NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2593-23
CENTER CITY PARTNERS, LLC,
Plaintiff-Respondent,
v.
PATERSON PARKING AUTHORITY,
Defendant-Appellant. ______________________________
Argued January 16, 2025 – Decided July 18, 2025
Before Judges Mawla, Natali, and Walcott-Henderson.
On appeal from an interlocutory order of the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-000103-21.
William P. Opel argued the cause for appellant (McManimon, Scotland & Baumann, LLC, attorneys; William W. Northgrave, of counsel; William P. Opel, of counsel and on the briefs).
Dennis J. Drasco argued the cause for respondent (Lum, Drasco & Positan, LLC, attorneys; Dennis J. Drasco and Scott E. Reiser, of counsel and on the brief). PER CURIAM
Defendant Paterson Parking Authority (Authority) appeals from a March
15, 2024 order, which granted plaintiff Center City Partners, LLC's (Center
City) request to reform redevelopment and operating agreements related to a
substantial redevelopment project in Paterson's central business district. The
project included two parking garages, an atrium building, and other residential
and commercial development.
The redevelopment agreement obligated Center City to first construct a
parking garage and, upon completion, required the Authority to construct a
second garage, each at their own expense.1 The redevelopment agreement also
contained a complex revenue sharing formula where Center City was to receive
a portion of the combined income from both garages in excess of $1,600,000.
Although Center City constructed the project garage, the Authority never
constructed the authority garage, and the revenue generated by only the project
garage never exceeded $1,600,000. Thus, according to Center City, it never
received any return on its investment.
1 The parties refer to the parking garage constructed by Center City as the "project garage" and the garage the redevelopment agreement obligated the Authority to construct as the "authority garage." The parties also refer to the atrium building as the "mall." We do the same for ease of reference. A-2593-23 2 After a four-day bench trial and a failed attempt at specific performance
of the redevelopment agreement, detailed infra, the court reformed the revenue
sharing provision by removing the $1,600,000 threshold to allow Center City to
receive a portion of all revenue derived from the project garage. Because we
have concluded the court's June 29 and March 12, 2024 oral decisions lack the
necessary findings required by Rule 1:7-4, we vacate the March 15, 2024 order,
in part, with respect to the reformation remedy and remand for further findings
of fact and conclusions of law.
I.
In 2002, Paterson requested proposals for the redevelopment of the central
business district, and accepted Center City's proposal by written memorandum
of agreement the next year. In 2005, the Authority, Paterson, and Center City
signed the redevelopment agreement, which governed the phased redevelopment
plan. Under the redevelopment plan, Phase I implemented alternative parking
and Phase II required Center City to construct the project garage. The parties
stipulated that Center City completed the project garage in or around 2007. It
expended approximately $25 million doing so. The later phases of the
redevelopment plan, including construction of the authority garage, did not
A-2593-23 3 proceed as planned, in part due to the economic recession in 2008, and, as noted,
the authority garage was never constructed.
As required by the project schedule and Section 8.2(a) of the
redevelopment agreement, the Authority was required to construct the authority
garage following Center City's completion of the project garage. Section 8.7(a)
of the redevelopment agreement required Assured Guaranty, previously known
as Financial Security Assurance, Inc., the third-party issuer of the Authority's
outstanding parking revenue bonds, consent for "any activities that have the
potential to impair the Authority's operations, financial security or revenue
generation prospects[,] or . . . the issuance of additional obligations . . . to
finance, among other things, . . . the [a]uthority [g]arage." Under Section
8.7(d), in the event Assured Guaranty did "not agree to insure the Authority's
bonds or other obligations expected to be issued to finance the [a]uthority
[g]arage, the parties agree[d] to negotiate other financial alternatives in good
faith for a period of [ninety] days."
With respect to the above-referenced revenue sharing provision contained
in Section 8.6(a) of the redevelopment agreement, Center City would receive
66.66% of the profits if the joint revenues of the garages exceeded $1,600,000
as of 2005, to be adjusted on an annual basis in accordance with the Consumer
A-2593-23 4 Price Index. The Authority retained all revenues under the threshold and the
remaining 33.34% of the revenue in excess of the threshold. Sections 8.2(e) and
(f) required the parties to work cooperatively to establish a validation system,
and that the Authority provide Center City with a report concerning the
Authority's financial operations with respect to the project garage.
In 2006, the parties executed an operating agreement, which governed the
operations of the project garage. That agreement provided the Authority would
manage and operate the project garage while Section 6.2 obligated Center City
to pay various operating expenses including: (1) an annual operating fee; (2)
maintenance expenses; (3) insurance costs; and (4) direct payroll and benefits
of Authority employees assigned to the project garage. According to Center
City, the property taxes for the project garage have increased to approximately
$800,000 per year. Further, it paid an average of $289,000 per year in operating
expenses.
Unrelated to the redevelopment project, the parties stipulated at trial "[i]n
or about 2018, the Authority initiated plans to demolish and replace [an] existing
parking garage located at Ward Street" (Ward Street garage), while the authority
garage remained unbuilt. They further agreed "[o]n August 20, 2018, the
Authority submitted an application to the New Jersey Economic Development
A-2593-23 5 Authority for financial assistance in the form of State incentive grants in
connection with the Ward Street project." Ron Jampel, a real estate consultant
who provided services to the Authority, testified that these grants could have
been used to finance the authority garage.
After years of paying the operating expenses for the project garage, and
because the Authority failed to construct the authority garage, which resulted in
Center City's inability to share in the revenue, Center City eventually filed the
operative ten-count complaint on May 4, 2021, seeking specific performance,
an accounting of the Authority's operations of the project garage and other
surface parking lots, reformation of the agreements, recission, and damages for
unjust enrichment. It also sought damages for breach of contract, breach of good
faith and fair dealing, and breach of fiduciary duties.
Center City contended the agreements had "only served to enrich the
Authority at the expense of Center City." With respect to specific performance,
Center City argued the Authority failed to fulfill its obligations to construct the
authority garage, prevented Center City from satisfying its obligation to
construct residential and commercial buildings by using the land on which those
buildings would sit as surface parking lots, and therefore should be compelled
to construct the authority garage and release the surface lots to Center City.
A-2593-23 6 Center City next contended "[t]he Authority also failed to fulfill its
contractual obligation under Section 8.2(e) of the [r]edevelopment [a]greement
and Section 8.3(c)(iv) of the [o]perating [a]greement to provide Center City with
monthly revenue/expenditure reports," and "grossly mismanaged the [p]roject
[g]arage by offering complimentary or reduced rates." Because of the missing
financial reports, Center City maintained it could not calculate its losses due to
these alleged breaches.
Particularly pertinent to the issue raised on appeal, Center City requested
the court reform the redevelopment and operating agreements as an alternative
to specific performance. It argued the agreements "fail[ed] to effectuate the
intent of the parties" and demanded the court "create a replacement standard to
set reasonable parking rates for the [p]roject [g]arage," implement "an
enforceable ticketing and validating system," and any further relief the court
deemed appropriate.
In a separate count, Center City alleged that "[w]ithout having the
construction of the [a]uthority [g]arage, residential building, and office building,
Center City has been denied the benefit of the [r]edevelopment [a]greement as
contemplated by the parties and has instead suffered ongoing financial losses as
a result of the Authority's refusal to proceed with the [p]roject." Center City
A-2593-23 7 accordingly demanded the redevelopment agreement be reformed to "account
for the Authority's refusal to allow the latter phases of the [p]roject to proceed ;"
have "all capital and operating expenses of the [p]roject [g]arage . . . paid out of
[the] revenue generated by the [p]roject [g]arage; . . . [d]irect[] that Center
City . . . retain . . . all net revenues of the [p]roject [g]arage;" and other relief as
the court deemed appropriate.
Center City also asserted two separate counts for breach of contract and
alleged four separate breaches. Specifically, Center City maintained: (1) the
Authority "diverted revenue from the [p]roject [g]arage through sub-market
parking rate agreements, discount programs, and selective enforcement of
parking charges" contrary to Section 8.5(c) of the redevelopment agreement; (2)
"[c]ontrary to Section 8.2(e) of the [r]edevelopment [a]greement, the Authority
failed to submit monthly revenue and expenditure reports to Center City,
depriving Center City of the ability to verify or dispute charges demanded by
the Authority"; (3) "[c]ontrary to Section 8.6 of the [r]edevelopment
[a]greement, the Authority failed to share the revenues derived from parking it
offered within the Project System"; and (4) the Authority failed to construct the
authority garage.
A-2593-23 8 The Authority filed an answer on June 8, 2021, and denied Center City's
allegations. It also asserted counterclaims for breach of Section 6.2 of the
operating agreement and unjust enrichment alleging Center City failed to pay
the above-described operating fees or expenses since March 2020.
The Authority later moved for summary judgment, which the court denied
along with the Authority's subsequent motion for reconsideration, and Center
City's application to enjoin the Authority from continuing repairs on the Ward
Street garage. The court granted Paterson's motion to intervene and as noted, a
four-day bench trial was conducted in March and April 2022.
The court issued an oral decision on June 29, 2022, and memorialized its
findings in a conforming order the next day. The court ordered the parties to
specifically perform and recommence the project by obtaining the necessary
approvals and satisfying financing contingencies set by the redevelopment
agreement because it found the parties each represented that they wanted the
project to proceed. The court explained "if updated approvals are obtained and
the contingencies are met, then construction [is] to resume in the earliest
possible time frame in accordance with the phasing plan" set forth in the
agreements. If, however, the parties cannot specifically perform, the court
instructed "the parties then shall confer pursuant to 8.7[(d)] of the
A-2593-23 9 redevelopment agreement and negotiate for a period of [ninety] days after
determination whether it's by assured guarantee or other
alternatives . . . [i]ncluding whether Center City wants to subsidize construction
of" the authority garage.
The court granted Center City's request for an "accounting of the
operations and finance of the project garage and the surface lots in the project
area since . . . 2009" and that those reports should be "furnished, not made
available" to Center City. The court also awarded "compensatory damages for
overpayment[] towards the expenses of the project garage, if any[,] as
determined through [the] accounting."
In the event the specific performance remedy was unsuccessful, the court
further stated, "the existing revenue sharing formula in the redevelopment
agreement should be revised, and the entire operation and expenses of the
project garage should be reconsidered." With respect "to the revenue sharing
formula, the parties should create an equitable replacement formula that is
consistent with the original intent of the parties, including revision of the [$]1.6
million . . . threshold" in addition to other changes pertaining to the operations
of the project garage.
A-2593-23 10 The court further stated it did not believe that the Authority "never had
any intention" to build the authority garage but that "there has to be a
reformation . . . [b]ecause it would be . . . unconscionable if it was not" as,
"[s]tanding alone, . . . there's no way for Center City to recoup the costs of th[e
project] garage." The court reasoned "the Authority didn't act fraudulently or
breach the contract . . . but if the project does not continue, this situation in the
project garage is unconscionable."
With respect to the various causes of action for breach of contract, the
court concluded the Authority did not breach the redevelopment agreement to
the extent it required the Authority to construct a parking garage because the
parties mutually agreed to put the project on hold. Specifically, it found the
"parties had some sort of verbal dialogue, . . . an agreement[,] or . . . acquiesced
somehow, that the project would just be stalled for at least a decade." Further,
the court concluded the Authority did not breach the revenue sharing provision
because, again, the parties were mutually responsible for the project's
incompletion.
The court did not, however, make an explicit finding of breach with
respect to the Authority's obligation under Section 8.2(e) to furnish financial
reports but instead ordered an accounting of the garage's operations. The court
A-2593-23 11 also did not find the Authority breached Section 8.5(c) concerning parking rate
agreements, discount programs, and selective enforcement as the Authority was
tasked with managing the garage. Finally, the court dismissed Center City's
claims for breach of fiduciary duty, breach of good faith and fair dealing, and
concluded there was no basis for recission.
With respect to the Authority's counterclaims, the court found Center City
breached Section 6.2 of the operating agreement by failing to pay certain
expenses since March 2020. As discussed herein, the court awarded the
Authority damages for unjust enrichment in its later order.
In light of the court's June 30, 2022 order, the Authority submitted a
proposal to construct the authority garage to Assured Guaranty, pursuant to
Section 8.7(a). Assured Guaranty denied the proposal. Following this response,
the parties conferred to negotiate options including waiver of the financing
contingency, and alternative management and revenue sharing for the project
garage, consistent with the court's order and Section 8.7(d). The parties soon
determined the negotiations were at an impasse and filed submissions informing
the court.
On March 15, 2024, in response to being informed of the parties' failed
attempts at specific performance, the court issued an order which: (1) reformed
A-2593-23 12 the redevelopment agreement, removed the $1,600,000 threshold, and afforded
Center City the right to receive 66.66% of all revenue derived from the project
garage after expenses; and (2) awarded Center City $499,007.77. In calculating
this figure, the court retroactively applied the reformed revenue sharing
provision and found Center City was owed $1,948,013.51. The court also
concluded the Authority was owed $1,449,005.74 because of Center City's
breach of Section 6.2 of the operating agreement due to its failure to pay certain
expenses. Thus, the court offset these amounts and awarded Center City
$499,007.77, to be paid over a twenty-four-month period.
We granted the Authority leave to appeal the March 15, 2024 order. The
Authority also moved before the trial court to stay the order pending appeal,
which the court denied. On June 14, 2024, we granted the Authority's
application for a stay pending the outcome of the instant appeal.
Before us, the Authority argues Center City failed to establish the
existence of either mistake, unconscionability, or fraud and, therefore, the court
erred in reforming the agreements. The Authority contends the contracts, as
agreed upon at the time of contracting by sophisticated entities represented by
competent counsel and financial professionals, accurately represent the intent of
A-2593-23 13 the parties. Thus, no mistake existed, which would warrant contract
reformation.
The Authority further maintains "Center City . . . failed to demonstrate
any instance of fraud or unconscionable conduct," and that the court 's finding
the current profit-sharing formula, absent construction of the remaining
buildings, created an unconscionable result is unsupported in fact and
inconsistent with the requirements for reformation. It contends a "perceived
'unconscionable' outcome does not equate to unconscionable conduct on the part
of the Authority" as "[m]ulti-party real estate development projects . . . involve
risk, and one party's disappointment with the resulting project does not mean the
other acted in bad faith or contrary to the terms of the governing agreement."
In response, Center City argues the Authority merely challenges
reformation but does not challenge the facts upon which the court relied in
granting such a remedy. It maintains the court properly exercised its broad
equitable discretion in fashioning a remedy to the unique circumstances of the
case and, therefore, "did not need to make a finding of fraud or mistake to reform
the [r]edevelopment [a]greement." Further, Center City contends the court
properly held the inequitable distribution of revenue to the Authority while
Center City bore the costs was "unconscionable" and "no matter how the [t]rial
A-2593-23 14 [c]ourt labeled its March 15, 2024 [o]rder, whether as reformation, or a remedy
for breach of contract, or otherwise (i.e., the form of relief), it directly addressed
[the Authority's] significant misconduct and provided appropriate relief."
Center City next argues, in the event this court finds reformation was
inappropriate, "the most [we] could do would be to remand the matter to the
[t]rial [c]ourt to oversee the imposition of the specific performance of th[e]
agreements, which presumably would require [the Authority] to build the
[a]uthority [g]arage."
The Authority disagrees and contends, with respect to a further attempt at
specific performance, "the decision to construct the [a]uthority [g]arage is not
in the sole discretion of the Authority" because of the financing contingency in
Section 8.7(a). Thus, because it requested approval from Assured Guaranty
following the court's June 30, 2022 award of specific performance and
negotiated alternatives following Assured Guaranty's denial of their application,
the Authority maintains it has fully complied with that order as well as its
obligations under the agreement.
II.
A trial judge's factual findings made following a bench trial are accorded
deference and will be left undisturbed so long as they are supported by
A-2593-23 15 substantial credible evidence. Reilly v. Weiss, 406 N.J. Super. 71, 77 (App.
Div. 2009) (quoting Rova Farms Resort, Inc. v. Invs. Ins. Co., 65 N.J. 474, 483-
84 (1974)). On the other hand, "[a] trial court's interpretation of the law and the
legal consequences that flow from established facts are not entitled to any
special deference." Rowe v. Bell & Gossett Co., 239 N.J. 531, 552 (2019)
(alteration in original) (quoting Manalapan Realty, L.P. v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995)). When issues on appeal present mixed
questions of law and fact, we give deference to the supported factual findings of
the trial court but review de novo the trial court's application of legal rules to
the factual findings. State v. Pierre, 223 N.J. 560, 576 (2015).
Reformation of a contract is an "extraordinary remedy," Martinez v. John
Hancock Mutual Life Insurance Co., 145 N.J. Super. 301, 312 (App. Div. 1976),
that is justified only where there has been "mutual mistake or unilateral mistake
by one party and fraud or unconscionable conduct by the other." St. Pius X
House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571, 577
(1982). The party seeking reformation is required to present "'clear and
convincing proof' that the contract in its reformed, and not original, form is the
one that the contracting parties understood and meant it to be." Cent. State Bank
A-2593-23 16 v. Hudik-Ross Co., Inc., 164 N.J. Super. 317, 323 (App. Div. 1978) (quoting
Brodzinsky v. Pulek, 75 N.J. Super. 40, 48 (App. Div. 1962)).
Additionally, reformation of a contract "is not a modification. It is merely
a recognition that the scrivener has failed to express accurately what the parties
themselves intended and a correction of that failure." Aarvig v. Aarvig, 248 N.J.
Super. 181, 186 (Ch. Div. 1991) (citing Capanear v. Salzano, 222 N.J. Super.
403, 407-08 (App. Div. 1988)). Courts should not "rewrite a contract for the
parties better than or different from the one they wrote for themselves." Kieffer
v. Best Buy, 205 N.J. 213, 223 (2011) (citing Zacarias v. Allstate Ins. Co., 168
N.J. 590, 595 (2001)).
We conclude the court's June 29 and March 12, 2024 oral decisions, with
respect to the reformation remedy and its conclusion the Authority did not
breach the redevelopment agreement in failing to construct the authority garage,
would benefit from more fulsome factual findings. Rule 1:7-4(a) provides that
"the court shall . . . find the facts and state its conclusions of law thereon . . . on
every motion decided by a written order that is appealable as of right."
"Meaningful appellate review is inhibited unless the judge sets forth the reasons
for [their] opinion. In the absence of reasons, we are left to conjecture as to
what the judge may have had in mind." Salch v. Salch, 240 N.J. Super. 441, 443
A-2593-23 17 (App. Div. 1990); see also Estate of Doerfler v. Fed. Ins. Co., 454 N.J. Super.
298, 301 (App. Div. 2018).
As we extensively detailed in our June 14, 2024 order granting the
Authority's application for a stay pending appeal, the court's oral decisions
explained that changed circumstances, specifically the failure to construct the
authority garage and Center City's inability to share in the profits, rendered the
revenue sharing provision in the redevelopment agreement unfair and
inequitable. Thus, the court implemented its own revenue sharing scheme to
correct the perceived inequity. In light of the above-cited principles, however,
reformation is not an appropriate equitable remedy to correct unfair
circumstances, but is extraordinary relief reserved for situations involving either
mutual mistake between the parties, or a unilateral mistake on behalf of one
party and unconscionable conduct of the other. St. Pius X, 88 N.J. at 577.
"The doctrine of mutual mistake applies when a 'mistake was mutual in
that both parties were laboring under the same misapprehension as to [a]
particular, essential fact.'" Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 608
(1989) (alteration in original) (emphasis omitted) (quoting Beachcomber Coins,
Inc. v. Boskett, 166 N.J. Super. 442, 446 (App. Div. 1979)). Unilateral mistake,
on the other hand, contemplates a situation where "the mistake of one
A-2593-23 18 party . . . was made as to a basic assumption . . . [that] has a material effect on
the agreed exchange of performances that is adverse" to the mistaken party.
Restatement (Second) of Contracts § 153 (Am. L. Inst. 1981). Finally,
unconscionable conduct "implies [a] lack of 'good faith, honesty in fact[,] and
observance of fair dealing.'" Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994)
(quoting Kugler v. Romain, 58 N.J. 522, 544 (1971)).
Here, the court did not specifically address the legal requirements for
reformation and as noted, awarded that extraordinary remedy to cure what it
perceived to be an unconscionable or inequitable result. Based on our review of
the record, it is not entirely clear how the court concluded reformation was
appropriate. As the Authority notes, the parties are sophisticated entities, were
represented by counsel, and agreed to the terms of the contract as written.
On the other hand, Center City alleges the Authority never intended to
construct the authority garage and depleted its financial resources on unrelated
projects, which led to its inability to perform under Section 8.2, that under the
above-cited legal principles, constitutes unconscionable conduct. We reject
Center City's argument the remedy was appropriate even though the court did
not make findings of mistake or unconscionable conduct as equity must follow
the law. See In re Est. of Shinn, 394 N.J. Super. 55, 67 (App. Div. 2007);
A-2593-23 19 Dunkin' Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166, 183
(1985).
In addition, in light of our remand on the reformation remedy, we also
conclude the court should make additional findings of fact, consistent with Rule
1:7-4, with respect to the Authority's alleged breach of Section 8.2(a) of the
redevelopment agreement. As noted, the court concluded the Authority did not
breach Section 8.2(a) due to its failure to construct the authority garage as it
found the decision to put the project on hold was mutual.2 It is unclear to us,
however, what evidence or testimony the court relied upon in reaching this
conclusion.
On this point, we note the testimony presented at trial appears
contradictory. Ekaterina Valiotis, an employee of Center City's management
company who specifically managed the redevelopment project, testified the
Authority "didn't want to build the [a]uthority garage." She further stated the
Authority's reasons varied but included that "there is no need for it, . . . [the
Authority] might not have money, . . . capital improvements to make elsewhere,
2 We do not address, however, the court's conclusions with respect to the other causes of action for breach of contract as the Authority does not specifically raise those issues before us, and the court's determinations are supported by sufficient factual findings under Rule 1:7-4. A-2593-23 20 or, . . . another project somewhere else." Jose Perez, an Authority director,
however, testified the "Authority did not build the garage because the Center
City representatives asked [the Authority] not to build the garage, [and] that they
had different plans in mind for the site," based on a purported conversation
regarding the project.
Depending on the court's factual findings and legal conclusions, Center
City may be entitled to damages or other equitable relief associated with this
alleged breach. In light of this contradictory testimony, the importance of this
issue, and court's limited findings, we are convinced the record would benefit
from more in-depth findings and legal conclusions on this point.
Finally, we reject Center City's contention we should remand for the court
to order and compel specific performance. As noted, the trial court previously
attempted this remedy, and the Authority complied with its obligations to
request financing and negotiate alternatives with Center City for a period of
ninety days. To the extent Center City contends that without such an award it
would be left without a remedy, as noted, on remand, the court shall address
specifically the Authority's alleged breach of its obligation to seek financing and
construct the authority garage in a timely manner.
A-2593-23 21 Accordingly, we remand for the court to make findings as necessary to
support its decision to reform the contract or devise an alternative remedy, if
appropriate. If, on remand, the court concludes reformation was appropriate, it
may reinstate its prior award to Center City. If, however, the court concludes
reformation was improper on this record, the court shall reconsider the
Authority's alleged breach of Section 8.2(a) for failure to construct the authority
garage and, if appropriate, award compensatory damages.
Nothing in our opinion should be construed as suggesting our view on the
outcome of the remanded proceedings. To the extent we have not specifically
addressed any remaining arguments, it is because we have concluded they are
without sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Vacated in part, and remanded in part. We do not retain jurisdiction.
A-2593-23 22