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Westmont Development Group v. Township of Haddon

2010 WL 1452495 (U.S. Ct. App. 3rd Cir. 2010) (Unpublished)

DEVELOPERS; REDEVELOPMENT — A municipality’s new administration has no express or implied obligation to continue the political and social policies of the previous administration nor to amend a redevelopment agreement to suit the developer.

A municipality entered into a redevelopment agreement with a developer. The agreement provided that upon completion of the project, title to the property would be conveyed to the developer in accordance with the terms of a contract attached to the redevelopment agreement. The agreement required the developer to submit a project plan for the municipality’s review before being submitted for preliminary site plan approval. It also provided that the failure to insist on strict performance of any term or obligation was not to be construed as a waiver of that obligation. In addition, modifications had to be in writing.

The developer did not obtain the municipality’s approval of its project plan before applying for site plan approval. The planning board expressed concern about the adequacy of parking at the project, but the developer never revised its application. Instead, the developer sought alternative methods to address the parking, including by asking the municipality to acquire a neighboring property through eminent domain.

The municipality did not acquire the neighboring property. Instead, it suggested amendments to the redevelopment agreement that would permit the developer to complete the redevelopment in stages. A written amendment was circulated, commented upon, and revised. However, before it was signed, there was a municipal election. The new officials would not sign the amendment. In fact, the municipality declared the developer in default under the agreement and gave it thirty days to comply. When the developer failed to cure the default, the municipality terminated the agreement.

The developer sued, alleging breach of contract as well as breach of duty of good faith and fair dealing. The lower court granted summary judgment in favor of the municipality. On appeal, the Third Circuit Court of Appeals affirmed, finding that the municipality did not breach the contract because it was not obligated to convey the property to the developer. The municipality’s obligation was predicated on the developer’s complying with the terms of the redevelopment agreement. Here, the developer failed to provide the municipality with a project plan for approval before submitting it to the planning board. It never obtained approvals for the project.

The Court also dismissed the developer’s claim that the municipality breached its duty of good faith and fair dealing. In doing so, it held that the municipality’s mere exercise of its contractual rights to declare the developer in default and terminate the agreement did not breach that duty. It found no bad faith motive on the part of the municipality to deprive the developer of the anticipated benefits from the contract. The Court disagreed with the developer’s assertion that the new municipal administration should have given it an opportunity to resolve the disputes just as the prior administration had done. Instead, it found that the new administration had no express or implied obligation to continue the political and social policies of the previous administration nor to amend the redevelopment agreement to suit the developer.

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