Court Opinion

ID: 214123
Source: CourtListenerOpinion
Date Created: 2011-04-06 20:09:15+00
Date Added: 2024-06-11T12:38:53.328429
License: Public Domain

NOT PRECEDENTIAL

                              UNITED STATES COURT OF APPEALS
                                   FOR THE THIRD CIRCUIT
                                        _____________

                                                 No. 10-2153
                                                _____________

                       JAMES COTTER; WILSON LAND REALTY, LLC,
                                                        Appellant

                                                         v.

                                  NEWARK HOUSING AUTHORITY
                                        _____________

                         On Appeal from the United States District Court
                                    For the District of New Jersey
                                       (Civ. No. 09-cv-02347)
                        District Judge: Honorable Joseph A. Greenaway, Jr.
                                           _____________

                             Submitted under Third Circuit L.A.R. 34.1(a)
                                          January 24, 2011

    BEFORE: FUENTES, CHAGARES, Circuit Judges, and POLLAK, District Judge*

                                       (Opinion Filed: April 6, 2011)
                                             _____________

                                        OPINION OF THE COURT
                                            _____________

*
  Honorable Louis H. Pollak, Judge of the United States District Court for the Eastern District of Pennsylvania,
sitting by designation.
FUENTES, Circuit Judge.

       James Cotter and his company, Wilson Land Realty, LLC, filed suit in District

Court alleging that the Newark Housing Authority ("NHA") is liable for breach of

contract, specific performance, promissory estoppel and equitable estoppel. The District

Court granted NHA's motion to dismiss on the grounds that (1) the allegations did not

show the existence of a valid contract; (2) specific performance is a remedy, not a claim;

(3) there was no allegation of the clear or definite promise necessary to successfully plead

promissory estoppel; and (4) there was no misrepresentation that would bestow contract

rights under a theory of equitable estoppel. Cotter and his company appeal each of these

rulings. For the reasons set forth below, we will affirm the District Court's order.

                                               I.

       We write exclusively for the parties and therefore recount only the facts necessary

to reach our decision.

       In a 2001 settlement between Cotter and his former business partner, Cotter

received a right of first refusal over 30 acres of land owned by NHA in Newark, New

Jersey. In a January 2001 letter, NHA asked Cotter to submit an offer for 22 of those 30

acres. That same letter sketched the outlines of a possible agreement: Cotter would have

to give up his right of first refusal over the other 8 acres, which were then being used to

store demolition materials, and he would have to commit to constructing a building on

the property.

       After an appraisal of the property, NHA sent Cotter a letter on March 15, 2001, in

which it stated that it was willing to sell him the 22 acres "as is" for the price of

                                               2
$2,486,000. That same letter repeated much of what was stated in the January 2001

letter: NHA would give Cotter a "reasonable time period" to conduct due diligence,

Cotter would have to commit to constructing a 40,000 square foot building on the

property, and Cotter "must execute the standard [United States Department of Housing

and Urban Development ("HUD")] Disposition Agreement." (J.A. 22.) The letter also

requested that Cotter give up his right of first refusal over the 8 acres, which were then

leased to a demolition and recycling company.

       In a June 1, 2001 letter, Cotter's counsel responded by providing a written

summary of his understanding of the agreement that had been reached between Cotter

and the NHA: Cotter would have the right to enter the property for testing and surveying

for at least 6 months, he would purchase the property for the appraised price, he would

construct a 40,000 square-foot building, and he would waive his rights over the eight

acres. NHA wrote back on June 4 that it would enter into a contract with Cotter subject

to approval by its Board of Commissioners. The June 4 letter agreed on the price, the

time for diligence, and the building. It also stated that, as a condition to any agreement,

Cotter would have to give up his right of first refusal over the eight acres. In the last

paragraph, the letter asserted that the parties would execute the standard HUD contract

according to HUD regulations.

       Cotter gave up his rights over the eight acres and, in February 2004 NHA's Board

of Commissioners passed a resolution authorizing the sale of the 22 acres to Cotter for

the agreed-upon price. A March 17, 2004 letter from NHA informed Cotter of the

resolution. It also observed that "we had previously negotiated an agreement with

                                              3
[Cotter]." (J.A. 26). The letter enclosed a formal contract of sale and stated that Cotter

must close by May 1, 2004. In an April 13 letter, Cotter stated that he would be ready to

close on that date, but objected to provisions of the formal contract. The closing did not

take place in May 2004. In letters sent in 2005, Cotter complained to NHA that the

debris on the property prevented an environmental assessment. Cotter sent letters to

NHA in 2008 about proceeding to closing. NHA responded that the debris on the

property, and environmental concerns, continued to be problems.

       Cotter filed suit against NHA in 2009. NHA moved to dismiss his Amended

Complaint, and the District Court granted the motion. According to the District Court,

the June 2001, March 2001, March 2004, and April 2004 letters were merely indications

of the parties' bargaining positions, not an agreement. Relying on Morton v. 4 Orchard

Land Trust, 849 A.2d 164 (N.J. 2004), the District Court concluded that the allegations in

the Amended Complaint did not sufficiently allege the existence of an agreement. It then

observed that Cotter's claim for specific performance is not an independent claim, but an

equitable remedy. As to promissory estoppel, the District Court ruled that there were no

allegations of a clear or definite promise, and hence no plausible claim. Finally, the

District Court decided that the Amended Complaint's claim of equitable estoppel was

insufficient because the letters described in the Amended Complaint did not bestow any

contract rights and there was no agreement over the sale.

                                             4
         Cotter filed a timely appeal.1 The District Court had jurisdiction pursuant to 28

U.S.C. § 1332 and we have jurisdiction over the District Court's final order pursuant to

28 U.S.C. § 1291.

                                                         II.

         To plead a breach of contract in New Jersey, a plaintiff must allege that (1) there

was a contract, (2) that contract was breached, (3) the breach resulted in damages, and (4)

the person suing for breach performed his own contractual duties. Nat'l Reprographics,

Inc. v. Strom, 621 F. Supp. 2d 204, 222 (D.N.J. 2009) (interpreting and applying New

Jersey law). The issue framed in this appeal concerns the first element of the claim.

When do negotiations turn into a contract?2

         The answer is only when there is a valid offer and acceptance. Fletcher-Harlee

Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 250 (3d Cir. 2007); 4 Orchard,
849 A.2d at 170. Here there was neither. In its January 2001 letter, NHA stated "we

request that Cotter give us an offer to purchase." (J.A. 22, 45). This was not an offer, but

merely a request for an offer. Id. Similarly, the March 2001 letter from NHA said that

the Authority was "willing" to convey the 22 acres for $2,486,000, yet another signal that

NHA was ready to negotiate. (J.A. 22, 48.). Paragraph 23 of the Amended Complaint
1
  We exercise plenary review over the District Court's order granting the NHA's motion to dismiss for failure to state
a claim under Federal Rule of Civil Procedure 12(b)(6). United States Dep't of Transp. ex rel. Arnold v. CMC
Engineering, 564 F.3d 673, 676 (3d Cir. 2009). This means that we accept the allegations in the Amended
Complaint as true and construe the allegations in the light most favorable to Cotter. Phillips v. County of Allegheny,
515 F.3d 224, 231, 233 (3d Cir. 2008) (internal quotations omitted). To survive a motion to dismiss, the allegations
must state a claim to relief that is "plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)).
2
 As the District Court observed, when documents are integral to a complaint or explicitly relied upon, those
documents can be considered in determining whether the complaint states a plausible claim. In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). The letters referenced in the Amended Complaint are such
documents, and, as such, are considered as part of the Court's analysis.

                                                          5
references the June 1 letter Cotter sent to NHA, which states that an agreement had been

reached between the parties. But if this is an allegation that an agreement had been

reached, it is a legal assertion, not a factual one, which the District Court properly

ignored. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007)). The June 4, 2001 letter from NHA to Cotter stated

that "subject to final approval by the Authority's Board of Commissioners, the Authority

will enter into a contract" that will have certain features. (J.A. 24, 54.) The use of the

future tense makes it clear that, once again, NHA was simply setting the stage for the an

actual agreement. Nowhere does this letter allege an offer or acceptance.

       The March 17, 2004 letter states that the parties had "previously negotiated an

agreement" but, once again, any allegation that an agreement had been reached is a legal

conclusion, not a factual one. (J.A. 9, 65). Later in the letter (and the allegation of the

Amended Complaint incorporating the letter), NHA pitched the following:

       At this time, the NHA is requiring that if your client has a continued
       interest in this property, it must close on or before May 1, 2004. Please
       advise me before the close of business on April 15, 2004 if your client
       desires to acquire this property in its current condition based upon the terms
       and conditions of our proposed agreement.

(J.A. 9, 65). This is the first offer—a "manifestation of willingness to enter into a

bargain, so made as to justify another person in understanding that his assent to that

bargain is invited and will conclude it"— alleged in the Amended Complaint.

Restatement (Second) of Contracts § 24 (1981). Paragraph 34 of the Amended

Complaint then references an April letter in which Cotter stated that he was "ready to

close May 1, 2004" but then pointed to problems with the contract proposed in the March

                                              6
17 letter before drawing attention to a copy of the contract enclosed with "requisite

changes." (J.A. 10, 67). This was a counter-offer, which the next paragraph of the

Amended Complaint states was not executed by NHA. Fletcher-Harlee Corp., 482 F.3d

at 250; Restatement (Second) of Contracts § 59 ("A reply to an offer which purports to

accept it but is conditional on the offeror's assent to terms additional to or different from

those offered is not an acceptance but is a counter-offer.").

       With this factual and legal framework established, we agree with the District

Court that the Amended Complaint failed to state a plausible breach of contract claim

because the Amended Complaint nowhere alleged a valid offer and acceptance. As the

District Court concluded, this makes the instant case similar to 4 Orchard where there

was a course of dealing culminating in a "flurry of letters" but the context made it

apparent that the parties intended to be bound only by a written contract. 849 A.2d 164.

Here, the allegations are that no offer was made until March 17, 2004, that the offer

included a written contract, and that the offer was rejected in favor of a counter-offer.

"No offer and no acceptance means no contract." Fletcher-Harlee, 482 F.3d at 251. The

District Court properly dismissed Cotter's breach of contract claim because there was no

plausible entitlement to relief on such a claim, based on the allegations in the Amended

Complaint.

       The District Court was also correct to point out that, without a contract, there can

be no claim for specific performance, which is an equitable remedy for breach of

contract.

                                              7
       We also agree with the District Court's decision to dismiss the claim for

promissory estoppel. In New Jersey, the elements of that claim are "(1) a clear and

definite promise; (2) made with the expectation that the promisee will rely on it (3)

reasonable reliance; and (4) definite and substantial detriment." Toll Bros., Inc. v. Bd. Of

Chosen Freeholders of County of Burlington, 944 A.2d 1, 19 (N.J. 2008). The problem is

that the only promises alleged in the Amended Complaint are promises to eventually

enter into a contract and a promise in the form of a contract that was rejected. Any

detrimental reliance on such promises was unreasonable.

       Cotter's claim for equitable estoppel requires that he plead "a knowing and

intentional misrepresentation by the party sought to be estopped under circumstances in

which the misrepresentation will probably induce reliance, and reliance by the party

seeking estoppel to his or her detriment." O'Malley v. Dep't of Energy, 537 A.2d 647,

651 (N.J. 1987) (citing Horsemen's Benevolent & Protective Ass'n v. Atlantic City Racing

Ass'n, 487 A.2d 707 (N.J. 1985)). But here, there is no allegation of a misrepresentation.

The Amended Complaint alleges that NHA would entertain an offer, which it did, that it

would authorize a formal contract, which it did, and that it would send Cotter a formal

contract, which it did.

       This case, like Fletcher-Harlee is a "cautionary tale" of offer and acceptance. 482
F.3d at 249. The appellant in Fletcher-Harlee, just like Cotter here, failed to sufficiently

plead a breach of contract claim and, also just like Cotter here, it asked for permission to

re-plead in a further amended complaint. Id. at 251. We said "no," reaffirming the long-

standing rule that "in ordinary civil litigation it is hardly error for a district court to enter

                                                8
final judgment after granting a Rule 12(b)(6) motion to dismiss when the plaintiff has not

properly requested leave to amend its complaint." Id. at 253. As the court stated in

Fletcher-Harlee, this rule does not impose an undue burden on civil plaintiffs, who have

a ten-day window under Rule 59(e) in which they can file a motion to reopen the

judgment and amend the complaint. Id. Because Cotter's case is not different from

Fletcher-Harlee's in this respect, we find that the District Court committed no error. We

decline his request for permission to re-plead.

                                                  III.

       We will affirm the ruling of the District Court. In short, the Amended Complaint

failed to allege the existence of a contract, a promise upon which reliance would have

been reasonable, or a misrepresentation. The District Court thus properly granted NHA's

motion to dismiss for failure to state a claim.

                                              9
POLLAK, District Judge, dissenting.

       The majority holds that documents exchanged between the parties do not plausibly

support the assertion that an agreement had been reached because whether “an agreement

had been reached . . . is a legal assertion, not a factual one, which the District Court

properly ignored.” Maj. Op. at 6 (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)

and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). However, Twombly and

Iqbal prohibit courts only from crediting a complaint’s “[t]hreadbare recital[] of the

elements of a cause of action, supported by mere conclusory statements.” Iqbal, 129 S.

Ct. at 1949 (citing Twombly, 550 U.S. at 570). Far from simply making a threadbare

recital of the elements of a breach of contract claim, the complaint here referenced

multiple documents in which both parties referred to an “agreement,” and it made factual

recitals of the actions that both parties took in reliance upon that agreement.

       Accordingly, I respectfully dissent.

                                              1