Woodmont v. Lehigh Memo of Law Woodmont

7/29/2019 Woodmont v. Lehigh Memo of Law Woodmont

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WOODMONT PROPERTIES, LLCPlaintiff,

v.LEHIGH ACQUISITION CORP. andYORKVILLE ADVISORS,tLLC

Defendants.

i SUPERIOR COURT OF NEW JERSEYICHANCERY DIVISION

I : ~ : ~ : : ~ - C - 1 5 - 1 1 CIVIL ACTION

MEMORANDUM OF LAW ON BEHALF OF PLAINTIFF WOODMONTPROPERTIES, LLC IN OPPOSITION TO DEFENDANTS' MOTION TO DISMISS

Of Counsel:Paul A. RoweDarren C. Barreiro

On the Brief:Darren C. BarreiroJustin P. Kolbenschlag

Greenbaum, Rowe, Smith, and Davis LLPMetro Corporate Campus OneP.O. Box 5600Woodbridge, New Jersey 07095(732) 549-5600Attorneys for Plaintiff


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TABLE OF CONTENTSPage

PRELIMINARY STATEMENT ...................................................................................... , ............ 1STATEMENT OF FACTS ............................................................................................................. 3LEGAL ARGUMENT .................................................................. : ................................................ 9

POINT I .............................................................................................................................. 9'THE LEGAL STANDARD FOR A MOTION TO DISMISS ........................................... 9POINT II ........................................................................................................................... 10WOODMONT HAS STATED A COGNIZABLE CLAIM OF BREACHOF CONTRACT/SPECIFIC PERFORMANCE ............................................................. 10POINT III .......................................................................................................................... 18WOODMONT HAS STATED A COGNIZABLE CLAIM OF BREACHOF COVENANT OF GOOD FAITH AND FAIR DEALING ....................................... 18POINT IV .......................................................................................................................... 21WOODMONT HAS STATED A COGNIZABLE CLAIM OFPROMISSORY ESTOPPEL ............................................................................................ 21POINT V ........................................................................................................................... 22WOODMONT HAS PLED ITS COMMON LAW FRAUD CLAIMWITH SUFFICIENT PARTICULARITY. ....................................................................... 22POINT VI. ......................................................................................................................... 24WOODMONT HAS STATED A COGNIZABLE CLAIM OF UNJUSTENRICHMENT ............................................................................ : ................................. 24POINT VII ........................................................................................................................ 26DEFENDANTS' MOTION MUST BE DENIED, AS THEALLEGATIONS OF THE COMPLAINT RAISE NUMEROUS ISSUESOF FACT ......................................................................................................................... 26

CONCLUSION ............................................................................................................................. 29

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TABLE OF AUTHORITIES

Abeles v. Adams Engineering Co.,64 N.J. Super. 167 (App. Div. 1960), modified 35 N.J. 411 (1961) ......................................... 13Banco PopularN. Am. v. Gandi,

1'84 N.J. 161 166 (2005) ................................................... '......................................................... 9Berg Agency v. Sleepworld-Willingboro, Inc.,

136 N.J. Super. 369 (App. Div. 1975) ...................................................................................... 14Berlin Med. Assocs., P.A. v. CMI N.J. Operating Corp.,

2006 N.J. Super. Unpub. LEXIS 2966 (App. Div. Aug. 3, 2006) ............................................ 27Borough of W. Caldwell v. Borough of Caldwell,26 N.J. 9 (1958) ........................................................................................................................ 11Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs.,

182 N.J. 210 (2005) .................................................................................................................. ~ 1 8 Callahan v. Stanley Works,

306N.J. Super. 488 (LawDiv.1997) ....................................................................................... 10Callano v. Oakwood Park Homes Corp.,

91 N.J. Super. 105 (App. Div. 1966) ........................................................................................ 24Camden County Energy Recovery Assocs. v. N.J. Dep't ofEnviron. Prot., 320

N.J. Super. 59, 64 (App. Div. 1999), affd, 170 N.J. 246 (2001) ............................................. 27Caputo v. Nice-Pak Prods., Inc.,300 N.J. Super. 498 (App. Div.), certif. denied 151 N.J. 463 (1997) ................................... .... 25Centex Homes Corp. v. Boag,

128 N.J. Super. 385 (Ch. Div. 1974) .................................................................................. 16, 17Coastal Oil Co. v. Eastern Tankers Seaways Corp.,29 N.J. Super. 565 (App. Div. 1954) ........................................................................................ 13Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 626 (1995) ..................................................... 9Enriquez v. W. Jersey Health Sys.,

342 N.J. Super. 501 (App. Div.), certif. denied 170 N.J. 211 (2001) ...... .......... : .................... 25

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First Nat. State Bank ofN.J. v. CommonwealthFed. Sav. and Loan Ass'n ofNorristown, Pa.,455 F. Supp. 464 (D.N.J. 1978) ...................... ......................... ........................ ................... ...... 17Fischetto Paper Mill Supply, Inc. v. Quigley Co., Inc.,

3 N.J. 149 (1949) ...................................................................................................................... 22Friendship Manor, Inc. v. Greiman,

244 N.J. Super. 104 (App. Div. 1990) ...................................................................................... 16Great Atlantic & Pacific Tea Co., Inc. v. Checchio,335 N.J. Super. 495 (App. Div. 2000) ...................................................................................... 28Iliadis v. Wal-Mart Stores, Inc.,

191 N.J. 88 (2007) .................................................................................................................... 25In re Carlisle Homes,

103 B.R. 524 (Bankr. D.N.J. 1988) .......................................................................................... 16In re Envtl. Ins. Declaratory Judgment Actions,149 N.J. 278 (1997) .................................................................................................................. 16Jersey City Redevelopment Agency v. Clean-0-Mat Corp.,

289 N.J. Super. 381 (App. Div. 1996) ...................................................................................... 16Jewish Center of Sussex County v. Whale,

86 N.J. 619 (1981) .................................................................................................................... 22Keifhaber v. Y annelli,N.J. Super. 139 (App. Div. 1950) ............................................................................................. 13K-T Corp. v. JB Assocs.,

2009 N.J. Super. Unpub. LEXIS 2087, 11-12 (App. Div. Aug.4, 2009), certif.denied 200 N.J. 550 (2009) ................................................................................................. 14,, 15Lobiondo v. O'Callaghan,

357 N.J. Super. 488 (App. Div.), certif. denied 127 N.J. 224 (2003) ....................................... 22Louis Schlesinger Co. v. Wilson,

22 N.J. 576 (1956) .................................................................................................................... 22Malaker Corp. Stockholders Protective Committee v. First Jersey Nat. Bank,

163 N.J. Super. 463 (App. Div. 1978), certif. denied 79 N.J. 488 (1979) ................................ 21McBarron v. Kipling Woods, L.L.C.,365 N.J. Super. 114 (App. Div. 2004) ................................................................................ 12, 14

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Morales v. Santiago,217 N.J. Super. 496 (App. Div. 1987) ...................................................................................... 14Murphy v. Implicito, 392 N.J. Super. 245, 265 (App. Div. 2007) .................................. .............. 11

NCP Litig. Trust v. KPMG LLP, 187 N.J. 353, 365 (2006) ........................................................... 9Onorato Constr., Inc. v. Eastman Constr. Co.,

312 N.J. Super. 565 (App. Div. 1998) (quoting 90(1) ofthe Restatement ofContracts, 2d.) .......................................................................................................................1 21Printing Mart-Morristown v. Sharp Elecs., 116 N.J. 739, 772 (1989) ............................................ 9Salomon v. Eli Lilly & Co.,

98 N.J. 58 (1984) ...................................................................................................................... 10Seidenberg v. Summit Bank,

348 N.J. Super. 243 (App. Div. 2002) ...................................................................................... 19Sons of Thunder, Inc.,148 N.J. at 421) ......................................................................................................................... 18State, Dep't of Treasury, Div. oflnv. ex rel. McCormac v. QwestCommunications Intern., Inc.,

387 N.J. Super. 469 (App. Div. 2006) ...................................................................................... 23Toll Bros., Inc. et al. v. Bd. of Chosen Freeholders ofthe County of Burlington etal.,

194 N.J. 223 (2008) .................................................................................................................. 21Velantzas v. Colgate-Palmolive Co., Inc.,

109 N.J. 189 (1988) .................................................................................................................. 10VRG Corp. v. GKN Realty Corp.,

135 N.J. 539 (1994) .................................................................................................................. 25Weichert Co. Realtors v. Ryan,

128 N.J. 427 (1992) ............................................................................................................ 11, 24Wilson v. Amerada Hess Corp.,

168 N.J. 236 (2001); Sons ofThunder, Inc. v. Borden, Inc., 148 N.J. 396(1997) ........................................................................................................................................ 18

R. 4:5-2 ......................................................................................................................................... 25R. 4:5-6 ......................................................................................................................................... 25

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R. 4:6-2(e) .....................................................................................................................................27

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PRELIMINARY STATEMENTDefendants' Lehigh Acquisition Corp. ("Lehigh") and Yorkville Advisors, LLC

("Yorkville") (collectively, "Defendants") Motion to Dismiss should be denied, as Defendants'motion does not identify a single pleading deficiency with regard to Woodmont Properties,LLC's ("Plaintiff' or "Woodmont") Complaint. Defendants do nothing more than challenge the

accuracy olcertain of the facts set forth in the Complaint while ignoring other critical facts in theComplaint prior to the taking of any dispovery. If the Court accepts all facts set forth inPlaintiffs Complaint as true for purposes of the motion, it is clear that Plaintiff established itsprima facie case for all of the claims therein.

Defendants selectively argue "facts" before the Court while ignoring other facts set forthin the Complaint. However, when all facts set forth in the Complaint are properly accepted astrue, it is clear that Defendants: (1) led Woodmont into believing that Woodmont and Defendantswere joint venture partners; (2) induced Woodmont to provide substantial and valuabledevelopment services in reliance upon Defendants' representations; (3) breached their agreementto make Woodmont a joint venture partner; (4) represented to Woodmont that Lehigh would sellthe property located at 555 South Street, Cranford, New Jersey (the "Property") to Woodmont;(5) then entered into a Letter of Intent ("LOI") by which the parties were to execute a formalPurchase and Sale Agreement; (6) agreed to extend the deadline contained therein and agreed toall of the terms of the Purchase and Sale Agreement required by the LOI; (7) breached the LOIby failing to negotiate in good faith contrary to an express term in the LOI; (8) refused to draftthe Purchase and Sale Agreement containing the terms agreed to by the parties as a way to causethe deadline in the LOI to expire (even though Defendants already had agreed to extend suchdeadline); and (9) by improperly attempting to terminate the LOI thereafter.

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Having breached their agreement to make Woodmont their joint venture partner, andrecognizing the substantial exposure for their conduct, Defendants initiated a scheme to lureWoodmont into signing an LOI to purchase the Property always intending to breach thatagreement and never intending to actually sell the Property to Woodmont.

Based on these facts, and properly attributing all reasonable inferences to Woodmont,Woodmont's Complaint states clear causes of action for Breach of Contract/Specific

Performance, Breach of the Covenant of Good Faith and Fair Dealing, Promissory Estoppel,Fraud and Unjust Enrichment. Defendants' Motion simply put misses the mark of the applicablestandard for a motion to dismiss. It should be denied.

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STATEMENT OF FACTSFor the purpose of evaluating this Motion, the facts and all inferences therefrom set forth

herein must be accepted by the Court. Beginning on or about July 8, 2009, Woodmont begandiscussing a potential joint venture concerning the Property with Defendants. See PlaintiffsComplaint (the "Complaint") dated February 3, 2011, attached as Exhibit A to the Certification

Iof Darren C. Barreiro, Esq. ("Barreiro Cert.") at ~ 7 . Defendants advised Woodmont that theywere seeking a joint venture partner to help them obtain approvals for development of theProperty, as Defendants had limited development experience. Complaint at ~ 9 .

After interviewing several developers, Defendants selected Woodmont to be their jointventure partner. Complaint at ~ 1 0 . Woodmont delivered a joint venture term sheet toDefendants but, rather than agree to a joint venture agreement, the parties elected to implementthe joint venture by forming an LLC with the company Operating Agreement defining theparties' rights and obligations. Complaint at ~ 1 2 . Defendants' counsel prepared an initial draftof the Operating Agreement and forwarded it to Woodmont on October 7, 2009. Complaint at~ 1 2 .

The parties continued to negotiate some of the details of the Operating Agreement duringthe fall of 2009. Complaint at ~ 1 3 . During those negotiations, Defendants led Woodmont tobelieve that Woodmont was their partner and in fact held Woodmont out to their professionalsand others as Defendants' partner. Complaint at ~ 1 3 - 1 4 . Woodmont believed them.

In reliance upon Defendants' commitments and representations, Woodmont providedextensive development services with respect to the Property. Complaint at ~ 1 6 - 1 7 , 24.

Consistent with Defendants' prior representations and actions, by email dated January 7,2010, Defendants' attorney acknowledged and represented that an agreement on the language ofthe Operating Agreement had in fact been reached. Complaint at ~ 1 8 . Then, on February 4,

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2010, Defendants advised Woodmont by email that the Operating Agreement was on the desk ofDavid Gonzalez, Defendants' General Counsel, awaiting execution and again, by e-mail datedFebruary 16, 2010, assured and represented to Woodmont that the deal was done and that theywere merely waiting for Mr. Gonzalez to return from a vacation in order to execute theOperating Agreement. Complaint at ~ 1 9 - 2 0 .

;Meanwhile, Defendants asked Woodmont to assist in the mediation of a builders remedysuit that had been filed against Cranford with respect to the Property. Complaint at ~ 2 1 . Inreliance on Defendants' representations and conduct, Woodmont continued to assist Defendantswith the builders remedy litigation, and various approvals itwas seeking from the Township.Complaint at ~ 2 2 .

Despite the fact that all of the material terms were agreed upon and a written agreementhad been drafted, in May 2010, Defendants refused to sign the Operating Agreement andbreached their agreement to make Woodmont their joint venture partner. Complaint at ~ 2 3 . When Woodmont threatened to bring claims against Defendants as a result of their breach of theagreement to make Woodmont their joint venture partner, Defendants (through the broker on theproject) presented Woodmont with an offer to sell the Property to Woodmont to resolve thedispute. Complaint at ~ 2 5 - 2 6 . After negotiations with the broker,. the resolution of the disputebetween Defendants and Woodmont culminated in the execution of the LOI. Complaint at ~ 2 7 .

The Letter of Intent

On or about November 1, 2010, Lehigh offered, and on November 3, 2010 Woodmontaccepted, the terms of the LOI, pursuant to which Woodmont agreed to purchase the Propertyfrom Lehigh for $4,000,000 subject to certain adjustments and conditions. Complaint at ~ 2 9 , Exhibit A.

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The LOI, inter alia, provided Woodmont with fifty-five (55) days to complete duediligence and required that the parties execute a more formal Purchase and Sale Agreementwithin twenty-five (25) days. Complaint at ~ 3 0 - 3 1 . Importantly, the LOI also obligated bothparties to negotiate the formal Purchase and Sale in good faith. Complaint at ~ 3 2 , Exhibit A at5. It is noteworthy that Defendants ignore this provision of the LOI in the motion to dismiss .

Defendants' Refusal to Sign the Formal Purchase and Sale AgreementInitially, Defendants agreed to have their counsel draft the Purchase and Sale Agreement.

The LOI states:Upon receipt, a Purchase Agreement shall be prepared andforwarded to the Purchaser's counsel for his/her review within 7days of receipt.

LOI at p.61. Thereafter, the parties agreed to split the cost of the drafting. Complaint at ~ 3 3 . However, after approximately one week after the LOI became effective, Defendants advisedWoodmont that, contrary to the above quoted provision in ~ h e LOI and their subsequentagreement to split the cost with plaintiff, they would not pay for their lawyer to draft thePurchase and Sale Agreement. Complaint at ~ 3 4 .

Despite Defendants' breach of their requirement to prepare the contract, Woodmontproceeded to draft a form of Purchase and Sale Agreement, and on November 9, 2010, sent it toDefendants for review and comment. Complaint at ~ 3 5 . Defendants, however, refused to issuewritten comments to the initial draft and refused to redline any suggested changes insisting thatthey be provided with a "new" draft. Complaint at ~ 3 6 . In response, Woodmont had severaltelephone conferences with Defendants regarding changes to the draft Purchase and SaleAgreement? Complaint at ~ 3 7 . On or about November 18, 2010, Woodmont forwarded to

1 Defendants ignore this provision of the LOI in the motion to dismiss.2 Defendants fail to acknowledge this allegation in the Complaint.-5-

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Defendants a revised Purchase and Sale Agreement incorporating the changes the parties agreedto during the telephone conferences. Complaint at 'lf38.

During the week of November 22, 2010, the parties and counsel conducted additionalconference calls to discuss, inter alia, an issue that had arisen relating to the deposit and escrow.Complaint at 'lf38. During these negotiations, Defendants agreed to extend the LOI's 25 day

f Iperiod within which a formal Purchase and Sale Agreement was required to be signed, providedthat a resolution of the deposit issue was reached.3 Complaint at 'lf39.

On November 23, 2010, the parties agreed upon a resolution of the deposit issue thusextending, consistent with the parties' agreement, the 25 day period within which a formalPurchase and Sale Agreement was required to be signed. 4 Complaint at '1!40-41. On November24, 2010, Woodmont asked Defendants to confirm the extension in writing. Complaint at 'lf42.In response, on November 24, 2010, Defendants agreed to have their counsel modify thePurchase and Sale Agreement to incorporate the change to the deposit/escrow provision to whichthe parties had agreed during the prior conference calls but ignored W oodmont' s request toconfirm their prior agreement to extend the 25 day period.5 Complaint at 'lf43.

On December 2, 2010, Woodmont sent an email to Defendants asking when it couldexpect the revision to the Purchase and Sale Agreement. Complaint at 'lf44. Defendants did notrespond. Complaint at 'lf44. Accordingly, on December 3, 2010, Woodmont once againrequested comments from Defendants on the draft Purchase and Sale Agreement and thatDefendants confirm in writing the extension of the 25 day period. Complaint at 'lf45.

3 In their motion to dismiss, Defendants ignore this allegation in the Complaint.4 In their motion to dismiss, Defendants ignore this allegation in the Complaint.5 In their motion to dismiss, Defendants ignore these allegations in the Complaint.-6-

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Finally, on December 3, 2010, Defendants responded, inter alia, that the outstandingissues on the Purchase and Sale Agreement had only been resolved the week before, and thattheir counsel who would be making the agreed upon changes to the Purchase and SaleAgreement was on vacation. Complaint at ~ 4 6 . Once again, Defendants ignored Woodmont'srequest that Lehigh confirm the previously agreed upon extension of the 25 day deadline inwriting. Complaint at 7.

Notwithstanding numerous requests by Woodmont for Defendants to make the agreedupon changes to the draft Purchase and Sale Agreement, Defendants took no action to make theagreed upon changes despite their undertaking to do so. Complaint at ~ 4 8 . Defendants neverprovided any drafts of the Purchase and Sale Agreement nor any written or redline comments tothe draft that Woodmont had prepared. Instead, on December 20, 2010, Defendants sentWoodmont a letter purporting to terminate the LOI on the grounds that Lehigh and Woodmontfailed to execute a binding Purchase and Sale Agreement within 25 days of the LOI. Complaintat ~ 4 9 .

Woodmont's Due Diligence and Assistance to Defendants on RedevelopmentAfter execution of the LOI, Woodmont requested that Defendants provide certain

additional specific due diligence materials relating to the condition of the Property, includingvarious environmental and engineering reports. Complaint at ~ 5 0 . The LOI provided Plaintiffwith 55 days to conduct due diligence. Complaint at ~ 3 2 , Exhibit A at 2. A list of the initial duediligence materials Woodmont requested of Defendants was attached to the LOI. Complaint at~ 5 1 , Exhibit A.

On December 2, 2010, Woodmont requested via email certain additional environmentaland geotech reports and other material. Complaint at ~ 5 2 . On December 8, 2010, Woodmont

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again requested additional due diligence materials, and again sought the due diligence coveredby its initial due diligence request outlined in the Complaint. Complaint at ~ 5 3 .

Despite Woodmont' s requests, Defendants refused to provide any of the due diligenceWoodmont requested. Complaint at ~ 5 4 . Hindsight reveals that Defendants' refusal to providethe due diligence was in furtherance of their scheme to have the time period in the LOI expire sothat they did not have to sell the Property, and at the same time exploiting and receivingWoodmont' s development expertise.

During the time the negotiations of the LOI and draft Purchase and Sale Agreement weretaking place, Defendants also were in the process of obtaining approval of a Redevelopment Planfor the Property. Complaint at ~ 5 5 . Defendants requested that Woodmont provide comments tothe Redevelopment Plan, which would affect the Property being purchased by Woodmont.Complaint at ~ 5 6 . On or about November 24, 2010, Woodmont provided comments on andsuggested changes to the Redevelopment Plan to Defendants' counsel in a good faith effort toassist Defendants and move the Redevelopment Plan forward. Complaint at ~ 5 7 .

The logical inference that can be made from all of these allegations is that Defendantsstalled the negotiation and refused to draft or execute the Purchase and Sale Agreement so thatthey could argue the twenty-five (25) day execution period had passed and terminate the LOI -all in bad faith and in breach ofDefendants' express obligations under the LOI.

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LEGAL ARGUMENTPOINT I

THE LEGAL STANDARD FORA MOTION TO DISMISSNew Jersey law is clear that in reviewing a complaint on a motion to dismiss, all doubt

must be resolved in favor of the plaintiffs and "a trial court should grant a dismissal 'in only therarest of instances."' NCP 'Litig. Trust v. KPMG LLP, 187 N.J. 353, 365 (2066) (quotingPrinting Mart-Morristown v. Sharp Elecs., 116 N.J. 739, 772 (1989)). The New Jersey SupremeCourt has held that "the test for determining the adequacy of a pleading [is] whether a cause of

action is 'suggested' by the facts." Printing Mart, 116 N.J. at 746."A court's review of a complaint is to be 'undertaken with a generous and hospitable

approach,' and the court should assume that the nonmovant's allegations are true and give thatparty the benefit of all reasonable inferences."' NCP Litig. Trust, 187 N.J. at 365 (emphasisadded) (quoting Printing Mart, 116 N.J. at 746). In addressing a motion to dismiss pursuant toR.4:6-2(e), "the Court is not concerned with the ability of plaintiffs to prove the allegationcontained in the complaint." Printing Mart, 116 N.J. at 746 (citation omitted). "I f 'thefundament of a cause of action may be gleaned even from an obscure statement of claim,' thenthe complaint should survive this preliminary stage." NCP Litig. Trust, 187 N.J. at 365 (quotingCraig v. Suburban Cablevision, Inc., 140 N.J. 623, 626 (1995)).

While the New Jersey Supreme Court has recently suggested that dismissal is appropriate

where "the complaint states no basis for relief and discovery would not provide one," it therebyimplied that where discovery may further illuminate a cause of action, the party asserting thecause of action should be permitted to proceed. Banco Popular N. Am. v. Gandi, 184 N.J. 161,166 (2005) (emphasis added). This is analogous to the summary judgment context, where theCourt has warned that final disposition of a case may be premature when the matter is not yet

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"ripe" for consideration, such as where discovery of he facts relevant to the cause of action isnot yet complete. See Velantzas v. Colgate-Palmolive Co., Inc., 109 N.J. 189, 193 (1988);Salomon v. Eli Lilly & Co., 98 N.J. 58, 61 (1984).

Defendants have not remotely met the strict legal standard in order to prevail on a motionto dismiss because the Complaint sets forth viable causes of action. When the facts set forth in

IWoodmont's Complaint and all legitimate inferences therefrom are properly accepted as true forpurposes of this motion, Woodmont has pled prima facie claims for Breach of Contract/SpecificPerformance (Count One), Breach of the Covenant of Good Faith and Fair Dealing (Count Two),Promissory Estoppel (Count Three), Fraud (Count Four) and Unjust Enrichment (Count Five).No discovery whatsoever has taken place in this case and no responsive pleadings have beenfiled. Applying this deferential standard, Defendants' motion should be denied in its entirety.6

POINT IIWOODMONT HAS STATED A COGNIZABLE CLAIM OFBREACH OF CONTRACT/SPECIFIC PERFORMANCE.

A. Woodmont Has Alleged the Necessary Elements to State a Breach ofContract Claim.Defendants argue that W oodmont fails to state a claim for breach of contract because the

LOI expired by its terms. However, Defendants miss the point, as Defendants agreed to sell theProperty to Woodmont (Complaint at ~ 5 9 ) , the parties extended the 25 day period within which aPurchase and Sale Agreement was to be drafted (Complaint at ~ 6 4 ) , the parties agreed on all6 Even when a court finds that a defendant's motion to dismiss should be granted, the dismissalshould normally be without prejudice. As New Jersey courts have consistently held, "motion[s]to dismiss should be granted only in rare instances and ordinarily without prejudice" in order topermit the plaintiff to file an amended complaint. Smith v. SBC Commc'ns, Inc., 178 N.J. 265,282 (2004) ; Callahan v. Stanley Works, 306 N.J. Super. 488, 492-93 (Law Div. 1997) ("Amotion to dismiss for failure to state a claim should only be granted in the rarest of instances andif granted, it should be without prejudice in order to allow the plaintiff to file an amendedcomplaint.").

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material terms of the Purchase and Sale Agreement (Complaint at ~ ~ 4 0 - 4 1 ) , and the LOIrequired Defendants to negotiate in good faith (Complaint at ~ 6 0 ) .

Plaintiff has alleged: (1) that the promise to sell the Property and the promise to negotiatein good faith in the LOI were valid, binding contracts (Complaint at ~ 6 0 ) ; (2) that Defendantsbreached the agreement to sell the Property and the promise to negotiate in good faith by

refusing to (a) incorporate the material terms that had been agreed upon by the parties, (b)negotiate in good faith and (c) proceed to a closing of the sale of the Property (Complaint a t ~ 65); and (3) plaintiff continues to suffer irreparable harm as a result (Complaint a t ~ 69).

This is all that is necessary to successfully state a claim for breach of contract. See,Murphy v. Implicito, 392 N.J. Super. 245, 265 (App. Div. 2007) ("To establish a breach ofcontract claim, a plaintiff has the burden to show that the parties entered into a valid contract,that the defendant failed to perform his obligations under the contract and that the plaintiffsustained damages as a result.").

In order for a contract to be enforceable, the parties are only required to be in agreementon the essential terms. "A contract arises from offer and acceptance, and must be sufficientlydefinite 'that the performance to be rendered by each party can be ascertained with reasonablecertainty."' Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting Borough of W.Caldwell v. Borough of Caldwell, 26 N.J. 9, 24-25 (1958)). "Thus, if parties agree on essentialterms and manifest an intention to be bound by those terms, they have created an enforceablecontract." Id. The "mere anticipation of a written memorialization of an oral agreement does not

7 Defendants argues that Y arkville was not a signatory to the LOI, did not participate in thenegotiations and, therefore, cannot be liable to Plaintiff. (Defendants' Brief at p.1 0, n.7).However, the e-mails Defendants attach to their motion papers clearly demonstrate thatYorkville was actively involved in the negotiation of the terms of the Purchase and SaleAgreement. See Certification of Steven R. Klein, Esq. ("Klein Cert."), Exhibits B through F.-11-

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as a matter of law vitiate an oral contract if the elements of a contract are contained in the oralagreement." McBarron v. Kipling Woods, L.L.C., 365 N.J. Super. 114, 116 (App. Div. 2004)(holding that issue of whether parties intended to be bound to preliminary agreement despitecontemplation of formal, written agreement was question for trial).

As the McBarron Court explained, "whether a valid oral contract was made or whetheroral agreements were intended not to bind the parties until a written contract was executed, issolely a matter of intent determined in large part by a credibility evaluation of witnesses . . . [t]hecases are legion that caution against the use of summary judgment to decide a case that turns onthe intent and credibility of the parties." Id. at 117 (citations omitted).

Here, after execution of the LOI, the parties engaged in negotiation over the materialterms of the Purchase and Sale Agreement. See Complaint at ~ 3 3 - 4 9 . On or about November23, 2010, the parties resolved the remaining outstanding issue and extended the 25 day periodwithin which a formal Purchase and Sale Agreement was required to be signed. Complaint at~ 4 0 - 4 1 . At this juncture, all of the material terms of the contract had been agreed upon by theparties.

Despite repeated requests by Woodmont for Defendants to make the agreed upon changesto the draft Purchase and Sale Agreement, Defendants took no action to make the agreed uponchanges despite their undertaking to do so. Complaint at ~ 4 8 . Rather, on December 20, 2010,Defendants sent Woodmont a letter purporting to terminate the LOI on the grounds that Lehighand Woodmont failed to execute a binding Purchase and Sale Agreement within 25 days of theLOI. Complaint at ~ 4 9 . Defendants' eleventh hour attempt to renege on the sale is ineffective,however, as the parties agreed upon all material terms and only the mere formalization of theagreement through the Purchase and Sale Agreement remained.

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Additionally, with all material terms of the sale agreed upon, the only reason a formalPurchase and Sale Agreement was not executed was because defendants refused to incorporatethe agreed upon terms in the Purchase and Sale Agreement. Complaint at ~ 3 6 and ~ 4 8 .

Defendants actually seek to rely upon their own refusal to sign the Purchase and SaleAgreement within 25 days to escape liability. However, Defendants cannot use their own default

to their advantage. Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N.J. Super. 565, 577(App. Div. 1954); see also Keifhaber v. Yannelli, 9 N.J. Super. 139, 142 (App. Div. 1950)(" .. . he who prevents a thing from being done may not avail himself of the non-performancewhich he has himself occasioned."); Abeles v. Adams Engineering Co., 64 N.J. Super. 167, 178(App. Div. 1960), modified 35 N.J. 411 (1961) ("One cannot utilize advantageously his owndefault as an exit or escape from the performance of his contractual obligations.").

In Coastal Oil, the Appellate Division noted:It is well established as a principle of fundamental justice that if apromisor prevents or hinders the occurrence or fulfillment of acondition in a contract, and the condition would have occurred orwould have been fulfilled except for such hindrance or preventionon the part of the promisor, then the performance of the conditionis excused and the liability of the promisor is fixed regardless offailure to fulfill the condition.

29 N.J. Super. at 577.It was Defendants who unilaterally refused to draft the Purchase and Sale Agreement

after a 7 day delay, despite their obligation under the LOI to draft it and to negotiate in goodfaith. It was Defendants who refused to execute the formal Purchase and Sale Agreement.Defendants cannot now be rewarded for hindering the execution of the formal agreement.

Additionally, Defendants bound themselves under the LOI to draft and negotiate thePurchase and Sale Agreement in good faith. It is well settled that parties may "effectively bindthemselves by an informal memorandum where they agree upon the essential terms of the

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contract and intend to be bound by the memorandum, even though they contemplate theexecution of a more formal document." Berg Agency v. Sleepworld-Willingboro, Inc., 136 N.J.Super. 369, 373-74 (App. Div. 1975). Whether a preliminary agreement such as a letter of intent"is binding is a matter of the parties' intent." Morales v. Santiago, 217 N.J. Super. 496, 501(App. Div. 1987). I f he parties "intend to be bound by their preliminary agreement and view thelater written contract as merely a memorialization of their agreement, they are bound by thepreliminary agreement." Id. at 501-02.

Importantly, in determining whether the parties intended to be bound by a preliminaryagreement, a Court must consider not only language of the preliminary agreement itself, but alsothe circumstances behind the agreement's preparation and the course of dealings between theparties both before and after the agreement was executed. See McBarron, 365 N.J. Super. at 116-17. Such an finding of the parties' intent is largely determined by credibility evaluations aftertrial and is typically not appropriately decided on a motion to dismiss or motion for summaryjudgment. Id. at 117.

Here, the LOI bound Defendants to negotiate the terms of the Purchase and SaleAgreement in good faith. Defendants rely upon K-T Corp. v. JB Assocs., 2009 N.J. Super.Unpub. LEXIS 2087, 11-12 (App. Div. Aug. 4, 2009), certif. denied 200 N.J. 550 (2009) (copyattached as Exhibit B to Barreiro Cert.), an unpublished decision, for the proposition that the LOIis not binding. However, the K-T Corp. decision was not made based upon a pre-answer motionto dismiss. Rather, in K-T Corp., there was a 5-day trial regarding, inter alia, the issue ofwhether the parties intended to be bound by the preliminary agreements despite the fact that thepreliminary agreements "contain[ed] multiple indications that the parties did not intend it to be abinding agreement." Id. at *8-9, 13 Despite the fact that the first sentence of the letter of intent

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inK-T Corp. stated that the letter was "non-binding," the Court thoroughly analyzed at trial theintent of the parties through both the language of the applicable agreement and the detailedtestimony presented. Id. at 13-22.

Conversely, here, Defendants have moved to dismiss based solely on the language of theLOI while attempting to preclude Defendants from demonstrating the parties intent to be boundby the LOI or even taking any discovery regarding the intent of the parties or the circumstancessurrounding the execution of the LOI and the negotiation of the Purchase and Sale Agreement.Defendants' request for a finding regarding the parties' intent is premature and improper on thismotion to dismiss.

Indeed, Defendants omit from their motion recognition that plaintiffs Complaint allegesthat (i) Defendants failed to provide an initial draft of the Purchase and Sale Agreement after acritical 7 day delay (Complaint at ~ 3 4 ) ; (ii) Woodmont had several telephone conferences withDefendants regarding changes to the draft Purchase and Sale Agreement. (Complaint at ~ 3 7 ) (iii)during negotiations, Defendants agreed to extend the 25 day period within which a formalPurchase and Sale Agreement was required to be signed pursuant to the LOI Complaint at ~ ~ 3 9 , 40-41; and (iv) despite undertaking to do so, Defendants refused to incorporate the agreed uponchanges to the Purchase and Sale Agreement. (Complaint at ~ 4 8 ) . The execution of the LOI,coupled with the subsequent agreement on the material terms of the Purchase and SaleAgreement, which is confirmed in the e-mails attached to Defendants' motion, evidences ameeting ofthe minds between the parties regarding the terms of the sale of the Property.

Most importantly, Defendants totally ignore the term of the LOI that required them tonegotiate the Purchase and Sale Contract in good faith. Plaintiffs Complaint clearly alleges thatDefendants breached this provision of the LOI. Affording plaintiff all reasonable inferences, the

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Complaint states a claim for breach of contract. A motion to dismiss pursuant toR. 4:6-2(e), inview of the allegations of the Complaint and the language of the LOI, is merely a perpetuation bythe Defendants of their bad faith that has led the parties to this court.

B. Contracts For The Sale Of Real Property Are Specifically Enforceable As AMatter Of Law.It is axiomatic t ~ a t "[t]he principle underlying the specific p e r f o r m ~ c e remedy is

equity's jurisdiction to grant relief where the damage remedy at law is inadequate." CentexHomes Corp. v. Boag, 128 N.J. Super. 385, 389 (Ch. Div. 1974); see also In re Envtl. Ins.Declaratory Judgment Actions, 149 N.J. 278, 294 (1997) ("[s]pecific performance is appropriatewhen relief at law, money damages, provides inadequate compensation for the breach of anagreement"); Jersey City Redevelopment Agency v. Clean-0-Mat Corp., 289 N.J. Super. 381,404 (App. Div.), certif. denied 147 N.J. 262 (1996) ("[t]he principle underlying the specificperformance remedy is equity's jurisdiction to grant relief where monetary damages would notmake the non-breaching party whole.").

"I t is a well-settled equitable principle that contracts for the sale of real property arespecifically enforceable by the purchaser." In re Carlisle Homes, 103 B.R. 524, 539 (Bankr.D.N.J. 1988). "There is a virtual presumption, because of the uniqueness of land and theconsequent inadequacy of monetary damages, that specific performance is the buyer'sappropriate remedy for the vendor's breach of the contract to convey." Friendship Manor, Inc. v.Greiman, 244 N.J. Super. 104, 113 (App. Div. 1990), certif. denied 126 N.J. 321 (1991)(emphasis added); In re Carlisle Homes, 103 B.R. at 539 ("[p]resumptively, real property isunique and damages at law are an inadequate remedy for breach of a contract to sell") (citationomitted); First Nat. State Bank of N.J. v. Commonwealth Fed. Sav. and Loan Ass'n ofNorristown, Pa., 455 F. Supp. 464, 469 (D.N.J. 1978), affd 610 F.2d 164 (3d Cir. N.J. 1979)

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(applying New Jersey law) ("[t]he traditional approach has been to assume that the remedy atlaw for such a contract is inadequate and incomplete.") (emphasis added).

In Centex Homes, the court explained the long-standing rule that specific performance isthe standard remedy in all contracts for the sale of real property:

[I]n applying this doctrine the courts of equity have established the furtherrule that in general the legal remedy of damages is inadequate in allagreements for the sale or letting of land, or of any estate therein; andtherefore in such class of contracts the jurisdiction is always exercised,and specific performance granted, unless prevented by other andindependent equitable considerations which directly affect the remedialright of the complaining party.128 N.J. Super. at 389 (emphasis added).

Here, Woodmont seeks specific performance of an agreement to sell real property.Plaintiffs Complaint properly alleges: (1) that there was a valid agreement to sell the Property(Complaint at 'i(59); (2) Defendants breached that agreement by failing to proceed with a closingof the sale of the Property (Complaint at 'i(65); (3) the Property is a unique parcel of land(Complaint at 'i(67); (4) Woodmont is ready, willing and able to complete the purchase of theProperty (Complaint at 'i(68); and (5) Defendants' breach has caused Woodmont to suffercontinuing irreparable hami (Complaint at 'i(69).

Once again, Defendants fail to identify any pleading deficiency with regard to Count I ofplaintiffs Complaint. Plaintiffs complaint alleges all the necessary elements of the cause ofaction. At most, Defendants' arguments regarding the expiration of the LOI, the extensionthereto, the intent of the parties and Defendants' bad faith in negotiating and terminating the LOIraise questions of fact that are disputed and may not support a motion to dismiss.

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POINT IIIWOODMONT HAS STATED A COGNIZABLE CLAIM OFBREACH OF COVENANT OF GOOD FAITH AND FAIRDEALING.

Although the LOI contains an express provision requiring Defendants to perform in goodfaith, even if it did not, the New Jersey Supreme Court has made clear that the covenant of good

( Ifaith and fair dealing is implicit in every contract made under the laws ofNew Jersey. S e e , ~ , Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 214(2005); Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001); Sons of Thunder, Inc. v.Borden, Inc., 148 N.J. 396, 420 (1997).

The covenant of good faith and fair dealing directs that "neither party shall do anythingwhich will have the effect of destroying or injuring the right of the other party to receive fruits ofthe contract .. ." Wilson, 168 N.J. at 245 (citing Sons of Thunder, Inc., 148 N.J. at 421). Stateddifferently, "[g]ood faith performance or enforcement of a contract emphasizes faithfulness to anagreed common purpose and consistency with the justified expectations of the other party."Brunswick Hills Racquet Club, Inc., 182 N.J. at 224 (citation omitted).

Generally, '"[s]ubterfuges and evasions' in the performance of a contract violate thecovenant of good faith and fair dealing 'even though the actor believes his conduct to bejust ified."' Id. (quoting Restatement (Second) of Contracts 205 comment d (1981 )).

To state a cognizable claim for breach of the covenant of good faith and fair dealing, aplainti ff must allege: (1) the existence of a contract; (2) that the defendant acted in bad faith withthe purpose of depriving the plaintiff of its rights or benefits under the contract; and (3) thatplaintiff suffered damages as a result. See generally Brunswick Hills Racquet Club, Inc., 182N.J. at 224-25.

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A court should be particularly hesitant to grant a motion to dismiss on a claim for breachof the covenant of good faith and fair dealing. See Seidenberg v. Summit Bank, 348 N.J. Super.243, 254 (App. Div. 2002) ("the implied covenant of good faith and fair dealing continues todevelop, and in light of the covenant's essential factors as discerned from the existing case law,we cannot say, in examining the unadorned record in this case, that an actionable claim cannot befound in plaintiffs' allegations.").

In Seidenberg, the Law Division dismissed plaintiffs' claim of breach of the covenant ofgood faith and fair dealing and held that plaintiffs were not claiming a breach of the impliedcovenant but rather were seeking to prove the existence of an oral agreement allegedly madebeyond the four corners of the written agreements between the parties in violation of the parolevidence rule. Id. at 253.

The Appellate Division reversed, holding that plaintiffs' claim was not barred by theparol evidence rule because a claim for breach of the covenant of good faith and fair dealingfocuses on the defendant's performance and termination of the contract. Id. at 258-59. The Courtexplained the liberal standard applicable to reviewing a plaintiffs claim for breach of thecovenant of good faith and fair dealing:

Id. at 260.

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In this case, the second amended complaint alleges circumstanceswhich, if proven, might support a claim based upon [defendant's]termination of their relationship. To some extent, plaintiffs allegedthere was an expectation--despite the express contractual right of[defendant] to terminate--that the relationship would last until theyreached retirement age. This contention would, on its face, fallwithin that type of implied covenant claim prohibiting a party fromterminating a contractual relationship in bad faith notwithstandingthe expressed right to do so.

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Wooelmont had an expectation that Defendants would negotiate the terms of the Purchaseand Sale Agreement in good faith as specifically set forth in the LOI. This is precisely the typeof allegation contemplated by the breach of the covenant of good faith and fair dealing cause ofaction.

Plaintiff has alleged all the necessary elements to state a claim of breach of the covenantc

of good faith and fair dealing. Plaintiff has alleged that the parties executed the LOI, whichexpressly and impliedly obligated the parties to negotiate a formal Purchase and Sale Agreementin good faith (Complaint at ~ 7 1 ) , and Defendants delayed making changes to the draft Purchaseand Sale Agreement, despite the fact that all material terms had been agreed to, in an effort toallow the 25 day period by which a formal agreement was to be executed to expire (Complaint at~ ~ 7 3 - 7 4 ) . The parties agreed to extend the 25-day period so that Defendants could make theagreed upon changes. Thereafter, Defendants refused to incorporate the additional material termsthat had been agreed to and to proceed with a closing of the sale in an effort to allow the 25 Dayperiod set forth in the LOI to expire. Finally, Plaintiff alleges that it suffered damages as a resultofDefendants' breach of the covenant of good faith and fair dealing (Complaint at ~ 7 7 ) .

Rather than challenge whether plaintiffs Complaint properly sets forth the elements ofthe cause of action (it does), Defendants argue that the "objective evidence shows that Lehighwas negotiating with Plaintiff in good faith." See Defendants' Brief at 2. Defendants selectivelyplace evidence, including e-mails, before the Court prior to any discovery being conducted.Defendants ignore the numerous phone conversations referenced in plaint iffs Complaint and theallegation that Defendants specifically agreed to extend the 25-day deadline. However, forpurposes of this motion, all facts set forth in the Complaint must be accepted as true. When allfacts as set forth by Woodmont are accepted as true, it is clear that Defendants acted in bad faith.

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Regardless, such an analysis is premature and misplaced on a motion to dismiss prior tothe taking of any discovery and before a trial. Defendants' arguments that they negotiatedpursuant to the LOI in good faith unequivocally presents a question of fact. The pleading states acause of action for breach of the obligation of good faith and fair dealing, and should not be

, dismissed.POINT IV

WOODMONT HAS STATED A COGNIZABLE CLAIM OFPROMISSORY ESTOPPEL.

The Doctrine of Promissory Estoppel provides that "[a] promise which the promisorshould reasonably expect to induce action or forbearance on the part of a promisee or thirdperson and which does induce such action or forbearance is binding if injustice can be avoidedonly be enforcement of the promise." Onorato Constr., Inc. v. Eastman Constr. Co., 312 N.J.Super. 565 (App. Div. 1998) (quoting 90(1) of the Restatement of Contracts, 2d.). Theessential justification for the doctrine is avoidance of substantial hardship or injustice were thepromise not to be enforced. Malaker Corp. Stockholders Protective Committee v. First JerseyNat. Bank, 163 N.J. Super. 463, 484 (App. Div. 1978), certif. denied 79 N.J. 488 (1979).

New Jersey Courts will apply promissory estoppel where there is: (1) a clear and definitepromise; (2) made with the expectation that the promisee will rely on it; (3) reasonable relianceupon the promise; and (4) which results in definite and substantial detriment. Toll Bros., Inc. etal. v. Bd. of Chosen Freeholders of the County ofBurlington et al., 194 N.J. 223,253 (2008).

Plaintiff has alleged all the elements of a cause of action of promissory estoppel.Woodmont alleges that Defendants made clear and definite promises to Woodmont thatWoodmont would be Defendants' joint venture partner and, after breaching that promise, theypromised that Lehigh would sell the Property to Woodmont. Complaint at ~ 7 9 . Woodmont

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further alleges that Defendants made such promises with the expectation that Woodmont wouldrely upon them and that Woodmont did in fact reasonably rely upon the promises by providingextensive development services with respect to the Property. As a result, Woodmont suffered adetriment. Indeed, Defendants made these promises to sell the Property to W oodmont to gainthe benefit of Woodmont' s development expertise, and to compromise Woodmont' s prior claims

I Iagainst Defendants relating to the Joint Venture Agreement. Complaint a t ~ ~ 80-81.8Once again, Defendants have not, and cannot, explain how Woodmont's pleading is

deficient. Rather, Defendants seek to contest the factual allegations of Woodmont's Complaint,which is improper on this motion to dismiss.9

POINTV

WOODMONT HAS PLED ITS COMMON LAW FRAUDCLAIM WITH SUFFICIENT PARTICULARITY.

The elements of common law fraud or misrepresentation are: (1) a false representation offact; (2) made by defendant; (3) with knowledge that it is false; (4) with the intent to deceive

plaintiff; (5) upon which representation plaintiff relies to his or her detriment; (6) sustaining aloss. See Jewish Center of Sussex County v. Whale, 86 N.J. 619, 624 (1981); Louis SchlesingerCo. v. Wilson, 22 N.J. 576, 585-86 (1956); Fischetto Paper Mill Supply, Inc. v. Quigley Co.,Inc., 3 N.J. 149, 152-53 (1949).

8 Defendants argue in their breach of contract brief section that the LOI is not binding, but in thePromissory Estoppel brief section, claim that the LOI negated Defendants' prior promises andrepresentations. Defendants cannot have it both ways and attempt to use the LOI as a sword anda shield.9 Defendants cite to Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 500 (App. Div.), certif.denied 127 N.J. 224 (2003) in support of their argument that plaintiff fails to state a claim forpromissory estoppel. However, the issue in Lobiondo was whether the plaintiff in that casepresented sufficient evidence at trial to support a claim for promissory estoppel. The case hasabsolutely no relevance to the sufficiency of Woodmont' s pleading on this pre-answer motion todismiss.

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The heightened fraud pleading requirements set forth in the Court Rules provides that the"particulars ofthe wrong, with dates and items if necessary, shall be stated insofar as practicable.Malice, intent, knowledge, and other condition of mind of a person may be alleged generally." R.4:5-8(a). See also State, Dep't of Treasury, Div. of Inv. ex rel. McCormac v. QwestCommunications Intern., Inc., 387 N.J. Super. 469, 484 (App. Div. 2006).

Woodmont' s Complaint sets forth the required elements to state a cause of action forcommon law fraud. Woodmont alleges that: (1) Defendants made misrepresentations toWoodmont that Woodmont would be their joint venture partner and then that Lehigh would sellthe Property to Woodmont (Complaint at ~ 8 4 ) ; (2) Defendants had knowledge of the falsity oftheir statements (Complaint at ~ 8 6 ) ; (3) Defendants made the misrepresentations to induceWoodmont to provide development services with respect to the Property (Complaint at ~ 8 5 ) ; (4)Woodmont relied upon the misrepresentations by providing extensive services with respect to theProperty (Complaint at 87); and (5) Woodmont suffered damages as a result. (Complaint at~ 8 9 ) .

Woodmont' s . Complaint pleads a claim of common law fraud with the requisitespecificity pursuant toR. 4:5-8(a). Woodmont provides, as specifically as possible, the dates andsubstance of the fraud. Specifically, Woodmont alleges that in late July 2009, Defendantsselected Woodmont as their joint venture partner (Complaint at 0) and that, duringnegotiations in the fall of 2009, Defendants led Woodmont to believe that Woodmont was theirjoint venture partner (Complaint at ~ 1 3 - 1 4 ) .

Defendants incorrectly argue that pre-LOI discussions cannot form the basis of plaintiffsfraud claim. See Defendants' Brief at 19. Defendants' argument misses the mark, as Woodmontalleges that it was fraudulently induced by Defendants to enter into the LOI. Further,

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Defendants' argument that "there were no material misrepresentations ... nor was there an intentto deceive on the part of the [Defendants]" (see Defendants' Brief at 20) is specifically disputedby plaintiff and premature. Woodmont's Complaint sets forth, with specificity, Defendants'misrepresentations and fraudulent conduct, which must be accepted as true at this stage of theproceeding.

The facts set forth m Woodmont' s Complaint, accepted as true, demonstrate thatWoodmont acted at all times in good faith, and Defendants made fraudulent misrepresentationsdesigned to cause Woodmont to believe that it would become Defendants' joint venture partnerand, subsequently, that Lehigh would sell the Property to Woodmont. Woodmont alleges that atthe time Defendants made the misrepresentations, Defendants had no intention to makeWoodmont their partner or to sell Woodmont the Property. Complaint a t ~ 86. Thus, Woodmonthas sufficiently pled a cause of action of common law fraud.

POINT VIWOODMONT HAS STATED A COGNIZABLE CLAIM OFUNJUST ENRICHMENT.

Woodmont's Complaint pleads a cause of action for unjust enrichment sufficient towithstand a R. 4:6-2 motion. It is well settled that a person shall not be allowed to enrich himselfunjustly at the expense of another, and that accordingly, courts have fashioned equitableremedies to prevent such a circumstance. See generally Callano v. Oakwood Park Homes Corp.,91 N.J. Super. 105, 108 (App. Div. 1966). A party is permitted to recover in quasi-contract"when one party has conferred a benefit on another, and the circumstances are such that to denyrecovery would be unjust." Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437 (1992) (citationsomitted).

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In order to establish a claim for unjust enrichment, the plaintiff must show both that (1)defendant received a benefit, and (2) retention of that benefit would be unjust. See Iliadis v.Wal-Mart Stores, Inc., 191 N.J. 88, 110 (2007); see also VRG Corp. v. GKN Realty Corp., 135N.J. 539, 554 (1994) (holding that to succeed on a claim for unjust enrichment, a plaintiff mustprove that the "defendant received a benefit and that retention of that benefit without paymentwould be unjust").

Although Woodmont has alleged a claim for breach of contract, a party is permitted toplead in the alternative. R. 4:5-2; R. 4:5-6. It is well settled in New Jersey that a plaintiff mayplead alternative or inconsistent claims in the same complaint. R. 4:5-6 (permitting alternativeand inconsistent pleadings). See, also, Enriquez v. W. Jersey Health Sys., 342 N.J. Super. 501,526 (App. Div.), certif. denied 170 N.J. 211 (2001).

A pleader may proceed simultaneously on the alternative counts of breach of contract andunjust enrichment, but may only recover under one theory. See Caputo v. Nice-Pak Prods., Inc.,300 N.J. Super. 498, 504 (App. Div.), certif. denied 151 N.J. 463 (1997) (concluding "that aplaintiff who has attempted to prove both breach of contract and unjust enrichment need notchoose which one will go to the jury, as long as there is sufficient evidence as to both.") It isonly recovery under two inconsistent theories that is prohibited. Id.

Woodmont alleges that, in reliance upon Defendants' promises that Woodmont wouldbecome their joint venture partner and, subsequently, that Lehigh would sell the property toWoodmont, it: (1) provided extensive development services to Defendants, including but notlimited to assisting Defendants in obtaining various approvals; (2) assisted Defendants withregard to a builders remedy litigation; and (3) assisted Defendants' with the Redevelopment

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Plan. Complaint at ~ 1 6 , 17, 22, 24, 56-57, 91. Woodmont has not been compensated for itsvaluable services, from which Defendants benefited significantly.

Indeed, Woodmont alleges that Defendants received an economic benefit as a result ofWoodmont's services and, as a result, Defendants have been unjustly enriched. Complaint at94. Defendants' argument that Defendants "have not been unjustly enriched at Plaintiff's

I Iexpense" (see Defendants' Brief at 23) is disputed (as set forth in the Complaint), premature, andmisinterprets the standard on a motion to dismiss. That is so profoundly a fact in issue that onecan only wonder what the Defendants were thinking when they filed this motion. Upon a liberalreading of the pleading, the facts necessary to plead a cause of action for unjust enrichment areset forth in the Complaint. (See Complaint, Count V). Defendants' motion to dismiss this countshould be denied.

POINT VIIDEFENDANTS' MOTION MUST BE DENIED, AS THEALLEGATIONS OF THE COMPLAINT RAISENUMEROUS ISSUES OF FACT.

This matter is in its preliminary stages. Defendants have not yet filed an answer and nodiscovery has taken place. 10

For the reasons set forth above, Defendants have failed to demonstrate that the allegationsin plaintiff's Complaint are unsupportable or insufficient as a matter of law. The allegations inthe Complaint and Defendants' arguments against them raise a host of factual issues that must bethe subject of discovery before the merits of plaintiff's claims may be adjudicated, which willlikely require a trial.

10 To the extent the Court determines to convert Defendants' Motion to Dismiss into a Motionfor Summary Judgment pursuant toR. 4:6-2(e), Plaintiff respectfully requests the opportunity tosubmit Certifications supporting the allegations in the Complaint.-26-

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The case law is clear that dismissal of a complaint is only appropriate where thecomplaints states no basis for relief and further discovery would never provide such a basis. SeeCamden County Energy Recovery Assocs. v. N.J. Dep't ofEnviron. Prot., 320 N.J. Super. 59, 64(App. Div. 1999), aff'd, 170 N.J. 246 (2001). The case law is also clear that any doubt should beresolved in favor of the plaintiff, who is entitled to every reasonable inference of fact. See PointI, infra.

In Berlin Med. Assocs., P.A. v. CMI N.J. Operating Corp., 2006 N.J. Super. Unpub.LEXIS 2966 (App. Div. Aug. 3, 2006) (copy attached as Exhibit C to Barreiro Cert.), four healthcare providers filed suit against, inter alia, a preferred provider organization ("PPO") allegingthat the PPO breached the providers' respective contracts and they were each owed additionalcompensation. Plaintiffs attached their contracts to the Complaint. Id. at *5.

Prior to any discovery taking place, defendants filed a motion to dismiss under R. 4:6-2(e) based upon an alleged failure to state a claim upon which relief may be granted. Id. at *6.The trial court granted the motion in its entirety and dismissed the Complaint. Id. at *7. Onappeal, plaintiffs argued that the trial court erred in finding that the contractually based claimswere not viable prior to discovery being taken. Id. Defendants, on the other hand, argued thatplaintiffs' claims, "which were largely predicated on contractual documents either attached to orreferred to in the complaint, were properly disposed of prior to the completion of discovery." Id.at 6-7.

The Appellate Division found that there was ambiguity in the contractual language andheld that, as a result, it was "premature for the motion judge to resolve the issue in favor ofdefendants before discovery and a potential trial to ascertain the intent of the parties." Id. at * 3

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(citing Great Atlantic & Pacific Tea Co., Inc. v. Checchio, 335 N.J. Super. 495, 502 (App. Div.2000)). The Court reasoned:

Although it may be appropriate on a motion to dismiss for a courtto consider exhibits attached to a complaint ... the applicable testfor whether a complaint survives such a motion under R. 4:6-2(e)merely requires that the non-movant show that a cause of action is"suggested" by the pleaded facts

We simply cannot tell from the face of the contract documentswhich interpretation is most faithful to the intent of the parties.We are also deprived .of any parol evidence or other extrinsicproofs, such as deposition transcripts and other documentation, thatmight aid us in divining what was intended in the contract on thisscore.Id. at 14-15. The Appellate Division vacated the dismissal and remanded for further discoveryand proceedings. Id. at 16.

Similarly, this Court should resolve any doubt raised by Defendants in favor ofpermitting Plaintiff to take discovery in order to appropriately and adequately respond to thefact-based arguments raised by the Defendants.

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CONCLUSIONFor all of the foregoing reasons, Woodmont respectfully requests that Defendants'

motion to dismiss be denied in its entirety.

Dated: June 29, 2011

GREENBAUM, ROWE, SMITH & DAVIS LLPAttorneys for Plaintiff

Woodmont v. Lehigh Memo of Law Woodmont

Documents

Transcript of Woodmont v. Lehigh Memo of Law Woodmont