Mieselman v. Hamilton Farm Golf Club, LLC
| Decision Date | 23 October 2013 |
| Docket Number | Civ. No. 11-653 |
| Parties | Kenneth M. Mieselman, et al., Plaintiffs, v. Hamilton Farm Golf Club, LLC, et. al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This matter appears before the Court on the motion of Defendants Hamilton Farm Golf Club, LLC and others ("Defendants") for partial summary judgment pursuant to Federal Rule of Civil Procedure 56 with respect to Count One. The Court has issued the Opinion below based upon the written submissions of the parties and without oral argument pursuant to Federal Rule of Civil Procedure 78(b). For the reasons stated herein, the Court denies Defendants' motion.
This case arises out of Defendants' refusal to refund deposits paid by Plaintiff Kenneth M. Mieselman and others ("Plaintiffs") as part of a golf membership program. Between May 2002 and December 2003, Plaintiffs each paid a deposit ranging from $200,000 to $275,000 in order to obtain an Individual Golf Membership ("IGM) or the upgraded Family Golf Membership ("FGM"). (Doc. No. 45).
The membership plan contained a "Refund of Membership Deposit" provision that stated "[i]f the member resigns before the end of the 30-year period, membership deposit paid by the member or the amount of the membership then charged for membership, whichever is the less,will be refunded, without interest, within 30 days after the issuance of the membership by the Club to a new member." (Doc. No. 45). Plaintiffs were also told that "the proceeds of every fourth membership sold by Defendant HFGC would be available to repay the membership deposits of resigned members, and that resigned members would have their membership deposits repaid in accordance with their priority on the waiting list." (Doc. No. 45).
However, Plaintiffs contend that prior to their retirement from membership, Defendants "created one or more new classes of membership in the Club . . . which were not provided for in the Membership Plan or contemplated in the FAQ distributed to induce them to join the Club." (Doc. No. 45). These memberships created Club "privileges identical to those provided for in the Plaintiffs'" IGMs and FGMs at a substantially lower cost. (Doc. No. 45). Plaintiff alleges that Defendants "knew or should have known that the offering of these New Golf Memberships would have the effect of rendering Plaintiffs' resigned [IGMs and FGMs] unsalable, as no perspective member would be interested in purchasing" the more expensive options when they could have "substantially identical New Golf Membership at a lower cost." (Doc. No. 45). Specifically, in Count I Plaintiffs allege that Defendants breached the covenant of good faith and fair dealing when they made these new memberships for the sole purpose of locking in current members. Defendants move for partial summary judgment with respect to the Count I.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). The Court must construe all facts and inferences in the light most favorable to the nonmoving party. Boyle v. City of Allegheny Pennsylvania, 139 F.3d 386, 393 (3d Cir. 1998). The nonmoving party must come forward with specific facts showing a genuine issue fortrial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations omitted). "A factual dispute is 'genuine' and . . . warrants trial 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Brightwell v. Lehman, 637 F.3d 187, 194 (3d Cir. 2011) (citations omitted).
"Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). If a civil defendant moves for summary judgment on the basis that plaintiff has failed to establish a material fact, the judge must inquire not as to "whether [s]he thinks the evidence unmistakably favors one side or the other but[,] whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented." Id. at 252. A mere "scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Id.
Here, the Court finds that sufficient admissible evidence exists to raise an issue of material fact with respect to the covenant of good faith and fair dealing. The Court will examine the applicable standard for good faith and fair dealing claims before turning to the remaining issues of material fact.
Under New Jersey law, "[e]very party to a contract . . . is bound by a duty of good faith and fair dealing in both the performance and enforcement of the contract." Elliot & Frantz, Inc. v. Ingersoll-Rand Co., 457 F.3d 312, 328 (3d Cir. 2006). A party "breaches the duty of good faith and fair dealing if that party exercises its discretionary authority arbitrarily, unreasonably, or capriciously, with the objective of preventing the other party from receiving its reasonably expected fruits under the contract." Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1130 (N.J.2001). "Such risks clearly would be beyond the expectations of the parties at the formation of a contract when parties reasonably intend their business relationships to be mutually beneficial." Id. "Bad motive or intention is essential" to a court's consideration of this claim. Id.
Evidence of bad motive can be shown through circumstantial evidence. "[I]t has been recognized that one's state of mind is seldom capable of direct proof and ordinarily must be inferred from the circumstances properly presented and capable of being considered by the court." Wilson, 773 A.2d at 1132 (Amerada Hess Corp. v. Quinn, 143 N.J. Super. 237, 249 (Law Div. 1976)). A party's intentions "need not be proved from what he said, but they may be inferred from all that he did and said, and from the surrounding circumstances of the situation under investigation." Id. (citing Mayflower Indus. V. Thor Corp., 15 N.J. Super. 139, 162 (Ch. Div. 1951)). Therefore, where "motive and interest are relevant to a claim, summary judgment should be granted with great caution." Marietta v. Cities Service Oil Co., 414 F. Supp. 1029, 1038 fn. 6 (D.N.J. 1976) (citations omitted); see also F.D.I.C. v. National Union Fire Ins. Co. of Pittsburgh, P.A., 146 F. Supp. 2d 541, 549 (D.N.J. 2001) ().
Here, the Court finds that a dispute of material fact exists such that a reasonable jury could find that Defendants acted in bad faith. Defendant was contractually authorized to add new membership categories; however, as the Court observed in its previous Opinion on the matter, "for the Club to create a new membership category nearly identical to IGMs and FGMs in all respects except price is unsettling, particularly in light of the various inducements in the Plan suggesting that resigned membership will be reissued as new members joined." (Doc. No. 28); see also Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992) (). Though Defendants put forward a set of reasons that, if accepted by the jury, could defeat Plaintiffs' claim, a...
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