COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A. A Professional Corporation Court Plaza North 25 Main Street P.O. Box 800 Hackensack, New Jersey 07602-0800 201-489-3 000 201-489-1536 Facsimile Attorneys for Defendants, Lehigh Acquisition Corp. and Yorkville Advisors, LLC

WOODMONT PROPERTIES, LLC,

Plaintiff,

v.

LEHIGH ACQUISITIONS CORP. and YORKVILLE ADVISORS, LLC

Defendants.

SUPERIOR COURT OF NEW JERSEY LAW DIVISION: UNION COUNTY DOCKET NO. UNN-C-15-11

Civil Action

REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S COMPLAINT FOR FAILURE TO STATE A

CLAIM UPON WHICH RELIEF CAN BE GRANTED

Of Counsel and On the Brief: Steven R. Klein, Esq.

On the Brief: Neoma M. Ayala, Esq.

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TABLE OF CONTENTS

TABLE OF AUTHORITiES .......................................................................................................... ii

PRELIMINARY STATEMENT .................................................................................................... 1

STATEMENT OF FACTS ............................................................................................................. 4

LEGAL ARGUMENT .................................................................................................................... 5

I. THIS COURT SHOULD GRANT THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S CLAIM FOR BREACH OF CONTRACT /SPECIFIC PERFORMANCE .......................................................... 5

A. The LOI Expired According To Its Own Terms And No Cause Of Action For Breach Of Contract Exists ........................................................ 5

B. Plaintiff Is Not Entitled To Specific Performance Of The LOI or The Purchase And Sale Agreement Which Was Never Executed .............. 9

II. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S CLAIM FOR BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING SHOULD ALSO BE GRANTED ............................................ 10

III. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S PROMISSORY ESTOPPEL CLAIM MUST ALSO BE GRANTED ................. 12

IV. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S FRAUD CLAIM MUST BE GRANTED BECAUSE FRAUD HAS NOT BEEN PLEAD WITH THE REQUISITE PARTICULARITY AND NO CLAIM FOR FRAUDULENT INDUCEMENT HAS BEEN PLED .................. 13

V. PLAINTIFF HAS FAILED TO ALLEGE A CAUSE OF ACTION FOR UNJUST ENRICHMENT AND THIS COUNT TOO MUST BE DISMISSED ......................................................................................................... 15

CONCLUSION: .......................................................................... h• ............................................... 17

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TABLE OF AUTHORITIES

Page(s) CASES

. Ballantyne House Assocs. v. City ofNewark, 269 N.J. Super. 322 (App. Div. 1993) ................... 9

Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N.J. Super. 565 (App. Div. 1954) ............. 8

Craig v. Suburban Cablevision, Inc., 274 N.J. Super. 303 (App. Div. 1994) ................................ 10 I ~

Evangelista v. Pub. Serv. Coordinated Transp., 7 N.J. Super. 164 (App. Div. 1950) .................. .13

Faces, Inc. v. Kennedy, 185 N.J. Super. 113,124 (Law Div. 1981), affd, 185 N.J. Super. 77 (App. Div. 1982) ................................................................................................................. 13

Henderson v. The Hertz Corp., 2005 WL 4127090 (N.J. Super. App. Div.) (June 22, 2006) ........................................................................................................................................ 10

Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105 (App. Div. 2009) ................................... 14

Levinson v. D' Alfonso & Stein, 320N.J. Super. 312 (App. Div. 1999) ...................................... 13

Marioni v. 94 Broadway, Inc., 374 N.J. Super 588 (App. Div. 2005) ....................................... 9, 10

Masseyv. Trump's Castle Hotel & Casino, 828 F.Supp. 314 (D.N.J. 1993) ................................ 15

McBarron v. Kipling Woods, LLC, 365 N.J. Super. 114 (App. Div. 2004) .................................... 7

Morris v. Jersey Cent. Power & Light Co., 118 N.J. Eg. 541 (Ch. Div. 1935) ............................. 15

Triffin v. Automatic Data Processing, Inc., 394 N.J. Super. 237,246 (App. Div. 2007) .............. 14

RULES

R. 4:5-8 .................................................................................................................................... 13, 17

R. 4:6-2(e) ...................................................................................................................................... 17

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PRELIMINARY STATEMENT

This Reply Memorandum of Law is submitted on behalf of Defendants, Lehigh

Acquisition Corp. ("Lehigh") and Yorkville Advisors, LLC ("Yorkville") (collectively Lehigh

and Yorkville are the "Lehigh Entities"), in further support of their motion, in lieu of an Answer,

to dismiss the Complaint of Woodmont Properties, LLC ("Plaintiff' or "Woodmont"), for failure t

to state a claim upon which relief can be granted and for failure to plead fraud with the requisite

specificity. Cognizant of the applicable standard on a motion to dismiss, the Lehigh Entities

submit the Complaint utterly fails to set forth viable claims principally because all of Plaintiffs

alleged claims have merged into and/or are superseded by the parties' November 30, 2010 Letter

of Intent (the "LOI"), which LOI terminated when a formal Purchase Agreement was not

executed within twenty-five (25) days. The parties expressly agreed, in that event, "neither party

shall have any further obligation to the other party."

Plaintiffs opposition brief ignores the critical fact (plead by Plaintiff) that the LOI

resolved any differences between the parties up to the execution of the LOI. As set forth in

Paragraphs 27 and 28 of Plaintiffs Complaint, Plaintiff specifically acknowledges that:

27. After negotiations with the broker, the resolution of the dispute with Defendants and Woodmont culminated in a Letter of Intent.

28. The Letter of Intent constitutes an accord and satisfaction of Woodmont' s claims against Defendants for breach of the agreement to make Woodmont their joint venture partner.

(Pl. Cmplt ~~27, 28.) Despite these admissions, the focus of Plaintiff's opposition is upon acts

allegedly committed prior to the execution of the LOI. Plaintiff's contract and tort claims fail

when viewed through this lens because these alleged claims have merged into and/or are

superseded by Plaintiff's claims under the LOI. Plaintiff cannot rely on those actions and/or

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representations concerning the joint venture to hold the Lehigh Entities liable under its various

contract and tort claims.

When the Court focuses on the operative contract here, the LOI, it must find, as a matter

of law, that any claims thereunder fail. That is because, according to the undisputed facts in the

Complaint and/or documents and conversations referenced therein, the parties were negotiating

.. !

in good faith to execute a Purchase Agreement as they agreed to do in the LOI, but did not

execute a Purchase Agreement within the timeframe set by the parties in the LOI. The LOI then

expired according to its own terms with no extension having been agreed upon by the parties. 1

Given the expiration of the LOI and the pronouncement therein that the parties would have no

further obligation to one another, there is currently no binding contractual obligation for Lehigh

to sell the Property to Plaintiff, and therefore no such duty can be specifically enforced by this

Court. Likewise, without a contract between the parties, there can be no breach.

Moreover, Plaintiffs allegation that the Lehigh Entities acted in bad faith by delaying

execution of the Purchase Agreement is belied by the limited evidence this Court may consider

on this motion. The Certification of Steven R. Klein, Esq., (the "Klein Cert."), specifically

Exhibits B, D and E, show that as a matter of law, Lehigh was negotiating with Plaintiff in good

faith. Additionally, by Plaintiffs own admissions there were numerous telephone calls and

emails back and forth between the parties that show Lehigh's manifest good faith with respect to

the Purchase Agreement. Given these inescapable facts, the Lehigh Entities' Motion to Dismiss

1 The Court does not need to reach or consider Plaintiffs allegation concerning the Lehigh Entities' purported failure to provide due diligence documents to Plaintiff. The LOI specifically provides for a fifty-five (55) day due diligence period. Thus, when the LOI terminated according to its own terms, after 25 days, the parties were in the middle of the due diligence exchange under the LOI and additional documentation could and/or would have been provided if the obligations under the LOI were subsequently succeeded by a Purchase Agreement.

2 48687/0003-7721884v5

Plaintiffs Complaint as to the count for breach of the covenant of good faith and fair dealing

should also be granted.

The Lehigh Entities' motion to dismiss should also be granted as to Plaintiffs fraud

' claim. For the first time in its opposition papers, Plaintiff Cl!gues a new claim framed as

"fraudulent inducement of the LOI" --which does not appear in the Complaint. Plaintiffs new

claim for fraudul~nt inducement is totally inconsistent with its claim for specific performance.

The remedy for its claim for fraudulent inducement of the LOI would be rescission, which makes

little sense in light of its claim for specific performance. Essentially, Plaintiff is contending it

was induced by fraud to enter a LOI that it wishes to specifically enforce. Plaintiff cannot

maintain such inconsistent positions.

Given the foregoing, even when all the facts in Plaintiffs Complaint are taken as true,

Plaintiff cannot sustain any viable claims against the Lehigh Entities, particularly Yorkville, and

the Complaint in its entirety must, as a matter of law, be dismissed. While Plaintiff may have

been displeased that a real estate deal never came to fruition, its revenge claims allege no basis

whatsoever upon which to attach any contract and/or tort liability against the Lehigh Entities.

For all the reasons set forth above and in the moving papers, and those discussed more

fully in detail below, the Lehigh Entities respectfully submit that the Court should dismiss

Plaintiffs Complaint in its entirety, with prejudice, for failure to state a claim upon which relief

may be granted.

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STATEMENT OF FACTS

A full recitation of the facts mandating a grant of the Lehigh Entities' Motion to Dismiss

is set forth in detail in the "Memorandum of Law in Support of Defendants' Motion to Dismiss

Plaintiffs Complaint for Failure to State a Claim Upon Which Relief Can be Granted" (the

"Motion to Dismiss"), and is incorporated by reference herein. Unless otherwise stated, all

capitalized terms used herein shall have the same meaning ascribed to them in the Motion to

Dismiss. The facts set forth in Plaintiffs opposition brief do not change this result, but rather

further serve to support the granting of the Motion to Dismiss.

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LEGAL ARGUMENT

I. THIS COURT SHOULD GRANT THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S CLAIM FOR BREACH OF CONTRACT/SPECIFIC PERFORMANCE.2

Simply put, Plaintiffs first count for breach of contract/specific performance should be

dismissed with prejudice because the allegations in support of this count are based on acts

committed prior to the execution of the LOI. By1Plaintiffs own allegation in the Complaint, the

LOI was an "accord and satisfaction ofWoodmont's claims against Defendants for breach of the

agreement to make Woodmont their joint venture partner." (Pl. Cmplt ~28.) Under the only

operative contract, the LOI, Plaintiffs claims must fail as a matter of law because the LOI

expired after twenty-five (25) days elapsed without execution of a Purchase Agreement.

Obviously, where there is no underlying enforceable agreement-there can be no claim for

specific performance or breach of contract. Accordingly, the Lehigh Entities' motion to dismiss

Plaintiffs first count for breach of contract/specific performance should be granted.

A. The LOI Expired According To Its Own Terms And No Cause Of Action For Breach Of Contract Exists.

Lehigh cannot be held liable under a breach of contract theory because the LOI was not

breached, but rather expired according to its own clear and definitive terms. The LOI expressly

provided as follows:

2 Plaintiff's Complaint does not seek to hold Yorkville liable for breach of contract. However, footnote 7 of Plaintiff's Opposition Brief suggests that Y arkville was actively involved in the negotiation of the Purchase Agreement. This conclusion by Plaintiff has no basis in fact and appears to be premised upon the fact that the emails attached to the Klein Cert. from Mr. Gardner have a signature block that denotes he is a "Yorkville" employee (which is understandable given the relationship between Y arkville and Lehigh). There is nothing in the substance of the emails which suggests that Y arkville was a party to the negotiations or was intended to be a third-party beneficiary of the LOI and/or the Purchase and Sale Agreement. Moreover, there is nothing in the emails that would impute liability to Yorkville or suggests that the corporate veil should be pierced. Given these facts, at a minimum Yorkville should be dismissed from this case.

5 48687/0003-7721884v5

The Parties recognize and understand that a formal Purchase Agreement is intended to be drafted and executed within twenty­five (25) days from the date this Letter of Intent is fully executed. If a binding Purchase Agreement has not been executed within twenty-five (25) days, neither party shall have any further obligation to the other party.

Klein Cert. Exhibit A (emphasis added).

Contrary to Plaintiff's protestations, the record evidence shows that the parties were ' I

negotiating in good faith to execute a Purchase Agreement, but were ultimately unable to agree

on the material terms. Plaintiff's bald allegation that the parties agreed on the material terms of

the Purchase Agreement, creating a binding contractual obligation, is directly contradicted by the

documents attached to the Klein Cert. and explicitly referenced in Plaintiff's Complaint.

Specifically, Exhibit B to the Klein Cert., a November 15,2010 email from William

Gardner, Esq., Senior Counsel to Yorkville, states that "[t]he Purchase and Sale Agreement does

not accurately incorporate the terms and conditions set forth in the LOI." Klein Cert., Exhibit B.

The email then proceeds to detail the material issues that need to be addressed before the

Purchase and Sale Agreement is acceptable to Lehigh. See Klein Cert., Exhibit B. Likewise,

Exhibit E to the Klein Cert., another email from Mr. Gardner dated November 24, 2010, also

expresses Lehigh's disagreement with certain material terms in the draft Purchase and Sale

Agreement. The email provides, in pertinent part, "[w]e have not yet provided written comments

[to the Purchase and Sale Agreement] because the drafts circulated by Woodmont contain terms

and conditions that differ materially from the terms and conditions sets forth in the LOI. We

have had several calls to discuss these differences." Klein Cert., Exhibit E (emphasis added). As

the foregoing correspondence indicates, there were differences on the material terms of the

Purchase Agreement, and thus there was no meeting of the minds as contended by Plaintiff.

6 48687 /0003-7721884v5

Additionally, the LOI was never extended by joint agreement of the parties despite

Plaintiff's wishful s~ggestion to the contrary.3 This allegation is directly contradicted by Exhibit

F to the Klein Cert., which further supports granting the Lehigh Entities' motion to dismiss the

count for breach of contract. Exhibit F to the Klein Cert., an email from StephenSantola of

Woodmont dated December 3, 2010, states that "[p ]lease recall Amir has not yet agreed to an

extension to the 25 day ~ontract deadline." Klein Cert., Exhibit F. Thus, Plaintiff's own

representative confirms as of December 3, 2010 (more than 25 days after the LOI was executed)

that there was no joint extension of the LOI. Thus, Lehigh's termination thereafter was in

conformity with the terms of the LOI.

As plainly seen, the LOI, subsequent disagreement on the material terms ofthe Purchase

Agreement and lack of extension, as reflected in the exhibits attached to the Klein Cert.,

demonstrate unequivocally the LOI expired thereby relieving the parties of any obligation to

each other.

Plaintiff notes in its opposition briefthat "whether a preliminary agreement such as a

letter of intent is binding is a matter of the parties intent." (Pl. Br. p. 14) Plaintiff's reliance on

the case ofMcBarron v. Kipling Woods, LLC, 365 N.J. Super. 114 (App. Div. 2004), however,

is misplaced as applied here. In McBarron, the Court was confronted with the issue of whether

two parties had entered into an oral contract for the sale of real property and whether defendant's

motion for summary judgment was properly granted. I d. at 115. The Appellate Division there

noted that based on the facts shown in the attorney's certification and the course of dealing

between the two parties, it could be found that the parties entered into .an oral contract which was

not dependent upon a later written document. Id. at 119. The situation here, however, is patently

3 Surely if Plaintiff had written proof of an extension of time in which to execute a Purchase and Sale Agreement, it would have been attached to its Complaint and/or opposition brief.

7 48687/0003-7721 884v5

distinguishable because the parties had already entered into a LOI, a written contract, that clearly

and unambiguously identified the parties' rights and responsibilities. Moreover, the LOI

carefully spelled out that neither party was bound until a formal Purchase Agreement was

executed and the parties would be relieved of all obligations if such an agreement was not signed

within twenty-five (25) days. These provisions were negotiated for months. Thus, there was no

oral contrCJ.ct in this case that can or should be binding on the parties.

Additionally, here the parties' specific intent, as evidenced by the unambiguous language

of the LOI, was that the parties would enter a formal Purchase Agreement to govern their further

relationship and the sale of the Property. The LOI was meant to be non-binding as a conveyance

document, as clearly indicated in the body of the document. Discovery in this case will do

nothing to support Plaintiffs flawed basis for seeking to impose contractual liability on Lehigh.

The fact that the parties agreed on some, but not all of the material terms to be incorporated in

the Purchase Agreement should not make Lehigh liable on a breach of contract claim to Plaintiff.

The plain and simple facts at hand demonstrate the LOI expired according to its own terms, and

the Purchase and Sale Agreement had not yet been executed. 4

Given the foregoing, Lehigh has no contractual liability to Plaintiff and the Lehigh

Entities' motion to dismiss Plaintiffs count for breach of contract must be granted.

4 Contrary to Plaintiffs assertions, the Lehigh Entities do not relyon their own refusal to execute the Purchase Agreement to escape liability for their purported contractual obligations. Plaintiff relies on the case of Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N.J. Super. 565, 577 (App. Div. 1954) for the principle that the promisor cannot rely upon his own breach to escape his contractual obligations. However, the facts in (:oastal Oil Co. are easily distinguishable frorri the facts in this case. In Coastal Oil Co., the issue before the Court was whether defendant had fraudulently represented that it was a citizen of the United States at the time it entered a contract with plaintiff and whether defendant made it impossible for certain conditions under the contract to be fulfilled by virtue of its own actions. I d.· The situation here is inapposite because Lehigh and Plaintiff were attempting to negotiate the terms of the Purchase Agreement. Lehigh subsequently refused to execute the formal agreement because all the material terms in the LOI and the additional material terms the parties had agreed to had not been incorporated therein and thus there was no complete meeting of the minds. Therefore, unlike the defendant in Coastal Oil Co., Lehigh did not cause the LOI to expire according to its own terms.

8 48687/0003-7721884v5

B. Plaintiff Is Not Entitled To Specific Performance Of The LOI or The Purchase And Sale Agreement Which Was Never Executed.

The Lehigh Entities' motion to dismiss as to Plaintiffs breach of contract/specific

' performance claim should also be granted because Plaintiff fails to offer any justification for its

alleged entitlement to the remedy of specific performance to compel a sale of the Property.

Plaintiffs opposition papers presume that specific performance is appropriate in all cases

where the sale of real property is at issue. However, Plaintifffails to recognize that "[s]pecific

performance is not an automatic remedy for a breach of contract .... " Ballantyne House Assocs.

v. City ofNewark, 269 N.J. Super. 322, 334 (App. Div. 1993). In order to establish a right to

specific performance "a plaintiff must demonstrate that the contract in question is valid and

enforceable at law" and "that the terms of the contract are expressed in such fashion that the

Court can determine, with reasonable certainty the duties of each party and the conditions under

which performance is due." Mariani v. 94 Broadway, Inc., 374 N.J. Super 588, 598-99 (App.

Div. 2005) (internal citations omitted).

Here, Plaintiff cannot succeed on its claim for specific performance because there is no

underlying contractual obligation upon which specific performance can or should be premised.

The LOI embodied the then complete agreement between the parties and terminated according to

its own terms. Specific performance is not an available remedy for Lehigh's alleged breach of

the LOI. The LOI, the only operative signed contract between Lehigh and Plaintiff, was a non-

binding term sheet that offered terms and conditions under which Lehigh would sell the Property

!fthe terms provided for in the LOI were met. As the Complaint, LOI and related documents

confirm, the LOI terminated according to its own terms. Thus there is no underlying contractual

obligation that could be breached and/or upon which specific performance can or should be

9 48687/0003-7721884v5

granted by this Court. Lehigh cannot be held to the terms of a bargain that expired according to

its own language before complete performance was achieved.

Likewise, Lehigh cannot be ordered to specifically perform a Purchase Agreement that

did not materialize. As aforesaid, in order to be entitled to specific performance, "a plaintiff

must demonstrate that the contract in question is valid and enforceable at law .... " Marioni v. 94

Broadway, Inc!, 374 N.J. Super 588, 598-99 (App. Div. 2005) (intemal'Citations omitted).

Plaintiff cannot make that showing in this case because the Purchase Agreement was never

consummated as there were open material terms and thus no binding obligation to sell the

Property ever arose.

Given the foregoing, Plaintiffs claim for breach of contract/specific performance as

against Lehigh must be dismissed.

II. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S CLAIM FOR BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING SHOULD ALSO BE GRANTED.

The Lehigh Entities' motion to dismiss the second count of Plaintiffs Complaint alleging

breach of the covenant of good faith and fair dealing should also be granted. The objective

evidence, as well as Plaintiff's own admissions, belie any allegation that Lehigh acted in bad

faith. Plaintiffs assertion that it is improper to dismiss this count is simply unsupported by

relevant case law and the facts at hand. See generally Craig v. Suburban Cablevision, Inc., 274

N.J. Super. 303, 314 (App. Div. 1994) (affirming dismissal of claim for breach of the implied

covenant of good faith and fair dealing.); Henderson v. The Hertz Corp., 2005 WL 4127090 *10

(N.J. Super. App. Div.) (June 22, 2006) (finding that as a matter oflaw plaintiffs claim failed to

set forth claim for breach of the covenant of good faith and fair dealing, as well as other claims,

and trial court properly granted defendant's motion to dismiss).

10 48687 /0003-7721884v5

Plaintiff states the correct legal standard on its claim for breach of the covenant of good

faith and fair dealing, but wrongfully applies the law to the facts of this case. Contrary to

Plaintiffs allegation that Lehigh acted in bad faith, the exhibits to the Klein Cert., as well as

Plaintiffs own statements, confirm that Lehigh was negotiating in good faith to solidify the

terms of the Purchase Agreement. In its opposition papers, Plaintiff makes reference to the

"numerous phone conversation's referenced in plaintiffs complaint. ... " (Pl. Br. p. 20.) 1This

corroborates the emails demonstrating that Lehigh and Plaintiff were engaged in an active

dialogue concerning the negotiation of the Purchase Agreement. It is therefore manifest under

these circumstances that the Lehigh Entities were proceeding in good faith.

Exhibits B, D and E to the Klein Cert. show beyond question that there were ongoing

negotiations between the parties concerning the Purchase Agreement. By way of example only,

the November 24, 2010 email from Mr. Gardner to Plaintiff indicates that, "[w]e have not yet

provided written comments [to the Purchase and Sale Agreement] because the drafts circulated

by Woodmont contain terms and conditions that differ materially from the terms and conditions

sets forth in the LOI. We have had several calls to discuss these differences." Klein Cert.,

Exhibit E. Likewise, Plaintiffs Complaint ~~37 and 38 indicate that the parties conducted

conference calls to discuss the Purchase Agreement and revisions thereto, further confirming that

the parties had an ongoing discussion in good faith to try and execute the Purchase Agreement.

Thus, the documentary evidence and Plaintiffs own Complrunt show that Lehigh was

negotiating in good faith with Plaintiff throughout the month ofNovember and was ready,

willing and able to sell the Property to Plaintiff at that time.

However, the date by which the parties agreed the formal Purchase Agreement had to be

executed came and went. Three weeks after the LOI terminated according to its own terms, and

11 48687/0003-7721884v5

a final Purchase Agreement still had not been signed, Lehigh confirmed termination of the deal.

Given the foregoing, there is absolutely no evidence of bad faith on the part of Lehigh (or

Yorkville) proffered by Plaintiff and the second count of Plaintiff's Complaint must be dismissed

because it fails to state a claim upon which relief can be granted.

III. THE LEHIGH ENTITIES~ MOTION TO DISMISS PLAINTIFF'S PROMISSORY ESTOPPEL CLAIM MUST ALSO BE GRANTED. 1

In addition to dismissing the foregoing claims, this Court should dismiss Plaintiffs claim

for promissory estoppel against the Lehigh Entities. Plaintiff misstates and mischaracterizes the

Lehigh Entities' argument as it applies to Plaintiffs promissory estoppel claim. The Lehigh

Entities' position is that the LOI governed the terms of Lehigh's and Woodmont's relationship;

they do not deny that this was a valid and binding agreement before it expired according to its

own terms. However, once the LOI terminated according to its own terms, no party was left with

any binding obligations or affirmative duty to the other party. That is what the LOI clearly

states: "If a binding Purchase Agreement has not been executed within twenty-five (25)

days, neither party shall have any further obligation to the other party." Klein Cert. Exhibit

A (emphasis added). A claim for promissory estoppel cannot possibly be sustained under these

irrefutable facts.

Reviewing Plaintiffs Complaint, the only allegations asserted by Plaintiff in support of

its claim for promissory estoppel are that the Lehigh Entities promised to make Plaintiff its joint

venture partner and that the Lehigh Entities agreed to sell Plaintiff the Property. As aforesaid,

the Lehigh Entities' motion to dismiss on this count should be granted because the so-called

promise to make Plaintiffajoint venture partner, iftrue and breached, was resolved and

superseded by the LOI. Given Plaintiffs own admissions in Paragraphs 27 and 28 of the

Complaint, any claims arising prior to the execution of the LOI (on November 3, 2010) have

12 48687/0003-7721884v5

been extinguished. Thus any claims, such as this promissory estoppel claim, arising from

circumstances between the parties prior to the execution of the LOI and concerning the joint

venture, should be dismissed.

IV. THE LEHIGH ENTITIES' MOTION TO DISMISS PLAINTIFF'S FRAUD CLAIM MUST BE GRANTED BECAUSE FRAUD HAS NOT BEEN PLEAD WITH THE REQUISITE PARTICULARITY AND NO CLAIM FOR FRAUDULENT INDUCEMENT HAS BEEN PLED.

Plaintiff's allegations fall far short of the legal and factual bases necessary to support a

fraud claim or a fraud in the inducement claim (the latter of which was only recently concocted

by Plaintiff). Plaintiff fails to offer any specific or concrete misrepresentations or concealments

by the Lehigh Entities that would support a claim of fraud. Given the insurmountable hurdle

before Plaintiffwith respect to its pleading, count four of Plaintiffs Complaint should be

dismissed.

Plaintiff does not satisfy the specificity requirements of R. 4:5-8. See Levinson v. D'

Alfonso & Stein, 32{) N.J. Super. 312 (App. Div. 1999) (dismissinga fraud claim with prejudice

because the particulars of the alleged fraud were not properly plead). Instead of offering

concrete promises or representations made by Lehigh and/or Yorkville, Plaintiff instead

wrongfully combines the Lehigh Entities and fails to distinguish which allegedly fraudulent

actions and/or statements were made by Lehigh and which by Yorkville. Thus the Lehigh

Entities are not properly on notice of the allegations against them. See generally Evangelista v.

Pub. Serv. Coordinated Transp., 7 N.J. Super. 164, 168-69 (App. Div. 1950); Faces, Inc. v.

Kennedy, 185 N.J. Super. 113,124 (Law Div. 1981), affd, 185 N.J. Super. 77 (App. Div. 1982).

Moreover, Plaintiff does not identify any specific representations made by the Lehigh

Entities that Plaintiff now alleges were false and that were intended to mislead Plaintiff at the

time made. Accordingly, facts establishing the element of scienter are lacking from the

13 48687/0003-7721 884v5

Complaint, and the fraud count fails as a result. See Triffin v. Automatic Data Processing, Inc.,

394 N.J. Super. 237, 246 (App. Div. 2007); Hoffman v. Hampshire Labs, Inc., 405 N.J. Super.

105, 116 (App. Div. 2009) (finding that a complaint lacking specific facts to establish defendants

had knowledge of the falsity oftheir statements fails to state a claim for fraud.)

Additionally, this Court should pay no attention to Plaintiffs latest claim in its opposition

papers for fraudulent inducement. In what can only be described as a desperate attempt to

concoct a new basis for liability, Plaintiff now tries to style its fraud claim as one for "fraudulent

inducement of the LOI". However, the Lehigh Entities did not "initiate a scheme to lure

Woodmont into signing an LOI always intending to breach that agreement. ... " (Pl. Br. p. 2)

Nowhere in the Complaint does Plaintiff allege that it was fraudulently induced to enter into the

LOI. Rather, this argument appears for the first time in its opposition papers. Plaintiff's original

count for fraud in the Complaint alleges only that the Lehigh Entities made alleged

representations to Plaintiff that the parties would enter into a joint venture with respect to the

Property and that those representations were false when made. However, Plaintiffs claim for

fraud cannot be premised upon obligations or actions taken prior to the parties entering the LOI.5

5 As stated previously, in Paragraphs 27 and 28 ofPlaintiff's Complaint, Plaintiff specifically acknowledges that:

27. After negotiations with the broker, the resolution of the dispute with Defendants and Woodmont culminated in a Letter of Intent.

28. The Letter of Intent constitutes an accord and satisfaction of Woodmont's claims against Defendants for breach of the agreement to make Woodmont their joint venture partner.

(Pl. Cmplt ~~27, 28.) (emphasis added.) Plaintiffs opposition brief thus ignores the critical fact that the LOI resolved any differences between the parties up until that point in time and any claims arising from the circumstances and/or the relationships between the parties prior to that juncture, have been extinguished and/or merged into the LOI.

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Moreover, Plaintiffs new claim for fraudulent inducement is totally inconsistent with its

claim for specific performance. The remedy for its claim for fraudulent inducement of the LOI

would be rescission, which is completely incompatible with its claim for specific performance.

See generally Massey v. Trump's Castle Hotel & Casino, 828 F.Supp. 314, 325 (D.N.J. 1993)

(stating that "under ordinary contract princip[le]s, transactions entered into in reliance upon

material misrepresentations are voidable.") If Plaintiff were somehow fraudulently induced td

enter the LOI, it is ludicrous that it would then seek to have that agreement specifically enforced.

Plaintiff should not be allowed to maintain such utterly inconsistent positions in one lawsuit.

When a vendee ascertains that he has been induced to make a contract of purchase by the fraudulent misrepresentations of his vendor, he has a choice of remedies. He m:ay rescind the contract, restore what he has received, and recover back what he has paid, or he may affirm the contract, and recover the damages he has sustained by the fraud. He cannot, however, do both. It is as difficult a feat to maintain a cause of action for the consideration paid for the purchase on the ground of rescission, and one for damages for the fraud which induced it, and for a breach of the contract of purchase itself, in the same action, as it is to ride at the same time two horses that are traveling in opposite directions.

Morris v. Jersey Cent. Power & Light Co., 118 N.J. Eq. 541,543 (Ch. Div. 1935) (internal

citations omitted) (emphasis added).

Given the foregoing, count four of Plaintiffs Complaint for fraud/fraudulent inducement

should be dismissed with prejudice.

V. PLAINTIFF HAS FAILED TO ALLEGE A CAUSE OF ACTION FOR UNJUST ENRICHMENT AND THIS COUNT TOO MUST BE DISMISSED.

The Lehigh Entities' motion to dismiss as to Plaintiffs unjust enrichment claim should

also be granted. As Plaintiff acknowledges in its opposition brief, unjust enrichment is premised

upon equitable principles. Given this fact, it would be inequitable to allow Plaintiff to recover

on an unjust enrichment theory that seeks recovery based on the alleged joint venture when it

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readily acknowledges in its Complaint that "[t]he Letter oflntent constitutes an accord and

satisfaction ofWoodmont's claims against Defendants for breach of the agreement to make

Woodmont their joint venture partner." (PL Cmplt. ~28). Thus, by Plaintiffs own admission, its

promissory estoppel claim relates to breach of the alleged agreement to make it a joint venture

partner, which agreement was superceded by the LOI. All of the services provided by Plaintiff,

as referenced in ~~17 and 91 of its Complaint, were provided in connection with a joint venture

that was replaced by the LOI. Contrary to Plaintiff's allegations, the Lehigh Entities have not

been unjustly enriched at Plaintiffs expense, but rather the parties agreed to try to resolve their

joint venture dispute by a sale of the Property, but failed to do so. Here, it would be patently

absurd to allow Plaintiff to proceed on its claim for unjust enrichment for past services it agreed

were extinguished. Thus, Plaintiff cannot properly plead a cause of action for unjust

enrichment/quasi contract and this count too should be dismissed with prejudice.

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CONCLUSION

For all of the foregoing reasons, and for those stated more fully in the Lehigh Entities'

Motion to Dismiss, the Court should grant the Lehigh Entities' Motion to Dismiss the Complaint,

in its entirety, with prejudice, for failure to state a claim for which relief can be granted pursuant

toR. 4:6-2(e) and for failure to plead fraud with the requisite specificity required by R. 4:5-8.

DATED: July~, 2011

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Respectfully submitted,

COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A. Attorneys for Defendants, Lehigh Acquisition Corp. and Y arkville Advisors,

LLC //

By<d/od~ Steven R. Klein