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4.2.2.3 Choice of law clauses
  • 1 Citibank, N.A. v. Errico

    1
    251 N.J. Super. 236 (1991)
    2
    597 A.2d 1091
    3
    CITIBANK, N.A., PLAINTIFF-RESPONDENT,
    v.
    ANTHONY ERRICO, DEFENDANT-APPELLANT.
    4

    Superior Court of New Jersey, Appellate Division.

    5
    Submitted September 16, 1991.
    6
    Decided October 16, 1991.
    7

    [238] Before Judges PETRELLA, ASHBEY and A.M. STEIN.

    8

    Hellring Lindeman Goldstein & Siegal, attorneys for appellant (Richard B. Honig and Matthew E. Moloshok, on the brief).

    9

    [239] Friedman Siegelbaum, attorneys for respondent (Joel R. Glucksman and Lindsey H. Taylor, on the brief).

    10
    The opinion of the court was delivered by PETRELLA, P.J.A.D.
    11

    Defendant Anthony Errico appeals from a September 11, 1990 order granting plaintiff Citibank N.A. (Citibank) summary judgment and entering a deficiency judgment of $2,601,149.08 as of August 3, 1990. The deficiency proceeding was instituted against Errico after foreclosure of a mortgage and security agreement which he and others had given to the bank in connection with a one year loan of $5,500,000. Errico's cross-motion for summary judgment dismissing the deficiency action was denied by the Law Division in the same order.

    12

    The underlying dispute between the parties arose out of the foreclosure of a mortgage and note on property known as Harbor Island Spa (the Spa) in Long Branch, New Jersey.

    13

    The facts are neither complicated nor disputed. On February 11, 1986, Errico, along with Ahmed Elsaid and Karim Elsaid (the Elsaids) executed a $5,500,000 note in favor of plaintiff Citibank secured by a first mortgage against the Spa, as well as mortgages against other properties (two in Hudson County and one in Monmouth County). Citibank was to be paid monthly interest at a rate of Citibank's prime rate plus .05%, with a balloon payment due on February 11, 1987.

    14

    The Mortgage Note and Security Agreement contained the following choice of law provisions:

    15
    This note is made and delivered in the Borough of Manhattan, City, County and State of New York, where all advances and repayments shall be made. The Maker agrees that this Note shall be construed in accordance with and governed by the laws of said State.
    16
    36.... this Mortgage, the Note and all other instruments, bearing even date herewith, in connection with the loan evidenced by the Note, have been executed and delivered in the Borough of Manhattan, City, County and State of New York. This Mortgage, the Note and said other instruments shall, in all respects, be governed, construed, applied and enforced in accordance with the [240] laws of the said State, except as to matters affecting title to Premises which shall be governed by the applicable laws of the State of New Jersey.
    17

    Citibank instituted foreclosure proceedings in the Chancery Division, Monmouth County, against Errico as well as the Elsaids on the mortgage when the parties failed to make the balloon payment on the maturity date. A judgment was entered in the foreclosure action and the sale of the Spa was ordered. However, the sale was stayed by the filing of a bankruptcy petition by the Elsaids. The stay was vacated by consent order of April 18, 1989 which also established that Citibank was entitled to $7,100,000 plus interest, fees and costs payable from the proceeds of the foreclosure sale. That order further provided that Errico and the Elsaids were not precluded from contesting the interest rate used by Citibank, and that Errico, as a second mortgagee, did not waive his right to object to confirmation of the sale.

    18

    A fair market value appraisal of the property was prepared in connection with the bankruptcy proceedings by Citibank's expert, Cushman & Wakefield, Inc., which indicated that as of February 3, 1989, the Spa's fair market value was $9,500,000. The Spa was sold at public auction on May 24, 1989, pursuant to the bankruptcy court order, to Citibank, the only bidder at the auction, for $5,900,000. Errico did not object to the auction price.[1]

    19

    Citibank then sued in the Law Division seeking a deficiency judgment against Errico in the amount of $1,769,153.17.[2] Errico moved to dismiss the complaint under R. 4:6-2(e), asserting a failure to state a claim upon which relief can be granted, and alleging that pursuant to New York law, which he asserted governed the transaction, no deficiency existed because he was [241] entitled to a $9.5 million credit for the fair market value of the property based on Citibank's own appraisal. After his motion to dismiss was denied on May 10, 1990, Errico filed an answer and demand for jury trial which contained an affirmative defense that no deficiency existed because the Spa's fair market value exceeded the debt claimed under the mortgage note.

    20

    Subsequently, Citibank moved for summary judgment arguing that (1) under N.J.S.A. 2A:50-3 Errico was not entitled to a fair market value credit in a commercial transaction; and (2) Errico's failure to object to the foreclosure sale price precluded him from claiming the fair market value credit. Errico cross-moved for summary judgment, alleging that New York law governed the deficiency proceeding based upon the choice of law provisions contained in the mortgage and note. In particular, Errico argued that New York's Real Property Actions and Proceedings Law (RPAPL) § 1371, subdivision 2, requires that when calculating a deficiency judgment, the debtor shall be credited with the higher of the fair market value as determined by the court, or the sale price. Thus, Errico claimed entitlement to a credit of $9,500,000, the appraised value of the Spa established for Citibank just three months prior to the foreclosure sale.

    21

    Citibank argued that New York's RPAPL provision is a procedural rule which is inapplicable to foreclosure and deficiency actions brought outside the State of New York, and that under general conflicts of law principles, New Jersey law governs the procedural aspects of the deficiency judgment proceeding.

    22

    After argument on the motions, summary judgment was entered in favor of Citibank. The judge's brief oral opinion addressed only the issue of which law governed the deficiency proceeding. Without distinguishing between the foreclosure action and the deficiency action, he concluded that New Jersey [242] law should apply because the property and foreclosure were in New Jersey.[3]

    23

    The summary judgment order from which Errico now appeals was entered on September 11, 1990. On Errico's request, execution and levy upon the judgment were stayed pending appeal, subject to certain conditions.

    24

    Because the mortgage and note specifically provided that New York law was to govern the financing transaction, but not title matters, Errico relies on the deficiency judgment provisions in RPAPL § 1371, subdivision 2, which states:

    25
    Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the party liable as determined by the judgment with interest, plus the amount owing on all prior liens and encumbrances with interest, plus costs and disbursements of the action including the referee's fee and disbursements, less the market value as determined by the court or the sale price of the property whichever shall be the higher. (Emphasis added)
    26

    Citibank contends that the New York fair market value credit provisions (sometimes referred to as the anti-deficiency provisions) is procedural, and, thus does not apply under conflicts of law principles, in a New Jersey forum. It also contends that regardless of the "substantive" or "procedural" designation, the New York legislature did not intend for RPAPL § 1371 to apply to property located outside of New York.

    27

    The determination of whether a fair market value credit is substantive or procedural is generally accomplished in accordance with the law of the forum state, here New Jersey. See H. Goodrich & F. Scoles, Conflict of Laws, § 81 (4th ed. 1964). Light v. Granatell, 171 N.J. Super. 557, 410 A.2d 266 (App.Div. 1979), does not support Citibank's argument that RPAPL § 1371, subdivision 2, is procedural, rather than substantive. Light only considered RPAPL § 1301, which was intended to [243] prevent multiplicity of suits on the same debt, and concluded that that section was procedural. Section 1371 deals with the extent of a debtor's liability, a substantive right, rather than how a creditor is to proceed in enforcing liability, the procedural aspect. We find persuasive the language in Gate City Federal Savings & Loan Ass'n v. O'Connor, 410 N.W.2d 448, 450 (Minn. Ct. App. 1987), which held a fair market value credit statute to be substantive:

    28
    A law is substantive if it will substantially affect the result. See Guaranty Trust Co. of New York v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945). If North Dakota's law on deficiency judgments applies, the O'Connors may incur either no judgment, or a larger or smaller one. If Minnesota law applies, there is a certain, relatively large deficiency judgment. Since the respective deficiency judgment laws are significantly different and application of the statute will substantially affect the result, we hold that deficiency judgments are matters of substantive law. [410 N.W.2d at 450] (Emphasis added).
    29

    We consider the New York law deficiency provisions to be substantive, but in any event even if they were procedural, there is no bar to the parties agreeing to apply the New York deficiency provisions to the non-title aspects of the financing arrangements. Simply stated, there is no impediment to applying a contractual choice of substantive law provision as long as the public policy of the forum state is not violated. Kalman Floor Co., Inc. v. Jos. L. Muscarelle, Inc., 196 N.J. Super. 16, 481 A.2d 553 (App.Div. 1984), aff'd o.b. 98 N.J. 266, 486 A.2d 334 (1985); Crinnion v. The Great Atlantic-Pacific Tea Co., 156 N.J. Super. 479, 384 A.2d 159 (App.Div. 1978); Knollmeyer v. Rudco Industries, Inc., 154 N.J. Super. 309, 381 A.2d 378 (App.Div. 1977), certif. denied 77 N.J. 477, 391 A.2d 492 (1978). Thus, the parties may expressly provide that the validity and interpretation of the mortgage and note are governed by the substantive laws of a state other than New Jersey.

    30

    Citibank argues that to apply the anti-deficiency provisions of the New York statute would be against the public [244] policy of this State because N.J.S.A. 2A:50-2.3(a), as amended,[4] contains a provision which exempts mortgage notes used in connection with mortgages for most business or commercial purposes from New Jersey's fair market value credit provision.

    31

    New Jersey's law now generally equates notes and bonds for the order of proceedings to collect a debt secured by a mortgage. N.J.S.A. 2A:50-2. It requires that in calculating a deficiency judgment a debtor shall be credited with the fair market value of the property. As a part of that law N.J.S.A. 2A:50-3 provides:

    32
    The obligor in any bond or note specified in section 2A:50-2 of this Title, with respect to any bond given after March 29, 1933, and with respect to any note given after the effective date of this amendatory act may file an answer in the action for deficiency, disputing the amount of the deficiency sued for. In that event both parties may introduce evidence as to the fair market value of the mortgaged premises at the time of the sale thereof in the foreclosure action, and the court, with or without a jury, shall determine the amount of such deficiency, by deducting from the debt secured the amount determined as the fair market value of the premises. If all parties to the action shall so agree, the court may accept as the fair market value of the mortgaged premises the value fixed by three appraisers, to be named by agreement of all the parties to the action, which agreement shall be evidenced by a stipulation to be filed in the action. (Emphasis added)
    33

    N.J.S.A. 2A:50-2.3 provides:

    34
    This act shall not apply to proceedings to collect a debt evidenced by a note and secured by a mortgage on real property in the following instances:
    35
    a. Where the debt secured is for a business or commercial purpose other than a two-family, three-family or four-family residence in which the owner or his immediate family resides;
    36
    b. Where the mortgaged property is other than a one-family, two-family, three-family or four-family dwelling in which the owner or his immediate family resides at the time of institution of proceedings to collect the debt;
    37
    c. Where a banking institution, savings and loan association or building and loan association, operating pursuant to State or Federal law, is the lender or his [245] assignee and the mortgage is not the primary security for the debt, as evidenced by (1) the financial condition of one or more persons directly or indirectly liable on the note, or (2) the giving of collateral in addition to the mortgage as security for the debt;
    38
    d. Where a banking institution, savings and loan association, building and loan association or licensed secondary mortgage lender, operating pursuant to State or Federal law, is the lender, and the mortgage is given to secure payment of a loan evidenced by a note, and where the mortgage so given is subject to the lien or liens of a prior mortgage or mortgages not held by such institution or association or by any holder in which such institution or association has an interest or with which such institution or association has an affiliation. (Emphasis added).
    39

    Errico argues that New Jersey law requires the court to consider fair market value in determining whether to grant the deficiency judgment, and that the statutory exception for commercial or business property does not preclude that result. Thus, Errico argues that we should conclude that the trial judge should have found that the Spa's fair market value exceeded and extinguished the personal debt based on Citibank's own appraisal, which reflected a fair market value in excess of the personal debt.

    40

    The enactment of Laws of 1979, chapter 286, was intended to eliminate the difference in treatment between bonds and notes secured by real estate mortgages so that a creditor would first have to look to the property in satisfaction of the debt, before personal liability was sought to be enforced on personal guarantees. See Central Penn National Bank v. Stonebridge, Ltd., 185 N.J. Super. 289, 304, 448 A.2d 498 (Ch.Div. 1982), and N.J.S.A. 2A:50-2. In Central Penn National Bank, the court did not limit the fair market value credit to residential property, but, in the case of a corporate debtor, imposed conditions, including a condition that "in the event of a suit for a deficiency, and upon objection to the sale of the mortgaged premises, defendants be permitted ... a fair market value hearing under the equitable deficiency proceedings pursuant to 79-83 Thirteenth Avenue v. DeMarco [44 N.J. 525, 210 A.2d 401 (1965)]...." 185 N.J. Super. at 312, 448 A.2d 498. The Chancery Division judge considered the fact that the secured debt in [246] the matter before him was for business or commercial purposes and fell within the exception of N.J.S.A. 2A:50-2.3(a) and (b). Id. at 304, 448 A.2d 498.

    41

    The judge in Central Penn National Bank clearly did not consider that the application of equitable principles in resolving that case conflicted in any way with the statute. Nor do we find any violation of public policy here in allowing the parties to contract for the application of New York law. The exceptions in N.J.S.A. 2A:50-2.3 do not create the type of policy statement that precludes private agreements. This statute merely declares the extent to which the Legislature was able to agree on equating mortgage bonds and notes at that time.

    42

    The argument raised by Citibank that the New York legislature did not intend for its deficiency statute to operate extraterritorially is a make-weight argument under these circumstances. Under our federal-state system no state purports to enact any legislation to operate extraterritorially, unless there is a legislatively sanctioned compact with another state or states or, perhaps, a uniform act. Citibank's argument is without merit where parties contract to be bound by a law that has a reasonable nexus to the transaction.

    43

    The case before us differs markedly from Key Bank of Alaska v. Donnels, 106 Nev. 49, 787 P.2d 382 (1990), which we do not find persuasive in any event. There, the Alaska statute's anti-deficiency language was specifically limited to Alaska land. The parties had contractually agreed in the mortgage note that Alaska law would govern. However, they agreed in the deed of trust (the counterpart of a mortgage) that they would be governed by Nevada law, thus setting up a conflict. Under those circumstances, the court declined to apply Alaska's anti-deficiency statute.

    44

    Even in the absence of the contractual provision applying New York law, Citibank's argument that there is no entitlement to a fair market value credit in a deficiency action in New Jersey on a note where business or commercial property is [247] involved is not a correct statement of our law. Although N.J.S.A. 2A:50-2.3 was amended to exempt mortgages secured by notes for business and commercial properties from the fair market credit provision, we find nothing which precludes a court from applying equitable principles to impose a fair market value credit to prevent a windfall or where circumstances require equitable relief in the interests of justice. See Hudson City Savings Bank v. Hampton Gardens, Ltd., 88 N.J. 16, 438 A.2d 323 (1981); 79-83 Thirteenth Avenue v. DeMarco, 44 N.J. 525, 210 A.2d 401 (1965), and Morsemere Federal Savings & Loan Ass'n v. Nicolau, 206 N.J. Super. 637, 503 A.2d 392 (App.Div. 1986). As we have noted, the Chancery Division applied equitable principles in conditioning relief on a fair market value hearing in Central Penn National Bank v. Stonebridge, Ltd., supra (185 N.J. Super. at 311, 448 A.2d 498). An equity court has the inherent power to prevent a potential double recovery or windfall to a judgment creditor. Morsemere Federal Savings & Loan Ass'n, supra (206 N.J. Super. at 645, 503 A.2d 392). Morsemere recognized that the court has equitable powers to mold relief. Although the deficiency suit here was instituted in the Law Division, rather than the Chancery Division, under our constitution each court has the ability to fashion equitable remedies. N.J. Const. of 1947, art. VI, § 3, para. 4; Wojcek v. Pollock, 97 N.J. Super. 319, 325, 235 A.2d 58 (Law Div. 1967). See also Winberry v. Salisbury, 5 N.J. 240, 247, 74 A.2d 406 (1950). We also note that the property involved in 79-83 Thirteenth Avenue Ltd. v. DeMarco, supra (44 N.J. 525, 210 A.2d 401) (a case decided before the amendments to the deficiency statutes), was commercial property but nonetheless, the court noted the inherent unfairness of the situation and applied traditional equitable principles. Such principles were also followed in Central Penn National Bank, decided after the amendments, which likewise involved business property. This analysis is particularly apt where the evidence of the security value being in excess of the debt was derived not from the debtor, but from the creditor.

    45

    [248] We conclude that, in accordance with the agreement by the parties in the note and mortgage, New York law applies to the deficiency claim, and that alternatively, under the circumstances here, New Jersey law allows a deficiency hearing to preclude a windfall under general equitable principles. Accordingly, we remand for a deficiency hearing at which the fair market value of the property at the time of foreclosure sale shall be determined and the calculation of any credit to be allowed defendant in the deficiency action.

    46

    We reject Citibank's contention that Errico is precluded under the entire controversy doctrine from claiming a fair market value credit because he failed to object to the sale price in the bankruptcy court, as permitted by the bankruptcy court order. In the first place, a debtor is not required to object to a foreclosure sale price as a prerequisite for claiming a fair market value credit in a deficiency suit under N.J.S.A. 2A:50-3. McCloskey v. M.P.J. Co., 85 N.J. Super. 573, 575, 205 A.2d 469 (Law Div. 1964). Although the foreclosure judgment sets the amount due on the debt and may be res judicata among the parties, it is not determinative as to the debtor's liability for a deficiency in a separate suit. See Central Penn National Bank v. Stonebridge, Ltd., supra (185 N.J. Super. at 302, 448 A.2d 498). A claim that no personal liability exists, e.g., that the fair market value of the property exceeds the mortgage debt, is a personal defense which is properly asserted in the deficiency action. See N.J.S.A. 2A:50-3. To assert it in a foreclosure proceeding would be premature. Central Penn National Bank, supra (185 N.J. Super. at 310, 448 A.2d 498). In addition, although the bankruptcy court ordered sale of the Spa, it did not have exclusive jurisdiction over the property and certainly did not have jurisdiction in the deficiency suit instituted by Citibank against Errico. See 28 U.S.C.A. § 1334(b); Matter of Lemco Gypsum, Inc., 910 F.2d 784, 788 (11th Cir.1990). In our view, the deficiency claim is independent of the bankruptcy proceeding for entire controversy doctrine purposes.

    47

    [249] Likewise, a defense to personal liability on the note by virtue of a claimed fair market value credit is not germane to either the foreclosure action or the bankruptcy matter. The entire controversy doctrine does not bar Errico's claim here. See Ayers v. Jackson Tp., 202 N.J. Super. 106, 493 A.2d 1314 (App.Div. 1985), mod. 106 N.J. 557, 525 A.2d 287 (1987); Zaromb v. Borucka, 166 N.J. Super. 22, 398 A.2d 1308 (App.Div. 1979). Since the deficiency cause of action did not accrue until after the foreclosure proceeding, and until the property was sold for less than the amount owed on the note, there can be no bar by virtue of the entire controversy doctrine. Indeed, it might equally be argued that if Errico were barred by the entire controversy doctrine, Citibank's own deficiency claim would be barred because it had not been asserted in the foreclosure action. Obviously, neither party is barred because the involved claims could not have been presented earlier. See Viviano v. CBS, Inc. 251 N.J. Super. 113, 128-129, 597 A.2d 543, 551 (App.Div. 1991).

    48

    Errico also argues that Citibank's "wholly conclusory affidavit as to the balance allegedly due under the Note," without any supporting documents or computations, does not suffice to establish the amount due. The affidavit submitted by Citibank states that as of April 1, 1990, it was entitled to a $2,345,409 deficiency judgment. We recognize that the issue was not raised below, and hence need not be considered by us. See Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234, 300 A.2d 142 (1973). Nevertheless, because of the circumstances here, where Citibank submitted a fair market value appraisal which exceeded the amount due on the mortgage, and the deficiency action was decided on a motion for summary judgment which addressed only the issue of which law governed and not the amount due or the deficiency procedure itself, the interests of justice are best served by remanding for a hearing to determine the amount of the deficiency, if any.

    49

    Because it was not a question of allowing the debtor to file an answer under N.J.S.A. 2A:50-3 to dispute the amount due in [250] the deficiency action, but merely allowing the debtor to use the creditor's own appraisal figures, no delay or extended hearing is required. On a remand Citibank must prove the amount due and the parties may agree to an appraisal procedure, perhaps with the designation of three appraisers, as set forth in N.J.S.A. 2A:50-3, to determine the value of the security in the creditor's hands so that there may be an expeditious determination of any deficiency.

    50

    In light of our determination we need not address Errico's contention that Citibank should be estopped from arguing that New York law applies because its pleadings and briefs filed in the foreclosure action sought the application of New York law.

    51

    We reverse the order granting summary judgment and remand for a hearing to determine the amount of the deficiency, if any, and the allowance of a fair market credit under equitable principles to the extent that the fair market value at the time of the foreclosure sale exceeded the price for which the property was bid in by Citibank.

    52

    [1] We are informed that the other three properties subject to the mortgage were of insufficient equity to yield a monetary return to Citibank and were not foreclosed.

    53

    [2] The deficiency complaint was originally filed in Passaic County. By consent order of September 13, 1989, venue was changed to Bergen County.

    54

    [3] Errico argues that the judge failed to make sufficient findings and conclusions under R. 1:7-4. Respondent in effect acknowledges this, but urges us to nonetheless decide the case on the record and the law.

    55

    [4] L. 1979, c. 286 § 13, effective May 1, 1980, amended by L. 1981, c. 333 § 1, effective December 14, 1981. Although not argued in this case, subsections b and c could also be applicable. Indeed, this section as written would appear to run counter to the purpose of the amendments by N.J.S.A. 2A:50-2 and 3 which purported to treat mortgages secured by notes the same as those secured by bonds. See Central Penn National Bank of Stonebridge, Ltd., 185 N.J. Super. 289, 304, 448 A.2d 498 (Ch.Div. 1982).

  • 2 CS-Lakeview, Inc. v. Simon Property Group

    1
    642 S.E.2d 393 (2007)
    2
    CS-LAKEVIEW AT GWINNETT, INC.
    v.
    SIMON PROPERTY GROUP, INC. et al.
    Simon Property Group, Inc. et al.
    v.
    CS-Lakeview at Gwinnett, Inc.
    3
    Nos. A06A1841, A06A1842.
    4

    Court of Appeals of Georgia.

    5
    February 22, 2007.
    6

    [395] Mayfield, Commander & Pound, William S. Mayfield, Constance E. Rodts, Atlanta, for appellant.

    7

    Morris, Manning & Martin, John F. Manning, Donald A. Loft, Ross A. Albert, Atlanta, for appellees.

    8
    MIKELL, Judge.
    9

    In the wake of their failed joint venture concerning a commercial property in Gwinnett County, CS-Lakeview at Gwinnett, Inc. (CS-Lakeview), and Simon Property Group, Inc., and its related entities (Simon) entered into a settlement agreement under which CS-Lakeview gained a right of first refusal should Simon obtain a third-party offer as to the Gwinnett property. When such an offer materialized, however, the parties differed as to the procedures to follow, and CS-Lakeview sued Simon and others for breach of contract and other claims. The trial court granted summary judgment to Simon on the ground that CS-Lakeview's right of first refusal was invalid under Delaware's rule against perpetuities, but allowed CS-Lakeview's unjust enrichment claim to go forward. Both parties now appeal. We conclude that none of CS-Lakeview's claims are viable. We therefore affirm in Case No. A06A1841 and reverse in Case No. A06A1842.

    10

    The relevant facts are not in dispute. In 1985, CS-Lakeview and the Simon Property Group, both of which are Delaware corporations, began a joint venture to develop 133 acres of land in Gwinnett County. Disputes arose, and Simon sued CS-Lakeview in Delaware Chancery Court in 1994. In the settlement agreement reached late the following year, Simon received the Gwinnett property, while CS-Lakeview retained a right of first refusal under which it could match any "bona fide" offer received "at any time after November 30, 1995." Among other things, the settlement agreement provided that the parties would "take all additional actions that may be necessary or appropriate to give full force and effect to the terms and intent of [the] Agreement" and that it was "subject to and construed in accordance with the laws of the state of Delaware."

    11

    In May 2000, Simon gave CS-Lakeview notice that Retail Development Partners (RDP) had made a "bona fide" offer of $5.5 million for the Gwinnett property. When CS-Lakeview asked for additional information, however, Simon reported that it had not yet received a written offer on the property. To avoid litigation over CS-Lakeview's right of first refusal, Simon proposed an option agreement based on RDP's tentative price of $5.5 million. The parties negotiated a license under which CS-Lakeview would inspect the property to determine its prospects for development, [396] but failed to reach agreement on the remaining terms of the option agreement. On October 6, 2000, CS-Lakeview offered $3.85 million for the Gwinnett property.[1] Soon afterward, Simon rejected this offer, although CS-Lakeview objected that its right had been ignored. In June 2001, Simon sold the Gwinnett property to RDP for the same $5.5 million price it had quoted to CS-Lakeview the previous October.

    12

    On March 1, 2002, CS-Lakeview filed a breach of contract action against Simon and associated entities. CS-Lakeview later added Chicago Title Insurance Company (CTIC) as a defendant, alleging tortious interference with contract, fraudulent conveyance, civil conspiracy and other claims. CS-Lakeview also sued RDP in federal court. The federal district court granted summary judgment to RDP on grounds including that the right of first refusal was void under Delaware's rule against perpetuities. After the Eleventh Circuit affirmed on other grounds, the trial court in this case revisited the choice-of-law issue on Simon's motion for summary judgment and also held that CS-Lakeview's right of first refusal was invalid because it violated Delaware's rule against perpetuities. The trial court denied Simon's motion as to CS-Lakeview's unjust enrichment claim, however.

    13
    Case No. A06A1841
    14

    1. CS-Lakeview first argues that the trial court erred when it granted summary judgment to Simon on its breach of contract claim. We disagree.

    15

    This case is governed by well-established conflict-of-law principles. Under OCGA § 11-1-105(1), "when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties."[2] "Absent a contrary public policy, this court will normally enforce a contractual choice of law clause."[3] As we have previously explained:

    16
    [A] contract should not be held unenforceable as being in contravention of public policy except in cases free from substantial doubt where the prejudice to the public interest clearly appears. Enforcement of a contract or a contract provision which is valid by the law governing the contract will not be denied on the ground of public policy, unless a strong case for such action is presented; mere dissimilarity of law is not sufficient for application of the public policy doctrine.[4]
    17

    Applying these principles to this case, it is plain that the settlement agreement at issue here bears a "reasonable relation" to the state of Delaware and its laws. CS-Lakeview and Simon Property Group are both Delaware corporations, the settlement agreement ended a lawsuit filed in Delaware, and the parties chose to construe that agreement under Delaware law. As the Supreme Court of Georgia noted long ago as it enforced a note executed in Georgia but payable elsewhere:

    18
    To construe this note and mortgage as we have done works injustice to no one, but puts the parties where they manifestly intended to put themselves. . . . The contract being under our laws perfectly legal, [the defendant] cannot and ought not to expect the courts of this State to release him from his solemn and deliberate undertakings.[5]
    19

    [397] Despite its own negotiated choice of Delaware law, CS-Lakeview argues that its right of first refusal is governed by and valid under Georgia law. Specifically, it asserts that the right, though a future interest in property, is exempt from Georgia's version of the Uniform Statutory Rule against Perpetuities, which "shall not apply to . . . [a] nonvested property interest . . . arising out of a nondonative transfer."[6] A contractual right of first refusal is neither a property interest nor a "nonvested" version of the same, however. Instead, a right of first refusal is a personal and contractual right under Georgia law, and does not run with the land as to which the right is given.[7]

    20

    It is true that Delaware law goes further than Georgia's in its pursuit of a policy favoring the alienability of land, as when Delaware disallows a right of first refusal with an unlimited duration.[8] But this difference does not necessarily signify that such a right violates Georgia public policy. In Shiver v. Benton,[9] for example, a co-tenant filed suit to enjoin a sale of property as in violation of a first refusal agreement without any explicit time limit.[10] Our Supreme Court held that when a right of first refusal "is not tied to a fixed price method or some method of pricing which may not reflect true market value, but is conditioned upon meeting a sale price which the seller is willing to accept, [such an a]greement encourages the development of [a] property to its fullest potential."[11] Since the right of first refusal at issue was "compatible with the policies of commerce and utilization of land," the Shiver court concluded that the right neither violated Georgia's rule against perpetuities nor acted as an illegal restraint on alienation.[12]

    21

    Like the provision at issue in Shiver, CS-Lakeview's bargained-for right of first refusal allowed it to participate in the open market for the Gwinnett property by giving it a chance to buy at a price reached in that market. Georgia public policy does not bar such provisions. But we respect the parties' selection of Delaware law and conclude that Delaware law voids that right.[13]

    22

    2. CS-Lakeview also contends that if its right of first refusal is invalid, the trial court erred in failing (a) to reform the settlement agreement so as to remedy the parties' mutual mistake in choosing Delaware law, which invalidates the right, in favor of Georgia law, which authorizes the right; or (b) to require Simon to execute a document agreeing to apply Georgia law. There is nothing in the record, however, to contradict the conclusion that the parties intended the right of first refusal to be of unlimited duration. As in Thomas v. Murrow,[14] "[t]he question is whether or not the manner in which the parties reflected [their] intention"—here, the settlement provision containing the right of first refusal—"violates the rule against perpetuities."[15]

    23

    Division 1 holds that the settlement provision does indeed violate Delaware's version of the rule. OCGA § 23-2-27 provides that "where the facts are all known and there is no misplaced confidence and no artifice, deception, or fraudulent practice is used . . ., [a [398] party's mere ignorance of the law] shall not authorize the intervention of equity." As Georgia courts have often held, then, the trial court did not err when it denied CS-Lakeview equitable relief for its mere ignorance of applicable Delaware law.[16]

    24

    3. Finally, CS-Lakeview argues that the trial court erred when it granted summary judgment to CTIC concerning CS-Lakeview's claims for tortious interference and other wrongs. We disagree.

    25

    A plaintiff asserting tortious interference with a contractual relationship must show that the defendant "(1) acted improperly and without privilege; (2) acted purposely and with malice with the intent to injure; (3) induced a third party or parties not to enter into or continue a business relationship with the plaintiff; and (4) caused the plaintiff financial injury."[17]

    26

    The record shows that as a result of RDP's concerns about CS-Lakeview's right of first refusal, and in exchange for an agreement to indemnify CTIC against "any claims arising out of the [right of first refusal,]" Simon obtained title insurance from CTIC. There is nothing in the record, however, to support a finding that CTIC committed any wrongful act, including the inducement of Simon to breach CS-Lakeview's right of first refusal. By November 2000, Simon had decided to sell the Gwinnett property to RDP, whereas CTIC did not agree to issue its title insurance policy until June 2001. Like the trial court, the federal district court, and the Eleventh Circuit before us, we conclude that because CTIC could not have induced Simon's alleged breach, CS-Lakeview's claim for tortious interference, as well as its claims for civil conspiracy, punitive damages and fees arising from the same transaction, must therefore fail.[18]

    27
    Case No. A06A1842
    28

    4. In the companion case, Simon cross-appeals from the trial court's denial of its summary judgment motion as to CS-Lakeview's unjust enrichment claim. The trial court held that because CS-Lakeview likely would not have agreed to the settlement agreement without the inclusion of its right of first refusal, a question of fact remained as to whether the invalidation of that right would unjustly enrich Simon. Simon now reasserts arguments made below that CS-Lakeview actually received its bargained-for right and that its unjust enrichment claim is time-barred.

    29

    Here, only one part of the settlement agreement has been held invalid, and the agreement contains a severability clause asserting that "[i]f any part or provision of this agreement should be held void or invalid, the remaining provisions shall remain in full force and effect." "A severability clause indicates the intent of the parties where the remainder of the contract can exist without the void portion."[19] The law of unjust enrichment applies, moreover, only when there is no express contract between the parties.[20]

    30

    We have held in Division 2 above that CS-Lakeview cannot turn to equity to reform the settlement agreement. It is likewise true, then, that it cannot obtain equitable compensation for any alleged unjust enrichment arising from the invalidation of a bargained-for term in that valid contract when it contains a severability clause.[21] Finally, [399] even if the law of unjust enrichment were available to CS-Lakeview, its own complaint shows that it received the right it bargained for when Simon informed it of RDP's "bona fide" offer of $5.5 million for the Gwinnett property. For these reasons, we reverse the trial court's denial of Simon's motion for summary judgment on CS-Lakeview's unjust enrichment claim, and need not reach Simon's contention that this claim is time-barred.

    31

    Judgment affirmed in Case No. A06A1841 and reversed in Case No. A06A1842.

    32
    BLACKBURN, P.J., and ADAMS, J., concur.
    33

    [1] One of CS-Lakeview's business associates testified that no larger offer was made because the entity was in the "embarrassing situation" of not being able to obtain the larger amount.

    34

    [2] See also Lafitte v. Lawton, 25 Ga. 305, 308 (1858) (construing marriage settlement entered into in South Carolina concerning land in Georgia under South Carolina law); Daniel F. Hinkel, Pindar's Georgia Real Estate Law and Procedure, § 1-4 (6th ed.2004), p. 10 ("resort may be had to the law of other states in determining the intentions of the parties to contracts who resided in other states at the time of execution, even though so doing may incidentally affect title to realty in Georgia") (footnotes omitted).

    35

    [3] (Citations omitted.) Carr v. Kupfer, 250 Ga. 106, 107(1), 296 S.E.2d 560 (1982), citing New England Mtg. Security Co. v. McLaughlin, 87 Ga. 1, 13 S.E. 81 (1891).

    36

    [4] (Citations and punctuation omitted; emphasis supplied.) Nationwide Gen. Ins. Co. v. Parnham, 182 Ga.App. 823, 825(4), 357 S.E.2d 139 (1987).

    37

    [5] New England Mtg. Security Co., supra at 5-6, 13 S.E. 81.

    38

    [6] OCGA § 44-6-204(1).

    39

    [7] See Ricketson v. Bankers First Sav. Bank, 233 Ga.App. 11, 13-14(1), 503 S.E.2d 297 (1998); Hasty v. Health Svc. Centers, 258 Ga. 625, 373 S.E.2d 356 (1988).

    40

    [8] See Stuart Kingston, Inc. v. Robinson, 596 A.2d 1378, 1384-1385(III) (Del.1991).

    41

    [9] 251 Ga. 284, 304 S.E.2d 903 (1983).

    42

    [10] Id.

    43

    [11] Id. at 286(1), 304 S.E.2d 903.

    44

    [12] Id. at 287(1), 304 S.E.2d 903.

    45

    [13] See Stuart Kingston, supra (right of first refusal with unlimited duration violates Delaware's rule against perpetuities); see also Manderson & Assoc. v. Gore, 193 Ga.App. 723, 725(1), 389 S.E.2d 251 (1989) (honoring contract's choice of Alabama law concerning employment and stock agreements); Nationwide Gen., supra at 825-826(4), 357 S.E.2d 139 (honoring contract's choice of Texas law concerning claim under Texas insurance policy); compare Nasco, Inc. v. Gimbert, 239 Ga. 675, 676(2), 238 S.E.2d 368 (1977) (because validity of covenants not to disclose was a matter of Georgia public policy, trial court correctly disregarded contract's choice of Tennessee law).

    46

    [14] 245 Ga. 38, 262 S.E.2d 802 (1980).

    47

    [15] Id. at 39(2), 262 S.E.2d 802.

    48

    [16] Id.; see also Robbins v. Nat. Bank of Ga., 241 Ga. 538, 543-544(2), 246 S.E.2d 660 (1978).

    49

    [17] (Citation and punctuation omitted.) Atlanta Multispecialty Surgical Assoc. v. DeKalb Med. Center, 273 Ga.App. 355, 356(2), 615 S.E.2d 166 (2005).

    50

    [18] See id. (when one element of tortious interference fails, the entire claim fails); Nelson & Hill, P.A. v. Wood, 245 Ga.App. 60, 67-68(3), 537 S.E.2d 670 (2000) (granting summary judgment on punitive damages dependent on claim for breach of fiduciary duty).

    51

    [19] (Citations omitted.) Capricorn Systems v. Pednekar, 248 Ga.App. 424, 428-429(2)(d), 546 S.E.2d 554 (2001); see also OCGA § 13-1-8.

    52

    [20] See Cox v. Athens Regional Med. Center, 279 Ga.App. 586, 593(3), 631 S.E.2d 792 (2006).

    53

    [21] See id. (affirming dismissal of unjust enrichment claim when parties entered into valid contract); Capricorn, supra at 426-429(2)(a)-(d), 546 S.E.2d 554 (invalidating restrictive covenant, but enforcing employment contract containing severability clause); compare Imerman v. London, 255 Ga.App. 140, 564 S.E.2d 544 (2002) (refusing to find global settlement agreement severable without noting whether agreement had severability clause).

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