HABITATE, LLC VS. CITY OF BRIDGETON (L-0517-13, CUMBERLAND COUNTY AND STATEWIDE) ( 2020 )


Menu:
  •                                 NOT FOR PUBLICATION WITHOUT THE
    APPROVAL OF THE APPELLATE DIVISION
    This opinion shall not "constitute precedent or be binding upon any court ." 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-0706-18T3
    HABITATE, LLC, and THOMAS
    MARTIN, individually,
    Plaintiffs/Appellants,
    v.
    CITY OF BRIDGETON, and
    RENEWABLE JERSEY, LLC,
    Defendants/Respondents,
    and
    ROBERT REYERS, and CLAUS
    AND REYERS COMPANY, a
    Delaware Corporation,
    Defendants.
    _______________________________
    Argued October 17, 2019 - Decided August 6, 2020
    Before Judges Alvarez, Nugent, and Suter.
    On appeal from the Superior Court of New Jersey, Law
    Division, Cumberland County, Docket No. L-0517-13.
    Keith Alan Bonchi argued the cause for appellants
    (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi
    & Gill, attorneys; Keith Alan Bonchi, of counsel and on
    the briefs; Elliott Joseph Almanza, on the briefs).
    Matthew Toto argued the cause for respondent City of
    Bridgeton (Traub Lieberman Straus & Shrewsberry
    LLP, attorneys; Matthew Toto, on the brief).
    Bridget A. Sykes argued the cause for respondent
    Renewable Jersey, LLC (Fox Rothschild LLP,
    attorneys; Jack Plackter, of counsel and on the brief;
    Bridget A. Sykes, on the brief).
    PER CURIAM
    Plaintiffs, Habitate, LLC and Thomas Martin (collectively "Habitate"),
    filed this prerogative writs action to challenge a City of Bridgeton resolution
    authorizing a corrective deed, and quiet title to a parcel of land in the City. The
    parcel is within the Bridgeton Municipal Port District Redevelopment Area and
    controls access to two other parcels in the Port District. Habitate previously
    attempted, unsuccessfully, to acquire the parcel. Defendant, Renewable Jersey,
    LLC, ("Renewable") the redeveloper, owns the parcel, which it acquired after
    Bridgeton authorized the corrective deed.
    The trial court dismissed Habitate's prerogative writs complaint on
    summary judgment, finding no genuinely disputed issue of material fact on the
    motion record and concluding defendants Bridgeton and Renewable were
    entitled to summary judgment as a matter of law. Habitate appeals. We affirm.
    A-0706-18T3
    2
    Because we write primarily for the parties, who are fully familiar with this
    case, and because the lengthy procedural history and complex factual backdrop
    are detailed in two other opinions, Habitate, LLC v. R&R Holdings, LLC, No.
    A-4262-12 (App. Div. Feb. 6, 2015) ("Habitate I"), and Habitate, LLC v. City
    of Bridgeton, No. A-2296-15 (App. Div. July 21, 2017) ("Habitate II"), it is
    unnecessary to recount the case history in its entirety. The following synopsis
    will suffice.
    In 1987, Bridgeton adopted the Port District Redevelopment Plan for its
    Port District. The property at issue here, 50 Grove Street, designated as Block
    132, Lot 1.02 on Bridgeton's tax map (the "property"), was within the Port
    District. Habitate I, slip op. at 2. Years later, after acquiring title to the property
    in a tax sale foreclosure, Bridgeton deeded it to a purported limited liability
    company, R&R Holdings, LLC ("R&R"), on December 27, 2004. Defendant
    Reyers was purportedly R&R's president. Id. at 4. The agreement of sale
    between Bridgeton and R&R committed Reyers to creating forty new full-time
    jobs at the property. Ibid.
    Reyers proved to be disreputable. In 2007, the United States filed an
    indictment charging him with one count of conspiracy to commit securities and
    mail fraud and one count of money laundering, charges to which he negotiated
    A-0706-18T3
    3
    pleas and for which he was sentenced to probationary terms. Central to this
    appeal, when Bridgeton conveyed title of the property to R&R in 2004, the
    company did not exist. Ibid. Reyers, who had judgments against him, had
    requested title be placed in R&R so that he could avoid judgments attaching to
    the property.   Ibid.   Concerning the property, Reyers failed to fulfill the
    commitments he made in the agreement of sale between Bridgeton and R&R.
    R&R stopped paying taxes on the property. Id. at 4-5.
    In April 2011, Renewable and Bridgeton entered into a redevelopment
    agreement in which Bridgeton designated Renewable as the Redeveloper of land
    within the Port District Redevelopment Plan, including the property. Id. at 5.
    In 2011 and 2012, Habitate acquired tax sale certificates for the property. Ibid.
    On February 17, 2012—the year following that in which Renewable became the
    redeveloper—Habitate filed a complaint to foreclose on a tax sale certificate.
    Renewable filed a motion to intervene. The trial court granted the motion.
    Habitate appealed. We affirmed. Id. at 2.
    While Habitate I was pending, Habitate learned Renewable had acquired
    the property. Bridgeton City Council had approved a corrective deed to remedy
    the 2004 conveyance from Bridgeton to R&R, the non-existent company.
    Habitate filed a four-count complaint in lieu of prerogative writs challenging
    A-0706-18T3
    4
    Bridgeton Council's action and the corrective deed. The trial court stayed the
    prerogative writs action pending the appeal in Habitate I.          Following our
    decision in Habitate I, Habitate amended its prerogative writs complaint in
    which it added a fifth count.
    Defendants, Reyers and Claus and Reyers Company ("Claus") defaulted.
    Habitate filed a motion to take discovery concerning Bridgeton's resolution
    authorizing the corrective deed, and Bridgeton and Renewable moved for
    summary judgment.       The trial court denied Habitate's motion and granted
    Bridgeton's and Renewable's motions. Habitate appealed. We affirmed the trial
    court's dismissal of count five of the amended complaint but otherwise reversed
    and remanded. Habitate II, slip op at 17.
    The facts the parties discovered on remand and established on the motion
    record underpin this appeal.       To provide the complete context and proper
    framework for the summary judgment motion, we begin with the amended
    complaint.   The first count, entitled "Illegal Manipulation of Land Titles,"
    alleged Reyers was the property's lawful owner, and Bridgeton's action in
    authorizing a corrective deed for land it did not own was "illegal and ultra vires."
    Habitate sought, among other remedies, an order voiding the resolution
    authorizing the corrective deed.
    A-0706-18T3
    5
    The second count, conspiracy, alleged the four defendants "conspired
    together to manipulate the land records in the state of New Jersey." The gist of
    the allegation was that Bridgeton did not have title to the property when it
    adopted the resolution authorizing the corrective deed, and thereby, in effect,
    enabled Reyers to avoid judgment creditors.
    The third count asked the court to quiet title to the property. The fourth
    count alleged the conspiracy of defendants to have Bridgeton issue a false
    corrective deed to Claus and Reyers, thereby manipulating land title to enable
    Reyers to avoid creditors, constituted common law fraud. As previously noted
    in Habitate II, we dismissed the fifth count.1
    Discovery disclosed that after Renewable became the redeveloper for the
    Port District in April 2011, it attempted to acquire the property directly from
    R&R. In October 2012, eight months after Habitate had filed the tax certificate
    foreclosure complaint, Renewable and R&R entered into an agreement of sale
    in which Renewable agreed to purchase the property for $55,692, $5000 more
    than the redemption amount. Habitate I, slip op. at 6. The parties could not
    1
    The fifth count alleged plaintiff Martin had purchased a $7975.55 assignment
    of judgment against Reyers, which he contended was a lien against the property
    due to the conspiratorial manipulation of title. He sought a declaration that he
    had a judgment lien against the property.
    A-0706-18T3
    6
    close because R&R could not convey marketable title. Ibid. R&R, the company
    to which Bridgeton had conveyed the property in 2004, did not exist at the time.
    Consequently, Renewable and Reyers had to determine how, if possible, they
    could remedy the problem so that a title company would insure the title.
    During the spring of 2013, Reyers provided information for his attorney
    to use in preparing an affidavit for the tax certificate foreclosure action Habitate
    had filed in February 2012. According to Reyers, the 2004 deed conveyed the
    property to R&R Holdings, LLC, but the deed should have conveyed the
    property to R&R Holding Company, a wholly owned subsidiary of Claus, a
    Delaware corporation.      Reyers referenced a "resolution for R&R Holding
    [C]ompany to become and [sic] LLC [i]n New Jersey (reg 04004842230) [d]ated
    March 1[,] 2012."
    Reyers also referenced a "fax" of what purported to be a director's
    resolution, prepared on a form entitled "Directors' Resolution (United States)
    Form-Law Depot." This "Consent to Action Without Meeting" contained a
    resolution authorizing "the follow [sic] DBA's as subsideries [sic] of Claus and
    Reyers Company[.]" One "DBA" was "R&R Holding Company." Although the
    resolution was dated March 17, 2000, the LawDepot form included printed dates
    in the lower left corner: "2002-2012."
    A-0706-18T3
    7
    Reyers' attorney provided a written synopsis of the information to
    Renewable's attorney on April 16, 2013. Two days later, Renewable's attorney
    prepared a memorandum (the "Memorandum") for the title company with whom
    the parties had been dealing. The Memorandum stated in pertinent part:
    By deed dated 12/27/04 and recorded 1/3/05, the City
    of Bridgeton deeded Block 132, Lot 1.02 (the
    "Property") to the entity, R&R Holdings, L.L.C. This
    entity, while a valid New Jersey limited liability
    company, has no affiliation with Robert Reyers.
    Therefore, an entity owned by Mr. Reyers does not
    currently hold title to the property and a corrective deed
    must be filed.
    Mr. Reyers advised that the Deed should have been
    made to R&R Holding Company, which is a wholly
    owned subsidiary of Claus And Reyers Company
    (CAR), a Delaware corporation. According to Mr.
    Reyers, R&R Holding Company was a "d/b/a" of CAR
    until March 1, 2012, at which time it was incorporated
    in New Jersey as a limited liability company known as
    R&R Holding Company Limited Liability Company.
    Because R&R Holding Company was a "d/b/a" of CAR
    at the time of the 2004 conveyance, the corrective deed
    may be made to CAR. CAR was incorporated in
    Delaware on November 14, 2004.
    Noting that Claus was voided in 1996, the Memorandum explained what
    had to be done to "revive" the corporation under Delaware law.               The
    Memorandum concluded:
    The objective is to ensure that conveyance of the
    Property from [Claus] to Renewable Jersey, LLC is
    A-0706-18T3
    8
    insured free and clear of any judgments against Robert
    Reyers.     The title company should review this
    memorandum and confirm that it will insure title to the
    Property as described herein free and clear of any
    judgment against Robert Reyers.
    The Memorandum is dated April 18, 2013. After paying delinquent taxes
    and penalties, Reyers revived Claus. On May 2, 2013, Reyers signed a corporate
    resolution on behalf of Claus authorizing R&R, characterized as a wholly owned
    subsidiary of Claus, to deed the land to Renewable. Bridgeton City Council
    adopted the resolution in controversy on May 7, 2013. As we recounted in
    Habitate I:
    On May 7, 2013, Bridgeton adopted a "resolution
    authorizing the execution of a corrective deed" at a
    regularly scheduled council meeting. The substance of
    this resolution was that Bridgeton would reconvey the
    lot to [Claus]. This reflected Bridgeton's intent for the
    initial conveyance, at which time [Claus] was allegedly
    doing business under the R&R name.
    On May 8, 2013, without first seeking court
    authorization, Renewable and Reyers amended their
    agreement of sale, changing the seller from R&R to
    [Claus] to reflect the corrective deed. The purchase
    price was also increased from $50,692 to $75,320,
    reflecting the updated redemption cost of the tax sale
    certificates. When added to the $5000 Renewable
    agreed to pay to Reyers, the consideration specified on
    the deed was $80,320.
    Bridgeton's May 8, 2013 conveyance to [Claus] tracked
    the recommendations made by Renewable's attorney to
    A-0706-18T3
    9
    correct the flaw in the title, namely, that in 2004
    Bridgeton had conveyed the ownership of the lot to a
    non-existent corporation. . . .
    [Id. at 6-7.]
    During discovery on remand, Habitate deposed the attorneys who
    represented Reyers, Bridgeton, and Renewable, as well as Renewable's principal
    and the owner of the title company that insured title. The title company's owner
    played no role in formulating the solution outlined in the Memorandum. His
    company issued a title policy, relying heavily on the information in the
    Memorandum "as far as solving [the] title issues." That a deed had been issued
    in 2004 to a non-existent entity did not really surprise him, as he explained,
    "going back over the years, it is not uncommon that I've come across
    conveyances into entities which don't exist."
    The title company's owner also testified he had a copy of Reyers' affidavit
    in his file. He did not recall if he read the Consent to Action Without Meeting.
    He doubted he looked at it.
    Reyers' attorney believed he prepared Reyers' affidavit but could not recall
    who requested it. The attorney recalled that he obtained most of the information
    for the affidavit, if not all, from his client. The attorney did not recall who
    prepared the State of Delaware Corporate Resolution of Claus, nor did he recall
    A-0706-18T3
    10
    who requested or who prepared the Consent to Action Without Meeting
    document. He thought it was a document needed to "resuscitate" Claus. He did
    not note the date on the document's lower left corner and did not think it was "of
    any moment" based on his understanding of Delaware corporate law.
    Questioned about his client's criminal record, Reyers' attorney recalled his client
    had "criminal issues," but did not recall whether his client had been convicted.
    The attorney for Renewable, who prepared the Memorandum, testified its
    purpose "was to ensure that there was a path to get clear title to my client" and
    they "were just trying to get clear title into Renewable[.]" He explained that
    anytime he was involved in a transaction involving conveyance of property, his
    objective would be to get free and clear title for his client. Often, title searches
    reveal judgments against entities not conveying title. He viewed the situation
    with Reyers, Claus, R&R, and Renewable as one "where there were no
    judgments against the entity that was conveying the title." He emphasized, "I
    made sure of that." For these reasons, judgments against Reyers would not have
    presented a problem "with clear title."
    Counsel thought he obtained from Reyers the information reflected in the
    Memorandum. He could not recall if he saw Reyers' affidavit; he did not see
    A-0706-18T3
    11
    the Claus corporate documents before closing and he did not see them at closing
    because closing was attended by another member of his law firm.
    Bridgeton's attorney testified she understood the corrective deed's purpose
    to be as stated in the deed, namely, "to correct an error as to the identity of the
    grantee contained in that certain deed . . . dated December 27, 2004[.]"
    Concerning the "error," she conducted no investigation of her own to determine
    if there had been an error; rather, she relied upon the representations of Claus's
    attorney and "the title company's requests." She did, however, check the 2004
    deed.    She had no reason to disbelieve the information contained in the
    Memorandum.
    The minutes of the May 7, 2013 Bridgeton Council meeting at which the
    resolution authorizing the corrective deed was adopted include the following:
    "[The President] called upon the Solicitor . . . who explained the reasoning for
    adoption which was ordered by the Superior Court Judge." Questioned about
    that alleged representation during her deposition, Bridgeton's attorney said she
    did not recall what she told Council about the corrective deed. She testified,
    however, she did not believe a judge had ordered a corrective deed, "[s]o if the
    clerk used those words, she incorrectly paraphrased my words."
    A-0706-18T3
    12
    In addition to discovery depositions, Habitate moved to compel certain
    email communications between Reyers' and Renewable's attorneys. Renewable
    cross-moved for a protective order and provided a privilege log. Habitate
    opposed the protective order, alleging privilege did not apply because the
    communications were made in furtherance of fraud. The trial court ultimately
    granted Habitate's motion in part but determined fifteen emails were privileged.
    The court reasoned that because Reyers and Renewable shared a common legal
    interest, these fifteen emails between their attorneys and principals were
    protected against disclosure.
    Upon conclusion of discovery, Habitate moved for summary judgment,
    and Bridgeton and Renewable cross-moved for summary judgment. In an oral
    opinion, the court denied Habitate's summary judgment motion, granted
    Renewable's and Bridgeton's cross-motions and dismissed Habitate's complaint.
    The court initially rejected Habitate's argument that Reyers should be
    deemed the property's owner. The court explained:
    I find little legal basis for concluding that title
    vested in Robert Reyers individually as a result of the
    original 2004 conveyance. The case that plaintiff cites
    for this proposition is unrelated to the transfer of title
    to real property. Rather, that case resolves the issuance
    of providing insurance coverage to an unnamed insured
    under policy language that [was] ambiguous . . .
    A-0706-18T3
    13
    Here, the relevant law is that which gives effect
    to the parties' intent in real estate transactions. [Oldfield
    v. Stoeco Homes, Inc., 
    26 N.J. 246
    , 257 (1958)], a 1958
    New Jersey Supreme Court case, in which the Court
    said the universal touchstone today is the intention of
    the parties to the instrument creating the interest in
    land.
    Here, the evidence shows that the City of
    Bridgeton intended to transfer 50 Grove Street to a
    corporate [re]developer. Once again, at the time that it
    issued the corrective deed, it was attempting to transfer
    property to a new corporate developer, Renewable, and
    had to clear the cloud created by the transfer into a
    corporate entity that was not a Reyers-controlled
    corporate entity, see [Den ex dem. Cairns v. Hay, 
    21 N.J.L. 174
    , 177-78 (Sup. Ct. 1847)]. . . .
    The court determined a corrective deed was necessary because Bridgeton
    intended to transfer the property to a corporate redeveloper, not Reyers
    personally. Addressing manipulation of title (count one) and fraud (count four)
    together, the court found the claims failed "as no evidence ha[d] been submitted
    to support the inference that Renewable or [Bridgeton] had any knowledge of
    any alleged false claims by Reyers."
    Moving to conspiracy (count two), the court found the evidence submitted
    was insufficient to support a claim of civil conspiracy:
    Basically, that evidence is Renewable’s counsel
    drafting a memo to West Jersey Title regarding the
    intent to purchase free and clear of any personal
    judgment. That would appear to be just regular
    A-0706-18T3
    14
    business correspondence and . . . is neither
    circumstantial nor conclusive evidence of an unlawful
    agreement between the parties to inflict a wrong or
    injury upon another.
    Further, Renewable submits and plaintiff
    concedes in its reply brief that there is no evidence
    supporting that Renewable had knowledge of the falsity
    of Reyers’ claims. Based on this concession, it makes
    little sense to conclude as plaintiff later does, that
    Renewable either knew of or should’ve known that it
    was developing [a scheme] that would deprive plaintiff
    of its right to foreclose on the property and gain title to
    the property.
    ....
    With respect to conspiracy, knowledge is a prior
    condition of intent. Defendants could not have intended
    to inflict a wrong or injury upon plaintiff via the use of
    Mr. Reyers’ statements without having known in the
    first place that the statements were false. Based on that
    count two alleging the conspiracy is dismissed.
    Last, concerning the third count, to quiet title, the court explained:
    Here, plaintiff is unable to satisfy the primary
    jurisdictional element of the quiet title action. Plaintiff
    is neither in peaceable possession of the lands nor
    claiming title to them. Rather, plaintiff is asking the
    Court to quiet title to the subject land in Robert Reyers
    and claiming that ownership of the land has rightfully
    already vested in him as of 2004.
    Habitate filed this appeal from the trial court's memorializing order.
    A-0706-18T3
    15
    We affirm, substantially for the reasons expressed by Judge McDonnell in
    her comprehensive oral opinion. We add the following comments.
    Each theory of liability identified in the amended complaint's first four
    counts rests on the foundation that Reyers owns, or should be declared to own,
    the property, so that his judgment creditors would have liens against it. The
    complaint expressly and baldly asserts in paragraph thirty-six, "The lawful
    owner of the subject property is in fact Robert Reyers."           Because this
    foundational premise is devoid of factual and legal support, it crumbles, as do
    the liability theories built upon it.
    The premise is devoid of factual support because the property was never
    conveyed to Reyers, Reyers never requested the property be conveyed to him,
    and Reyers never intended the property be conveyed to him. The premise is
    devoid of factual support because Bridgeton never conveyed the property to
    Reyers, Bridgeton was never asked to convey the property to Reyers, and
    Bridgeton never intended to convey the property to Reyers. Construction of the
    motion record as generously as possible in Habitate's favor supports no contrary
    conclusion.
    Habitate's foundational premise—that Reyers owned the property—is
    devoid of legal support. Habitate has cited no case that supports the proposition
    A-0706-18T3
    16
    a deed conveying property to a wrongly named or non-existent entity should be
    reformed to convey title in a manner contrary to the intention of any party to the
    transaction, and to a party never intended to have title. Rather, Habitate cites a
    case—not precedential—in which an insurance policy issued in an individual's
    trade name was construed against an insurer and in favor of the individual. That
    decision was based on settled legal principles requiring ambiguities in policies
    of insurance to be construed in favor of coverage. Am. Bankers Ins. Co. of Fl.
    v. Stack, 
    208 N.J. Super. 75
    , 80 (Law Div. 1984). The analysis in the case before
    us is not controlled by legal principles applicable to insurance policies issued to
    consumers. Rather, the case is controlled by legal principles applicable to
    redevelopment of municipal land, deeds, and the conveyance of real property,
    legal principles aptly and correctly applied by Judge McDonnell.
    Our de novo review of the record confirms Judge McDonnell's findings
    Bridgeton and Renewable had no knowledge Reyers' statements concerning the
    business entities were false.
    We have considered Habitate's remaining arguments, including its
    argument that it was improperly denied certain discovery, and found them to be
    without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).
    Affirmed.
    A-0706-18T3
    17
    

Document Info

Docket Number: A-0706-18T3

Filed Date: 8/6/2020

Precedential Status: Non-Precedential

Modified Date: 8/6/2020