NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1029-24
BOARD OF EDUCATION OF THE CITY OF NEWARK,
Plaintiff-Appellant,
v.
HOUSING AUTHORITY OF THE CITY OF NEWARK, 33 MAPLE URBAN RENEWAL LLC, THE FRIENDS OF TEAM CHARTER SCHOOLS, INC., EQUITABLE FACILITIES FUND, INC., EQUITABLE SCHOOL REVOLVING FUND, INC., and U.S. BANK NATIONAL ASSOCIATION,
Defendants-Respondents. ___________________________
Argued March 24, 2026 – Decided June 10, 2026
Before Judges Gilson, Firko, and Vinci.
On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C- 000062-20. Matthew J. Tharney and Brenda C. Liss argued the cause for appellant (Sattiraju & Tharney, LLP and Newark Board of Education, Office of the General Counsel, attorneys; Matthew J. Tharney and Brenda C. Liss, on the briefs).
Anthony R. Twardowski (Zarwin Baum DeVito Kaplan Schaer Toddy, PC) of the Pennsylvania bar, admitted pro hac vice and Thomas Owen Johnston argued the cause for respondents The Friends of Team Charter Schools, Inc., Equitable Facilities Fund, Inc., Equitable School Revolving Fund, LLC, and U.S. Bank National Association (Zarwin Baum DeVito Kaplan Schaer Toddy, PC, Johnston Law Firm, LLC, and Anthony R. Twardowski, attorneys; Chelsea P. Jasnoff and Thomas O. Johnston, on the brief).
PER CURIAM
Plaintiff the Board of Education of the City of Newark (the Board) sold
twelve unused public-school properties to defendant the Housing Authority of
the City of Newark (the Authority), with the plan that the properties would be
used for housing, redevelopment, or economic development. The Authority
thereafter sold one of the properties—33 Maple Avenue—to a developer. After
spending over $4 million to clean up and renovate 33 Maple Avenue, the
developer sold the property to defendant The Friends of Team Charter Schools,
Inc. (FO Team) for $10 million. FO Team borrowed over $21 million to
purchase and renovate the property and secured the loan with a mortgage on the
A-1029-24 2 property. Thereafter, FO Team leased 33 Maple Avenue to be used as a charter
school.
The Board appeals from orders granting summary judgment to FO Team
and the Authority and dismissing with prejudice its claims that the agreement
with the Authority did not allow 33 Maple Avenue to be used as a charter school
and that the Board had no right to recover title to 33 Maple Avenue through a
reversion provision in its agreement with the Authority. The Board also appeals
from orders granting summary judgment to FO Team and awarding damages
based on a theory of promissory estoppel and denying its cross-motion for
summary judgment on the promissory estoppel claim.
Having reviewed the record and law, we hold the Authority did not breach
its contract with the Board. We also hold the Board had no right to recover title
to 33 Maple Avenue. Accordingly, we affirm the orders granting summary
judgment to FO Team and the Authority and dismissing all the Board's claims.
We also reverse the order granting summary judgment to FO Team on its
counterclaim of promissory estoppel. The material undisputed facts establish
that the Board did not make a promise to FO Team and FO Team did not
reasonably rely on the alleged promise by the Board. Thus, we remand and
A-1029-24 3 direct the trial court to enter an order granting summary judgment to the Board
on the promissory estoppel claim.
I.
We summarize the relevant facts from the record, viewing them in the
light most favorable to the Board, which was the party against whom summary
judgment was granted. Samolyk v. Berthe, 251 N.J. 73, 78 (2022); Richter v.
Oakland Bd. of Educ., 246 N.J. 507, 515 (2021). In doing so, we note that many
of the material issues are resolved by a plain reading of the contract between the
Board and the Authority.
For several years before 2016, the Newark School District (the District)
was experiencing a budget crisis. Numerous school buildings owned by the
Board were not being used, needed substantial repairs, and were incurring
significant maintenance costs. The Board and Authority developed a plan to sell
unused school properties so that they could be developed for other uses.
In February 2016, the Authority adopted resolution H-16-25-02-01
(Resolution H) authorizing an agreement with the Board to obtain twelve school
properties and develop them to generate revenue for the Board and to create job
opportunities for city residents. Resolution H references N.J.S.A. 18A:20-9, a
statute that permits boards of education to convey unused school buildings so
A-1029-24 4 that those buildings can be sold or developed for other uses. The statute also
permits restrictions on the future uses of the buildings and provides that if a
building is not used for the stated purposes, title can revert to the board of
education. N.J.S.A. 18A:20-9.
On April 19, 2016, the Board and the Authority entered into a Site
Disposition and Development Agreement (SDD Agreement). The SDD
Agreement states that the Board would convey to the Authority for "nominal
consideration" twelve "unproductive" public school "sites," with the plan that
the sites would be redeveloped or sold. In that regard, the SDD Agreement
described a "Sites Development Program" and defined it in a "WHEREAS"
clause:
WHEREAS, [the Board] and [the Authority] hereby intend to create a program whereby designated [Board] Sites throughout the City are conveyed to the [Authority] for purposes of alleviating unproductive sites from the [Board] balance sheet in order to create expense savings and generate revenue opportunities for [the Board], while also [] increasing tax ratables for the City of Newark (the "City") and enhancing job and employment opportunities for City residents (referred herein as the "Sites Development Program" or the "Program")[.]
The SSD Agreement also defined the "Purposes" of the conveyance of the
school properties. Article 5.1 states, in relevant part:
A-1029-24 5 The Sites are being transferred and conveyed to [the Authority] for purposes of effectuating the Site Development Program. It is anticipated that the Site Development Program will enable [the Board] to realize expense savings and generate revenue for capital improvements while also increasing tax ratables for the City and enhancing job and employment opportunities for City residents ("Purposes"). As such, under the Program [the Authority] shall accept conveyance of various Sites in accordance with the terms of this [SDD] Agreement, and shall utilize its experience, expertise and resources available to it in order to pursue development and housing opportunities for each Site conveyed to it.
The SDD Agreement also provided the Board with a right of reversion to
the properties. In Article 5.2, the SDD Agreement states, in relevant part:
Any Sites conveyed to [the Authority] shall be subject to a right of reversion exercisable by [the Board], if and to the extent, [the Authority] has not developed a Site Project or demonstrable plans for such Site within three (3) years from the date of execution of this [SDD] Agreement. . . . This right of reversion shall not be included in any deed, or otherwise recordable document, from [the Board] to [the Authority] for any Site; and if requested by [the Authority] or any third[- ]party developer, [the Board] shall execute and deliver a document to discharge this right of reversion.
Article 5.4 of the SDD Agreement described the Authority's obligation
concerning developing a "Site Project" for each site. Section one of Article 5.4
states, in relevant part:
A-1029-24 6 [The Authority] shall work diligently to investigate and identify feasible housing, redevelopment and economic development opportunities at each Site (each, a "Site Project"). [The Authority] shall solicit proposals for Site Projects and shall interview and negotiate with third[-]parties in an effort to develop realizable Site Projects consistent with the Purposes of the Program. In so doing, [the Authority] shall work with [the Authority's] professionals, as necessary, to perform site investigations, consider financing options, examine [a]pplicable [l]aws and State programs, and liaise with state and local governmental entities, as necessary. [The Authority] shall engage professionals to draft development and other agreements (each, a "Developer Agreement") necessary in order to realize each Site Project. A Developer Agreement for a Site Project shall set forth details of adequate Site Project finance, financial closing, construction, lease up, and other milestones and requirements in order to ensure that such Site Project can be completed in accordance with commercially reasonable standards and timeliness (collectively, "Performance Milestones").
Article 5.4(4) required City council approval for any developer agreement or
disposition to a third-party developer.
The SDD Agreement also allowed the Authority to obtain a right of
reversion to each site conveyed to a "third[-]party developer." Thus, section two
of Article 5.4 states:
[The Authority] shall be authorized, subject to the requirements set forth in [s]ection 5.4(4) below, to dispose of a Site to a third[-]party developer for purposes of effectuating a Site Project. In connection therewith, each Developer Agreement that provides for
A-1029-24 7 or contemplates disposition of a Site to a third[-]party developer shall provide for revisionary rights to [the Authority] in the event such Performance Milestones are not met.
Additionally, the SDD Agreement recognized that some sites might not
be feasible for redevelopment. For those sites, the SDD Agreement states that
they can be disposed of as "Unwanted Site(s)." Article 5.5(a) states in relevant
part:
In the event [the Authority] determines that it will not be able to generate a feasible Site Project at such Site(s) ("Unwanted Site(s)"). [The Board] and [the Authority] shall work collaboratively and collectively to dispose of the Unwanted Site(s) at minimum cost to [the Board] and no cost to [the Authority]. [The Board] and [the Authority] may consider the following options: a) [the Authority] may convey the Unwanted Site(s) to [the Board] conditioned upon acceptance of such conveyance by [the Board]; b) [the Board] and [the Authority] may agree to auction such Unwanted Site(s), with [the Board] bearing all costs of such auction; and c) any other avenues through which [the Authority] can dispose of such Unwanted Site(s) provided such avenues are agreed upon by both parties.
In accordance with the SDD Agreement, the Board conveyed twelve
school properties to the Authority. One of the properties conveyed was a former
school located at 33 Maple Avenue, also known as Block 3712, Lot 1 (33 Maple
Avenue). In that regard, on June 30, 2016, the Board transferred title to 33
A-1029-24 8 Maple Avenue to the Authority for $1.00. The transfer was made through a
deed, which was thereafter recorded.
Several months later, in November 2016, the Authority issued a request
for qualifications and proposal (RFQ/P) to develop 33 Maple Avenue and other
sites that had been conveyed to the Authority. The RFQ/P explained: "The
overarching objective of [the Authority] is to convey 100 % fee interest in the
properties to third[-]party purchasers/developers for re-use and/or
redevelopment pursuant to agreed upon performance milestones . . . ." The
RFQ/P also stated that housing and commercial facilities were acceptable
purposes for developing the properties and required potential developers to
disclose whether they had ownership interest in a City charter school.
Just before issuing the RFQ/P, the Authority had 33 Maple Avenue
appraised. The appraisal valued 33 Maple Avenue at $3.96 million. The
appraisal, however, also noted: "This appraisal does not take into consideration
any environmental concerns and assumes the subject property is remediated."
In September 2017, the superintendent of the District wrote to the
Authority stating that city council approval was not necessary for the sale of any
of the sites to third parties. The superintendent accordingly waived the
A-1029-24 9 requirement that the city council approve the sale of any site to a third party
under Article 5.4(4) of the SDD Agreement.
Two months later, on November 16, 2017, the superintendent signed an
affidavit of title representing that the Board had clear title to 33 Maple Avenue.
The following month, on December 28, 2017, the Authority sold 33 Maple
Avenue to 33 Maple, LLC (the LLC) for $1.2 million. 1
The deed conveying 33 Maple Avenue to the LLC stated that it was "a
Bargain and Sale Deed with Covenants as to Grantor's Acts." In that regard, the
deed included the following language:
Promise by Grantor. The Grantor promises that the Grantor has done no act to encumber the property. The promise is called a "covenant as to grantor's acts" (N.J.S.A. 46:4-6). The promise means that the Grantor has not allowed anyone else to obtain any legal rights which affect the property (such as by making a mortgage or allowing a judgment to be entered against the Grantor).
This conveyance is made subject to all easements, covenants, restrictions and agreement of record; if any, zoning and ordinances, land use regulations and requirements of the City of Newark, and all facts that an accurate survey and physical inspection of the property may disclose.
1 The LLC later changed its name to 33 Maple Urban Renewal, LLC. We use the LLC to refer to both entities. A-1029-24 10 Resolution H was attached to the deed, and the deed was recorded on January
11, 2018.
The LLC did not sign a Developer Agreement. About a year after the sale,
in December of 2018, the Board received approximately $1.1 million from the
net proceeds of the sale of 33 Maple Avenue to the LLC.
At the time that 33 Maple Avenue was sold in December 2017, the
property was described to be in "poor" condition, and it was noted that the
property would require major renovations. Following the sale, the LLC spent
approximately $4.5 million on environmental remediation and renovations to 33
Maple Avenue.
In March 2020, the LLC sold 33 Maple Avenue to FO Team for $10
million. In the deed of sale, the LLC provided a "covenant as to the grantor's
act (N.J.S.A. 46:4-6)." In that covenant, the LLC represented that it "has not
allowed anyone else to obtain any legal right which would affect the property
(such as by making a mortgage or allowing a judgment to be entered against the
[LLC].)"
To finance the purchase and additional renovations to 33 Maple Avenue,
FO Team borrowed $21.5 million from Equitable Facilities Fund, Inc. and gave
the lender a mortgage on the property. Thereafter, the mortgage was assigned
A-1029-24 11 to Equitable School Revolving Fund, Inc. and then to U.S. Bank National
Association (collectively, the Lenders).
Beginning in 2021, FO Team leased 33 Maple Avenue to Team Academy
Charter School, Inc. (Team). Team operates the KIPP Seek Academy at 33
Maple Avenue and the school provides education to approximately 540 students.
A month after the sale of 33 Maple Avenue to FO Team, the Board sued
FO Team and the Authority. The Board claimed that using 33 Maple Avenue as
a charter school was not permitted under the SDD Agreement. The Board also
sought to recover title to 33 Maple Avenue by exercising its reversion rights
under the SDD Agreement. Additionally, the Board named the LLC and the
Lenders as defendants. At approximately the same time, the Board filed a notice
of lis pendens against 33 Maple Avenue.
At the time the notice of lis pendens was filed, the Lenders had advanced
just over $10.9 million to FO Team. Thereafter, the Lenders placed the
remaining approximately $10.6 million of the loan in FO Team's construction
account but refused to allow those monies to be used for renovation of 33 Maple
Avenue. Consequently, FO Team arranged to borrow an additional $6.5 million
from a different lender and FO Team thereafter used that loan to complete
renovations at 33 Maple Avenue.
A-1029-24 12 Defendants filed several motions to dismiss, which were denied. In May
2023, the Board filed a third amended complaint. In that complaint, the Board
asserted seven causes of action: three counts of breach of contract (counts one
through three); a violation of the covenant of good faith and fair dealing (count
four); tortious interference with contract against the LLC and FO Team (count
five); tortious interference with a prospective economic advantage against the
LLC (count six); and unjust enrichment against the LLC (count seven). In
connection with the breach of contract claims, the Board sought specific
performance of its right of reversion and sought to recover title to 33 Maple
Avenue. The Board also made claims for compensatory damages, punitive
damages, attorneys' fees, and costs.
In January 2023, FO Team and the Authority moved for summary
judgment.2 In response, the Board cross-moved for partial summary judgment
on its claim that the Authority had breached the SDD Agreement. On June 9,
2 The LLC and Lenders also moved for summary judgment. The LLC was eventually dismissed from the litigation, and no party is challenging that dismissal on this appeal. All parties concede that the claims against the Lenders are dependent on the claims against FO Team.
A-1029-24 13 2023, the trial court denied all those motions, reasoning that there were material
fact disputes.3
Several months later, FO team moved for reconsideration. By that time,
a different judge (the second judge) had assumed responsibility for oversight of
the litigation. The second judge heard argument on the motion for
reconsideration on February 12, 2024. Initially, the judge stated that she would
deny the motion and she scheduled a hearing on whether a charter school was a
permitted use under the SDD Agreement.
On April 10, 2024, the second judge conducted a conference with counsel.
At that conference, the judge announced that there was no need for an
evidentiary hearing because she held, at best, the SDD Agreement was
ambiguous as to whether a charter school was a "redevelopment," or "economic
development" under the SDD Agreement. The judge then reasoned that an
ambiguous use restriction could not, as a matter of law, bind FO Team as a
subsequent purchaser of 33 Maple Avenue. In making that ruling, the second
3 The trial court also barred the Board's expert from testifying concerning the value of 33 Maple Avenue. While the Board challenges that ruling on this appeal, given our affirmance of the dismissal of all the Board's claims, any issue concerning the expert is moot. A-1029-24 14 judge also determined that the bargain and sale deeds and affidavit of title did
not include language precluding using 33 Maple Avenue as a charter school.
Despite that ruling, the Board argued that it still had a right of rev ersion
because 33 Maple Avenue had not been developed within the three-year
provision of the SDD Agreement. On May 7, 2024, the second judge heard
further arguments on the reversion claim. Two days later, on May 9, 2024, the
judge placed an oral decision on the record. The second judge held that the
Board had no right of reversion to 33 Maple Avenue.
On June 18, 2024, the second judge entered an order that (1) granted
reconsideration of portions of the June 9, 2023 order denying summary judgment
to FO Team and the Authority; (2) granted summary judgment to FO Team on
the Board's claims asserted in counts one and five of the third amended
complaint; (3) dismissed count two of the third amended complaint against FO
Team as moot; and (4) granted summary judgment to the Authority on counts
one and two of the third amended complaint. In that same order, the second
judge directed the parties to move for summary judgment on the remaining
claims, which included the Board's claim of breach of contract against the
Authority and FO Team's counterclaim for promissory estoppel.
A-1029-24 15 The judge heard further arguments on those summary judgment motions
on July 19, 2024. On October 29, 2024, the court entered three orders and
explained the reasons for those orders on the record. In one order, the judge
granted summary judgment to the Authority on the third count of the Board's
third amended complaint and dismissed with prejudice the Board's claim of
breach of contract against the Authority. In another order, the judge granted
summary judgment to FO Team on its promissory estoppel counterclaim and
awarded FO Team $768,487.05 in damages. Finally, in the third order, the judge
denied the Board's cross-motion for summary judgment to dismiss FO Team's
promissory estoppel claim.
The Board now appeals from the June 18, 2024 order and the October 29,
2024 orders.
II.
On appeal, the Board presents three main arguments. It contends that the
trial court erred in (1) granting summary judgment to FO Team; (2) granting
summary judgment to the Authority; and (3) granting summary judgment to FO
Team on its promissory estoppel claim. The Board asserts that there are several
issues of material fact disputes precluding summary judgment and that the
second judge erred in her legal rulings.
A-1029-24 16 A plain reading of the SDD Agreement established that there was no
breach by the Authority. Moreover, the law is well-established that a right of
reversion must be clearly stated and there was no clear right of reversion stating
that the former public-school properties could not be used as charter schools.
Because there was no breach, the trial court properly entered summary judgment
in favor of FO Team and the Authority and dismissed all the Board's claims.
The material undisputed facts also establish the Board did not make a
definitive promise to FO Team and FO Team did not reasonably rely on a
promise. Accordingly, we reverse and vacate the October 29, 2024 order
granting summary judgment to FO Team on its promissory estoppel claim and
remand, directing the trial court to enter an order granting summary judgment
to the Board and dismissing with prejudice FO Team's promissory estoppel
counterclaim.
III.
We review de novo orders granting summary judgment and apply the same
standard that governed the trial court's rulings. Conley v. Guerrero, 228 N.J.
339, 346 (2017). Summary judgment will be granted if, viewing the evidence
in the light most favorable to the non-moving party, "there is no genuine issue
of material fact and 'the moving party is entitled to a judgment or order as a
A-1029-24 17 matter of law.'" Ibid. (quoting Templo Fuente De Vida Corp. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016)); Samolyk, 251 N.J. at 78; R.
4:46-2(c).
Moreover, appellate courts review de novo a trial court's interpretation of
contracts. Serico v. Rothberg, 234 N.J. 168, 178 (2018); JPC Merger Sub LLC
v. Tricon Enters., Inc., 474 N.J. Super. 145, 159-60 (App. Div. 2022).
"Accordingly, we pay no special deference to the trial court's interpretation and
look at the contract with fresh eyes." JPC Merger Sub LLC, 474 N.J. Super. at
160 (quoting Kieffer v. Best Buy, 205 N.J. 213, 223 (2011)). In interpreting
contracts, we look at the language used by the parties and construe the language
consistent with its plain meaning, considering the overall purpose and meaning
of the contracts. See In re County of Atlantic, 230 N.J. 237, 254 (2017).
"Because '[t]he plain language of the contract is the cornerstone of the
interpretative inquiry[,] "when the intent of the parties is plain and the language
is clear and unambiguous, a court must enforce the agreement as written, unless
doing so would lead to an absurd result."'" JPC Merger Sub LLC, 474 N.J.
Super. at 161 (alterations in original) (quoting Barila v. Bd. of Educ. of Cliffside
Park, 241 N.J. 595, 616 (2020)).
A-1029-24 18 IV.
We begin our analysis by addressing the Board's affirmative claims
against the Authority and FO Team. All the Board's affirmative claims depend
on an interpretation of the SDD Agreement. Specifically, the claims depend on
construing whether the SDD Agreement allowed the sites conveyed to the
Authority to be used as charter schools. The Board's right of reversion is also
dependent on construing the SDD Agreement and determining whether there is
a clear and unambiguous restriction on using the former public-school properties
as charter schools.
The SDD Agreement states that the properties conveyed by the Board to
the Authority can be used for "housing, redevelopment and economic
development opportunities." In other provisions of the SSD Agreement, it
references "development" opportunities. First, in Article 5.1, the SDD
Agreement defines the "Purposes" to include "development and housing
opportunities for each Site conveyed to [the Authority]." In article 5.4(1), the
SDD Agreement states: "[The Authority] shall work diligently to investigate and
identify feasible housing, redevelopment and economic development
opportunities at each Site (each, a 'Site Project')."
A-1029-24 19 A plain reading of the terms "development," "redevelopment," and
"economic development" does not preclude using the former Board properties
as charter schools. See Merriam-Webster Dictionary, https://www.merriam-
webster.com/dictionary/development (last visited May 18, 2026) (defining
"development" as "a tract of land that has been made available or usable: a
developed tract of land," and "redevelopment" as "the act or process of
redeveloping"); see also Black's Law Dictionary 566, 1532 (12th ed. 2024)
(defining "development" as "[t]he conversion of land to a new purpose . . . a
substantial human-created change to improved or unimproved real estate,
including the construction of buildings or other structures" and "redevelopment"
as "[r]ehabilitation of an urban-residential or commercial section that is subject
to blight or in decline, [] by erecting new buildings or renovating the old ones").
Consequently, "development" and "redevelopment" are both broad terms, and
when read in context of the entire SDD Agreement, those terms allow for any
use of the former school properties which "enhance[ed] job and employment
opportunities for City residents." More to the point, neither of those terms
precludes developing the sites to be used as a charter school. Indeed, nowhere
in the SDD Agreement does it state that charter schools are prohibited uses.
A-1029-24 20 To the extent the Board relies on the meaning of redevelopment as used
in the redevelopment statute, N.J.S.A. 18A:20-9, we reject that argument. While
Resolution H and the SSD Agreement refer to N.J.S.A. 18A:20-9, they do so in
the context of the conveyance of the properties to the Authority. Nothing in the
SSD Agreement states that a sale of the properties by the Authority to a third
party is subject to N.J.S.A. 18A:20-9. Indeed, the Board expressly waived the
Authority's obligation to seek approval of a sale from the City council.
Consequently, a plain reading of the SDD Agreement establishes that the
Authority did not breach the SDD Agreement by selling 33 Maple Avenue to
the LLC. It is undisputed that prior to the sale to the LLC, the Board, through
the superintendent of the District, provided the Authority with an affidavit that
it had a clear title to 33 Maple Avenue. Therefore, the material undisputed facts
establish that the Board knew that the Authority planned to sell 33 Maple
Avenue to a third party.
The sale then took place in December 2017, well within the three-year
reversion period set forth in the SDD Agreement. After that sale, the Board
received over $1 million in consideration for the sale. Importantly, the LLC did
not execute a "Developer Agreement" with the Authority. Instead, the deed
given to the LLC made it clear that it was receiving 33 Maple Avenue as its own
A-1029-24 21 property and there is nothing in that deed restricting how the property was
thereafter to be used.
A plain reading of the SDD Agreement also establishes that the Board's
right of reversion ended with the sale to the LLC. The Board's right of reversion
was limited. Specifically, the Board had a right of reversion against the
Authority if, and only if, the Authority did "not develop[] a Site Project or
demonstrable plans for such Site within three (3) years from the date of
execution of this agreement." It is undisputed that the Authority sold 33 Maple
Avenue to the LLC in December 2017. The sale was clearly a demonstrable
plan for 33 Maple Avenue and was also well within the three-year period
because the SDD Agreement was executed on April 19, 2016, and 33 Maple
Avenue was sold to the LLC on December 28, 2017.
Moreover, as stated in Article 5.2 of the SSD Agreement, the Board's
reversion rights were connected to a "Site Project," which might take some time
to complete. No provision or language of the SSD Agreement stated that the
Authority could not sell a property without a Site Project. Indeed, the RFQ/P
stated: "The overarching objective of [the Authority] is to convey 100 % fee
interest in the properties to third[-]party purchasers/developers for re-use and/or
A-1029-24 22 redevelopment pursuant to agreed upon performance milestones to place the
properties back into productive commercial use."
The material undisputed facts also establish that the Board had no right of
reversion against FO Team. FO Team did not directly purchase 33 Maple
Avenue from the Authority. Instead, FO Team was a subsequent purchaser, and
it purchased 33 Maple Avenue in March 2020, from the LLC. Importantly, the
deed conveying 33 Maple Avenue to FO Team did not contain any restriction
on the use of the property as a charter school.
The law is well established that a right of reversion needs to be clear and
unambiguous. See Cooper River Plaza E. v. Briad Grp., 359 N.J. Super. 518,
529 (App. Div. 2003) (explaining "[a]n ambiguous restriction [in a deed] will
not be enforced in equity so as to impair the alienability or use of property");
Hagaman v. Bd. of Educ. of Woodbridge Twp., 117 N.J. Super. 446, 453
(explaining "[l]anguage in an instrument which is alleged to create" a
reversionary interest in property should be "strictly construed"); see also Lehigh
Valley R.R. Co. v. Chapman, 35 N.J. 177, 188 (1961) (stating "[a] recognized
rule of construction dictates that an instrument, when a choice exists, is to be
construed against rather than in favor of forfeiture").
A-1029-24 23 The deed given to the LLC was a bargain and sale deed, which stated that
there were no encumbrances on the property. In turn, the LLC gave FO Team a
bargain and sale deed, which iterated that there were no encumbrances on the
property. Even if FO team had looked back at the SDD Agreement, there is no
provision in that agreement that expressly precludes 33 Maple Avenue from
being used as a charter school.
The trial court reasoned that, at best, the terms "redevelopment" and
"economic development" were ambiguous as to whether they could be read to
preclude using the property as a charter school. As we have already held, we do
not see ambiguity. Nevertheless, we do agree, to the extent that there was any
argument that those terms precluded using the property as a charter school, the
terms were at best ambiguous as to the restriction. Therefore, as a matter of law,
the restriction was unenforceable against FO Team. Hagaman, 117 N.J. Super.
at 454 (refusing to recognize a reversionary right to property, where the deed
contained "no words creating" such a right).
Having construed the SDD Agreement, the Board's arguments about
notice of the SSD Agreement are not controlling. Even if FO Team had been
given a copy of the SDD Agreement and told that it was part of the chain of title,
A-1029-24 24 a plain reading of the SSD Agreement would not have put it on notice that 33
Maple Avenue could not be used as a charter school.
Given our construction of the SDD Agreement, counts one, two, and three
of the Board's third amended complaint, all of which asserted breach of contract
claims, were properly dismissed with prejudice. Count five of the Board's third
amended complaint was also properly dismissed with prejudice. That count
asserted a claim for tortious interference against FO Team. To establish tortious
interference, a party must show: "(1) actual interference with a contract; (2) that
the interference was inflicted intentionally by a defendant who is not a party to
the contract; (3) that the interference was without justification; and (4) that the
interference caused damages." Dello Russo v. Nagel, 358 N.J. Super. 254, 268
(App. Div. 2003). Because a plain reading of the SDD Agreement establishes
that the Authority did not breach that agreement by allowing 33 Maple Avenue
to be used as a charter school, FO Team could not have tortiously interfered with
the SDD Agreement.
In its fourth count of the third amended complaint, the Board asserted a
claim of violation of the convent of good faith and fair dealing against the
Authority. The undisputed material facts establish that the Authority did not act
inconsistently with its obligations under the SDD Agreement, nor did it act
A-1029-24 25 arbitrarily or in bad faith. Therefore, the Board had no claim for a violation of
the covenant of good faith and fair dealing. See Wilmington Sav. Fund Soc'y,
FSB v. Daw, 469 N.J. Super. 437, 452 (App. Div. 2021) (quoting Wilson v.
Amerada Hess Corp., 168 N.J. 236, 251 (2001)). (explaining "[a] party breaches
the implied covenant when it exercises its contractual functions 'arbitrarily,
unreasonably, or capriciously' and with an 'improper motive'").
The sixth and seventh counts of the Board's third amended complaint
asserted claims against the LLC. The Board dismissed all its claims against the
LLC, and it has not and cannot challenge those dismissals on this appeal.
Finally, we analyze the claim of promissory estoppel asserted by FO
Team. To prevail on a promissory estoppel claim, a claimant must show: "(1) a
clear and definite promise; (2) made with the expectation that the promis ee will
rely on it; (3) reasonable reliance; and (4) definite and substantial detriment."
Goldfarb v. Solimine, 245 N.J. 326, 339-40 (2021) (quoting Toll Bros., Inc. v.
Bd. of Chosen Freeholders of Burlington, 194 N.J. 223, 253 (2008)).
In terms of a definite promise, FO Team relies on the deed given by the
Board to the Authority on November 16, 2017, which included a "covenant as
to grantor's act." In that covenant, the Board represented that it had "not allowed
A-1029-24 26 anyone else to obtain any legal rights which affect the property (such as by
making a mortgage or allowing a judgment to be entered against the Grantor)."
FO Team argues that the provision was a "clear and definite promise," and, as a
subsequent purchaser, it was entitled to rely on the recorded promise when it
acquired 33 Maple Avenue. FO Team then asserts it suffered damages when the
Board violated its promise by placing a lien on the property, which caused its
Lenders to stop releasing money to FO Team. The stopped loan releases, in
turn, required FO Team to secure an additional $6.5 million from another lender
to complete renovations at 33 Maple Avenue. FO Team's promissory estoppel
claim fails for three reasons.
First, the promise in the deed was that the Board did not know of any other
third-party claims against 33 Maple Avenue. The Board was not promising that
it would not assert a claim under its agreements with the Authority. Whi le we
have now ruled that the Board has no reversionary right to 33 Maple Avenue
and that the Authority did not breach the SSD Agreement, that interpretation of
the SDD Agreement was not definitive in November 2017. More to the point,
the Board did not state in the deed that it would not make any claims against the
Authority or any subsequent purchaser of 33 Maple Avenue if it believed its
rights under the SDD Agreement had been violated.
A-1029-24 27 Second, the Board did not make a "clear and definite" promise to FO
Team. FO Team was not a party to the deed executed between the Board and
the Authority; rather it was a subsequent purchaser in the chain of title. There
is no evidence showing the Board had any direct dealings with FO Team or that
it gave a definitive promise to FO Team that 33 Maple Avenue could be used as
a charter school.
Third, FO Team has not established reasonable detrimental reliance. FO
Team claims it was damaged because its Lenders stopped releasing monies
under a loan agreement and it had to secure a new loan. Following the close of
discovery, however, FO Team did show why and under what provisions of the
loan documents the Lenders took their actions. More importantly, FO Team has
not established that the Lenders were acting only because of the lis pendens filed
by the Board. Indeed, to the extent the Lenders relied on the lis pendens, that
action reflects that the Lenders believed there was a legitimate basis for the
Board's claims.
In short, the material undisputed facts establish the Board did not make a
promise to FO Team and FO Team did not reasonably rely on a promise from
the Board. Accordingly, we reverse and vacate the order granting summary
judgement to FO Team on its promissory estoppel claim and remand with
A-1029-24 28 direction that the trial court enter an order granting summary judgment to the
Board and dismiss with prejudice the promissory estoppel claim.
Affirmed in part, reversed and vacated in part, and remanded. We do not
retain jurisdiction.
A-1029-24 29