Goldman South Brunswick Partners v. Stern

• Decision Date: 06 July 1993
• Citation: Goldman South Brunswick Partners v. Stern, 627 A.2d 1160, 265 N.J.Super. 489 (N.J. Super. App. Div. 1993)
• Parties: GOLDMAN SOUTH BRUNSWICK PARTNERS, Plaintiff-Respondent, v. A. Joseph STERN, Eastern Homes, L.P., and Raymond Road II Corp., Defendants-Appellants (Two Cases).
• Court: New Jersey Superior Court — Appellate Division

Page 489

265 N.J.Super. 489

627 A.2d 1160

GOLDMAN SOUTH BRUNSWICK PARTNERS, Plaintiff-Respondent, v. A. Joseph STERN, Eastern Homes, L.P., and Raymond Road II Corp., Defendants-Appellants (Two Cases).

Superior Court of New Jersey Appellate Division.

Submitted April 20, 1993.

Decided July 6, 1993.

Greenbaum, Rowe, Smith, Ravin & Davis, Iselin, attys. for appellants (David L. Bruck, of counsel; Bruce D. Greenberg and Ellen A. Silver, on the brief).

Hellring, Lindeman, Goldstein & Siegal, Newark, attys. for respondent (Charles Oransky, of counsel; John A. Adler, on the brief).

Before Judges BAIME and WALLACE.

The opinion of the court was delivered by

WALLACE, J.S.C. (temporarily assigned).

This is an appeal from the grant of summary judgment in favor of plaintiff in two separate mortgage foreclosure complaints which were consolidated in the Chancery Division. Plaintiff is a New Jersey partnership which owned vacant land in South Brunswick Township. Defendant Joseph Stern is a real estate developer. Defendant Raymond Road II Corp. is a corporation owned and controlled by Stern. Defendant Eastern Homes, L.P. is a New Jersey limited partnership in which Stern is a general partner. Defendants contend that the trial court erred in denying their motion to release a portion of the property from the lien of the mortgage pursuant to the agreement. We disagree and affirm.

I

The facts are uncomplicated. On December 30, 1986, pursuant to an agreement dated November 21, 1983, plaintiff sold to defendants a portion of the land owned by plaintiff in South Brunswick on which defendants developed single-family homes and town houses known as "Princeton Walk." (Tract I). On May 2, 1989, plaintiff sold to defendants the balance of the land consisting of approximately 222 acres. (Tract II). The purchase price of Tract II was $7,390,184.97. The portion of the purchase price allocated in cash was $1,849,796.24. After taking into account "credits," defendants then gave plaintiff two promissory notes in the amount of $3,635,887.12 and $1,121,250 for the remainder of the purchase price. Both notes were secured by a mortgage on Tract II.

The Rider to the mortgage provided in pertinent portion:

(A) Mortgagor shall be entitled to obtain, without charge or payments therefor, the release from the lien of this Mortgage of any open space, roads ... [which] are otherwise required to allow for development of the subject property in accordance with Mortgagor's development plan....

(B) Any payments made by Mortgagor for releases of land from the lien of this Mortgage shall be applied against the principal balance otherwise due hereunder.

(C) Mortgagor shall, at any time or times, be entitled to obtain the release of lands from the lien of this Mortgagee upon payment to the Mortgagee for each residential unit and related undivided interests in common elements so related an amount determined as follows:

(1) For each residential unit, including single family dwellings and townhouse units ... to be released, there shall be paid ... $13,000 [per unit]. In addition, for each acre not subdivided into units to be released from the lien of this Mortgage, there shall be paid ... $40,000 [per acre].

....

[ (2) ] The location of released units and related undivided interests in common elements and/or released acreage shall be as specified by Mortgagor provided....

Such releases shall be provided by Mortgagee to Mortgagor forthwith upon request therefor by Mortgagor accompanied by the appropriate payment and the appropriate form of release....

....

(D) Anything herein contained to the contrary notwithstanding, it is expressly understood and agreed between the parties that the lien of the within Mortgage shall be subject and subordinate to the following: A mortgage or mortgages from one or more institutional lenders for land, land improvement and/or construction purposes.... For purposes hereof, "institutional lenders" shall mean and refer to any bank, savings bank....

....

(G) In the event of any default under the terms, covenants and conditions of this Mortgage or the Note which it secures, resulting in an acceleration of the principal amount due ... the sole remedy of the Mortgagee shall be to foreclose on the property covered by this Mortgage and ... there shall be no liability otherwise on the part of the Mortgagor, it successors or assigns.

....

(I) Mortgagee agrees to execute and deliver the release of the Excluded Option Property as defined and provided in the Real Estate Purchase/Option Property ... forthwith upon demand therefor by the Mortgagor in consideration of the downpayment paid by the Mortgagor at the closing of title to the above property covered by this Mortgage in the amount of $1,831,836.89, without any cost or expense whatsoever to the Mortgagor.

(emphasis added). Pursuant to Paragraph D of the Rider, defendants borrowed monies from United Jersey Bank (UJB) and plaintiff's mortgage was subordinated to UJB on approximately eighty-nine percent of the property.

Applying the per-unit release price of $13,000 to the above-mentioned cash sum of $1,849,794.24, defendants were initially entitled to request the release of a total of 142.29 units. From July 1989 through February 1990, defendants requested and received releases of sixteen units in connection with the sale of those units. On April 6, 1990, plaintiff released an additional sixty-seven units to defendants. In total, eighty-three units of subdivided lots were released to defendants.

After making an interest payment on December 6, 1989 in the amount of $277,608.26, defendants failed to make any principal or further interest payments. When defendants failed to make the June 1, 1990 principal payment, plaintiff by letter dated July 2, 1990 notified defendants of their default. Plaintiff notified defendants again by a letter dated June 18, 1991 of their default in failing to make the June 1, 1990, December 1, 1990 and June 1, 1991 principal and interest payments.

On March 14, 1991, plaintiff filed a foreclosure complaint under Docket Number F-4699-91 (Complaint I) with the Chancery Division concerning the portion of the property free from UJB's lien. On April 29, 1991, defendants filed an answer.

On November 7, 1991, plaintiff filed a second foreclosure complaint (Complaint II) under Docket Number F-20310-91 with the Chancery Division concerning the portion of the property subordinate to UJB's lien. On December 17, 1991, defendants filed an answer. The cases were consolidated.

On February 21, 1992, defendants moved to file an amended answer, affirmative defenses and counterclaim to Complaint II. The motion was granted on February 21, 1992. On February 27, 1992, defendants filed a counterclaim asserting that they are entitled to additional releases of the property based on the remaining sum from the $1,831,836.89 cash down payment. After responding to the counterclaim, plaintiff filed a motion for summary judgment. At that time plaintiff held a first lien on eleven percent of the property consisting of approximately twenty-five acres. On May 18, 1992, defendants filed a cross-motion for partial summary judgment seeking, in part, releases of the property in consideration of the previous cash payment. Defendants essentially contended that because Paragraph C of the Rider provides that they are entitled to obtain releases "at any time or times," additional releases of the property were warranted. On June 10, 1992, defendants specifically requested the motion judge for the release of 19.27 acres of the property which was subject to plaintiff's lien.

On June 12, 1992, after oral argument on the motion and cross-motion for summary judgment, the motion judge granted judgment in favor of plaintiff and denied defendants cross-motion.

II

Defendants essentially contend the trial...