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L.L.C. v. C&S Truck Sales, Inc.

Superior Court of New Jersey, Appellate Division

September 20, 2013

577 TONNELE AVENUE, L.L.C., Plaintiff-Respondent,
v.
C&S TRUCK SALES, INC., GHAZI GHARIB, Defendants-Appellants

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 9, 2013

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-0521-12.

Lani M. D'Agostino argued the cause for appellants (Seidman & Pincus, L.L.C., attorneys; Mitchell B. Seidman, on the brief).

Joanne Venino argued the cause for respondent (Venino and Venino, L.L.C., attorneys; Ms. Venino on the brief; Thomas M. Venino, Jr., on the brief).

Before Judges Yannotti and Ashrafi.

PER CURIAM

In this action for money damages for breach of a commercial lease, defendant-tenant C&S Truck Sales, Inc., and its owner, defendant Ghazi Gharib, appeal from an order for summary judgment awarding more than $163, 000 to plaintiff-landlord, 577 Tonnele Avenue, LLC. Because summary judgment was granted without affording defendants the opportunity to conduct discovery and to gather evidence in support of their defenses and counterclaims, we reverse and remand for further proceedings.

Viewed most favorably to defendants as the parties opposing summary judgment, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the summary judgment record reveals the following facts and procedural history.

Plaintiff is the owner of a one-acre commercial lot in Jersey City that contains only a small building used as a sales office. In June 2007, plaintiff entered into a six-year lease with defendant C&S, which would use the property to sell used trucks. Defendant Gharib personally guaranteed payment of C&S's obligations under the lease. Beginning in 2008, C&S failed to pay the full amount of rent and other charges when due. By letter of plaintiff's attorney dated August 28, 2009, plaintiff canceled the lease in accordance with its terms.

Subsequently, plaintiff filed a complaint for summary eviction of C&S in the Special Civil Part, Landlord-Tenant Division. On November 9, 2009, the parties settled the eviction action, executing the landlord-tenant court's standard form for a "Consent to Enter Judgment (Tenant to Stay in Premises)."

Thereafter, the parties agreed to the entry of an amended consent judgment that was prepared by the attorney for plaintiff. The amended judgment, dated January 8, 2010, permitted C&S to continue its occupancy on the condition that it pay plaintiff $66, 687.20, which defendants acknowledged was then due and owning. Defendants also agreed to pay "all amounts coming due under the Lease between the parties, except real estate taxes, reference being made to the Lease for the purpose only of computing the amounts to be paid by the Tenant." C&S was to pay the sums due in installments — $20, 000 at the time of the agreement and $13, 487.20 each month while C&S's occupancy continued until all amounts due from C&S were paid up to date. The amended consent judgment allowed the immediate entry of a judgment for possession in favor of plaintiff, but it also provided that plaintiff would not request a warrant of removal if defendants made timely payments. If defendants complied with the agreement, the consent judgment would be vacated and the lease would be reinstated:

but all real estate taxes which would otherwise have been due from the Tenant under the Lease shall be forgiven, and the parties shall execute an appropriate Memorandum to evidence the reinstatement of the Lease. However, until that time, the Lease between the parties shall remain cancelled as it is now.

Over the ensuing months, C&S made substantial payments but not the total amounts due under the amended consent judgment. Nevertheless, plaintiff did not seek C&S's eviction. Instead, it attempted to find a substitute tenant while continuing to collect partial rent from C&S. As of December 2010, C&S had unilaterally reduced its installment payments to $7, 500 per month. Plaintiff accepted the payments without agreeing to forgo its remedies.

In the latter part of 2011, plaintiff found a new tenant, Aladdin Shipping, Inc. Plaintiff and Aladdin agreed in writing that, if C&S did not vacate the premises by December 1, 2011, plaintiff would be penalized $1, 000 per day until C&S was removed. Gharib signed the document under the words, "I accept." C&S, however, did not vacate the property until December 15, 2011.

On January 30, 2012, plaintiff filed its complaint in this Law Division action seeking a judgment against C&S and Gharib for amounts due, which include rent, late charges, the costs of eviction, costs of re-letting the premises, repair of alleged damage to the property, interest, and attorney's fees. On March 30, 2012, defendants filed an answer and a counterclaim, which alleged breach of contract by plaintiff, breach of the covenant of good faith and fair dealing, and breach of the covenant of quiet enjoyment. Plaintiff filed an answer to the counterclaim on June 4, 2012. The court set January 24, 2013, as the discovery end date for the case.

On June 15, 2012, less than two weeks after the last pleading was filed and before any discovery was conducted, plaintiff filed a motion for summary judgment. Plaintiff's motion was supported by a certification of its sole member, John Carouso, with attached spreadsheets showing a summary accounting of defendants' charges and credits from the beginning of the lease term in June 2007 through the end of the tenancy in December 2011. The amounts charged included a $14, 000 penalty payable to Aladdin for late delivery of the premises for Aladdin's occupancy, utility charges in various amounts, insurance payments, real estate taxes, expenses of re-renting the property, a fee for appraisal of the property for sale or rental purposes, repairs and clean-up of the property that were allegedly the responsibility of defendants, and attorney's fees. Plaintiff's claim also included a "real estate tax differential" of $30, 081, which, according to Carouso, was the difference between defendants' obligation to pay real estate taxes through the end of the lease term, May 31, 2013, and the absence of a similar obligation by Aladdin to pay the real estate taxes under its lease with plaintiff. Carouso's certification claimed that plaintiff was entitled to a total of $163, 286.36 from defendants.

Defendants filed opposition to the summary judgment motion, including a certification of Gharib alleging with factual detail four grounds upon which defendants intended to defend the case and present their counterclaim for damages. In summary form the four grounds were: (1) the lease was cancelled by plaintiff, and the January 8, 2010 amended consent judgment in the landlord-tenant action was the controlling agreement that applied to defendants' monetary obligations; (2) plaintiff's requests to C&S to vacate the property after the entry of the amended consent judgment disrupted C&S's business operations and caused it to suffer losses; (3) plaintiff failed to keep the perimeter fence in good repair, and burglars and vandals caused damage and losses to C&S; and (4) the parties agreed that past due amounts would be forgiven if defendants found a buyer for the property, and defendants did so but plaintiff unreasonably rejected the buyer's offer. In support of the last contention, defendants submitted a certification of a proposed buyer of the property, Tony Garoyan, stating the circumstances of his presenting an offer to Carouso to purchase the property and Carouso's initial oral acceptance but subsequent rejection of the offer.

The trial court heard oral argument on plaintiff's motion for summary judgment on August 24, 2012. By oral decision on that date and an order dated August 27, 2012, the court granted plaintiff's motion in its entirety for summary judgment in the amount of $163, 286.36. The order also dismissed defendant's counterclaim. After defendants filed a notice of appeal, the court amplified the reasons for its decision, pursuant to Rule 2:5-1(b), in a written opinion dated October 16, 2012.

Initially, we reject defendants' argument on appeal that their due process rights were violated because plaintiff's notice of motion for summary judgment did not specifically request that the counterclaim be dismissed. The notice of motion sought judgment for plaintiff, and the supporting papers set forth plaintiff's positions. Defendants had adequate notice that plaintiff contended the counterclaim was without merit and should be dismissed in order to permit entry of a judgment for plaintiff in the amounts it claimed.

However, we conclude that summary judgment was granted prematurely, immediately after the pleadings, without any opportunity for discovery that might have supported defendants' defenses and counterclaim, and without full development of an evidentiary record on the amount of damages claimed by plaintiff.

In Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 193 (1988), the Court stated: "When 'critical facts are peculiarly within the moving party's knowledge, ' it is especially inappropriate to grant summary judgment when discovery is incomplete." (quoting Martin v. Educ. Testing Serv., Inc., 179 N.J.Super. 317, 326 (Ch. Div. 1981)). Here, defendants were not permitted to conduct discovery even though a number of plaintiff's claims of specific amounts of damages chargeable to defendants were within the peculiar knowledge of plaintiff. For example, the amounts claimed by plaintiff on its accounting spreadsheets included utility charges, insurance, taxes, repair costs, re-renting expenses, an appraisal fee, and attorney's fees, all of which were peculiarly within the knowledge of plaintiff, and regarding which defendants had a right to conduct discovery to establish the accuracy of the figures claimed and actually expended by plaintiff. Furthermore, the summary judgment submissions did not include evidence that the $14, 000 penalty was actually paid to Aladdin, and the notation "I accept" signed by Gharib did not establish without further evidence that the charge became a responsibility of the tenant under the terms of the lease. Also, no documentary evidence was presented regarding the terms of the lease between plaintiff and Aladdin that would have established whether plaintiff actually suffered a $30, 081 loss in the form of a real estate tax differential as a result of defendants' breach. Nor were the attorney's fees claimed under the lease documented in detail. Defendants had a right to conduct discovery of all these and similar claims by plaintiff to determine whether they were items in fact chargeable to defendants in accordance with the terms of the lease.

We agree in part with the trial court's conclusion that some of defendants' claims in defense or as counterclaims pertained to facts that were not peculiarly known to plaintiff but were within defendants' knowledge and ability to prove. Discovery from plaintiff was not needed to support those claims, see Wellington v. Estate of Wellington, 359 N.J.Super. 484, 496 (App. Div.), certif. denied, 177 N.J. 493 (2003); Auster v. Kinoian, 153 N.J.Super. 52, 56 (App. Div. 1977), and defendants' submissions in opposition to summary judgment did not provide sufficient factual details actually proving their contentions. But it was very early in the litigation, and defendants were not given sufficient time to gather their evidence.

For example, defendants claimed offsets of the amounts owed to plaintiff on the ground that they suffered losses as a result of plaintiff failing to maintain the perimeter fence in good repair, thus facilitating thefts and vandalism. They presented police reports of intrusions and claimed loss of property valued at $4, 000 or more. In its amplification opinion, the court concluded that plaintiff had no duty to provide security for the property because the parties entered into a use and occupancy agreement after plaintiff canceled the lease. This conclusion was premature without evidence of the intent of the parties in entering into the use and occupancy agreement, and without testimony or other evidence establishing the specific terms of the agreement. The conclusion that plaintiff had no duty to maintain the premises also appears inconsistent with the court's conclusion that the terms of the lease otherwise controlled the amounts owed by defendants to plaintiff.

We make no determination as to whether defendants had viable defenses or counterclaims based on alleged novation of the lease agreement through entry of the amended consent judgment. We note that the language of the amended consent judgment may be deemed ambiguous as to the applicability of the original lease terms on all items of damages claimed by plaintiff. In addition, disputed issues of fact existed pertaining to the terms of an alleged oral agreement between the parties to forgive past due amounts upon defendants producing a buyer for the property, or the reasonableness of plaintiff's decision not to accept the buyer's offer. The trial court rejected these defense contentions as unproven, but defendants produced some evidence to support their defenses at the early stage of litigation when the motion for summary judgment was filed, and the only question before the court was whether genuine disputed issues of fact were shown to preclude summary judgment. We think genuine issues of fact were shown in the opposition papers.

Before rejecting the defenses and deciding that plaintiff is entitled to summary judgment in the amounts of damages it claims, the trial court should have permitted defendants more time to gather evidence and to conduct discovery, including a deposition of plaintiff's representative and an examination of plaintiff's documents supporting its claims. The court must allow "every litigant who has a bona fide cause of action or defense the opportunity for full exposure of his case." Velantzas, supra, 109 N.J. at 193 (quoting United Rental Equip. Co. v. Aetna Life & Cas. Ins. Co., 74 N.J. 92, 99 (1977)) (internal quotation marks omitted); accord James v. Bessemer Processing Co., 155 N.J. 279, 311 (1998); Mohamed v. Iglesia Evangelica Oasis De Salvacion, 424 N.J.Super. 489, 498-500 (App. Div. 2012).

Rules 4:46-2(c) and 4:46-3(a) authorize the court to grant partial summary judgment, or to designate those facts that shall be deemed established for purposes of a trial. Here, the granting of summary judgment disposing of the case entirely in the full amount of plaintiff's claims was premature and unwarranted.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.


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