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Wallington Plaza, LLC v. Michael Taher

July 7, 2011


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9506-08.

Per curiam.


Telephonically argued February 3, 2011

Before Judges Fuentes and Gilroy.

Plaintiff Wallington Plaza, LLC, appeals from the May 4, 2010 judgment entered against defendant Michael Taher in the amount of $2,684.28, together with prejudgment interest. We affirm as modified infra, and remand for entry of a corrected order of judgment.

Plaintiff is the owner of a small commercial shopping center in Wallington that contained fourteen retail stores. On December 16, 1998, plaintiff entered into a written lease agreement with Abroad Unlimited Jewelry, Inc., as tenant, under which tenant leased a 1,400 square-foot store in the shopping center for a term of ten years, expiring March 31, 2009. Defendant Michael Taher, as owner of Abroad Unlimited, and defendant Lisa Taher, personally guaranteed the terms of the lease on behalf of tenant.*fn1 On December 16, 2008, after tenant vacated the premises and defaulted in payment of rent, plaintiff filed a complaint against defendant seeking to collect six months' unpaid rent, including real property taxes and common area maintenance (CAM) charges under the guarantee. On May 7, 2009, defendant filed an answer and counterclaim alleging that plaintiff breached the lease by failing to maintain the shopping center.

The matter was tried to the court non-jury on April 22, 2010. At the conclusion of the trial, the court rendered an oral decision determining that plaintiff was entitled to a judgment in the amount of two months' rent, less the amount of the security deposit held by plaintiff. On May 4, 2010, the court entered an order of judgment memorializing its decision. It is from this order that plaintiff appeals.*fn2

The only individuals who testified at trial were Arlene Faustini, plaintiff's bookkeeper; and defendant. We gather the following additional facts from the trial testimony and the exhibits introduced at trial. The lease provided that tenant would pay plaintiff a monthly base rent together with one-twelfth of tenant's pro-rata share of annual real estate taxes and CAM charges. The base rent during the tenth year was fixed at $3,501.14 per month and tenant's monthly share of the real estate taxes and CAM charges were $350 and $324 per month, respectively. On September 15, 2008, defendant sent tenant a letter advising that tenant was not going to renew the lease because defendant was moving his business to another location. Defendant requested plaintiff to "deduct the security deposit [of] $5,366.66 from the last two-month[s] of rent." In October 2008, without further notice to plaintiff, tenant vacated the premises without paying rent for the months of October, November and December 2008; and January, February and March 2009.

At trial, Faustini testified to the amount of unpaid rent claimed by plaintiff. Although the lease contained a provision requiring tenant to pay a late charge fee of 5% of any rent installment that remained unpaid beyond five days of its due date, Faustini did not testify to the amount of the late charge claimed, nor was a late charge included on plaintiff's accounts receivable ledger sheets introduced into evidence in support of the amount of rent claimed. According to Faustini, upon tenant vacating the store in October 2008, plaintiff engaged a real estate broker to re-let the premises, but was unsuccessful. However, Faustini did not testify to any specific actions the broker performed in an attempt to obtain a new lessee for the premises.

Prior to tenant executing the lease in December 1998, defendant had spoken with plaintiff's shopping center manager. Because the shopping center appeared to be "a first class place to conduct business," tenant entered into the lease for the purpose of operating a "quality jewelry" store. The term "quality jewelry" is defined in the lease as "jewelry which contains gold, silver, platinum, diamonds, and/or precious gems or minerals." Under the terms of the lease, tenant agreed to operate his business six days a week in a "first class and reputable manner," and that if it failed to open as agreed upon, it would pay plaintiff a $500 liquidated damage charge for each day the store was not open for business.

According to defendant, during the years immediately preceding tenant vacating the premises, the shopping center's parking lot fell into a state of disrepair. More importantly, many of the other stores in the shopping center closed and vacated the shopping center: a Rite-Aid Drug Store (formerly a Genovese Drug Store), a West Coast Video store, a Dollar Store, an A&P grocery store, and a Hallmark card store. As a result, defendant decided to relocate his jewelry business "because I .. . have no traffic of customer. I lost a lot of business, and I can't survive any more days in that location. I was the only one holding the flag for quite some time there, in this location." In October 2008, defendant relocated his jewelry store to an adjoining municipality, paying substantially more rent.

At the conclusion of the trial, the court determined that plaintiff breached its implied covenant to operate a "first-class" shopping center. The court concluded that while the lease obligated tenant to "only sell quality jewelry," it also imposed "a responsibility" on the landlord "to keep the premises in a reasonable condition as a tenant would expect, if he had to operate a first-class business to make respective customers welcome." The court reasoned that plaintiff had breached the implied covenant to maintain the shopping center in a good condition:

It is without question that the shopping center and the parking lot as viewed by this court [are] deplorable. The parking lot has no parking space white lines. The parking lot is uneven. There is grass growing all throughout the broken concrete of the parking lot. The store themselves have vacant signs in front of them. It is not an appealing strip mall. And certainly not one that someone would say would be a "first[-]class strip mall."

There[ are] a number of vacancy signs and [the] general condition of the mall is far below a good condition, ...

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