subsection (a), Buyer agrees to
move quickly and diligently through a
"negotiation" process (if any) with lender and
in the event such process takes more than 15
days, Seller has the right to terminate the
Contract and provide Buyer with 3 days'[sic]
notice to vacate the Premises. On or before
the initial occupancy date, Buyer shall
deposit the sum of $2,300 as security to be
held by Seller in Seller's attorney trust
account until [c]losing at which time it will
be credited to Buyer. If title does not close,
Seller may use the deposit to cover loss
incurred by Seller for Buyer's breach of this
Agreement. In such event, the deposit (or
balance thereof) shall be returned to Buyer
within 30 days of the date Buyer vacates the
Premises.
Paragraph ten of the U&O further provided:
Should closing of title not take place and the
parties enter into a three-month [sic]
occupancy agreement . . . and Buyer does not
vacate the Premises on the appointed date
therein, Seller may initiate legal action to
remove Buyer from the Premises, Buyer shall
be responsible for any and all legal and court
fees incurred by Seller in bringing an
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eviction or any action to enforce the terms
of this [U&O].
Paragraph twelve of the U&O provided, "Buyer hereby waives
its right to terminate the Contract of Sale as set forth in ¶10
of the Contract of Sale (See ADM Letter dated 9/8/10) . . . and
SHM Letter dated 8/17/10)."3
The SHM letter contained the following amendment to paragraph
ten:
Closing shall be targeted to take place
at the office of the Buyers' attorney on or
about October 15, 2010. While the Buyers
recognize that the within sale may be subject
to the approval of Seller's lender, if closing
does not take place within sixty days of the
conclusion of attorney review, Buyers shall
have the option to cancel the Contract.
Sellers [sic] agree that if all conditions of
sale have been met and he has vacated the
premises, Buyers may be permitted to take
occupancy prior to closing of title.
The ADM letter accepted the amendment as to paragraph ten
with caveats:
Acceptable, provided (a) Buyer's right to
cancel the Contract is upon 15 days written
notice and opportunity to cure; and (b) Buyer
has the right to occupy the Property as long
as Buyer waives any right to cancel Contract,
Contract remains executory, and Buyer pays
expenses from the date of occupancy.
3
SHM appears to refer to an August 17, 2010 letter from plaintiffs'
attorney, Sheila H. Mylan, Esq., and ADM appears to refer to a
September 8, 2010 letter response from defendant's attorney, Anne
D. Morrison, Esq.
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On September 27, 2010, defendant submitted a short sale
application to the first lienholder, IndyMac. On October 23,
2010, the parties entered into the U&O.
Defendant did not submit a short sale application to the
second lienholder, Green Tree, until May 6, 2013. On May 21,
2013, IndyMac informed defendant that the short sale request had
been suspended and the file was no longer under review because
Green Tree did not meet investor requirements.
The balance owed on the second mortgage was $73,375.74, but
Green Tree agreed to accept $16,000 to be paid by August 31, 2013.
On May 28, 2013, defendant asked plaintiffs to contribute $15,413
to secure Green Tree's approval, given that plaintiffs had occupied
the property rent-free for two years. On May 31, 2013, plaintiffs
declined to contribute, but advised they remained interested in
purchasing the property. They further advised they would terminate
the contract and vacate the property if defendant was unsuccessful
in negotiating with the lenders to sell the property at the
contract price. On June 28, 2013, Green Tree approved the
application.
On June 27, 2013, plaintiffs terminated the contract and
demanded return of their deposit. On July 11, 2013, defendant
rejected the termination and advised he had received approval from
Green Tree and expected approval from IndyMac. On July 15, 2013,
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IndyMac issued an approval letter conditioned upon receipt of an
acceptance by Green Tree. IndyMac's approval letter indicated
that the first mortgage balance was $350,375.20, and IndyMac would
pay Green Tree $6000.
On July 27, 2013, defendant's attorney sent a time of the
essence letter to plaintiffs' new attorney setting August 9, 2013
as the closing date. The closing did not occur. Plaintiffs
vacated the property in August 2013, and filed a complaint for the
return of their deposit. On June 3, 2014, plaintiffs filed a
third amended complaint, alleging breach of contract, breach of
fiduciary duty, and negligence. On December 12, 2014, defendant
counterclaimed for breach of contract and unjust enrichment.
Defendant sought specific performance, rent for thirty-four months
at $2,300 per month or $78,200, and money for alleged damage to
the property.
Following a bench trial, Judge W. Hunt Dumont found no
material breach of the contract because three years was an
unreasonable amount of time for defendant to obtain short sale
approval. In finding the time unreasonable, Judge Dumont noted
defendant did not apply to Green Tree for approval for more than
two years after the contract was executed. He noted that the
contract provided "if title does not close, Seller may use the
deposit [$2,300] to cover loss[es] incurred by Seller for Buyer's
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breach of this Agreement." Judge Dumont reasoned that if
plaintiffs had breached the contract, that provision essentially
provided for liquidated damages.
Other than the provision that plaintiffs were not permitted
to terminate the contract, Judge Dumont noted the contract was
devoid of terms regarding the parties' rights if plaintiffs
terminated. He concluded from that analysis that the only losses
defendant could claim under the contract were equitable in nature
for the time plaintiffs were in possession of the property. The
judge found defendant had no contractual right to specific
performance, and that specific performance would be too harsh
under the circumstances. The judge found further that the U&O
expressly provided that the parties were not in a landlord-tenant
relationship, and there would be no charge for plaintiffs' use and
occupancy of the property. Therefore, defendant had no reasonable
expectation of obtaining rent which he sought in the amount of
$78,200. In denying defendant equitable relief, the judge again
pointed to the three years it took defendant to obtain the short
sale approvals.
Finally, the judge denied plaintiffs' claims for $10,700 for
lawn care, property damage, and other items the U&O required them
to pay, and awarded them $27,179.50 of their $38,300 deposit. The
judge awarded defendant the balance of $11,120.50. In doing so,
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Judge Dumont denied defendant's request for $11,350 to replace a
24-foot Norwegian Spruce tree plaintiffs cut down after it was
struck by lightning, instead awarding defendant $850 for tree
removal costs.
Defendant filed a motion for reconsideration which was denied
on April 15, 2016, for reasons set forth on the record. This
appeal followed. On appeal, defendant argues that Judge Dumont
erred by (1) rewriting the contract of sale and the U&O; (2)
failing to order plaintiffs to pay for all the damages caused to
the property; (3) basing his decision, in part, on "personal
experience", not evidence; (4) failing to order specific
performance requiring plaintiffs to purchase the property; and (5)
failing to order plaintiffs to pay any rent or money for living
at the property for free and thereby permitting plaintiffs to be
unjustly enriched.
Our review of a trial court's fact-finding in a non-jury case
is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150,
169 (2011). "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[.]'" Llewelyn v. Shewchuk, 440 N.J.
Super. 207, 213 (App. Div. 2015) (quoting Rova Farms Resort, Inc.
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v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). "However,
we confer no deference to a trial court's interpretation of the
law, which we review de novo to determine whether the judge
correctly adhered to applicable legal standards." Id. at 214.
"[F]or mixed questions of law and fact, [we] give deference . . .
to the supported factual findings of the trial court, but review
de novo the lower court's application of any legal rules to such
factual findings." Sullivan v. Port Auth. of N.Y. & N.J., 449
N.J. Super. 276, 283 (App. Div. 2017) (citing State v. Pierre, 223
N.J. 560, 577 (2015)).
The objective in construing a contractual provision is to
determine the intent of the parties. Mantilla v. NC Mall Assocs.,
167 N.J. 262, 272 (2001) (citation omitted). The judicial task
is simply interpretative; it is not to rewrite a contract for the
parties better than or different from the one they wrote for
themselves. See Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595
(2001) (citation omitted). Thus, we should give contractual terms
"their plain and ordinary meaning[,]" M.J. Paquet, Inc. v. N.J.
DOT, 171 N.J. 378, 396 (2002) (citation omitted), unless
specialized language is used peculiar to a particular trade,
profession, or industry. See VRG Corp. v. GKN Realty Corp., 135
N.J. 539, 548 (1994) (citation omitted).
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Defendant points to the U&O to support his argument that the
terms of the U&O prohibited plaintiffs from terminating the
contract to purchase the property. Defendant argues that once the
U&O terms were negotiated and plaintiffs began residing in the
property, they lost the ability to cancel the contract. Defendant
repeats the well-known adage that "[c]ourts cannot make contracts
for parties. They can only enforce the contracts which the parties
themselves have made." Kampf v. Franklin Life Ins. Co., 33 N.J.
36, 43 (1960) (citation omitted). Plaintiffs argue the judge
correctly found the delay in finalizing the sale was a reasonable
basis on which to allow termination.
Judge Dumont wrestled with the failure of the parties to
specify an end date for the closing of title, stating: "[t]he only
contractual provision regarding a breach by buyer refusing to
close states: 'if title does not close, Seller may use the deposit
[$2,300] to cover loss incurred by Seller for Buyer's breach of
this Agreement.'" Since the parties did not agree on a specific
time, the law infers, as Judge Dumont found, the contract will be
performed within a reasonable amount of time. River Dev. Corp.
v. Liberty Corp., 45 N.J. Super. 445, 464 (Ch. Div. 1957), aff'd,
51 N.J. Super. 447 (App. Div. 1958), aff'd 29 N.J. 239 (1959).
"What constitutes a reasonable time . . . 'is usually an
implication of fact, and not of law, derivable from the language
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used by the parties considered in the context of the subject matter
and the attendant circumstances, in aid of the apparent
intention.'" Mazzeo v. Kartman, 234 N.J. Super. 223, 231 (App.
Div. 1989) (citing West Caldwell v. Caldwell, 26 N.J. 9, 28
(1958)). The "intent expressed or apparent in the writing"
memorializing an agreement controls. Friedman v. Tappan Dev.
Corp., 22 N.J. 523, 531 (1956).
Terms are generally implied because:
the parties must have intended them and have
only failed to express them . . . because they
are necessary to give business efficacy to the
contract as written, or to give the contract
the effect which the parties, as fair and
reasonable [people], presumably would have
agreed on if, having in mind the possibility
of the situation which has arisen, they
contracted expressly in reference thereto.
[Mazzeo, supra, 234 N.J. Super. at 231
(quoting William Berland Realty Co. v. Hahne
& Co., 26 N.J. Super. 477, 487 (Ch. Div. 1953),
modified, 29 N.J. Super. 316 (App. Div.
1954)).]
An examination of the contract and the U&O reveal ample basis
for the court to conclude that the parties did not intend either
to languish for over two-and-a-half years.
All indications are that both sides anticipated the obstacles
to closing would be resolved expeditiously. The original contract
of sale dated August 10, 2010 set the estimated closing date as
October 15, 2010. When it became apparent that defendant would
11 A-3802-15T2
not receive short sale approval before that date, the parties
signed the U&O on October 23, 2010. In paragraph nine, there is
evidence that the parties anticipated lender approval within
fifteen days, as the agreement stated: "Buyer agrees to move
quickly and diligently through a "negotiation" process (if any)
with lender and in the event such process takes more than 15 days,
Seller has the right to terminate the Contract and provide Buyer
with 3 days-notice to vacate the Premises." A further indication
of early resolution is the parties' agreement to cover damages by
a deposit of $2,300 or one-month's occupancy. Another indication
that the parties anticipated that the U&O would be short in
duration was the agreement that plaintiffs would pay no per diem
charges to defendant for the occupancy.
We agree with Judge Dumont's finding of no material breach
in plaintiffs' withdrawal of their offer to purchase, based upon
his determination that the lapse of time between the execution of
the U&O and defendant's application for short sale approval "over
two years after the contract of sale was executed" was unreasonable
under the circumstances. However, we continue our review.
The terms of the U&O expressly provide that if defendant's
lenders accepted his short sale application subject to terms
unacceptable to defendant, plaintiffs had the option to: (a)
increase the offer; (b) begin a three-month occupancy at $2,300
12 A-3802-15T2
per month; or (c) vacate within seven days. The record reveals
the option selection was triggered on May 21, 2013, when IndyMac
advised defendant that the short sale request had been suspended
and the file was no longer under review because the second lien
did not meet investor requirements. Notwithstanding, defendant's
attorney wrote to plaintiffs on May 28, 2013, inquiring whether
plaintiffs would pay $15,413 to Green Tree to secure sale approval.
On May 31, 2013, plaintiffs refused to contribute to the Green
Tree demand and did not vacate within seven days.
Although defendant testified he was not sure of the exact
date plaintiffs vacated the property, Kornacki testified that
plaintiffs vacated the property in August 2013. Thus, a three-
month occupancy began in June 2013 and continued through August
2013. Prior to trial, the parties stipulated that,
[i]n the event [the court] rules [p]laintiffs
were unjustly enriched and/or required to pay
rent/money to [d]efendant for the time
[p]laintiffs resided at the subject property,
the rental amount shall be $2,300.00/month and
[the court] shall determine how many months
[p]laintiffs are required to pay rent for[.]
As determined by Judge Dumont, there is no basis for
defendant's claim for rent beyond the three-month occupancy. The
U&O specifically and unambiguously provided that "Buyer agrees to
pay Seller a use and occupancy charge of $0.00 per diem for
occupancy of the Premises, or a total of $0.00, such sum to be
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paid to Seller prior to Buyer's taking occupancy". Further, the
U&O specifically eschews a landlord-tenant relationship, stating
"[n]othing herein shall be construed to establish a landlord-
tenant relationship between the parties as set forth in N.J.S.A.
2A:18-81.1 et seq." Finally, the U&O authorized eviction as
defendant's only recourse if plaintiffs failed to vacate the
premises in the event a closing did not take place, with plaintiffs
to be responsible for costs and legal fees. Accordingly,
consistent with the U&O, we remand for entry of an amended final
judgment to award defendant $6900 for plaintiffs' occupancy of the
premises for the months of June, July and August 2013.
Defendant argues further that specific performance should
have been granted, because the non-cancellation provision was an
integral part of the agreement, and the court erred in permitting
plaintiffs to cancel the contract. Plaintiffs counter that
specific performance -- as agreed by defendant's counsel -- would
be a harsh consequence, and the court properly found it to be so.
In general, to establish the remedy of specific performance,
a party 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. 2005), certif. denied, 183 N.J. 591
(2005). See 25 Williston, Contracts (Lord ed., 2002) § 67:2 at
186. Further, the party must show that "the terms of the contract
14 A-3802-15T2
are expressed in such fashion that the court can determine, with
reasonable certainty, the duties of each party and the conditions
under which performance is due." Salvatore v. Trace, 109 N.J.
Super. 83, 90 (App. Div. 1969), aff'd o.b., 55 N.J. 362 (1970).
Lastly, the party must demonstrate that an order compelling
performance of the contract will "not be harsh or oppressive."
Stehr v. Sawyer, 40 N.J. 352, 357 (1963); Ridge Chevrolet-
Oldsmobile, Inc. v. Scarano, 238 N.J. Super. 149, 155 (App. Div.
1990).
The right to specific performance turns not only on whether
a plaintiff has demonstrated a right to legal relief, but also
whether the performance of the contract represents an equitable
result. Marioni, supra, 374 N.J. Super. at 599. That is, after
determining that the purchaser has a legal right to recovery, a
court of equity must make a further determination that has been
deemed to be discretionary. See, e.g., Friendship Manor, Inc. v.
Greiman, 244 N.J. Super. 104, 113 (App. Div. 1990) (specific
performance is a discretionary remedy resting on equitable
principles), certif. denied, 126 N.J. 321 (1991).
We are satisfied that Judge Dumont correctly exercised his
discretion in denying specific performance, primarily because the
equities in this case are far from clear. The record is devoid
of any substantive proof that the contingencies attached to the
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short sale approvals were ever satisfied. As the judge noted, "no
one can show me a letter in which [defendant] indicates that you've
paid the money and therefore, you anticipate Green[]Tree will go
through with approving." Without such a letter, or testimony upon
which to base a finding, the court was unable to determine, with
reasonable certainty, the duties of each party and the conditions
under which performance was due. Given the lack of clarity
regarding the terms under which performance was to be had, we find
the judge's refusal to grant specific performance well within his
discretion. The absence of expeditious performance on the part
of defendant should not be rewarded with the admittedly harsh
remedy of specific performance. Stehr, supra, 40 N.J. at 357.
Defendant argues Judge Dumont erred by allowing plaintiffs
to terminate the contract based upon the delayed lender approval.
In support of this argument, defendant highlights plaintiffs'
failure to complain of the delay. Further, defendant asserts that
the U&O did not permit plaintiffs to terminate due to an increase
in price, and, even if it had, the price was never actually
increased. Defendant relies on the absence in the record of any
evidence regarding how long a short sale approval should take.
Defendant is correct that the U&O contained an explicit waiver
of termination provision with a single exception, rejection of the
purchase offer by the lenders. Because there is no proof that
16 A-3802-15T2
defendant satisfied the contingencies of the short sale and
obtained final approval to consummate the sale, we are satisfied
that Judge Dumont's determination that the delay in closing
combined with the absence of a contractual end date justified the
finding that plaintiffs did not materially breach the contract.
Finally, we address defendant's claim that Judge Dumont erred
in failing to require plaintiffs to pay replacement costs for the
Norwegian Spruce which was damaged when it was struck by lightning.
During the trial, the judge questioned defendant about the tree
replacement quote. After ascertaining the quote for replacement
of the tree was $13,054, the judge inquired, "are you seeking the
plaintiff to pay for that? Even though it was hit by lightning?"
Defendant responded that he had not known the tree had been hit
by lightning prior to plaintiffs' testimony earlier in the day.
Subsequently, the judge ruled as follows:
The court will allow [d]efendant to be
reimbursed in full for each of those items,
with the exception of restoration of the
damaged tree, for that loss, the court will
allow the cost of removing the tree ($850),
but not the costs of acquiring a new 24-foot
Norwegian Spruce ($11,350). That is excessive
and unwarranted.
Although the U&O unequivocally stated that plaintiffs must
indemnify defendant for any damages that occur during their
occupancy of the property, the parties did not specify a formula
17 A-3802-15T2
for calculating damages in the event of tree loss. "The
predominant measure of damages in cases involving the destruction
or removal of trees and ornamental shrubs is the diminution-of-
market-value measure. Although various other measures have been
applied by courts, the law is not rigid and "ordinarily the measure
of damages is the resulting depreciation in the value of the land
on which the trees or shrubs stood." Mosteller v. Naiman, 416
N.J. Super. 632, 639 (App. Div. 2010) (citing Kristine Cordier
Karnezis, Annotation, Measure of Damages for Injury to or
Destruction of Shade or Ornamental Tree or Shrub, 95 A.L.R. 3d 508
§ 2 (2008)).
Cases addressing value ordinarily involve the tortious
removal of trees. There is no evidence in the record that
plaintiffs purposely caused the destruction of the tree. The
record is devoid of any cause of damage to the tree other than
plaintiffs' testimony that the tree was struck by lightning,
causing part of it to fall on the house and requiring removal of
the tree top. Presumably, the tree would have suffered the same
damage regardless of who was in possession of the property. We
find no abuse of discretion in the court's judge's award of $850
for removal of the remainder of the tree. In so finding, we note
defendant presented no evidence of a peculiar value to the damaged
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tree, nor loss in value of the property caused by the loss of the
tree.
Affirmed in part, reversed in part, and remanded for entry
of an amended final judgment consistent with this opinion.
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