On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket Nos. L-8868-05 and LT-20836-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: March 10, 2010
Before Judges Cuff, C.L. Miniman and Waugh.
Defendant/third-party plaintiff S&C Leasing of South Orange (S&C) appeals from a January 28, 2008, order for judgment in its favor against plaintiff Crescent Trading, LLC (Crescent), and third-party defendant Eralp Sement (Sement) in the amount of $6000 plus fees and costs of $6000, and from a November 7, 2008, amended order for judgment following our remand in the amount of $39,949.64 plus fees and costs of $29,025. Sement, but not Crescent, cross-appeals from the same judgment orders. We affirm in part and reverse and remand in part for further proceedings consistent with this opinion.
On November 4, 2005, Crescent filed a complaint against Charles Chera, Steven Chera, Rosewood Holding, LLC, and S&C in the Law Division, Essex County, under docket number L-8868-05, asserting various causes of action. Among other claims, Crescent sought damages, costs, and attorneys' fees incurred as a result of defendants' alleged breach of a ten-year lease agreement between the parties covering premises located at 127 South Orange Avenue in South Orange (the premises).
On February 14, 2006, S&C filed an answer, counterclaim, and third-party complaint. In the counterclaim, S&C asserted a claim for breach of the lease against Crescent and sought damages, costs, and attorneys' fees. In its third-party complaint, S&C sued Sement pursuant to a Guarantee of Lease he signed and in which he guaranteed the payment of rent by Crescent. S&C sought recovery of damages, costs, and attorneys' fees from Sement. Sement is one of two members of Crescent; the other member is not a party to this suit.
On August 2, 2006, S&C filed a complaint against Crescent in the Special Civil Part under docket number LT-020836-06, seeking to evict Crescent from the premises for nonpayment of rent. The matter was consolidated with Crescent's complaint on September 13, 2006. In the order of consolidation, the judge dismissed all claims asserted by Crescent regarding continued possession of the premises because Crescent had voluntarily relinquished possession.
A bench trial was held on January 7, 8, 9, and 10, 2008. The judge placed her decision on the record on January 10 and entered a judgment on January 28, 2008. In the judgment order, the judge granted S&C's motion for an involuntary dismissal of the Fourth, Fifth, and Sixth Counts as to all defendants and the First, Second, and Third Counts as to defendants Charles and Steven Chera and Rosewood Holdings, LLC. The judge then dismissed the remaining counts against S&C on the merits. Regarding S&C's counterclaim and third-party claim, the judge found that S&C had met its burden of proof on both claims. The judge awarded $6000 in damages and an additional $6000 in attorneys' fees and costs in favor of S&C and against Crescent and Sement.
S&C filed its first notice of appeal on March 13, 2008, in which it challenged the damage award as too small. After a pre-argument conference on April 29, 2008, we entered an order remanding the case to the Law Division, instructing the trial judge to issue a written opinion or memorandum decision setting forth factual findings and conclusions of law regarding the January 28, 2008, order. The Law Division judge filed her decision on August 7, 2008. After setting forth her factual findings and conclusions of law, the judge vacated the $6000 damage award and entered an amended judgment of $39,949.64 in favor of S&C and against Crescent and Sement.
On September 16, 2008, we entered a second order of limited remand, this time instructing the trial judge to issue a written opinion or memorandum decision setting forth factual findings and conclusions of law regarding the award of attorneys' fees to S&C. The Law Division judge filed a written opinion on October 16, 2008, in which she increased the $6000 award of attorneys' fees to $29,025. On November 7, 2008, an amended order for judgment reflecting the increased amounts of damages and attorneys' fees was entered.
S&C filed a second notice of appeal on November 20, 2008, appealing the amended damage award. On December 15, 2008, Sement filed a cross-appeal in which he challenges the judgments entered on January 28 and November 7, 2008. These are the appeals presently before the court.
S&C, a partnership of brothers Charles and Steven Chera, is the owner of the premises in question. After beginning negotiations in September 2004, S&C and Crescent entered into a commercial lease agreement on January 14, 2005. The ten-year lease was to commence on May 1, 2005. Crescent, as the tenant, intended to use the premises as a Quiznos restaurant. Eralp Sement is the president and one of two members of Crescent.
The premises covered approximately 2000 square feet of floor area in a shopping center. Rent was fixed at $4166.66 per month for the first two years; $4500 for years three through five; and $5000 for years six through ten. In pertinent part, the lease provided that Crescent shall, at its sole cost and expense, obtain, prior to the opening for business with the public, any and all permits, licenses, approvals, and/or certificates of occupancy for the lawful operation of its Business, and shall comply with all applicable laws, ordinances, resolutions and codes and all rules and regulations of each and every department, bureau, body or agency, or any governmental or quasi-governmental authority having jurisdiction over the operation, occupancy, maintenance and use of the Demised Premises. If [Crescent] fails, for any reason whatsoever, to obtain all licenses, approvals and/or certificates of occupancy, or permits necessary for the operation of [Crescent's] business, such failure shall not affect [Crescent's] obligations under this Lease. [S&C] shall, at [Crescent's] sole cost and expense, cooperate with [Crescent], when [S&C's] assistance is required by law, in obtaining any item set forth in this Section.... [S&C] represents and warrants that the Demised Premises may be legally occupied for the uses permitted to [Crescent] under this Lease, and that said uses are permitted under applicable zoning laws.
The lease obligated Crescent to "apply for a variance to secure the use of the Premises to operate as a Quiznos restaurant." The lease was also "contingent on... [Crescent's] receipt of all necessary building... permits, and other approvals by the City of South Orange, New Jersey, allowing [Crescent] to construct the Premises for its intended use." The lease further obligated S&C to provide electrical and plumbing to the premises; to install a fire door; and to erect a floor-to-ceiling wall.
In the event of default or breach by Crescent, the lease provided that S&C could terminate Crescent's right to possession. In such an event, Article 22(a) of the lease provided that S&C "shall be entitled to recover from [Crescent] all damages incurred by [S&C] by reason of [Crescent's] default including, but not limited to, the cost of recovering possession of the premises; expenses of reletting[; and] reasonable attorneys' fees." Article 31(q) of the lease further stated:
In the event of any action or proceeding brought by either party against the other under this Lease the prevailing party shall be entitled to recover its expenses and costs, including its attorneys' fees and expert witness fees in such action or proceeding, including costs of appeal, if any, in such amount as the court may adjudge reasonable.
Sement executed a guarantee of the lease, pursuant to which he "guarantee[d], unconditionally at all times, payment of all rentals due under this Lease and the performance of all obligations of [Crescent] under the terms of this Lease." Crescent provided a two-month security deposit and the rent for the first month upon signing the lease.
This controversy arose out of a dispute between the parties as to their respective obligations under the lease. On the date the lease was executed, the properties at 125 South Orange Avenue and 127 South Orange Avenue were set up as one store using both store spaces without division by a floor-to-ceiling wall; thus, the stores would need to be separated before the Quiznos could be operated at 127 South Orange Avenue. The only separation ...