PER CURIAM.
This case arises from a dispute over a shopping center owned by Nelson's Corner Associates, L.L.C. (hereafter, Nelson's Corner Associates or the L.L.C.). Three members of the L.L.C., defendants Lauren J. Gardner Trust, David Gardner Trust, and Jamie I. Gardner Trust, appeal from the following trial court orders in favor of the remaining members, plaintiffs Martin Heller and Nelson's Corner Trust (the Allen Trust)
In 2004, plaintiffs and defendants entered into an Operating Agreement (Agreement) to form Nelson's Corner Associates, a limited liability company in which each party was a designated member. The purpose of the L.L.C. was to manage a shopping center in Hillsborough which Lawrence Gardner and Martin Heller had built decades earlier. By 2004, Gardner had transferred his interest in the shopping center to trusts for his three children. At the time the parties created the L.L.C., plaintiffs owned a combined 66 2/3% membership interest in the L.L.C., and each defendant owned an individual 11 1/9% membership interest or 33 1/3% collectively. Pursuant to the Agreement, defendants appointed Gardner as a designee to act on behalf of each defendant trust. Gerald D. Allen was appointed as the designee for the Nelson's Corner Trust (also known as the Allen Trust).
The Agreement contained a mechanism, known as a put offering notice, by which one or members could require the other members to buy out their shares. Under the terms of the Agreement, "upon receipt of the Put Offering Notice, the Responding Member shall be obligated to purchase the Membership Interest of the Initiating Member at the purchase price set forth in subsection (b) of this Section 6.03." The Agreement provided that "closing shall occur thirty-one (31) days following receipt of the Put Offering Notice."
The Agreement set the purchase price at "an amount equal to eighty percent (80%) of the `net fair market value' of the Company determined in accordance with Section 10 of this Agreement, multiplied by the Membership Interest of the Initiating Member." Section 10.01(b) provided that the "value of such interest in the Company shall be determined as follows: The Members shall jointly appoint two (2) appraisers, which appraisers shall then jointly determine the fair market value of the assets of the Company. All such appraisers shall be members of the American Institute of Real Estate Appraisers." The purchase price "shall be paid by promissory note of the Company in a sum equal to the purchase price and payable on a direct amortization basis over a twenty (20) year period, but to be due and payable ten (10) years from the date of closing," at an annual interest rate "no greater than" twelve percent nor "less than" eight percent.
Section 11.03 provided that, should a dispute arise between Members, "any Member may require arbitration of such dispute," but if the arbitration did not conclude in sixty days the Member had the option of filing a lawsuit instead. Under Section 11.04, "should any litigation be commenced between the parties hereto or their representatives or should any party institute any proceeding..., the party prevailing in such litigation shall be entitled to, in addition to such other relief as may be granted, to a reasonable sum as and for his attorneys' fees and court costs in such litigation."
On April 27, 2010, Gardner, on behalf of defendants, sent a letter which on its face served a put offering notice on "Nelson's Corner Associates, L.L.C., c/o The Heller Group," pursuant to Section 6.03 of the Agreement. The letter was delivered to Martin Heller, who was the president of the Heller Group and, under the terms of the Agreement, also served as the L.L.C.'s property managing member. Because the April 27, 2010 letter is central to this dispute, we quote it in full:
In a letter dated April 30, 2010, a law firm representing Heller and the Allen Trust
On May 12, 2010, defendants' counsel sent a letter rejecting the appraisers selected by plaintiffs as "unacceptable," without giving reasons why they were not acceptable and without proposing any alternate appraisers. Defendants' counsel also insisted that it was not yet necessary to select appraisers because the April 17 letter was not a put offer, and urged plaintiffs to engage in continued negotiations over the transfer of defendants' membership in the L.L.C. Plaintiffs' appraisers completed their report on May 31, 2010, valuing the L.L.C.'s net fair market value at $9,147,383.
On May 13, 2010, pursuant to Section 11.03 of the Agreement, plaintiffs commenced an arbitration proceeding by filing a statement of claim with the American Arbitration Association, seeking a declaration that the April 27, 2010 letter constituted a "Put Offering Notice," and a judgment compelling defendants to cooperate in the appraisal process and sell their membership interests in the L.L.C. However, on July 12, 2010, plaintiffs voluntarily dismissed the arbitration pursuant to Section 11.02 of the Agreement, because the matter had not been resolved within sixty days. Instead, they filed a Law Division complaint against defendants seeking, in relevant part, a declaratory judgment that the April 27 letter constituted a valid and enforceable put offering notice or in the alternative claiming that defendants breached the Agreement by refusing to cooperate in the appointment of appraisers. Defendants filed an answer and counterclaim seeking an accounting of the L.L.C., demanding that Heller be replaced as the L.L.C.'s property manager, and seeking a declaratory judgment that the April 27 letter was not a put offering notice.
Following limited discovery, plaintiffs filed a motion for partial summary judgment concerning the validity of the put offer notice and the appraisal.
Gardner's certification was significant for what it said and what it did not say. He described two conversations with Heller. In the first, "in or about late April 2010," Gardner "explained to Heller that while the Gardner trusts would be interested in selling their interest in Nelson's Corner [L.L.C.], they had no intention of following the specific mechanisms and restrictions set forth in the Operating Agreement for a `put offering' sale." Obviously, by his own admission, Gardner was well aware of the put offering clause of the Agreement and how it worked.
According to Gardner, after a few days he again spoke with Heller, who told him that Gerald Allen, the representative of the Allen Trust, was "not returning his calls." Heller suggested to Gardner that Gardner "write a strong letter to prompt discussions of a potential buy out of the Gardner trusts' interest in Nelson's Corner." In his certification, Gardner asserted that, after that conversation with Heller, he "wrote the April 27, 2010 letter to Heller, which he requested, and referred to the `put offering' under Section 6... for the purpose of acting as a stimulus to get all of the members to discuss and explore a potential buy out transaction." According to Gardner, before he wrote the letter, he and Heller agreed "that the members would not proceed with a put offering transaction pursuant to the terms contained in Section 6.03 of the Operating Agreement." However, contrary to those assertions in Gardner's certification, his April 27 letter did not merely "refer" to the possibility that he would make a put offer in the future if the matter were not otherwise resolved. Instead, the letter unequivocally stated that he was making a put offer.
Solely for purposes of the summary judgment motion, plaintiffs admitted that Heller and Gardner had the conversations described in Gardner's certification. However, they contended that those facts were not material, because after those conversations, Gardner sent a letter that on its face explicitly made a put offer, rather than merely referring to the possibility that he would make such an offer in the future. They also argued there was no evidence that Heller ever told Gardner to actually make a put offer or that he told Gardner that if he made such an offer Heller would refrain from accepting it.
During oral argument of the partial summary judgment motion, counsel for both sides agreed that Gardner and Heller were highly experienced businessmen, and that Gardner in particular had "40 years of experience" in the real estate field. Defendant's counsel agreed that both men were "sophisticated in the... transaction area."
Immediately after hearing oral argument, Judge Hansbury placed an opinion on the record explaining his reasons for enforcing the April 27 letter as a put offer under section 6.03 of the Agreement and for concluding that the offer was properly served on plaintiffs:
On December 17, 2010, the judge entered an order declaring that the April 27, 2010 letter constituted a "Put Offering Notice" in accordance with Section 6.03 of the Agreement; and ordering "that defendants shall forthwith engage in the procedures contained in Section 6.03 of the Operating Agreement to finalize the sale of defendants' entire membership interest in Nelson's Corner Associates, L.L.C." Immediately thereafter, on December 22, 2010, plaintiffs' counsel sent defendants a letter notifying them that plaintiffs intended to rely upon the May 31, 2010 appraisal to calculate the purchase price and scheduling the closing for January 21, 2011.
On December 30, 2010, defendants filed a motion for reconsideration, which the judge denied. In the course of denying the motion, he declined to consider a new expert report defendants submitted critiquing plaintiffs' appraisal reports. Notably, while defendants' report criticized the approach used by plaintiffs' appraisers, the report did not state that the May 31, 2010 appraisal placed an incorrect value on the L.L.C.; nor did the report offer an alternate valuation number.
The judge found that defendants had unreasonably failed to respond to plaintiffs' repeated requests that they cooperate with the appraisal process. He also found that defendants could have submitted the expert report with their original motion papers and it was improper to attempt to supplement the record by filing a reconsideration motion. The judge entered an order dated February 16, 2011 denying defendants' application for a stay of the closing, deeming fair market value to have been determined by the May 31, 2010 appraisal, and ordering the closing to take place on or before March 21, 2011. Thereafter, the transaction closed and defendants transferred their shares in the L.L.C. to plaintiffs.
Pursuant to the Agreement, which permitted the winning party in a dispute under the Agreement to collect counsel fees from the losing party, plaintiffs' counsel submitted a fee application seeking approximately $221,000. The application included proof of the reasonableness of the firm's hourly rates as compared to other firms, together with voluminous and detailed billing records. Defendants submitted opposition, objecting to the fees for the initial arbitration and for the closing costs, a separate fee claim for Mr. Allan's personal counsel which defendants claimed was duplicative of work done by plaintiffs' primary law firm, redactions to certain invoices, and fees for other hours claimed to be excessive or duplicative. They also challenged the hourly rate being charged and the award of fees for defending against an interlocutory appeal.
In a detailed oral opinion placed on the record on September 23, 2011, Judge Hansbury found that the hourly rate charged was reasonable and it was appropriate for the trial court to award fees for the interlocutory appeal. However, he reduced the overall requested fee award considerably. He denied the almost $16,000 fee application for the arbitration, because the Agreement did not permit fees for arbitration; he denied the $12,000 in fees for the closing, because it would have occurred even without the litigation; he denied the fee request of about $7000 for Mr. Allen's separate counsel; and he reduced the requested court costs. After considering the value and quality of the services rendered, the outcome achieved, the difficulty of the litigation, and other applicable factors, the judge awarded a total of $150,000, which was about $70,000 less than plaintiffs requested.
On this appeal, defendants argue that the trial court erred in granting partial summary judgment on the issue of whether the April 27 letter constituted a put offering; that the trial court erred in requiring the parties to use plaintiffs' appraisal report in establishing valuation; and that the fee award was excessive.
Having thoroughly reviewed the record in light of the applicable law, we conclude that the "put offer" issue was ripe for summary judgment, and judgment on that issue was properly granted in plaintiffs' favor; the trial judge did not abuse his discretion in declining to grant reconsideration and in declining to consider defendants' untimely submission on the appraisal issue; and the trial judge did not abuse his discretion in arriving at a fee award. Defendants' arguments to the contrary are completely without merit and, except as addressed below, they do not warrant further discussion.
Our review of the trial court's grant of summary judgment is de novo, following the same standard employed by the trial judge.
In this case, we agree with Judge Hansbury that there was nothing ambiguous about Gardner's April 27 letter.
We acknowledge that parol evidence is admissible in construing a contract, not to change the contract's unambiguous terms, but to put the words in context.
Applying those principles to the parol evidence in this case, Gardner's certification was not sufficient to warrant disregarding the clear language of his letter. There was no evidence of fraud. As noted earlier, Gardner never attested that Heller told him to made a put offer, or that Heller promised him that any put offer he made would be disregarded.
The remainder of his letter — discussing ways by which the parties might avoid the expense of an appraisal, which Gardner obviously knew the Agreement required as part of the buy-out process, and ways in which the Gardner trusts might mitigate some of the tax implications of a buy-out — did not contradict the legal force and effect of his put offer. Nowhere in his letter did he say that the put offer was conditioned on the parties avoiding an appraisal or that it should be considered withdrawn if that condition could not be met. Nor did he state that the put offer would be withdrawn if the Gardner trusts were dissatisfied with the tax consequences of a buy-out. If Gardner secretly intended to send a put offer which he could later enforce or repudiate at his option, the plain language of his letter was inadequate to permit him to do so, and plaintiffs were not bound by his unexpressed intentions.
We likewise find no merit in defendants' claim that the judge deprived them of the opportunity to participate in selecting the appraisers. We agree with Judge Hansbury that defendants waived that opportunity.
We find no abuse of the trial court's discretion in declining to consider defendants' expert report, which was improperly filed for the first time on their motion for reconsideration.
Finally, on this record we find no basis to depart from our usual deference to a trial judge's decision on a motion for counsel fees. "`[F]ee determinations by trial courts will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion.'"
Affirmed.
