ARTRE SOURCES, LLC v. HARTZ CARPET II LIMITED PARTNERSHIP
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0402-16T3
ART RESOURCES, LLC,
Plaintiff-Appellant,
v.
HARTZ CARPET II LIMITED
PARTNERSHIP,
Defendant-Respondent.
________________________________
HARTZ MOUNTAIN ASSOCIATES,
Plaintiff-Respondent,
v.
ART RESOURCES, LLC,
Defendant-Appellant.
________________________________
Argued January 22, 2018 – Decided June 4, 2018
Before Judges Sabatino, Ostrer, and Whipple.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket Nos., L-
5766-13 and L-5349-13.
Walter J. Fleischer, Jr. argued the cause for
appellant (Drinker Biddle & Reath, LLP,
attorneys; Walter J. Fleischer, Jr., on the
briefs).
Joseph M. Aronds argued the cause for
respondents (Horowitz, Rubino & Patton,
attorneys; Joseph M. Aronds, of counsel and
on the brief).
PER CURIAM
Plaintiff Art Resources, LLC, appeals from an August 25, 2016
judgment after a bench trial, where the trial court found for
plaintiff on some counts, for defendant Hartz Mountain
Associates/Hartz Carpet II Limited Partnership1 on other counts,
and reversed a prior finding of summary judgment. Because we find
the trial judge did not give the parties notice he would be
revisiting the issue previously decided by summary judgment, we
reverse and remand for a new hearing on the issues of unlawful
detainer and trespass, for a proper determination of rent due to
Hartz, and for the consideration of the appropriate attorney's
fees due.
I.
Art Resources operates a business selling high-end imported
rugs wholesale. Hartz is a commercial landlord who owned and
1
Hartz Mountain Associates is an affiliate of Hartz Carpet II
Limited Partnership. For ease of reference, we refer to Art
Resources, LLC as "Art Resources", and both Hartz organizations
collectively as "Hartz."
2 A-0402-16T3
leased Art Resources a space in its building at 100 Park Plaza
Drive in Secaucus.
Beginning September 1, 2007, and expiring August 31, 2009,
Art Resources and Hartz entered a two-year term lease; this was
extended to end on August 31, 2013. In 2011, Hartz gave notice
to their tenants they intended to repurpose the building; in 2013
Art Resources considered various locations but struggled to find
one suitable for its uses.
Hartz began seeking bids for demolition of the building in
July 2013, with the goal to have the work completed before December
1, 2013. Interior demolition began in August 2013.
On July 24, 2013, Hartz terminated Art Resources' lease by
issuing a notice to quit and demand for possession. In August
2013, Hartz representatives informed Art Resources it was in
default and that it owed unpaid rent, fees, and costs.
Hartz sent a general letter on August 14, 2013 to all tenants,
offering to relocate any who had not yet found a new location. It
offered space at its other building, 50 Enterprise Avenue, free
of charge through the end of September, provided that the tenant
supplied its own security and signed a short-term lease.
According to an email dated August 22, 2013, the manager of
Art Resources' store informed Hartz it might not be able to move
out on time. In response, Hartz offered space at 50 Enterprise
3 A-0402-16T3
Avenue; however, after Art Resources looked at the offered location
and expressed interest, Hartz informed Art Resources the space was
no longer free and offered a unit at 40 Enterprise Avenue instead.
In an email dated August 28, 2013 Art Resources indicated to
Hartz it believed it was entitled to remain on the Park Plaza
Drive property at a holdover rate of twice the rent, citing a
clause in the lease. The next day, Art Resources emailed Hartz
stating that the space at 40 Enterprise Avenue would not work for
its purposes, due to the difficulty and high cost of security.
On August 31, 2013, Hartz locked Art Resources out of the
building. There was no constable present, Hartz had not sought
court approval before changing the locks, and had also padlocked
the construction fence around the outside of the property.
On the morning of September 3, 2013, Art Resources' store
manager and another employee went to the location, where a Hartz
employee denied them access. On September 4, 2013, Art Resources
sent Hartz a check for $9386.66, the amount Art Resources would
owe as a holdover tenant into September; Hartz did not cash the
check and instead returned it to Art Resources.
On September 6, 2013, Hartz moved Art Resources' inventory,
including carpets, furniture, shelving, a laptop, and boxes, to
40 Enterprise Avenue and notified Art Resources it had done so.
That same day, Art Resources filed a complaint and order to show
4 A-0402-16T3
cause against Hartz, seeking a temporary restraining order to
restore Art Resources to possession of the original leased
premises.
On September 9, 2013, the parties appeared before a judge of
the Chancery Division, who found Hartz had not given notice to Art
Resources the inventory would be moved, and should not have locked
Art Resources out without a hearing. The judge ordered defendant
to restore the "status quo" and "restore [Art Resources] to
whatever they had prior to [Hartz's] removal of the premises," and
entered an order to show cause with temporary restraints.
On September 10, a Secaucus building inspector deemed the
property unsafe, and issued a notice of unsafe structure. Later
that day, Hartz requested a stay of the order from the day before.
However, the judge viewed the inspection as a way to "runaround
his order," stating, "[Art Resources is] entitled to a hearing.
I have already determined that. If you don’t agree with my
decision, you appeal it. You don't go to the construction official
and ask for an inspection." Despite this, he issued an order
staying the previous decision, "on the condition that Hartz
immediately provide appropriate and comparable premises to [Art
Resources] at which [Art Resources] can operate its business
without interruption." On September 16, 2013 Art Resources moved
into the space at 40 Enterprise Avenue.
5 A-0402-16T3
Art Resources filed a complaint on September 18, 2013,
alleging breach of contract; illegal lockout; forcible entry and
detainer; distraint of Art Resources' personal property;
conversion; trespass; violation of
N.J.S.A. 2A:18-72; breach of
duty of good faith and fair dealing; and violation of the New
Jersey Consumer Fraud Act (CFA),
N.J.S.A. 56:8-1 to -20.
On September 27, 2013, Hartz sent Art Resources a notice to
quit and demand for possession of 40 Enterprise Avenue, requiring
Art Resources to vacate the premises by October 31; Hartz also
sent a letter seeking the October 2013 rent and utility payments
for 40 Enterprise Avenue.
On October 7, 2013, Hartz Mountain Associates filed a
complaint in the Special Civil Part for landlord/tenant matters,
making no mention of any prior related court proceedings, seeking
unpaid rent and utilities under "an oral agreement." On October
8, 2013, Hartz Carpet II Limited Partnership filed a complaint in
the Special Civil Part for landlord/tenant matters, making no
mention of related court proceedings, asserting Art Resources was
a holdover tenant.
Art Resources vacated the premises at 40 Enterprise Avenue
on November 1, 2013.
6 A-0402-16T3
On November 15, 2013, Hartz Mountain Associates filed a
complaint in the Law Division against Art Resources for unpaid
rent owed for October 2013.
In December 2013, the court entered an order transferring the
Chancery matter to the Law Division and dismissing the September
9 order to show cause with temporary restraints. It also issued
an order vacating certain of Art Resources' claims for failure to
state a claim. In January 2014, both Law Division matters were
consolidated.
On May 1, 2015, the Law Division judge granted in part Art
Resources' motion for summary judgment, finding against Hartz for
breach of contract, illegal lock-out, and forcible entry. At the
same time, the judge denied Hartz's motion for summary judgment
in its entirety.
On October 13, 2015, after a bench trial, a different Law
Division judge issued a written decision finding for Art Resources
on breach of duty of good faith and fair dealing and the CFA
claims. The judge found in favor of Hartz in its claim for unpaid
rent for September 2013, and on the trespass claim, but also
granted Art Resources credit for rent overpaid in the previous
building.
Additionally, without any prior notice to the parties, the
judge reversed the prior judge's summary judgment determination
7 A-0402-16T3
in Art Resources' favor regarding the claim of forcible entry and
detainer. Noting the previous judge had a limited record and
opining that justice required a different result, he found the
requisite threat of force was not present to allow a cause of
action for forcible entry and detainer.
The judge entered judgment for Art Resources for compensatory
damages, including treble damages under the CFA, plus attorney's
fees and costs. Judgment was also entered in favor of Hartz in
the amount of $9386.66 for unpaid rent covering the period of time
Art Resources occupied the original premises pursuant to the order
imposing temporary restraints.
Art Resources' motion for reconsideration was denied on
October 29, 2015. On August 8, 2016, the court found Art Resources
was entitled to $71,266.30 in attorney's fees and costs, out of
the $422,036.50 requested. Final judgment for Art Resources was
entered on August 25, 2016. This appeal followed.2
II.
Art Resources argues that by reversing the previous judge's
grant of summary judgment on the forcible detainer claim without
2
Hartz has already paid the judgment, and has not appealed.
However, as the only "outcome could serve to increase but not to
reduce the amount of the judgment," Art Resources is not barred
from pursuing an appeal. Adolph Gottscho, Inc. v. American Marking
Corp.,
26 N.J. 229, 242 (1958).
8 A-0402-16T3
warning the parties he might revisit the determination, the trial
judge deprived it of the opportunity to argue against the
reconsideration. We agree.
"It is well established that 'the trial court has the inherent
power to be exercised in its sound discretion, to review, revise,
reconsider and modify its interlocutory orders at any time prior
to the entry of final judgment.'" Lombardi v. Masso,
207 N.J.
517, 532 (2011) (quoting Johnson v. Cyklop Strapping Corp.,
220 N.J. Super. 250, 257 (App. Div. 1987)). Additionally, under Rule
4:42-2, "any order or form of decision which adjudicates fewer
than all the claims as to all parties . . . shall be subject to
revision at any time before the entry of final judgment." "[A]
party's sense of finality upon summary judgment is just that -- a
feeling unsupported by the notion of what is, in fact,
interlocutory. Interlocutory orders are always subject to
revision in the interests of justice." Lombardi,
207 N.J. at 535-
36. Therefore, as a judge retains the power to revise an
interlocutory order, the revision here was within the trial judge's
authority.
However, parties must have a fair opportunity to be heard on
the matter being reconsidered. Id. at 537. Unlike in Lombardi,
where the judge initially warned all of the parties of his
intentions to revisit a previously closed issue, and then held a
9 A-0402-16T3
full hearing on the matter,
207 N.J. at 522, the judge here simply
reversed the summary judgment order without indicating ahead of
time that he might do so. Further, the judge here did not revisit
the order of his own volition; he reversed at the urging of Hartz
in a post-trial memorandum. While, presumably, Art Resources was
aware Hartz had requested the judge to revisit the matter, the
trial judge then never gave Art Resources any notification that
he would be reconsidering the issue.
As such, the parties were not given a proper opportunity to
be heard. Therefore, we reverse the finding on the forcible
detainer issue and remand for the trial judge to hold a hearing
where Art Resources has the opportunity to present evidence on the
issue of forcible detainer under
N.J.S.A. 2A:39-1.3 Pending the
outcome of this hearing, the issue of common law trespass should
likewise be revisited.4
3
Because we reverse and remand for further proceedings, we do
not address the propriety of the judge's application of
N.J.S.A.
2A:39-1.
4
The judge determined there was no trespass because (1) the
violence required under in Mesgleski v. Oraboni,
330 N.J. Super. 10, 28 (App. Div. 2000), was not present; (2) Art Resources was a
tenant at sufferance, thus excusing Hartz's actions; and (3) Art
Resources was barred by the economic loss doctrine.
Based upon our review of the record we cannot determine
whether the judge was correct. It is not clear that actual
violence is an essential element of the tort of trespass,
10 A-0402-16T3
Based on the same grounds set forth above, Art Resources
argues the trial judge erred by denying its motion for
reconsideration. Motions for reconsideration should not be used
"merely because of dissatisfaction with a decision of the Court."
D'Atria v. D'Atria,
242 N.J. Super. 392, 401 (Ch. Div. 1990). A
litigant must show the court acted in "an arbitrary, capricious,
or unreasonable manner, before the Court should engage in the
actual reconsideration process." Ibid. "Reconsideration should
be utilized only for those cases which fall into that narrow
corridor in which either 1) the Court has expressed its decision
based upon a palpably incorrect or irrational basis, or 2) it is
obvious that the Court either did not consider, or failed to
appreciate the significance of probative, competent evidence."
Ibid. Here, as the judge erred by reversing the prior summary
judgment finding without giving Art Resources the opportunity to
be heard in opposition, we find the denial of reconsideration to
Art was made on "a palpably incorrect or irrational basis," and
notwithstanding the rule as stated in Mesgleski. See Pinkowski
v. Twp. of Montclair,
299 N.J. Super. 557 (App. Div. 1997)
(citation omitted) (defining trespass as "the unauthorized entry
onto another's property, real or personal"); see also Ross v.
Lowitz,
222 N.J. 494, 510 (2015) (citation omitted) (defining
trespass as "an intentional entry onto another's land, regardless
of harm").
11 A-0402-16T3
we reverse the denial of the motion for reconsideration on the
issue of unlawful detainer.
III.
Art Resources argues the trial court erred by awarding Hartz
damages on its counterclaim for rent accrued by Art Resources'
stay at 40 Enterprise Avenue for the month of October 2013, and
by finding against Art Resources on its trespass claim. This
court applies a deferential standard to the review of "the findings
and conclusions of a trial court following a bench trial" as the
trial court "heard the witnesses, sifted the competing evidence,
and made reasoned conclusions." Allstate Ins. Co. v. Northfield
Med. Ctr., P.C.,
228 N.J. 596, 619 (2017) (quoting Griepenburg v.
Township of Ocean,
220 N.J. 239, 254 (2015)). "Reviewing appellate
courts should not disturb the factual findings and legal
conclusions of the trial judge unless convinced that those findings
and conclusions were so manifestly unsupported by or inconsistent
with the competent, relevant and reasonably credible evidence as
to offend the interests of justice." Ibid. (internal citations
omitted).
Under a theory of quantum meruit, the trial judge found Hartz
was entitled to payment for the unpaid rent. The judge took notice
that "there was no lease negotiated for this space, and specific
rent was not negotiated – although a rental obligation was
12 A-0402-16T3
acknowledged by Art Resources' counsel in an October 1, 2014
letter."
"Quantum meruit is a form of quasi-contractual recovery and
'rests on the equitable principle that a person shall not be
allowed to enrich himself unjustly at the expense of another.'"
Starkey v. Estate of Nicolaysen,
172 N.J. 60, 68 (2002) (quoting
Weichert Co. Realtors v. Ryan,
128 N.J. 427, 437 (1992)). "To
recover under a theory of quantum meruit, [Hartz] must establish:
(1) the performance of services in good faith, (2) the acceptance
of the services by [Art Resources], (3) an expectation of
compensation therefor, and (4) the reasonable value of the
services." Starkey,
172 N.J. at 68 (citations omitted). As a
conclusion of law, a finding under the theory of quantum meruit
is reviewed de novo by this court. Allstate Ins. Co,
228 N.J. at
619.
While the premises were delivered pursuant to a court order,
it is undisputed that Hartz conferred upon Art Resources a benefit
by providing access to 40 Enterprise Avenue from the middle of
September through November 1, and that Art Resources accepted this
benefit by making use of the premises during that time. It is
also not irrational for Hartz to expect reasonable compensation
from Art Resources during that time. While they had extended an
offer to their tenants to provide space free of charge, this offer
13 A-0402-16T3
was only to last through the end of September, and was contingent
on the tenant supplying their own security and signing a short-
term lease.
In calculating the "reasonable value of the services," the
trial court reasoned "if Art Resources had been restored to the
[original premises] and since the lease had been terminated, . .
. equity (and the express terms of the lease) would require a
payment of double the fixed rent or $9386.66." However, this
requirement would have been pursuant to the lease applicable to
the original premises, which Hartz locked them out of. As the
judge noted, there was no lease or agreed-upon rental payment for
40 Enterprise Avenue. As such, the "reasonable value" of the
services should have been the reasonable monthly rental value for
that space at that time, not a contractually agreed-upon holdover
rate for an entirely different location. Therefore, we reverse
the trial judge's award of $9386.66 to Hartz, and remand for a
determination of the proper rental value for the space in October
2013. As stated previously, in Section II, supra, the trespass
claim should be revisited as well.
IV.
Art Resources argues the trial judge erred by reducing its
requested legal fees. "[F]ee determinations by trial courts will
be disturbed only on the rarest of occasions, and then only because
14 A-0402-16T3
of a clear abuse of discretion." Rendine v. Pantzer,
141 N.J.
292, 317 (1995). A court abuses its discretion "when a decision
is made without a rational explanation, inexplicably departed from
established policies, or rested on an impermissible basis." Flagg
v. Essex Cty. Prosecutor,
171 N.J. 561, 571 (2002) (citation
omitted).
"The starting point in awarding attorneys' fees is the
determination of the 'lodestar,' which equals the 'number of hours
reasonably expended multiplied by a reasonable hourly rate.' Furst
v. Einstein Moomjy, Inc.,
182 N.J. 1, 21 (2004) (quoting Rendine,
141 N.J. at 335). In considering the rate submitted, the court
should look to the prevailing market rate in the community and
ensure the rate is "fair, realistic, and accurate, and should make
appropriate adjustments." Rendine,
141 N.J. at 337. Further,
under the New Jersey Rules of Professional Conduct, "[a] lawyer's
fee shall be reasonable," and shall be determined by the
consideration of a number of factors. Rules of Professional
Conduct, (RPC) 1.5(a).
The court here undertook a full analysis of the fee
application submitted by Art Resources, and determined a
reasonable rate in light of the prevailing market rates in the
community. It then determined that a number of hours spent by Art
Resources' attorneys were "excessive, unnecessary, or duplicative"
15 A-0402-16T3
and eliminated them from consideration. There has been no showing
that this was an abuse of discretion. See Furst,
182 N.J. at 22
("The court must not include excessive and unnecessary hours spend
on the case in calculating the lodestar.") (citations omitted).
Lastly, the trial court determined that since, out of the nine
claims brought to trial, Art Resources prevailed on only three,
or one-third, it was reasonable to decrease the lodestar
accordingly, and granted Art Resources one-third of their
requested fees, plus costs. This too, was not an abuse of
discretion. See ibid. ("[A] trial court should decrease the
lodestar if the prevailing party achieved limited success in
relation to the relief he had sought.") (citations omitted).
On its face, we see no reason to disturb the trial court's
award of attorney's fees. However, our determination that the
unlawful detainer, trespass, and reimbursement of rent claims must
be revisited may necessitate a new look at the attorney's fees,
as it would change the level of "success in relation to the relief
. . . sought." Ibid.
Given the deferential standard applied by this court, the
remainder of the issues Art Resources raises on appeal do not
warrant reversal, or discussion in a written opinion, as they are
supported by sufficient credible evidence in the record. R. 2:11-
3(e)(1)(E).
16 A-0402-16T3
Affirmed in part, reversed and remanded in part for further
proceedings consistent with this opinion. We do not retain
jurisdiction.
17 A-0402-16T3
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