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Pinedge Associates v. Steliga Homes Corp.


August 14, 2009


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4439-04.

Per curiam.


Submitted December 17, 2008

Before Judges Rodríguez and Waugh.

Plaintiffs, Pinedge Associates and Pinedge Associates, LLC (collectively "Pinedge") appeal from the March 23, 2007 final judgment following a bench trial. The judge awarded $34,053.30 plus $11,952.34 in costs and counsel fees to Pinedge to be paid by defendant Steliga Homes Corporation (Steliga). This judgment represents an award of $55,558, less a set off to Steliga on its counterclaim of $21,501.64. Steliga cross-appeals, arguing that it is entitled to the reasonable value of its services and challenging both the amount of the judgment and the award of counsel fees to Pinedge. We affirm on the appeal and cross-appeal, but remand for a statement of reasons for the award of attorney's fees.

These are the salient facts. Pinedge owned several properties called the Pinedge Corporate Center in Burlington and Camden Counties. Joseph Samost is the principal of Pinedge. Kenneth Steliga is the chief executive officer of Steliga. His son, Timothy Steliga, also works for Steliga. Samost and the Steligas maintained an informal and amicable relationship.

On July 15, 1998, Steliga agreed to lease the upper level of a building at the Pinedge Corporate Center for $600 per month, plus payment of the yearly real estate taxes. Provision 7(c)(1) of the upper lease states:

TAXES. Landlord shall be responsible for Real Estate Taxes and assessments, (including special assessments and all expenses pertaining to contesting or negotiating said assessment) levied, imposed or assessed upon the site during the Lease year. Tenant shall be responsible for all personal property taxes and assessments, including without limitation sanitary sewer, electric and gas assessments. Any increase in real estate taxes: over the base year of 1998 shall be paid by the tenant.

The lease provided for automatic, annual renewals unless written notification was provided by either party. The lease agreement called for a five percent late charge for any late payments or unpaid rent, on which interest accrued at eight percent per annum.

Main Line Realty entered into a lease agreement with Pinedge to occupy the lower level at the same building from July 15, 1998 to July 14, 2001, at a monthly rent of $1000. On March 1, 2000, Main Line assigned its rights to the lower levels to Steliga. In a separate agreement, Steliga agreed to lease the lower level from Pinedge for $1,000 a month. Provision 9 of the lower level lease states:

Rent is due and payable on or before the first day of each month. Rent received after the tenth (10th) of the month is subject to a late charge of ten (10%) of the monthly payment which charge must accompany the rent. Provision 9 of the upper level lease states:

Rent is due on or before the first day of each month. Rent received after the tenth of the month is subject to a late charge of (5) percent of the monthly payments which charge must accompany the rent. Interest at the rate of 8% per annum shall ac[crue] from the date payment was due to date receive[d].

A severe fire damaged the property. According to Kenneth, "the tenants were out on the street and Joe [Samost] asked us to help." Kenneth and Tim assisted with the clean-up and construction, which included hiring subcontractors, purchasing materials and working with suppliers. Steliga repaired the building and assisted Pinedge with obtaining zoning approvals. Additionally, Steliga loaned Pinedge $37,737.77 for property tax payments. In January of 2002, Steliga ceased paying rent.

Steliga remained as a tenant. On March 5, 2004, Pinedge sent Steliga a letter demanding payment of $68,100 in unpaid rent, additional rent, late charges and interest. The letter also terminated the lease and requested vacation of the premises.

On December 30, 2004, Pinedge filed the present suit, alleging breach of the lease contract and unjust enrichment. Pinedge alleged Steliga failed to pay rent and various other fees and costs for the leased space from January 2002 until July 2004.

Steliga answered, counterclaimed and filed a third-party complaint.*fn1 Steliga alleged it was due setoff amounts against its rent for payments made for advertising costs and for cleanup following the fire. Steliga also alleged it was never reimbursed for political contributions Pinedge required it to make. Additionally, Steliga alleged Pinedge utilized its Courier Post account for legal advertising in the sum of $5,200.89.

Pinedge moved for summary judgment. The judge ordered:

1. Plaintiff's motion for judgment on liability is granted as to Def. Steliga Homes Corp., and the matter shall be set down by the Court for a hearing on damages;

2. Plaintiff's motion to dismiss Defendant Steliga Homes Corporation's Third Party Complaint is granted and said pleadings are dismissed without prejudice.

Subsequently, the judge reversed his determination to grant summary judgment in favor of Pinedge for real estate taxes in the amount of $1,860 for the upper lease. Pinedge did not object to the ruling.

On March 9, 2007, a bench trial was held to determine the remaining "additional rent" and setoff amount. At the beginning of the hearing, Pinedge waived its claim for additional rent and real estate taxes, but proceeded on "the eight percent interest [to which Pinedge is] entitled to under the lease." During the trial, Samost, Kenneth and Timothy Steliga testified.

At the conclusion of the trial, the judge entered final judgment in favor of Pinedge and against Steliga in the amount of $34,056.36.

The judge found:

Now, the remaining issues -- again, I'm modifying somewhat my determination of summary judgment. The remaining issues deal with the taxes. I had heretofore made a determination $1,869 in taxes were due plus a five percent late fee plus eight percent interest. I'm vacating that portion and allowing it [to] be subject to proofs by the plaintiff.

Having articulated all the set offs, the set offs as I -- I see them to be, total $21,501.64. The set off will be applied against the final judgment of 55,000 --55,558. How I arrived at that figure, I said total summary judgment, $51,730. Interest at a rate of eight percent per annum on the lower level from June the 1st of '04 through March the 1st of '07, it was $3,828. You total those numbers together . . . .

The set off amount, $21,501.64, gives rise to . . . a net judgment in favor of the plaintiff and against the defendant, Steliga Homes . . . . The total amount of the judgment, $34,056.36, plus costs of suit.

The Appeal

Pinedge appeals, contending that the judge erred by:

(1) "failing to include additional rent on the lower lease as there was no issue in dispute when the matter was addressed on summary judgment"; and (2) "modifying [the] grant of summary judgment as to liability for taxes on the eve of trial, which ultimately resulted in [Pinedge] being left no choice but to waive the presentation of evidence regarding this claim."

Looking to the claim for additional rent, Pinedge argues it is entitled to the additional rent as provided in the lease: "Additional Rent should have been awarded at the base rate of $300 per month from the time of default." Pinedge concedes it failed to submit to the court any evidence that it delivered statements to Steliga about payment of additional rent as required by the lease. Moreover, Pinedge failed to provide any material evidence that it was entitled to the additional rent or as to the amount of additional rent. Moreover, Pinedge voluntarily withdrew this claim before the trial began. Given the facts in the record, there were no genuine issues of material fact in dispute and summary judgment was properly granted to Steliga. Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540 (1995).

Pinedge also argues it was forced to "waive" the issue of real taxes because the court improperly reversed its decision to grant summary judgment. "Although the trial court had already entered summary judgment as to Plaintiff's entitlement to taxes pursuant to the Lease, at the opening of trial, the court 'modified' its determination and vacated that potion of its decision, thus requiring Plaintiff on the eve of trial to 'waive' the issue at trial . . . ."

Steliga argues that because Pinedge voluntarily waived its right to claim payment of state taxes, it cannot raise this issue on appeal. "Waiver is the voluntary and intentional relinquishment of a known right." Knorr v. Smeal, 178 N.J. 169, 177-78 (2003).

Because the provision of the lease expressly states the landlord is responsible for payment of real estate taxes, there are no material facts in dispute. Because Pinedge failed to provide any support for its claim of real estate taxes and it waived its claim and failed to preserve the issue for appeal, the judge's correction of his previous grant of summary judgment was proper.

The Cross-Appeal

Steliga cross-appeals, contending "the trial court erred in not awarding [Steliga] the reasonable value of services provided to [Pinedge];" "the manner and method in which the trial court computed the damages resulted in [Pinedge] receiving more than it was entitled to receive;" and "the trial court erred in its award of counsel fees."

Steliga argues that the late fee provision applies only to late payments of rent, not to the non-payment of rent. Steliga further argues the ten percent fee is an "invalid stipulated damage clause."

In Metlife Capital Fin. Corp. v. Washington Ave. Assocs., 159 N.J. 484 (1999), the Supreme Court discussed the enforceability of liquated damages clauses. "We first observe that liquidated damages provisions in a commercial contract between sophisticated parties are presumptively reasonable and the party challenging the clause bears the burden of proving its unreasonableness." Id. at 496. Liquidated damages are reasonable if "(a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and (b) the harm that is caused by the breach is one that is incapable or very difficult or accurate estimation." Id. at 493 (quoting Restatement of Contracts § 339 (1932)). "We, therefore, have adopted the 'modern trend' that the reasonableness test is applied either at the time the contract is made or when it is breached." Id. at 502.

In discussing the late fee here, the judge stated, "I didn't think that the defendant had sufficient proof of unreasonableness per Metropolitan Life versus Washington Avenue, . . . to convince me that that should not be part of it." Additionally, the judge stated, "I already made a determination under law as to the appropriateness of that ten percent despite the fact that Mr. Sturm has provided me with a case today, Fanarjian v. Moskwitz, [237 N.J. Super. 395 (App. Div. 1989),] which I didn't find to be really applicable to this situation."

Steliga relies on the different late fees for the upper and lower leases, five percent and ten percent, respectively, to demonstrate unreasonableness. However, this fact alone does not rise to the level of unreasonableness. Metlife, supra, 159 N.J. at 494. Steliga and Pinedge are sophisticated business entities that entered into a commercial lease. Steliga provided no evidence that it was "strong-armed" into entering the lease with the late fee penalty. Id. at 496. Steliga failed to meet its burden of proving that the late fee was unreasonable. The judge properly granted summary judgment to Pinedge.

As for Steliga's challenge to the damages award, the standard of review for determining the excessiveness of a damages award is the same standard applicable to the trial court, with one significant exception. See Baxter v. Fairmont Food Co., 74 N.J. 588, 596 (1977). An appellate court must pay deference to the trial court's "'feel of the case,'" given that, on appeal, review is confined to "the cold record." Id. at 600. However, "[t]he 'feel of the case' factor, while entitled to deference, is the only element distinguishing the standard governing appellate review from that controlling trial court reaction to a jury verdict." Ibid.

The judge calculated Steglia's damages as follows: (i) $6,000 payment; (ii) $5,200.89 for Courier Post ads; (iii) $5,162.98 for windows, construction materials, equipment rental and field supervision; (iv) $1,364 for dumpster rental, labor and clean-up; and (v) $3,773.77 credit for payment of property taxes for property.

We find no basis to overturn the judge's determination as to Steliga's damages.

Finally, Steliga argues the award of attorney's fees was unreasonable. Pinedge counters the lease provides for the payment of attorney's fees and the award of $11,952 was reasonable.

Provision 30(H) of both upper and lower floor leases states: "In addition to all remedies provided herein by law, Tenant shall pay reasonable attorney's fees and court costs incurred as a result of such breach." In addition, Rule 4:42-9 permits recovery of attorneys fees "where the parties have agreed thereto in advance by stipulation . . . or other agreement or contract. . . ." See Satellite Gateway Comm. v. Musi Dining Car Co., 110 N.J. 280, 286 (1988); Alcoa Edgewater No. 1 Fed. Credit Union v. Carroll, 44 N.J. 442, 448 (1965).

The threshold issue in determining whether an attorneys' fee award is reasonable is whether the party seeking the fee prevailed in the litigation. Singer v. State, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S.Ct. 121, 83 L.Ed. 2d 64 (1984). Because the focus should be on the ultimate results achieved through the litigation, a two-pronged test has been established to determine when a party seeking fee shifting has been a prevailing party. Ibid. The first part of the Singer test requires "[a] party must demonstrate that his lawsuit was causally related to securing the relief obtained; a fee award is justified if [the party's] efforts are a 'necessary and important' factor in obtaining the relief." Ibid. The second part requires the party seeking attorneys' fees to show that "the relief granted had some basis in law." Ibid.

The party seeking attorneys' fees need not recover all relief sought, but rather, there must be "'the settling of some dispute that affected the behavior of the [party asked to pay attorneys' fees] towards the [party seeking attorneys' fees].'" Davidson v. Roselle Park Soccer Fed'n, 304 N.J. Super. 352, 357 (Ch. Div. 1996) (quoting Feriozzi Co. v. Atlantic City, 268 N.J. Super. 310, 314 (Law Div. 1993)) (noting that because an eleven-year-old female soccer player tried out for and made all-boys team prior to litigation under the Law Against Discrimination, her parents could not demonstrate a causal connection between litigation and ultimate result).

The fact that Steliga breached the lease by failing to pay rent was not in dispute. Initially, Pinedge requested $19,876.66 in counsel fees; the judge awarded $11,952.34. Although the judge was within his discretion to award the fees, the record is devoid of the judge's reasoning for awarding that amount. Therefore, we reverse and remand for a statement of reasons for the award of counsel fees.

Affirmed in part and remanded in part. We retain jurisdiction.

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