LT PROPCO, LLC v. WESTLAND GARDEN STATE PLAZA LIMITED PARTNERSHIP

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2529-09T1

LT PROPCO, LLC,

Plaintiff-Appellant,

v.

WESTLAND GARDEN STATE PLAZA

LIMITED PARTNERSHIP AND BOROUGH

OF PARAMUS PLANNING BOARD,

Defendants-Respondents.

_________________________________

December 28, 2010

Argued: November 4, 2010 - Decided:

Before Judges Cuff, Sapp-Peterson and Fasciale.

On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-217-09.

John R. Edwards, Jr., argued the cause for appellant (Price, Meese, Shulman & D'Arminio, P.C., attorneys; Gail L. Price and Kathryn J. Razin, on the brief).

Matthew H. Adler argued the cause for respondent Westland Garden State Plaza Limited Partnership (Pepper Hamilton, LLP, and Stephen P. Sinisi, LLC, attorneys; Mr. Adler, Michael T. Pidgeon, and Suvarna Sampale, of counsel and on the brief).

PER CURIAM

This case involves a lease dispute between plaintiff subtenant LT Propco, LLC (Propco) and a commercial landlord, defendant Westland Garden State Plaza Limited Partnership (Westland). Propco appeals from Judge Peter Doyne's January 5, 2010 order that dismissed its first amended complaint pursuant to Rule 4:6-2(e), and denied its motion to file a second amended complaint. Judge Doyne determined that Propco had no standing to sue Westland due to lack of privity. We agree and affirm.

Westland leased property in the Garden State Plaza Mall to The May Department Store Company (May Stores).1 The lease term was for twenty years with an option to extend. Section 19.2 of the lease required May Stores to operate a:

specialty [] retail department store . . . under the trade name of 'Lord & Taylor' or under such other name as is then being used in conjunction with a majority of the stores operating in the 'Metropolitan New York Area' . . . now operated by the division known as Lord & Taylor.

Lord & Taylor was not a freestanding company when the Lease was executed; it was a division of May Stores.

Other than Westland and May Stores, no other party is a beneficiary of the Lease. Section 41.22 of the Lease provided that:

This Lease is made for the exclusive benefit of the parties hereto and to their successors and assigns (except to the extent limited by the specific terms of this Lease), and nothing herein contained shall be deemed to confer upon any other Person than the parties hereto, and such successors and assigns, any rights or remedies by reason of this Lease.

The Lease provided that May Stores had expansion rights of up to 65,000 square feet of retail space (Section 42.2), and entitled May Stores to withhold consent to any parking plan that decreased the number of parking spots guaranteed by Westland (Section 21).

Section 26.4 of the Lease entitled May Stores to sublet the premises and stated in part that:

[t]enant shall have the right . . . to assign or sublease this lease to an entity which, in conjunction with such assignment or sublease, acquires a majority of the then existing stores in the metropolitan New York area now operated by the division known as Lord & Taylor.

On October 2, 2006, Federated (formerly May Stores) sublet the premises to Propco for a five-year term, or until October 1, 2011. In 2006, Propco acquired the Lord & Taylor division from Macy's and continued to operate the Lord & Taylor retail store. The Sublease recognized that there is no privity of contract between Westland and Propco. Paragraph seven of the Sublease stated in part that:

Subtenant [Propco] acknowledges that Sublandlord [Federated] is not obligated to provide services hereunder; however, since Prime Landlord [Westland] and Subtenant do not have privity of contract under this Sublease . . . Sublandlord shall . . . enforce . . . Sublandlord s rights to cause Landlord to provide such services, repairs or replacements as Landlord is obligated to provide under the Prime Lease.

The Sublease provided that Propco, for the payment of a separate fee and execution of additional documents, had the right to take the Lease by assignment. Paragraph eighteen of the Sublease stated in part that:

Subtenant shall have the right to elect to take, or have its designee take, the Prime Lease by assignment by notice delivered to Sublandlord not earlier than the date the 'Tenant's Operating Covenant' as described in section 19.2 of the Prime Lease expires. Such assignment shall be made pursuant to the form of Lease Assignment and Assumption Agreement . . . and the form of Real Estate Contracts Assignment and Assumption Agreement . . . and shall take effect upon the date that all of the following have occurred: . . . (b) Subtenant has paid to Sublandlord the assignment fee . . . .

Propco did not elect to take the Lease by assignment.

On July 14, 2006, Westland and Macy's (formerly Federated) signed a first amendment to the Lease that provided Westland with the right to construct a new one-level mall addition of, among other things, additional retail space.

On August 29, 2008, Westland filed a land development application (Application) with the Paramus Planning Board (the Board). Westland requested certain relief from the Board to construct a new parking structure and additional retail space. Westland appeared before the Board on six days between February and July 2009. Westland did not notify either Macy's or Propco of the Application, and did not request additional retail space for Lord & Taylor. Through counsel, Propco made an appearance at the hearings before the Board. On July 16, 2009, the Board voted to approve the Application.

On July 13, 2009, Propco filed a verified complaint and order to show cause with temporary restraints. Propco sought to enforce provisions of the Lease between Westland and Macy's. Propco sought to (1) enjoin Westland from proceeding on the Application; (2) compel Westland to withdraw the Application; and (3) compel Wetland to specifically enforce "the terms of the leasehold documents,"2 including the enforcement of its expansion rights of 65,000 square feet on a third level.

On September 15, 2009, Judge Doyne denied the injunctive relief requested by Propco. On September 22, 2009, Propco filed the first amended complaint.3 The verified complaint and first amended complaint cited and quoted extensively to the Lease and Sublease. Westland filed its Rule 4:6-2(e) motion and Propco filed a cross-motion to file a second amended complaint.

Judge Doyne conducted oral argument on December 9, and issued a comprehensive eighteen-page written opinion on December 15, 2009. Relying on the Lease and Sublease specifically referred to in the first amended complaint, Judge Doyne dismissed the contract claims for lack of privity. He found that Propco was not a signatory, assignee, or third-party beneficiary of the Lease. The Sublease allowed for an assignment but Propco never executed the necessary documents or paid the required fee. Judge Doyne explained that Lord & Taylor was only referenced in the Lease because it was a division of May Stores. Lord & Taylor was not a party to the Lease. In concluding that Propco was not a third-party beneficiary of the Lease, Judge Doyne explained that:

There is nothing in the plain language of the [L]ease to indicate [that May Stores and Westland] intended to create independent rights for whoever may one day own Lord & Taylor [Propco]. In fact, the [L]ease specifically prohibits the creation of such rights in the absence of the execution of the documents provided in the assignment provisions of the [L]ease.

Propco's counsel explained to Judge Doyne that the consumer fraud counts were dropped in the proposed second amended complaint, and Judge Doyne dismissed the "protection of future interests" count as non-existent. In denying Propco's motion to file a second amended complaint, Judge Doyne stated that:

[Propco's] counsel conceded [that] the only differences between the amended complaint and the second amended complaint are the abandonment of the claims alleging misrepresentation and violations of the CFA and the expansion of the argument for [Propco's] status as a third party beneficiary. As such, the need for an in depth review of both filed complaints is obviated.

This appeal followed.

On appeal, Propco argues that Judge Doyne misapplied the standards of Rule 4:6-2(e) and erred by finding that Propco was not a third-party beneficiary. We disagree.

"In reviewing a complaint dismissed under Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 746 (1989). "[A] reviewing court 'searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary.'" Ibid. (quoting Di Christofaro v. Laurel Grove Memorial Park, 43 N.J. Super. 244, 252 (App. Div. 1957)).

Rule 4:6-2 provides in pertinent part that:

If, on a motion to dismiss based on [a failure to state a claim upon which relief can be granted], matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion.

Thus, the motion for dismissal "should be based on the pleadings, with the court accepting as true the facts alleged in the complaint." Nat'l Realty Counselors, Inc., v. Ellen Tracy, Inc., 313 N.J. Super. 519, 522 (App. Div. 1998). A court may consider documents referenced in the complaint without converting a motion to dismiss into one for summary judgment. E. Dickerson & Son, Inc. v. Ernst & Young, LLP, 361 N.J. Super. 362, 365 n.1 (App. Div. 2003), aff d, 179 N.J. 500 (2004); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); N.J. Sports Prod. Inc. v. Bobby Bostick Promotions, LLC, 405 N.J. Super. 173, 178 (Ch. Div. 2007).

Our Supreme Court has stated "[i]n evaluating motions to dismiss, courts consider 'allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.'" Banco Popular N. Am v. Gandi, 184 N.J. 161, 183 (2005) (quoting Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir.), cert. denied., 543 U.S. 918, 125 S. Ct. 271, 160 L. Ed. 2d 203 (2004)). "The purpose of this rule is to avoid the situation where a plaintiff with a legally deficient claim that is based on a particular document can avoid dismissal of that claim by failing to attach the relied upon document." Lum, supra, 361 F.3d at 221 n.3. Reliance on a document referenced in a complaint gives a plaintiff notice that it will be considered. Ibid.

Here, Judge Doyne applied properly the standards of Rule 4:6-2(e). We have carefully reviewed the record and the arguments presented by counsel and affirm for the reasons expressed by Judge Doyne in his thorough written opinion.

1 The May Department Store Company subsequently changed its name to Federated Retail Holdings, Inc. (Federated), and then to Macy's Retail Holdings, Inc, (Macy's).

2 Alternatively, Propco sought to enjoin the Board from continuing its review of the Application.

3 The first amended complaint contained six counts: specific performance (count one); breach of contract (count two); breach of implied covenant of good faith and fair dealing (count three); consumer fraud (count four); misrepresentation (count five); and protection of future interests (count six).