COLE, SCHOTZ, MEISEL,

FORMAN & LEONARD, P.A.

A Professional Corporation
Court Plaza North
25 Main Street
P.O. Box 800
Hackensack, New Jersey 07602-0800
201-489-3 000
201-489-1536 Facsimile
Attorneys for Defendants, Lehigh Acquisition Corp.
and Yorkville Advisors, LLC
WOODMONT PROPERTIES, LLC,
Plaintiff,
v.
LEHIGH ACQUISITIONS CORP. and
YORKVILLE ADVISORS, LLC
Defendants.
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION: UNION COUNTY
DOCKET NO. UNN-C-15-11
Civil Action
REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS'
MOTION TO DISMISS PLAINTIFF'S COMPLAINT FOR FAILURE TO STATE A
CLAIM UPON WHICH RELIEF CAN BE GRANTED
Of Counsel and On the Brief:
Steven R. Klein, Esq.
On the Brief:
Neoma M. Ayala, Esq.
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TABLE OF CONTENTS
TABLE OF AUTHORITiES .......................................................................................................... ii
PRELIMINARY STATEMENT .................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................. 4
LEGAL ARGUMENT .................................................................................................................... 5
I. THIS COURT SHOULD GRANT THE LEHIGH ENTITIES' MOTION
TO DISMISS PLAINTIFF'S CLAIM FOR BREACH OF
CONTRACT /SPECIFIC PERFORMANCE .......................................................... 5
A. The LOI Expired According To Its Own Terms And No Cause Of
Action For Breach Of Contract Exists ........................................................ 5
B. Plaintiff Is Not Entitled To Specific Performance Of The LOI or
The Purchase And Sale Agreement Which Was Never Executed .............. 9
II. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S
CLAIM FOR BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING SHOULD ALSO BE GRANTED ............................................ 10
III. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S
PROMISSORY ESTOPPEL CLAIM MUST ALSO BE GRANTED ................. 12
IV. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S
FRAUD CLAIM MUST BE GRANTED BECAUSE FRAUD HAS NOT
BEEN PLEAD WITH THE REQUISITE PARTICULARITY AND NO
CLAIM FOR FRAUDULENT INDUCEMENT HAS BEEN PLED .................. 13
V. PLAINTIFF HAS FAILED TO ALLEGE A CAUSE OF ACTION FOR
UNJUST ENRICHMENT AND THIS COUNT TOO MUST BE
DISMISSED ......................................................................................................... 15
CONCLUSION: .......................................................................... h ............................................... 17
48687 /0003-7721884v5
TABLE OF AUTHORITIES
Page(s)
CASES
. Ballantyne House Assocs. v. City ofNewark, 269 N.J. Super. 322 (App. Div. 1993) ................... 9
Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N.J. Super. 565 (App. Div. 1954) ............. 8
Craig v. Suburban Cablevision, Inc., 274 N.J. Super. 303 (App. Div. 1994) ................................ 10
I ~
Evangelista v. Pub. Serv. Coordinated Transp., 7 N.J. Super. 164 (App. Div. 1950) .................. .13
Faces, Inc. v. Kennedy, 185 N.J. Super. 113,124 (Law Div. 1981), affd, 185 N.J. Super.
77 (App. Div. 1982) ................................................................................................................. 13
Henderson v. The Hertz Corp., 2005 WL 4127090 (N.J. Super. App. Div.) (June 22,
2006) ........................................................................................................................................ 10
Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105 (App. Div. 2009) ................................... 14
Levinson v. D' Alfonso & Stein, 320N.J. Super. 312 (App. Div. 1999) ...................................... 13
Marioni v. 94 Broadway, Inc., 374 N.J. Super 588 (App. Div. 2005) ....................................... 9, 10
Masseyv. Trump's Castle Hotel & Casino, 828 F.Supp. 314 (D.N.J. 1993) ................................ 15
McBarron v. Kipling Woods, LLC, 365 N.J. Super. 114 (App. Div. 2004) .................................... 7
Morris v. Jersey Cent. Power & Light Co., 118 N.J. Eg. 541 (Ch. Div. 1935) ............................. 15
Triffin v. Automatic Data Processing, Inc., 394 N.J. Super. 237,246 (App. Div. 2007) .............. 14
RULES
R. 4:5-8 .................................................................................................................................... 13, 17
R. 4:6-2(e) ...................................................................................................................................... 17
11
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PRELIMINARY STATEMENT
This Reply Memorandum of Law is submitted on behalf of Defendants, Lehigh
Acquisition Corp. ("Lehigh") and Yorkville Advisors, LLC ("Yorkville") (collectively Lehigh
and Yorkville are the "Lehigh Entities"), in further support of their motion, in lieu of an Answer,
to dismiss the Complaint of Woodmont Properties, LLC ("Plaintiff' or "Woodmont"), for failure
t
to state a claim upon which relief can be granted and for failure to plead fraud with the requisite
specificity. Cognizant of the applicable standard on a motion to dismiss, the Lehigh Entities
submit the Complaint utterly fails to set forth viable claims principally because all of Plaintiffs
alleged claims have merged into and/or are superseded by the parties' November 30, 2010 Letter
of Intent (the "LOI"), which LOI terminated when a formal Purchase Agreement was not
executed within twenty-five (25) days. The parties expressly agreed, in that event, "neither party
shall have any further obligation to the other party."
Plaintiffs opposition brief ignores the critical fact (plead by Plaintiff) that the LOI
resolved any differences between the parties up to the execution of the LOI. As set forth in
Paragraphs 27 and 28 of Plaintiffs Complaint, Plaintiff specifically acknowledges that:
27. After negotiations with the broker, the resolution of the
dispute with Defendants and Woodmont culminated in a Letter of
Intent.
28. The Letter of Intent constitutes an accord and satisfaction
of Woodmont' s claims against Defendants for breach of the
agreement to make Woodmont their joint venture partner.
(Pl. Cmplt ~ ~ 2 7 , 28.) Despite these admissions, the focus of Plaintiff's opposition is upon acts
allegedly committed prior to the execution of the LOI. Plaintiff's contract and tort claims fail
when viewed through this lens because these alleged claims have merged into and/or are
superseded by Plaintiff's claims under the LOI. Plaintiff cannot rely on those actions and/or
48687/0003-7721884v5
representations concerning the joint venture to hold the Lehigh Entities liable under its various
contract and tort claims.
When the Court focuses on the operative contract here, the LOI, it must find, as a matter
of law, that any claims thereunder fail. That is because, according to the undisputed facts in the
Complaint and/or documents and conversations referenced therein, the parties were negotiating
.. !
in good faith to execute a Purchase Agreement as they agreed to do in the LOI, but did not
execute a Purchase Agreement within the timeframe set by the parties in the LOI. The LOI then
expired according to its own terms with no extension having been agreed upon by the parties.
1
Given the expiration of the LOI and the pronouncement therein that the parties would have no
further obligation to one another, there is currently no binding contractual obligation for Lehigh
to sell the Property to Plaintiff, and therefore no such duty can be specifically enforced by this
Court. Likewise, without a contract between the parties, there can be no breach.
Moreover, Plaintiffs allegation that the Lehigh Entities acted in bad faith by delaying
execution of the Purchase Agreement is belied by the limited evidence this Court may consider
on this motion. The Certification of Steven R. Klein, Esq., (the "Klein Cert."), specifically
Exhibits B, D and E, show that as a matter of law, Lehigh was negotiating with Plaintiff in good
faith. Additionally, by Plaintiffs own admissions there were numerous telephone calls and
emails back and forth between the parties that show Lehigh's manifest good faith with respect to
the Purchase Agreement. Given these inescapable facts, the Lehigh Entities' Motion to Dismiss
1
The Court does not need to reach or consider Plaintiffs allegation concerning the Lehigh
Entities' purported failure to provide due diligence documents to Plaintiff. The LOI specifically provides
for a fifty-five (55) day due diligence period. Thus, when the LOI terminated according to its own terms,
after 25 days, the parties were in the middle of the due diligence exchange under the LOI and additional
documentation could and/or would have been provided if the obligations under the LOI were
subsequently succeeded by a Purchase Agreement.
2
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Plaintiffs Complaint as to the count for breach of the covenant of good faith and fair dealing
should also be granted.
The Lehigh Entities' motion to dismiss should also be granted as to Plaintiffs fraud
'
claim. For the first time in its opposition papers, Plaintiff Cl!gues a new claim framed as
"fraudulent inducement of the LOI" --which does not appear in the Complaint. Plaintiffs new
claim for inducement is totally inconsistent with its claim for specific performance.
The remedy for its claim for fraudulent inducement of the LOI would be rescission, which makes
little sense in light of its claim for specific performance. Essentially, Plaintiff is contending it
was induced by fraud to enter a LOI that it wishes to specifically enforce. Plaintiff cannot
maintain such inconsistent positions.
Given the foregoing, even when all the facts in Plaintiffs Complaint are taken as true,
Plaintiff cannot sustain any viable claims against the Lehigh Entities, particularly Yorkville, and
the Complaint in its entirety must, as a matter of law, be dismissed. While Plaintiff may have
been displeased that a real estate deal never came to fruition, its revenge claims allege no basis
whatsoever upon which to attach any contract and/or tort liability against the Lehigh Entities.
For all the reasons set forth above and in the moving papers, and those discussed more
fully in detail below, the Lehigh Entities respectfully submit that the Court should dismiss
Plaintiffs Complaint in its entirety, with prejudice, for failure to state a claim upon which relief
may be granted.
3
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STATEMENT OF FACTS
A full recitation of the facts mandating a grant of the Lehigh Entities' Motion to Dismiss
is set forth in detail in the "Memorandum of Law in Support of Defendants' Motion to Dismiss
Plaintiffs Complaint for Failure to State a Claim Upon Which Relief Can be Granted" (the
"Motion to Dismiss"), and is incorporated by reference herein. Unless otherwise stated, all
capitalized terms used herein shall have the same meaning ascribed to them in the Motion to
Dismiss. The facts set forth in Plaintiffs opposition brief do not change this result, but rather
further serve to support the granting of the Motion to Dismiss.
4
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LEGAL ARGUMENT
I. THIS COURT SHOULD GRANT THE LEHIGH ENTITIES'
MOTION TO DISMISS PLAINTIFF'S CLAIM FOR
BREACH OF CONTRACT/SPECIFIC PERFORMANCE.
2
Simply put, Plaintiffs first count for breach of contract/specific performance should be
dismissed with prejudice because the allegations in support of this count are based on acts
committed prior to the execution of the LOI. By
1
Plaintiffs own allegation in the Complaint, the
LOI was an "accord and satisfaction ofWoodmont's claims against Defendants for breach of the
agreement to make Woodmont their joint venture partner." (Pl. Cmplt ~ 2 8 . ) Under the only
operative contract, the LOI, Plaintiffs claims must fail as a matter of law because the LOI
expired after twenty-five (25) days elapsed without execution of a Purchase Agreement.
Obviously, where there is no underlying enforceable agreement-there can be no claim for
specific performance or breach of contract. Accordingly, the Lehigh Entities' motion to dismiss
Plaintiffs first count for breach of contract/specific performance should be granted.
A. The LOI Expired According To Its Own Terms And No
Cause Of Action For Breach Of Contract Exists.
Lehigh cannot be held liable under a breach of contract theory because the LOI was not
breached, but rather expired according to its own clear and definitive terms. The LOI expressly
provided as follows:
2
Plaintiff's Complaint does not seek to hold Yorkville liable for breach of contract. However,
footnote 7 of Plaintiff's Opposition Brief suggests that Y arkville was actively involved in the negotiation
of the Purchase Agreement. This conclusion by Plaintiff has no basis in fact and appears to be premised
upon the fact that the emails attached to the Klein Cert. from Mr. Gardner have a signature block that
denotes he is a "Yorkville" employee (which is understandable given the relationship between Y arkville
and Lehigh). There is nothing in the substance of the emails which suggests that Y arkville was a party to
the negotiations or was intended to be a third-party beneficiary of the LOI and/or the Purchase and Sale
Agreement. Moreover, there is nothing in the emails that would impute liability to Yorkville or suggests
that the corporate veil should be pierced. Given these facts, at a minimum Yorkville should be dismissed
from this case.
5
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The Parties recognize and understand that a formal Purchase
Agreement is intended to be drafted and executed within twenty-
five (25) days from the date this Letter of Intent is fully executed.
If a binding Purchase Agreement has not been executed within
twenty-five (25) days, neither party shall have any further
obligation to the other party.
Klein Cert. Exhibit A (emphasis added).
Contrary to Plaintiff's protestations, the record evidence shows that the parties were
' I
negotiating in good faith to execute a Purchase Agreement, but were ultimately unable to agree
on the material terms. Plaintiff's bald allegation that the parties agreed on the material terms of
the Purchase Agreement, creating a binding contractual obligation, is directly contradicted by the
documents attached to the Klein Cert. and explicitly referenced in Plaintiff's Complaint.
Specifically, Exhibit B to the Klein Cert., a November 15,2010 email from William
Gardner, Esq., Senior Counsel to Yorkville, states that "[t]he Purchase and Sale Agreement does
not accurately incorporate the terms and conditions set forth in the LOI." Klein Cert., Exhibit B.
The email then proceeds to detail the material issues that need to be addressed before the
Purchase and Sale Agreement is acceptable to Lehigh. See Klein Cert., Exhibit B. Likewise,
Exhibit E to the Klein Cert., another email from Mr. Gardner dated November 24, 2010, also
expresses Lehigh's disagreement with certain material terms in the draft Purchase and Sale
Agreement. The email provides, in pertinent part, "[w]e have not yet provided written comments
[to the Purchase and Sale Agreement] because the drafts circulated by Woodmont contain terms
and conditions that differ materially from the terms and conditions sets forth in the LOI. We
have had several calls to discuss these differences." Klein Cert., Exhibit E (emphasis added). As
the foregoing correspondence indicates, there were differences on the material terms of the
Purchase Agreement, and thus there was no meeting of the minds as contended by Plaintiff.
6
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Additionally, the LOI was never extended by joint agreement of the parties despite
Plaintiff's wishful to the contrary.
3
This allegation is directly contradicted by Exhibit
F to the Klein Cert., which further supports granting the Lehigh Entities' motion to dismiss the
count for breach of contract. Exhibit F to the Klein Cert., an email from StephenSantola of
Woodmont dated December 3, 2010, states that "[p ]lease recall Amir has not yet agreed to an
extension to the 25 day deadline." Klein Cert., Exhibit F. Thus, Plaintiff's own
representative confirms as of December 3, 2010 (more than 25 days after the LOI was executed)
that there was no joint extension of the LOI. Thus, Lehigh's termination thereafter was in
conformity with the terms of the LOI.
As plainly seen, the LOI, subsequent disagreement on the material terms ofthe Purchase
Agreement and lack of extension, as reflected in the exhibits attached to the Klein Cert.,
demonstrate unequivocally the LOI expired thereby relieving the parties of any obligation to
each other.
Plaintiff notes in its opposition briefthat "whether a preliminary agreement such as a
letter of intent is binding is a matter of the parties intent." (Pl. Br. p. 14) Plaintiff's reliance on
the case ofMcBarron v. Kipling Woods, LLC, 365 N.J. Super. 114 (App. Div. 2004), however,
is misplaced as applied here. In McBarron, the Court was confronted with the issue of whether
two parties had entered into an oral contract for the sale of real property and whether defendant's
motion for summary judgment was properly granted. I d. at 115. The Appellate Division there
noted that based on the facts shown in the attorney's certification and the course of dealing
between the two parties, it could be found that the parties entered into .an oral contract which was
not dependent upon a later written document. Id. at 119. The situation here, however, is patently
3
Surely if Plaintiff had written proof of an extension of time in which to execute a Purchase and
Sale Agreement, it would have been attached to its Complaint and/or opposition brief.
7
48687/0003-7721 884v5
distinguishable because the parties had already entered into a LOI, a written contract, that clearly
and unambiguously identified the parties' rights and responsibilities. Moreover, the LOI
carefully spelled out that neither party was bound until a formal Purchase Agreement was
executed and the parties would be relieved of all obligations if such an agreement was not signed
within twenty-five (25) days. These provisions were negotiated for months. Thus, there was no
oral contrCJ.ct in this case that can or should be binding on the parties.
Additionally, here the parties' specific intent, as evidenced by the unambiguous language
of the LOI, was that the parties would enter a formal Purchase Agreement to govern their further
relationship and the sale of the Property. The LOI was meant to be non-binding as a conveyance
document, as clearly indicated in the body of the document. Discovery in this case will do
nothing to support Plaintiffs flawed basis for seeking to impose contractual liability on Lehigh.
The fact that the parties agreed on some, but not all of the material terms to be incorporated in
the Purchase Agreement should not make Lehigh liable on a breach of contract claim to Plaintiff.
The plain and simple facts at hand demonstrate the LOI expired according to its own terms, and
the Purchase and Sale Agreement had not yet been executed.
4
Given the foregoing, Lehigh has no contractual liability to Plaintiff and the Lehigh
Entities' motion to dismiss Plaintiffs count for breach of contract must be granted.
4
Contrary to Plaintiffs assertions, the Lehigh Entities do not relyon their own refusal to execute
the Purchase Agreement to escape liability for their purported contractual obligations. Plaintiff relies on
the case of Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N.J. Super. 565, 577 (App. Div. 1954)
for the principle that the promisor cannot rely upon his own breach to escape his contractual obligations.
However, the facts in (:oastal Oil Co. are easily distinguishable frorri the facts in this case. In Coastal Oil
Co., the issue before the Court was whether defendant had fraudulently represented that it was a citizen of
the United States at the time it entered a contract with plaintiff and whether defendant made it impossible
for certain conditions under the contract to be fulfilled by virtue of its own actions. I d. The situation here
is inapposite because Lehigh and Plaintiff were attempting to negotiate the terms of the Purchase
Agreement. Lehigh subsequently refused to execute the formal agreement because all the material terms
in the LOI and the additional material terms the parties had agreed to had not been incorporated therein
and thus there was no complete meeting of the minds. Therefore, unlike the defendant in Coastal Oil Co.,
Lehigh did not cause the LOI to expire according to its own terms.
8
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B. Plaintiff Is Not Entitled To Specific Performance Of
The LOI or The Purchase And Sale Agreement Which
Was Never Executed.
The Lehigh Entities' motion to dismiss as to Plaintiffs breach of contract/specific
'
performance claim should also be granted because Plaintiff fails to offer any justification for its
alleged entitlement to the remedy of specific performance to compel a sale of the Property.
Plaintiffs opposition papers presume that specific performance is appropriate in all cases
where the sale of real property is at issue. However, Plaintifffails to recognize that "[s]pecific
performance is not an automatic remedy for a breach of contract .... " Ballantyne House Assocs.
v. City ofNewark, 269 N.J. Super. 322, 334 (App. Div. 1993). In order to establish a right to
specific performance "a plaintiff must demonstrate that the contract in question is valid and
enforceable at law" and "that the terms of the contract are expressed in such fashion that the
Court can determine, with reasonable certainty the duties of each party and the conditions under
which performance is due." Mariani v. 94 Broadway, Inc., 374 N.J. Super 588, 598-99 (App.
Div. 2005) (internal citations omitted).
Here, Plaintiff cannot succeed on its claim for specific performance because there is no
underlying contractual obligation upon which specific performance can or should be premised.
The LOI embodied the then complete agreement between the parties and terminated according to
its own terms. Specific performance is not an available remedy for Lehigh's alleged breach of
the LOI. The LOI, the only operative signed contract between Lehigh and Plaintiff, was a non-
binding term sheet that offered terms and conditions under which Lehigh would sell the Property
!fthe terms provided for in the LOI were met. As the Complaint, LOI and related documents
confirm, the LOI terminated according to its own terms. Thus there is no underlying contractual
obligation that could be breached and/or upon which specific performance can or should be
9
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granted by this Court. Lehigh cannot be held to the terms of a bargain that expired according to
its own language before complete performance was achieved.
Likewise, Lehigh cannot be ordered to specifically perform a Purchase Agreement that
did not materialize. As aforesaid, in order to be entitled to specific performance, "a plaintiff
must demonstrate that the contract in question is valid and enforceable at law .... " Marioni v. 94
Broadway, Inc!, 374 N.J. Super 588, 598-99 (App. Div. 2005) (intemal'Citations omitted).
Plaintiff cannot make that showing in this case because the Purchase Agreement was never
consummated as there were open material terms and thus no binding obligation to sell the
Property ever arose.
Given the foregoing, Plaintiffs claim for breach of contract/specific performance as
against Lehigh must be dismissed.
II. THE LEHIGH ENTITIES' MOTION TO DISMISS
PLAINTIFF'S CLAIM FOR BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING SHOULD ALSO
BE GRANTED.
The Lehigh Entities' motion to dismiss the second count of Plaintiffs Complaint alleging
breach of the covenant of good faith and fair dealing should also be granted. The objective
evidence, as well as Plaintiff's own admissions, belie any allegation that Lehigh acted in bad
faith. Plaintiffs assertion that it is improper to dismiss this count is simply unsupported by
relevant case law and the facts at hand. See generally Craig v. Suburban Cablevision, Inc., 274
N.J. Super. 303, 314 (App. Div. 1994) (affirming dismissal of claim for breach of the implied
covenant of good faith and fair dealing.); Henderson v. The Hertz Corp., 2005 WL 4127090 *10
(N.J. Super. App. Div.) (June 22, 2006) (finding that as a matter oflaw plaintiffs claim failed to
set forth claim for breach of the covenant of good faith and fair dealing, as well as other claims,
and trial court properly granted defendant's motion to dismiss).
10
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Plaintiff states the correct legal standard on its claim for breach of the covenant of good
faith and fair dealing, but wrongfully applies the law to the facts of this case. Contrary to
Plaintiffs allegation that Lehigh acted in bad faith, the exhibits to the Klein Cert., as well as
Plaintiffs own statements, confirm that Lehigh was negotiating in good faith to solidify the
terms of the Purchase Agreement. In its opposition papers, Plaintiff makes reference to the
"numerous phone conversation's referenced in plaintiffs complaint. ... " (Pl. Br. p. 20.)
1
This
corroborates the emails demonstrating that Lehigh and Plaintiff were engaged in an active
dialogue concerning the negotiation of the Purchase Agreement. It is therefore manifest under
these circumstances that the Lehigh Entities were proceeding in good faith.
Exhibits B, D and E to the Klein Cert. show beyond question that there were ongoing
negotiations between the parties concerning the Purchase Agreement. By way of example only,
the November 24, 2010 email from Mr. Gardner to Plaintiff indicates that, "[w]e have not yet
provided written comments [to the Purchase and Sale Agreement] because the drafts circulated
by Woodmont contain terms and conditions that differ materially from the terms and conditions
sets forth in the LOI. We have had several calls to discuss these differences." Klein Cert.,
Exhibit E. Likewise, Plaintiffs Complaint ~ ~ 3 7 and 38 indicate that the parties conducted
conference calls to discuss the Purchase Agreement and revisions thereto, further confirming that
the parties had an ongoing discussion in good faith to try and execute the Purchase Agreement.
Thus, the documentary evidence and Plaintiffs own Complrunt show that Lehigh was
negotiating in good faith with Plaintiff throughout the month ofNovember and was ready,
willing and able to sell the Property to Plaintiff at that time.
However, the date by which the parties agreed the formal Purchase Agreement had to be
executed came and went. Three weeks after the LOI terminated according to its own terms, and
11
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a final Purchase Agreement still had not been signed, Lehigh confirmed termination of the deal.
Given the foregoing, there is absolutely no evidence of bad faith on the part of Lehigh (or
Yorkville) proffered by Plaintiff and the second count of Plaintiff's Complaint must be dismissed
because it fails to state a claim upon which relief can be granted.
III. THE LEHIGH E N T I T I E S ~ MOTION TO DISMISS
PLAINTIFF'S PROMISSORY ESTOPPEL CLAIM MUST
ALSO BE GRANTED.
1
In addition to dismissing the foregoing claims, this Court should dismiss Plaintiffs claim
for promissory estoppel against the Lehigh Entities. Plaintiff misstates and mischaracterizes the
Lehigh Entities' argument as it applies to Plaintiffs promissory estoppel claim. The Lehigh
Entities' position is that the LOI governed the terms of Lehigh's and Woodmont's relationship;
they do not deny that this was a valid and binding agreement before it expired according to its
own terms. However, once the LOI terminated according to its own terms, no party was left with
any binding obligations or affirmative duty to the other party. That is what the LOI clearly
states: "If a binding Purchase Agreement has not been executed within twenty-five (25)
days, neither party shall have any further obligation to the other party." Klein Cert. Exhibit
A (emphasis added). A claim for promissory estoppel cannot possibly be sustained under these
irrefutable facts.
Reviewing Plaintiffs Complaint, the only allegations asserted by Plaintiff in support of
its claim for promissory estoppel are that the Lehigh Entities promised to make Plaintiff its joint
venture partner and that the Lehigh Entities agreed to sell Plaintiff the Property. As aforesaid,
the Lehigh Entities' motion to dismiss on this count should be granted because the so-called
promise to make Plaintiffajoint venture partner, iftrue and breached, was resolved and
superseded by the LOI. Given Plaintiffs own admissions in Paragraphs 27 and 28 of the
Complaint, any claims arising prior to the execution of the LOI (on November 3, 2010) have
12
48687/0003-7721884v5
been extinguished. Thus any claims, such as this promissory estoppel claim, arising from
circumstances between the parties prior to the execution of the LOI and concerning the joint
venture, should be dismissed.
IV. THE LEHIGH ENTITIES' MOTION TO DISMISS
PLAINTIFF'S FRAUD CLAIM MUST BE GRANTED
BECAUSE FRAUD HAS NOT BEEN PLEAD WITH THE
REQUISITE PARTICULARITY AND NO CLAIM FOR
FRAUDULENT INDUCEMENT HAS BEEN PLED.
Plaintiff's allegations fall far short of the legal and factual bases necessary to support a
fraud claim or a fraud in the inducement claim (the latter of which was only recently concocted
by Plaintiff). Plaintiff fails to offer any specific or concrete misrepresentations or concealments
by the Lehigh Entities that would support a claim of fraud. Given the insurmountable hurdle
before Plaintiffwith respect to its pleading, count four of Plaintiffs Complaint should be
dismissed.
Plaintiff does not satisfy the specificity requirements of R. 4:5-8. See Levinson v. D'
Alfonso & Stein, 32{) N.J. Super. 312 (App. Div. 1999) (dismissinga fraud claim with prejudice
because the particulars of the alleged fraud were not properly plead). Instead of offering
concrete promises or representations made by Lehigh and/or Yorkville, Plaintiff instead
wrongfully combines the Lehigh Entities and fails to distinguish which allegedly fraudulent
actions and/or statements were made by Lehigh and which by Yorkville. Thus the Lehigh
Entities are not properly on notice of the allegations against them. See generally Evangelista v.
Pub. Serv. Coordinated Transp., 7 N.J. Super. 164, 168-69 (App. Div. 1950); Faces, Inc. v.
Kennedy, 185 N.J. Super. 113,124 (Law Div. 1981), affd, 185 N.J. Super. 77 (App. Div. 1982).
Moreover, Plaintiff does not identify any specific representations made by the Lehigh
Entities that Plaintiff now alleges were false and that were intended to mislead Plaintiff at the
time made. Accordingly, facts establishing the element of scienter are lacking from the
13
48687/0003-7721 884v5
Complaint, and the fraud count fails as a result. See Triffin v. Automatic Data Processing, Inc.,
394 N.J. Super. 237, 246 (App. Div. 2007); Hoffman v. Hampshire Labs, Inc., 405 N.J. Super.
105, 116 (App. Div. 2009) (finding that a complaint lacking specific facts to establish defendants
had knowledge of the falsity oftheir statements fails to state a claim for fraud.)
Additionally, this Court should pay no attention to Plaintiffs latest claim in its opposition
papers for fraudulent inducement. In what can only be described as a desperate attempt to
concoct a new basis for liability, Plaintiff now tries to style its fraud claim as one for "fraudulent
inducement of the LOI". However, the Lehigh Entities did not "initiate a scheme to lure
Woodmont into signing an LOI always intending to breach that agreement. ... " (Pl. Br. p. 2)
Nowhere in the Complaint does Plaintiff allege that it was fraudulently induced to enter into the
LOI. Rather, this argument appears for the first time in its opposition papers. Plaintiff's original
count for fraud in the Complaint alleges only that the Lehigh Entities made alleged
representations to Plaintiff that the parties would enter into a joint venture with respect to the
Property and that those representations were false when made. However, Plaintiffs claim for
fraud cannot be premised upon obligations or actions taken prior to the parties entering the LOI.
5
5
As stated previously, in Paragraphs 27 and 28 ofPlaintiff's Complaint, Plaintiff specifically
acknowledges that:
27. After negotiations with the broker, the resolution of the dispute
with Defendants and Woodmont culminated in a Letter of Intent.
28. The Letter of Intent constitutes an accord and satisfaction of
Woodmont's claims against Defendants for breach of the agreement to
make Woodmont their joint venture partner.
(Pl. Cmplt ~ ~ 2 7 , 28.) (emphasis added.) Plaintiffs opposition brief thus ignores the critical fact that the
LOI resolved any differences between the parties up until that point in time and any claims arising from
the circumstances and/or the relationships between the parties prior to that juncture, have been
extinguished and/or merged into the LOI.
14
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Moreover, Plaintiffs new claim for fraudulent inducement is totally inconsistent with its
claim for specific performance. The remedy for its claim for fraudulent inducement of the LOI
would be rescission, which is completely incompatible with its claim for specific performance.
See generally Massey v. Trump's Castle Hotel & Casino, 828 F.Supp. 314, 325 (D.N.J. 1993)
(stating that "under ordinary contract princip[le]s, transactions entered into in reliance upon
material misrepresentations are voidable.") If Plaintiff were somehow fraudulently induced td
enter the LOI, it is ludicrous that it would then seek to have that agreement specifically enforced.
Plaintiff should not be allowed to maintain such utterly inconsistent positions in one lawsuit.
When a vendee ascertains that he has been induced to make a
contract of purchase by the fraudulent misrepresentations of his
vendor, he has a choice of remedies. He m:ay rescind the contract,
restore what he has received, and recover back what he has paid, or
he may affirm the contract, and recover the damages he has
sustained by the fraud. He cannot, however, do both. It is as
difficult a feat to maintain a cause of action for the consideration
paid for the purchase on the ground of rescission, and one for
damages for the fraud which induced it, and for a breach of the
contract of purchase itself, in the same action, as it is to ride at the
same time two horses that are traveling in opposite directions.
Morris v. Jersey Cent. Power & Light Co., 118 N.J. Eq. 541,543 (Ch. Div. 1935) (internal
citations omitted) (emphasis added).
Given the foregoing, count four of Plaintiffs Complaint for fraud/fraudulent inducement
should be dismissed with prejudice.
V. PLAINTIFF HAS FAILED TO ALLEGE A CAUSE OF
ACTION FOR UNJUST ENRICHMENT AND THIS COUNT
TOO MUST BE DISMISSED.
The Lehigh Entities' motion to dismiss as to Plaintiffs unjust enrichment claim should
also be granted. As Plaintiff acknowledges in its opposition brief, unjust enrichment is premised
upon equitable principles. Given this fact, it would be inequitable to allow Plaintiff to recover
on an unjust enrichment theory that seeks recovery based on the alleged joint venture when it
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readily acknowledges in its Complaint that "[t]he Letter oflntent constitutes an accord and
satisfaction ofWoodmont's claims against Defendants for breach of the agreement to make
Woodmont their joint venture partner." (PL Cmplt. ~ 2 8 ) . Thus, by Plaintiffs own admission, its
promissory estoppel claim relates to breach of the alleged agreement to make it a joint venture
partner, which agreement was superceded by the LOI. All of the services provided by Plaintiff,
as referenced in ~ ~ 1 7 and 91 of its Complaint, were provided in connection with a joint venture
that was replaced by the LOI. Contrary to Plaintiff's allegations, the Lehigh Entities have not
been unjustly enriched at Plaintiffs expense, but rather the parties agreed to try to resolve their
joint venture dispute by a sale of the Property, but failed to do so. Here, it would be patently
absurd to allow Plaintiff to proceed on its claim for unjust enrichment for past services it agreed
were extinguished. Thus, Plaintiff cannot properly plead a cause of action for unjust
enrichment/quasi contract and this count too should be dismissed with prejudice.
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CONCLUSION
For all of the foregoing reasons, and for those stated more fully in the Lehigh Entities'
Motion to Dismiss, the Court should grant the Lehigh Entities' Motion to Dismiss the Complaint,
in its entirety, with prejudice, for failure to state a claim for which relief can be granted pursuant
toR. 4:6-2(e) and for failure to plead fraud with the requisite specificity required by R. 4:5-8.
DATED: 2011
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Respectfully submitted,
COLE, SCHOTZ, MEISEL,
FORMAN & LEONARD, P.A.
Attorneys for Defendants, Lehigh
Acquisition Corp. and Y arkville Advisors,
LLC //

Steven R. Klein