August 17, 2009
IHSAN M. UYGUR, PLAINTIFF-RESPONDENT,
BELL ENVIRONMENTAL CONSULTANTS, INC.,*FN1 DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-838-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 27, 2009
Before Judges Skillman, Graves and Grall.
On October 29, 1998, defendant leased premises located on the second floor of the Lakefront Professional Center in Budd Lake, New Jersey, from plaintiff. The lease was for a term of seven years. The lease provided for rent payable at $4,500 per month for the first year, $5,000 per month for the second year and $6,000 per month for the remainder of the lease term. Paragraph twenty-seven of the lease stated:
This lease contains the entire contract between the parties. No representative, agent or employee of the Landlord has been authorized to make any representations or promises with reference to the within letting or to vary, alter or modify the terms hereof. No additions, changes or modifications, renewals or extensions hereof, shall be binding unless reduced to writing and signed by the Landlord and Tenant.
During the lease term, there was correspondence between the parties regarding defendant's failure to pay the full amount of rent. In August 2003, Ellen Silberstein, one of defendant's principals, sent a handwritten note to plaintiff, which stated:
Thank you for being so patient. We are reorganizing our expenses and will make every effort to catch up with you.
On November 28, 2005, another one of defendant's principals, Donald M. Bello, sent a letter to plaintiff, which stated in pertinent part:
Thank you so much for taking the time to discuss with me the open matters. As a summary of our discussions, please note the following:
Please find attached to this letter the proposal which you requested regarding the outstanding account. Obviously this plan assumes the execution of a lease renewal acceptable on 295C Route 46 that is acceptable to both parties.
Again I wish to thank you for taking the time to try and resolve this matter. Per your request, I have not included in the attached document any discussion regarding execution of a new lease so that it may be used as you see fit. However, the final execution of the agreement will require that we both execute a mutually acceptable new 5 year lease as the payment plan is tied to the 5 year plan (i.e., first payment due (separate check) with first payment under new lease and lump sum payment due at same time as last lease payment)[.] As we are currently discussing such matters, and as per your conversation with Ms. Silberstein, Bell will assume unless we hear otherwise that the current lease will remain in effect until such time as a new lease can be discussed and executed.
The attachment to this letter, signed by Silberstein and Bello, stated:
This document, when combined with [the] assumptions outlined in our November 28, 2005 letter, outlines Bell Environmental's proposed plan to settle an outstanding account payable to Ihsan M. Uygur. Our plan is as follows:
Settlement of debt issues under the current leasehold agreement for a total of $60,000 payable as follows:
1. A minimum of $500.00 per month for a total of 60 months.
2. A lump sum payment of $30,000.00 due and payable on the 1st day of the 60th month.
Once an agreement is reached, Bell will formalize this proposal for execution by both parties which will establish the actual timetable with respect to starting dates and lump sum payment date and which will include the notarized signatures which you requested.
On November 30, 2005, plaintiff sent a letter to Silberstein, which stated:
Enclosed is an analysis from my accountant of the rents paid on your lease from inception through November 30, 2005. If you are in agreement, please remit to me the balance due on your lease, of $130,500.
The rent will continue to be $6,000 per month as long as you occupy this space.
On December 5, 2005, Bello sent plaintiff a letter which stated:
First an apology for the figure presented last month since my personal evaluation of the data shows it to be grossly incorrect. As I promised, this letter will serve to update you on those issues which we discussed.
1. As of late last night, please note that I am able to confirm $92,000.00 of the total figure you presented. I am presently having the older 2003/2004 archived accounting records (paper and tape) pulled for my review as I have been unable to review those yet. I am not saying your number i[s] correct or incorrect. Rather, once I have pulled and reviewed this record (by no later than December 7th), I should be able to address in totality the paperwork you presented from your accountant.
2. Bell Environmental has instructed our accountant and attorney to evaluate and pursue any viable corporate funding option (e.g., line of credit, term loan, factoring, equity sale, etc.) that may be available. In order to reach a resolution of this issue as soon as possible, I have also requested that a funding figure of $150,000 be used for discussion purposes.
I will personally provide you with frequent updates on the funding issue as we gather more information on the process and timeline. Hopefully, this issue can be resolved to your satisfaction in a timely manner.
On December 7 and 16, 2005, Bello sent plaintiff additional letters. The December 7th letter stated:
As of this date I am able to confirm the figure which you presented verbally during our conversation. We continue to press ahead on an evaluation of any and all viable corporate funding options using a baseline figure of $150,000.00. As previously indicated, I will personally provide you frequent updates (next one likely by December 16th) on the funding issue as we gather more information on the process and timeline. Again, it is hoped this can be resolved to your satisfaction in the near term.
The December 16th letter stated:
As promised, this letter will serve as an update on the issues previously discussed. I have personally tasked the necessary personnel to continue with the process of assembling and/or preparing of any and all necessary financial information (e.g., corporate tax returns, historical corporate P&L statements, historical and targeted future sales, etc.) necessary to resolve our short term funding or equity infusion issue in the very near term. At this time, this issue is my top priority. Bell is striving to resolve this issue in as quick a time frame as possible including preparing a draft 2005 P&L now as opposed to after year end. As previously indicated, I will personally provide you frequent updates and I hope to have more definitive information right after the Christmas holiday.
The parties were unable to reach an accommodation, and on March 21, 2006, plaintiff filed this action seeking $147,000 in unpaid rent due under the lease.
Defendant filed an answer denying the allegations of the complaint and asserting several affirmative defenses, including waiver, estoppel, and laches. Defendant also counterclaimed against plaintiff on several theories including negligent misrepresentation and fraud.
After the period for discovery had expired, plaintiff filed a motion for summary judgment. In support of the motion, plaintiff relied to a substantial extent upon the previously quoted correspondence with defendant's principals. Plaintiff also relied upon a series of defendant's own invoices, which accompanied its rent checks, dated June 1, 2003, April 1, 2004, May 31, 2004, and April 1, 2005, which indicated that the amounts paid by those checks was only a portion of the full invoice amount of $6,000 per month.
In response to the motion, Bello submitted a certification in which he asserted that plaintiff had agreed to an oral modification of the lease in April 2003 under which defendant would be allowed to pay whatever amount of rent it could:
In April 2003, Bell approached Uygur and informed him that Bell was vacating the premises as it could no longer afford the monthly rental payments due under the Lease Agreement. In response, Uygur told Bell that Bell would not be obligated for the full amount due under the lease and that he would accept any amount of rent Bell could pay each month. Uygur indicated that he wanted the business to succeed and he did not want the space to sit vacant or to incur the costs associated with finding a new tenant for the property as he had with prior tenants. Bell suggested an addendum to the lease to memorialize this agreement, but Uygur was insulted and said he was a "man of his word" whose handshake was as good as any agreement. For this reason, written modification to the agreement was never executed.
Bello's certification alleged that the previously quoted November 28, 2008 letter to plaintiff was designed to try to deal with Uygur's backing out of his previous "pay what you can" agreement by including selected items regarding payment toward arrears and reduction in space, as well as a proposal for renewal. These proposals were made by Bell in [an] effort to minimize the ongoing concerns that Bell would be locked out of the premises and to formalize an agreement.
Regarding his December 5, 2007 letter, Bello stated:
Uygur misinterprets and misrepresents the $92,000 figure referenced in the December 5, 2005 letter as this was not in any capacity an acknowledgement of an amount owed to Uygur. Additionally, the $150,000.00 "funding" set forth in the December 5, 2005 letter was provided to Uygur in response to Uygur's adamant position that he would not negotiate another lease term, as proposed under the November 28, 2005 letter, unless he was certain Bell had sufficient capital going forward. Thus Bell was willing to obtain and explore additional advanced funding for Bell in the amount of $150,000.00 in an effort to secure additional time under the lease and/or a lease renewal term.
Plaintiff filed a reply certification which denied that there had been any oral modification of the rent terms of the lease. Plaintiff's certification also noted that none of the correspondence sent to him by Bello in November and December 2005 asserted that there had been such a modification. The trial court granted plaintiff's motion by a letter and order entered on April 16, 2007, concluding that paragraph twenty-seven barred any oral modification of the rent terms of the lease and entered judgment in plaintiff's favor for $147,000 in back rent. The court in its letter opinion also observed that defendant "acknowledged back rent due and owing throughout the correspondence exchanged between the parties." The court denied defendant's motion for reconsideration by an order entered on May 25, 2007.
The court entered an additional order on July 20, 2007 denying defendant's motion to restore its counterclaim. On appeal, defendant argues that the trial court erred in ruling that paragraph twenty-seven of the lease, which barred any oral modification, could not be amended by a subsequent oral agreement between the parties. This argument is correct. Absent a statute requiring a contract to be in writing, parties may agree to disregard contract provisions barring oral modifications. See Lewis v. Travelers Ins. Co., 51 N.J. 244, 253 (1968) (contract provision stating that an agent's authority to bind the insurance company could be extended only in writing did not "disable [the parties] from amending, supplementing or replacing the contract by a later agreement made orally"); see also Headley v. Cavileer, 82 N.J.L. 635, 637-39 (E. & A. 1912). However, there was a statute requiring the lease to be in writing, specifically a Statute of Frauds, N.J.S.A. 25:1-12, which requires "[a] transaction intended to create a lease of real estate for more than three years" to be "established in a writing signed by or on behalf of the party against whom enforcement is sought[,"] or alternatively, "proved by clear and convincing evidence." This Statute of Frauds also applies to any purported modification of a lease of more than three years. See Willow Brook Recreation Ctr., Inc. v. Selle, 96 N.J. Super. 358, 364 (App. Div. 1967), certif. denied, 51 N.J. 187 (1968); see also Tiedemann v. Cozine, 297 N.J. Super. 579, 582 (App. Div. 1997). The lease involved in this appeal was for seven years and thus clearly subject to N.J.S.A. 25:1-12. Moreover, in view of the written communications between the parties regarding defendant's rental obligations, the alleged oral modification of the lease was not "proved by clear and convincing evidence." N.J.S.A. 25:1-12(b). Therefore, the modification had to be "established in a writing signed by or on behalf of" plaintiff. N.J.S.A. 25:1-12(a).
Even if evidence of an oral agreement between the parties is inadmissible to establish a variation of the terms or modification of a contract, it may be admissible to support a claim of waiver or estoppel. See Mazza v. Scoleri, 304 N.J. Super. 555, 559-60 (App. Div. 1997); Loria's Garage, Inc. v. Smith, 49 N.J. Super. 242, 248-50 (App. Div. 1958). However, the doctrines of waiver and estoppel may not be expansively applied in a manner that subverts the operation of a Statute of Frauds. See Malaker Corp. v. First Jersey Nat'l Bk., 163 N.J. Super. 463, 484 (App. Div. 1978), certif. denied, 79 N.J. 488 (1979); Kooba v. Jacobitti, 59 N.J. Super. 496, 500-01 (App. Div. 1960); Kufta v. Hughson, 46 N.J. Super. 222, 230-31 (Ch. Div. 1957).
A waiver is "the intentional relinquishment of a known right." W. Jersey Title & Guar. Co. v. Indus. Trust Co., 27 N.J. 144, 152 (1958). A waiver must be voluntary, and there must be a clear act showing an intent to waive the rights. County of Morris v. Fauver, 153 N.J. 80, 104 (1998). Mere acceptance of a lesser amount than provided by contract, without more, does not show an intent to waive proper payment. Id. at 101.
The trial court decided this case on plaintiff's motion for summary judgment. Summary judgment must be granted to a party in a case if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." [R. 4:46-2(c).]
In deciding whether there are any genuine issues of material fact, a court must determine whether "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to resolve the alleged dispute in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The basic inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 536 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed. 2d 202, 214 (1986)).
We conclude that the evidence before the court on defendant's motion for summary judgment was insufficient to show a contested issue of fact regarding plaintiff's waiver and estoppel claims. Initially, we note that defendant was obligated by the lease to make the rental payments provided thereunder for the term of the lease. Defendant could of course have vacated the premises and breached the lease. However, defendant has not cited any authority for the proposition that a party's forbearance from breaching a contract can provide a foundation for a finding of waiver or estoppel.
Moreover, defendant's assertion of an oral modification of the rent terms of the lease is so inconsistent with its own records and correspondence as to preclude a finding of a "genuine issue of material fact." Only four months after that alleged oral modification, in August 2003, defendant's president, Ellen Silberstein, sent a handwritten note to plaintiff, which stated:
Thank you for being so patient. We are reorganizing our expenses and will make every effort to catch up with you.
This note is fully consistent with plaintiff's claim that he simply agreed to accept partial payment of rent, while allowing defendant to remain in possession of the premises, rather than agreeing to a reduction in the amount of rent. Significantly, Silberstein did not file any certification in opposition to plaintiff's motion for summary judgment which indicated that she had a different understanding of defendant's obligations regarding the payment of rent to plaintiff.
Furthermore, although Bello's series of letters to plaintiff in November and December 2005 reflect uncertainty concerning the exact amount of rent owed to plaintiff, they indicate a clear understanding on his part that a substantial amount was still owed. More importantly, there is no mention in any of those letters of any alleged oral modification of defendant's obligations for the payment of rent to plaintiff. The conclusion that there was no agreement as to a modification is reinforced by defendant's own invoices that accompanied the checks for partial payment of the agreed $6,000 per month rent. Therefore, we conclude that this was a case in which the evidence presented on the motion for summary judgment was "so one-sided that [plaintiff] must prevail as a matter of law."
Brill, supra, 142 N.J. at 536 (quoting Anderson, supra, 477 U.S. at 251-52, 106 S.Ct. at 2512, 91 L.Ed. 2d at 214). The other arguments presented by defendant in support of its appeal are clearly without merit. R. 2:11-3(e)(1)(E).