Settlement agreements need to "actually be agreed upon," is the message that the New Jersey Appellate Division imparted to one frum couple in their quest to purchase a new home in Toms River.
In June 2020, the frum couple entered into an agreement with North Maple Associates, LLC and PR-1-MA Builders, Inc. for construction of a single-family home in Toms River. North Maple owned the land and PR-1-MA was the builder.
The purchase price of $999,500 was to be paid according to the following payment schedule: $5,000 paid prior to signing the purchase contract, $94,950 upon signing, and $99,950 ninety days after signing with the balance of $799,600.00 due at closing.
The couple made the $5,000 deposit in June 2020 and the $94,950.00 deposit in July 2020. However, they failed to make the payment for the $99,950 deposit due on October 11, 2020 (ninety days after signing).
Construction on the home began in October 2020.
Prior to commencement of construction of the home, and during the construction process, the couple ordered a number of upgrades and expansions to the home, with a stipulation of a payment schedule for these upgrades.
Prima began to send weekly requests for the payment of the outstanding invoices. After the couple failed to respond to these requests, they halted construction of the home.
On May 28, 2021, after payment was still not submitted, Michael B. York the contractors' counsel, warned the couple's counsel, Larry Loigman of the "significant breach of the terms and conditions of the contract" - and the overdue balance of $442,039.50 (which included the $99,950 deposit due as well as the total amount for the all the extras the couple had added on).
Mr. York further advised that the house would be listed for sale on June 1, 2021.
At that point, Mr. Loigman replied, "the parties were in talks to cure and reinstate the contract," and plaintiffs "advised that they would send $350,000 to the seller next week." Mr. York responded, "that was not accurate. Your clients had made repeated promises, none of which have been kept." Mr. York reiterated "the house would be on the market on Tuesday."
In June 2021, the couple requested a return of their deposit monies. The contractors refused, saying that the costs of construction incurred exceeded the deposit.
Subsequently, the couple filed a lawsuit in the Chancery Division seeking specific performance of the real estate contract, and other relief. Additionally, they recorded a notice of lis pendens on the home.
A highlight of their claim is that they alleged that the parties the parties had a settlement agreement that the court should enforce.
In support of this claim, they presented a voicemail message left by Mr. York that stated, "I think we can actually settle, and we'll just sell to your client. Just give me a call when you get a chance, and we'll see if that works. And I figure we'll just close in 30 days." Mr. Loigman stated that he returned the call that afternoon and Mr. York represented that the contractors were still willing to settle and sell at the contract price.
Additionally, in a January 18, 2022 email, Mr. York reiterated the contractors' willingness to settle.
The trial judge rejected Mr. Loigman's argument that the parties agreed to a settlement.
Relying on well-established contract principles, the judge concluded there was no settlement agreement. The judge further concluded "the exchange between the parties was really nothing more than an invitation to begin settlement negotiations and to talk about how they would proceed to closing." The judge found there was no: agreement to "essential terms," "unambiguous offer," or "unambiguous acceptance," and thus, no agreement to settle.
The judge also ruled in favor of the contractors, saying that they had the right to terminate the contract for unpaid bills. The judge further directed the couple to remove the notice of lis pendens.
The couple brought their case up to the Appellate Division, contending that the trial court erred in denying enforcement of the settlement agreement.
Judges Currier and Bishop-Thompson were not persuaded.
A settlement agreement, like a contract, requires an offer and acceptance by the parties, and it "must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan.
A legally enforceable contract "requires mutual assent, a meeting of the minds based on a common understanding of the contract terms." Morgan v. Sanford Brown.
"Plaintiffs' contentions are misplaced and unconvincing. Plaintiffs rely on a voicemail left by defense counsel, who stated, "I think we can actually settle, and we'll just sell to your client. Just give me a call when you get a chance, and we'll see if that works." The message was not a firm offer to settle the contract dispute. In addition, there was no unconditional acceptance by plaintiffs.
"The emails between counsel demonstrate the parties never reached a final settlement agreement. The emails also establish there was no meeting of the minds as to the essential terms for payment or an unambiguous offer and unambiguous acceptance of settlement regarding the outstanding balance.
"Moreover, defense counsel refuted in an email plaintiffs' counsel's inaccurate representation that the parties were "in talks" and $350,000 would be sent the following week and further noted plaintiffs' "repeated promises" to pay had not been kept. Defense counsel unequivocally stated the house would be listed for sale. Plaintiffs have not demonstrated the parties reached a settlement. Therefore, we find no reason to disturb the judge's ruling denying plaintiffs' motion to enforce a settlement," the court concluded.
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