PER CURIAM.
In this commercial tenancy dispute, plaintiff, Village Super Market, Inc., appeals from an order of summary judgment entered against it, terminating its lease with defendant, the Estate of Cantor, and awarding counsel fees and costs to that defendant.
The facts of the matter are relatively straightforward. In 1991, plaintiff, the owner and operator of ShopRite Supermarkets, leased commercial property in Bernardsville from Saul Cantor, now deceased, for supermarket use. The property was leased "as is," and the obligation to repair was placed on plaintiff by paragraph 7 of the lease, which stated in relevant part:
The lease, with extensions, would not expire until February 28, 2022. The leased premises was managed by defendant Jacobs Enterprises, Inc.
At some time after the lease was commenced, plaintiff allowed the property to "go dark," shifting its operations to a new store next door. Thereafter, the vacant premises was used primarily for storage and for overflow parking. Nonetheless, rent payments remained current.
At some point in 2006, Peter Jacobsen, Vice-President of JK Management, L.L.C. and Vice-President of Acquisitions and Leasing at Jacobs Enterprises, Inc., received a report by Paul Beck Associates, P.A., of its inspection of the leased premises, conducted in connection with a potential sublease of the property to The Thirsty Turtle. The Beck report, which was dated February 6, 2006, detailed the findings of an inspection of the vacant site made on January 31, 2006. It disclosed substantial damage to the premises, requiring repair, including the installation of new floor joists and wood flooring, repair of the basement block wall in areas showing extensive water damage, modification of drainage, restoration of original framing or the addition of new supports, repair of cracked and water damaged joists, repair of failures in the basement walls with steel and concrete fill in order to withstand soil pressure, correction of deflection in a metal deck closing off abandoned concrete stairs, replacement and sealing of the roofing surface, and other matters.
Thereafter, Jacobsen and George Jacobs, the President of JK Management and Jacobs Enterprises, determined to commission their own inspections. In May 2007, they commissioned architect John Buchholz and his firm, The Buchholz Architectural Group, P.C., to identify and retain structural engineering experts to inspect the property and render reports on its condition. Buchholz retained CEC Group, L.L.C., which issued a letter report, dated May 18, 2007, limited to its "visual observation of the exposed structural components of the foundation walls and the floor and roof construction only." The report separately described the results of CEC's inspection of the roof trusses and of areas designated as Area A through Area I, the locations of which were set forth in an accompanying plan. Additionally, photographs of the various conditions mentioned in the report were provided.
The report indicated that seven of the eight visible roof trusses had been inspected. All showed signs of un-engineered repairs, some causing a reversal of forces from tension to compression and the reverse. The report stated that "[f]urther analysis of the trusses is definitely required. Currently, we estimate about fifty members of the trusses will need reinforcement or repair." In addition, the report noted, in Areas A through I, extensive water damage, failures of framing, joists and flooring, and a wall crack requiring repointing and wall reinforcement. The report concluded with the following statement:
Additionally, Buchholz retained Dajon Associates to prepare an inspection report on the building's roof trusses, which was completed on May 10, 2007. The report indicated that all trusses had been extensively repaired, including the installation of a post-tension cable system, reinforcement with additional lumber and installation of columns extending from the finished floor to the bottom chords. The report also noted fractures and splits in the trusses, as well as water damage. Numerous photographs of the condition of the trusses were provided.
On July 27, 2007, Jacobsen wrote to William Sumas of Village Super Market, enclosing the CEC Group and Dajon Associates reports, noting that they "indicate[d] the need for extensive structural work to the ground floor supports and to the roof truss system in the Shoprite Annex building[.]" The letter continued:
Sumas did not respond, but in a subsequent conversation, claimed not to have received the reports. As a result, the structural engineers' reports were forwarded by fax again on December 28, 2007.
In a further communication from Jacobs to Sumas dated February 1, 2008, Jacobs stated:
Paragraph 3 of the lease declared that "Each of the following shall be deemed a default by the Tenant and breach of this lease[.]" Paragraph 3(a)(1) declared as a default failure to pay rent. Additionally, Paragraph 3(a)(2) declared as a default
On March 6, 2008, defendant served plaintiff with a twenty-day notice pursuant to Paragraph 3 of the lease demanding cure of the conditions noted in the structural reports of the CEC Group and Dajon Associates. No repairs were commenced. Instead, in May 2008, plaintiff filed a verified complaint against defendants alleging that upon learning that plaintiff had identified a potential sublessor for the property at a substantially higher rent than was being charged by the landlord and learning that plaintiff was intending to request the landlord's consent to sublease, the landlord sought to prematurely terminate the lease in order to regain the property and enjoy the full amount of the higher rental.
On July 21, 2008 the court signed a consent order for preliminary injunctive relief enjoining defendants from reentering the premises, reletting the premises, or commencing any proceedings, taking any other action to evict or otherwise remove plaintiff from the premises, exercising rights or remedies granted to defendants in the event of a default, advertising the premises for rent, interfering with plaintiff's efforts to sublease the premises, and engaging in any conduct that interfered with plaintiff's quiet use and enjoyment of the premises. However, the order permitted defendants to send a notice of termination of lease, while conditioning actual termination upon entry of a court order permitting that relief. As of August 7, 2008, repairs had not been commenced. Accordingly, defendants served plaintiff with a notice of termination of lease in accordance with Paragraph 3(c) of that lease.
On August 21, 2008, defendants sent plaintiff a second twenty-day notice of default.
As of November 2008, plaintiff had not made any structural repairs to the property. An inspection on March 9, 2010 disclosed that plaintiff had recently effected a few of the repairs referenced in the CEC report, but none of the repairs referenced in the Dajon report.
On January 8, 2010, the court entered a consent order granting plaintiff permission to file an amendment to its verified complaint to add claims for specific performance, rent abatement and rent set-off. A further extension of discovery was denied on March 3, 2010, and trial was set for June 7, 2010.
On March 30, 2010, defendants moved for summary judgment or, in the alternative, for an order barring testimony from plaintiff's expert at trial and compelling the depositions of two of plaintiff's officers. In connection with this motion, defendants served the April 9, 2010 certification of Rajnikant Doshi, a principal of CEC Group, that was denominated "Final Report of CEC Group, Inc." In that report, Doshi opined that,
Plaintiff countered on April 12, 2010 by serving the report of its expert Todd R. Heacock, a structural engineer employed by the firm of Paulus, Sokolowski & Sartor, L.L.C. That report focused solely on the roof trusses, which Heacock found did not require any structural repair "at the time of the Dajon and CEC Reports" to make them stable. Heacock did not opine as to the trusses' present condition.
On April 19, 2010, plaintiff filed a cross-motion for partial summary judgment, arguing that the notices issued by defendants with respect to the alleged breaches by plaintiff were defective and inadequate, in that they did not sufficiently identify "structural" conditions in need of repair. In support of its motion, plaintiff relied on Heacock's analysis of the roof trusses and also on a certification of Kevin C. Sommons, a professional engineer, who opined that the need for repair of the roof trusses could not be determined by visual inspection alone.
The motions were heard by the court on April 30, 2010. At that time, defendants focused on the first twenty-day notice, as to which the notice of termination pertained. They conceded that issues of fact existed regarding the condition of the roof. With respect to the remainder, defendants also conceded that, "in the last couple of months," plaintiff had repaired "a few" of the conditions identified in the CEC report, but had done so only after two years' inactivity, and had not made all of the necessary repairs. Plaintiff argued that the reports furnished by defendants were inadequate because, admittedly, there was no engineering verification that the identified conditions were structural in nature.
Following argument, the court rendered an oral opinion granting summary judgment to defendants. In doing so, it framed the issue as being "whether . . . the defendant has complied with the terms of the lease by issuing a notice to the plaintiff of a failure to comply with a specific term[,] namely Article 7 . . ., to repair structural and non-structural defects in the property." It acknowledged plaintiff's position that the first twenty-day notice was inadequate, but held:
The court additionally found that the plaintiff was a "sophisticated tenant" that had an opportunity to inspect the property before taking possession of it, and because of the length of its tenancy, it could not be deemed "a stranger to the property." Notice number one, the court held, was "more than adequate to put the plaintiff on notice that there were defects and those defects needed to be repaired. They simply were not repaired and the defendant appropriately under the terms of the lease then issued a notice of termination." Thus, the court found, summary judgment in defendants' favor was warranted. After determining that defendants had no responsibility under the terms of the lease to repair defects in the premises, and that plaintiff had offered no facts to support the claims set forth in its complaint, the court denied plaintiff's cross-motion for partial summary judgment.
Defendants were directed to file a motion for attorney's fees, and they did so, obtaining an award of $113,556.27 in fees together with costs to be taxed.
Plaintiff has appealed the entry of summary judgment in defendant's favor, the denial of its motion for partial summary judgment and the fee award.
On appeal, plaintiff argues, as it did on summary judgment, that the first default notice was inadequate in that it indicated a need for "extensive structural work in and about the Premises," but failed to advise what specific "structural" defects in the property were the focus of the notice. Thus, the court erred in finding that the notice provided was "more than adequate." Plaintiff contends that because the CEC and Dajon reports were limited to "visual observation of exposed elements of the Leased Premises only," neither report stated that the conditions observed constituted structural defects that required repair, and the CEC report specifically advised that "the structural adequacy of visible members and connections cannot be verified by visual observation alone," the reports did not provide the necessary support for the notice. In plaintiff's view, all the first notice of default did was to advise plaintiff of "defects in general," and without greater specificity, supported by engineering analysis demonstrating that a particular defect was "structural," no duty to repair arose.
We do not accept plaintiff's position, but instead agree with defendants that the clear language of Paragraph 3(c) of the lease required a written notice of default, not an expert report, and that if any doubt existed as to the repairs required after review of the CEC report and accompanying photographs, plaintiff could have made inquiry of defendants, instead of doing nothing for a period of two years. In the circumstances presented, we find
Resolution of defendants' summary judgment motion depended on the court's interpretation of the language of the lease agreement — usually a matter of law, suitable for decision on a motion for summary judgment.
Whether an ambiguity exists is a matter of law to be decided by the trial court.
Paragraph 7 of the lease required plaintiff to maintain "structural and non-structural" elements of the premises in "good condition" and to "repair and maintain the said premises as may be necessary, in Landlord's opinion, reasonably exercised[.]" In the present case, defendants had ample reason as the result of the reports of two structural engineering companies, Beck and CEC,
We acknowledge that the first notice of default utilized the phrase "extensive structural work" and that the CEC report that was furnished to plaintiff contained no detailed engineering analysis, but merely the conclusions of trained engineers. Nonetheless, we are satisfied that the observations made by CEC's structural engineer of damage to structural elements of the demised premises, as documented in photographs, were sufficient to support defendants' reasonable belief that structural repairs were needed.
The purpose of a default notice is to inform the tenant of the alleged breach and provide the tenant with an opportunity to cure.
Further, even if we were to find the notice to be vague, which we do not, the record reflects that the parties communicated extensively in the period between July 2007 when the CEC and Dajon reports were first furnished to plaintiff and March 2008 when the first notice of default was served. During that time, plaintiff never sought clarification as to what needed to be done — and indeed, it eventually performed some of the repairs mandated by the CEC report, albeit long after notice of termination had been sent. If clarification were required, plaintiff's responsibility to obtain it would clearly fall within the implied covenant of good faith and fair dealing inherent in the lease agreement.
We are thus satisfied that the trial court was correct in concluding that the first notice properly triggered plaintiff's obligations under Paragraphs 3 and 7 of the lease.
Plaintiff next argues that the trial court erred in granting summary judgment because defendants failed to establish the absence of a genuine factual dispute as to the existence of any structural defect that plaintiff failed to correct. In this argument, like the prior one, plaintiff seeks to require scientific proof by defendants that the defects observed by CEC were, in fact, structural in nature. Plaintiff claims that: "While the trial court might be able to look at the pictures in the CEC and Dajon Reports and find as a matter of undisputed fact that defects are depicted and exist at the property, the trial [court] could not read those reports and find as a matter of undisputed fact that the defects depicted are structural defects." Plaintiff points to the Heacock report regarding the structural integrity of the roof trusses as raising a factual issue in that regard. Further, plaintiff argues that the lack of engineering analysis in the initial CEC report precludes a conclusion that the other defects at issue were structural, and that its supplemental report, despite its conclusion that the defects were in fact structural, suffers from the same flaw.
While plaintiff may have created an issue of fact regarding defects in the roof by its late submission of Heacock's certification and report, plaintiff has offered no evidence whatsoever with respect to the basement and ground floor of the building. Thus, the claims of structural defects in those areas, as attested to by CEC's Doshi, are unrebutted. The trial court found those defects, when not timely repaired, to be sufficient to provide grounds for a declaration of default by defendant in connection with a material provision of the lease. We agree.
As stated in the certification of architect Buchholz in support of defendant's motion for summary judgment:
No issue of fact had been raised with respect to the conclusions of Buchholz and other experts as they related to Areas A through I. Thus, the court was correct that the matter was appropriate for summary judgment.
Plaintiff next argues that even if the court were correct in concluding that the undisputed facts established that the conditions identified in the first default notice constituted structural defects, those defects were latent, preexisted the signing of the lease, and were known by defendants who did not disclose them to plaintiff. Thus, defendants could not hold plaintiff responsible for their repair or declare plaintiff in default for not making the repairs.
We find this argument to lack sufficient merit to warrant extensive discussion in a written opinion.
Further, we decline to accept plaintiff's argument that defendant somehow failed to disclose structural defects known to it, and thus the rule of
In this case, Paragraph 4 of the lease provides:
In addition, Paragraph 29 states that "[e]ach party agrees to pay all attorneys' fees and other expenses incurred by the other in the successful enforcement of any of the agreements, covenants, terms, conditions and obligations under this lease."
Because we have found defendant Estate of Cantor to be the prevailing party in this matter, in accordance with the terms of the lease, it was entitled to counsel fees and costs.
Plaintiff argues that the court abused its discretion in calculating the fee award, that the court failed to analyze whether the time spent on the case was necessary or reasonable, that it improperly awarded fees for legal work unconnected with the case, and that it mistakenly accepted the hourly rates charged by defendants' New York counsel as representing the rates customarily charged in the locality for similar services.
We reject plaintiff's first two contentions, determining that the court meticulously examined defense counsels' submissions in light of the factors set forth in PRC 1.5(a). Further, we find that the judge properly eliminated unrelated, duplicative, and overlapping charges. We thus find no abuse of discretion in these respects.
However, we find that the court did not address the reasonableness of the hourly rates charged by the prevailing attorneys, and we remand to permit that issue to be considered.
We further require clarification as to whether defendants' amended petition requesting fees associated with plaintiff's successful motion to amend the April 30, 2010 judgment was granted, finding that it is doubtful that it should have been. We are also uncertain whether the twenty percent deduction for duplicated telephone conferences was applied to both the defendants' New Jersey and New York counsel or to New York counsel alone. In this regard, the $80,421.72 awarded to New Jersey counsel is less than the $95,011.50 originally requested by more than twenty percent, but there is no explanation for the reduction. There is a similar inconsistency in the amount awarded to New York counsel.
Plaintiff has requested a plenary hearing on remand to address issues surrounding the counsel fee award. However, the Supreme Court has discouraged the use of such a procedure, determining that its use invites the parties "to become mired in a second round of litigation."
In the present matter, the certifications and billing records submitted to the trial court are detailed and complete. The primary issue that remains involves the reasonableness of counsels' billing rates. No testimony with respect to these matters is required.
Summary judgment in defendants' favor is granted; the matter is remanded for further consideration of the award of attorney's fees. Jurisdiction is not retained.
