On appeal from Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-50-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 20, 2011
Before Judges Payne, Simonelli and Hayden.
In this commercial tenancy dispute, plaintiff, Village Super Market, Inc., appeals from an order of summary judgment entered against it, terminating its lease with defendant, the Estate of Cantor, and awarding counsel fees and costs to that defendant.
The facts of the matter are relatively straightforward.
In 1991, plaintiff, the owner and operator of ShopRite Supermarkets, leased commercial property in Bernardsville from Saul Cantor, now deceased, for supermarket use. The property was leased "as is," and the obligation to repair was placed on plaintiff by paragraph 7 of the lease, which stated in relevant part:
The Tenant has examined the demised premises, including roof, and agrees to accept same "as is" upon the commencement of this lease term (except as otherwise expressly provided herein) and without any representations on the part of the Landlord or its agents as to the present or future condition of the said premises with respect to habitability. The Tenant at its sole cost and expense shall keep the demised premises, exterior and interior, structural and non-structural, in good condition, and shall paint and renovate and repair and maintain the said premises as may be necessary, in Landlord's opinion, reasonably exercised, to keep them and all items furnished by Landlord and Tenant in good repair and condition, including and not limited to heating and cooling facilities installed in the premises . . . .
The lease, with extensions, would not expire until February 28, 2022. The leased premises was managed by defendant Jacobs Enterprises, Inc.
At some time after the lease was commenced, plaintiff allowed the property to "go dark," shifting its operations to a new store next door. Thereafter, the vacant premises was used primarily for storage and for overflow parking. Nonetheless, rent payments remained current.
At some point in 2006, Peter Jacobsen, Vice-President of JK Management, L.L.C. and Vice-President of Acquisitions and Leasing at Jacobs Enterprises, Inc., received a report by Paul Beck Associates, P.A., of its inspection of the leased premises, conducted in connection with a potential sublease of the property to The Thirsty Turtle. The Beck report, which was dated February 6, 2006, detailed the findings of an inspection of the vacant site made on January 31, 2006. It disclosed substantial damage to the premises, requiring repair, including the installation of new floor joists and wood flooring, repair of the basement block wall in areas showing extensive water damage, modification of drainage, restoration of original framing or the addition of new supports, repair of cracked and water damaged joists, repair of failures in the basement walls with steel and concrete fill in order to withstand soil pressure, correction of deflection in a metal deck closing off abandoned concrete stairs, replacement and sealing of the roofing surface, and other matters.
Thereafter, Jacobsen and George Jacobs, the President of JK Management and Jacobs Enterprises, determined to commission their own inspections. In May 2007, they commissioned architect John Buchholz and his firm, The Buchholz Architectural Group, P.C., to identify and retain structural engineering experts to inspect the property and render reports on its condition. Buchholz retained CEC Group, L.L.C., which issued a letter report, dated May 18, 2007, limited to its "visual observation of the exposed structural components of the foundation walls and the floor and roof construction only." The report separately described the results of CEC's inspection of the roof trusses and of areas designated as Area A through Area I, the locations of which were set forth in an accompanying plan. Additionally, photographs of the various conditions mentioned in the report were provided.
The report indicated that seven of the eight visible roof trusses had been inspected. All showed signs of un-engineered repairs, some causing a reversal of forces from tension to compression and the reverse. The report stated that "[f]urther analysis of the trusses is definitely required. Currently, we estimate about fifty members of the trusses will need reinforcement or repair." In addition, the report noted, in Areas A through I, extensive water damage, failures of framing, joists and flooring, and a wall crack requiring repointing and wall reinforcement. The report concluded with the following statement:
All physical condition visual observation surveys consist of a walk through visual observation tour of the building's readily accessible areas to note the general condition of major structural components and systems. Accessible areas were observed.
Stored materials, suspended ceilings and other items which obstruct the view of the observer will not be moved. Observation of structural items is of a visual nature only.
The structural adequacy of visible members and connections cannot be verified by visual observation alone. The determination or verification of member capacity is beyond the scope of this report.
Additionally, Buchholz retained Dajon Associates to prepare an inspection report on the building's roof trusses, which was completed on May 10, 2007. The report indicated that all trusses had been extensively repaired, including the installation of a post-tension cable system, reinforcement with additional lumber and installation of columns extending from the finished floor to the bottom chords. The report also noted fractures and splits in the trusses, as well as water damage.
Numerous photographs of the condition of the trusses were provided.
On July 27, 2007, Jacobsen wrote to William Sumas of Village Super Market, enclosing the CEC Group and Dajon Associates reports, noting that they "indicate[d] the need for extensive structural work to the ground floor supports and to the roof truss system in the Shoprite Annex building[.]" The letter continued:
Pursuant to paragraph 7 of your lease (paragraph enclosed), you are responsible to maintain the building and its structures in good condition. Please make the necessary repairs as soon as possible. Please inform us within the next 30 days as to your intended schedule. Also please provide us with a set of plans and an indication of how you intend to protect the other tenants in the building. As these repairs are structural in nature, the Landlord has the right to approve the activity. Once we receive and are satisfied with all of these arrangements and materials, we will give you permission to proceed; you are not authorized to proceed until that moment. All legal requirements will also, obviously, be required to be met prior to construction commencement.
Sumas did not respond, but in a subsequent conversation, claimed not to have received the reports. As a result, the structural engineers' reports were forwarded by fax again on December 28, 2007.
In a further communication from Jacobs to Sumas dated February 1, 2008, Jacobs stated:
We have spoken a number of times about the building condition. When I saw and spoke to you about 6 weeks ago, you told me to send the engineering material to you, which was done. There was still no response. We have an obligation to the Cantors and our tenant is not meeting its obligations.
Paragraph 3 of the lease declared that "Each of the following shall be deemed a default by the Tenant and breach of this lease[.]" Paragraph 3(a)(1) declared as a default failure to pay rent. Additionally, Paragraph 3(a)(2) declared as a default (2) Failure to perform any other covenant or condition or term of this lease on the part of the Tenant to be performed for a period of twenty (20) days after service of notice by the Landlord on the Tenant, and regardless of its materiality . except that if performance after notice shall reasonably require more than twenty (20) days, Tenant shall not be in default so long as it shall commence performance of the covenant within ten (10) days after the notice and proceed diligently thereafter with full manpower and material to completion of performance in not more than sixty (60) days after the notice.
On March 6, 2008, defendant served plaintiff with a twenty-day notice pursuant to Paragraph 3 of the lease demanding cure of the conditions noted in the structural reports of the CEC Group ...