Cash-strapped New Jersey City University got a much-needed victory Wednesday.
A state appellate court panel reversed a lower court ruling and dismissed two of three counts in a $1.75 million lawsuit that claims the university welched on a $1.75 million “success fee” payment to its former real estate consultant.
The panel did not rule on whether the university reneged on its contract with Strategic Development Group (SDG), but stated in the 17-page decision that SDG had filed its lawsuit too late.
Anthony Bastardi, founder and president of Strategic Development Group, was a special advisor to former President Sue Henderson and a former board member of the NJCU Foundation. SDG was a key player in the university’s over-aggressive expansion plans that led to its financial emergency in 2022 and Henderson’s resignation.
SDG’s lawsuit argued that the university agreed to pay a 1% success fee upon completion of each of the five projects on the West Side, four of which had already been paid. The fifth project, known as block 4, was completed and a facility lease was agreed upon with an unaffiliated third party, earning SDG $1.75 million.
“Strategic made several ‘good faith’ attempts to reach out to the university’s counsel regarding payment of the success fee, but the university ‘was silent,’” the panel said in recounting the thrust of the lawsuit.
“Three days later (after announcing its financial emergency), the university terminated the (SDG) contract, ‘citing its lack of available funds to continue with Strategic’s services.’ The termination letter indicated that ‘effective August 1, 2022, payments would not be issued by the university to” Strategic.”
SDG filed a complaint in June 2023 alleging a breach of contract, unjust enrichment and fraudulent misrepresentation. The appellate court panel directed the trial court to dismiss the breach of contract and unjust enrichment.
The motion judge ruled that SDG “failed to timely file its CLA (New Jersey Contractual Liability Act)” notice when the breach of contract was accrued in 2019. The consultant also “did not waive sovereign immunity for contracts.”
But the appellate division remanded SDG’s torts claim involving fraudulent misrepresentation back to the lower court.
Bastardi declined to comment and deferred to his lawyers, Denis F. Driscoll and John P. Inglesino, who could not be reached for comment.
NJCU spokesman Ira Thor said the university does not comment on litigation.
The project located on block 4 is a part of the $400 million project once envisioned as a “campus village” to be built across the 22 acres of land the university owns between West Side Avenue and Route 440.
Henderson resigned in June 2022 amid the financial emergency of a $22.7 million annual operating deficit. The university spent the next year establishing austerity measures, including cutting its academic portfolio by 33%, in place to cut the deficit down.
Bad real estate investments, an ill-timed decision to beef up sports programming, the COVID-19 pandemic and a dip in enrollment were a “perfect storm” for the school’s financial emergency. Most of the $244 million in long-term debt the school accumulated over the years is traced back to these unsuccessful investments.
The 100-year-old institution has been fighting its way toward financial stability ever since and is waiting to see if it will receive additional state aid in the new state budget, expected to be announced this week. The governor proposed $38 million ($3 million less than last year) in state aid for the school, a far cry from the school’s request for $55 million.
