New Jersey Appellate Court Remands Easement Case to Determine Sufficiency of Prior Notice

The New Jersey Appellate Division recently reversed summary judgment for a plaintiff and remanded the case to determine whether plaintiff was a bona fide purchaser without knowledge of an easement modification. See RRR Newgen, LLC v. RESOL53 LLC, 2021 WL 4143325 (N.J. Super. Ct. App. Div. 2021).  Defendant Peter Riccio (“Riccio”) was the principal of an entity that owned two lots (“Lot 1” and “Lot 2”), along with a parking lot on Lot 2 that sat between the properties. The entity sold Lot 2 and the parking lot in 1987, but reserved an easement allowing its customers to use the parking lot, subject to some restrictions.  Lot 2 was sold again in 2004, and the deed incorporated the same easement language. Riccio later sought to expand the use of the pharmacy on Lot 1, which would require additional uses of the parking lot that were outside the scope of the easement. Riccio negotiated the terms of the modification with Lot 2’s new owner, and the township board approved the expansion of the pharmacy on Lot 1. The terms of the modification (the “2012 Agreement”) were set forth in a letter, but the letter was never incorporated into an easement agreement and was never recorded. Riccio sold the pharmacy to Mahendra Patel in 2014, but maintained ownership of Lot 1. Riccio’s attorney claimed that he met with Patel’s son-in-law Ashish Patel (“Ashish”) shortly after the sale of the pharmacy and at that time told Ashish about the parking lot easement, but Ashish later claimed he did not recall such a conversation. Ashish bought Lot 2 in 2018 and Riccio began leasing the pharmacy on Lot 1 to a new tenant, and the parties quickly got into a dispute about the use of the parking lot, resulting in this lawsuit.  During discovery, the prior owner of Lot 2 said that he believed that he informed Ashish about the 2012 Agreement before the 2018 sale to Ashish, but his testimony was conflicting, and Ashish denied any such knowledge.  The parties cross-moved for summary judgment and the trial court granted Ashish’s motion, rejecting Riccio’s argument that Ashish had notice of the 2012 Agreement.  Riccio appealed.

The Appellate Division overturned the grant of summary judgment regarding the 2012 Agreement, remanding for further discovery as to Ashish’s status as a bona fide purchaser. The Court noted that, though the 2012 Agreement was not recorded, Ashish could still be subject to it if he had actual or constructive notice of the modification.  However, the Court noted that, given the parties’ differing accounts as to Ashish’s notice, summary judgment was inappropriate for either party.  “In sum, [the prior owner of Lot 2], at least in part, testified that he gave or sent the 2012 agreement to Ashish, and spoke to some extent to Ashish about the changes made to the easement, as [the attorney] also alluded to, thus creating a genuine dispute as to plaintiffs’ knowledge. Moreover, it was undisputed that Ashish participated to some extent in the operation of Ray’s Pharmacy while it was located in Lot 1’s building, during which time its customers enjoyed whatever arrangement had been entered into between [Riccio and the prior owner of lot 2].”  

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.