May 20, 2008
KRGK REALTY, L.L.C., PLAINTIFF-RESPONDENT,
ANDREW BARTOK D/B/A REVELATIONS CONSULTING, L.L.C., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. LT-5394-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 5, 2008
Before Judges Parrillo and S.L. Reisner.
This is a landlord-tenant case. Defendant Andrew Bartok d/b/a Revelations Consulting, L.L.C. (Bartok) appeals from a September 4, 2007 order granting judgment for possession in favor of his landlord KRGK Realty, L.L.C. (KRGK). We affirm.
These are the most pertinent facts. On February 15, 2004, Bartok and KRGK entered into a five-year commercial lease for first-floor office space and an adjacent rear parking lot at a building in North Bergen, New Jersey. The lease specifically prohibited Bartok from assigning the lease or subletting the premises without the landlord's written consent.
On March 30, 2007, KRKG served Bartok with a notice to quit, citing violations of the lease and damage to the property. The notice alleged that Bartok had "sub-leased or assigned a portion of the demised premises to H&A Tax Services without the landlord's knowledge or consent." The notice also recited that Bartok had failed to remove snow and ice from the premises in violation of the lease. The notice further contended that Bartok had removed a sign from the outside of the building and replaced it with a new sign, and in so doing had caused damage by driving masonry nails into the building. Thereafter, KRKG filed a complaint seeking to evict Bartok pursuant to N.J.S.A. 2A:18-53(c), governing eviction of non-residential tenants.
At the trial on May 8, 2007, KRKG presented testimony from its managing partner, Gary Harrison. According to Harrison, when the first floor space was leased to Bartok, there was a sign on the outside of the building advertising "insurance sales" which brought in customers to a business founded by Harrison's father.*fn1 Harrison testified that Bartok removed that sign without his permission. Also, without Harrison's permission, Bartok put up a sign advertising Bartok's business, Revelations Consulting, and a second sign advertising a tax preparing service called H&A Tax Services. Harrison testified that Bartok attached the Revelation sign to the building with very large nails called "masonry nails" that could damage the building and let water enter.*fn2 Harrison believed that if the sign had been professionally installed, it would have been less likely to damage the building's exterior. Installing the signs violated section 9.02 of the lease, which prohibited the tenant from making alterations or additions to the premises without the landlord's written permission.
According to Harrison, the telephone number advertised on the H&A sign was different than Revelations' phone number. Harrison testified that he did not authorize Bartok to add any co-tenants to the lease or to sublease or assign any portion of the premises. Moreover, H&A was not paying rent to use the building or to maintain a sign on the exterior. Harrison testified that section 4.01 limited the tenant to use the premises only for the tenant's own purposes without the landlord's consent, and sections 15.01 and 15.02 of the lease prohibited assignment or subletting of the lease. The landlord had not given its consent to any use other than for Bartok's business.
Harrison also testified that section 9.02 of the lease required the tenant to remove snow from the parking lot and sidewalk adjacent to the premises. He testified that in February and March 2007, Bartok failed to remove snow from the parking lot despite reminders from the landlord; the snow accumulation posed a liability hazard for the landlord.
On cross-examination, Harrison confirmed that he observed that the nails that affixed the signs actually pierced the siding of the building. In response to questions from the court, Harrison testified that he saw two of the nails protruding from the siding of the building, and noticed that they were "scored" or "grooved" which the judge recognized as characteristic of masonry nails. Harrison testified that he first noticed the unauthorized signs in February 2007; he denied that the signs had been up for two years.
Alejandro Alonso, the managing partner of Revelations, testified for the defense. According to Alonso, he had negotiated the lease with Tom Pahos, Harrison's rental agent, and had originally negotiated to put the lease in the name of Alonso and H&A Tax Service. Alonso then agreed with Pahos to put the lease in the name of Revelations and Bartok. Alonso conceded that when he rented the space, there were signs for Harrison's father's insurance business on the building. However, Alonso also contended that he had told Pahos that Revelations was going to put up signs, and Pahos did not object. He contended that the Revelations signs had been in place since the beginning of the tenancy in 2004. He admitted that Harrison did complain about the H&A sign in 2005. Alonso also testified that the signs were installed using existing nails and that no new nails were driven into the building. He alleged that the H&A signs were put up in 2004, and that Harrison was aware of them.
Alonso contended that Pahos knew that Alonso's business, H&A, was co-occupying the space with Revelations since the inception of the lease. Alonso admitted that H&A and Revelations were separate limited liability corporations. The members of H&A were Alonso, his sister, Bartok, and another Revelations employee. The members of Revelations were Alonso and Bartok. Significantly, Alonso admitted that he removed his own name from the original lease because he did not want to be responsible for paying the rent.
In rebuttal testimony, Pahos agreed that H&A was originally going to be the tenant. However, Bartok and Alonso decided to start a new company, Revelations, and wanted Revelations to be the tenant. According to Pahos, when the lease was signed he made it clear to Bartok and Alonso that there could be no other entities as tenants and "no sublease." Pahos did not authorize Bartok and Alonso to affix any new signs to the building, although he gave Revelations permission to slide one of its signs into a pre-existing sign casing that was already attached to the building. Pahos confirmed that he saw Alonso's sign attached to the side of the building with nails that "pierced the stucco." Contrary to Alonso's testimony that the sign was attached to pre-existing nails, Pahos asserted that the nails were not there before the sign was installed. It was also clear from his testimony that the lease terms were negotiated and that defendants had a complete copy of the lease, whether or not they chose to read the final version before they signed it.
Alonso was re-called as a defense rebuttal witness. On cross-examination he explained why he did not want his name or H&A's name on the lease: "Since I have a major stake in H&A I do not want to be majorly [sic] liable for any liability occurring out of the lease being in my name, as it was in the last lease, it was in my name to have us responsible for looking for a new place, dealing with the landlord." In response to the judge's question as to why Bartok was not present in court and testifying, defense counsel responded that Bartok was not available to testify that day and Alonso had personal knowledge as to the lease negotiations and the signage and snow removal issues.
In an oral opinion placed on the record on May 8, 2007, Judge Fast concluded that Bartok was bound by the lease terms and was chargeable with knowledge that it prohibited subleasing or assignment. He concluded there was substantial evidence that Bartok had sublet the premises to H&A in violation of the lease: "There's no question in my mind about that. H&A is using the premises without permission or prior written consent." He also found that Alonso was not a credible witness. Judge Fast concluded that there were one or more lease violations that justified judgment for plaintiff:
A plaintiff, in order to get a judgment for possession must prove any ground alleged as a basis for breach of the lease. I have found, and I have just expressed that the defendant did nail the sign to the building. I find that the nails through that stucco type of surface do damage the surface of the premises. I find that there was a subletting to H&A Tax Services, without consent, and based upon those two aspects, I am satisfied to enter the judgment for possession, and I am not going to address the other two grounds because, as I say, the plaintiff need only prove one ground - - one allegation, and the law does permit the judgment for possession, pursuant to [N.J.S.A.] 2A:18-53(c)(4), which is a breach, or violation of any of the covenants, or agreements after the service of the written notice of termination, and demand for possession.
On this appeal, defendant raises the following three points for our consideration:
POINT I: THE TRIAL COURT'S FINDINGS OF FACT HOLDING THAT THE DEFENDANT BREACHED HIS LEASE BY CAUSING "WILLFUL DAMAGE" TO THE LEASEHOLD PREMISES IS PLAINLY UNWARRANTED AND NOT SUPPORTED BY THE TESTIMONY AND EVEN IF SOME DAMAGE WAS CAUSED TO THE PREMISES, THE DAMAGE WAS SO "DE MINIMIS" AND VIOLATION SO UNSUBSTANTIAL, SO THAT NO JUDGMENT OF POSSESSION SHOULD HAVE BEEN ENTERED ON THESE GROUNDS.
POINT II: FROM THE INCEPTION OF THE LEASE NEGOTIATIONS AND SIGNING OF THE LEASE IN FEBRUARY 2004, THE LANDLORD KNEW THAT THE PERSON NEGOTIATING THE LEASE FOR DEFENDANT, ALEJANDRO ALONSO, WAS A PARTNER WITH DEFENDANT ANDREW BARTOK IN THE DEFENDANT TENANT'S BUSINESS REVELATIONS CONSULTING; THAT MR. ALONSO AND MR. BARTOK ALSO RAN A BUSINESS CALLED H&A TAX SERVICE; THAT THE H&A TAX SERVICE SIGN WAS INSTALLED AT THE INCEPTION OF THE LEASE; THAT THERE IS NO LANGUAGE IN THE LEASE SPECIFICALLY DEALING WITH SIGNAGE; AND THAT THE LANDLORD WAIVED ANY OBJECTION TO THE PRESENCE OF H&A TAX SERVICE OCCUPYING THE PREMISES WITH DEFENDANT BY ACCEPTING RENT FOR 3 YEARS SUBSEQUENT TO THE ALLEGED SUBTENANCY.
POINT III: IN THIS NON JURY CASE THE APPELLATE COURT IS NOT BOUND BY THOSE FINDINGS OF FACT WHICH ARE NOT SUPPORTED BY ADEQUATE AND SUBSTANTIAL EVIDENCE AND ARE CLEARLY WIDE OF THE MARK.
Having thoroughly reviewed the entire record, we conclude that all of these arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following comments.
Our appellate review of the trial judge's decision is limited. "Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). We give particular deference to the judge's credibility determinations. See Ibid.; State v. Locurto, 157 N.J. 463, 474 (1999). In light of the record, we conclude that Judge Fast's factual findings, which are largely based on his evaluation of witness credibility, are unassailable.
We also find his legal conclusions well-supported by the record. The lease prohibition on subletting was plainly intended to protect the landlord against a sublease to a financially or otherwise irresponsible subtenant. In fact, the lease contains several provisions aimed at protecting the landlord's financial interests in case of a sublease, including a requirement that any request to sublet be accompanied by the proposed subtenant's "current financial statement and business resume" and "trade and bank references." Alonso's explanation as to why he did not want his or H&A's name on the lease - that he wanted no financial responsibility for the tenancy - runs directly contrary to the purpose of the prohibition on subletting without the landlord's consent.
By subletting to H&A without the landlord's prior consent, defendant committed a fundamental violation of the lease which justified the trial court in granting judgment of possession to the landlord. See N.J.S.A. 2A:18-53(c)(4)(authorizing eviction for any breach of the lease "where a right of re-entry is reserved in the lease for a violation of such covenants or agreements"). Moreover, there is no dispute that the lease gave the landlord the right to terminate the lease and recapture the premises in the event of an unauthorized subletting or assignment. See Ibid. We need not decide whether the damage to the building, standing alone, would have justified evicting the tenant. See N.J.S.A. 2A:18-53(c)(2). However, in combination with the more serious subletting violation, it provides additional support for the trial court's decision.