On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2172-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing, Grall and Messano.
In this civil action alleging breach of a lease for commercial property, plaintiff Bank Building Associates, LP (BBA) filed a complaint to recover the costs of restoring premises leased to Bank of America (BOA). The issues of liability and damages were tried to the court, and on June 3, 2008 the judge awarded BBA damages in the amount that BBA spent to restore the exterior elements of the premises, $430,600. On July 1, 2008, the judge stayed the judgment pending appeal "without the necessity of BOA posting a bond or other security" and dissolved a writ of execution.
BOA appeals seeking reversal of the judgment, and BBA cross-appeals from the order staying execution of the judgment without posting of a bond as required by Rule 2:9-5.*fn1 We affirm the trial judge's determination on liability. To the extent the judgment awards damages equivalent to the costs of repairing, resurfacing and relining the parking lot, it is affirmed. The judgment is otherwise reversed and remanded for further proceedings in conformity with this opinion. Our order vacating the judgment moots the issue raised by BBA on its cross-appeal.
On July 30, 1994, BOA's predecessor, United Jersey Bank (UJB), leased the commercial real estate, a bank building, from Panterra Realty Investments, Inc., for a ten-year period commencing on April 24, 1995. BBA purchased the property from Panterra in December 1995, about one year and five months after the lease was signed; at that time, UJB was the tenant. BOA and BBA do not dispute their obligations to comply with the terms of the lease as the successors of UJB and Panterra, respectively.
On September 7, 2004, about seven months before the lease was to expire, BBA gave BOA notice of its failure to fulfill its obligations under the lease to maintain the premises and surrender the property at the end of the lease in good order and repair except for ordinary wear and tear. BBA's complaints were not about the building but about exterior improvements - initially the landscaping and asphalt parking lots, and later two loading docks and concrete sidewalks and concrete curbing as well as the landscaping and parking areas.
Three provisions of the lease are relevant to BOA's obligations to maintain and repair the exterior improvements:
Paragraph 8(d) provides, in relevant part:
Tenant shall make, at its sole cost and expense, any and all necessary repairs . . . in order to preserve, protect, and maintain the Premises in the condition they were in on the Commencement Date, reasonable wear and tear excepted, or to such superior condition as Tenant may desire . . . . Tenant's obligation for repairs extends to repairs made after the Tenant has vacated the Premises which were necessary because of damage by Tenant to the Premises. If the Tenant refuses or neglects to commence such repairs or fails to diligently prosecute the same to completion within thirty (30) days from the date on which Tenant receives written notice from Landlord of the need therefor, Landlord may make such repairs at the expense of Tenant and such expense shall be collectible as Additional Rent hereunder. [(Emphasis added).]
Paragraph 8(f) states, in relevant part:
Surrender of Premises. At the end of the Term or any renewal or extension thereof, Tenant shall surrender the Premises to Landlord, together with all alterations, additions, renovations and improvements thereto, in broom-clean condition and in good order and repair except for ordinary wear and tear, failing which Landlord may restore the Premises to such condition and Tenant shall pay the cost of said repair and restoration.
Paragraph 9 addresses additional rent, and subparagraph (iii) includes the "cost of maintaining, repairing and operating the [l]eased [p]remises during the term of the [l]ease . . . ." It specifically includes, all costs to keep and maintain the [l]eased [p]remises in a clean and sanitary condition free from rubbish and debris, ordinary wear and tear excepted, landscaping maintenance; snow and ice removal; . . . repainting of parking lot lines, repair, maintenance and resurfacing of macadam and concrete surfaces . . . .
BBA provided the only evidence tending to establish the condition of the exterior improvements at the time of the lease. That evidence was of the condition of the premises just prior to BBA's purchase, which was, as noted above, about one year and five months after the lease was signed and about eight months after the term of the lease commenced.
In preparation for BBA's purchase and as contemplated by paragraph 22 of the lease, UJB's senior vice president executed an "estoppel certificate" in favor of Panterra and the prospective purchaser of the leased property. Through that estoppel certificate, the senior vice president acknowledged that the terms of the lease would remain in full force, that UJB knew of no defaults by the landlord and that he had the authority to execute the estoppel certificate. The senior vice president also recognized the prospective purchaser's right to rely upon the tenant's representations.
On December 20, 1995, BBA's financer obtained a site survey from ATEC Associates, Inc. The stated purpose of ATEC's survey was to "provide an observation and report on the physical condition and maintenance of the building and site improvements." The report includes a description of conditions ATEC deemed "significant" to "continued operation of the facility . . . consistent with comparable properties of similar age." ATEC used the following terms to describe the conditions: "Good - No remedial ...