NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1611-19T3
COMMERCIAL SPACE, LLC,
Plaintiff-Appellant,
v.
PIRANHA PROPERTIES, LLC and PAULO MATOS,
Defendants-Respondents. ____________________________
Argued November 18, 2020 – Decided January 7, 2021
Before Judges Accurso and Vernoia.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-0733-18.
Joshua M. Lurie argued the cause for appellant (Lurie Strupinsky, LLP, attorneys; Joshua M. Lurie, on the briefs).
Donald J. Rinaldi argued the cause for respondents (DiBiasi & Rinaldi, LLC, attorneys; Donald J. Rinaldi, on the brief).
PER CURIAM Plaintiff Commercial Space, LLC filed a complaint alleging defendants
Piranha Properties, LLC and Paulo Matos trespassed on plaintiff's property and
caused environmental contamination requiring costly remediation. The parties
resolved the underlying dispute and entered into a settlement agreement.
Plaintiff later moved to enforce the agreement, arguing defendants' alleged
failure to make a timely settlement payment required entry of judgment against
defendants in the amount of $241,565. The court rejected plaintiff's claim,
finding the payment was timely because the payment schedule had been
modified or amended by the parties, and that any delay in making the payment
did not constitute a material breach of the agreement. Plaintiff appeals from the
court's order denying its motion to enforce the settlement agreement. Having
reviewed the record in light of the applicable law, we vacate the court's order
and remand for further proceedings.
I.
Following the filing and service of plaintiff's January 2018 complaint,
defendants did not file a responsive pleading. On August 17, 2018, the court
entered a final default judgment against defendants in the amount of $241,565,
the amount of compensatory damages plaintiff sought in the action. Two
months later, the court granted defendants' motion to vacate the final default
A-1611-19T3 2 judgment and permitted defendants to file an answer to the complaint.
Defendants subsequently filed an answer generally denying the allegations in
the complaint and asserting affirmative defenses.
In July 2019, while the action was still pending, plaintiff moved to enforce
a settlement agreement it alleged had been reached between the parties. Plaintiff
requested the court enter a $241,565 judgment against defendants in accordance
with what it claimed were the terms of the settlement agreement. 1 More
particularly, plaintiff claimed defendants defaulted on their obligation to timely
make a $100,000 payment due under the settlement agreement and, as a result,
it was entitled to entry of a $241,565 judgment against defendants. The record
presented to the court on plaintiff's enforcement motion consisted of the
certifications of plaintiff's counsel and defendants' counsel.
Plaintiff's Counsel's Certification
In support of the motion, plaintiff relied solely on the certification of its
counsel, who generally described the events leading to the entry of a written
settlement agreement, as well as defendants' alleged breach of the agreement.
Attached to counsel's certification is a copy of an agreement that is signed by
1 Plaintiff also sought an award of costs and attorney's fees pursuant to the settlement agreement. A-1611-19T3 3 defendants and dated June 27, 2019. 2 In pertinent part, the agreement requires
that defendants pay plaintiff $150,000, with $100,000 due concurrent with the
execution of the agreement and the balance to be paid by five successive $10,000
monthly installments commencing on September 1, 2019.
The agreement also includes a provision entitled "Default" that details
what occurs in the event a party to the agreement defaults. The agreement
requires service of a notice to the defaulting party and a fifteen-day period to
cure the default after the requisite notice is provided. The agreement further
provides that if defendants are in default following the fifteen-day cure period,
a judgment in the amount of $241,565, less any prior settlement payment
amounts, shall be entered against them.
The Default provision states:
Should any Settling Party default on any term set forth herein, and after being provided with a period of fifteen (15) days to cure with notice of the default by way of the Notice provision below, then:
a. The Party asserting the default shall be permitted to commence an action in a court of competent jurisdiction to enforce the terms of this Agreement. Such action shall either be by a motion to enforce the terms herein or a separate action for breach of contract;
2 The record on appeal does not include a copy of the agreement signed and dated on plaintiff's behalf. A-1611-19T3 4 b. The Parties agree that, in the event of a default, a stipulated judgment shall be entered against Defendants, jointly and severally, in the amount of Two Hundred Forty One Thousand, Five Hundred Sixty Five Dollars ($241,565[]), minus any payments made to [plaintiff] consistent with this agreement;
....
d. [Plaintiff] shall be entitled to reasonable counsel fees and costs incurred to enforce this Settlement Agreement and Mutual Release provided that [plaintiff] successfully establishes that a breach has occurred. The Settling Parties agree that a cure of the default by the Defendants after any action to enforce this Agreement is taken by the Defendants shall not make moot or diminish in any amount the counsel fees and costs provision herein.
A separate provision, entitled "Notices," states that "[a]ll notices . . . required
by or given under [the agreement] shall be given by overnight mail through a
service to which any package may be tracked[] and addressed" to a designated
address of the attorney for the party to whom the notice of default is provided.
In his certification supporting the motion to enforce the settlement,
plaintiff's counsel represented that defendants proposed to settle the matter for
$150,000 with payments to be made over time. Plaintiff's counsel sent
defendants' counsel a June 11, 2019 email stating plaintiff agreed to settle the
matter for $150,000 conditioned on defendants' payment of $100,000
"[c]oncurrent with the execution of a settlement agreement" and five successive
A-1611-19T3 5 monthly installments of $10,000. The email further stated plaintiff's agreement
to settle was conditioned on defendants' agreement to entry of a judgment
against them in the amount of $225,000, less any payments otherwise made, if
defendants "miss[] a payment." The subsequent written agreement provided that
in the event of a default by defendants, a $241,565 judgment could be entered
against them.
In his certification, plaintiff's counsel also explained that he forwarded a
written settlement agreement to defendants' counsel on June 20, 2019. Attached
to the certification is a June 25, 2019 email from defendants' counsel stating his
clients did "not like the [j]udgment amount in the event of a default," but that he
had explained to them "this is pretty much standard language." The email also
requested amendments to the settlement agreement, including a requirement for
written notice of a default and a fifteen-day period to cure any default. In the
email, defendants' counsel stated that he would arrange for his clients to make
"the first payment" during the week of June 25, 2019.
It appears plaintiff's counsel interpreted the June 25, 2019 email as
confirmation of an agreement to settle the litigation subject to inclusion of
defendants' requested revisions to the settlement agreement. In his certification,
plaintiff's counsel states that "[u]pon notice from [d]efendants that the terms
A-1611-19T3 6 were agreed to by [d]efendants, [he] advised [his] client which executed the
settlement at that time." Plaintiff's counsel represented that forty-five minutes
later, he received an email from defendants' counsel stating defendants "had
suddenly backed out of the agreement and [were] only willing to pay an initial
$50,000[], an additional $50,000[] on August 1, 2019, and then begin the
periodic payments a month thereafter." Plaintiff's counsel also stated that he
"inquired from [his] client regarding these changed terms after the agreement
was agreed to and execution began," and that "[p]laintiff did not agree to these
new terms."
Two days later, on June 27, 2019, plaintiff's counsel advised defendants'
counsel that defendants should sign the written settlement agreement and pay
$50,000 immediately and put the additional $50,000 "in the mail prior to the
cure period."
In an email on the same date, defendants' counsel advised that he had a
check for $50,000 and the signed settlement agreement, and that they would be
hand-delivered to plaintiff's counsel the next day.3 The following morning,
plaintiff's counsel responded in an email, stating that, as he had discussed with
3 In his email, defendants' counsel referred to the settlement agreement as a "release." The settlement agreement includes a mutual release of all claims of the parties. A-1611-19T3 7 defendants' counsel, defendants must pay $100,000 "consistent with the terms
of the settlement agreement" and that plaintiff would accept the initial $50,000
payment "with the expectation that the [$50,000] balance is in the mail."
The record does not include a fully executed copy of the written settlement
agreement.4 The agreement included in the record is signed by defendants only
and is dated June 27, 2019. The settlement agreement defendants signed on June
27, 2019, requires that they pay $100,000 at the time the agreement is executed
followed by five subsequent monthly $10,000 payments.
Plaintiff's counsel certified that on June 28, 2019, he received the
settlement agreement signed by defendants and a $50,000 payment. By July 2,
2019, he had not received a second $50,000 payment. In his supporting
certification, plaintiff's counsel stated that, "consistent with the terms of the
agreement," on July 2, 2019, he "wrote to [defendants' counsel] regarding the
default and demanding that it be cured" and enclosed a stipulation of dismissal.
The letter is not attached to counsel's certification, and his certification provides
4 At oral argument on plaintiff's motion to enforce the settlement agreement, plaintiff's counsel represented that a fully executed copy had been "filed" with the court. The record on appeal, however, does not include a copy of the agreement executed by plaintiff. A-1611-19T3 8 no facts establishing that the letter was served in accordance with the
requirements of the settlement agreement's Notices provision.5
Plaintiff's counsel "did not hear back from" defendants' counsel in
response to the letter and did not receive the signed stipulation of dismissal he
expected from defendants' counsel. In his certification, plaintiff's counsel states
that on July 18, 2019, sixteen days after he sent his prior correspondence, he
again wrote to defendants' counsel "to advise of the ongoing issue." In his email,
plaintiff's counsel made no mention of a prior notice of default or request to
cure. The email states that plaintiff's counsel had not heard back from
defendants' counsel "in response to a date certain to pay the balance of the initial
payment" and the email references defendants' counsel's failure to return the
signed stipulation of dismissal. The email states plaintiff "wants to accelerate
the payments and judgment amount." It also expresses plaintiff's counsel's
5 We interpret plaintiff's counsel's assertion that he wrote to defendants "consistent with the terms of the agreement" as a conclusory declaration and not a statement of fact. As noted, the Notices provision requires service of the notice of default in a prescribed manner, and plaintiff's counsel's certification does not provide any facts establishing his letter was served in accordance with the Notices provision's requirements. Moreover, there is no evidence establ ishing defendants' counsel received the letter that plaintiff's counsel asserts concerned the default and demand that it be cured, or demonstrating when it was received, if at all. A-1611-19T3 9 concern that the "initial $50,000 sent . . . is it" and that he would be "going back
to court with a confession of judgment."
Defendants' counsel responded the same day in an email stating
defendants "want to keep the settlement together" and that they could deliver
the second $50,000 payment the following day and pay the first $10,000
installment by August 15, 2019. Defendants' counsel also suggested that if
plaintiff took "an unreasonable position" concerning its receipt of the settlement
payments, the parties could ask the court to decide the issue.
Plaintiff's counsel's certification does not indicate when he received the
second $50,000 payment from defendants, but the certification is dated July 31,
2019, and plaintiff's counsel acknowledges that, by then, he had received
$100,000 from defendants. Plaintiff's counsel requested that the court enter
judgment in plaintiff's favor "in the amount of $241,565[] minus $100,000
already paid" in accordance with the Default provision of the settlement
agreement.6
Defendants' Counsel's Certification
In opposition to plaintiff's motion to enforce the settlement agreement,
defendants relied on their counsel's certification. Defendants' counsel stated,
6 Plaintiff also sought an award of attorney's fees and costs. A-1611-19T3 10 "There is no question that [his] client[s] agreed to the overall settlement . . . for
$150,000[], payable with an initial payment of $100,000[], and then the payment
of $10,000[] per month thereafter for . . . five months." Defendants' counsel,
however, "did not realize" when the payment terms were first discussed that
plaintiff "expected instant payment of the settlement proceeds."7 Defendants'
counsel further explained that his clients had issues with the Default provision's
requirement that "even the smallest default [would] end up with the filing of a
judgment for the entire amount demanded in the [c]omplaint." Defendants'
counsel recalled that he requested that the settlement agreement "provide for a
short period in which . . . defendant[s] could cure any default."
Defendants' counsel further asserted his "client[s] did not sign off on the
[s]ettlement [a]greement that was drafted by [p]laintiff's counsel" and that "he
made the changes regarding the payments and then had [the agreement] hand
delivered" to plaintiff's counsel "with the first check of $50,000[]." Defendants'
counsel asserted that plaintiff "was free to refuse the changes [he] had made" to
the settlement agreement "and return the check," but instead plaintiff accepted
7 Counsel's certification refers to "defendant[s] expect[ing] instant payment of the settlement proceeds." In context, however, it is clear counsel intended to refer to plaintiff's expectations concerning the payment of the settlement proceeds. A-1611-19T3 11 the initial $50,000 payment, accepted the second $50,000 delivered "a few
weeks later, and then accepted the first monthly payment of $10,000[]."
Defendant's counsel averred that if "[p]laintiff did not agree to the slight
modification that [he] made" to the settlement agreement, "the checks should
have been rejected or returned."
Defendants' counsel represented that as of August 8, 2019, the date of his
certification, defendants had paid plaintiff $110,000 toward the $150,000
settlement. He requested that the court either order that defendants should pay
the remaining four $10,000 monthly payments or require that all the monies paid
be returned and the putative settlement be set aside.
The Court's Decision
The court heard argument on plaintiff's motion to enforce the settlement.
In a decision from the bench, the court found the agreement was signed on June
27, 2019. The court further found that although the agreement states $100,000
would be paid at the time of its execution, the payment requirements under the
agreement "were not clear" following the June 27 communications between
counsel. The court determined the agreement's requirement that $100,000 be
paid at the time of the agreement's execution was "modified or waived by the
parties, notwithstanding" the payment provision in the agreement. The court
A-1611-19T3 12 also found that the manner in which defendants paid the initial $100,000 did not
constitute a material breach of the parties' agreement.
The court entered an order denying plaintiff's motion. This appeal
followed.
II.
"A settlement agreement between parties to a lawsuit is a contract." Nolan
v. Lee Ho, 120 N.J. 465, 472 (1990). The construction and interpretation of a
settlement agreement is a matter of law and is subject to de novo review on
appeal. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div.
2009); see also Manahawkin Convalescent v. O'Neill, 217 N.J. 99, 115 (2014)
("When a trial court's decision turns on its construction of a contract, appellate
review of that determination is de novo."). We "give 'no special deference to
the trial court's interpretation and look at the contract with fresh eyes.'"
Manahawkin Convalescent, 217 N.J. at 115 (quoting Kieffer v. Best Buy, 205
N.J. 213, 222 (2011)). We apply that standard of review here.
"[T]he settlement of litigation ranks high in our public policy," and we
"strain to give effect to the terms of a settlement wherever possible. " Brundage
v. Estate of Carambio, 195 N.J. 575, 601 (2008) (citations omitted). "Our strong
policy of enforcing settlements is based upon 'the notion that the parties to a
A-1611-19T3 13 dispute are in the best position to determine how to resolve a contested matter
in a way which is least disadvantageous to everyone.'" Ibid. (citation omitted).
The interpretation of a settlement agreement is "governed by basic
contract principles." Capparelli v. Lopatin, 459 N.J. Super. 584, 603 (App. Div.
2019). "'[A]bsent a demonstration of "fraud or other compelling
circumstances,"' a court should enforce a settlement agreement as it would any
other contract." Id. at 603-04 (quoting Jennings v. Reed, 381 N.J. Super. 217,
227 (App. Div. 2005)). "'[C]ourts enforce contracts "based on the intent of the
parties, the express terms of the contract, surrounding circumstances and the
underlying purpose of the contract."' A reviewing court must consider
contractual language '"in the context of the circumstances" at the time of
drafting . . . .'" In re County of Atlantic, 230 N.J. 237, 254 (2017) (citations
omitted). "[W]hen 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." Capparelli, 459 N.J. Super. at 604 (quoting
Quinn v. Quinn, 225 N.J. 34, 45 (2016)). As with the interpretation of any other
contract, a court shall not rewrite a settlement agreement "to provide a better
bargain than contained in [the] [parties'] writing." Kaur, 405 N.J. Super. at 477
A-1611-19T3 14 (first alteration in original) (quoting Grow Co. v. Chokshi, 403 N.J. Super. 443,
464 (App. Div. 2008)).
Plaintiff argues the court erred by failing to enforce the plain language of
the written settlement agreement, which required that defendants pay $100,000
at the time of the execution of the agreement. The motion court rejected
plaintiff's reliance on the agreement's plain language, however, finding
defendants' obligation to pay $100,000 at the time of the execution of the
agreement was modified through the communications between, and actions of,
the parties' respective counsel.
"[I]n the absence of some vested derivative interest in another, a contract
may be modified . . . by . . . the contracting parties." DeAngelis v. Rose, 320
N.J. Super. 263, 280 (App. Div. 1999) (third alteration in original) (quoting
County of Morris v. Fauver, 153 N.J. 80, 95 (1998)). "A contract modification
is 'a change in one or more respects which introduces new elements into the
details of a contract and cancels others but leaves the general purpose and effect
undisturbed.'" Wells Reit II-80 Park Plaza, LLC v. Dir., Div. of Tax'n, 414 N.J.
Super. 453, 466 (App. Div. 2010) (quoting Int'l Bus. Lists, Inc. v. Am. Tel. &
Tel. Co., 147 F.3d 636, 641 (7th Cir.1998)). Modifications to a written contract
are not required to be made in writing. A contract "modification can be proved
A-1611-19T3 15 by an explicit agreement to modify, or . . . by the actions and conduct of the
parties, so long as the intention to modify is mutual and clear." County of
Morris, 153 N.J. at 99.
The motion court correctly recognized the certifications of the parties'
respective counsel suggest there was a modification of the written settlement
agreement's requirement that defendants pay $100,000 at the time of the
agreement's execution. Indeed, plaintiff's counsel acknowledges defendants'
counsel advised him defendants were only willing to pay an initial $50,000
during the week of June 25, 2019, and an additional $50,000 on August 1, 2019.
In addition, plaintiff's counsel subsequently informed defendants' counsel
plaintiff would accept an initial payment of $50,000 as long as the remaining
$50,000 was "in the mail."
In contrast, in his certification, defendants' counsel asserts he
"made . . . changes regarding the payments" under the settlement agreement and
"had [the agreement] hand delivered to the office of the [p]laintiff's attorney
with the first check of $50,000[]." Defendants' counsel further asserts plaintiff
was "free to refuse the changes" he made concerning the payments "and return
the check" but did not do so.
A-1611-19T3 16 In our view, counsels' certifications raise fact issues concerning whether
there was a modification of the written agreement's requirement that defendants
pay $100,000 upon their execution of the settlement agreement, and, if so, what
were the precise terms of the modification. Plaintiff's counsel's certification
indicates plaintiff agreed to an extension of the due date at least during the time
the second $50,000 was "in the mail," but plaintiff's counsel also acknowledges
defendants' counsel requested an extension until August 1, 2019. Defendants'
counsel asserts he made changes to the payment schedule for the initial
$100,000.
In any event, there are insufficient undisputed facts presented to permit a
finding there was a modification of the settlement agreement. Moreover, if there
was mutual agreement to modify the due date for the payment of the initial
$100,000, the record does not permit a determination as to the modified due
date. Resolution of those fact issues are essential to plaintiff's claimed
entitlement to a judgment in the amount of $241,565 under the Default provision
of the written agreement because any modification of the due date for the
payment of the initial $100,000 necessarily defines when any alleged default
occurred. Stated differently, if, as a matter of fact, the parties, through their
counsel, modified the agreement to extend the time for full payment of the initial
A-1611-19T3 17 $100,000, then defendants did not default until they failed to make the required
payment by the modified extended due date. See generally Amatuzzo v.
Kozmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997) (explaining when
settlement negotiations made by an attorney on behalf of a client are binding on
the client). Plaintiff's entitlement to a judgment in the amount of $241,565 must
then be determined based on whether plaintiff provided proper notice of the
default and afforded defendants the fifteen-day cure period.
Our opinion should not be interpreted as making any findings of fact
concerning the existence of a settlement agreement between the parties, the
terms of any purported settlement agreement, whether any purported settlement
agreement was modified, or any other facts pertinent to the parties' respective
positions. We conclude only that the motion court erred by making findings of
fact concerning the purported settlement agreement and its modification based
on the conflicting, and at times confusing, certifications presented. The record
was inadequate and otherwise presented issues of fact precluding the court from
properly making its findings without an evidentiary hearing. See, e.g., Conforti
v. Guliadis, 245 N.J. Super. 561, 565 (App. Div. 1991) (holding evidentiary
hearings are required when there are "contested issues of material fact on the
A-1611-19T3 18 basis of conflicting affidavits"), aff'd in part and modified in part on other
grounds, 128 N.J. 318 (1992).
We also observe that, even assuming the written settlement agreement
provided by plaintiff's counsel fully defined the parties' obligations and was not
otherwise modified, the record was inadequate to permit the granting of
plaintiff's enforcement motion. Entry of a $241,565 judgment under the Default
provision is permitted only following service of a notice of a default and
expiration of a fifteen-day cure period. We have no reason to question plaintiff's
counsel's representation that on July 2, 2019, he sent a letter to defendants'
counsel "regarding the default and demanding it be cured," but his certification
does not establish service of the notice in accordance with the requirements of
the Notices provision, and there is no evidence defendants' counsel received the
letter. Plaintiff bore the burden of establishing its right to relief under the
Default provision, but it failed to present competent evidence that defendants'
counsel was served with the notice of default and afforded the cure period
required by the Default and Notices provisions of the settlement agreement.
Additionally, the date defendants' counsel received the purported notice,
assuming the notice complied with the requirements of the Default and Notices
provisions, must be established to determine whether defendants' payment of the
A-1611-19T3 19 second $50,000 payment fell within the cure period. The record presented to
the motion court did not permit such a determination based on competent
evidence, and it thereby precluded any finding plaintiff was entitled to the
$241,565 judgment under the Default provision of the settlement agreement.
We also consider the court's determination that the alleged late delivery
of the second $50,000 payment did not constitute a material breach of the parties'
agreement. We observe that any agreement reached by the parties was for the
settlement of a claim, and the parties were free to make the timing of the
settlement payments a condition of plaintiff's acceptance of less than it
otherwise claimed it was entitled. The parties were similarly permitted to agree
that if the payments were not timely made, defendants would pay more. See
Columbia Presbyterian Anesthesiology v. Brock, 379 N.J. Super. 11, 15-17
(App. Div. 2005) (reversing a court's denial of a motion to enforce a settlement
agreement providing for entry of a stipulated judgment for the total amount of
damages claimed by plaintiff, where the defendant failed to make an agreed-
upon timely payment against an agreed-upon, and lower, settlement amount).
An agreement by the parties permitting entry of a $241,565 judgment following
a default, proper service of notice of the default, and expiration of the fifteen -
day cure period renders a default material, and it is not the court's role to rewrite
A-1611-19T3 20 an agreement to provide any party with more favorable settlement terms than
those to which it agreed. See Kaur, 405 N.J. Super. at 477.
In sum, we vacate the court's order denying plaintiff's motion to enforce
the settlement, and we remand for further proceedings. As noted, we make no
findings of fact, and nothing in our opinion shall be construed to limit the
arguments the parties may make in support of their respective positions or the
court's consideration of whatever issues are pertinent and necessary to resolve
plaintiff's claim it is entitled to entry of a $241,565 judgment against defendants
under the Default provision of the written settlement agreement.
Vacated and remanded for further proceedings. We do not retain
jurisdiction.
A-1611-19T3 21