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Service Refrigerated Transport v. Williams Development

December 2, 2008

SERVICE REFRIGERATED TRANSPORT, A DIVISION OF SERVICE WAREHOUSE, PLAINTIFF-APPELLANT,
v.
WILLIAMS DEVELOPMENT, INC., DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-456-00.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 27, 2008

Before Judges Lisa and Reisner.

Plaintiff appeals from an order denying its motion to enforce a stipulation of settlement (stipulation) with defendant. Plaintiff argues that the trial court mistakenly exercised its discretion in failing to enforce the stipulation in the manner argued by plaintiff, or, alternatively failing to schedule a plenary hearing because material facts were disputed. Plaintiff further argues that the trial court order should be reversed because the judge failed to adequately set forth findings of fact and conclusions of law. We reject these arguments and affirm.

Plaintiff leased from defendant a portion of defendant's building in South Brunswick for a ten-year term beginning February 15, 1997. The leased premises consisted of 38,000 square feet of refrigerated warehouse space and 2770 square feet of office space. The lease provided for annual rent for the first five years of $195,930, and for the second five years of $222,081. The lease also obligated plaintiff to pay other sums as "additional rent."

A condition of the lease required plaintiff to post a $32,655 security deposit, which plaintiff deposited on December 17, 1996. It is plaintiff's effort to obtain a return of that security deposit that forms the basis of this litigation.

On October 15, 1998, plaintiff abandoned the lease and vacated the premises. Defendant was able to secure a new tenant for the space covered by the lease, Wisconsin Express Lines (WEL), which occupied the space immediately upon plaintiff's departure. WEL apparently paid a comparable rent to that plaintiff was paying. However, WEL vacated the premises at the end of March 2004. The premises remained vacant for a time. Unable to find other suitable tenants to lease refrigerated warehouse space, defendant conducted extensive modifications and renovations, converting the refrigerated space to nonrefrigerated space. Eventually, other tenants were found to occupy subdivided portions of the space previously leased to plaintiff.

On January 5, 2000, plaintiff initiated this action, seeking return of the security deposit. Defendant answered and counterclaimed for damages it alleged were caused by plaintiff's breach. On October 3, 2001, the parties entered into the stipulation, in which they acknowledged that plaintiff's entitlement to the return of the security deposit could not be determined at that time, but must abide future events over the remaining portion of the ten-year lease term between the parties. The stipulation provided that defendant would pay plaintiff three yearly installments of $10,885 on October 30 of 2004, 2005 and 2006, provided defendant was able to fully rent the space from June 15, 2001 through October 15, 2004, 2005 and 2006 respectively, for the net rental income plaintiff would have paid but for the breach. "Net rental income" would not include, however, "the costs of improvements, modifications, repairs or changes reasonably necessary and related to attracting or obtaining a new tenant." Additionally, if defendant was not required to pay a broker's commission of $69,668.62 by February 15, 2007, plaintiff would receive a credit for that sum, which would be added to gross rent actually received by defendant.

The stipulation further provided that if defendant's damages resulting from plaintiff's breach exceeded the amount of the security deposit ($32,665), defendant would be authorized to reinstate its counterclaim by serving a motion on plaintiff by June 15, 2007. The stipulation further provided that defendant would be entitled to credit in calculating "net rental income" for all costs of construction, as determined in defendant's sole discretion, reasonably necessary and related to attracting or obtaining a new tenant, together with architects, engineers or attorney's fees incurred after June 15, 2001 in dealing with existing, future or potential tenants. Conversely, if defendant failed to make any payment as required by the stipulation, plaintiff could file a motion to enforce the terms of the settlement agreement embodied in the stipulation.

The stipulation contained the following provisions pertaining to a claim by defendant that it was entitled to an offset against its obligation to refund plaintiff's security deposit because of costs incurred to re-rent the space or because of lost rental income:

5. In the event defendant claims an offset to any costs incurred, as provided for within paragraph 3 of this settlement agreement, defendant shall so provide copies of any and all invoices, and proof of any payment thereto, to plaintiff, and/or its counsel.

6. In the event defendant claims that the net rental income, as defined within paragraph 3 of this agreement, is less that what defendant would have collected from plaintiff, defendant shall provide to plaintiff, and/or its counsel, copies of any and all lease agreements, and/or any other memorandum, communication, and/or agreement which would indicate and evidence the amount so received by the defendant.

On January 22, 2007, plaintiff's attorney wrote to defendant's attorney demanding a refund of the full $32,655 deposit.*fn1 Defendant's attorney responded, advising that substantial construction costs had been incurred and the space remained vacant for a period of time, all of which would serve to wipe out any claim plaintiff might have had for a refund. Plaintiff's counsel requested documentation, as required by ...


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