SUMMIT RESOURCES GROUP, INC. VS. MERCER GROUPÂ INTERNATIONAL OF NEW JERSEY, INC. (L-1430-13, MERCER COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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 only binding 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-3911-15T1
SUMMIT RESOURCES GROUP, INC.,
Plaintiff-Appellant,
v.
MERCER GROUP INTERNATIONAL
OF NEW JERSEY, INC.1 and
FAIRLESS IRON & METAL, LLC,
Defendants-Respondents,
and
SIMS METAL MANAGEMENT, LLC, and
SIMS METAL EAST, LLC,
Defendants.
————————————————————————————————————-
Argued May 18, 2017 – Decided July 10, 2017
Before Judges Hoffman and Whipple.
On appeal from Superior Court of New Jersey,
Law Division, Mercer County, Docket No. L-
1430-13.
Michael Confusione argued the cause for
appellant (Hegge & Confusione, LLC, attorneys;
Mr. Confusione, of counsel and on the briefs).
1
Improperly pled as Mercer Group International.
Lewis J. Pepperman argued the cause for
respondents (Stark & Stark, attorneys; Bryan
M. Buffalino, of counsel and on the brief).
PER CURIAM
Plaintiff Summit Resources Group, Inc. (Summit) appeals from
a February 22, 2016 Law Division order granting partial summary
judgment in favor of defendants Mercer Group International of New
Jersey, Inc. (Mercer) and Fairless Iron & Metal, LLC (Fairless).
Summit also appeals from an April 15, 2016 Law Division order
granting defendants' motion for reconsideration and dismissing
Summit's complaint in its entirety. This dispute arose from a
contract between Summit and Mercer, which guaranteed Summit
commission payments from an arrangement it brokered between Mercer
and a third party for the delivery of scrap metals. For the
reasons that follow, we reject Summit's arguments and affirm.
I.
We discern the following facts from the record, viewed in the
light most favorable to Summit, the non-moving party. See Davis
v. Brickman Landscaping, Ltd., 219 N.J. 395, 405-06 (2014). Summit
is a broker that identifies sources of steel and other metals and
markets the products to buyers. Through its owner, E. Dennis
Matecun, Jr., Summit developed a relationship with Covanta Energy
Corporation (Covanta). Covanta's business involves converting
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municipal solid waste into renewable energy and removing certain
metals in the process.
According to Thomas Mazza, an officer of both Mercer and
Fairless, Mercer is a New Jersey corporation that "owns and
operates a solid waste, construction and demolition debris, and
materials recovery facility/transfer station in Trenton." Prior
to 2007, Mercer was engaged in the business of scrap metal
recycling and processing. Mercer transitioned this business to
Fairless, its affiliate, sometime in early 2007. Fairless also
engaged in the business of scrap metal recycling from October 2006
to July 2009.
In 2006, Matecun discussed a business opportunity with Mazza
where defendants would purchase scrap metal from Covanta. Covanta
requested Summit structure the contracts for sale to ensure they
were between Covanta and Mercer or Fairless, with Summit receiving
commission as the broker.
On October 25, 2006, Matecun sent Mazza a one-page document
titled "Commission Agreement for Municipal Scrap and White
Goods/Misc. Scrap" (Commission Agreement). After making hand-
written alterations, Mazza returned the signed document to Summit.
The Commission Agreement stated as follows, in relevant part:
Tom [Mazza] – I'm writing to confirm our
commission agreement for Summit Resources
Group for the Covanta Energy scrap metal that
you've been awarded, and eventually for
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additional facilities such as Union and Newark
when we succeed in getting them:
 Summit Resources Group will receive a fee
of $5 per gross ton U.S. funds from
Mercer beginning November 1st, 2006, for
each ton of raw material . . . shipped
from Covanta's Delaware Valley and
Hempstead plants to/through your
companies.
 The commission will be paid once monthly,
on or before the 15th of the month for
all scrap shipped during the previous
month . . . .
 This relationship between Mercer and
Summit regarding commission/consulting
for these plants will last as long as
Mercer, their related companies, or any
purchaser of Mercer or related companies
receives scrap metal from these plants.
 Sale of Mercer, or sale/transfer of these
scrap accounts by Mercer does NOT void
the above commission agreement/fees.
Between November 1, 2006, and August 1, 2007, Covanta awarded
Fairless five separate contracts for the purchase of Ferrous
Materials from Covanta plants (Covanta Contracts). Fairless paid
commissions to Summit of $5 per gross ton for four of these
contracts, as required by the Commission Agreement. For the fifth
contract, Fairless paid Summit $3 per gross ton. Fairless
continued to pay commissions to Summit through the beginning of
2009.
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However, on July 2, 2009, Fairless entered into an "Asset
Purchase Agreement" (APA) with Simsmetal East, LLC (Sims), a
Delaware company engaged in the scrap metal business. Sims agreed
to purchase certain assets from Fairless, and the agreement listed
Sims as the "Purchaser." As part of this transaction, Sims
employed Mazza as a "general manager" beginning on or about July
2, where he remained until May 2, 2013. Defendants assert that
following this sale, Fairless continued to exist as an entity, but
it ceased all scrap recycling operations.
The APA contained a section titled "Certain Included
Contracts," which listed the contracts Fairless was assigning to
Sims. The Covanta Contracts were initially included in this
section; however, according to Mazza, they were removed from the
APA in August 2009. Instead, Sims and Covanta executed "new"
agreements, beginning October 1, 2009, whereby Covanta agreed to
sell scrap metal to Sims. Summit disputes whether these agreements
constituted "new" contracts, claiming the parties simply changed
the name on the existing Covanta Contracts from Fairless to Sims.
Fairless disclosed the Commission Agreement to Sims prior to the
asset sale, but the parties did not list it as an included contract
in the APA.
Following the execution of the APA in July 2009, Fairless
ceased purchasing scrap metal from Covanta. On July 11, 2009,
5 A-3911-15T1
Mazza informed Matecun the Commission Agreement was no longer in
effect, and Fairless no longer existed. Instead, Sims purchased
over 400,000 tons of scrap metal from Covanta beginning in July
2009, for which Summit did not receive commissions.
In 2013, Summit filed a complaint against Mercer, Fairless,
and Sims, asserting in count one that defendants breached the
Commission Agreement by failing to pay commissions owed to Summit.
In counts two through five, Summit alleged wrongful interference
with contract, unjust enrichment, and sought a declaratory
judgment stating the Commission Agreement remained valid and
binding.
In October 2013, Summit and Sims entered into a stipulation
of dismissal, whereby Summit dismissed its suit against Sims
without prejudice. In 2015, Mercer and Fairless filed a motion
for summary judgment, contending that under the Commission
Agreement, Sims was not a "purchaser" of Fairless, a "related
compan[y]" of Mercer, because Sims only purchased certain assets
from Fairless. As these assets did not include the Commission
Agreement or Covanta Contracts, and defendants ceased receiving
scrap shipments in July 2009, the Commission Agreement effectively
terminated in July 2009 following the asset sale. In response,
Summit contended Sims fell within the definition of "purchaser"
due to its acquisition of Fairless' assets. Summit further argued
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that at a minimum, this provision was ambiguous, requiring
resolution by a jury to determine what the parties meant by
"purchaser." Summit pointed to the APA and a 2010 indemnity
agreement between Sims and Fairless, both of which identified Sims
as the "Purchaser."
On January 8, 2016, after oral argument, the motion judge
dismissed counts two through five of Summit's complaint and granted
partial summary judgment on count one in favor of defendants. On
count one, the judge found that because Sims only purchased the
assets of Fairless and not the entity, "Sims [was] not a purchaser
of Mercer or Fairless as the term purchaser was used in the
[Commission Agreement,] and [d]efendants therefore are not liable
for commissions on scrap metal purchased by Sims."
The judge denied full summary judgment, however, because he
found an issue of fact as to whether defendants purchased scrap
metal from Covanta from July 2009 to December 2009. This issue
arose because Covanta erroneously credited certain payments from
Sims as being from Fairless. Defendants moved for reconsideration
and provided documents showing Fairless did not pay Covanta for
scrap metal after July 2009. Summit did not dispute the new
documentation but reiterated its opposition to summary judgment.
The motion judge then granted reconsideration and dismissed
Summit's complaint in its entirety. This appeal followed.
7 A-3911-15T1
II.
We "review the trial court's grant of summary judgment de
novo under the same standard as the trial court," and we accord
"no special deference to the legal determinations of the trial
court." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co.
of Pittsburgh, 224 N.J. 189, 199 (2016). Pursuant to this
standard, we must grant summary judgment "if the pleadings,
depositions, answers to interrogatories and admissions on file,
together with the affidavits, if any, show that 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." Ibid.
(quoting R. 4:46-2(c)).
If no genuine issue of material fact is present, we focus our
review on the legal interpretations of the trial judge. DepoLink
Court Reporting & Litig. Support Servs. v. Rochman, 430 N.J. Super.
325, 333 (App. Div. 2013). We review issues of law de novo and
accord no deference to the trial judge's legal conclusions.
Nicholas v. Mynster, 213 N.J. 463, 478 (2013). Contractual
interpretation is a legal matter ordinarily suitable for
resolution on summary judgment. Celanese Ltd. v. Essex Cty.
Improvement Auth., 404 N.J. Super. 514, 528 (App. Div. 2009).
"When a trial court's decision turns on its construction of a
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contract, appellate review of that determination is de novo."
Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 115 (2014).
We are obligated to read contracts "as a whole in a fair and
common sense manner." Id. at 118 (quoting Hardy ex rel. Dowdell
v. Abdul-Matin, 198 N.J. 95, 103 (2009)). "The polestar of
contract construction is to discover the intention of the parties
as revealed by the language used by them." Karl's Sales & Serv.,
Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 492 (App. Div.),
certif. denied, 127 N.J. 548 (1991). Our review focuses upon "the
intention of the parties to the contract as revealed by the
language used, taken as an entirety; and, in the quest for the
intention, the situation of the parties, the attendant
circumstances, and the objects they were thereby striving to
attain." Lederman v. Prudential Life Ins. Co. of Am., Inc., 385
N.J. Super. 324, 339 (App. Div.) (quoting Biovail Corp. Int'l v.
Hoechst Aktiengesellschaft, 49 F. Supp. 2d 750, 774 (D.N.J. 1999)),
certif. denied, 188 N.J. 353 (2006).
If a contract can be construed according to its plain
language, then that language governs. Twp. of White v. Castle
Ridge Dev. Corp., 419 N.J. Super. 68, 74-75 (App. Div. 2011).
"However, 'where there is uncertainty, ambiguity or the need for
parol evidence in aid of interpretation, then the doubtful
provision should be left to the jury.'" Driscoll Constr. Co.,
9 A-3911-15T1
Inc. v. State, 371 N.J. Super. 304, 314 (App. Div. 2004) (quoting
Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335 N.J. Super. 495,
502 (App. Div. 2000)). Ambiguity exists where the terms "are
susceptible to at least two reasonable alternative
interpretations." M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171
N.J. 378, 396 (2002) (quoting Nester v. O'Donnell, 301 N.J. Super.
198, 210 (App. Div. 1997)). Nonetheless, we construe ambiguous
provisions against the drafter of the contract. Kotkin v. Aronson,
175 N.J. 453, 455 (2003).
Summit urges reversal, arguing the motion judge erred as a
matter of law because the plain language of the Commission
Agreement required defendants to continue paying commission to
Summit. Summit further contends even if the Commission Agreement
was not clear and unambiguous in favor of its position, it was not
clear and unambiguous in favor of defendants; therefore, we should
remand for a jury determination. Essentially, Summit contends the
Commission Agreement guaranteed it commission from Mercer so long
as Sims, as a "purchaser" of Fairless, received scrap metals from
Covanta.
In support of this position, Summit argues that contrary to
the motion judge's determination, Sims was a "purchaser" of
Fairless as defined in the third bullet point of the Commission
Agreement. Summit contends the motion judge erred because the
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Commission Agreement does not distinguish between "a sale of
Fairless the company" and "a sale of Fairless' assets." Summit
further asserts that the reference to "your companies" in the
first bullet point included asset purchasers such as Sims,
especially here, where Sims "simply continued carrying on
Fairless' business." Last, Summit argues the language from the
fourth bullet point, "Sale of Mercer, or sale/transfer of these
scrap accounts by Mercer does NOT void the above commission
agreement/fees," shows defendants were bound to continue
commission payments to Summit after the Fairless sale.
Having reviewed the language of the Commission Agreement, we
reject Summit's arguments and affirm. First, we have noted that
selling a "company" as opposed to its "assets" are two different
concepts. See Woodrick v. Jack J. Burke Real Estate, Inc., 306
N.J. Super. 61, 74 (App. Div. 1997) ("[T]he crucial inquiry is
whether there was an intent on the part of the contracting parties
to effectuate a merger or consolidation rather than a sale of
assets." (quoting Glynwed, Inc. v. Plastimatic, Inc., 869 F. Supp.
265, 276 (D.N.J. 1994))), appeal dismissed, 157 N.J. 537 (1998).
Summit argues the absence of this distinction shows the parties
intended the phrase "purchaser" to cover both types of
transactions. However, construing the contract against Summit as
the drafter, we find Summit's failure to make this distinction
11 A-3911-15T1
fatal to its argument. See Kotkin, supra, 175 N.J. at 455. The
motion judge did not err by concluding, because the asset sale did
not qualify Sims as a "purchaser of Mercer or related companies,"
the relationship between defendants and Summit had terminated.
We further find the clear language from the first bullet
point of the Commission Agreement defeats Summit's argument. This
section guaranteed Summit a fee from Mercer "for each ton of raw
material . . . shipped from Covanta's Delaware Valley and Hempstead
plants to/through your companies." Contrary to Summit's claims,
no reasonable construction of this agreement could define Sims as
one of Mercer's "companies." As such, once Sims began receiving
scrap metal from Covanta instead of Fairless,2 defendants were no
longer bound to pay commission fees to Summit.
For similar reasons, we reject Summit's argument that the
fourth bullet point is dispositive. This provision stated that a
"[s]ale of Mercer" does not void the agreement, but that did not
occur here. Furthermore, while it also stated a "sale/transfer
of these scrap accounts" would not void the Agreement, it is clear
that, after the APA, neither Mercer companies nor a "purchaser of
Mercer or related companies" continued to receive scrap metal.
2
Sims utilized Fairless' recycling operating system for a
transition period following the closing of the asset sale.
However, Sims paid for these purchases from Covanta.
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Therefore, we agree with the motion judge that the Commission
Agreement was no longer in effect after July 2009.
Finally, as noted by the motion judge in his oral decision,
Summit's position is "inequitable" because it would require
defendants to pay Summit commission for scrap metal they no longer
receive, for the indefinite period Sims and Covanta choose to
maintain their relationship. "Perpetual contractual performance
is not favored in the law and is to be avoided unless there is a
clear manifestation that the parties intended it." In re Estate
of Miller, 90 N.J. 210, 218 (1982). Because we find parties did
not clearly intend such a result, we discern no basis to disturb
the decision of the motion judge.
III.
Summit also argues defendants breached the covenant of good
faith and fair dealing implied in the Commission Agreement by
endeavoring to prevent Sims from adopting the Covanta Contracts
from Fairless. We find this argument lacks merit.
"[E]very contract in New Jersey contains an implied covenant
of good faith and fair dealing . . . ." Wood v. N.J. Mfrs. Ins.
Co., 206 N.J. 562, 577 (2011) (quoting Kalogeras v. 239 Broad
Ave., L.L.C., 202 N.J. 349, 366 (2010)). Under this doctrine,
"neither party shall do anything which will have the effect of
destroying or injuring the right of the other party to receive the
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fruits of the contract." Ibid. (quoting Kalogeras, supra, 202
N.J. at 366). The covenant "cannot override an express term in a
contract," but "a party's performance under a contract may breach
that implied covenant even though that performance does not violate
a pertinent express term." Wilson v. Amerada Hess Corp., 168 N.J.
236, 244 (2001).
Summit's argument stems from a series of emails between Mazza
and another Sims manager regarding Sims' decision not to adopt the
Covanta Contracts from Fairless, and an affidavit from a Covanta
manager stating Covanta did not believe it entered into "new"
contracts with Sims. Summit contends the evidence shows Mazza
"concocted a scheme to make it appear that the Covanta Contracts
were not transferred to Sims[]." Summit alleges that by pursuing
this action, a jury could find Mazza "was attempting to destroy
Summit's right to receive the full fruits under the Commission
agreement."
However, as Summit admits in its brief, "whether the Covanta
Contracts were included in Sims' purchase of Fairless . . . does
not affect whether the Mercer [d]efendants remain liable for
commission payment to Sims. Mercer's liability for commissions
hinges only on whether Sims is a 'purchaser' of Fairless under the
[Commission] Agreement." Therefore, by Summit's own admission,
Mazza's actions would not have impaired Summit's right to enjoy
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the "fruits" of the Commission Agreement. Wood, supra, 206 N.J.
at 577. Summit's claim for breach of good faith and fair dealing
against defendants thus lacks merit.
Affirmed.
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