Court Forces Plaintiff to Disclose Unconsummated Contract of Sale

by: Anthony F. Della Pelle
17 Feb 2016

In Broadway-Somerset, LLC v. Twp. of Franklin, the parties were in dispute over the disclosure of an unconsummated contract for the sale of the subject property.  During the course of discovery in plaintiff’s 2015 tax appeal, plaintiff disclosed in its answers to Interrogatories that “[a] confidential contingent agreement to sell the property exists, but a number of contingencies need to be satisfied before any sale can occur.”  Plaintiff however did not provide a copy of the contract, and efforts by the Township to obtain the document was rejected.

Defendant filed a motion to compel production of the contract, and an entry of a Protective Order limiting dissemination of the document.  Plaintiff opposed the disclosure of the contract claiming that it was not relevant to the subject matter because it is unconsummated and contains many contingencies.  Furthermore, plaintiff argued that it was not likely to lead to admissible evidence, and contained confidential information, including the sales price, which the parties of the contract agreed not to disclose.  The Township countered that the contract was relevant to the valuation of the property and its expert real estate appraiser requested it to formulate a report and opinion of value in preparation to be used at trial.

The Judge ruled in favor of the Township and compelled plaintiff to disclose the contract along with a Protective Order to safeguard unnecessary dissemination of the contract to the public.  The central issue before the court is to determine the true market value of the property and thus the contract is relevant, especially given the fact that it was entered into by the parties close to the relevant valuation date.  Furthermore, despite the number of contingencies, the court indicated that “contingencies i[n] a sales contract neither diminishes the relevancy of the contract to determining true market value, nor renders the contract inadmissible as evidence.”  For instance, one of more of the contingencies of the contract dealt with obtaining land use approvals, and this information would be relevant to the determination of the property’s highest and best use analysis.

With respect to plaintiff’s argument as to protecting its privacy and confidentiality of plaintiff’s business practices, the court stated that plaintiff “filed this action and elected to put the true market value of its property in contest in a public forum.”  The court stated further that “plaintiff cannot file suit alleging that its property is assessed at above its true market value and subsequently claim that a contract which it executed for the sale of that property cannot be produced in discovery because it contains a sales price plaintiff considers confidential.”  In addition, “the initiation of suit necessarily involves acceptance by plaintiff of some measure of intrusion into its private affairs.”

A copy of the court’s opinion can be found here.