JAMES DEAN VS. ROCK SPRING CLUB, INC. (L-4329-19, ESSEX COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-1256-19
JAMES DEAN, WILLIAM ROSS,
SR., WILLIAM ROSS, JR., JAMES
GIESE, JAMES JENCO,
CHARLES DWYER, WILLIAM
FIORE, FRANK CARPENTER,
ALASDAIR SWANSON,
BERNARD DAVIS, DIANE
IMPERIALE, CHARLES BALETTI,
CHARLES ROTUNDI, ANTHONY
CAPUTO, THOMAS HOATSON,
RICHARD BAUM, NANCY
PARIS, KI HYUN HAN, RICHARD
WRIGHT, WARREN PETRAGLIA,
ROBERT FAILLA, STEVEN
BURNS, ED CHARLES CERNY,
DINA GOLAS, JEFFREY
MORYAN, and KENNETH
KUNZMAN,
Plaintiffs-Appellants,
v.
ROCK SPRING CLUB, INC.,
MGC-RSC, INC., and
MONTCLAIR GOLF CLUB, INC.,
Defendants-Respondents.
______________________________
Submitted March 1, 2021 – Decided March 19, 2021
Before Judges Rothstadt and Mayer.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-4329-19.
William J. Rush, attorney for appellants.
Sills Cummis & Gross, PC, attorneys for respondents
(Mark Evan Duckstein, of counsel and on the brief;
Kyle E. Vellutato, on the brief).
PER CURIAM
Plaintiffs, twenty-six former members of a defunct golf club, appeal from
a November 8, 2019 order granting summary judgment in favor of defendants
Rock Spring Club, Inc. (RSC), MGC-RSC, Inc. (Merged Club), and Montclair
Golf Club, Inc. (MGC) and dismissing plaintiffs' claims with prejudice. We
affirm for the reasons expressed by Judge Thomas R. Vena in his cogent and
thorough memorandum opinion dated November 8, 2019.
The following facts were undisputed. RSC, a private country club in West
Orange, owned a 138-acre property with a clubhouse. RSC offered various
activities to its members, including access to an eighteen-hole golf course. RSC
was governed by a twelve-member Board of Governors (RSC Board) and had
written by-laws.
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In 2015, RSC could no longer support itself financially and discussed a
potential merger with another club facility located in Montclair, MGC.
Alternatively, RSC considered selling its property and dissolving the club.
After weighing the options, the RSC Board decided a merger with MGC
was preferable to selling its property. As a result, on October 19, 2015, RSC
and MGC executed a letter of intent (LOI), outlining a merger of the two golf
club facilities.
RSC and MGC began negotiating the terms of a merger agreement.
During the negotiations, MGC discovered RSC's financial position was more
precarious than originally stated, and it was agreed MGC would commit to
operating the RSC property for three years, as opposed to the five years set forth
in the LOI.
On November 19, 2015, the RSC Board provided information regarding
the terms of the proposed merger to its members. A vote on the merger was held
on December 19, 2015. RSC's members voted in favor of the merger. The final
vote count tallied "125 votes in favor, 1 affirmative vote against, and 18 non-
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voting members (87% approval)."1 Plaintiffs voted on the merger proposal as
follows: eighteen plaintiffs voted in favor and four plaintiffs did not vote. 2
MGC's members voted to approve the merger and a merger agreement was
signed on December 31, 2015. As a result of the merger, plaintiffs' club was
eliminated and the Merged Club, MGC-RSC, Inc., became a wholly owned
subsidiary of MGC.3
Under the merger agreement, RSC members became MGC members and
continued to use RSC's facility in West Orange. In addition, the merger
agreement provided the Merged Club would maintain RSC's property for a
minimum of three years, including payment of the mortgage and RSC's other
outstanding debts. In the event RSC's property was sold within that three-year
period, the merger agreement provided the former RSC members would have an
economic interest in any net proceeds from such a sale. Conversely, sale of the
RSC property after the three-year period under the merger agreement would not
1
In accordance with RSC's by-laws, approval of the merger required a two-
thirds vote of RSC's eligible voting members.
2
Pursuant to RSC's by-laws, only twenty-two plaintiffs were eligible to vote on
the merger proposal at the time.
3
MGC-RSC, Inc., later renamed Rock Spring Club, Inc., became vested with
RSC's 183-acre property after the merger.
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entitle the former RSC members to any profits associated with a sale of the
property. The merger agreement expressly provided MGC owed no
"responsibility for liabilities due to RSC [r]esignees . . . or other former and
current RSC [m]embers" except as provided in the document.
The merger agreement also required MGC to "either replace or assume
RSC's indebtedness that [wa]s secured by a mortgage on RSC['s]" property. The
estimated amount of the mortgage at the time was $3.75 million. Based on
RSC's prior financial difficulties and in order to facilitate payment of RSC's
debts, in October 2018, MGC decided to refinance the RSC property. As part
of the refinancing, "title to the RSC property was conveyed from RSC to MGC
by [d]eed dated October 30, 2018, and recorded on November 8, 2018[.]" The
property transfer had no impact on the operation of RSC's facilities. Nor was
there any consideration involved in the transfer of the property for the purpose
of refinancing RSC's outstanding mortgage.
By late 2018, the financial situation of the Merged Club had not improved.
It became apparent the Merged Club could no longer retain and operate RSC's
property. By that time, a majority of former RSC members resigned from the
Merged Club to avoid paying annual dues for the next year in accordance with
the terms of the merger agreement. Prior to taking any action, MGC asked its
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members what should be done with RSC's property. Sixty-eight percent of the
responding MGC members favored selling RSC's property.
In January 2019, MGC retained a commercial real estate broker to market
RSC's property. Prior to officially listing RSC's property for sale, the Township
of West Orange asked MGC to delay the listing so Essex County and the
Township could discuss acquiring the property. Ultimately, the Township,
without Essex County's participation, agreed to purchase RSC's property for $11
million. The Township and MGC signed a written contract of sale in late March
2019 and RSC's property was officially sold to the Township on April 18, 2019,
more than three years after the date of the merger agreement.
Because plaintiffs believed they were entitled to a portion of the net
proceeds from the sale of RSC's property, on June 11, 2019, they filed a
complaint alleging defendants engaged in conversion, unjust enrichment,
promissory estoppel, breach of the merger agreement, fraud in the inducement,
common law fraud, and breach of the fiduciary duty of good faith. Prior to filing
an answer, defendants moved for summary judgment. Plaintiffs filed opposition
and Judge Vena heard counsels' arguments on November 8, 2019.
Judge Vena, ruling from the bench at the conclusion of the arguments,
granted defendants' motion for summary judgment and dismissed plaintiffs'
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claims with prejudice. A corresponding order and written decision were issued
on November 8, 2019.
Judge Vena concluded the issues in defendants' summary judgment
motion could "be resolved by reviewing the [m]erger [a]greement." He noted
RSC "simply merged with Montclair" and did not dissolve or liquidate its assets
according to the merger agreement. He also found "[p]laintiffs conceded they
were not members [of the Merged Club] at the end of the three years." In
addition, the judge highlighted the provision in the merger agreement that "if
any of the Rock Spring property was sold, transferred, leased or otherwise
disposed of within the three-year period then Rock Spring members would have
been entitled to a pro rata share equivalent to 'the face value of the relevant
[Rock Spring] Share without interest.'"
Based on the unequivocal terms of the merger agreement, Judge Vena
rejected plaintiffs' argument that the November 2018 deed, for the purpose of
refinancing the mortgage on RSC's property, triggered plaintiffs' entitlement to
a financial return as a transfer of the property within the initial three-year term
of the merger agreement. The judge explained "the deeding of the property
yielded no funds and was simply a management tactic. The fact that the
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conveyance did not produce a return on the asset for the [p]laintiffs did not mean
a breach occurred."
Regarding the argument that granting summary judgment prior to the end
of the discovery period was premature and improper, Judge Vena found
plaintiffs failed to identify the discovery required to establish any elements of
their claim. Further, the judge determined "[a]dditional discovery would not
shed any light on the dissolution and liquidation issue or the issue of the sale of
the property."
On appeal, plaintiffs argue summary judgment was improper because
there was no opportunity for discovery. In addition, plaintiffs contend the judge
misinterpreted the facts and failed to provide adequate reasons in support of his
summary judgment decision. We disagree and affirm for the oral and written
reasons stated by Judge Vena on November 8, 2019. We add the only the
following comments.
Generally, plaintiffs are correct that courts should "afford 'every litigant
who has a bona fide cause of action or defense the opportunity for full exposure
of his [or her] case." Mohamed v. Iglesia Evangelica Oasis De Salvacion, 424
N.J. Super. 489, 498-99 (App Div. 2012) (quoting Velantzas v. Colgate
Palmolive Co., 109 N.J. 189, 193 (1988)). "Where a party opposing a motion
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for summary judgment is unable to file fully responsive supporting papers
because critical facts are particularly within the moving party's knowledge, the
motion should be denied to permit the opposing party an opportunity for
complete discovery." Id. at 499 (citing Bilotti v. Accurate Forming Corp., 39
N.J. 184, 188 (1963)).
However, summary judgment may be granted prior to the completion of
discovery if a party fails to identify any discovery that might alter the outcome
of the case. Kaczorowska v. Nat'l Envelope Corp., 342 N.J. Super. 580, 591
(App. Div. 2001) (quoting J. Josephson, Inc. v. Crum & Forester Ins. Co., 293
N.J. Super. 170, 204 (App. Div. 1996)) ("When the incompleteness of discovery
is raised as a defense to a motion for summary judgment, that party must
establish that there is a likelihood that further discovery would supply the
necessary information."). A party opposing a summary judgment motion prior
to the end of the discovery period "must do more than simply show that there is
some metaphysical doubt as to the material facts." Triffin v. Am. Int'l. Grp.,
Inc., 372 N.J. Super. 517, 523-24 (App. Div. 2004) (quoting Big Apple BMW,
Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992)).
Judge Vena properly granted summary judgment because the facts
relevant to resolution of plaintiffs' claims were set forth in the merger
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agreement. Moreover, plaintiffs failed to identify any discovery that might have
changed the outcome of the motion. No plaintiff submitted an affidavit or
certification establishing relevant and material disputed facts or identifying
critical information that could not be ascertained absent discovery. Pursuant to
Rule 4:46-5, "an adverse party may not rest upon the mere allegations or denials
of a pleading, but must respond by affidavits . . . setting forth specific facts
showing that there is a genuine issue for trial."
For the first time on appeal, plaintiffs assert discovery was required to
resolve certain disputes. However, even on appeal, plaintiffs do not establish
how these disputes implicate issues of material fact requiring discovery beyond
the plain language of the merger agreement. In addition, plaintiffs fail to explain
the need for discovery to resolve these disputes or how the discovery would have
altered the outcome of defendants' motion.
We also reject plaintiffs' contention the judge failed to set forth the facts
upon which he relied in rendering his legal conclusions. Judge Vena made the
specific findings, which more than adequately addressed each of plaintiffs'
claims consistent with Rule 1:7-4. He found RSC "did not undergo a dissolution
and did not liquidate its assets, it simply merged with MGC" and, therefore, the
"dissolution or liquidation" provision did not apply. He also concluded
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"[c]hanging title through deed, even between subsidiary and parent corporation,
[wa]s a transfer" yet "the deeding of the property yielded no funds and was
simply a management tactic." Judge Vena determined "[t]he dispute between
the parties center[ed] on differing interpretations of the [a]greement[,]" and
MGC complied with the terms of the merger, therefore "[a]dditional discovery
would not shed any light on the dissolution and liquidation issue or the issue of
the sale of the property."
Plaintiffs' claims were factually interrelated and premised upon the
language in the merger agreement. Because plaintiffs did not challenge the
validity of the merger agreement, Judge Vena based the dismissal of plaintiffs'
claims on the unequivocal language in that document. Plaintiffs argue,
generally, the judge's findings lacked sufficient "breadth" and "detail."
However, plaintiffs do not argue Judge Vena's findings were incorrect or
improper. Having reviewed the record, we are satisfied Judge Vena's factual
findings and legal conclusions comported with the requirements of Rule 1:7-4.
Affirmed.
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