Court Opinion

ID: 2911965
Source: CourtListenerOpinion
Date Created: 2015-09-10 14:09:09.884821+00
Date Added: 2024-06-11T11:37:55.613079
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                 APPROVAL OF THE APPELLATE DIVISION

                                      SUPERIOR COURT OF NEW JERSEY
                                      APPELLATE DIVISION
                                      DOCKET NO. A-2794-13T2

LISA VAN HORN,                          APPROVED FOR PUBLICATION

                                              September 10, 2015
      Plaintiff-Appellant,
                                              APPELLATE DIVISION
v.

HARMONY SAND & GRAVEL, INC.,

      Defendant-Respondent.

_______________________________________________________

          Argued April 28, 2015 – Decided September 10, 2015

          Before Judges Messano, Hayden and Tassini.

          On appeal from Superior Court of New Jersey,
          Law Division, Warren County, Docket No. L-
          288-12.

          Randi A. Wolf argued the cause for appellant
          (Spector, Gadon, & Rosen, P.C., attorneys;
          Mr. Wolf, on the brief).

          Scott M. Wilhelm argued the cause for
          respondent   (Winegar,   Wilhelm, Glynn   &
          Roemersma, P.C., attorneys; Mr. Wilhelm and
          Jennifer L. Toth, on the brief).

      The opinion of the court was delivered by

HAYDEN, J.A.D.

      Plaintiff Lisa Van Horn appeals from a February 10, 2014

Law   Division   order   granting   summary     judgment    to     defendant
Harmony Sand & Gravel (Harmony) and dismissing her complaint to

eject Harmony from her property.                 After reviewing the record in

light    of    the    applicable    law,    we   affirm    the   judgment    but    on

different grounds than the trial court.                    Shim v. Rutgers, 191
N.J. 374, 378 (2007); Isko v. Planning Bd. of Livingston, 51
N.J. 162, 175 (1968) ("[I]f the order of [a trial court] is

valid, the fact that it was predicated upon an incorrect basis

will not stand in the way of its affirmance.").

    The record reveals the following facts.                      Van Horn owned a

forty-five-acre property (hereinafter "the property") in White

Township, Warren County.            She inherited the property from her

father, Earl Richmond Smith.

    In        1990,   Smith   and   Harmony       signed   an    agreement    (First

Agreement), which they called a "Lease Agreement," permitting

Harmony "to remove available soil materials and aggregates from

the premises . . . during the term of this Agreement."                             The

parties conditioned the First Agreement on Harmony's ability to

secure    permits      necessary    to     conduct   the   quarrying   operation.

The First Agreement further stipulated that once the materials

were removed from the property, Harmony had discretion to choose

its prices.       Harmony agreed to pay a fixed price for each ton of

materials it removed, subject to a minimum amount of $25,000 per

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year.    The agreement also identified several methods by which

Smith could verify the amount removed.

       The First Agreement permitted Harmony to construct various

improvements on the property, in particular, a screening and

processing      plant.     Harmony      constructed          the    improvements        and

claimed the market value of the equipment was $1,500,000 in

2012.     In    the    First    Agreement,      Smith     conveyed       the    right   to

remove materials exclusively to Harmony, stating that "no other

person   or     entity   has    an    option    or   right     to    purchase     and/or

remove minerals from the subject premises, nor [had he] entered

into    any    agreement       with   any   person      or    entity      which     would

interfere       with   [Harmony's]      ability      to      perform      a     quarrying

operation on the [Property]."

       The parties agreed that the First Agreement could only be

amended through a written agreement, and that it extended to

"heirs, successors, and assigns."                Harmony had a great deal of

discretion over the First Agreement's termination.                            If Harmony

chose to terminate its mining operations, it was obligated to

make all required payments to Smith and had up to one year to

remove    any     stockpiled      materials.         Smith         had   more    limited

termination rights, as they only became available in the event

Harmony defaulted.         In that event, Smith had to give notice to

Harmony that it was in default, and Harmony had thirty days to

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correct the default from the date on which it received notice.

Upon    termination,      Harmony       had      to    remove    all        equipment      and

discontinue further operations, but any equipment left on the

property   became     Smith's         property.         The     First       Agreement      was

witnessed and notarized, but it was never recorded.

       The First Agreement expired in February 2000.                          The parties

signed a new agreement ("Second Agreement") on March 2, 2000.

This agreement contained many of the same terms as the First

Agreement.      However, the Second Agreement changed the term of

the First Agreement from ten years to "an indeterminate period

of years and until [Harmony] determines, in its sole discretion,

that    sufficient    aggregate         materials       cannot       be     removed     in    a

manner    and/or     in   such    amounts         as   to     make     it    commercially

reasonable     to    continue     the        removal     of     soil      materials        and

aggregates from [Smith's] properties."                      The royalty payment for

every    ton   of   certain      of    the       processed      materials       or    gravel

removed changed from one dollar to one dollar and twenty-five

cents.         Additionally,           the       parties      increased         Harmony's

termination obligations by requiring it to re-slope banks and

spread    stockpiled      soil,       and    specified        that     this    obligation

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survived termination of the agreement.            The Second Agreement was

not formally witnessed,1 nor was it notarized or recorded.

     Smith died in 2002, and Van Horn inherited the property

after protracted litigation.           In 2008, Van Horn's attorney sent

a letter to Harmony stating that Van Horn was terminating the

lease and sent a notice to quit along with the letter.                    She sent

a second letter terminating the lease along with another notice

to quit on April 4, 2012.

     On   July     16,   2012,   Van   Horn    filed    a     complaint    seeking

declaratory judgment2 that "[Harmony] has no further rights in

the property" and that "except for [Harmony's] obligations to

restore the property as set forth in the Lease, the Lease is of

no further force and effect" and that "[Van Horn] is entitled to

possession    of     the   property,        including    possession       of    all

improvements on the Property."              After discovery was completed,

the parties agreed that no material facts were in dispute and

submitted    the    sole   remaining     count    to    the    trial   court     to

determine the meaning of the Second Agreement.

1
  The record shows that an employee and a relative of Smith were
present when he signed it.
2
  In her complaint, Van Horn included a count seeking damages for
breach of the lease, but the parties later consented to dismiss
this count along with Harmony's counterclaim.

                                        5                                 A-2794-13T2
    In her summary judgment motion, Van Horn contended, for the

first time, that the Second Agreement was a license rather than

a lease.   Harmony urged the court to reject this argument based

on Van Horn's failure to plead this theory in the complaint,

claiming that it had defended the case based on the theory that

the Second Agreement was a lease.        The trial court rejected this

argument, finding that Harmony had sufficiently addressed the

license theory in its summary judgment papers.

    After hearing oral argument, the court issued its order on

February   10,   2014,    granting   summary   judgment   in   favor   of

Harmony.   The court held that the Second Agreement created a

lease, because the parties deemed it a lease and it conferred an

exclusive right to conduct a mining operation on the property.

The court also addressed Van Horn's argument that the Second

Agreement violated the statute of frauds, N.J.S.A. 25:1-10 to -

13, because it did not contain a definite term as required for

leases. See N.J.S.A. 25:1-12(a).         The court held that, although

the agreement uses the word "indeterminate," the actual term was

clear, as the agreement terminated under specific conditions,

namely default or the depletion of the gravel to a commercially

unreasonable point.      This appeal followed.

                                     6                          A-2794-13T2
      On   appeal,    Van    Horn   urges    this      court    to     interpret     the

Second Agreement as a license revocable at will.3                      Alternatively,

she   argues   that,    if    the   Second    Agreement         was     a   lease,    it

violated    the   statute      of   frauds       and    must     run    year-to-year

terminable on reasonable notice.             Harmony argued that the Second

Agreement    either    conveyed     a   lease,      which      complied     with     the

statute of frauds, or, alternatively that, if it was a license,

it was irrevocable.          At oral argument, we asked the parties to

submit supplemental briefs on whether the agreement is a profit

a prendre (profit).

      We begin with our standard of review relevant to summary

judgment.      Rule    4:46-2(c)     directs      that    summary        judgment     be

granted     "if       the     pleadings,         depositions,           answers       to

interrogatories       and    admissions     on    file,        together     with     the

affidavits, if any, show there is no genuine issue as to any

material fact challenged and that the moving party is entitled

to a judgment or order as a matter of law."                      "While 'genuine'

3
   We reject Harmony's claim that this argument cannot be
considered because Van Horn did not raise the lease theory until
she filed the summary judgment motion. The trial court addressed
the license issue and observed that Harmony had sufficiently
briefed it. We perceive no prejudice to Harmony here. While a
complainant must state the factual basis for a complaint the
complainant "'is not required to spell out the legal theory upon
which [the complaint] is based.'" Teilhaber v. Greene, 320 N.J.
Super. 453, 464 (App. Div. 1999) (quoting Farese v. McGarry, 237
N.J. Super. 385, 390 (App. Div. 1989)).

                                        7                                     A-2794-13T2
issues     of    material   fact    preclude      the    granting      of    summary

judgment, those that are 'of an insubstantial nature' do not."

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 530 (1995)

(internal       citations   omitted).        Essentially,      the     court       must

determine       "'whether    the     evidence       presents      a        sufficient

disagreement to require submission to a jury or whether it is so

one-sided that one party must prevail as a matter of law.'"

Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J.
436, 445-46 (2007) (quoting Brill, supra, 142 N.J. at 536).

    We review a trial court's decision on summary judgement "de

novo, employing the same standard used by the trial court."

Tarabokia v. Structure Tone, 429 N.J. Super. 103, 106 (App. Div.

2012) (citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307
N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608

(1998)),    certif.    denied,     213 N.J. 534    (2013).       We    give   "no

deference to the trial judge's conclusions on issues of law."

Depolink Court Reporting & Litig. Servs. v. Rochman, 430 N.J.

Super. 325, 333 (App. Div. 2013).               Thus, we must also "view the

evidence in the light most favorable to the non-moving party and

analyze whether the moving party was entitled to judgment as a

matter of law."       Mem'l Props., LLC v. Zurich Am. Ins. Co., 210
N.J. 512, 524 (2012) (citing Brill, supra, 142 N.J. at 523).

                                         8                                   A-2794-13T2
    A lease is an agreement whereby a landowner, known as the

lessor, agrees to turn over exclusive possession of a property

to another party, known as the lessee, for some period of time.

Thiokol Chem. Corp. v. Morris Cnty. Bd. of Taxation, 41 N.J.
405, 416 (1964).       While there are no technical requirements to

create a lease, generally parties use language such as "'lease,'

'let,' 'demise,' 'grant,' and the like."           Ibid.   Thus, during a

lease agreement, the lessee's rights of possession and use are

greater than the landowner's.        See id. at 417.

    In New Jersey, if a lease is intended to last longer than

three years, it is not enforceable unless it complies with the

statute of frauds.       N.J.S.A. 25:1-12.     The statute requires a

writing signed by the party against whom the agreement is sought

to be enforced containing a description of the premises, the

term, and the identity of the lessee and lessor.           N.J.S.A. 25:1-

12(a).     Alternatively, if there is not a writing, the above

elements   must   be   proved   by   clear   and   convincing   evidence.

N.J.S.A. 25:1-12(b).

    In contrast to a lease, a license is an agreement that only

gives permission to use the land at the owner's discretion.

Thiokol, supra, 41 N.J. at 417.           A license is usually freely

revocable at the owner's pleasure and is limited to the scope of

the agreement for which it was granted.            Ibid.   A license does

                                     9                           A-2794-13T2
not provide protection for the licensee against interference by

the licensor.          Twp. of Sandyston v. Angerman, 134 N.J. Super.
448, 451 (App. Div. 1975).                    Additionally, a license terminates

at the death of either of the parties.                        See Moore v. Schultz, 22
N.J. Super. 24, 31 (App. Div. 1952), aff’d o.b., 12 N.J. 329

(1953);    25    Am.       Jur.   2d    Easements       and    Licenses       §    117     (2004)

(hereinafter "25 Am. Jur.").

       While    a   license        is    generally       revocable       at       will,       under

certain circumstances it becomes irrevocable.                           Moore, supra, 22

N.J. Super. at 29; 25 Am. Jur. at § 122.                               A license becomes

irrevocable if the licensee expends substantial sums of money

pursuing    the     privilege          while    the    licensor     acquiesces            to   the

expenditures,         or    if    permitting          revocation    would         permit        the

licensor to practice a fraud on the licensee, such as revoking a

license to cut timber after the licensee has already cut the

timber    and    prepared         it    for    removal.        Moore,    supra,          22    N.J.

Super. at 29; see also 25 Am. Jur. at § 122.

       Based upon the well-established legal principles above, we

find   that     the    Second          Agreement      was     neither    a    lease        nor    a

license.        While the agreement may have been titled a "lease

agreement," the name that parties give to an agreement is not

determinative.             Sandyston,         supra,     134    N.J.    Super.       at        451.

Instead, courts must evaluate the agreement itself to determine

                                                10                                       A-2794-13T2
its legal effect rather than rely on what the parties choose to

call it.     Ibid.       This agreement did not explicitly state that

Harmony had exclusive possession of the property, which is the

cornerstone of any lease agreement.                  Thiokol, 41 N.J. at 416-17.

Rather,    the     agreement          permitted      Smith       to   interfere           with

Harmony's possession of the land so long as he did not interfere

with    their    mining       operation.          "[A]   lease        gives     exclusive

possession of the premises against all the world, including the

owner," Thiokol, supra, at 417, and no such grant is present in

the agreement.

       Similarly,       we    also    find    that    this   agreement          is     not    a

license.     In the Second Agreement, Smith conveyed rights and

privileges to mine the property that could not be revoked by the

landowner,      absent        a    default.       Such      an    agreement          is    not

consistent       with        the     revocable       character        of    a    license.

Additionally,     Smith       covenanted      that    the    Second        Agreement       was

binding on his heirs.              Licenses are generally freely revocable

by the licensor, Thiokol, supra, 41 N.J. at 417, and terminate

at the death of either party.                 Moore, supra, 22 N.J. Super. at

31; 25 Am. Jur. at § 117.                Not only does the Second Agreement

violate both core principles, but the agreement also provided

protection to Harmony against interference with its conduct of

the mining operation by the landowner for the duration of the

                                             11                                      A-2794-13T2
agreement, while a license does not provide such protection.

Sandyston, supra, 134 N.J. Super. at 451.             Thus, to classify the

Second Agreement as a license would be to violate the clear

intent of the parties, which is the lodestar in interpreting an

agreement.        Sachau v. Sachau, 206 N.J. 1, 5 (2011) (citations

omitted); Barr v. Barr 418 N.J. Super. 18, 32 (App. Div. 2011);

see also Sandyston, supra, 134 N.J. Super. at 451.

      In response to our request for supplemental briefs, Harmony

argues that the Second Agreement should be construed as a profit

or   an    easement   in   gross,    claiming     that     the    situation      was

factually analogous to Moore, supra, 22 N.J. Super. at 24.                         In

Moore, we found that an agreement allowing a person to enter on

the land of another to put up quarrying equipment and extract

sand and gravel was not a license but a profit.                  Id. at 30.      The

court observed: "Quarry rights, mining rights, oil rights, and

other similar rights relating to the severance of the physical

substances of a servient tenement are normally more commonly

interests a prendre appurtenant or in gross, or easements in

gross."     Ibid. (emphasis omitted).

      On    the    other   hand,    Van    Horn   argues    that     the    Second

Agreement did not create a profit, because profits are interests

in real property, which can only be conveyed by an instrument

complying with the formalities associated with a deed, including

                                          12                               A-2794-13T2
that the deed be witnessed and recorded.                She also points to the

lack of language such as "grant," "transfer," or "convey," in

the agreement and argues that the less formal Second Agreement,

which was not witnessed or notarized like the First Agreement

was, could not convey a greater interest in the property than

conveyed by the more formal First Agreement.

      We are not persuaded by Van Horn's arguments.                 Initially,

Van Horn does not provide any legal support for her contention

that, despite the clearly expressed intention of the parties,

the lack of formalities prevented the creation of a profit.

Indeed, under the statute of frauds, interests in property can

be   transferred    so   long   as   there    is    a    writing   providing     a

sufficient description of the property, the type of the interest

transferred, and the identity of the parties to the transaction

signed   by   the   party    against       whom    enforcement     is   sought. 4

N.J.S.A. 25:1-11(a).        Moreover, Van Horn seeks to elevate form

over substance, which violates the principle that we interpret

agreements to determine the intent of the parties, rather than

4
  In fact, New Jersey permits even less formalities in the
transfer of property, as even oral agreements can result in
enforceable land transfer contracts so long as they are proved
by clear and convincing evidence.   Prant v. Sterling, 332 N.J.
Super. 369, 378 (Ch. Div. 1999), aff’d o.b., 332 N.J. Super.
292, 293 (App. Div.), certif. denied, 166 N.J. 606 (2000);
N.J.S.A. 25:1-13(b).

                                      13                                A-2794-13T2
focus solely on the language used.              Sandyston, supra, 134 N.J.

Super. at 451; 25 Am. Jur. at § 117.                Consequently, we find no

support for Van Horn's contention that the Second Agreement was

too informal to convey a profit.

       A profit is distinct from both a lease and a license, as it

conveys a lesser interest than exclusive possession, but still

conveys    an   interest       that    is    "alienable,       assignable,          and

inheritable,"     which   distinguishes        it    from    the   mere   personal

privilege of a license.         Moore, supra, 22 N.J. Super. at 28; see

also 25 Am. Jur. at §§ 2, 3.            A profit is closely analogous to

an easement.      Moore, supra, 22 N.J. Super. at 28; Restatement

(Third) of Property: Servitudes ("Restatement") § 1.2, comment

(a).    Generally, an easement conveys a right of access to land,

whereas a profit confers a right to remove something of value

from the land.     Moore, supra, 22 N.J. Super. at 28; Restatement,

§ 1.2(2); 25 Am. Jur. § 3.              Typical forms of profits include

permission to take "marl, loam, peat, sand, gravel, coal, and

other minerals."      Moore, supra, 22 N.J. Super. at 28 (emphasis

added).     Significantly,      the    distinctions         between    profits      and

easements are "microscopic."           Ibid.

       An easement "may be modified or terminated by agreement of

the    parties,    pursuant       to     its    terms"        or      under      other

circumstances,    such    as    abandonment,        prescription,       merger,      or

                                        14                                    A-2794-13T2
estoppel.    Restatement § 7.1; 25 Am. Jur. at § 96.                     Only the

holder of the easement is able to unilaterally terminate an

easement through renunciation.            See Rossi v. Sierchio, 30 N.J.

Super. 575, 578 (App. Div. 1954); Restatement § 7.4.                     There is

no authority for the proposition that the owner of property

subject to an easement can simply renounce the easement.

    While the Second Agreement was titled a "lease agreement,"

agreements creating profit relationships are frequently called

lease agreements.      1 Thompson on Real Property, Second Thomas

Edition,    (David    A.     Thomas,      ed.      LexisNexis)     §     65.03(b).

Moreover,   we   evaluate    agreements       to   determine     their   intended

effects,    rather    than        give    determinative        effect     to    the

terminology used.     Sandyston, supra, 134 N.J. Super. at 451; 25

Am. Jur. at § 117.         We are convinced that the Second Agreement

clearly created a profit relationship.                 The Second Agreement

never conveyed the right of exclusive possession, merely the

right to extract materials from the property.               Additionally, the

Second Agreement limited the non-interference obligations of the

owner to Harmony's conduct of a mining operation.                 Moreover, the

entire agreement was made contingent on Harmony's ability to

secure   permits,    and    the    Second     Agreement   was    terminable      on

Harmony's cessation of mining operations.                 It is evident that

the parties intended to convey the right to extract materials

                                         15                               A-2794-13T2
rather   than   anything   more.     Thus,   we    find   that   the    Second

Agreement   conveyed   a   profit,   which   has    not   yet    terminated.

Accordingly, we affirm the trial court's order dismissing Van

Horn's complaint, albeit on different grounds.

    Affirmed.

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