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Malden Real Estate v. Cycle Craft

January 6, 2012

MALDEN REAL ESTATE, PLAINTIFF-RESPONDENT,
v.
CYCLE CRAFT, INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2052-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 16, 2011

Before Judges A. A. Rodriguez and Grall.

This appeal is from an order and final judgment entered following a bench trial on a complaint filed by plaintiff, Malden Real Estate (Malden), the owner of the Rutgers Village Shopping Center on Route 46 in Parsippany, and a counterclaim filed by its tenant, Cycle Craft, Inc. (Cycle). The judge dismissed Malden's complaint for possession of the leased premises and counts of Cycle's counterclaim alleging unjust enrichment and violation of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, and entered judgment against Cycle on Malden's claim for past due assessments. She also awarded Cycle damages on its allegations of breach of the covenant of good faith and fair dealing and of breach of an order and stipulation of settlement terminating a prior lawsuit between the parties. Cycle appeals and challenges the dismissal of its claims for unjust enrichment and damages under the CFA, and the denial of counsel fess for its successful efforts to enforce the order and stipulation of settlement. We affirm in part and reverse in part.

In March 2002, Cycle purchased its business from a predecessor and assumed the existing lease with Malden. However, in September 2002, pursuant to eminent domain, the State of New Jersey condemned a portion of the shopping center so that the Department of Transportation (DOT) could undertake a project to widen Route 46. The State paid Malden $654,773 in compensation. The project eliminated several parking spaces used by Cycle's business and affected access to the area of the mall directly in front of Cycle's business.

In the first lawsuit, Cycle sued Malden, alleging breach of its lease and seeking damages resulting from the elimination of parking spaces and the deleterious effect on its business caused by the road project. The first litigation ended with an order incorporating determinations made by the judge and a stipulation of settlement in August 2005, which provided that Malden would pay Cycle $15,000 and reduce Cycle's rent by $2000 per month, until the completion of the widening project and re-striping of the shopping center parking lot. After the re-striping was completed, Malden would reduce Cycle's rent by $1500 per month for the duration of the lease term and an additional renewal period.

Despite the settlement, the problems continued. In April 2008, Malden commenced the second litigation by suing Cycle in the Special Civil Part for unpaid rents and common area maintenance (CAM) charges. Cycle counterclaimed, alleging a claim pursuant to the CFA, breach of the terms of the August 2005 order and stipulation of settlement, breach of the implied covenant of good faith and fair dealing, and unjust enrichment.

Following a bench trial, the judge denied Malden's demand for possession of the premises, finding that Malden had breached the terms of the August 2005 order and stipulation of settlement and the implied covenant of good faith and fair dealing. The judge awarded Cycle a retroactive rent abatement, but determined that Cycle owed Malden for unpaid common area charges. The judge dismissed Cycle's CFA claim and unjust enrichment claim. Although Malden may have breached the settlement and lease agreement, the judge reasoned that the trial evidence did not show that there were substantial aggravating circumstances present in such breach. Finally, the judge denied both parties' demands for attorney's fees.

Consumer Fraud Act Claim

Cycle appeals and contends that it proved Malden's CFA violation. Specifically, Cycle argues that Malden's actions, in raising CAM charges from $225 in 2002 to $1300 in 2009, constitute an unconscionable commercial practice in violation of the CFA. Cycle also argues that the evidence adduced at trial, including the increase of CAM charges, the absence of an increase for Malden's other tenants and the rates charged by Malden's snow removal vendor at Malden's other property, establishes a fraudulent act in violation of the CFA. We disagree.

At the outset, we note that there was ample evidence in the record to support the judge's factual findings. Such findings "are considered binding on appeal when supported by adequate, substantial and credible evidence." Sager v. O.A. Peterson Constr. Co., 182 N.J. 156, 164 (2004) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (internal quotation marks omitted)). We will not disturb a trial court's factual findings unless "they are so wholly unsupportable as to result in a denial of justice." Greenfield v. Dusseault, 60 N.J. Super. 436, 444 (App. Div.), aff'd, o.b., 33 N.J. 78 (1960). We note that Cycle's lease called for payment of charges based on percentage of the leased space, and the pertinent question is whether its charges were assessed in that manner.

On the merits, we note that the CFA is "one of the strongest consumer protection laws in the nation." Cox v. Sears Roebuck & Co., 138 N.J. 2, 15 (1994) (internal quotation marks omitted). Violations of the CFA "can occur as a result of an affirmative act, an omission to act, or a violation of an administrative regulation." Wozniak v. Pennella, 373 N.J. Super. 445, 456 (App. Div. 2004), certif. denied, 185 N.J. 212 (2005).

It is settled that "[t]he CFA is applicable to the landlord/tenant relationship." Ibid. (citing 49 Prospect Street Tenants Ass'n v. Sheva Gardens, Inc., 227 N.J. Super. 449, 468 (App. Div. 1988); 316 49 St. Assoc. v. Galvez, 269 N.J. Super. 481, 491 (App. Div. 1994)). However, in this case, we agree with the judge that it does not apply. This is because "a breach of warranty, or any breach of contract, is not per se unfair or unconscionable . . . and a breach of warranty alone does not violate a consumer protection statute." Cox, supra, 138 N.J. at 18 (quoting D'Ercole Sales, Inc. v. ...


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