PER CURIAM.
This is the second appeal taken following a bench trial to resolve a dispute about allocation of an "Overhead Charge" under a commercial lease for second floor commercial space at 89 Washington Street in Hoboken. The plaintiff is Washington and Court, LLC (Landlord), and the defendants are Bangz Salon Hoboken, LLC (Bangz) and its former owner Joseph E. Branco (collectively Tenant).
This dispute centers on paragraph 42 of the lease, which defines the scope of Tenant's obligation to pay a share of the "Overhead Charge." It requires Tenant to pay, as additional rent, 10.272% of the "Overhead Charge" for "the Building."
The lease has a payment plan that is as intricate as the allocation of the "Overhead Charge." Tenant must pay $800 per month as additional rent.
This is a ten-year lease that commenced on October 1, 2004, but this dispute did not arise until 2007 when Tenant received the statement/reconciliation for the 2006 "Overhead Charge." That was the first time Tenant's estimated payments were short of actual costs. Landlord reported that Tenant's share for 2006 was $15,891.29, $6291.29 more than Tenant's estimated share, and Tenant refused to pay the alleged overages.
The primary point in contention is the meaning of the term "the Building" as it is used in paragraph 42. The lease describes the leased premises as "second floor commercial space... at 89 Washington Street ... in the building known as 89 Washington Street ... (the `Building')."
On appeal from the first bench trial, the panel affirmed in part, reversed in part and remanded for a trial on the issues that remained.
Because the "Overhead Charge" could not be calculated until the meaning of the term "the Building" was determined, the panel also directed the trial court to adjudicate the "Overhead Charge" for 2006.
The second bench trial was conducted on March 11 and April 19, 2011.
At the remand hearing the parties presented testimony and documentary evidence addressing the question whether the term "the Building" for purposes of paragraph 42 includes 89-91 Washington Street or just 89 Washington Street. That evidence can be summarized as follows.
The deed reflects that the property consists of lots 1.1 and 1.2 of Block 211 on Hoboken's tax map. The metes and bounds description filed with the deed reveals that the property is bordered by public streets on three sides, Washington, Newark and Court Streets, and that it has an area of 5000 square feet. There is no dispute that the structure at 89-91 Washington Street abuts Newark and Court Streets as well. In addition, the affidavit of consideration filed with the deed lists multiple addresses — 89-91 Washington Street and 60-64 Newark Street. The property and its improvements are taxed by the City of Hoboken as 89-91 Washington Street, its Newark and Court Street addresses are not referenced in the tax bill.
The lease indicates Tenant's leasehold consists of approximately 1200 square feet of second floor commercial space. Defendant Branco estimates that the space is somewhat larger, about 1250 square feet. The lease confirms that "the Building" has premises entered via Newark Street. It states that Tenant's access is through the Washington Street sidewalk entrance, "not the Newark Street side of the building."
An architectural report prepared in 1988 provided the area of the leased portions of the various commercial and residential premises at 89-91 Washington Street, 60-64 Newark Street and 90 Court Street. That report indicates the total area of the several leaseholds is 11,585 square feet, with the space Tenant occupies having an area of 1190 square feet, or 10.272% of the leased area. There is no indication that any of the leaseholds are in the basement or that the total area stated includes the common areas.
A licensed architect, who had done work on the building in the past, surveyed 89-91 Washington Street and testified for Landlord at the trial on remand. He determined that the structure comprising 89-91 Washington Street has a single basement and a total area, as opposed to the area of the leased space only, of 11,827 square feet. This total area included the basement. Accordingly, 10.272% of that total area is 1215 square feet.
The acting construction official for Hoboken testified and produced six City records relating to the property — a construction permit, two certificates of occupancy, an application to renovate the second floor of the building and two certificates of zoning compliance. All of the records, except the application to renovate the second floor premises leased by Tenant, which was prepared by Landlord, list the address as 89-91 Washington Street. As noted above, property tax receipts for 2005 and 2006 also list the address as 89-91 Washington Street.
There was other evidence suggesting that 89 and 91 Washington Street are two buildings. Photographs showed that there are different facades and elevations. But there was no testimony as to the significance of those differences. In fact, when shown a photograph of the Washington Street facades, Landlord's architect indicated that it showed two buildings.
According to defendant Branco, he understood that Tenant's share of the "Overhead Charge" would be for 89 Washington Street. Despite that testimony, Branco acknowledged that Landlord gave him the 2005 and 2006 tax receipts issued for 89-91 Washington Street. On remand, Branco also admitted that the first time he objected to paying expenses for 91 Washington Street on the ground that they were not for "the Building" was after the judge raised that question during the first trial.
After recounting and considering the terms of the lease, the parties' conduct and the evidence tending to show the parameter of "the Building," the judge presiding over the remand hearing determined that the parties intended to include expenses for the building known as 89-91 Washington Street in the "Overhead Charge" when the lease was executed. The evidence the judge deemed most persuasive was the fact that the leased premises was, in fact, roughly 10.272% of the total area of 89-91 Washington Street — the share of the "Overhead Charge" Landlord agreed to accept and Tenant agreed to pay. The judge further reasoned that if the term "the Building" referred only to the portion known as 89 Washington Street, the portion occupied by Tenant would be about 42% of its total area.
In reviewing a determination based on evidence and testimony presented at a bench trial, this court "`do[es] not disturb the factual findings and legal conclusions of the trial judge unless ... convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'"
Applying that standard, we see no basis for disturbing the judge's determination. On the prior appeal, the panel also focused on Branco's assertion that he had no "objection to paying [T]enant's pro rata share of a tax bill for the property even though it covered the large building with multiple addresses." For that reason, the panel concluded that a remand was required for proofs to be "taken to determine the parameters of `the Building' referenced in [p]aragraph 42 of the lease."
We have considered Tenant's objections to the admission of evidence pertinent to the meaning of the term "the Building" in paragraph 42 of the lease. The objections are to documentary evidence presented by the City's employee admitted as business records, the architect's testimony about the total area of the building and the allowance of rebuttal testimony. The claimed errors involve matters left to the sound discretion of the trial court, and there is no discernible abuse of that discretion here.
We turn to consider whether the evidence presented supports the judge's calculation of Tenant's 2006 share of the "Overhead Charge."
Tenant raises a preliminary question about Landlord being permitted to proceed without providing the accounting directed by this court in its decision on the prior appeal. Tenant suggests that Landlord is to blame, but the parties share that responsibility. As noted above, the panel referred to the accounting the trial court had directed in a post-judgment order, and under the terms of the trial court order the parties were required to cooperate to obtain an accounting from an independent certified public accountant. Thus, Tenant is in no position to contend that reversal is required because Landlord did not comply with the mandate from this court and the trial court proceeded without one.
In hindsight, it would have been more productive for the parties to obtain an accounting after the judge resolved the dispute about the meaning of the term "the Building," which is critical to the calculation of Tenant's share of the "Overhead Charge." But the trial transcript does not indicate that the parties urged the judge to reconsider the order, entered by a different judge, denying bifurcation on the ground that it should have been completed when the motion to bifurcate was filed. Accordingly, we address the 2006 "Overhead Charge" on the record that the parties have made. In doing so, we recognize that Landlord, the plaintiff in this action, had the obligation to establish its entitlement to the contribution it sought — a responsibility Landlord assumed when it agreed to send Tenant an "annual statement/reconciliation of Tenant's share."
The evidence Landlord presented is adequate to support a finding that Landlord paid $72,924.42 for 2006 property tax on 89-91 Washington Street. A tax receipt prepared by the City establishes that payment. Tenant's 10.272% share is $7490.80.
The evidence is also adequate to support a finding that Landlord paid $8223.42 in 2006 as a management fee for 89-91 Washington Street. The property manager testified that her fee was $1100 per month for 89-91 Washington Street and $1100 per month for 93 Washington Street. Cancelled checks for the 89-91 Washington Street expense in the total amount of $8223.42 were produced demonstrating payments for the 2006 management fees. Tenant's 10.272% share of that expense is $844.71.
In addition, payment records for supplies purchased for 89 Washington Street from City Paint & Ace Hardware that clearly indicate payment made for 89 or 91 Washington Street reflect total expenses of $1593.33. Tenant's 10.272% share of that expense is $163.67.
Apart from Tenant's share of taxes, management fees and supplies, a total of $8499.18, Landlord failed to establish its entitlement to shift 10.272% of any other expenses to Tenant. Thus, Tenant's estimated payments, $9600, exceed the amount due by $1100.82.
Our conclusion about what Landlord did not establish warrants some explanation. Landlord sought a share of the expense for insurance policies that cover 89-91 and 93 Washington Street. Landlord allocated 50% of its permissible insurance cost to 89-91 Washington Street. But there is nothing in this record that provides a rational basis for a fifty-fifty allocation of the cost. In short, the division, as far as we can discern, was based on nothing other than Landlord's opinion of a fair allocation. The lease does not contemplate calculation of the "Overhead Charge" based on Landlord's opinion of the expenses incurred for 89-91 Washington Street. Because Landlord did not present any evidence to show a cost for insuring 89-91 Washington Street, it did not meet its burden of proof on this portion of the "Overhead Charge."
Landlord's proofs for allocating its expenditures for janitorial costs and extermination fees are wanting for the same reason — absence of any explanation as to allocation of those expenses between 89-91 and 93 Washington Street. The bill for janitorial services simply indicates that "10% of the total is paid by 93 Washington Street." The only explanation given for that ninety-ten division is the property manager's assertion — hardly any janitorial work was done in 93 Washington Street and 93 Washington Street is "a smaller building."
There is no documentary evidence supporting inclusion of extermination fees in the "Overhead Charge." Eight invoices of varying amounts ranging from $400.68 to $556.50, and seven checks indicating payment of exterminating expenses were produced. Each invoice indicates that the work was done for "Washington & Court LLC — 93 Washington Street." By the opinion of the panel that decided the first appeal, Tenant may not be assessed a share of the expenses for 93 Washington Street.
The property manager testified that the exterminating bills covered work at both buildings, 89-91 and 93 Washington Street, and produced a spreadsheet allocating $80.89 of each invoiced bill to 93 Washington Street. She did not explain how she or Landlord determined that all but $80.89 billed in each invoice was for work done at 89-91 Washington Street. Accordingly, Landlord did not prove the amount of the extermination expense chargeable to Tenant.
The foregoing discussion of the proofs on the 2006 "Overhead Charge" accounts for all of the expenses addressed at the trial on remand. The significant difference between Tenant's share calculated by the judge and the share we have calculated is based on a complete absence of adequate evidence to allocate the expenses for extermination, janitorial services and insurance costs to Tenant. As deferential as our standard of review may be, where a determination is not supported by the evidence no deference is due.
Our disposition of the case makes it unnecessary for us to address Tenant's claim that the trial judge erred in reconsidering the initial judgment and in denying Tenant's requests for reconsideration. To the extent Tenant sought reconsideration of the judge's conclusion about the meaning of the term "the Building," we have addressed that issue in part A of this opinion. To the extent that Tenant argues that the judge should have ruled on the "Overhead Charge" for years subsequent to 2006, that question was not before the judge on remand.
Tenant also argues that the judge erred in denying its request for counsel fees in accordance with paragraph 52 of the lease. The judge denied that request based on an assessment of the parties' relative success. The disposition of this case on appeal alters that balance. Accordingly, we remand for reconsideration of the judge's determination on counsel fees. Because fees on this appeal must abide by the trial judge's determination of fees in the trial court, we "refer the issue of attorney's fees for appellate services [on this appeal] to the trial court for disposition."
In sum, the judge's determination that the term "the Building" within the meaning of paragraph 42 includes 89-91 Washington Street is affirmed. As this court previously held, "the Building" does not include 93 Washington Street. The judgment in favor of Landlord is vacated and the matter is remanded for entry of judgment in favor of Tenant in the amount of $1100.82 — that amount represents the difference between the $9600 Tenant paid in $800 monthly installments for its estimated share of the "Overhead Charge" and Tenant's actual share of the charge, $8499.18. On remand, the trial court must reconsider its determination on counsel fees incurred on the first remand and the question of fees on this appeal, which we have referred.
To the extent that there is an order in effect concerning escrow that must be resolved, the parties are free to bring that matter to the attention of the trial court for resolution of that question informed by this opinion if they are unable to resolve that matter by consent order.
In pertinent part, paragraph 42 provides:
In pertinent part, paragraph 38 provides:
