771 F.Supp.3d 481
D.N.J.2025Background
- Plaintiffs, Centennial Plaza Prop, LLC and IMARC Properties, LLC, owned two units in a condominium; Defendant, Trane U.S. Inc., owned the other two.
- Plaintiffs claimed the Defendant violated their right of first refusal by selling its units to third parties without first offering to sell to Plaintiffs, based on terms from a 1985 Master Deed.
- The Master Deed of 1985 explicitly included a right of first refusal for unit owners.
- However, in 2001 and 2002, Article 17 of the Master Deed was amended and restated “in its entirety,” and the right of first refusal was omitted from both amendments.
- The Plaintiffs sued for breach of contract, breach of implied covenant of good faith and fair dealing, specific performance, and declaratory judgment.
- Defendant moved to dismiss the claims, arguing the right of first refusal no longer exists due to the amendments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of Right of First Refusal | Right of first refusal from 1985 Master Deed survives amendments; no later amendment expressly removed it. | 2001/2002 amendments amended and restated Article 17 in their entirety, omitting the right of first refusal, thus eliminating it. | The amendments fully superseded the 1985 right; no right of first refusal exists. |
| Breach of Contract | Defendant breached the Master Deed by failing to honor the right of first refusal. | No such right remained to be breached after 2001/2002 amendments. | No breach; claim dismissed. |
| Breach of Implied Covenant | Defendant’s conduct unfairly prevented Plaintiffs from exercising (now inexistent) right of first refusal. | Implied covenant cannot resurrect a right explicitly removed by contract amendment. | No plausible claim; no breach. |
| Specific Performance/Declaratory Judgment | Plaintiffs entitled to compel sale on right of first refusal terms. | No such enforceable right exists anymore. | No basis for relief; claims dismissed. |
Key Cases Cited
- Suburban Transfer Serv., Inc. v. Beech Holdings, Inc., 716 F.2d 220 (3d Cir. 1983) (contract construction is a question of law unless ambiguous)
- Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) (pleading standards under Rule 12(b)(6); court takes well-pleaded factual allegations as true)
- Goldfarb v. Solimine, 245 N.J. 326 (N.J. 2021) (elements of breach of contract under New Jersey law)
- Wade v. Kessler Inst., 172 N.J. 327 (N.J. 2002) (implied covenant of good faith and fair dealing)
- M.J. Paquet, Inc. v. N.J. Dep’t of Transp., 171 N.J. 378 (N.J. 2002) (contract ambiguity defined as reasonable alternative interpretations)
- Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210 (N.J. 2005) (standards for breach of implied covenant)