# OAKLYN VILLAS URBAN RENEWAL LLC v. BOROUGH OF OAKLYN

> District Court, D. New Jersey · December 24, 2023

URL: https://www.frixlaw.com/law-library/cases/10278014

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** December 24, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10278014

## How later opinions describe it (automated extraction)

- recognizing, pursuant to Arthur Andersen, that “a contract may sometimes be equitably enforced by or against even nonparties”
- recognizing, pursuant to Arthur Andersen, that “a contract may sometimes be equitably enforced by or against even nonparties”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
__________________________________
:
OAKLYN VILLAS URBAN :
RENEWAL, LLC et al., :
:
Plaintiff, : Civil No. 22-3177 (RBK/SAK)
:
v. : OPINION
:
BOROUGH OF OAKLYN et al., :
:
Defendants. :
__________________________________

KUGLER, United States District Judge:
This matter comes before the Court upon Defendants Peter Rhodes, Ajay Shah, and
ALKA Real Estate, LLC (collectively, “Defendants” or “ALKA Defendants”)’s Motion to
Dismiss Plaintiffs’ Amended Complaint (“Motion”) (ECF No. 30). For the reasons set forth
below, Defendants’ Motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
A. Factual Background
In March 2003, Defendant the Borough of Oaklyn (“the Borough”) adopted its
Redevelopment Plan for Block 49, Lots 4, 5, and 6, which included a plan for the historic
restoration of Oaklyn Manor, a multi-family building. (ECF No. 28, Am. Compl. ¶ 22). In March
2015, Plaintiff Oaklyn Villas Urban Renewal, LLC (“Oaklyn Villas”) was designated the
redeveloper of Oaklyn Manor and acquired the property by condemnation initiated by the
Borough (Id. ¶¶ 4, 29). Oaklyn Villas paid a total of $600,000 for the property. (Id. ¶ 29).
On November 10, 2015, Oaklyn Villas and the Borough entered into a Financial
Agreement, in which the Borough granted Oaklyn Villas a tax exemption in exchange for
payment of an annual service charge. (Id. ¶¶ 33–35). The Financial Agreement further required
that, in the event Oaklyn Villas wanted to sell Oaklyn Manor, the transfer of the terms of the
Financial Agreement would need to be approved by Resolution of the Borough Council of the

Borough of Oaklyn, “upon whose approval [the Financial] Agreement and its then remaining
obligations and the tax exemption of the improvements shall continue, and inure to the benefit of
the transferee urban renewal entity.” (Id. ¶ 36). The Financial Agreement also provided that, for
the processing of any request to transfer the Project and the benefits under the Financial
Agreement, Oaklyn Villas must pay an administrative fee of 2% of the annual service charge as
well as “a reasonable fee for the legal services of the Borough’s Attorney.” (Id. ¶¶ 38–39).
In May 2016, Oaklyn Villas completed the redevelopment of Oaklyn Manor at a total
cost of $1.8 million. (Id. ¶ 40). On July 11, 2017, the Borough entered into an agreement (the
“Parking Lot Agreement”) with Oaklyn Villas under which the Borough would acquire a portion

of the property adjacent to Oaklyn Manor, owned by Defendant ALKA Real Estate LLC
(“ALKA”), on which Oaklyn Villas would construct a parking lot for use by the tenants of
Oaklyn Manor. (Id. ¶ 44–47).
As part of the Parking Lot Agreement, Oaklyn Villas agreed to compensate ALKA by
installing a sidewalk, an LED sign, and a fence on ALKA’s remaining portion of the property.
(Id.). The agreement required Oaklyn Villas’ principal, Plaintiff Richard DePetro, to install a
single “two-sided LED sign measuring no more than 25 square feet, to be placed consistent with
the requirements of the land use laws of the Borough of Oaklyn.” (Id. ¶ 48). Oaklyn Villas
incurred $250,000 in costs in the acquisition and construction of the parking lot. (Id. ¶ 49).
In March 2021, ALKA solicited a proposal from a sign-maker that did not conform to
some of the requirements of the Parking Lot Agreement. (Id. ¶ 50). The proposal indicated that
ALKA planned to install both a 25 square foot double-sided light cabinet with LED lighting and
translucent vinyl artwork and a 27.6 square foot full color RGB board for a total of 52.6 square
feet of signage. (Id.). On April 6, 2021, Mr. DePetro notified the Mayor, the Borough Clerk, Mr.

Higgins, and Ajay Shah (the owner of ALKA) that the proposed sign violated both the
Borough’s zoning ordinances and the Parking Lot Agreement. (Id. ¶ 51).
On June 18, 2021, ALKA applied to the Borough’s Zoning Administrator for a variance
permitting ALKA to install a double-sided LED sign measuring approximately 24 square feet
and a second changeable-copy sign measuring approximately 20 square feet on its property.
(Id. ¶ 52). The proposed sign would be 25 feet high, or five feet higher than permitted by the
Borough’s zoning ordinance. (Id.). The proposed signs also exceeded the maximum size allowed
by the Borough’s zoning ordinance. (Id.). Resultingly, the Zoning Administrator denied the
request for a variance. (Id. ¶ 53).

On December 22, 2021, ALKA’s attorney, Defendant Peter Rhodes, appealed the Zoning
Administrator’s decision. (Id. ¶ 56). On January 20, 2022, the Planning Board of Oaklyn held a
hearing regarding ALKA’s request for a variance, which it ultimately granted in February 2022.
(Id. ¶ 57–58).
On June 22, 2021, Oaklyn Villas entered into a contract to sell Oaklyn Manor to Success
Estates, LLC (“the Purchaser”). (Id. ¶ 59). Oaklyn Villas informed the Borough of its intention to
request a transfer of the Financial Agreement to the Purchaser, and the Purchaser delivered
materials to the Borough describing the Purchaser’s experience and qualifications. (Id. ¶ 60–63).
The managing member of the Purchaser is named Zev Censor. (Id. ¶ 64).
Defendant Robert Forbes, who was then the Mayor of the Borough of Oaklyn, appointed
himself as well as Defendants Charles Lehman and Dorothy Valianti, both members of the
Borough Council, to an Ad Hoc Committee to investigate the Purchaser’s application. (Id. ¶ 67).
On February 10, 2022, the Ad Hoc Committee met with Mr. Censor, his attorney, and Oaklyn
Villas, evidently to discuss the Purchaser’s application. (Id. ¶ 68).

On April 4, 2022, the Mayor, Borough Council, Borough Clerk, and Borough Attorney
Timothy J. Higgins discussed the Purchaser’s application in a closed session that was not open to
the public. (Id. ¶ 70). On April 12, 2022, the Ad Hoc Committee held another meeting that was
closed to the public and presented its recommendation to the Borough Council. (Id. ¶ 71).
Although the Borough found that the Purchaser was “competent in the field of commercial real
estate ownership and apartment management,” the Borough resolved unanimously that transfer
of the Financial Agreement was “not in the best interests of the Borough of Oaklyn” because
Oaklyn Villas and the Purchase “demonstrated no public policy basis for property tax assistance
for a fully functional commercial property . . . .” (Id. ¶¶ 71–74). At a May 2, 2022, Borough

Council meeting, Mr. DePetro requested that the Borough Council reconsider its denial of
Oaklyn Villas’ request to transfer the Financial Agreement. (Id. ¶ 75). The Borough Council
denied to do so, adopting a resolution stating that Mr. DePetro “presented no documents or
information different from that which already had been presented prior to [their April 12, 2022
decision].” (Id. ¶ 76–77).
Plaintiffs allege that the rejection of the application to transfer the Financial Agreement
has “caused significant economic harm,” including a “dramatic increase” in mortgage interest
rates that “will cost the Purchaser more than $23,000 annually . . . causing both the Purchaser
and seller damages.” (Id. ¶ 78).
In their Amended Complaint, Plaintiffs bring various civil rights causes of action under
both federal and New Jersey state law (Counts I–VI), as well as several state contract claims
(Counts VII–VIII, X–XI) and a general claim of violation of New Jersey law (Count IX). In
short, Plaintiffs allege that “the Borough, the Mayor, the Borough Council, the Borough Clerk,
and the Borough Attorney [collectively, the “Borough Defendants”] have deprived Oaklyn Villas

of its constitutionally protected rights to property and equal protection by irrationally and
summarily denying Oaklyn Villas’ request to sell [Oaklyn Manor] . . . .” (Id. ¶ 1).
Against the ALKA Defendants, specifically, Plaintiffs allege breach of contract, violation
of the duty of good faith and fair dealing, more generalized “violations of New Jersey law,” and,
in its civil rights claims, that the ALKA Defendants “acted in concert with the Borough
Defendants to deprive Oaklyn Villas of its property rights in Oaklyn Manor.” (Id. ¶ 108). The
claims against the ALKA Defendants are encompassed in Counts II–V and IX–XI, which we
review for the sake of this Motion.
B. Procedural History

Plaintiffs filed their initial Complaint on May 26, 2022. (ECF No. 1). All Defendants
jointly filed a Motion to Dismiss on August 3, 2022. (ECF No. 10). Following briefs in
opposition by the Plaintiffs (ECF Nos. 14–15), all Defendants jointly filed a Motion for More
Definite Statement under Federal Rule of Civil Procedure 12(e) on September 6, 2022. (ECF No.
16). Plaintiffs filed a brief opposing on September 19, 2022. (ECF No. 17).
This Court issued an Opinion granting in part and denying in part Defendants’ Motion for
More Definite Statement, ordering that Plaintiffs shall file an amended complaint “that properly
places Defendants on notice of the claims against them” by March 31, 2023. (ECF Nos. 26–27).
On March 31, 2023, Plaintiffs filed an Amended Complaint. (ECF No. 28). The ALKA
Defendants filed the instant Motion to Dismiss on April 17, 2023. (ECF No. 30). Plaintiffs filed a
brief opposing the Motion on May 1, 2023. (ECF No. 31). The matter has been fully briefed and
is now ripe for adjudication.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to

state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts
accept all factual allegations as true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff
may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)
(quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). A complaint survives a
motion to dismiss if it contains enough factual matter, accepted as true, to “state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
To make this determination, courts conduct a three-part analysis. Santiago v. Warminster
Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must “tak[e] note of the elements a

plaintiff must plead to state a claim.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)).
Second, the court should identify allegations that, “because they are no more than conclusions,
are not entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 680). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (quoting Iqbal, 556 U.S. at 678). Moreover, “where there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 679). Finally, a complaint must
“give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,”
Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
III. DISCUSSION
The ALKA Defendants argue that the claims against them (Counts II–V, IX–XI) should
be dismissed for failure to state a claim.1 (ECF No. 30 at 9, 11). We address each Count in turn.2
A. Counts II–V
The ALKA Defendants argue that Plaintiffs’ federal and state civil rights claims should

be dismissed because Plaintiffs failed to plead facts establishing that the Defendants, who are
private individuals, assumed the color of law and deprived Plaintiffs of any constitutional rights.
Defendant Rhodes is an attorney with the firm of Cahill, Wilinsky, Rhodes and Joyce.
(Am. Compl. ¶ 16). Defendant Shah is the managing member of Defendant ALKA, a limited
liability company. (Id. ¶¶ 17–18). Rhodes is alleged to have advised ALKA to apply to the
Borough for a variance that is allegedly in violation of the agreement between ALKA, Plaintiffs,
and the Borough. (Id. ¶ 56, 169–71). Plaintiffs allege that “[i]n applying for and receiving the
variance . . . ALKA breached the contract provision requiring it to ‘fully cooperate’ with
[Plaintiffs].” (Id. ¶ 171). Plaintiffs also allege that, despite making a “good faith attempt to fulfill

its obligations under the contract . . . those efforts have been frustrated by the Borough and the
ALKA Defendants.” (Id. ¶ 177).
A plaintiff may have a cause of action under 42 U.S.C. § 1983 for certain violations of
constitutional rights. Section 1983 provides in relevant part:
Every person who, under color of any statute, ordinance, regulation, custom, or
usage, of any State or Territory or the District of Columbia, subjects, or causes to
be subjected, any citizen of the United States or other person within the jurisdiction

1 The ALKA Defendants also purport to “seek[] filing fees, and legal fees, against Plaintiffs for this frivolous
filing as it relates to Moving Defendants.” (ECF No. 30 at 2). Because such a request would require a separate (and
yet unfiled) request for sanctions under Federal Rule of Civil Procedure Rule 11, we do not consider the Defendants’
request for filing fees and legal fees at this stage.
2 Counts I and VI–VIII of Plaintiffs’ Amended Complaint are explicitly directed only to the Borough
Defendants. (Am. Compl. at 16, 28–33).
thereof to the deprivation of any rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party injured in an action at law, suit in
equity, or other proper proceeding for redress, except that in any action brought
against a judicial officer for an act or omission taken in such officer's judicial
capacity, injunctive relief shall not be granted unless a declaratory decree was
violated or declaratory relief was unavailable.
Thus, to state a claim for relief under § 1983, a plaintiff must allege, first, the violation of a right
secured by the Constitution or laws of the United States, and second, that the alleged deprivation
was committed or caused by a person acting under color of state law. Harvey v. Plains Twp.
Police Dep’t, 635 F.3d 606, 609 (3d Cir. 2011) (citations omitted); see also West v. Atkins,
487 U.S. 42, 48 (1988). It is not disputed that Plaintiffs here allege violations of rights secured
by the Constitution. (See Am. Compl. ¶ 1) (alleging violations of Plaintiffs’ “constitutionally
protected rights to property and equal protection”). Instead, Defendants argue that the state-
action requirement has not been satisfied because the Complaint does not plead facts sufficient to
allege that Defendants’ conduct was committed while acting under color of state law.
“Like the state-action requirement of the Fourteenth Amendment, the under-color-of-
state-law element of § 1983 excludes from its reach merely private conduct, no matter how
discriminatory or wrongful.” American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999)
(internal citations and quotation marks omitted). “The traditional definition of acting under color
of state law requires that the defendant in a § 1983 action have exercised power possessed by
virtue of state law and made possible only because the wrongdoer is clothed with the authority of
state law.” West v. Atkins, 487 U.S. 42, 49 (1988). The Third Circuit has held that “a private
party who willfully participates in a joint conspiracy with state officials to deprive a person of a
constitutional right acts ‘under color of state law’ for purposes of § 1983.” Abbott v. Latshaw,
164 F.3d 141, 147–48 (3d Cir. 1998); see also Reitz v. County of Bucks, 125 F.3d 139, 148 (3d
Cir. 1997) (private parties who act “as a ‘joint participant’ in the challenged activity with the
state . . . can be found to have acted under color of state law and to be liable under § 1983.”).
Plaintiffs argue Defendants are subject to § 1983 liability because they acted “in
conjunction” with the Borough in depriving Plaintiffs of their constitutionally protected rights.
(Am. Compl. ¶ 129, 132). Plaintiffs argue further that “Defendants and the Borough worked

together to delay, complicate, and prevent the proposed sale of Oaklyn Manor to a qualified
buyer.” (ECF No. 31 at 12).
We are not convinced that the Amended Complaint pleads facts showing that Defendants
“participate[d] in a joint conspiracy with state officials to deprive [Plaintiffs] of a constitutionally
protected right.” See Abbott, 164 F.3d at 147–48. In Abbott, the plaintiff’s ex-wife, Laurie
Latshaw, “enlisted” the aid of Constable Albert Diehl and three Pennsylvania police officers in
“her plan to take a van from her former husband [the plaintiff].” Id. at 143. The Third Circuit
held that Latshaw, despite being a private individual, “acted under color of state law” for
purposes of § 1983 because the complaint “depicted joint action by Latshaw and Diehl in

effectuating the recovery of the van” and because there was evidence that Latshaw “paid [Diehl]
to help her take possession of the van.” Id. at 148. The Third Circuit has also expressed approval
of finding § 1983 liability for “conduct as seemingly benign as towing a vehicle at the direction
of a police officer.” Reitz, 125 F.3d at 148.
The conduct the ALKA Defendants are alleged to have engaged in is not similar to the
joint conduct involved in paying a state official to deprive a person of his property, as in Abbott,
or acting under the direction of a police officer, as referenced in Reitz. Here, Counts II–V are
based on allegations that the Borough “rejected Oaklyn Villas’ request to sell Oaklyn Manor and
transfer the Financial Agreement to the Purchaser.” (Am. Compl. ¶ 86). The ALKA Defendants
are not alleged to have been involved in that decision in any way—that is, Plaintiffs have not
adequately plead how ALKA Defendants acted “in conjunction” with the Borough Defendants to
deprive Plaintiffs of a constitutional right. Although the ALKA Defendants are alleged to have
violated a contract with Plaintiffs in seeking a variance with the Borough, these allegations do
not form the basis of the § 1983 claims, and, moreover, we are not convinced that such conduct

would constitute a “joint conspiracy” such that Defendants would be considered to be acting
under color of state law. See Abbott, 164 F.3d at 147–48.
Nor can Defendants prevail on their state civil rights claims under N.J. Stat. Ann. § 10:6-
2(c), as alleged in Counts IV and V.3 It is long established that this Court analyzes claims under
§ 10:6-2(c) as it would for claims under § 1983. See Hottenstein v. City of Sea Isle City, 977 F.
Supp. 2d 353, 365 (D.N.J. 2013) (“This district has repeatedly interpreted [§ 10:6-2(c)]
analogously to § 1983.”) (quoting Pettit v. New Jersey, 2011 WL 1325614, at *3 (D.N.J. Mar.
30, 2011)). As such, we decline to find state action under § 10:6-2(c) for the same reasons we
decline to find state action under its federal analogue.

Accordingly, because the Complaint does not allege facts showing that the ALKA
Defendants acted under color of state law for purposes of § 1983 or § 10:6-2(c), we dismiss
Counts II–V against the ALKA Defendants in their entirety.

3 N.J. Stat. Ann. § 10:6-2(c) provides:
Any person who has been deprived of any substantive due process or equal protection rights,
privileges or immunities secured by the Constitution or laws of the United States, or any substantive
rights, privileged or immunities secured by the Constitution or laws of this State, or whose exercise
or enjoyment of those substantive rights, privileges or immunities has been interfered with or
attempted to be interfered with, by threats, intimidation or coercion by a person acting under color
of law, may bring a civil action for damages and for injunctive or other appropriate relief.
B. Count IX
Next, the ALKA Defendants argue that Count IX, which simply asserts a claim of
“violations of New Jersey law,” should be dismissed because it “is unnecessary, lacks
foundation, and lacks a cognizable cause of action.” (ECF No. 30 at 10). Further, they argue
Count IX is “duplicative of Counts Seven, Eight, Ten and Eleven of Plaintiffs Complaint,” which

all allege specific violations of New Jersey law. (Id.). The ALKA Defendants assert that Count
IX does not satisfy Rule 8’s pleading requirements because it fails to “provide Moving
Defendants fair notice of what this claim is, and the grounds that it rests upon.” (Id.). Plaintiffs
do not appear to dispute the ALKA Defendants’ arguments regarding Count IX. Because we
agree with the ALKA Defendants that Count IX does not satisfy the Rule 8 requirement that a
complaint “give the defendant fair notice of what the . . . claim is and the grounds upon which it
rests,” Twombly, 550 U.S. at 555, Count IX of Plaintiffs’ Complaint against the ALKA
Defendants will also be dismissed.
C. Counts X–XI

Counts X and XI surround Plaintiffs’ claims that the ALKA Defendants breached the
terms of the Parking Lot Agreement and violated the doctrine of good faith and fear dealing.4
First, Defendants argue that Count X, the breach-of-contract claim, must be dismissed
with regard to Defendant ALKA. To state a claim for breach of contract in New Jersey,5 a party

4 Because we have jurisdiction to rule on the merits in Counts X–XI, see 28 U.S.C. § 1367(a), we decline to
address either the ALKA Defendants’ jurisdictional arguments for dismissal (see ECF No. 30 at 14) or the relevance
of New Jersey’s “entire controversy doctrine” to the instant Motion (see ECF No. 31 at 12).
5 The Court follows New Jersey state law in its analysis of Plaintiffs’ contractual claims, as the Parking Lot
Agreement was formed in and concerns matters relating principally to New Jersey. Portillo v. Nat’l Freight, Inc.,
323 F. Supp. 3d 646, 658 (D.N.J. 2018) (“New Jersey has adopted ‘the most significant relationship’ test set out in
the Restatement (Second) of Conflict of Laws.”) (quoting P.V. ex rel. T.V. v. Camp Jaycee, 962 A.2d 453 (N.J.
2008)). We note this for the sake of clarity, as the parties do not dispute choice-of-law or Plaintiffs’ assertion that
the Parking Lot Agreement constitutes a contract under New Jersey law. (See Am. Compl. ¶ 165).
must allege (1) a contract between the parties; (2) breach of that contract; (3) damages flowing
therefrom; and (4) that the party performed its own contractual obligations. Video Pipeline, Inc.
v. Buena Vista Home Entertainment, Inc., 210 F. Supp. 2d 552, 561 (D.N.J. 2002).
There is no dispute that a contract existed between Defendant ALKA and the Plaintiffs.
However, Defendants argue that Plaintiffs failed to establish that “[a] mere request for a

variance” constitutes a breach of that obligation. (ECF No. 30 at 12). Moreover, Defendants
argue that Plaintiffs “failed to articulate any cognizable damages deriving from” ALKA’s request
for a variance. (Id.). Lastly, Defendants argue that the requirement that the party bringing a
breach of contract claim perform its own contractual obligations is not met, as demonstrated by
the fact that Plaintiffs’ requested relief is a judgment that Plaintiffs “do not have to perform their
duties under the contract due to the issued variance.” (Id.).
Plaintiffs respond that the Amended Complaint satisfies the pleading requirements for a
breach of contract claim because:
(1) the parties entered into an agreement for the construction of a parking lot for
Oaklyn Manor, (2) ALKA failed to cooperate with DePetro regarding the
construction of ALKA’s new sign by attempting to procure two signs when the
contract authorized only one, and (3) DePetro has sustained damages to the extent
that it is compelled to pay for a non-conforming sign, as well as damages due to the
delay caused by ALKA’s request for a variance.

(ECF No. 31 at 14–15) (citing Am. Compl. ¶¶ 164–74). Plaintiffs do not appear to respond to
Defendants’ argument that the fourth element, which requires an allegation that Plaintiffs met
their obligations under the contract, is not met.
To begin, we disagree with Defendants’ bald assertion that “[a] mere request for a
variance does not constitute a breach,” a proposition which Defendants neither explain further
nor cite any case law to support. (ECF No. 30 at 12). As Plaintiffs explain, the alleged breach
occurred in ALKA’s act of “requesting a variance so that Defendants can force DePetro to buy
ALKA more signs than authorized under the contract, all while ignoring entreaties from DePetro
to discuss installing a conforming sign.” (ECF No. 31 at 15). Plaintiffs allege that they were
required under the contract to replace ALKA’s sign, in accordance with specific limitations such
as that the sign would measure no more than 25 square feet and would be consistent with the
land use laws of the Borough. (Am. Compl. ¶ 168). They allege further that Defendant ALKA

applied to the Borough for a variance because the sign it wanted to install exceeded the
maximum size allowed by local ordinance and that the proposed sign exceeded 25 square feet.
(Id. ¶ 169). In this way, they allege that ALKA breached the contract by “applying for and
receiving the variance, and demanding that DePetro install a sign that exceeded the requirements
laid out in the contract.” (Id. ¶ 171).
But we agree with Defendants that the third and fourth elements of a breach of contract
claim are not met by the pleadings in the Amended Complaint. As to the damages requirement,
Plaintiffs argue that “DePetro has suffered and will continue to suffer damages” as a result of the
variance request. (Id. ¶¶ 173, 179). Significantly, however, the Complaint does not allege that

DePetro has paid for a non-conforming sign, and we were unable to locate any allegations in the
Amended Complaint that Plaintiffs have incurred any other costs resulting from the alleged
breach. As to the fourth requirement, that Plaintiffs satisfied their obligations under the contract,
the Amended Complaint seeks “a declaration that DePetro is relieved of its obligation to replace
ALKA’s sign.” (Id. ¶¶ 174, 180). Nevertheless, we agree with Defendants that this requested
relief amounts to a declaration that Plaintiffs are not obliged to perform under the contract,
indicating that Plaintiffs have not at this time satisfied their obligations under the contract.
Accordingly, having found that the Amended Complaint does not plead facts establishing
all four elements of a breach of contract claim, we dismiss Count X in its entirety against all
three of the ALKA Defendants.
Next, Defendants argue that Count XI, which asserts a claim of violation of the duty of
good faith and fair dealing, must also be dismissed. This covenant “mandates that neither party

shall do anything which will have the effect of destroying or injuring the right of the other party
to receive the fruits of the contract.” Seidenberg v. Summit Bank, 791 A.2d 1068, 1074 (N.J.
Super. Ct. App. Div. 2002) (internal citations and quotation marks omitted). “A party breaches
the implied covenant when it exercises its contractual functions arbitrarily, unreasonably, or
capriciously and with an improper motive.” Wilmington Sav. Fund Soc’y, FSB v. Daw, 265 A.3d
178, 187 (N.J. Super. Ct. App. Div. 2021) (internal citations and quotation marks omitted).
We have already found that Defendant ALKA’s conduct in requesting a variance likely
violated the terms of the Parking Lot Agreement. Insofar as the conduct violated the doctrine of
good faith and fair dealing, we agree with Plaintiffs that ALKA’s conduct could be considered

“arbitrary, unreasonable, and capricious, and lacking a proper motive.” See id. The Amended
Complaint further alleges in Count XI that ALKA’s conduct contributed to “the delay in selling
Oaklyn Manor,” (Am. Compl. ¶ 179), thus injuring the right of the other party to receive the
fruits of the contract. See Seidenberg, 791 A.2d at 1074. We therefore decline to dismiss Count
XI of the Complaint against Defendant ALKA.
Next, Defendants argue that both contractual claims must be dismissed as to Defendants
Rhodes and Shah because they were not in privity of contract with Plaintiffs in the Parking Lot
Agreement. (ECF No. 30 at 11). Because we have already dismissed Count X in its entirety, we
turn our focus solely to the relation of Defendants Rhodes and Shah to Count XI.
Defendants argue that, because the Complaint does not allege a contract between
Plaintiffs and Defendants Rhodes and Shah, the contractual claims must be dismissed as to them.
Plaintiffs counter by stating that Defendants’ argument is “unavailing,” because “adherence to
the fiction of separate corporate existence would sanction fraud or promote injustice.” (ECF No.
31 at 14 n.2 (citing Jurista v. Amerinox Processing, Inc., 492 B.R. 707, 768 (D.N.J. 2013)).

Plaintiffs argue that because Shah is the sole shareholder of ALKA, “maintaining the corporate
fiction would allow Shah to evade personal liability for his role” in the dispute. (Id.). With regard
to Defendant Shah, we agree.
Defendant Shah is the owner and “managing member” of ALKA. (Am. Compl. ¶ 17, 51).
Although Shah is technically a nonparty to the contract in his individual capacity, “traditional
principles of state law” allow a contract to be enforced by or against nonparties to the contract by
piercing the corporate veil. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009); see also
Flintkote Co. v. Aviva PLC, 769 F.3d 215, 220 (3d Cir. 2014) (recognizing, pursuant to Arthur
Andersen, that “a contract may sometimes be equitably enforced by or against even nonparties”).

Plaintiffs allege—and the ALKA Defendants do not contest—that the Parking Lot Agreement
constitutes a contract under New Jersey law. (Am. Compl. ¶ 165). In New Jersey, state law “allows
for piercing the corporate veil to hold shareholders liable when there is a unity of interest.”
Jurista v. Amerinox Processing, Inc., 492 B.R. at 768. Given that Defendant Shah is the
managing member of ALKA, it is plausible that such a unity of interest exists in this case.
Accordingly, we decline to dismiss Defendant Shah from Count XI.
Lastly, Plaintiffs do not allege any form of liability against Defendant Rhodes other than
the fact that ALKA acted “on the advice” of Rhodes when applying to the Borough for a
variance. This claim is insufficient to establish a contractual relationship through privity or by
piercing the corporate veil. Nor would piercing ALKA’s corporate veil have any impact on
Rhodes, as Rhodes was acting merely as ALKA’s attorney throughout the events at issue. (Am.
Compl. ¶ 56). It follows that because there was no contractual relationship between Rhodes and
the Plaintiffs, there was neither breach of contract nor violation of the doctrine of good faith and
fair dealing. Therefore, we dismiss Count XI as to Defendant Rhodes.

In sum, we dismiss all Counts in Plaintiffs’ Amended Complaint against Defendant
Rhodes. Regarding Defendants ALKA and Shah, we dismiss all Counts except for Count XI.
IV. CONCLUSION
For the reasons expressed above, the ALKA Defendants’ Motion is GRANTED IN
PART and DENIED IN PART. An Order follows.

Dated: 12/24/2023 /s/ Robert B. Kugler
ROBERT B. KUGLER
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10278014. Public record. Not legal advice.