Panetta v. Equity One, Inc.

• Decision Date: 01 May 2007
• Docket Number: A-3 September Term 2006.,A-2 September Term 2006.
• Citation: 920 A.2d 638,190 N.J. 307
• Parties: Joseph PANETTA, Plaintiff-Appellant, v. EQUITY ONE, INC., Defendant-Respondent. Anne Covey, Plaintiff-Appellant, v. Equity One, Inc., Defendant-Respondent, and Joseph D. Corvaia, Howard W. Smith and John Doe(s), Defendants.
• Court: New Jersey Supreme Court

920 A.2d 638

190 N.J. 307

Joseph PANETTA, Plaintiff-Appellant, v. EQUITY ONE, INC., Defendant-Respondent.

Anne Covey, Plaintiff-Appellant, v. Equity One, Inc., Defendant-Respondent, and Joseph D. Corvaia, Howard W. Smith and John Doe(s), Defendants.

A-2 September Term 2006.

A-3 September Term 2006.

Supreme Court of New Jersey.

Argued January 3, 2007.

Decided May 1, 2007.

Christopher J. LaMonica, Brick, argued the cause for appellant Joseph Panetta.

George Dougherty, Michael S. Morris and Anne Covey, pro se, argued the cause for appellant Anne Covey (Covey & Associates and Katz & Dougherty, attorneys).

Michael J. Milstead, Cherry Hill, argued the cause for respondent (Milstead & Associates, attorneys).

Michael J. Fasano, Freehold, argued the cause for amicus curiae New Jersey Land Title Association (Lomurro, Davison, Eastman & Munoz, attorneys).

Jeffrey A. Oshin, Springfield; Joshua A. Burkhardt, Fort Wayne, IN and Kurt R. Bachman, LaGrange, IN, members of the Indiana bar, submitted a brief on behalf of amicus curiae National Auctioneers Association (Hardin, Kundla, McKeon & Poletto, attorneys, Springfield).

Justice LONG delivered the opinion of the Court.

The primary issue in this appeal is whether a conveyance of real property that makes no mention of an abutting riparian grant can be construed under N.J.S.A. 46:3-16 to include that grant as an appurtenance. Unlike a riparian right, which is a license or privilege, a riparian grant is a conveyance in fee simple of real property. As such, without specific mention in the deed or other evidence that the parties intended its inclusion, a riparian grant will not pass as appurtenant to another distinct parcel.

I.

Beginning in 1943, several generations of the Francis family owned the property located at 633 Point Avenue, Brick Township, which consisted of an upland lot designated as Block 934, Lot 23.01 and a riparian grant separately designated as Block 934, Lot 23.03 on the municipal tax map. The riparian grant was created in 1928 and was recorded in Deed Book 781, page 481, in the Ocean County Clerk's Office.

As of 1992, the property was owned by Rowina Schoener Francis and her son George Francis. On April 6th of that year, Rowina and George deeded the property to themselves and to George's wife Carolyn Francis. That deed specifically included and described the upland lot and the riparian grant as tract one and tract two, respectively.

Several years later, in 1995, George was operating a business that was struggling financially. As a result, he applied for a loan from Equity One, Inc. (Equity One), using the property as security. During the application process, George, Carolyn, and Rowina deeded their interest in the upland property to George and Carolyn. That deed, dated March 22, 1995, did not mention the adjacent riparian grant (Lot 23.03) but only described the property as Lot 23.01, Block 934 on the tax map and also contained a metes and bounds description of only the upland lot as provided by the title company.

On March 23, 1995, Equity One agreed to lend George $220,000. As security for the loan, George and Carolyn executed a mortgage in favor of Equity One on property that was described exactly as it had been in the 1995 deed—as Lot 23.01, Block 934 on the tax map and also as 633 Point Avenue. Although the mortgage documents included the language "TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property," no mention of the riparian grant (Lot 23.03) was contained therein.

George thereafter defaulted on the loan. Equity One foreclosed on the mortgage, and a sheriff's sale occurred on June 24, 1997. The sheriff's deed contained the same description of the encumbered property as the 1995 deed, including a metes and bounds description of the upland lot only. Equity One was the successful bidder and thus acquired title to the mortgaged property.

Subsequently, Equity One received separate offers to purchase the property from Joseph Panetta, Dennis and Dorothy McKenna, and Anne Covey. Panetta offered to buy the property for $220,000 and Equity One made a counteroffer of $235,000. Panetta agreed to the increased purchase price, and on July 16, 1997, the attorney for Equity One prepared a contract to that effect. Panetta signed the contract and forwarded a $10,000 deposit. However, the contract was never signed by a corporate representative of Equity One.

In the interim, Dennis and Dorothy McKenna offered to purchase the property for $265,000 with the assistance of their real estate agent. The agent forwarded a contract signed by the McKennas, as well as an executed Right-to-Sell Listing Agreement and Dual Agency Consent Agreement. An officer of Equity One signed the contract, but the attorney for Equity One canceled it within the attorney review period. On July 23, 1997, Michael Morris, on behalf of Anne Covey, faxed an offer of $240,000 to Equity One.

On July 25, 1997, Equity One rejected all previous offers and initiated a closed bidding process limited to the three prior bidders—Panetta, McKenna and Covey. The bid letter communicated Equity One's offer, as "the owner of 633 Point Avenue," to sell the property to the highest bidder subject to a few terms, which included that "[n]o realtor commissions [would] be paid by seller." Panetta submitted a bid of $255,000 with no other conditions or terms. McKenna submitted a bid of $287,000, describing the property as including both the upland lot and the riparian grant, and conditioned on the realtor's commission being subtracted from the bid offer. Covey submitted a bid of $280,000 with a statement that "[s]aid property according to the deed recorded in Ocean County lists a riparian grant which is incorporated in this bid as sale of both the property and the riparian grant."

On July 29, 1997, Equity One informed Covey that her bid was the highest. She promptly forwarded a ten-percent deposit and a contract, inclusive of the riparian grant. The contract was never signed by Equity One. Rather, the following day, the attorney for Equity One, believing a mistake had been made regarding the real estate commission, advised all parties that Equity One would reopen the process on an open competitive basis.

Covey immediately filed suit against Equity One for specific performance; breach of contract; breach of implied covenant of good faith and fair dealing; consumer fraud; fraud; and malicious misrepresentation. Panetta and the McKennas filed separate complaints and the McKenna's realtor successfully moved to intervene. The complaints were consolidated into a single action in the Chancery Division in which the parties stipulated to the facts and agreed that the judge's findings could be based solely on the deposition testimony and documents that had been submitted.

At trial, the issues presented were: (1) whether the pre-bid communications between Panetta and Equity One's attorney resulted in a valid and enforceable contract; (2) whether the July 25th bid process letter was a solicitation of offers or an offer soliciting acceptance; (3) if the July 25th letter represented an offer, whether the highest responsive bid constituted a valid acceptance; and (4) whether a valid and enforceable contract resulted from the post-bid communications between Covey and Equity One. The trial judge, Judge Clyne, concluded that the communication between Panetta and Equity One's attorney did not result in an enforceable contract because it was not signed by Equity One and because the parties intended to enter into a formal written contract before being bound.

The judge further determined that Equity One's July 25th letter constituted an offer in a without-reserve auction¹ for which the highest responsive bid would constitute a valid acceptance, resulting in a binding contract. Next, the judge considered each bid. He found the McKenna bid non-conforming because, contrary to the bid letter, it was conditioned on realtor commissions being paid from the bid amount and because it included the riparian grant, which was not part of Equity One's offer. He also held that Covey's bid was non-conforming because of the inclusion of the riparian grant.

With respect to post-bidding communications between Covey and Equity One, the judge found that the parties contemplated a formal written contract that was never signed. He concluded that Panetta had submitted the only conforming bid, ordered specific performance in favor of Panetta, and deconsolidated the lawsuits.

Covey filed a motion for reconsideration asserting that she was the highest conforming bidder because the riparian grant followed the upland property as a matter of law under N.J.S.A. 46:3-16, which provides:

Every deed conveying land shall, unless an exception shall be made therein, be construed to include all and singular the buildings, improvements, ways, woods, waters, watercourses, rights, liberties, privileges, hereditaments and appurtenances to the same belonging or in anywise appertaining; and the reversion and reversions, remainder and remainders, rents, issues and profits thereof, and of every part and parcel thereof.

The judge disagreed, concluding that Equity One could only convey that which it owned and that because it had only foreclosed on the upland property, it did not own the riparian grant. Accordingly, he denied Covey's motion for reconsideration. Covey appealed.

In an unpublished opinion, the Appellate Division remanded the case to the trial judge, stating that on the record before it, it could not "determine whether the riparian rights were intended to be separate and distinct and purposely not intended to be included in the deed transfer on March 22, 1995, or whether the omission of the riparian rights was a scrivener's oversight." In addition, the panel noted that the parties' intent was "an important factor in determining whether the...