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East Brunswick Sewerage Authority v. East Mill Associates, Inc.

365 N.J. Super. 120, 838 A.2d 494 (App. Div. 2004)

ZONING; DEVELOPERS; AGREEMENTS—Where the terms of a developer’s agreement are clear, the risk of unforseen expenses falls on the responsible party even though a court of equity retains the power to deny enforcement of an agreement that inequitably imposes a great hardship or does a manifest injustice.

A developer entered into a developer’s agreement with a municipal authority. The contract provided that, in exchange for connecting residential units to the sewer system, the developer would be responsible for fifty-five percent of the total cost of expanding and upgrading the existing pumping station. Due to events unforeseen by either party at the time the contract was signed, the costs were substantially greater than anticipated by the developer. It sued.

At trial, the lower court awarded the municipal authority less than the fifty-five percent allocation, holding that the developer should not have been required to pay for increased costs associated with unforeseen events. The Appellate Division reversed, finding that the lower court improperly re-wrote the contract. A court cannot make a different or better contract than the parties make for themselves. In this case, there were two sophisticated parties who were well equipped and savvy enough to deal with the allocation of cost overruns and additional unexpected costs. Since they failed to do so, it was not the court’s job to re-write the contract for them. While courts of equity “have the power not to enforce a contract that inequitably imposes a greater hardship or a manifest injustice,” the cases cited by the developer dealt with a court’s refusal to award specific performance of a contract and where the Court awarded monetary damages instead. The Court found that, in this case for money damages, there was no manifest injustice or great hardship. Therefore, the developer was required to pay its share of all costs, even those it had not anticipated.

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