Morton v. 4 Orchard Land Trust

• Decision Date: 09 June 2004
• Citation: 180 N.J. 118,849 A.2d 164
• Parties: Frederick A. MORTON, Jr., Plaintiff-Appellant, v. 4 ORCHARD LAND TRUST, Defendant-Respondent.
• Court: New Jersey Supreme Court

849 A.2d 164

180 N.J. 118

Frederick A. MORTON, Jr., Plaintiff-Appellant, v. 4 ORCHARD LAND TRUST, Defendant-Respondent.

Supreme Court of New Jersey.

Argued February 19, 2004.

Decided June 9, 2004.

Robert A. Wayne, New York, NY, argued the cause for appellant (St. John & Wayne, attorneys; Mr. Wayne and Bryant K. Aaron, of counsel and on the brief).

Michael P. De Marco argued the cause for respondent (De Marco & De Marco, attorneys).

Justice ALBIN delivered the opinion of the Court.

This appeal concerns whether the parties entered into a contract for the sale of real property. The buyer claims that there was a legally enforceable agreement, whether written or oral, and that the seller breached its provisions. The Appellate Division affirmed the Chancery Division's grant of summary judgment dismissing the buyer's complaint. We agree with the courts below that the contract was missing an essential element—a meeting of the minds on the terms of the agreement.

I.

At this juncture, we present the facts, as we must, in the light most favorable to plaintiff to determine whether the grant of summary judgment in favor of defendant was appropriate. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540, 666 A.2d 146 (1995). Plaintiff Frederick A. Morton, Jr., was interested in purchasing a house in the Montclair area and engaged the services of Laurena White (the realtor), a real estate agent for Schweppe & Co. The Trustees of defendant 4 Orchard Land Trust listed for sale a five-bedroom home located at 4 Orchard Court in Montclair. On July 24, 2001, the realtor contacted the Trustees and scheduled an appointment for plaintiff to view the property. After plaintiff toured defendant's property on July 29, he authorized the realtor to submit an offer. By that time, however, the realtor was advised by the Trustees that defendant had entered into a contract to sell the property to another buyer. Nevertheless, the Trustees said that defendant would entertain additional offers while the contract was under attorney review. On July 31, the realtor forwarded to defendant a signed broker-prepared real estate contract with the signatures of both the realtor and plaintiff, offering $625,000 for the Orchard Court property. On August 1, plaintiff increased his bid to $635,000, and submitted the change on the same broker-prepared contract forwarded the day before.

The broker-prepared contract represented that it was the sole agreement between the parties "who sign it" and that there were "[n]o representations" made by the parties other than those set forth in the agreement. The contract also included a standard attorney review clause in paragraph 22 that provided for the commencement of a three-day attorney review period after "delivery of the signed Contract to the Buyer and Seller." Under the provisions of that clause, at the end of the three-day review period, the contract would be legally binding unless the attorney for the buyer or seller disapproved of the contract. Paragraph 22 required that the attorney disapproving of the contract "notify the REALTOR ®(S) and the other party named" within the three-day period and that the method of delivery of "the notice of disapproval to the REALTOR ®(S) [be] by certified mail, by telegram, or by delivering it personally."

On August 2, the Trustees informed the realtor that "they were able to get out of the deal with [the original buyer]," that plaintiff's offer was accepted, and that plaintiff's attorney would receive an attorney review letter that day. Later that day, defendant's attorney, Frank Catania Jr. (defendant's attorney), sent a letter via facsimile to plaintiff's attorney, Eric Pennington (plaintiff's attorney), stating:

After review of the Contract in this regard, I find same to be acceptable provided the following changes and/or modifications are made thereto.¹

...

Upon receipt, please review the above with the Buyer and advise if acceptable. In the event I do not hear to the contrary by the close of business on August 6, 2001, I will take the position that same is acceptable and the attorney review period concluded.

[ (Emphasis added.) ]

That same day, the realtor informed both plaintiff and Penny Codrington, a partner of Mr. Pennington (also referred to as plaintiff's attorney), that the offer had been accepted. The realtor also spoke with the Trustees and requested a copy of the real estate contract signed by defendant. The Trustees replied that "they would take care of that detail later." Neither plaintiff nor any of his representatives ever received a contract signed by defendant.

On August 3, defendant's attorney sent a second faxed letter to plaintiff's attorney, further modifying the contract to require that plaintiff "accept the premises with the present occupant in place" and to impose on plaintiff the "responsibility" of removing the "occupant." The letter requested plaintiff's attorney to "kindly advise as to [plaintiff's] position with respect to the above as well as the requested changes of August 2nd." That same day, before receiving a response from plaintiff, defendant's attorney faxed yet a third letter to plaintiff's attorney, stating that, pursuant to "Paragraph 22 of the Contract of Sale," his client exercised the option to declare the "transaction null and void." The letter contained the notation "CC: Schweppe & Co. (via fax[) ]," signifying that a copy was forwarded to the realtor's agency. The realtor denied ever receiving the letter.

On August 6, plaintiff learned from his attorney that defendant had disavowed the contract and, from his realtor, that the original buyer had submitted a higher offer. Plaintiff was informed by his attorney that the letter of withdrawal was "without effect" because defendant's attorney did not comply with the contract's attorney review clause, which required that the letter be delivered to the realtor by certified mail, telegram, or personal delivery. Plaintiff's attorney took the position that the attorney's receipt of the letter withdrawing the offer did not comply with the broker-prepared contract that defendant never signed. Based on his attorney's advice, plaintiff decided not to increase his offer, and instead, instructed his attorney to accept the proposed changes to the contract contained in the August 2 and August 3 letters from defendant's attorney. On August 6, in accordance with those instructions, plaintiff's attorney sent the following letter to defendant's attorney via facsimile and certified mail:

Please be advised that the changes to the above-referenced contract set forth in your attorney review letters dated August 2, 2001 and August 3, 2001 are acceptable to my client. Your letter dated August 3, 2001 purporting to terminate the Contract is ineffective notice pursuant to paragraph 22 of the Contract.

This letter confirms the conclusion of the attorney review period and my client's acceptance of a binding contract which we intend to enforce.²

In a response letter, defendant's attorney maintained that there was "no pending transaction" between the Trustees and plaintiff for the sale of the Orchard Court property. On August 8, 2001, plaintiff's attorney sent a second letter, again stating that the notice of termination was defective because it had been sent by facsimile. In reply, defendant's attorney stated that the Trustees never signed the contract and, therefore, there was no binding agreement between the parties.

Thereafter, plaintiff filed a complaint seeking specific performance of the contract and a temporary restraining order prohibiting the Trustees from selling the Orchard Court property pending a hearing. The trial court denied the issuance of a temporary restraining order, but required the Trustees to show cause why they should not be prevented from selling the Orchard Court property.

Plaintiff then filed a notice of lis pendens to protect his "interest" in the Orchard Court property and, in response, the defendant filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted and to discharge the lis pendens. Following a hearing, the Chancery Court treated defendant's failure to state a claim motion as a summary judgment motion, and then granted summary judgment and discharged the lis pendens. The court stayed its judgment pending plaintiff's appeal, but by then the Orchard Court property had been sold to the original buyer.

The Appellate Division upheld the grant of summary judgment in favor of defendant, finding that the parties never had entered into a contract because defendant never signed the broker-prepared real estate contract. Morton v. 4 Orchard Land Trust, 362 N.J.Super. 190, 196, 827 A.2d 352 (2003). The panel rejected plaintiff's claim that an oral contract had been formed, concluding that "the parties intended to be bound only by a formal written contract, not by an oral agreement." Id. at 198, 827 A.2d 352.

We granted plaintiff's petition for certification, 178 N.J. 251, 837 A.2d 1094 (2003), and now affirm.

II.

Plaintiff contends that he entered into an enforceable oral agreement to purchase real property from defendant and that the agreement complied with the requirements of the Statute of Frauds, N.J.S.A. 25:1-13b. Plaintiff asks this Court to hold that his realtor, who prepared a written contract of sale to be signed by both parties for the purchase of the Orchard Court property, consummated the deal with defendant pursuant to an oral agreement. Plaintiff also posits that there is a conflict between the Statute of Frauds, which sanctions oral agreements for the sale of real estate, and this Court's requirement that broker-prepared real estate contracts be signed by the parties.³See N.J. State Bar Ass'n v. N.J. Ass'n of Realtor Bds., 93 N.J. 470, 472, 475, 461 A.2d 1112 (1983) (requiring use of standard attorney review clause in all broker-prepared real estate contracts pursuant to...