1008 ASTORIA BOULEVARD ASSOCIATES, LLC v. HEINE ASSOCIATES, P.A.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0100-14T1

1008 ASTORIA BOULEVARD

ASSOCIATES, LLC,

Plaintiff-Respondent/

Cross-Appellant,

v.

HEINE ASSOCIATES, P.A.,

Defendant-Appellant/

Cross-Respondent.

________________________________

April 19, 2016

Submitted January 6, 2016 Decided

Before Judges Fuentes, Koblitz and Gilson.

On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. DC-15950-13.

Heine Associates, P.A., appellant/cross-respondent pro se(I. Michael Heine, on the brief).

Eisenberg, Gold, Cettei & Agrawal, P.C., attorneys for respondent/cross-appellant (Donna L. Cettei and Douglas J. Ferguson, on the brief).

PER CURIAM

The basis of this dispute relates back to the parties' now defunct landlord-tenant relationship. Plaintiff 1008 Astoria Boulevard Associates, LLC filed suit against its former tenant, defendant Heine Associates, P.A., to recover monetary damages under specific provisions of the parties' lease agreement as amended and extended during the tenancy. After joinder of issue, the matter came before the Law Division, Special Civil Part by way of cross-motions for summary judgment.

On May 6, 2014, the motion judge issued a letter-opinion finding in favor of plaintiff and entered judgment against defendant in the amount of $5660.55. The court found defendant remained in possession of the premises as a holdover tenant during a specific period of time and was ordered to pay plaintiff double rent, late fees, and counsel fees. More than twenty days after receiving the court's letter-opinion, defendant filed a motion for reconsideration pursuant to Rule 4:49-2 claiming the court: (1) overlooked undisputed evidence in calculating the damage award; and (2) erred in applying the legal principles governing the parties' relationship. In a letter-opinion dated July 8, 2014, the court granted defendant's motion for reconsideration and reduced the amount of the damages awarded to plaintiff by $1700, resulting in a final judgment in the amount of $3960.55.

The record also includes an order signed by the motion judge on July 22, 2014. This form of order was prepared by plaintiff's counsel and memorializes the final judgment the court issued in the July 8, 2014 letter-opinion. Thereafter, both parties filed notices of appeal that expressly identified the July 22, 2014 order as the one they sought to appeal. Defendant seeks that this court vacate the $3960.55 judgment based on the same arguments defendant made in support of its motion for reconsideration before the Special Civil Part.

In its cross-appeal, plaintiff argues the motion judge should have denied defendant's motion for reconsideration because it was filed more than twenty days after the receipt of the court's May 6, 2014 letter-opinion, in violation of the time restrictions in Rule 4:49-2. Plaintiff also argues the motion judge erred when he failed to find defendant liable for double the amount of rent for the month of May 2013. Plaintiff argues defendant was a holdover tenant on May 2013 under paragraph 25(b) of the original lease agreement and was therefore contractually obligated to pay double rent.

Here, the Law Division, Special Civil Part decided this matter based on the parties' written submissions in support of their respective motions for summary judgment. We will thus review the legal issues raised in these appeals de novo, without any deference to the court's interpretation of law that flows from the undisputed facts. Ross v. Lowitz, 222 N.J. 494, 503-504 (2015). In conducting a de novo review of the record, we will apply the standard codified in Rule 4:46-2(c), as explained by the Court in Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

Applying the relevant legal principles governing adjudications of civil actions in the Law Division, Special Civil Part to these undisputed facts, we affirm the July 22, 2014 order granting defendant's motion for reconsideration and reducing the amount of the judgment to $3960.55. Consequently, we reject defendant's arguments seeking to vacate the $3960.55 final judgment entered by the court and plaintiff's cross-appeal seeking to restore the original damage award of $5660.55.

I

Commencing on March 14, 1995, defendant Heine Associates, P.A., a law firm headed by Michael Heine, rented office space in a multi-tenant commercial building under a five-year written lease agreement with Liberty Property Partnership, the owner of the property at the time. Plaintiff 1008 Astoria Boulevard Associates, LLC acquired the property sometime thereafter. After the original five-year lease term ended on May 1, 2000, the parties entered into two consecutive lease amendments, which extended the term of the tenancy by five-year increments, until April 30, 2011. These two amendments expressly provided that the terms and conditions of the original lease "remain unchanged and in full force and effect."

On April 15, 2011, the parties entered into a third lease amendment extending the term of the tenancy by one year, "from May 1, 2011 through and including April 30, 2012." Under paragraph 4 of this third lease amendment, defendant was "entitled to a one year option at the rental amount of [$1700.00]1 per month." To exercise this option, defendant was obligated to notify plaintiff's attorneys in writing by no later than January 31, 2012. The one-year option was conditioned on defendant remaining current with its monthly rental obligations. The option period ran from May 1, 2012 to April 30, 2013. Finally, unless otherwise expressly modified in the third lease amendment, the terms and conditions of the original lease remained unchanged. It is undisputed that defendant exercised this option, thus extending the tenancy until April 30, 2013.

The parties were unable to agree on the terms for further extensions. By letter dated April 23, 2013, plaintiff's counsel notified defendant it was required to vacate the rental premises by no later than April 30, 2013. Plaintiff's counsel also apprised defendant that in the event defendant remained in possession of the premises after April 30, 2013, it was obligated to pay double rent under paragraph 25(b) of the original lease agreement. Defendant did not vacate the premises by April 30, 2013.

Plaintiff served defendant with a notice to quit on May 6, 2013, requiring defendant to vacate the premises and surrender possession to plaintiff by or before June 5, 2013. Plaintiff filed a summary action on June 11, 2013, in the Special Civil Part, Landlord/Tenant Section, seeking possession of the premises. The parties settled the summary action in a consent judgment through which defendant vacated the premises on July 15, 2013. Paragraph 7 of the consent judgment expressly provided that the parties had not reached an agreement "as to any rental due and owing . . . [and] reserve[d] all claims, defenses and remedies" with respect to this aspect of the dispute.

On November 15, 2013, plaintiff filed a complaint in the Law Division, Special Civil Part claiming defendant violated the terms of the lease agreement. By way of damages, plaintiff sought a total of $10,760.55, which included $4410 in counsel fees. After joinder of issue, the parties filed cross-motions for summary judgment. Defendant also sought frivolous litigation sanctions against plaintiff pursuant to Rule 1:4-8. Both sides agreed to waive oral argument and have the motion judge decide the matter based on the written submissions.

In a letter-opinion dated May 6, 2014, and mailed to the attorneys representing both parties, the motion judge found plaintiff was entitled to collect double rent from defendant for June 2013 through July 15, 2013, the date defendant vacated the premises. The judge reached this conclusion by applying paragraph 25(b) of the original lease agreement, which he found continued to legally bind defendant through the three lease amendments. Independent of, and in addition to this contractual obligation, the judge also found defendant was liable to pay double rent as a "holdover tenant" under N.J.S.A. 2A:42-6.

The judge held plaintiff's notice to quit dated May 6, 2013, required defendant to vacate the premises by or before June 5, 2013. Applying our holding in S.D.G. v. Inventory Control Co., 178 N.J. Super. 411, 415 (App. Div. 1981), the judge found defendant was required to surrender possession of the premises "as of the end of the month following the month in which the short notice was given."2 Thus, the judge ruled defendant "is not required to pay double rent for the month of May, since the lease was not terminated until the end of May. Defendant shall only pay double rent for June 2013, and July 2013, until [d]efendant vacated on or before July 15, 2013."

In light of the evidence presented by both sides, the motion judge found plaintiff was entitled to $5660.55 in compensatory damages. He found defendant "made his final rental payment to [p]laintiff to cover the month of April 2013." The court thus awarded plaintiff $1700 constituting rent for May 2013; $3400, constituting double rent for June 2013; $1700, constituting double half-month rent for July 1 to 15, 2013; $340 constituting 5% late fees; $381.38 in costs; and $1100 in counsel fees; totaling $8281.38.3 Finally, the judge applied a $2960.83 credit for the security deposit held by plaintiff; the net award totaled $5660.55.

On June 11, 2014, defendant filed a motion for reconsideration seeking a recalculation of damages based on both a mistake of fact and legal error committed by the court. Anticipating plaintiff's objection to the motion as untimely under Rule 4:49-2, defendant's letter-brief in support of the motion for reconsideration states

Please accept this letter in lieu of a more formal brief in support of Defendant's Motion for Reconsideration on the judgment apparently entered pursuant to your written decision of May 6, 2014, which has not yet been served on Defendant. Because Defendant has not yet been served with the judgment, this application is timely under the express wording of [Rule] 4:49-2. It provides

. . . a motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it.

Attacking the court's factual findings, defendant claimed the court erroneously found he did not pay rent due for the month of May 2013. With respect to the court's legal analysis, defendant argued the court improperly concluded he was a "holdover tenant" within the meaning of paragraph 25(b) of the initial lease agreement or N.J.S.A. 2A:42-6. Defendant also argued the court improperly awarded defendant late fees because he had prepaid rent in the form of the $2960.83 security deposit, which the court credited in defendant's favor. Defendant also claimed plaintiff improperly comingled the security deposit funds with the property's operating funds. Finally, defendant argued plaintiff was not entitled to an award of counsel fees because it was not a prevailing party.

Citing Rule 4:49-2, plaintiff argued the court should not have considered defendant's untimely motion for reconsideration because it was filed more than twenty days from the judgment entered by the court in its May 6, 2014 letter-opinion. Plaintiff claimed the parties' received the court's May 6, 2014 letter-opinion on May 8, 2014. Plaintiff attached to its opposition brief: (1) a copy of a printout purportedly obtained from the Camden County vicinage's Clerk of the Special Civil Part, dated May 13, 2014, showing a judgment in the amount of $5660.55 was docketed in favor of creditor 1008 Astoria Blvd. and against debtor Heine Associates; and (2) a copy of a letter sent by plaintiff's counsel to defendant dated May 16, 2014, stating: "[a]s you are now aware, the [c]ourt now entered a Judgment in favor of [plaintiff] and against [defendant] in the amount of $5660.55. Please advise when we can expect payment."

Finally, plaintiff argued defendant did not satisfy the standard of review applicable to a motion for reconsideration under D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990),4 which requires the party seeking relief to show the court's original ruling was "palpably incorrect or irrational" or "failed to appreciate the significance of probative, competent evidence." Plaintiff claimed defendant instead was merely attempting to improperly re-litigate issues the court had comprehensively addressed and decided in its May 6, 2014 letter-opinion.

By letter-opinion dated July 8, 2014, the motion judge found it was "factually undisputed" that defendant had timely paid the May 2013 rent. The judge specifically noted defendant's $1700 check, dated May 9, 2013, was received and cashed by plaintiff. With respect to the timeliness of defendant's motion for reconsideration, the judge found defendant was "not out of time based on the ambiguous application of [Rule] 4:49-2 to the facts at hand." The judge found he created this ambiguity by mailing the May 6, 2014 letter-opinion "simultaneously" to the attorneys representing the parties. Because Rule 4:49-2 requires the motion for reconsideration to be filed within twenty days "after service of the judgment or order upon all parties by the party obtaining it," the judge found "it is not absolutely clear whether [Rule] 4:49-2 still would require the party obtaining the Judgment (Plaintiff) to serve it upon Defendant. . . . In view of the slight ambiguity, the Motion for Reconsideration is not untimely."

II

We will begin our analysis by examining the timeframe for filing a motion for reconsideration under Rule 4:49-2

Except as otherwise provided by [Rule] 1:13-1 (clerical errors) a motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it. The motion shall state with specificity the basis on which it is made, including a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred, and shall have annexed thereto a copy of the judgment or order sought to be reconsidered and a copy of the court's corresponding written opinion, if any.

[(Emphasis added).]

Rule 1:3-4(c) prohibits "the parties" and "the court" from enlarging the twenty-day time restriction in Rule 4:49-2.

Here, the motion judge found the emphasized language in Rule 4:49-2 "ambiguous" because the judge believed he was transmitting his final judgment in the form of a letter-opinion "simultaneously" to the attorneys representing both parties. We disagree. In analyzing the time restrictions in Rule 4:49-2, the motion judge did not distinguish between a letter-opinion and "a judgment or order." The motion practice in the Special Civil Part is governed by an interplay between the rules governing civil actions in the Law Division under Part IV of the Rules Governing the Courts of the State of New Jersey, and those governing civil actions in the Special Civil Part under Part VI.

Rule 6:6-1 lists the Law Division rules under Part IV that are applicable to civil actions cognizable in the Special Civil Part5 in the judgment phase. As it relates to this case, Rule 6:6-1 provides, Rules "4:48 to 4:50, inclusive, shall apply to the Special Civil Part." Furthermore, Rule 6:3-3(c)(1) to (6) imposes a series of additional procedural requirements that are unique to motion practice in the Special Civil Part. As it relates to the issue raised in this case, Rule 6:3-3(c)(6) requires "[t]he party seeking an order under this rule shall submit a proposed form of order with the moving papers."

Despite this clear requirement, neither party submitted a proposed form of order with their cross-motions seeking summary judgment. Based on the record before us, we conclude the May 6, 2014 letter-opinion granting plaintiff's motion for summary judgment was erroneously treated by the motion judge as an order granting summary judgment to plaintiff, which was thereafter entered on the Judiciary Electronic Filing System (JEFIS) by the Clerk of the Special Civil Part of the vicinage. The record also shows the motion judge mailed a copy of the May 6, 2014 letter-opinion to both parties simultaneously. The motion judge's misapprehension regarding the procedural significance of the letter-opinion affected his analysis of the twenty-day restriction in Rule 4:49-2. We thus conclude defendant's June 11, 2014 motion for reconsideration was timely filed because the twenty-day time restriction in Rule 4:49-2 starts to run only "after service of the judgment or order upon all parties by the party obtaining it."6

The remaining arguments raised by the parties attacking the motion judge's July 22, 2014 order lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). The record supports the judge's decision to grant defendant a $1700 credit for the payment of the May 2013 rent. We affirm substantially for the reasons expressed by the judge in his July 8, 2014 letter-opinion.

Affirmed.

1 Although the lease extension document states the monthly rent is $1800, the record supports the motion judge's finding the parties agreed to reduce the rent to $1700 per month. More importantly, neither party has raised this discrepancy as a material fact in dispute precluding summary judgment.

2 In S.D.G., we construed the common law rule requiring a commercial month-to-month tenant to give written notice to the landlord of his or her intention to vacate the premises at least one month before he or she actually vacates. supra, 178 N.J. Super at 413. In that case, the tenant notified the landlord on November 16, 1976, he intended to vacate on November 30, 1976. Id. at 414. The trial judge voided the notice and held the tenant liable for the lost rent until the landlord found a new tenant. Ibid. We reversed. Writing for the panel, Judge Pressler held

We are . . . satisfied that the common-law rule which refers the effective date of the late notice of vacation to the end of the next ensuing monthly period is eminently sound as a matter of public policy, common sense and customary practice. We do not believe that any legitimate interest would be served by penalizing a month-to-month tenant for his late notice by subjecting him to indefinite liability for rent in the event of the landlord's inability to relet. Certainly, such a penalty is beyond the legitimate expectations of the landlord who must be assumed to know that his month-to-month tenant can leave at any time without liability, provided one full month's notice is given.

[Id. at 415 (footnote omitted).]

3 The motion judge disallowed plaintiff's application to include counsel fees incurred in prosecuting the landlord-tenant action. The judge held plaintiff cannot be considered a "prevailing party" when the dispute was "amicably resolved by the parties."

4 The standard of review established in D'Atria, by our colleague Judge Jonathan Harris when he sat in the Chancery Division, has been adopted without modification by this court and consistently followed since its publication. See Medina v. Pitta, 442 N.J. Super. 1, 18 (App. Div.) certif. denied, 223 N.J. 555 (2015); Lahue v. Pio Costa, 263 N.J. Super. 575, 598 (App. Div.), certif. denied, 134 N.J. 477 (1993).

5 Rule 6:1-2 describes the matters which are cognizable in the Special Civil Part.

6 Given our resolution of this appeal, we do not address any relief that may be available to defendant under Rule 4:50-1.