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Mill Race Village, Ltd v. Main & Glen Associates

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 25, 2012

MILL RACE VILLAGE, LTD., PLAINTIFF-APPELLANT/CROSS-RESPONDENT,
v.
MAIN & GLEN ASSOCIATES, L.L.C., DEFENDANT-RESPONDENT/CROSS-APPELLANT.

On appeal from the Superior Court of New Jersey, Chancery Division, Sussex County, Docket No. C-25-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 15, 2011 -

Before Judges Yannotti, Espinosa and Kennedy.

Plaintiff Mill Race Village, Ltd. (Mill Race) appeals from a final judgment entered against it on April 9, 2010, following a bench trial, dismissing its complaint and awarding $2.7 million in compensatory damages and counsel fees and costs of $652,577.79 to defendant Main & Glen Associates, L.L.C. (Main & Glen) on its counterclaim for breach of contract. Main & Glen cross-appeals from the trial court's denial of prejudgment interest and additional counsel fees.

We affirm on the appeal and the cross-appeal.

I

This case arises from a real estate contract in which Mill Race agreed to sell to Main & Glen 13.64 acres of land in the Township of Sparta (Township). The property is largely unimproved and Mill Race has owned the property since at least 1987. One of the principals of Mill Race is Bernard Langan (Bernard),*fn1 who is vested with authority to enter into contracts on behalf of Mill Race. In the summer of 2003, Mill Race offered to sell its property for $1.62 million to any developer who would agree to construct fifty-four townhouse units on the property pursuant to an agreement between Mill Race and the Township which would have satisfied the Township's low and middle income housing obligations under laws pertaining to the New Jersey Council On Affordable Housing (COAH). The COAH agreement would expire on March 31, 2004, unless the developer filed an appropriate development application with the Township's planning board on or before that date.

Joseph Langan (Joseph), Bernard's son, was the principal of an entity that had been engaged to manage the property. In October 2003, Joseph and others formed Main & Glen for the purpose of purchasing and developing the property and he reached an oral agreement with Bernard that Mill Race would sell the property to Main & Glen for $1.62 million. Over the next several months, Main & Glen spent over $500,000 and much time and effort seeking the necessary government approvals and preparing the plans for the townhouse development. On March 31, 2004, Main & Glen filed a development application and on June 16, 2004, the Township's planning board granted final subdivision and site plan approval for the proposed development of the property.

At this point, Bernard wanted more money for the property and refused to execute a written contract unless the price was set at $2 million. By September 2004, Mill Race and Main & Glen had negotiated a written agreement whereby Main & Glen would purchase the property for $2 million. Bernard signed the contract on September 2, 2004, and Main & Glen's principal signed on September 10, 2004. The contract contained a number of provisions relevant to this appeal. We briefly summarize these provisions.

Under Article 2.1, Mill Race agreed to sell all the property except for a parcel on which a house and some buildings were located. Article 5.4 provided that Main & Glen would obtain a minor subdivision covering that .294-acre plot, and Mill Race would retain ownership of that plot.

Article 3.3 established a six-month contract period and provided for a six-month extension of that period in exchange for a non-refundable payment of $100,000. Article 7.1 provided that the closing of title "shall occur no later than the sixth (6th) month anniversary of the contract date or any agreed upon extensions. The closing shall occur at the Office of Neil Kilstein", an attorney in Elmwood Park. Article 4.1 provided that unless Main & Glen had exercised its extension rights, this contract shall terminate upon the sixth (6th) month anniversary of the Contract Date. The Initial Deposit shall be retained by the Seller and neither party shall have any further rights or obligations hereunder . . . If Purchaser has exercised its Extension Right, but title has not closed by the twelfth (12th) [month] anniversary of the contract date, this contract shall terminate[.]

Article 5.3(a) addressed "hazardous substances" and provided that if, prior to closing, there was a discharge of hazardous substances on the property not caused by Main & Glen, Mill Race would remediate the condition and "the closing shall be adjourned for a reasonable period to permit [Mill Race] to complete such activities."

Article 5.3(b) stated that Mill Race had obtained a "no further action" (NFA) letter in accordance with New Jersey Department of Environmental Protection (NJDEP) regulations governing the removal of underground gasoline and oil tanks on the property together with the contaminated soil.

Article 5.8 required Mill Race, upon request, to promptly execute any documents required by Main & Glen to obtain governmental approvals and also provided that any delay by Mill Race in that regard would result in a tolling of any time periods established in the contract.

Article 9 of the contract governed default and remedies. Article 9.1 stated that Mill Race could terminate the agreement by notice to Main & Glen at any time prior to the closing date in the event of a material default by Main & Glen which remains uncured for twenty days after notice. In the event the default could not be cured with due diligence within twenty days, Main & Glen was given a longer period "as shall be necessary to cure such default" provided that it started to cure the default within twenty days and completed the cure within ninety days. Article 9.2 accorded the same right to Main & Glen in the event of a material default by Mill Race and established the same time frames.

Article 9.3(b) concerned Main & Glen's remedies in the event of a default by Mill Race. That section provides:

If Purchaser fulfills its obligations hereunder, but Seller defaults under this Agreement beyond any applicable cure period, or materially breaches any representation or warranty contained herein, Purchaser shall be entitled, as its sole and exclusive remedies and at its election, either (i) to specific performance and any costs, including reasonable attorney's fees incurred in pursuing an action for specific performance, or (ii) to terminate this Agreement and recover all Deposit Monies and any interest accrued thereon. The return of the Deposit shall constitute and be liquidated and agreed damages, and upon payment thereof the parties hereto shall be relieved of any further liability to each other, it being expressly understood that such remedy, if elected, shall then be the sole and exclusive right and remedy of Purchaser, and constitutes a fair and reasonable remedy for the damages sustained by Purchaser by reason of Seller's breach of this Agreement.

Finally, Article 10.4 addressed attorneys' fees and provided that:

In the event any action or proceeding is commenced to obtain a declaration of rights hereunder, to enforce any provision hereof, or to seek rescission of the Agreement for default contemplated herein, whether legal or equitable, the prevailing party in such action shall be entitled to recover its reasonable attorneys' fees in addition to all other relief to which it may be entitled therein.

After execution of the contract, Main & Glen proceeded with apparent diligence to obtain governmental approvals and financing.

In November and December of 2004, Main & Glen received offers to purchase the property from other developers for $5 million. While Main & Glen rejected these offers, Joseph expressed concern that Bernard might be upset if he learned of the offers. Moreover, in December 2004, Main & Glen learned that the NFA letter from the NJDEP referenced in Article 5.3(b) of the agreement was no longer valid. In order to obtain a new NFA letter, months were required to install monitoring wells, sample ground water and survey the test results. On March 5, 2005, Main & Glen exercised its option to extend the contract for an additional six months and paid $100,000 to Mill Race, pursuant to the contract. While this would have extended the closing date to September 10, 2005, because that date fell on a Saturday, the actual closing date would have been September 12, 2005, the following Monday.

In May 2005, other principals of Mill Race contacted Bernard to inquire whether the $2 million purchase price was the fair market value of the property. In July 2005, Bernard ordered an appraisal to determine the value of the property but claimed he did so only to resolve "internal issues" with other principals of Mill Race. In August 2005, Bernard contacted Joseph and asked him to "hold off" until the appraisal was received. While Bernard testified that he only meant to "hold off" any meeting between Mill Race and Main & Glen, the trial court found that, under the circumstances, Bernard was actually asking Joseph to "hold off the deal until the appraisal gets done. That is the only way this makes sense."

By early September 2005, Main & Glen had obtained a financing commitment on the property and forwarded a deed to Bernard which was necessary for the minor subdivision. Also, on September 9, 2005, Main & Glen's counsel sent a notice to Mill Race and Neil Kilstein (Kilstein) advising it was ready to close and asking that a closing date be scheduled. On September 12, 2005, however, Kilstein responded by letter stating that Mill Race "will be represented by other counsel in this matter and I will have no further participation in it." Mill Race never identified an attorney to replace Kilstein at closing, never scheduled a closing and never returned the deed necessitated by the minor subdivision.

On September 15, 2005, Bernard received the appraisal and it listed values of the property as of August 15, 2004, and August 15, 2005, in excess of the contract price. Bernard then left for a ten-day vacation. Also, on September 30, 2005, Mill Race first received the new NFA letter from the NJDEP and forwarded it to Main & Glen.

Thereafter, on October 3, 2005, Bernard sent an email to counsel for Main & Glen stating that the appraisal showed the August 15, 2005 value of the property to be $2,970,000 and that eighty-percent of that value would be $2,376,000. He added "we will close at this value this Friday."

In response, on October 5, 2005, counsel for Main & Glen sent a letter and closing documents to Bernard but the closing documents specified the purchase price of the property at $2.1 million which reflected the $2 million contract price and the $100,000 paid for the extension.

Not hearing from Bernard, and the closing not having been scheduled, on November 7, 2005 counsel for Main & Glen sent a letter to Bernard notifying him that Main & Glen wanted to close title and that it was making "time . . . of the essence" for a closing on November 21, 2005. Again, counsel for Main & Glen sent Bernard another copy of the minor subdivision deed and other documents for his review so that they could be signed by him at the closing. In response, Mill Race retained a new attorney who, on November 16, 2005, notified counsel to Main & Glen that Mill Race regarded the time-of-the-essence letter to be improper and that the agreement was terminated as a consequence of Main & Glen's failure to "close title" in September 2005.

II

On November 28, 2005, Mill Race filed a two-count complaint against Main & Glen in the Chancery Division seeking a declaration that the contract had been terminated and that Mill Race was entitled to counsel fees and to retain ownership of the development plans for the property. On December 5, 2005, Main & Glen filed a separate complaint against Mill Race in the Chancery Division alleging that Mill Race had breached the contract. The complaint sought specific performance (count one); damages for breach of contract in the event it did not obtain specific performance (count two); damages under an unjust enrichment theory (count three); and promissory estoppel (count four). Mill Race filed an answer to the Main & Glen complaint denying its allegations and setting forth seventeen "separate defenses" including waiver, failure to mitigate damages, entire controversy doctrine and failure to state a claim upon which relief could be granted. Significantly, Mill Race did not allege in any of the separate defenses that Main & Glen's damage claims were barred by the contract under Article 9.3(b) which limited remedies to specific performance or a recovery of deposit monies and accrued interest. In March 2006, a consent order was entered consolidating the two actions and converting Main & Glen's complaint into a "counterclaim."

Nearly two years after the complaints were filed, and after the time for discovery had ended, Mill Race moved for summary judgment on its complaint. The trial judge granted the motion and determined that Main & Glen had breached its contract by not closing in September 2005, awarded counsel fees and gave Mill Race the right to assume Main & Glen's plans and approvals. Main & Glen appealed from that order and on January 22, 2009, we reversed. Mill Race Village, Ltd. v. Main & Glen Associates, L.L.C., No. A-1335-07 (App. Div. Jan. 22, 2009). We determined that "the record in this case discloses multiple issues of fact that bear directly on the question of whether the termination provision of the agreement of sale should be strictly enforced." (Slip op. at 24). We explained that, viewing the facts from the perspective of Main & Glen, suggests that the [contract closing] date should properly have been regarded as formal, not essential. Thus, consideration should have been given to the conduct of the parties, to the issue of whether the contractual deadline had been waived by Bernard Langan, and whether Main & Glen was or could have been ready to perform in a reasonable time after the September 10 date - - contested matters that could not have been determined as a matter of law on summary judgment. [Slip op. at 20]

The case was remanded and on April 22, 2009, the trial court entered a pretrial conference order providing that any motion to amend pleadings must be filed and returnable before June 5, 2009, and allowing any party to obtain an expert evaluation of the property by June 15, 2009, with reply evaluations due by August 15, 2009. The trial was scheduled for September 15, 2009.

Main & Glen obtained and served its expert appraisal report which evaluated the property as of November 2005 - the date of its proposed "time-of-the-essence closing" - at $4.7 million. Mill Race never obtained a responding report but, instead, filed a motion on July 23, 2009, to strike the report and to strike Main & Glen's damage claims on the basis of Article 9.3 of the contract. The certification in support of the motion comprised only three pages referencing the complaint and the contract. The trial judge denied the motion, essentially holding that Mill Race, having never raised the issue in almost four years of litigation and until after discovery was completed, waived the defense.

The judge explained that the contractual defense "was not set forth as an affirmative defense . . . is not pleaded, nor is that defense set forth on the face of the pleading itself." She observed that "the reason that we have pleading rules in New Jersey is so that the parties know what the issues in the case are." She also explained:

It is a waste of the judicial process . . . to go through the discovery process, up to the Appellate Division, back down, and be within a couple of months prior to trial, and not have the parties know what it is that they are arguing and defending in their case.

Analogizing the issue to cases dealing with waivers of contractual arbitration provisions and waivers of statutory defenses, the judge explained that Mill Race had not raised the defense in its pleadings, in its briefs before the Appellate Division or, indeed, at any time prior to its receipt of Main & Glen's appraisal report.

The trial judge thereafter conducted a bench trial in the matter. On January 28, 2010, the trial judge set forth her oral decision from the bench determining that Mill Race had breached the agreement and that Main & Glen should be awarded $2.7 million in compensatory damages. The judge also determined that Main & Glen was entitled to attorneys' fees under the agreement, deferring resolution of that matter until appropriate certifications were filed.

The trial judge found specifically that September 10, 2005 was not a "time-of-the-essence closing date." She noted that the contract did not use the phrase and that the contract itself had a number of "tolling provisions to it, which in and of themselves, indicated that the parties contemplated that there would be circumstances whereby the closing date would have to be extended." For example, she noted that Article 5.3(a) allows for an adjournment of closing, if required, to permit Mill Race to address any environmental concerns; Article 5.8 states that Mill Race must provide any signatures or consents that are required and that any delays in providing such signatures or consents "shall result in the tolling of all time periods;" Article 7.1 provides for a closing date no later than the anniversary date of the contract or any "agreed upon extensions;" and Article 9.1 allows for a cure period following default.

In addition to finding that the contract itself does not explicitly establish a time-of-the-essence closing date, the court found that "even if there had been an extended time-ofthe-essence closing date of September 12, it was waived absolutely by Mill Race Village in . . . negotiations after the purported closing date." In making this finding, the judge observed, among other things, that Mill Race never delivered a deed or any closing papers; failed to deliver the NFA letter prior to the original closing date of September 12; continued to negotiate over the purchase price and, in fact, sent a letter in October to Main & Glen setting forth a new contract price and a new closing date; contacted Main & Glen and asked it to "hold off" until an appraisal was completed, and then delivered the appraisal after the original closing date; and failed to sign the minor subdivision deed submitted to it prior to the original closing date.

The trial judge also found that Main & Glen was ready, willing and able to close title in September 2005 whereas Mill Race was not. In making this determination, she found Main & Glen's witnesses to be "entirely credible" in their testimony that they would have been able to close on September 12, 2005 had Mill Race actually been serious about closing on that date. For example, Main & Glen had obtained its final subdivision and site plan approval; received final approval from the Sussex County Planning Board; obtained financing for the property; and sent a letter prior to the closing date to Mill Race asking that a closing date be scheduled.

The trial judge found that Mill Race breached the contract and that there was "no showing why specific performance would be an adequate measure of damages." She noted that had the trial moved more quickly "perhaps specific performance would have been an adequate remedy because the parties would have gotten the benefit of their bargain." She explained, however, that "five years later specific performance with all of the approvals that have to be re-obtained is not putting the parties in as good a position as they would have been . . . if the contract had actually been effectuated." She credited the appraisal of Main & Glen showing the market value at the time of the essence date to be $4.7 million, and subtracting out the contract purchase price of $2 million, found damages of $2.7 million. The court entered judgment in conformance with its findings. This appeal and cross-appeal followed.

Mill Race argues on appeal that the trial court's findings are not supported by the record and that the court's conclusions respecting whether the contract made time-of-the-essence, waiver fees and the inapplicability of the contractual limitation on damages were reached in error. Main & Glen, as noted, argues it is entitled to prejudgment interest and additional counsel fees.

III

The scope of our review of a non-jury case is limited. "Final determinations made by the trial court sitting in a non-jury case are subject to a limited and well-established scope of review: 'We do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]'" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)(quoting In re Trust Created by Agreement Dated December 20, 1961, X.L. Johnson, 194 N.J. 276, 284 (2008)); Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974)(internal quotations and citations omitted)(the judge's factual findings "should not be disturbed unless . . . they are so wholly unsupportable as to result in a general denial of justice.") However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995). With these principles guiding our analysis, we turn first to the question of whether the trial judge erred in finding that time was not of the essence in the contract.

Where an agreement itself "provides a clear understanding that time is of the essence" it is settled that prompt performance is required "and the date contained in the contract for closing would be strictly enforced by a court of equity." Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 603 (App. Div.), certif. denied, 183 N.J. 591 (2005). However, a closing date in a contract is often viewed as "formal rather than essential." Paradizo v. Mazejy, 3 N.J. 110, 115 (1949). It is also a well-settled rule in equity that time is ordinarily not of the essence of a contract for the sale of lands. Rosie v. Wisniewski, 112 N.J. Eq. 364, 366 (E. & A. 1933).

We agree with the trial judge that "time of the essence" was not part of the contract between the parties. Not only did the contract itself fail to specify that time was of the essence, but also the contract allows for extensions of the closing date. For example, Article 7.1, dealing with the closing date, states that the closing of title shall take place "no later" than the anniversary date "or any agreed upon extension." Moreover, Article 5.3(a) provides that Mill Race was responsible for any hazardous material problems and specified that, if necessary, closing would be adjourned for a reasonable period to allow Mill Race to cure the problems. Article 5.8 provides for tolling the closing date if Mill Race fails to sign any document required as part of the transaction. Article 9.1 provides that, if Main & Glen defaulted under the agreement, Mill Race could terminate the contract following a twenty-day period during which Main & Glen could attempt to cure the default.

The claim by Mill Race that Main & Glen's representatives "understood and agreed" that time was of the essence is belied by the trial testimony. Main & Glen's representative at trial testified that, under the agreement, closing on the date scheduled would have occurred if there was otherwise no tolling and if Mill Race cooperated in the sale of the property. Further, there was no explicit concession by Joseph that the agreement contained a time-of-the-essence closing date. In conclusion, we find substantial, credible evidence in the record to support the trial court's finding that the parties' agreement did not provide for a time-of-the-essence closing date and we will not disturb that finding on appeal.

Moreover, we agree with the trial court that even if time was of the essence, the conduct of the parties overwhelmingly indicates that it was waived.

When it has been demonstrated that a party has acted inconsistently with the attempt to make time of performance of the essence, whether the conduct precedes or follows the closing date, a waiver will be found and the parties will be deemed to have extended the time for performance for a reasonable period of time[.]

[Marioni, supra, 374 N.J. Super. at 607-08.] This consideration applies here with great force.

First, Mill Race represented in the agreement that it had a valid NFA letter, but the parties learned in December 2004 that this assertion was incorrect. The NFA letter was eventually issued on September 30, 2005, three weeks after the purported time-of-the-essence closing date.

Moreover, Bernard contacted Joseph to request that Main & Glen "hold off" any further action until the appraisal was received. The appraisal was not received by Bernard until September 15, 2005. Thereafter, Bernard proposed an alternative purchase price for the property based upon the appraisal and agreed to close title at a higher price.

That conduct clearly demonstrates Mill Race did not consider the agreement to have terminated. Finally, Bernard's failure to sign a minor subdivision deed submitted to him on September 2, 2005, and the failure of Mill Race to appear for closing firmly supports the trial court's determination that Mill Race had waived any time-of-the-essence closing.

Mill Race argues further that the trial court's determination that it had waived its right to rely upon Article 9.3(b) limiting damages, constitutes error. We disagree. Rule 4:5-4 addresses affirmative defenses and requires that a "responsive pleading shall set forth specifically and separately a statement of facts constituting an avoidance or affirmative defense." Mill Race's responsive pleading in this case never "set forth specifically and separately" an affirmative defense under Article 9.3(b).

Also, "it is well settled that an affirmative defense is waived if not pleaded or otherwise timely raised." Brown v. Brown, 208 N.J. Super. 372, 384 (App. Div. 1986). The intent to waive a right "need not be stated expressly, provided the circumstances clearly show that the party knew of the right and then abandoned it, either by design or indifference." Knorr v. Smeal, 178 N.J. 169, 177 (2003).

Waivers have been found where a party raises a meritorious defense prior to trial, but the defense is nevertheless asserted in an untimely fashion. Fees v. Trow, 105 N.J. 330, 335 (1987)(waiver of statute of limitations defense found because it was not pleaded, not raised in a motion for summary judgment, and not adverted to by either party at any time); White v. Karlsson, 354 N.J. Super. 284, 290-92 (App. Div.) (waiver found where statute of limitations defense asserted sixteen months after complaint was filed and one week before trial), certif. denied, 175 N.J. 170 (2002); Kopin v. Orange Prods., Inc., 297 N.J. Super. 353, 375-76 (App. Div.) (waiver of entire controversy defense found where it was not asserted in an answer nor asserted during the three-year period prior to grant of summary judgment), certif. denied, 149 N.J. 409 (1997).

In Wein v. Morris, 388 N.J. Super. 640, 646-47, 649-51 (App. Div. 2006), aff'd in part, rev'd in part on other grounds, 194 N.J. 364 (2008), we reversed a trial court's ruling that the parties were required to arbitrate, as mandated by their contract, holding that the failure to timely resort to arbitration waived that right under the contract. We noted, [c]onsidering the duration of the discovery proceedings and the trial court's extensive involvement in managing this suit, we are required to conclude that by the time the judge sua sponte compelled arbitration - -more than one year after the withdrawal of the motion to compel arbitration and nearly five years after the filing of the complaint - - the parties had waived their contractual right to arbitration. [Id. at 651.]

The Supreme Court agreed with this reasoning. 194 N.J. at 376.

Here, the parties litigated and conducted extensive discovery for a period of over three years before Mill Race sought to assert the contractual remedy limitation set out in Article 9.3(b). Mill Race had every opportunity to assert this defense earlier, including in its initial motion for summary judgment, but failed to do so. The protracted pretrial litigation in this case amounts to a waiver based upon the obvious burden of expense and delay Main & Glen shouldered without notice of Mill Race's intention to rely upon Article 9.3(b). The trial judge was correct when she determined that Mill Race waived its right to rely on that provision. Mill Race simply delayed too long in seeking that relief and in asserting that affirmative defense. During the three and one-half year period of delay, Main & Glen suffered prejudice as it conducted extensive discovery, incurred expenses and actively litigated the case.

Additionally we find Mill Race's argument that Main & Glen was not able to close title on the date specified to be without sufficient merit to warrant discussion in a written opinion.

R. 2:11-3(e)(1)(E).

Mill Race also claims the trial court erred in awarding counsel fees to Main & Glen pursuant to Article 10.4. That provision states that the prevailing party is entitled to recover its attorneys' fees in any action or proceeding "commenced to obtain a declaration of rights . . . to enforce any provision [of the contract], or to seek rescission of the agreement."

In Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 440 (2001), the Supreme Court explained that "[a]lthough New Jersey generally disfavors the shifting of attorneys' fees, a prevailing party can recover those fees if they are expressly provided for by . . . contract." Article 10.4 of the parties' agreement expressly provides for the award of counsel fees to such a prevailing party.

A plain reading of Article 10.4 reveals that it allows a prevailing party to recover attorneys' fees expended in declaratory actions or to enforce any provisions in the agreement. Here, whether viewed from the perspective of Mill Race or Main & Glen, the actions were clearly declaratory actions pertaining to the parties' rights and obligations under their agreement. Indeed, Mill Race's own complaint explicitly sought a declaration that the contract had terminated in accordance with its terms. Main & Glen sought an adjudication of its rights under the contract. Under Article 10.4, the prevailing party is entitled to recover its attorneys' fees. Main & Glen, as the prevailing party, was entitled to recover the attorneys' fees it incurred.

We now turn to the cross-appeal filed by Main & Glen. Main & Glen cross-appeals from the trial court's denial of its request for the award of counsel fees to Joseph Torre (Torre). However, while one certification submitted by Alan L. Zegas did generally reference work performed by Torre, Torre himself did not file a certification explaining his role in this litigation or the work he undertook. Torre's failure to provide an affidavit or certification was fatal to that part of defendant's application.

Rule 4:42-9(b) states that, except in tax and foreclosure actions, "all applications for the allowance of fees shall be supported by an affidavit of services addressing the factors enumerated by R.P.C. 1.5(a)." The requirement applies to "case[s] involving contractually-based claim[s] for attorneys' fees[.]" City of Englewood v. Exxon Mobile Corp., 406 N.J. Super. 110, 124-25 (App. Div.), certif. denied, 199 N.J. 515 (2009). Trial courts utilize the information provided in such affidavits to analyze the factors set out in R.P.C. 1.5(a) in order to make a determination about the reasonableness of the requested fee. Ibid.

While the Zegas certification included information that addressed the work of his firm, the trial judge was not able to make a determination of the reasonableness of defendant's fee application for Torre's services because of Torre's failure to submit an affidavit or certification. Consequently, we find no abuse of discretion in the trial judge's determination not to award counsel fees for Torre's work.

Main & Glen also cross-appeals from the trial court's denial of its request for prejudgment interest. A trial court has discretion to grant or deny prejudgment interest and its decision on the matter will not be disturbed absent an abuse of discretion. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 390 (2009). Here, the court explained that prejudgment interest "is not being awarded because other aspects of the judgment operate to place Main & Glen in a position to receive the benefit of its bargain." Additionally, the court found that there was no "loss of the use of funds" here.

In general, "the 'equitable purpose of prejudgment interest is to compensate a party for lost earnings on a sum of money to which it was entitled, but which has been retained by another.'"

N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 574-75 (1999)(quoting Suclov v. 2100 Linwood Owners, Inc., 303 N.J. Super. 13, 39 (App. Div.), appeal dismissed, 162 N.J. 194 (1999)). An award of prejudgment interest in contract cases is based upon equitable principles and is addressed to the discretion of the court. Litton Indus., Inc., supra, 200 N.J. at 390. We find no reason to disturb the trial court's determination to deny prejudgment interest.

Affirmed on the appeal and the cross-appeal.


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