Cumberland Farms, Inc. v. New Jersey , 447 N.J. Super. 423 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4335-14T2
CUMBERLAND FARMS, INC.,
Plaintiff-Appellant/
APPROVED FOR PUBLICATION
Cross-Respondent,
November 2, 2016
v.
APPELLATE DIVISION
NEW JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION and
THE ADMINISTRATOR OF THE NEW
JERSEY SPILL COMPENSATION
FUND,
Defendants-Respondents/
Cross-Appellants.
___________________________________
Argued October 17, 2016 – Decided November 2, 2016
Before Judges Sabatino, Haas and Currier.
On appeal from Superior Court of New Jersey,
Law Division, Mercer County, Docket No. L-
1368-13.
Mark E. Tully (Goodwin Procter, LLP) of the
Massachusetts bar, admitted pro hac vice,
argued the cause for appellant/cross-
respondent (Archer & Greiner, Mr. Tully and
Chad W. Higgins (Goodwin Procter, LLP) of
the Massachusetts bar, admitted pro hac
vice, attorneys; Mr. Tully, Mr. Higgins, and
Nicholas J. Lochetta, II, on the briefs).
Leonard Z. Kaufmann argued the cause for
respondents/cross-appellants (Christopher S.
Porrino, Attorney General, and Cohn Lifland
Pearlman Herrmann & Knopf, LLP, attorneys;
Mr. Kaufmann, Barry A. Knopf, and Gwen
Farley, Deputy Attorney General, on the
briefs).
The opinion of the court was delivered by
HAAS, J.A.D.
Plaintiff Cumberland Farms, Inc. ("CFI") appeals from the
Law Division's April 15, 2015 order dismissing its complaint
seeking to enforce an alleged settlement with defendants New
Jersey Department of Environmental Protection and the
Administrator of the New Jersey Spill Compensation Fund
(collectively "the DEP") that purportedly resolved natural
resource damage claims the DEP had asserted under the New Jersey
Spill and Compensation Act, N.J.S.A. 58:10-23.11 to -23.50 ("the
Spill Act"). The DEP has filed a cross-appeal from a provision
in the same order granting judgment to CFI on its breach of the
implied covenant of good faith and fair dealing claim, and
ordering CFI and DEP to continue settlement negotiations.
Having reviewed the parties' contentions in light of the
record and applicable law, we affirm the trial court's dismissal
of CFI's breach of contract, specific performance, promissory
estoppel, and declaratory judgment claims. However, on the
DEP's cross-appeal, we reverse the trial court's decision
granting judgment to CFI on its breach of the implied covenant
of good faith and fair dealing claim.
2 A-4335-14T2
I.
We derive the following facts and procedural history from
the record developed during the two-day bench trial. Under the
Spill Act, the DEP may seek damages against a responsible party
for the loss of use of natural resources adversely affected by
the party's discharge of hazardous substances. N.J. Dep't of
Envtl. Prot. v. Exxon Mobil Corp., 393 N.J. Super. 388, 399-400
(App. Div. 2007) (citing N.J.S.A. 58:10-23.11f(a)(1) and -
23.11q). In an attempt to encourage responsible parties to
voluntarily settle their potential natural resource damages
("NRD") liability, the DEP published Policy Directive 2003-07
("the Directive") in September 2003. Id. at 395. The
Directive, which by its terms created "no enforceable rights,
legal or equitable, for any person," laid out the DEP's
procedures and formulae for resolving NRD claims. In order to
take advantage of the settlement process, responsible parties
had to notify the DEP prior to January 2, 2004 of their
intention to settle any potential NRD claims.
CFI owns numerous convenience stores and service stations
in New Jersey. On December 31, 2003, CFI's attorney sent a
letter to the Commissioner of the DEP advising that "CFI would
like to voluntarily enter into good faith discussions with the
[DEP] concerning any potential NRD claims at this time. . . ."
3 A-4335-14T2
In May 2004, CFI identified twenty-three of its sites as
candidates for settlement. CFI later notified the DEP of
another fifty-five potential sites where it faced potential NRD
liability.
At trial, CFI called the Administrator of the DEP's Office
of Natural Resource Restoration ("ONRR"), John Sacco, as a
witness. Sacco testified that he and his staff member, Vicky
Galofre, did not have the authority to approve NRD settlements.
Instead, Sacco stated that he and Galofre only had the
"authority to take part in negotiation, [and] come to an
understanding of terms" with the responsible party. Once Sacco
knew the terms of a proposed settlement, he had to "go to [his]
respective management teams and make a recommendation or start a
discussion and then . . . at that point get the authority to
finalize a document for settlement."
According to Sacco, proposed settlements proceeded through
"a very iterative process. It goes back and forth quite often."
There were repeating rounds of analysis between the ONRR, the
DEP's management teams, and the New Jersey Division of Law,
which provided legal advice to the DEP. The attorneys for
potential responsible parties engaged in a similar process with
their clients and experts. During this process, which normally
took months to complete, the parties exchanged numerous drafts
4 A-4335-14T2
of the proposed settlement agreement, correspondence, and other
documents before any enforceable agreement could be struck.
Sacco also testified about the public notice requirement
the DEP and responsible parties had to follow before any
settlement could be finalized. On January 12, 2006, the
Legislature enacted L. 2005, c. 348. This law, which became
effective on April 12, 2006, amended N.J.S.A. 58:10-23.11f(b) to
provide that a responsible party that had resolved its NRD
liability with the DEP "shall not be liable for claims for
contribution [from any non-settling responsible parties]
regarding matters addressed in the settlement. . . ."
Chapter 348 also added a new provision, N.J.S.A. 58:10-
23.11e2, which stated:
At least 30 days[1] prior to its
agreement to any administrative or
judicially approved settlement . . . the
[DEP] shall publish in the New Jersey
Register and on the [DEP's] website the name
of the case, the names of the parties to the
settlement . . . , the location of the
property on which the discharge occurred,
and a summary of the terms of the settlement
. . . , including the amount of any monetary
payments made or to be made. The [DEP]
shall also provide written notice of the
settlement . . . , which shall include the
information listed above, to all other
parties in the case and to any other
1
On December 2, 2015, the Legislature increased this thirty-day
advance notification requirement to sixty days. L. 2015, c.
166.
5 A-4335-14T2
potentially responsible parties of whom the
[DEP] has notice at the time of the
publication.
Thus, under this new provision, the DEP and a responsible party
could not agree to a final settlement of a NRD claim until after
public notice of the possible settlement had been provided.
Even prior to the enactment of N.J.S.A. 58:10-23.11e2,
however, the settlement agreements negotiated between the DEP
and responsible parties included provisions requiring the
publication of public notice in the New Jersey Register of a
settlement agreement, even if it was already signed. For
example, the first settlement agreement the DEP negotiated with
CFI involved a site in Ridgefield. This agreement provided that
the DEP reserved the right to withdraw from the settlement if
the public comments received following the notice "indicate[d]
to the [DEP] in its sole discretion, that the [s]ettlement
[a]greement is inappropriate, improper, or inadequate." Thus,
the DEP retained the right to withdraw from the agreement based
upon its review of any comments received from the public or
other interested parties.
Prior to the April 12, 2006 effective date of the thirty-
day advance public notice requirement established by N.J.S.A.
58:10-23.11e2, the DEP and CFI entered into a written settlement
agreement for the remaining twenty-two sites CFI had originally
6 A-4335-14T2
identified as candidates for potential settlement. As was the
case with the Ridgefield settlement, the parties exchanged
multiple draft agreements and correspondence before an agreement
covering all twenty-two sites was executed. Like the Ridgefield
settlement, this agreement required public notice of the
settlement, and granted the DEP the right to withdraw from the
agreement if, after reviewing any public comments, it determined
the agreement was "inappropriate, improper, or inadequate."
At that point, there were fifty-five CFI sites remaining
for consideration under the settlement program. The DEP had
already initiated litigation to recover NRD damages from CFI for
one of these sites, which was located in Berkeley Township.
Settlement negotiations involving sites that were already in
litigation were handled in the first instance by the DEP's
outside litigation counsel, rather than by Sacco or Galofre.
CFI's attorney testified that she wanted to keep the other
fifty-four sites out of litigation. The DEP agreed with this
approach. Therefore, the parties dealt with the Berkeley site
separately. Indeed, CFI's attorney testified that none of the
correspondence CFI subsequently exchanged with DEP's litigation
counsel concerning the Berkley property mentioned the remaining
fifty-four sites.
7 A-4335-14T2
After going through a mediation process, CFI and the DEP's
litigation counsel negotiated a settlement of the Berkeley site
litigation. On April 12, 2007, DEP's litigation counsel advised
CFI's attorney that CFI's "proposed settlement has been approved
and accept[ed] by the State." The parties then began a year-
long exchange of documents and correspondence until they agreed
upon the terms of the agreement. At that point, and in
accordance with N.J.S.A. 58:10-23.11e2, the parties arranged for
public notice of the unsigned agreement. The DEP "received no
comments that disclosed facts or considerations that indicated
to the [DEP], in its sole discretion, that the [s]ettlement
[a]greement was inappropriate, improper, or inadequate[,]" and
the parties consummated the agreement on April 14, 2008, when
the final required signature was affixed to the document.
The DEP did not issue a release to CFI concerning the NRD
claims relating to the Berkeley site until 2013. At trial,
Sacco speculated that the release for that site may have "fell
through the cracks."
As part of its settlement of the Berkeley site litigation,
CFI agreed to fund the purchase of forty-three acres of land in
Cumberland County, which would "be held in trust and for the
benefit of the State of New Jersey to remain undeveloped and
undisturbed so that the natural resources on and under the
8 A-4335-14T2
[p]roperty shall remain available for the use and benefit of the
citizens of the State." At trial, CFI's attorney asserted that
CFI purchased additional acreage at that time that it hoped to
use as part of any future settlement of the remaining fifty-four
sites. However, CFI did not provide any documentation linking
these additional acres of land to the fifty-four sites prior to
CFI's purchase of this property.
The remaining fifty-four sites, which are located
throughout New Jersey, are the subject of this appeal. On
August 3, 2006, Galofre sent an email to CFI's attorney stating,
"Please let me know when you are available for a conference call
to go over the [fifty-four CFI] sites." It appears there was a
subsequent discussion between the attorney and Galofre
concerning the sites. On October 20, 2006, Galofre sent the
attorney another email stating, "About two months ago we
discussed the NRD for [fifty-four CFI] properties. Is [CFI]
still interested in settling these [fifty-four] sites?" CFI's
attorney responded later that day, expressing continued interest
in pursuing a settlement, but stating that CFI's environmental
consultants needed to obtain additional information.
When Galofre heard nothing further, she sent an email to
CFI's attorney on January 11, 2007, advising that Sacco was
considering forwarding the fifty-four sites to the DEP's outside
9 A-4335-14T2
counsel for litigation. CFI's attorney responded that same day,
stating CFI was still interested in negotiating a settlement.
Five months later, CFI's attorney sent Galofre an email on
June 14, 2007, stating that CFI
has authorized me to propose [36.99]
additional acres that will be purchased by
The Nature Conservancy to satisfy CFI's
potential NRD liability at the remaining
sites we were discussing. This offer is
made without prejudice and solely in an
attempt to resolve a bona fide dispute and
CFI is making no admissions of fact or law.
The next day, Galofre thanked CFI's attorney for the email
and stated that she would "review this and will be in touch with
you about it." On June 20, 2007, Galofre sent the following
email to CFI's attorney:
I have reviewed the proposal made by CFI as
stated in your email dated 6/14/07, below,
and discussed this proposal with John Sacco.
[The] ONRR is satisfied with this proposal,
therefore attached find a draft settlement
agreement for your review. Please see
Appendix B, that lists the sites, and fill
in the missing block and lot numbers and
program identification numbers. If you have
comments to the draft[,] also provide them.
However, note that [the] ONRR will not make
changes to boilerplate language especially
not to the definition of "Natural Resource
Damages[.]" Thank you.
As noted above, Sacco, Galofre, and the ONRR did not have
the authority to approve a settlement with CFI or any other
potential responsible party in a NRD case. Instead, their task
10 A-4335-14T2
was to flesh out the terms of any proposed agreement and then
forward it to their management teams for review and possible
approval.
Mindful of the bounds of the ONRR's limited authority, the
"draft settlement agreement" that Galofre sent to CFI's attorney
was a template the ONRR used as the starting point for its
negotiations. There were numerous blank spaces, strikeouts, and
"redlines" throughout the form. The template listed CFI's name
and address, and identified the fifty-four sites that were under
discussion. The form also included CFI's proposal to fund the
purchase of approximately 36.99 acres of land. The provision
stating the amount of money CFI would pay the DEP for its
"oversight costs" was left blank, and the dates by which certain
steps would have to be completed were not included in the
document.
The draft agreement included a provision that stated, "This
[s]ettlement [a]greement shall be effective upon the execution
of this [s]ettlement [a]greement by the Department" and CFI. In
addition, by operation of N.J.S.A. 58:10-23.11e2, prior to DEP's
agreement to any settlement, the terms of the contract had to be
published in order to give the public the opportunity to comment
on them.
11 A-4335-14T2
At trial, Sacco confirmed that, aside from the number of
acres of land CFI proposed to purchase, the remainder of the
draft settlement agreement was "still a work in progress."
Sacco described the draft as "basically a template that we send
out." He stated that other than the "terms of the
compensation[,] . . . the rest of it was yet to be determined
how it would look." CFI's trial counsel specifically asked
Sacco, "[W]hat are you suggesting was still subject to
negotiation?" Sacco replied, "It would be the entirety of the
document."
Nevertheless, CFI's attorney testified that after CFI
received the draft settlement agreement from Galofre on June 20,
2007, "we had a deal." During cross-examination, however, the
DEP's trial counsel read the following portion of CFI's
attorney's deposition testimony into evidence:
Q. So there is no currently existing
document to which you would expect [the] DEP
to affix -- defendants to affix their
signature, correct?
A. Not that I've seen.
CFI's attorney did not respond to Galofre's June 20, 2007
email. On July 25, 2007, Galofre sent the attorney an email
stating, "Please email me and tell me the status of your review
of the settlement document, attached, for the additional [fifty-
four] sites." CFI's attorney did not answer this email either.
12 A-4335-14T2
In August 2008, Galofre sent an email to CFI's attorney
stating that she was leaving the ONRR and that another staff
member, Pam Lange, would "be taking over the [CFI] matter, the
[fifty-four] volunteer service stations[.]" The attorney sent
an email thanking Galofre, but provided no substantive response
to her previous requests for a status report.
CFI's attorney testified that she tried to call Lange on
one occasion, but did not speak to her. The attorney never
contacted Sacco to discuss the draft settlement agreement or to
engage in negotiations. As the months turned into years, Sacco
testified "there was still no response from CFI to continue with
it." Sacco explained that CFI's attorney was aware of the
iterative process from the "three previous deals . . . [a]nd I
think was pretty clear of what were the next steps. We made our
couple of overtures and we never heard back. And you know it
just -- we moved on with other things."
Sometime in 2012, the DEP added CFI as a defendant to a
lawsuit it had filed in 2007 in the Southern District of New
York. In that action, the DEP sought to recover compensation
for the public for contamination caused by the discharge of a
chemical that was added to gasoline, Methyl Tertiary Butyl Ether
("MTBE"), at approximately 5000 sites throughout New Jersey.
With the addition of CFI, the fifty-four sites at issue in this
13 A-4335-14T2
appeal were included in the contaminated sites for which the DEP
sought compensation. One of the CFI properties, known as the
Baker's Waldwick site, was designated as a "bellwether site"
that would be tried during the first phase of the MTBE
litigation.
On September 13, 2012, CFI's attorney sent a letter to the
DEP's trial counsel in the MTBE litigation. In the letter,
CFI's attorney claimed that it and DEP had settled the DEP's NRD
claims for the fifty-four sites on June 20, 2007. On December
4, 2012, DEP's attorney responded with a letter stating,
"Although I am aware that settlement discussions occurred
several years ago as to a number of sites and that some were
settled, I have seen no documentation that such discussions
actually resulted in an enforceable settlement of the scope you
reference."
On June 20, 2013, six years after Galofre sent CFI's
attorney the draft settlement agreement for the fifty-four
sites, CFI filed a complaint seeking to enforce the alleged
final settlement. CFI asserted that the DEP breached the
parties' agreement by including the sites in the MTBE
litigation, and it sought specific performance of the
settlement. CFI also claimed that the DEP breached the implied
covenant of good faith and fair dealing "by failing to
14 A-4335-14T2
consummate the [s]ettlement [a]greement and failing to perform
any of [its] obligations under this [s]ettlement [a]greement."
CFI also argued that it partially performed its obligations
under the alleged agreement by purchasing property that could be
used to satisfy its NRD liability for the fifty-four sites and,
therefore, the DEP was estopped from denying the existence of an
enforceable contract. Finally, CFI sought a judgment
"[d]eclaring that the parties' agreement remains in full force
and effect," and requiring the DEP to enter into a settlement
agreement "as agreed to and otherwise completing the settlement
in this matter."
At the conclusion of testimony, the trial judge rendered an
oral decision, rejecting CFI's claim that "the draft settlement
agreement" the DEP sent CFI's attorney on June 20, 2007
constituted an enforceable contract. The judge noted that the
draft agreement had a number of blanks, redlines, and
strikeouts. In addition, neither party had signed the
agreement, and no public notice had been provided as required by
N.J.S.A. 58:10-23.11e2. The judge found that both Sacco and
CFI's attorney2 testified that "it's an iterative process,"
2
The judge found that Sacco was "an honest witness," but stated
he gave "greater weight" to CFI's attorney's testimony. In
support of this credibility finding, the judge stated that Sacco
testified "that the [DEP] always acts in good faith. And at the
(continued)
15 A-4335-14T2
involving the exchange of emails "and letters and going back and
forth. . . . They go one thing at a time going through it until
finally -- the matter is completely resolved."
The trial judge also found that Sacco lacked the authority
to approve a settlement and "that it has to go through and be
signed by certain people at DEP." In addition, the judge noted
that CFI's attorney acknowledged during her deposition testimony
that the draft agreement was not in the form required for either
party to sign it. Because the judge found there was no valid
settlement agreement between CFI and the DEP, he dismissed CFI's
breach of contract, specific performance, and declaratory
judgment claims.
The trial judge also rejected CFI's promissory estoppel
argument. The judge found that CFI had purchased property that
it could use to satisfy part of its NRD liability for the fifty-
four sites, but had not completed its stated plan of buying all
of the acreage necessary to move forward.
(continued)
same time he also testified that in the case of the [fifty-four]
sites[,] the application fell through the cracks." However,
Sacco's comment about something falling through the cracks was
limited to the DEP's failure to send CFI a timely release in
connection with the Berkeley settlement. He made no similar
comment concerning the fifty-four sites involved in this appeal.
Therefore, the judge's finding on this point critical of Sacco
lacks evidentiary support in the record.
16 A-4335-14T2
Finally, the trial judge entered judgment in CFI's favor on
its breach of the implied covenant of good faith and fair
dealing claim. The judge stated "that the DEP needs to resume
its negotiations. Whether that means that they actually wind up
with an agreement that can be published that's subject to the
publication contingency, I can't say. In the end[,] you may not
have a settlement agreement." This appeal and cross-appeal
followed.
II.
On appeal, CFI argues that the trial judge erred by
concluding there was no enforceable settlement agreement between
the parties. CFI asserts it made an offer to settle its NRD
liability for the fifty-four sites in CFI's attorney's June 14,
2007 letter, and that Galofre's June 20, 2007 email with the
attached "draft settlement proposal" constituted an acceptance
of that offer. We disagree.
Our review of a trial court's fact-finding in a non-jury
case is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J.
150, 169 (2011). "The general rule is that findings by the
trial court are binding on appeal when supported by adequate,
substantial, credible evidence. Deference is especially
appropriate when the evidence is largely testimonial and
involves questions of credibility." Ibid. (quoting Cesare v.
17 A-4335-14T2
Cesare, 154 N.J. 394, 411-12 (1998)). We "should not disturb
the factual findings and legal conclusions of the trial judge
unless [we are] convinced that they are so manifestly
unsupported by or inconsistent with the competent, relevant and
reasonably credible evidence as to offend the interests of
justice." Ibid. (internal quotation marks omitted).
However, we owe no deference to a trial court's
interpretation of the law, and review issues of law de novo.
State v. Parker, 212 N.J. 269, 278 (2012); Mountain Hill, L.L.C.
v. Twp. Comm. of Middletown, 403 N.J. Super. 146, 193 (App. Div.
2008), certif. denied, 199 N.J. 129 (2009). We also review
mixed questions of law and fact de novo. In re Malone, 381 N.J.
Super. 344, 349 (App. Div. 2005). The interpretation and
construction of a contract is a matter of law for the trial
court, subject to de novo review on appeal. Fastenberg v.
Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div.
1998); see also Kaur v. Assured Lending Corp., 405 N.J. Super.
468, 474 (App. Div. 2009) (reviewing the enforcement of a
settlement agreement de novo).
"A settlement agreement between parties to a lawsuit is a
contract." Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). The
burden of proving that the parties entered into a settlement
18 A-4335-14T2
agreement is upon the party seeking to enforce the settlement.
Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997).
Since the "settlement of litigation ranks high in our
public policy," Jannarone v. W.T. Co., 65 N.J. Super. 472, 476
(App. Div.), certif. denied sub nom., Jannarone v. Calamoneri,
35 N.J. 61 (1961), "settlement agreements will be honored
'absent a demonstration of fraud or other compelling
circumstances.'" Nolan, supra, 120 N.J. at 472 (quoting
Pascarella v. Bruck, 190 N.J. Super. 118, 125 (App. Div.),
certif. denied, 94 N.J. 600 (1983)). Unless there is "an
agreement to the essential terms" by the parties, however, there
is no settlement in the first instance. Mosley v. Femina
Fashions Inc., 356 N.J. Super. 118, 126 (App. Div. 2002),
certif. denied, 176 N.J. 279 (2003).
"A contract arises from offer and acceptance, and must be
sufficiently definite 'that the performance to be rendered by
each party can be ascertained with reasonable certainty.'"
Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting
West Caldwell v. Caldwell, 26 N.J. 9, 24-25 (1958)). "A written
contract is formed when there is a 'meeting of the minds'
between the parties evidenced by a written offer and an
unconditional, written acceptance." Morton v. 4 Orchard Land
Trust, 180 N.J. 118, 129-30 (2004) (quoting Johnson & Johnson v.
19 A-4335-14T2
Charmley Drug Co., 11 N.J. 526, 538-39 (1953)). Thus, "[i]t is
requisite that there be an unqualified acceptance to conclude
the manifestation of assent." Weichert Co. Realtors, supra, 128
N.J. at 435-36 (quoting Johnson & Johnson, supra, 11 N.J. at
539). "In the very nature of the contract, acceptance must be
absolute" and "unequivocally shown." Johnson & Johnson, supra,
11 N.J. at 538.
Applying these principles in this case, we discern no basis
for disturbing the trial judge's determination that CFI failed
to meet its burden of proving there was an enforceable
settlement agreement. The record clearly establishes that the
DEP never agreed to do anything more than attempt to negotiate a
final settlement through the iterative process, and that CFI
never responded to the DEP's overtures.
Both parties knew that Sacco, Galofre, and the ONRR did not
have the authority to enter into a binding settlement agreement.
Their authority was limited to negotiating with a potential
responsible party on the terms of a possible settlement, which
then needed to be reviewed and approved by DEP managers. Thus,
Galofre never stated in her June 20, 2007 email that DEP
management had agreed to settle the matter. Instead, she
specifically advised CFI's attorney that she was forwarding a
"draft settlement agreement" for the attorney's review.
20 A-4335-14T2
Contrary to CFI's contention, Galofre's email cannot be
read as an "unqualified"; "absolute"; or "unequivocal[]"
acceptance of CFI's June 14, 2007 "offer" to settle CFI's NRD
liability for the fifty-four sites. Johnson & Johnson, supra,
11 N.J. at 538-39. Instead, as the trial judge found, the
emails and the "draft settlement agreement" did not contain the
terms necessary to constitute a binding settlement. CFI's
attorney's email only referred to the property CFI proposed to
fund as part of the settlement. In turn, the draft agreement
Galofre sent to the attorney contained numerous redlines,
strikeouts, and blanks. As CFI's attorney conceded during her
deposition testimony, neither party could sign the agreement in
the condition it was in when Galofre started the negotiation
process on June 20, 2007.
The fact that CFI's attorney never responded to Galofre's
July 25, 2007 email asking the attorney to advise her of the
"status of [the attorney's] review of the [draft] settlement
document," is also telling. "A contracting party is bound by
the apparent intention he or she outwardly manifests to the
other party. It is immaterial that he or she has a different,
secret intention from that outwardly manifested." Hagrish v.
Olson, 254 N.J. Super. 133, 138 (App. Div. 1992) (citing Looman
21 A-4335-14T2
Realty Corp. v. Broad St. Nat'l Bank of Trenton, 74 N.J. Super.
71, 82 (App. Div.), certif. denied, 37 N.J. 520 (1962)).
It is clear from Galofre's email that the DEP did not
believe there was a binding settlement agreement. CFI's
attorney did nothing to question the DEP's understanding of the
nascent status of the negotiations. Indeed, CFI did not
communicate with the DEP concerning the fifty-four sites for
over five years and, only then, asserted that its NRD liability
for these locations had been settled. Under these
circumstances, the trial judge properly rejected CFI's
contention that there was an enforceable settlement as of June
20, 2007.
The trial judge's determination is further supported by two
additional factors. First, the draft agreement expressly stated
that the settlement would not be effective until it was executed
by both parties. As the judge observed, this provision was a
material term of any resolution of the case. Because neither
party signed the marked-up version of the agreement Galofre sent
to CFI's attorney on June 20, 2007, there was no final,
enforceable contract between the parties.
Second, under N.J.S.A. 58:10-23.11e2, the DEP and a
potentially responsible party may not agree to a settlement of
NRD liability until after the DEP has published notice of the
22 A-4335-14T2
terms of the settlement. Because the parties never arrived at
an understanding of the terms of a final settlement, the DEP was
never able, much less required, to publish the notice pursuant
to the statute. Therefore, the trial judge properly determined
there was no enforceable agreement between the DEP and CFI
regarding the fifty-four sites.
Finally on this point, CFI contends that if the parties
agreed upon the terms that needed to be included in the notice
required by N.J.S.A. 58:10-23.11e2, this "agreement" would
constitute a binding contract and the DEP would thereafter be
powerless to withdraw from that "agreement" even if it received
persuasive negative comments about the proposed settlement
during the public comment period following the publication of
the notice. Because we have determined that no valid settlement
agreement was forged between the DEP and CFI, we need not
further address this contention in this opinion. See Indep.
Realty Co. v. Twp. of N. Bergen, 376 N.J. Super. 295, 301 (App.
Div. 2005) (noting that while the New Jersey Constitution does
not confine the exercise of judicial power to actual cases and
controversies, "it is well settled that [courts] will not render
advisory opinions or function in the abstract").
That having been said, however, we perceive no principled
basis for the Legislature to have required in N.J.S.A. 58:10-
23 A-4335-14T2
23.11e2 that public notice be published of the proposed
settlement terms thirty days prior to DEP's agreement to a
settlement of a NRD claim if it did not intend for the DEP to be
able to consider the public comments received during that period
and make a determination whether to consummate, withdraw from,
or modify the settlement. See State v. Reynolds, 124 N.J. 559,
564 (1991) ("A construction of a statute that will render any
part of a statute inoperative, superfluous, or meaningless, is
to be avoided."). Significantly, the parties' prior agreements
expressly permitted the DEP to withdraw from the settlements in
its sole discretion after it considered the public comments.
Paragraphs six and seven of the "draft settlement agreement"
Galofre sent to CFI's attorney also contained the template of a
similar provision that was not finalized because the parties
never agreed to the terms of a settlement in this case.
The DEP's interpretation of the public comment process and
its ability to respond to those comments in the public interest
as evidenced by the language included in its final agreements is
entitled to "great weight as evidence of its conformity with the
legislative intent." Malone v. Fender, 80 N.J. 129, 137 (1979).
Therefore, we reject CFI's contention on this point.
In sum, CFI failed to prove there was an enforceable
settlement agreement. Therefore, the trial judge correctly
24 A-4335-14T2
dismissed CFI's claims for breach of contract, specific
performance, and a declaratory judgment against the DEP.
For similar reasons, the judge also properly rejected CFI's
promissory estoppel argument. "The elements of promissory
estoppel are '1) a clear and definite promise, 2) made with the
expectation that the promisee will rely upon it, 3) reasonable
reliance upon the promise, 4) which results in definite and
substantial detriment.'" East Orange Bd. Of Educ. v. N.J. Sch.
Const. Corp., 405 N.J. Super. 132, 148 (App. Div.) (quoting
Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 499 (App. Div.),
certif. denied, 177 N.J. 224 (2003)), certif. denied, 199 N.J.
540 (2009). As discussed above, there was no "clear and
definite promise" by DEP that it would enter into a final
settlement agreement with CFI. Thus, CFI cannot demonstrate
that it relied upon that nonexistent "promise" in connection
with its purchase of additional property that it hoped to use to
resolve its NRD liability for the fifty-four sites.
Finally, we are constrained to reverse the portion of the
April 15, 2015 order entering judgment in CFI's favor on its
claim that the DEP breached the implied covenant of good faith
and fair dealing. "[E]very contract in New Jersey contains an
implied covenant of good faith and fair dealing." Sons of
Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420 (1997). The
25 A-4335-14T2
implied covenant applies to "both the performance and
enforcement of the contract." Brunswick Hills Racquet Club,
Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 224
(2005). Under this "implied covenant . . . 'neither party shall
do anything which will have the effect of destroying or injuring
the right of the other party to receive the fruits of the
contract.'" Palisades Props., Inc. v. Brunetti, 44 N.J. 117,
130 (1965) (quoting 5 Williston on Contracts § 670, at 159-60
(3d ed. 1961)).
However, it is well established and CFI concedes, that
"[i]n the absence of a contract, there can be no breach of an
implied covenant of good faith and fair dealing." Noye v.
Hoffman-La Roche Inc., 238 N.J. Super. 430, 434 (App. Div.
1990). Here, there was no contract between CFI and the DEP.
Therefore, the judge should have also dismissed CFI's breach of
the implied covenant of good faith and fair dealing claim.
In sum, we affirm the trial court's dismissal of CFI's
breach of contract, specific performance, promissory estoppel,
and declaratory judgment claims. We reverse the portion of the
April 15, 2015 order granting judgment to CFI on its breach of
the implied covenant of good faith and fair dealing claim, and
remand for the prompt entry of an order dismissing CFI's
complaint in its entirety.
26 A-4335-14T2
Affirmed in part; reversed in part; and remanded. We do
not retain jurisdiction.
27 A-4335-14T2