Opinion ID: 167812
Heading Depth: 3
Heading Rank: 2

Heading: Tribune Publishing's first amended complaint

Text: 29 Tribune Publishing argues that MPI's appraisal should be set aside for four reasons: 30 (1) MPI committed a mistake of law by defining fair market value differently than the Option Agreement; 31 (2) MPI ignored evidence relevant to the valuation of the newspaper assets; 32 (3) MPI exceeded the authority conferred in the Option Agreement and the Appraisal Agreement by using a different definition of fair market value and by violating professional appraisal standards; and 33 (4) MPI displayed evident partiality in favor of MediaNews. 34 Aplt. Br. at 35, 41-45. Applying the New Jersey Supreme Court's decision from Elberon to MPI's appraisal, and accepting Tribune Publishing's allegations as true, we conclude that the district court may review the appraisal to determine whether MPI committed a mistake of law, failed to consider relevant evidence, or exceeded its authority. 35 The parties disagree whether MPI's appraisal is binding under the Option Agreement, which states that [e]ach determination of the Fair Market Value... in accordance with the appraisal provisions of this paragraph 2 shall be final, binding and conclusive. Option Agreement ¶ 2(d), Aplt.App. at 87. When interpreting contracts, New Jersey courts examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and surrounding circumstances. State Troopers Fraternal Ass'n v. New Jersey, 149 N.J. 38, 692 A.2d 519, 523 (1997). When the terms of a contract are unambiguous, as here, the court's function is to enforce [the contract] as written and not to make a better contract for either party. Schenck v. HJI Assocs., 295 N.J.Super. 445, 685 A.2d 481, 484 (1996) (internal quotation marks omitted). 36 MediaNews contends that MPI's appraisal is binding and that no judicial review is permitted because paragraph 2(d) of the Option Agreement includes the words final, binding and conclusive. Option Agreement ¶ 2(d), Aplt.App. at 87. MediaNews' interpretation fails for two reasons. 37 First, MediaNews' interpretation ignores paragraph 13 of the Option Agreement, which specifically allows the parties to enforce the Option Agreement in any court. A contract must be read as a whole, without artificial emphasis on one section, with a consequent disregard for others. Borough of Princeton v. Bd. of Chosen Freeholders, 333 N.J.Super. 310, 755 A.2d 637, 645 (2000), aff'd, 169 N.J. 135, 777 A.2d 19 (2001). The plain language of the Option Agreement demonstrates the parties' intent to allow the enforcement of the Option Agreement in any court. Paragraph 13 of the Option Agreement explicitly allows the parties to seek judicial review to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States and to seek any other remedy to which they are entitled at law or in equity. Option Agreement ¶ 13, Aplt.App. at 91. MediaNews' interpretation of paragraph 2(d) would render paragraph 13 meaningless. See, e.g., Cumberland County Improvement Auth. v. GSP Recycling Co., 358 N.J.Super. 484, 818 A.2d 431, 438 (2003) (stating that a contract should not be interpreted to render one of its terms meaningless). Given the plain language in paragraph 13, we cannot agree with MediaNews' contention that MPI's appraisal is binding and no judicial review of the appraisal is permitted. 38 Second, MediaNews' interpretation conflicts with the plain language in paragraph 2(d), which makes the determination of a fair market value final, binding and conclusive only when it is in accordance with the appraisal provisions of this paragraph 2. Option Agreement ¶ 2(d), Aplt.App. at 87. Disproportionate emphasis upon a word or clause or single provision does not serve the purpose of interpretation. Words and phrases are not to be isolated but related to the context and the contractual scheme as a whole. Newark Publishers' Ass'n v. Newark Typographical Union No. 103, 22 N.J. 419, 126 A.2d 348, 352-53 (1956). Tribune Publishing has alleged that MPI disregarded the definition of fair market value in the Option Agreement. First Am. Compl. ¶¶ 41, 44, Aplt.App. at 126, 127. Were we to accept this allegation as true as we must in review of a Rule 12(b)(6) dismissal, MPI's appraisal would not be binding. 39 MediaNews concedes as much, acknowledging that a court could determine whether the parties violated the appraisal provisions in paragraph 2, but it contends that this does not include a challenge to the judgments of appraisers who were properly selected. MediaNews Br. at 50 n.22. MediaNews cannot have it both ways. Just as a court has authority to review whether the parties violated paragraph 2, it may review whether MPI complied with paragraph 2, including the definition of fair market value. MediaNews' argument invites us to revise the Option Agreement in their favor, which, of course, we cannot do. See, e.g., Camden Bd. of Educ. v. Alexander, 181 N.J. 187, 854 A.2d 342, 349 (2004). 40 In further support of its argument that the appraisal is binding, MediaNews cites Cap City, but the contract in Cap City is distinguishable from the contracts in this case. In Cap City, the parties agreed to `mutually select a third party to value the stock [of a closed corporation] and to arbitrate a binding settlement.' 753 A.2d at 1206. The third decision-maker had authority to value the stock and to arbitrate a binding settlement, regardless of the valuations from the party-appointed appraisers. Id. at 1207. Thus, in Cap City, the parties agreed that the third decision-maker had the authority to value the stock and to arbitrate a binding settlement. Id. at 1206. 41 In contrast to the contract in Cap City, the Option Agreement did not authorize MPI to arbitrate. MPI did not function as an umpire deciding between two appraisals. Instead, MPI merely supplied a data point that the parties may use in determining fair market value. Tribune Publ'g II, 390 F.3d at 690. In our prior ruling in this case, we specifically discussed MPI's role in the appraisal procedure: 42 SLTPC and MediaNews fashioned an agreement where, in the event that they could not agree on a price and their chosen appraisers were too far apart, a third appraiser would contribute a value that may, or may not, be used to calculate the exercise price.... 43 Here, MPI's appraisal would by no means definitively settle the dispute between [Tribune Publishing] and MediaNews. At most, MPI supplied a data point that the parties could use in establishing the exercise price. Under the terms of the Option Agreement, a scenario existed where the parties would not use MPI's report at all.... 44 MPI was not asked to decide between two values established by [Tribune Publishing] and MediaNews, nor were they asked to assign independently a single value binding on the parties. Indeed the parties did not even agree to average MPI's figure with one or both of their own. The parties merely asked MPI to prepare a report evaluating the newspaper and establishing the Fair Market Value of the newspaper's assets, a value which the parties may, under certain circumstances, have used to fix the exercise price under the Option Agreement. MPI's report would not necessarily settle a dispute between SLTPC and MediaNews. 45 Id. at 690-91. Thus, the Option Agreement did not permit MPI, as the third appraiser, to set the fair market value on its own. 46
47 Accepting Tribune Publishing's allegations as true, the district court may review the appraisal to determine whether MPI committed a mistake of law. 48 A court may review an appraisal if it involves a mistake of law, but not if it involves a mistake of fact. Elberon, 389 A.2d at 446. Where the parties have negotiated specific terms in a contract, courts may review the appraisal for the appraiser's compliance with the contractual terms. E.g., Melton Bros., Inc. v. Philadelphia Fire & Marine Ins. Co., 104 N.J. Eq. 153, 144 A. 726, 728 (1929); Collings Carriage Co. v. German-Am. Ins. Co., 86 N.J. Eq. 53, 97 A. 726, 728 (1916) (invalidating an appraisal because the appraiser failed to comply with the requirements of the agreement of submission). The interpretation of a contractual term, such as fair market value, where its meaning is clear is a legal determination. See, e.g., Driscoll Const. Co., Inc. v. State, Dep't, 371 N.J.Super. 304, 853 A.2d 270, 276 (2004); Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J.Super. 78, 783 A.2d 731, 740 (2001). An appraiser commits a mistake of law in failing to follow a contractual provision. See Elberon, 389 A.2d at 445. 49 In its first amended complaint, Tribune Publishing alleges that MPI's appraisal is invalid because its definition of Fair Market Value differed from the definition set forth in the Option Agreement. First Am. Compl. ¶¶ 41, 48, Aplt.App. at 126, 128. Accepting Tribune Publishing's allegations as true, MPI committed a mistake of law. 50
51 Additionally, the district court may review the appraisal to determine whether MPI failed to consider the relevant evidence. Under New Jersey law, a court may set aside an appraisal where the appraiser fails to consider the relevant evidence. See Elberon, 389 A.2d at 446 (vacating an appraisal where one appraiser and the umpire failed to consider the relevant evidence). 52 Tribune Publishing alleges that MPI failed to consider relevant evidence in its appraisal. First Am. Compl. ¶¶ 41, 44, Aplt.App. at 126, 127. The Appraisal Agreement allowed the parties to present evidence to MPI, and it required MPI to consult with them following release of its draft report. Accepting these allegations as true, the district court may review the appraisal for MPI's failure to consider relevant evidence. 53 MediaNews disputes the factual allegations in the complaint, maintaining that MPI considered plaintiff's evidence in its report. Despite MediaNews' invitation, we do not weigh potential evidence when reviewing a dismissal pursuant to Rule 12(b)(6). See, e.g., Duran v. Carris, 238 F.3d 1268, 1270 (10th Cir.2001). 54
55 The district court may review the appraisal to determine whether MPI exceeded its contractual authority. 56 A court may review an appraisal where the appraiser exceeds the scope of his or her contractual authority. See Levine, 478 A.2d at 399-400 (considering an accountant's valuation of a person's interest in a company as an appraisal where the accountant was bound by professional standards governing accountancy) (internal quotation marks omitted). A decision-maker exceeds his or her authority when he or she disregards the contractual limitations. 3 See, e.g., N.J. Tpk. Auth. v. N.J. Tpk. Supervisors Ass'n, 143 N.J. 185, 670 A.2d 1, 8-9 (1996); County Coll. of Morris Staff Ass'n v. County Coll. of Morris, 100 N.J. 383, 495 A.2d 865, 869 (1985) (The scope of an arbitrator's authority depends on the terms of the contract between the parties.); Commc'ns Workers of Am., Local 1087 v. Monmouth County Bd. of Soc. Servs., 96 N.J. 442, 476 A.2d 777, 780 (1984) ([T]he jurisdiction and authority of the arbitrator are circumscribed by and limited to the powers delegated to him.). A contract may limit authority both in the procedure that the arbitrator must apply in resolving disputes and the substantive matters that he may address. Commc'ns Workers, 476 A.2d at 780. 57 Tribune Publishing alleges that the Appraisal Agreement limited MPI's authority in three ways. First, the Appraisal Agreement required MPI to use the definition of fair market value from the Option Agreement. First Am. Compl. ¶¶ 32-35. Second, the Appraisal Agreement required MPI to comply with professional appraisal standards. Id. ¶¶ 32-35. Third, the Appraisal Agreement required MPI to alert the parties if the Option Agreement's definition of fair market value conflicts with professional appraisal standards so that the parties could seek judicial review. Id. ¶ 35. Accepting these allegations as true, Tribune Publishing has alleged that MPI exceeded its authority, and the district court may review MPI's appraisal on that ground. 58
59 The parties discuss evident partiality as another ground for setting aside an appraisal, but Tribune Publishing has not alleged evident partiality, even when viewing its factual contentions in the most favorable light. On appeal, Tribune Publishing has not identified any paragraph in the amended complaint that alleges bias, the appearance of bias, or improper motive by MPI. In arguing that MPI displayed evident partiality in its briefs, Tribune Publishing merely restates its factual allegations that MPI applied the wrong definition of fair market value, violated professional appraisal standards, and failed to consider Tribune Publishing's evidence. Tribune Publishing acknowledges that the allegations in its amended complaint are insufficient by maintaining that its complaint alleges conduct by MPI that would lead a reasonable, well-informed observer to doubt substantially MPI's impartiality. Aplt. Br. at 45. Elsewhere, Tribune Publishing concludes that its allegations in the amended complaint would raise serious questions in a reasonable person's mind about MPI's impartiality. Aplt. Br. at 46. Because Tribune Publishing has failed to allege evident partiality in its first amended complaint, we have no basis for directing the district court to review MPI's appraisal on that ground. 60