U.S. District Judge Noel Hillman in Camden declined to dismiss the suit, but stopped short of ordering an immediate closing on the 35-acre property—the utility’s former headquarters, which Wal-Mart agreed to buy more than 14 years ago.
The “sparse, disputed record regarding the…approval process and who might be responsible for the failure to obtain final approval or even whether final approval could be obtained” precludes judgment, Hillman wrote.
According to court documents in Atlantic City Electric Co. v. Wal-Mart Stores East Inc., the utility, a subsidiary of Pepco Holdings Inc., executed an $11.5 million contract with the retail chain in 1999.
The deal was contingent on Wal-Mart obtaining “final, unappealable, valid and irrevocable” regulatory approval.
Among the entities that had to sign off were the municipality and the state Department of Transportation—because the property is located at Fire Road and Black Horse Pike, the latter a state-maintained road.
Delays ensued during the following years, but Wal-Mart did have plans drawn up and approved by the municipality and Atlantic County.
During that time, the contract was amended several times.
In the sixth and final version, executed in May 2005, Wal-Mart agreed to pay Atlantic City Electric $60,000 a month until closing to offset the utility’s carrying costs—ongoing insurance, tax and other bills.
The payments are credited to the purchase price. Closing was to be within 20 days of final DOT approval.
That approval proved hard to come by. Around that time, the DOT rejected Wal-Mart’s plan, mandating that a service road be added.
The amended plan—which now provides for inclusion of a supermarket in the store—required new approvals.
The corporation got conceptual approval from the DOT in 2009 and from Egg Harbor Township’s planning board in June 2011.
But the next month, the township approval was challenged in an Atlantic County Superior Court complaint by Village Super Market Inc. of Springfield, which owns 29 ShopRite stores around the state, including two within a few miles of the proposed Wal-Mart site.
Village claimed that the plan violated zoning strictures and was not properly considered by the planning board.
As the litigation played out, Wal-Mart held off on seeking final DOT approval.
Atlantic City Electric apparently lost patience by April 2013, when it filed a complaint alleging breach of contract and breach of the implied covenant of good faith and fair dealing.
The complaint, removed to federal court based on diversity of citizenship, accused Wal-Mart of foot dragging while the zoning litigation was pending, causing the utility to lose millions in carrying costs.
Wal-Mart moved for dismissal, while Atlantic City Electric moved for summary judgment, seeking an order for immediate closing.
After the motions were filed, an Atlantic County judge knocked out Village’s zoning challenge and Wal-Mart filed for final DOT approval, which is pending. However, Village has appealed to the Appellate Division.
Hillman denied both motions on Wednesday.
The utility’s claims “set for very straightforward…allegations and, although factually lean, satisfy…plausibility standard[s],” he says.
Wal-Mart “interprets the contract to make itself a passive participant in the NJDOT approval process” and “argues that without NJDOT approval, there can be no closing,” Hillman said.
“Although that interpretation may be true to a certain extent, it does not preclude a claim at the pleading stage by ACE that Wal-Mart is culpable” for the lack of approval, the judge said.
Wal-Mart’s arguments, not enough to strike the suit, nonetheless “demonstrate that it may have substantive defenses”—enough to defeat Atlantic City Electric’s summary judgment motion.
Wal-Mart’s attorney, N. Ari Weisbrot of Fox Rothschild in Roseland, defers comment to the corporation.
Wal-Mart spokesman Randy Hargrove says the company is pleased that the court denied the plaintiff’s motion for summary judgment.
Atlantic City Electric’s attorney, Lloyd Levenson of Cooper Levenson in Atlantic City, declines comment.
Village’s counsel, Ronald Gasiorowski of Gasiorowski & Holobinko in Red Bank, did not return a call. ■