Opinion
DOCKET NO. A-5227-12T3
04-09-2015
BLACK CREEK SANCTUARY CONDOMINIUM ASSOCIATION, INC., ROUZBEH SATTARI AND SHARON HONIG, CHERYL KERN, FRANK AND GIOVANNA DUPRÉE, GREGSIMONIAN, KAIVAL AND DIPIKA PATEL, JOHN AND MARYELLEN FARRELLY, DAVID THIERMAN, ANTHONY AND EMILY BARROS, KENNETH AND TIMOTHY STELIGA, JEFFREY AND BERNADETTE PIO, DAVID THIERMAN AND JEAN-CLAUDE LABISSIERE, JAMES AND COLLEEN FANELLY, JOSE MALDONADO, JACK LASCHEVER, A. PAUL AND ANNE DIEDIER, LOUIS, JACQUELINE AND KEITH SPRAUER, WILLIAM AND ELLEN MARKS, MARK AND NILGUN FOLEY, PETER YARROW, MARY HANENIAN, JOHN AND KAREN SWEENEY, MIKE DEMARCO, VARTON AND VIRGINIA MEGERDICHIAN, DAVID AND DENISE JELINSKI, JOHN AND LAURA KRISTINSSON, JOANNE POLLACK, JEFF AND MONICA ASTON, CHOON HEE AND SUNG HO CHOI, DONALD AND PATRICIA SEITZ, BRIAN DONAHUE, PETER GALLO, GREGORY DAVIS, FRANK FERRARO, MICHAEL AND ANNMARIE ANASTASIO, EILEEN AND FRANK CANNAROZZO, MARC AND SUSAN SCHWABER, THOMAS HEINZ, ROBERT KISZKA, GARY PARZIALE, DAWN MAGUIRE, KAATSKIL KLUB, INC., DINO COTILLETTA AND JOSEPH COTILLETTA, AHMAD IBRAHIMBACHA, DAVID STERN, TODD SECCAFICO, VAIDYA HARSHAD, KEVIN AND ESTHER LEE, LARRIS AND PATRICIA LEE, MICHAEL GILHOOLEY AND KENNETH GILHOOLEY, TIMONIEL PEREZ, ANDREW AND KRISTEN FARVER, PATRICIA AND CHRISTOPHER CRONIN, APRIL GINLEY, SUSAN HAWLEY, JOHN JELNICKI, CHARLES JELNICKI, JEFFREY AND DARLENE PIEPER, EDWARD AND LENORE SILVER, LAWRENCE ROCHE, EDWARD AND KAREN ZUCHENBERG, GEORGE KOURGELIS, DAVID AND RUTH SORENSON, MARYANN BUETTI-SGOUROS, MICHAEL EWART, DAVID REED, NAREYMIS SALMEN, ANTHONY HOM, AND ZIAD SAVAL, Plaintiffs-Appellants/Cross-Respondents, and BARBARA AND JOHN MACMILLAN, KEITH VANCE, GERALD LEEN, CHANDRAKANT AND KUNDAN PATEL, DARRYL LIEBERMAN, ROSA RODRIGUEZ AND ISIDORO LOPEZ, ALAIN DERZIE, JULIUS AND THELMA HERSCHBERG, HENRY AND MARY ANG, KENNY GEE, SHELLY AND WAYNE SPENCER, MARK BRAVERMAN AND KAREN HERRERA, DANUTA AND WLODZIMIERZ JEGOROW, ANTHONY AND JANICE KUCZINSKY, JOYCE AVEDISIAN, MARTIN AND JOSEPHINE GAVIN, STEVEN ZEIKOWITZ, NICOLE MAGRO AND TOBY WOLFE, JAMES DREW, ROBERT AND CATHY WEEKS, TODD AND ELOISE HEACOCK, JERIE CHARNOW, DDJD PROPERTIES, LLC, ROBERT AND LYDIA DORSKY, MAHESH AND LUCIA PATEL, ADAM AND DEBI SILBER, ANDREW AND JULIE MILLER, BRUCE FROMMEYER, LEAH BLUMLING, RON AND NADIA KULHANJIAN, STEPHEN AND FRANCES SLOAN, JAMES AND EILEEN GARCHITORENA, TODD MERSHON, ANTHONY AND SUSAN DIMEGLIO, PATRICIA MARINO, DALE BECKNER, MIKE AND BARBARA TROMBLEY, ERIN GADHAVI, ROBERT ARENHOLZ, JANE GREEN, STEPHEN LEAVITT, DAVID FAYNGEASH, ROBERT AND BEVERLY PYSKATY, ANTHONY AND JADWIGA PANUCCIO, KEVLIN HOLDINGS, LLC, JMR CONDO LLC, LLOYD AND JEANNE BOSCA, KEVIN WOODRUFF, ROSALY ROSARIO, WILLIAM LASALLE, STACI HERRUP, JOSEPH AND RENEE SPANO, DIANA MCGONNELL, BARBARA AND LOWELL SHINDLER, MARYELLEN CAHILL, HJS ENTERPRISES, SUE BARAN, CHARLES AND FRANCES DEMARTIN, JEFFREY SCHNAPPER, ANNE SCHNAPPER AND RICHARD SCHNAPPER, NAIDA DZANIC-CEMALOVIC, AGNES PORC, WILLIAM AND ELAINE WIGDER, THOMAS AND PATRICIA BANSBACH, MICHAEL CARR, KEVIN AND SANDRA MORAN, EDWARD HARRIGAN, FRANK AND LILY LIM, ALLEGRA CAPRA, JUAN CARLOS AND ARLES ARENAS, JOSEPH AND JOYCE MATTERA, MICHAEL TOMASULO, ANTHONY AND GABREIELLE MACALUSO, EMILIO DEGUIA AND RUDLEY MARCAHATAL, PETER TUMILO,MICHAEL AND LISA SQUOROS, VICTOR AND CINDY LAGRECA, ROBERT AND MELODY ZELIN, PHILIP DEFALCO, DIAMOND PROPERTIES LLC, STANLEY HERSH, ANTHONY BUFFALINO, DAVID LAIBLE, CAITLIN HART, PETER GERHARD, SUSAN PAGEL AND SANDRA HAINES, JOHN AND DONNA DONALDSON, RICHARD AND BARBARA O'KEEFE, AND FRED AND HILDEGARD HANKE, Plaintiffs, v. FORTRESS INVESTMENT GROUP, L.L.C., INTRAWEST U.L.C., INTRAWEST U.S. HOLDINGS, INC., MOUNTAIN CREEK RESORT, INC., PLAYGROUND DESTINATION PROPERTIES, INC., MOUNTAIN CREEK RESORT, AND MOUNTAIN CREEK, Defendants-Respondents/Cross-Appellants.
Jerome M. Marcus (Marcus & Auerbach, L.L.C.) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellants/cross-respondents (Norris, McLaughlin & Marcus, P.A., and Mr. Marcus, attorneys; Robert Mahoney, of counsel and on the brief; Mr. Marcus, Jonathan Auerbach and Marc B. Auerbach, on the brief). Cory Mitchell Gray argued the cause for respondents/cross-appellants (Greenberg Traurig, L.L.P., attorneys; Mr. Gray, on the brief; Aaron Van Nostrand, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fuentes, Ashrafi, and O'Connor. On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3417-07. Jerome M. Marcus (Marcus & Auerbach, L.L.C.) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellants/cross-respondents (Norris, McLaughlin & Marcus, P.A., and Mr. Marcus, attorneys; Robert Mahoney, of counsel and on the brief; Mr. Marcus, Jonathan Auerbach and Marc B. Auerbach, on the brief). Cory Mitchell Gray argued the cause for respondents/cross-appellants (Greenberg Traurig, L.L.P., attorneys; Mr. Gray, on the brief; Aaron Van Nostrand, on the brief). PER CURIAM
Plaintiffs appeal from a final judgment dismissing with prejudice all causes of action in their complaint and imposing massive attorneys' fees upon them under their contracts to purchase real property from a defendant-developer. We reverse
Plaintiffs are a condominium association and its members who purchased newly-built condominiums in a proposed "resort" development in Sussex County. Defendants are the developer and associated entities that marketed the residential units as an integrated part of a four-season residential and recreational community that was magnified in appeal and value by its own proposed "Village Center" of upscale shops, galleries, restaurants, and entertainment venues. Defendants touted their development plan as one that matched similar, successful "resort" communities built by the same developers in other parts of the world.
By our count, 132 of the approximately 235 plaintiffs named in the complaint have settled their claims with defendants and are no longer involved in the case.
Several years after purchasing their units, plaintiffs sued the developers and the related entities alleging they were misled by these marketing representations. They claimed defendants were never "committed" to build the Village Center in accordance with the sales pitch, and the value of their condominiums decreased precipitously because of defendants' decision not to follow through on building the Village Center.
Defendants assert they never promised to build the Village Center and that economic conditions beginning in 2007 delayed some aspects of the planned development. They rely on provisions in the public offering statements, the sales contracts, the deeds, and other documents establishing that the developer could change its plans for any reason or no reason at all and waiving any claim by the buyers based on the sales representations.
On defendants' motions, Judge Stephan C. Hansbury (the first judge) dismissed some of plaintiffs' causes of action but declined to dismiss others. The judge concluded that the contracts and other written disclaimers precluded any claims by plaintiffs for breach of contract or fraud based on sales representations that preceded execution of plaintiffs' contracts. He also determined that five causes of action would survive defendants' motions to dismiss and for summary judgment. The causes of action that remained were: (1) breach of the covenant of good faith and fair dealing, (2) common law fraud with respect to post-contract representations made by defendants, (3) violation of the Consumer Fraud Act similarly based on post-contract representations, (4) unjust enrichment, and (5) promissory estoppel, again based on alleged promises made to plaintiffs after they had signed purchase contracts that contained disclaimers.
Defendants moved promptly for reconsideration. The motions were heard just a few weeks later by a different trial judge. The second judge granted summary judgment to defendants dismissing all five remaining claims and subsequently awarded $3.2 million in attorneys' fees to defendants under the terms of the purchase contracts.
Plaintiffs appeal from the May 22, 2013 final judgment entered by the second judge and the February 22, 2013 order on reconsideration. Defendants have filed cross-appeals from some of the issues decided against them by the earlier orders of the first judge on January 10, 2013, and plaintiffs also challenge some of the first judge's earlier orders dismissing parts of their complaint.
We conclude that the decision of the first judge should not have undergone review as it did by the second judge. We reverse the second judge's rulings on procedural grounds and reinstate those issued by the first judge. Because our reversal means there is no final judgment, we decline to decide on an interlocutory basis the merits of the additional issues raised in the cross-appeal or by plaintiffs.
The facts of the case are complex, but we need not narrate them in detail for purposes of the current appeal. Instead, we will quote the summary of the case that was recited by the second judge on defendants' motion for reconsideration:
Defendants are the developers of a large condominium complex which the parties usually refer to as the Mountain Creek Resort. That resort is located in a relatively isolated part of northern New Jersey. Sale of individual units began around 2002, the exact date not critical.
The filed plans, brochures contemplated the construction of what the parties describe as "The Village at Mountain Creek." As planned the developers contemplated numerous restaurants, bars, entertainment venues, and upscale shops. The thrust of the sales pitches to individuals emphasized the added value to the individual residential condominium units resulting from this "village."
Every pertinent filed document and non-filed document and the contracts for sale of the residential units and other documents emphasized in no uncertain terms that the developers might never build the village. The plaintiffs acknowledge on the record and with respect to the summary judgment motion that the developers reserve the right to not build the village for any reason whatsoever.
At some time probably in 2006 the developers decided that they would not build the village for the foreseeable future. It appears that . . . despite that determination the developers continued to either permit or urge their sales agents to emphasize the boon that the village would be
to the residential owners and their commitment to build the village.
Sometime around 2007 it was announced that the village would not be built for now. And as a result we have to assume as a fact for purposes of this motion that the residential units experienced the sharp decrease in price, a drop which exceeded any decrease in real estate values resulting from the general economic problems which began to arise at about that time and which have continued to date.
The word "emphasized" as used by the second judge in this context seems to be an overstatement. Our de novo review of the record indicates that the sales contracts and other referenced documents contained disclaimers of any guarantee or promise that the Village Center would be built and granted discretion to defendants to modify the proposed development plans.
This short narrative should not be mistaken for a thin evidentiary record. Plaintiffs presented substantial evidence to show that the condominiums were offered for sale as part of an integrated community, not just a residential complex. They relied on the testimony of a former salesperson and the marketing documents to prove that Mountain Creek Resort was presented as a "world-class, four-season, village-centered destination resort . . . a vibrant pedestrian village, fantastic lodging and a world of unforgettable experiences!" Upon completion of all four "waves" of the planned development, the resort would become "a Great Playground of the Western World."
Ten years after plaintiffs began purchasing their condominiums, the shops, galleries, restaurants, and entertainment venues were nowhere to be found. For the time being, those plans were scratched from the overall development. The Village Center was nothing but pictorial renderings in sales brochures and an unfulfilled marketing strategy. The allure of the four-season resort had faded into a mere possibility that the village in some form would be built someday.
At the same time, the economic downturn in real estate and the construction industry was an undeniable and unforeseeable turn of events. Defendants explained their departure from their original plans by the economic realities of the times and their inability to justify further development of the resort community without the prospect of financial success.
In his written decision, the first judge held that plaintiffs were bound by the provisions of their purchase contracts that disclaimed reliance on sales representations. He concluded that plaintiffs could not claim breach of contract, fraud, and related causes of action based on pre-contract marketing communications.
He also considered, however, plaintiffs' allegations that defendants continued to misrepresent their "commitment" to building the Village Center after the execution of purchase contracts and after those plans were put on hold by defendants. According to plaintiffs, these alleged misrepresentations induced some plaintiffs to go through with closing on their contracts when they could have canceled the contracts and caused others to delay reselling their units. In considering defendants' "communications after the parties executed the sales contracts," the first judge found that some of the defendants "engaged in an aggressive marketing plan to communicate to Plaintiffs that they were 'committed' to building the Village and to instill within them an 'unshakeable belief that the Village would be built." He viewed these communications as "promises" not covered by the contractual disclaimers and concluded that "a material issue of fact exists with respect to whether, taking the record as a whole, [the developer's] intentions aligned with its representations."
On defendants' motions for reconsideration, the second judge listed all the documents by which defendants disclaimed liability in the event they did not finish the resort community as planned. He agreed with the first judge that these contractual provisions and related documents were binding on plaintiffs and barred any claims based on the sales representations that led them to sign purchase contracts. The second judge concluded that plaintiffs bore the economic risk of a change in the development plans.
Viewing the evidence differently from the first judge, the second judge also concluded that plaintiffs did not have evidence demonstrating that they relied on the continuing post-contract representations. As a further basis for granting summary judgment on the remaining claims, he posited that plaintiffs could not prove the post-contract representations caused their losses because they were bound by their contracts to close on the purchases even if defendants had revealed they would not build the Village Center, or because cancellation of their contracts would not provide to them the equivalent of the damages they now seek in this lawsuit.
Plaintiffs contend some of these grounds in the second judge's decision were not raised by defendants in support of summary judgment and originated with the second judge. They also argue that the accelerated manner in which the second judge heard the motion for reconsideration gave plaintiffs no opportunity to challenge the judge's reasoning or his reliance on new grounds to dismiss their complaint.
--------
The first judge had analyzed the evidence and provided rational explanations for granting summary judgment on some of plaintiffs' claims and denying it on others. Whether or not his detailed written decision was correct as a matter of law is not the issue we must decide today. The issue is whether the second judge correctly applied the long-settled standards for deciding a motion for reconsideration of an interlocutory decision made by a fellow trial judge. We hold he did not.
A trial judge may reconsider and vacate an interlocutory order if the judge determines the matter was incorrectly decided. Lombardi v. Masso, 207 N.J. 517, 539 (2011); Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 257, 263-64 (App. Div. 1987), certif. denied, 110 N.J. 196 (1988). But our system of civil litigation does not permit one trial judge to review whether the decision of another judge "of coordinate jurisdiction" is correct in the same way that an appellate court does. See Akhtar v. JDN Props. at Florham Park, LLC, ___ N.J. Super. ___, ___ (App. Div. 2015) (slip op. at 11) ("[R]elitigation of an interlocutory order before successive judges of coordinate jurisdiction is generally disfavored."); Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 14 (App. Div. 2001) (disapproving "lateral appeals" of the decision of one trial judge to a different trial judge); Lewis v. Preschel, 237 N.J. Super. 418, 422 (App. Div. 1989) (same).
In Cineas v. Mammone, 270 N.J. Super. 200, 207-08 (App. Div. 1994), we stated: "judges should not vacate orders of judges of co-ordinate jurisdiction unless there are exceptional circumstances" or "unless there has been a material change in the facts or available evidence." There were no exceptional circumstances in this case, nor any change in the facts or the evidence. See Clarkson v. Kelly, 49 N.J. Super. 10, 15-16 (App. Div. 1958). The first judge's decision was not "a denial of justice under the law" that warranted the second judge's contrary rulings. Id. at 18 (quoting Hartpence v. Grouleff, 15 N.J. 545, 548 (1954)).
A second judge would also be justified in reconsidering and vacating a prior order if there was an intervening change in the law or an authoritative judicial decision that affected the prior decision. See Fujisawa Pharm. Co. v. Kapoor, 115 F.3d 1332, 1339 (7th Cir. 1997) ("The doctrine of law of the case requires the second judge in a case in which there has been a reassignment to abide by the rulings of the first judge unless some new development, such as a new appellate decision, convinces him that his predecessor's ruling was incorrect."). There was no change in the law in this case.
The second judge simply had a different view of the evidence and the applicable law from that of the first judge. Whether his view ultimately is determined to be correct or not, it was not within the scope of his authority as a trial judge to review the first judge's decision and to contradict it as he did.
To explain his departure from the first judge's decision, the second judge made reference to the standard for reconsideration of trial court rulings: "1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)). But the first judge did not reach a palpably incorrect conclusion or fail to consider competent evidence. Indeed, his detailed written opinion demonstrates careful attention to the facts and the law that applied to each count of plaintiffs' complaint. That decision should have been left intact pending a final resolution of the case and the parties' opportunity for appellate review.
While our case law has recognized some flexibility in the application of the procedural limitations we discuss here, see Akhtar, supra, ___ N.J. Super. at ___ (slip op. at 12); Hart v. City of Jersey City, 308 N.J. Super. 487, 497-98 (App. Div. 1998); Sisler v. Gannett Co., 222 N.J. Super. 153, 159-60 (App. Div. 1987), certif. denied, 110 N.J. 304 (1988), the decision of the second judge essentially amounts to a one-judge review of a trial court decision, the equivalent of the appellate process reserved for this court and the Supreme Court.
We vacate the May 22, 2013 judgment and the February 22, 2013 order for summary judgment issued by the second judge, and reinstate the January 10, 2013 orders issued by the first judge. We do so on procedural grounds and without adjudicating the merits of the parties' claims and defenses. The case shall be restored to its status as of the time of the filing of defendants' motions for reconsideration. All other issues raised by plaintiffs and defendants are preserved pending a final judgment in the case.
Reversed and remanded for further proceedings in conformity with this decision. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION