On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9562-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves and Waugh.
Plaintiffs Pearlmont, L.L.C. (Pearlmont), Janet Caggia, and Alfred Caggia appeal from an order of the Law Division granting summary judgment to defendants The Waterfall, Inc. (Waterfall), Fintan Seeley, Brendan Maddan, and Eugene Gillespie. We reverse in part, and affirm in part.
I. We discern the following facts and procedural history from the record on appeal.
In 1997, the individual defendants formed and were equal shareholders of Waterfall, which did business as a restaurant known as The Porter House. The restaurant was located on Kinderkamack Road in Montvale.
In August 1999, the Caggias leased their property on Kinderkamack Road, which was adjacent to the restaurant, to defendants for a term of ten years, to commence on September 1, 1999 and terminate on August 31, 2009.*fn1 The lease provided that defendants would pay a monthly rent of $2750 for the first sixty months, and a monthly rent of $3000 for another sixty months commencing September 1, 2005. The lease provided that "[t]he Tenant covenants and agrees to use the demised premises as a parking area for cars associated with the operation of The Porter House Restaurant . . . to accommodate a minimum of thirty (30) cars." At the time the lease was signed, the Caggias had neither sought nor obtained Montvale's formal approval for use of their property as a parking lot. Plaintiffs, however, contend they had informal, oral permission for that use.
Customers of the restaurant subsequently used the property for parking. In November 1999, Waterfall applied to the Montvale planning board for variances needed to make improvements on its property, but did not seek approval for parking on the Caggia property. On April 30, 2000, defendants Maddan and Gillespie signed a letter agreeing to extend the lease terms "as originally designated." Seeley did not sign the letter.*fn2
At some point in 2002, Seeley bought Gillespie and Maddan's shares of Waterfall.*fn3 During the same time period, the planning board raised the issue that there was no approval for parking on the Caggias' property. In November 2002, lease payments stopped, although Seeley offered to pay a reduced rent of $500 per month.
On December 10, 2002, the Caggias sent Seeley a letter stating that he was two months in arrears on the rent and demanding that he comply with the terms of the lease. The letter also rejected Seeley's offer to pay a lower monthly rent. No further rent was paid, and the Caggias continued to send monthly demand letters for several years.
On April 6, 2005, Alfred Caggia filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the District of New Jersey. The lease was not listed as an asset in his filing. The property was transferred to the Bankruptcy Trustee on August 16, 2006, and subsequently sold to Nancy Caggia Smith, the Caggias' daughter. On December 5, 2006, the property was transferred by her to Pearlmont, an entity owned by the Caggias.
On December 18, 2008, the Caggias filed a complaint against defendants for unpaid rent and late fees in the amount of $215,000, plus rent for the balance of the lease. On April 15, 2009, after plaintiffs initiated a summary dispossess action, possession of the property was returned to plaintiffs by consent of the parties. Pearlmont was added as a plaintiff in January 2010.
Alfred Caggia and Seeley were deposed on March 2, 2010. Seeley testified that while applying for permits to make improvements to the restaurant property, at some point between 1999 and 2002, the chair of the local planning board requested that an application be submitted for parking approval. Seeley subsequently informed Caggia that the lease was "illegal" and refused to pay rent for that reason in late 2002. Seeley testified that "[a]ccording to the town, [Caggia] had to make the application" for parking approval.*fn4 At his deposition, Caggia confirmed that he had never made any application for approval to have thirty cars parked on the property rented ...