JOAN FRANCES LUCIANO IRREVOCABLE TRUST VS. WASTE MANAGEMENT INC. VS. HUGH B. MCCLUSKEY (L-1695-15, MORRIS COUNTY AND STATEWIDE) ( 2018 )

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APPROVAL OF THE APPELLATE DIVISION
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Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0409-16T3
JOAN FRANCES LUCIANO
IRREVOCABLE TRUST, and
MICHAEL J. LUCIANO,
Plaintiffs-Appellants/
Cross-Respondents,
v.
WASTE MANAGEMENT, INC.,
and WASTE MANAGEMENT OF
NEW JERSEY, INC.,
Defendants/Third-Party
Plaintiffs-Respondents/
Cross-Appellants,
v.
HUGH B. MCCLUSKEY,
Third-Party Defendant-
Respondent.
________________________________
Argued May 10, 2018 – Decided August 15, 2018
Before Judges Simonelli, Rothstadt and Gooden
Brown.
On appeal from Superior Court of New Jersey,
Law Division, Morris County, Docket No. L-
1695-15.
Jorge R. de Armas argued the cause for
appellants/cross-respondents (Waters,
McPherson, McNeill, PC, attorneys; Jorge R.
de Armas and Daniel E. Horgan, on the briefs).
Peter R. Yarem argued the cause for
respondents/cross-appellants (Scarinci &
Hollenbeck, LLC, attorneys; Peter R. Yarem,
of counsel and on the briefs; Laura M. Miller,
on the briefs).
Hugh B. McCluskey, respondent, argued the
cause pro se.
PER CURIAM
Plaintiffs, the Joan Frances Luciano Irrevocable Trust and
Michael J. Luciano (collectively, the Lucianos), and defendants
Waste Management, Inc. and Waste Management of New Jersey, Inc.
(collectively, Waste Management), appeal from the Law Division's
April 22, 2016 order dismissing their claims against each other.
The Lucianos also appeal from a July 25, 2016 order denying their
motion for leave to file an amended complaint.
In their complaint, the Lucianos alleged that Waste
Management wrongfully terminated payment of royalties that they
and third-party defendant, Hugh B. McCluskey, were owed under an
agreement relating to solid waste transfer stations they developed
and later sold to Waste Management's predecessors. Waste
Management denied it was obligated to pay any royalties after it
sold the transfer stations and further, that they were entitled
2 A-0409-16T3
to recover from the Lucianos and McCluskey any amounts they paid
in error after their sale.
Judge Stuart A. Minkowitz dismissed the Lucianos' complaint
after he concluded that their entitlement to royalties was
conditioned upon Waste Management continuing to operate and earn
income from the transfer stations, which it continued to do until
2013. He dismissed Waste Management's counterclaim because it
operated the transfer stations through 2013, and in any event did
not timely assert its rights. The judge denied the Lucianos'
motion to amend because the proposed amendment would still not
give rise to a cause of action against Waste Management.
On appeal, the Lucianos primarily argue that they were
entitled to the continued payment of royalties regardless of Waste
Management's lack of involvement as the owner or operator of the
transfer stations. Waste Management contends that after it sold
the transfer stations, its obligation to pay royalties ceased. We
disagree with both parties.
For the reasons that follow, we affirm Judge Minkowitz's
decisions substantially for the reasons expressed in his April 22,
2016 and July 25, 2016 written statements of reasons addressing
the parties' claims.
The facts derived from the motion record leading to the
dismissal of the parties' claims are generally not in dispute.
3 A-0409-16T3
They are summarized as follows. The parties' disagreement focused
upon a provision in a 1990 contract between the Lucianos, McCluskey
and Waste Management's predecessors that required they cooperate
to ensure the continued existence of solid waste transfer stations
in Morris County. The agreement also provided that the Lucianos
and McCluskey would be paid a royalty based upon the amount of
waste handled by the transfer stations. The royalties were paid
to the Lucianos and McCluskey until 2013, when Waste Management
lost the public bid contract to operate the transfer stations.
The 1990 agreement arose from the Lucianos' and McCluskey's
activities almost thirty years ago. At that time, they
incorporated Morris County Transfer Stations, Inc. (MCTS) to
develop two solid waste transfer stations in Morris County. The
transfer stations were an interim solution to Morris County's
solid waste issues, which were to be ultimately resolved by the
construction of a resource recovery facility – i.e. an incinerator
– by December 1990.
The Lucianos and McCluskey were the sole shareholders of MCTS
until October 28, 1987, when they sold all of their shares to
Chambers of New Jersey, Inc. (Chambers). Under the October 28,
1987 stock purchase agreement, MCTS paid the Lucianos and McCluskey
"royalties of [one dollar] per ton for each ton of municipal solid
waste accepted and processed by [MCTS]" at the transfer stations.
4 A-0409-16T3
A separate agreement dated November 10, 1987 that addressed the
royalty payments, similarly based the royalty upon "solid waste
accepted and processed by [MCTS] at the Solid Waste Transfer
Station . . . which are constructed, developed and operated by
[MCTS] . . . ." (Emphasis added). In accordance with the terms
of the 1987 agreements, those payments stopped in 1990, but resumed
after November 20, 1990, when the Lucianos and McCluskey entered
into the agreement with MCTS that is the subject of this dispute.
Dating back to November 23, 1987, MCTS was involved in
litigation with the Morris County Municipal Utility Authority
(MCMUA) and Morris County before the Board of Public Utilities
(BPU) and the New Jersey Office of Administrative Law over "the
method of rate regulation" for solid waste disposal at the transfer
stations. The dispute ended in an October 1989 settlement
agreement1 in which the parties agreed to specific rates to be
charged per ton of solid waste handled at the transfer stations
for the years 1990 through 1994. The agreement also provided that
"[u]pon the [c]ommercial [o]peration date of the County's resource
recovery facility on or after January 1, 1993, the operation of
MCTS' transfer stations shall terminate . . . ." If the facility
was not operational by January 1, 1993, the agreed upon rate for
1
The terms of the agreement were reflected in the Morris County
Solid Waste Management Plan Amendment dated October 1989.
5 A-0409-16T3
1994 would take effect, and if the facility was still not operating
by December 31, 1994, the agreement stated that "MCTS' rates for
1995 shall be established by petition to the BPU . . . ."
The settlement prompted the Lucianos, McCluskey and MCTS to
enter into the November 20, 1990 agreement in which they agreed
to not compete and to "cooperate in developing one or more plans,
proposals and/or agreements . . . in order to extend the useful
life of one or both transfer stations" beyond the end of 1992.
The agreement called for the continued payment of royalties to the
Lucianos and McCluskey, who agreed to waive any claims they had
against MCTS regarding any other payments that may have been owed
to them under the original October 28, 1987 agreement.
The 1990 agreement's requirement for the payment of royalties
was subject to two conditions. Specifically, section three of the
agreement stated:
In the event that (i) the projected operating
life of one or both transfer stations, as part
of an integrated program for handling and
disposing of Morris County's Waste, is
extended beyond [five] years, and (ii) a rate
per ton for waste handled at the transfer
station is established and agreed to by MCTS
by agreement, stipulation or settlement, the
parties agree that:
. . . .
(c) for each year after the fourth year that
the transfer station or stations remain in
existence handling Morris County's waste,
6 A-0409-16T3
[Lucianos and McCluskey] will be paid an
aggregate continuation royalty for solid waste
processed at such transfer station(s) of [one
dollar] per ton . . . .
[(Emphasis added).]
Another portion of the agreement acknowledged that extending
the transfer stations' useful lives beyond the original five years
could result in a reduction in "the amount which must be charged
by MCTS per ton for solid waste to recover its costs and earn a
reasonable profit . . . resulting in substantial savings to the
residents of Morris County." (Emphasis added).
The parties ultimately succeeded in extending the useful
lives of the transfer stations. On February 27, 1991, MCTS, MCMUA
and Morris County amended their October 1989 settlement agreement
to reflect their new arrangement2 that in exchange for the
extension of the lives of the transfer stations beyond December
31, 1992, MCTS would reduce the 1993 and 1994 rates that were
previously set in the 1989 settlement agreement in the event that
the County's resource recovery facility was not operational on or
after January 1, 1993. The amendment also provided:
In the event that the County provides for
the continued operation of MCTS' transfer
stations after January 1, 1995 . . ., MCTS'
rates, on or after January 1, 1995 and for so
2
The terms of their new arrangement were detailed in the Morris
County Solid Waste Management Plan Amendment dated March 1991.
7 A-0409-16T3
long as such transfer stations continue to be
owned by MCTS . . . shall be established by
the BPU.
On December 31, 1993, MCTS sold the transfer stations to the
MCMUA, but continued to operate them under a public contract.3 In
advance of the sale, an attorney for the Lucianos and McCluskey
wrote on October 21, 1993 to MCTS's attorney asserting their
continued right to the royalty payments despite the sale. After
the sale, payments due to the Lucianos and McCluskey did in fact
continue.
After a series of mergers and acquisitions, Waste Management
acquired MCTS. Waste Management continued to operate the transfer
stations and make royalty payments to the Lucianos and McCluskey
until January 27, 2013, at which point it lost the bid to continue
to operate the transfer stations.
On July 8, 2015, the Lucianos filed their complaint alleging
that Waste Management breached the 1990 agreement by stopping the
royalty payments. According to the complaint, Waste Management's
"obligation to pay the . . . [r]oyalty [arose] . . . from the
operation of the [t]ransfer [s]tations" being continued regardless
of who was "the operator of the . . . [s]tations . . . ."
3
These terms were detailed in the Morris County Solid Waste
Management Plan Amendment dated November 1993.
8 A-0409-16T3
In response, Waste Management filed a counterclaim and third-
party complaint seeking a return of the royalty payments it made
to the Lucianos and McCluskey since 1993. In its pleadings, Waste
Management argued that the doctrine of unjust enrichment required
the return of the royalty payments it had mistakenly made because
the condition precedent to its royalty payments - that the "rate
per ton for waste handled at the transfer station [be] established
and agreed to by MCTS by agreement, stipulation or settlement" –
could not be satisfied after MCTS sold the transfer stations to
MCMUA. Waste Management also sought a declaratory judgment to
"determine the rights, obligations, and liabilities that exist[ed]
among the parties" under the 1990 contract.
In lieu of filing an answer to the counterclaim, the Lucianos
filed a motion to dismiss Waste Management's counterclaim under
Rule 4:6-2(e), and Waste Management filed a cross-motion for the
same relief, seeking to dismiss the Lucianos' complaint. In
support of their motion, the Lucianos argued that (1) Waste
Management could not rely on its voluntary decision to sell the
transfer stations to excuse its obligation to pay the royalties
and that the obligation to pay royalties continued as long as
Morris County waste is handled by the transfer stations; and (2)
Waste Management's claim was barred by the voluntary payment
9 A-0409-16T3
doctrine4 and by the applicable statute of limitations. In support
of its cross-motion, Waste Management argued that its obligation
to pay the royalties ceased after it sold the transfer stations
to MCMUA.
On April 22, 2016, Judge Minkowitz granted both motions
finding that the parties' 1990 agreement required royalty payments
to be made as long as Waste Management operated the transfer
stations and participated through an agreement with the MCMUA to
set rates, which Waste Management could no longer do as of 2013
because it lost the public contract. With respect to Waste
Management's counterclaim, the judge found that unjust enrichment
was not a valid claim because a contract existed between the
parties and, in any event, if it did, it was barred by the statute
of limitations. He also found that the voluntary payment rule
barred Waste Management's claim to recover amounts it paid since
it sold the transfer stations.
In his written statement of reasons, Judge Minkowitz
explained that the parties' agreement
4
See Cont'l Trailways, Inc. v. Dir., Div. of Motor Vehicles, 102
N.J. 526, 548 (1986) (stating "where a party, without mistake of
fact, fraud, duress, or extortion, voluntarily pays money on a
demand that is not enforceable against him, he may not recover it"
(citations omitted)); see generally Miller v. Eisele, 111 N.J.L.
268 (Ct. Err. & App. 1933) (discussing the voluntary payment rule).
10 A-0409-16T3
clearly establishes two separate conditions
that must exist before performance under the
contract is due. . . . [T]he phrase, "[i]n
the event that," applies to
both . . . conditions . . . . Accordingly,
in the event that, (i), the operating life of
the transfer station(s) is extended beyond
five years, and, (ii), the rate per ton of
waste handled at the transfer stations is
established and agreed to by MCTS by
agreement, stipulation or settlement, a
royalty of [one dollar] per ton will be paid
to the Lucianos. There is no dispute that
condition (i) has continuously been satisfied,
as the [t]ransfer [s]tations are still used
to this day to handle Morris County waste. As
to condition (ii), MCTS or its successor,
[Waste Management], established and agreed to
the rate per ton for waste until January 2013,
when they controlled the [t]ransfer
[s]tations, thereby meeting the condition and
resulting in royalty payments to the
[Lucianos]. . . . However, once [Waste
Management] lost its contract with the County
of Morris in January 2013, they no longer
established and agreed to the rate per ton of
waste handled at the [t]ransfer [s]tations.
Therefore, this condition was no longer met.
[(Emphasis added).]
In response to the Lucianos' argument that the precondition
should not be excused because it was Waste Management's voluntary
decision to sell the stations that made it impossible for the
precondition to be satisfied, the judge found that the "non-
occurrence of a condition is not a breach unless a party is under
a duty to maintain the condition[ and h]ere, the contract contains
no duty to maintain these conditions." He stated:
11 A-0409-16T3
This is not a case where parties are subject
to liability where a condition precedent may
be excused where its performance is prevented
or hindered by a breach of the obligor's duty
of good faith and fair dealing. . . . Indeed,
[the Lucianos have] not alleged that [Waste
Management] has purposely prevented or
hindered performance, by, for example,
purposely submitting a nonconforming bid in
order to lose the public contract. Instead,
the condition was no longer met because [Waste
Management] could no longer establish and
agree to rates with their customers. A non-
occurrence of a condition is not a breach
unless a party is under a duty to maintain the
condition. . . . Here, the contract contains
no duty to maintain these conditions.
With respect to Waste Management's counterclaim, the judge
found that unjust enrichment is "a quasi-contractual claim subject
to the six-year statute of limitations." He determined that if
unjust enrichment applied that "[b]ecause the [a]greement was
entered into in 1990, regardless of continuing royalty payments,
the counterclaims are barred by the six-year statute of
limitations . . . ." However, the judge noted that Waste
Management's claim was barred by the fact that there was a contract
between the parties and "unjust enrichment [applied] only when
there was no express contract. . . ." Moreover, he observed that
"the voluntary payment rule applie[d] as the [c]ourt [found] there
[was] an absence of fraud, duress, extortion or mistake of fact."
On June 3, 2016, the Lucianos moved to file a second amended
complaint with new exhibits, which included, among other
12 A-0409-16T3
documents, the 1991 amendment to the settlement agreement between
MCTS, MCMUA and Morris County, which they alleged proved that the
precondition was not intended to be an ongoing one because once
the amended settlement agreement came to fruition "the rate per
ton for waste handled at the [t]ransfer [s]tations for 1988 through
1994" was established and "the projected operating life of both
[t]ransfer [s]tations [was extended] beyond five years, as sought
by the parties . . . ." As a result, they claimed "the
[p]recondition was finally, fully and forever satisfied."
On July 25, 2016, Judge Minkowitz denied the motion without
oral argument, explaining in a written statement of reasons that
the Lucianos "have not provided sufficient proofs to overcome
[his] already detailed analysis of the agreement in [his] April
22, 2016 [s]tatement of [r]easons." According to the judge, "the
1991 amendment state[d] that the rates [were] set for '1992, 1993,
and 1994,' and [did] not provide for rates thereafter." Therefore,
he concluded that "nothing in any agreement or amendment
indicate[d] that the rate[s] [were] set ad infinitum."
Waste Management's and McCluskey's respective claims against
each other were subsequently dismissed without prejudice through
a consent order entered on September 9, 2016. The Lucianos' and
Waste Management's cross-appeals followed.
13 A-0409-16T3
We review de novo a motion judge's order dismissing a
complaint under Rule 4:6-2(e), applying the same standard as the
motion judge. See Stop & Shop Supermarket Co. v. Cty. of Bergen,
450 N.J. Super. 286, 290 (App. Div. 2017). That standard requires
us to examine the challenged pleadings to determine "whether a
cause of action is 'suggested' by the facts." Teamsters Local 97
v. State, 434 N.J. Super. 393, 412 (App. Div. 2014) (quoting
Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746
(1989)). We search the pleading "in depth and with liberality to
determine whether a cause of action can be gleaned even from an
obscure statement." Seidenberg v. Summit Bank, 348 N.J. Super.
243, 250 (App. Div. 2002) (citing Printing Mart-Morristown, 116
N.J. at 746). "[I]t is the existence of the fundament of a cause
of action . . . that is pivotal[.]" Teamsters Local 97, 434 N.J.
Super. at 412-13 (second alteration in original) (quoting Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005)).
"A pleading should be dismissed if it states no basis for
relief and discovery would not provide one." Rezem Family Assocs.,
LP v. Borough of Millstone, 423 N.J. Super. 103, 113 (App. Div.
2011) (citing Camden Cty. Energy Recovery Assocs., LP v. N.J.
Dep't of Envtl. Prot., 320 N.J. Super. 59, 64 (App. Div. 1999),
aff'd, 170 N.J. 246 (2001)). Ordinarily, dismissal for failure
to state a claim is without prejudice, and the court has discretion
14 A-0409-16T3
to permit a party to amend the pleading to allege additional facts
in an effort to state a claim. See Hoffman v. Hampshire Labs,
Inc., 405 N.J. Super. 105, 116 (App. Div. 2009).
On appeal, the Lucianos argue that Judge Minkowitz erred in
granting Waste Management's motion because he misinterpreted the
1990 agreement, ignored circumstances surrounding its entry, and
impermissibly rewrote the agreement. Moreover, they contend that
their pleadings stated "sufficient facts to withstand the motion
for dismissal . . . as to . . . the claimed condition precedent"
that "was not an ongoing precondition." In addition, they assert
that even if the judge was correct as to the meaning of the
disputed provision, he improperly and prematurely foreclosed the
Lucianos from presenting any defenses that would still entitle
them to the continued royalty payments, such as the fact that
Waste Management's voluntary actions prevented the satisfaction
of the condition to the payment of the royalties.
The gist of the Lucianos' argument is that under section
three of the 1990 agreement, their right to royalties continued
so long as the transfer stations "remain[ed] in existence handling
Morris County's waste" regardless of who owned or operated them.
They argue that Judge Minkowitz "improperly construed the
[c]ontract against [them]. . . . because . . . the [p]recondition
can be said to be susceptible to more than one interpretation [and
15 A-0409-16T3
a]s such, the [judge] was required to presume that the Lucianos[']
interpretation (that the [p]recondition was satisfied by the
settlement of MCTS' dispute with the MCMUA . . .) was the correct
one . . . ." They explain that the word "event" used in section
three of the agreement actually refers to "the resolution of the
uncertainty related to [the] dispute [between MCTS, MCMUA, and
Morris County before the BPU over] the extension of the useful
life of the [t]ransfer [s]tations beyond 1992 and the rates that
MCTS would charge upon such extension."
Waste Management contends that Judge Minkowitz properly
dismissed the Lucianos' claims. However, in its cross-appeal, it
argues that he should not have dismissed its counterclaim because
its "obligation to pay royalties expired in 1994" and its claim
to recover the amounts it was not required to pay was not barred
by the statute of limitations.
The determination of the parties' appeals thus turns on the
meaning of the disputed contract provision. The interpretation
of a contract is a question of law that we review de novo. In re
Cty. of Atl., 230 N.J. 237, 255 (2017).
"[I]n interpreting an agreement, we 'must try to ascertain
the intention of the parties as revealed by the language used, the
situation of the parties, the attendant circumstances, and the
objects the parties were striving to attain.'" Barr v. Barr, 418
16 A-0409-16T3
N.J. Super. 18, 32 (App. Div. 2011) (quoting Celanese Ltd. v.
Essex Cty. Imp. Auth., 404 N.J. Super. 514, 528 (App. Div. 2009)).
However, "when the terms of a contract are clear and unambiguous,
there is no room for construction and the court must enforce those
terms as written." Watson v. City of E. Orange, 175 N.J. 442, 447
(2003) (citations omitted); see also Twp. of White v. Castle Ridge
Dev. Corp., 419 N.J. Super. 68, 74-75 (App. Div. 2011). The court
may not, however, make "a better contract for the parties than
they themselves have seen fit to enter into, or to alter it for
the benefit of one party and to the detriment of the other."
Karl's Sales & Serv., Inc. v. Gimbel Bros., 249 N.J. Super. 487,
493 (App. Div. 1991) (citing James v. Fed. Ins. Co., 5 N.J. 21,
24 (1950)).
When faced with differing proposed interpretations of
contractual terms, we must determine whether the language of the
agreement is indeed clear and unambiguous. Schor v. FMS Fin.
Corp., 357 N.J. Super. 185, 191 (App. Div. 2002).
An ambiguity in a contract exists if the terms
of the contract are susceptible to at least
two reasonable alternative interpretations[.]
To determine the meaning of the terms of an
agreement by the objective manifestations of
the parties' intent, the terms of the contract
must be given their "plain and ordinary
meaning."
17 A-0409-16T3
[Ibid. (alteration in original) (quoting
Nester v. O'Donnell, 301 N.J. Super. 198, 210
(App. Div. 1997)).]
"In construing [the] contract[, we] must not focus on an
isolated phrase but should read the contract as a whole . . . ."
Wheatly v. Sook Suh, 217 N.J. Super. 233, 239 (App. Div. 1987)
(citing Joseph Hilton & Assocs., Inc. v. Evans, 201 N.J. Super.
156, 171 (App. Div. 1985)); see also Hardy ex rel. Dowdell v.
Abdul-Matin, 198 N.J. 95, 103 (2009) ("A basic principle of
contract interpretation is to read the document as a whole in a
fair and common sense manner." (citing DiProspero v. Penn, 183
N.J. 477, 496-97 (2005))). "A 'court should not torture the
language of [a contract] to create ambiguity.'" Nester, 301 N.J.
Super. at 210 (alteration in original) (quoting Stiefel v. Bayly,
Martin & Fay, Inc., 242 N.J. Super. 643, 651 (1990)).
Here, the Lucianos argue that an ambiguity exists because
contrary to Waste Management's contention, the word "event" used
in the 1990 agreement's royalty provision was not an ongoing
condition, but instead referred to the settlement of the dispute
between MCTS, MCMUA and Morris County. Moreover, they contend
section three established their perpetual right to royalties
regardless of the owner or operator of the transfer stations. We
disagree.
18 A-0409-16T3
We conclude from our de novo review that Judge Minkowitz
correctly determined that the Lucianos' and McCluskey's right to
royalties terminated when Waste Management lost its contract to
operate and receive income from the operation of the transfer
stations. We therefore affirm substantially for the reasons
expressed by Judge Minkowitz in his comprehensive April 22, 2016
and July 25, 2016 decisions. We add only the following comments.
The wording of the royalty clause is not ambiguous as it
clearly expressed that a condition to the Lucianos' and McCluskey's
receipt of royalties was Waste Management's ability to receive
income for operating the transfer stations and participate in
setting its rates through an agreement with the county.5 Contrary
to the Lucianos' contentions, the 1990 agreement expressly
identified that one of its purposes was to "enable MCTS to reach
a settlement or compromise of a rate or rates for such services
provided by MCTS." There is no ambiguity in the language used by
the parties that clearly expressed their understanding that in
5
Our conclusion is consistent with the clear language of all of
the agreements. For example, the 1987 stock purchase agreement
specifically based royalties on "each ton of municipal solid waste
accepted and processed by [MCTS,]" clearly inferring that their
payment was conditioned upon MCTS operating the transfer stations
and earning income from its endeavors. So too the ensuing royalty
agreement dated November 10, 1987 that based the royalty upon
"solid waste accepted and processed by [MCTS] at the
. . . [t]ransfer [s]tation or [s]tations . . . which are
constructed, developed and operated by [MCTS] . . . ."
19 A-0409-16T3
order for the Lucianos and McCluskey to receive royalties, MCTS
must operate the transfer stations and participate in the rates
being charged through an agreement. Because the language of the
contract is clear, we "must enforce those terms as written."
Watson, 175 N.J. at 447 (citations omitted); see also Moscowitz
v. Middlesex Borough Bldg. & Loan Ass'n, 18 N.J. Super. 182, 186
(1952) ("The parties are normally bound by the language employed
regardless of some different intent or divergent understanding
entertained by either party." (citation omitted)).
Section three of the 1990 agreement unambiguously created a
condition precedent that had to be satisfied in order for the
Lucianos and McCluskey to be entitled to royalty payments. In a
condition precedent based on performance,
[t]he parties may make contractual liability
dependent upon the performance of a condition
precedent . . . . Generally, no liability can
arise on a promise subject to a condition
precedent until the condition is met. . . . A
condition in a promise limits the undertaking
of the promisor to perform, either by
confining the undertaking to the case where
the condition happens, or to the case where
it does not happen.
[Duff v. Trenton Beverage Co., 4 N.J. 595,
604-05 (1950) (citations omitted).]
Although "condition precedents are 'disfavored by the
courts.' . . . because the 'failure to comply with a condition
precedent works a forfeiture[,]'" condition precedents are
20 A-0409-16T3
enforceable when expressed clearly and unambiguously. Liberty
Mut. Ins. Co. v. President Container, Inc., 297 N.J. Super. 24,
34 (App. Div. 1997) (citations omitted).
Here, the first condition that the stations continue to exist
was obviously satisfied. The second condition, however, could not
be satisfied after Waste Management lost the bid to operate the
transfer stations,6 and as a result it could no longer participate
in setting the "rate per ton for waste handled at the transfer
station . . . ."
The Lucianos' arguments that the word "event" used in section
three of the 1990 agreement referred to the settlement of the
dispute between MCTS, MCMUA and Morris County and that their right
to royalties was perpetual as long as the transfer stations existed
are without merit. Nowhere in the parties' 1990 agreement is
there any reference to any dispute between MCTS, MCMUA and Morris
County. The fact that a later amendment to the settlement
agreement between MCTS, MCMUA and Morris County fixed rates for
certain years did not give rise to a perpetual right to royalty
payments.
6
Contrary to Waste Management's contentions, the sale of the
transfer stations to the MCMUA, did not terminate its obligation
to pay because it continued to participate in setting rates through
entering into an agreement with the MCMUA.
21 A-0409-16T3
Moreover, if the parties had intended to create a perpetual
contract covering the lifetime of the transfer stations,
regardless of their owner or operator, as the Lucianos claim,
there needed to be a "clear manifestation" that the parties
intended such a perpetual right. In re Estate of Miller, 90 N.J.
210, 218 (1982). That is because generally, New Jersey law does
not favor perpetual contracts. Ibid. "Absent an almost
overwhelming showing that the parties to a contract intended such
a one-sided, unreasonable construction, courts will not construe
a contract as providing some perpetual right or option which one
side can exercise against the other at any time in the future."
Home Props. of N.Y., LP v. Ocino, Inc., 341 N.J. Super. 604, 613
(App. Div. 2001) (citing In re Estate of Miller, 90 N.J. at 218).
We turn to the Lucianos' contention that Judge Minkowitz
should have allowed them to file the amended pleading alleging
primarily that the 1991 amendment to the settlement agreement
between MCTS, MCMUA and Morris County established that the 1990
agreement's precondition to the royalty payments was not intended
to be ongoing. We find their argument to be without merit.
We review a trial court's determination on a motion to amend
a pleading for a "clear abuse of discretion." Franklin Med.
Assocs. v. Newark Pub. Schs., 362 N.J. Super. 494, 506 (App. Div.
2003) (quoting Salitan v. Magnus, 28 N.J. 20, 26 (1958)). Applying
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this deferential standard, we conclude that Judge Minkowitz
properly exercised his discretion and denied the Lucianos' motion
because, as Judge Minkowitz found, the proposed amendment would
still not have "state[d] a claim upon which relief [could] be
granted . . . ." R. 4:6-2(e).
As Judge Minkowitz observed in his written statement of
reasons, the 1991 amendment to the settlement agreement "only set
rates agreed to by [MCTS] through 1994 . . . and do not provide
for rates thereafter." He concluded "that nothing in any agreement
or amendment indicates that the rate was set ad infinitum. To the
contrary, [p]laintiffs' proposed amended [c]omplaint, based
primarily on the 1991 [settlement amendment] and [the] 1993
[amendment to the Morris County Solid Waste Management Plan],
evidence the intent that the rates were to be set until 1994."
While we acknowledge that motions for leave to amend should
be liberally granted, "without consideration of the ultimate
merits of the amendment," they need not be granted where, as here,
granting the motion would be a "futile" and "useless endeavor."
Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006) (citation
omitted); see also Prime Accounting Dep't v. Twp. of Carney's
Point, 212 N.J. 493, 511 (2013). We have no cause to disturb the
judge's decision to deny the motion to amend.
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We next address Waste Management's arguments that its
counterclaim should not have been dismissed. According to Waste
Management, although the court correctly found its "unjust
enrichment claim [was] quasi-contractual and subject to a six-year
[s]tatute of [l]imitations[,]" the statute of limitations "would
not bar [its] claim to recover royalty payments mistakenly paid
during the six-year period from October 30, 2009, to October 30,
2015, when Waste Management's [c]ounterclaim was filed." As a
result, Waste Management contends it was error for the court to
dismiss its "[c]ounterclaim in its entirety." Waste Management
also contends that the application of the "volunteer rule" to its
claim was erroneous. It argues the rule is inapplicable because
it made the payments based on a mistake of fact.
We conclude that Waste Management's arguments are without
merit. First, as we and Judge Minkowitz concluded, Waste
Management was obligated to pay royalties as long as it operated
the transfer stations and received payment for its services. Thus,
the payments made by Waste Management through 2013 were not
recoverable and there was no evidence that it made any payments
after 2013.
Second, regardless of Waste Management's argument that its
obligation to pay royalties terminated with the sale of the
transfer stations, they are not entitled to recovery because they
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are unable to prove a mistake of fact as a defense to the voluntary
payment rule. See Villanueva v. Amica Mut. Ins. Co., 374 N.J.
Super. 283, 287 (App. Div. 2005) ("[O]ne who has paid money under
a mistake of fact but for which payment would not have been made
may have restitution from the payee notwithstanding that the
mistake was unilateral and a consequence of the payor's negligence,
providing, however, that such restitution will not prejudice the
defendant." (quoting Great Am. Ins. Co. v. Yellen, 58 N.J. Super.
240, 244 (App. Div. 1959))). The proofs here however are to the
contrary as the Lucianos and McCluskey placed Waste Management on
notice through their attorney's October 21, 1993 letter that the
sale of the transfer stations did not relieve Waste Management of
its obligations. With that notice, Waste Management continued to
make payments for twenty years, until it ceased operating the
transfer stations. Under these circumstances, there was no mistake
of fact.
In light of our determination, we need not address any of the
parties' remaining arguments.
Affirmed.
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