Lisa Van Horn v. Harmony Sand & Gravel, Inc. , 442 N.J. Super. 333 ( 2015 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2794-13T2
LISA VAN HORN, APPROVED FOR PUBLICATION
September 10, 2015
Plaintiff-Appellant,
APPELLATE DIVISION
v.
HARMONY SAND & GRAVEL, INC.,
Defendant-Respondent.
_______________________________________________________
Argued April 28, 2015 – Decided September 10, 2015
Before Judges Messano, Hayden and Tassini.
On appeal from Superior Court of New Jersey,
Law Division, Warren County, Docket No. L-
288-12.
Randi A. Wolf argued the cause for appellant
(Spector, Gadon, & Rosen, P.C., attorneys;
Mr. Wolf, on the brief).
Scott M. Wilhelm argued the cause for
respondent (Winegar, Wilhelm, Glynn &
Roemersma, P.C., attorneys; Mr. Wilhelm and
Jennifer L. Toth, on the brief).
The opinion of the court was delivered by
HAYDEN, J.A.D.
Plaintiff Lisa Van Horn appeals from a February 10, 2014
Law Division order granting summary judgment to defendant
Harmony Sand & Gravel (Harmony) and dismissing her complaint to
eject Harmony from her property. After reviewing the record in
light of the applicable law, we affirm the judgment but on
different grounds than the trial court. Shim v. Rutgers, 191
N.J. 374, 378 (2007); Isko v. Planning Bd. of Livingston, 51
N.J. 162, 175 (1968) ("[I]f the order of [a trial court] is
valid, the fact that it was predicated upon an incorrect basis
will not stand in the way of its affirmance.").
The record reveals the following facts. Van Horn owned a
forty-five-acre property (hereinafter "the property") in White
Township, Warren County. She inherited the property from her
father, Earl Richmond Smith.
In 1990, Smith and Harmony signed an agreement (First
Agreement), which they called a "Lease Agreement," permitting
Harmony "to remove available soil materials and aggregates from
the premises . . . during the term of this Agreement." The
parties conditioned the First Agreement on Harmony's ability to
secure permits necessary to conduct the quarrying operation.
The First Agreement further stipulated that once the materials
were removed from the property, Harmony had discretion to choose
its prices. Harmony agreed to pay a fixed price for each ton of
materials it removed, subject to a minimum amount of $25,000 per
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year. The agreement also identified several methods by which
Smith could verify the amount removed.
The First Agreement permitted Harmony to construct various
improvements on the property, in particular, a screening and
processing plant. Harmony constructed the improvements and
claimed the market value of the equipment was $1,500,000 in
2012. In the First Agreement, Smith conveyed the right to
remove materials exclusively to Harmony, stating that "no other
person or entity has an option or right to purchase and/or
remove minerals from the subject premises, nor [had he] entered
into any agreement with any person or entity which would
interfere with [Harmony's] ability to perform a quarrying
operation on the [Property]."
The parties agreed that the First Agreement could only be
amended through a written agreement, and that it extended to
"heirs, successors, and assigns." Harmony had a great deal of
discretion over the First Agreement's termination. If Harmony
chose to terminate its mining operations, it was obligated to
make all required payments to Smith and had up to one year to
remove any stockpiled materials. Smith had more limited
termination rights, as they only became available in the event
Harmony defaulted. In that event, Smith had to give notice to
Harmony that it was in default, and Harmony had thirty days to
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correct the default from the date on which it received notice.
Upon termination, Harmony had to remove all equipment and
discontinue further operations, but any equipment left on the
property became Smith's property. The First Agreement was
witnessed and notarized, but it was never recorded.
The First Agreement expired in February 2000. The parties
signed a new agreement ("Second Agreement") on March 2, 2000.
This agreement contained many of the same terms as the First
Agreement. However, the Second Agreement changed the term of
the First Agreement from ten years to "an indeterminate period
of years and until [Harmony] determines, in its sole discretion,
that sufficient aggregate materials cannot be removed in a
manner and/or in such amounts as to make it commercially
reasonable to continue the removal of soil materials and
aggregates from [Smith's] properties." The royalty payment for
every ton of certain of the processed materials or gravel
removed changed from one dollar to one dollar and twenty-five
cents. Additionally, the parties increased Harmony's
termination obligations by requiring it to re-slope banks and
spread stockpiled soil, and specified that this obligation
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survived termination of the agreement. The Second Agreement was
not formally witnessed,1 nor was it notarized or recorded.
Smith died in 2002, and Van Horn inherited the property
after protracted litigation. In 2008, Van Horn's attorney sent
a letter to Harmony stating that Van Horn was terminating the
lease and sent a notice to quit along with the letter. She sent
a second letter terminating the lease along with another notice
to quit on April 4, 2012.
On July 16, 2012, Van Horn filed a complaint seeking
declaratory judgment2 that "[Harmony] has no further rights in
the property" and that "except for [Harmony's] obligations to
restore the property as set forth in the Lease, the Lease is of
no further force and effect" and that "[Van Horn] is entitled to
possession of the property, including possession of all
improvements on the Property." After discovery was completed,
the parties agreed that no material facts were in dispute and
submitted the sole remaining count to the trial court to
determine the meaning of the Second Agreement.
1
The record shows that an employee and a relative of Smith were
present when he signed it.
2
In her complaint, Van Horn included a count seeking damages for
breach of the lease, but the parties later consented to dismiss
this count along with Harmony's counterclaim.
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In her summary judgment motion, Van Horn contended, for the
first time, that the Second Agreement was a license rather than
a lease. Harmony urged the court to reject this argument based
on Van Horn's failure to plead this theory in the complaint,
claiming that it had defended the case based on the theory that
the Second Agreement was a lease. The trial court rejected this
argument, finding that Harmony had sufficiently addressed the
license theory in its summary judgment papers.
After hearing oral argument, the court issued its order on
February 10, 2014, granting summary judgment in favor of
Harmony. The court held that the Second Agreement created a
lease, because the parties deemed it a lease and it conferred an
exclusive right to conduct a mining operation on the property.
The court also addressed Van Horn's argument that the Second
Agreement violated the statute of frauds, N.J.S.A. 25:1-10 to -
13, because it did not contain a definite term as required for
leases. See N.J.S.A. 25:1-12(a). The court held that, although
the agreement uses the word "indeterminate," the actual term was
clear, as the agreement terminated under specific conditions,
namely default or the depletion of the gravel to a commercially
unreasonable point. This appeal followed.
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On appeal, Van Horn urges this court to interpret the
Second Agreement as a license revocable at will.3 Alternatively,
she argues that, if the Second Agreement was a lease, it
violated the statute of frauds and must run year-to-year
terminable on reasonable notice. Harmony argued that the Second
Agreement either conveyed a lease, which complied with the
statute of frauds, or, alternatively that, if it was a license,
it was irrevocable. At oral argument, we asked the parties to
submit supplemental briefs on whether the agreement is a profit
a prendre (profit).
We begin with our standard of review relevant to summary
judgment. Rule 4:46-2(c) directs that summary judgment be
granted "if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the
affidavits, if any, show there is no genuine issue as to any
material fact challenged and that the moving party is entitled
to a judgment or order as a matter of law." "While 'genuine'
3
We reject Harmony's claim that this argument cannot be
considered because Van Horn did not raise the lease theory until
she filed the summary judgment motion. The trial court addressed
the license issue and observed that Harmony had sufficiently
briefed it. We perceive no prejudice to Harmony here. While a
complainant must state the factual basis for a complaint the
complainant "'is not required to spell out the legal theory upon
which [the complaint] is based.'" Teilhaber v. Greene, 320 N.J.
Super. 453, 464 (App. Div. 1999) (quoting Farese v. McGarry, 237
N.J. Super. 385, 390 (App. Div. 1989)).
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issues of material fact preclude the granting of summary
judgment, those that are 'of an insubstantial nature' do not."
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 530 (1995)
(internal citations omitted). Essentially, the court must
determine "'whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.'"
Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J.
436, 445-46 (2007) (quoting Brill, supra, 142 N.J. at 536).
We review a trial court's decision on summary judgement "de
novo, employing the same standard used by the trial court."
Tarabokia v. Structure Tone, 429 N.J. Super. 103, 106 (App. Div.
2012) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307
N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608
(1998)), certif. denied, 213 N.J. 534 (2013). We give "no
deference to the trial judge's conclusions on issues of law."
Depolink Court Reporting & Litig. Servs. v. Rochman, 430 N.J.
Super. 325, 333 (App. Div. 2013). Thus, we must also "view the
evidence in the light most favorable to the non-moving party and
analyze whether the moving party was entitled to judgment as a
matter of law." Mem'l Props., LLC v. Zurich Am. Ins. Co., 210
N.J. 512, 524 (2012) (citing Brill, supra, 142 N.J. at 523).
8 A-2794-13T2
A lease is an agreement whereby a landowner, known as the
lessor, agrees to turn over exclusive possession of a property
to another party, known as the lessee, for some period of time.
Thiokol Chem. Corp. v. Morris Cnty. Bd. of Taxation, 41 N.J.
405, 416 (1964). While there are no technical requirements to
create a lease, generally parties use language such as "'lease,'
'let,' 'demise,' 'grant,' and the like." Ibid. Thus, during a
lease agreement, the lessee's rights of possession and use are
greater than the landowner's. See id. at 417.
In New Jersey, if a lease is intended to last longer than
three years, it is not enforceable unless it complies with the
statute of frauds. N.J.S.A. 25:1-12. The statute requires a
writing signed by the party against whom the agreement is sought
to be enforced containing a description of the premises, the
term, and the identity of the lessee and lessor. N.J.S.A. 25:1-
12(a). Alternatively, if there is not a writing, the above
elements must be proved by clear and convincing evidence.
N.J.S.A. 25:1-12(b).
In contrast to a lease, a license is an agreement that only
gives permission to use the land at the owner's discretion.
Thiokol, supra, 41 N.J. at 417. A license is usually freely
revocable at the owner's pleasure and is limited to the scope of
the agreement for which it was granted. Ibid. A license does
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not provide protection for the licensee against interference by
the licensor. Twp. of Sandyston v. Angerman, 134 N.J. Super.
448, 451 (App. Div. 1975). Additionally, a license terminates
at the death of either of the parties. See Moore v. Schultz, 22
N.J. Super. 24, 31 (App. Div. 1952), aff’d o.b., 12 N.J. 329
(1953); 25 Am. Jur. 2d Easements and Licenses § 117 (2004)
(hereinafter "25 Am. Jur.").
While a license is generally revocable at will, under
certain circumstances it becomes irrevocable. Moore, supra, 22
N.J. Super. at 29; 25 Am. Jur. at § 122. A license becomes
irrevocable if the licensee expends substantial sums of money
pursuing the privilege while the licensor acquiesces to the
expenditures, or if permitting revocation would permit the
licensor to practice a fraud on the licensee, such as revoking a
license to cut timber after the licensee has already cut the
timber and prepared it for removal. Moore, supra, 22 N.J.
Super. at 29; see also 25 Am. Jur. at § 122.
Based upon the well-established legal principles above, we
find that the Second Agreement was neither a lease nor a
license. While the agreement may have been titled a "lease
agreement," the name that parties give to an agreement is not
determinative. Sandyston, supra, 134 N.J. Super. at 451.
Instead, courts must evaluate the agreement itself to determine
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its legal effect rather than rely on what the parties choose to
call it. Ibid. This agreement did not explicitly state that
Harmony had exclusive possession of the property, which is the
cornerstone of any lease agreement. Thiokol, 41 N.J. at 416-17.
Rather, the agreement permitted Smith to interfere with
Harmony's possession of the land so long as he did not interfere
with their mining operation. "[A] lease gives exclusive
possession of the premises against all the world, including the
owner," Thiokol, supra, at 417, and no such grant is present in
the agreement.
Similarly, we also find that this agreement is not a
license. In the Second Agreement, Smith conveyed rights and
privileges to mine the property that could not be revoked by the
landowner, absent a default. Such an agreement is not
consistent with the revocable character of a license.
Additionally, Smith covenanted that the Second Agreement was
binding on his heirs. Licenses are generally freely revocable
by the licensor, Thiokol, supra, 41 N.J. at 417, and terminate
at the death of either party. Moore, supra, 22 N.J. Super. at
31; 25 Am. Jur. at § 117. Not only does the Second Agreement
violate both core principles, but the agreement also provided
protection to Harmony against interference with its conduct of
the mining operation by the landowner for the duration of the
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agreement, while a license does not provide such protection.
Sandyston, supra, 134 N.J. Super. at 451. Thus, to classify the
Second Agreement as a license would be to violate the clear
intent of the parties, which is the lodestar in interpreting an
agreement. Sachau v. Sachau, 206 N.J. 1, 5 (2011) (citations
omitted); Barr v. Barr 418 N.J. Super. 18, 32 (App. Div. 2011);
see also Sandyston, supra, 134 N.J. Super. at 451.
In response to our request for supplemental briefs, Harmony
argues that the Second Agreement should be construed as a profit
or an easement in gross, claiming that the situation was
factually analogous to Moore, supra, 22 N.J. Super. at 24. In
Moore, we found that an agreement allowing a person to enter on
the land of another to put up quarrying equipment and extract
sand and gravel was not a license but a profit. Id. at 30. The
court observed: "Quarry rights, mining rights, oil rights, and
other similar rights relating to the severance of the physical
substances of a servient tenement are normally more commonly
interests a prendre appurtenant or in gross, or easements in
gross." Ibid. (emphasis omitted).
On the other hand, Van Horn argues that the Second
Agreement did not create a profit, because profits are interests
in real property, which can only be conveyed by an instrument
complying with the formalities associated with a deed, including
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that the deed be witnessed and recorded. She also points to the
lack of language such as "grant," "transfer," or "convey," in
the agreement and argues that the less formal Second Agreement,
which was not witnessed or notarized like the First Agreement
was, could not convey a greater interest in the property than
conveyed by the more formal First Agreement.
We are not persuaded by Van Horn's arguments. Initially,
Van Horn does not provide any legal support for her contention
that, despite the clearly expressed intention of the parties,
the lack of formalities prevented the creation of a profit.
Indeed, under the statute of frauds, interests in property can
be transferred so long as there is a writing providing a
sufficient description of the property, the type of the interest
transferred, and the identity of the parties to the transaction
signed by the party against whom enforcement is sought. 4
N.J.S.A. 25:1-11(a). Moreover, Van Horn seeks to elevate form
over substance, which violates the principle that we interpret
agreements to determine the intent of the parties, rather than
4
In fact, New Jersey permits even less formalities in the
transfer of property, as even oral agreements can result in
enforceable land transfer contracts so long as they are proved
by clear and convincing evidence. Prant v. Sterling, 332 N.J.
Super. 369, 378 (Ch. Div. 1999), aff’d o.b., 332 N.J. Super.
292, 293 (App. Div.), certif. denied, 166 N.J. 606 (2000);
N.J.S.A. 25:1-13(b).
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focus solely on the language used. Sandyston, supra, 134 N.J.
Super. at 451; 25 Am. Jur. at § 117. Consequently, we find no
support for Van Horn's contention that the Second Agreement was
too informal to convey a profit.
A profit is distinct from both a lease and a license, as it
conveys a lesser interest than exclusive possession, but still
conveys an interest that is "alienable, assignable, and
inheritable," which distinguishes it from the mere personal
privilege of a license. Moore, supra, 22 N.J. Super. at 28; see
also 25 Am. Jur. at §§ 2, 3. A profit is closely analogous to
an easement. Moore, supra, 22 N.J. Super. at 28; Restatement
(Third) of Property: Servitudes ("Restatement") § 1.2, comment
(a). Generally, an easement conveys a right of access to land,
whereas a profit confers a right to remove something of value
from the land. Moore, supra, 22 N.J. Super. at 28; Restatement,
§ 1.2(2); 25 Am. Jur. § 3. Typical forms of profits include
permission to take "marl, loam, peat, sand, gravel, coal, and
other minerals." Moore, supra, 22 N.J. Super. at 28 (emphasis
added). Significantly, the distinctions between profits and
easements are "microscopic." Ibid.
An easement "may be modified or terminated by agreement of
the parties, pursuant to its terms" or under other
circumstances, such as abandonment, prescription, merger, or
14 A-2794-13T2
estoppel. Restatement § 7.1; 25 Am. Jur. at § 96. Only the
holder of the easement is able to unilaterally terminate an
easement through renunciation. See Rossi v. Sierchio, 30 N.J.
Super. 575, 578 (App. Div. 1954); Restatement § 7.4. There is
no authority for the proposition that the owner of property
subject to an easement can simply renounce the easement.
While the Second Agreement was titled a "lease agreement,"
agreements creating profit relationships are frequently called
lease agreements. 1 Thompson on Real Property, Second Thomas
Edition, (David A. Thomas, ed. LexisNexis) § 65.03(b).
Moreover, we evaluate agreements to determine their intended
effects, rather than give determinative effect to the
terminology used. Sandyston, supra, 134 N.J. Super. at 451; 25
Am. Jur. at § 117. We are convinced that the Second Agreement
clearly created a profit relationship. The Second Agreement
never conveyed the right of exclusive possession, merely the
right to extract materials from the property. Additionally, the
Second Agreement limited the non-interference obligations of the
owner to Harmony's conduct of a mining operation. Moreover, the
entire agreement was made contingent on Harmony's ability to
secure permits, and the Second Agreement was terminable on
Harmony's cessation of mining operations. It is evident that
the parties intended to convey the right to extract materials
15 A-2794-13T2
rather than anything more. Thus, we find that the Second
Agreement conveyed a profit, which has not yet terminated.
Accordingly, we affirm the trial court's order dismissing Van
Horn's complaint, albeit on different grounds.
Affirmed.
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