Opinion
DOCKET NO. A-3272-13T3
05-11-2015
COLEMAN BROTHERS REALTY, LLC, Plaintiff-Respondent/Cross-Appellant, v. ACINO PRODUCTS, LLC, and RAVI DESHPANDE, Defendants-Appellants/Cross-Respondents.
Joel D. Rosen, attorney for appellants/cross-respondents. Destribats Campbell, LLC, attorneys for respondent/cross-appellant (Brian J. Duff, on the briefs).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Gilson. On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-001195-09. Joel D. Rosen, attorney for appellants/cross-respondents. Destribats Campbell, LLC, attorneys for respondent/cross-appellant (Brian J. Duff, on the briefs). PER CURIAM
This appeal by a commercial tenant, and the cross-appeal by the tenant's landlord, arise out of a series of decisions by the trial court in connection with the termination of the tenancy and various competing claims for monetary and other relief. For the reasons that follow, we affirm.
I.
We glean the following pertinent facts and procedural history from the record. Plaintiff Coleman Brothers Realty, LLC ("CBR") is the owner of a warehouse and office building in Hamilton Township in Mercer County. Defendant Acino Products, LLC is a manufacturer of generic pharmaceutical products. Co-defendant Ravi Deshpande is a managing member of Acino.
We shall use the terms "Acino" or "defendants" to refer collectively to both defendants, unless the context indicates otherwise.
In January 2004, CBR and Acino entered into a five-year lease by which Acino would occupy the Hamilton property effective April 1, 2004. Acino agreed under the lease to pay CBR a monthly "basic rent," plus what was termed "additional rent" for its proportionate share of utilities, taxes, sewer costs, maintenance costs, insurance premiums, and similar charges. The lease provided in paragraph 35 that if Acino failed to comply with the terms of the lease, CBR could recoup from Acino its costs to comply, including reasonable attorney's fees.
After the lease term began, Acino allegedly encountered difficulties in adapting the premises to its needs. According to Acino, there was a delay of several months in procuring a certificate of occupancy for the premises, and also in gaining approval from the Food and Drug Administration to conduct drug manufacturing on site.
Acino fell behind in the monthly rent. That prompted CBR to bring an initial summary dispossess action in the Special Civil Part. That first summary dispossess action was resolved through a February 5, 2007 Consent Order for Entry of Judgment of Possession (the "Consent Order"), which was negotiated by counsel for both sides.
The Consent Order recited the following terms:
1. Judgment for possession shall be entered as of the date of the court's entry of this consent order.
2. The amount in arrears is acknowledged to be $18,729.29.
3. Defendants shall make installment payments on the amount in arrears at the rate of not less than $1,000.00 per month in addition to current rents due under the ongoing lease. The installment payments shall be due on the same date as the rent (i.e., the first day of each month). Said payments of $1,000.00 shall continue until all outstanding arrears are paid in full pursuant to this consent order.
[3.] In the event any installment payment or
current rent is late by 10 days or more, plaintiff shall have the right to issuance of a warrant of eviction upon affidavit of plaintiff's attorney. Defendants reserve the right to contest the factual basis of any such application. In the event any monthly installment is not received by the ninth of the month, plaintiff's attorney will send a written notification by fax to defendants' attorney at [telephone number omitted].The parties' counsel each signed the Consent Order, which bore a heading with the name and address of Acino's attorney. The Special Civil Part judge signed the Consent Order as well.
4. Upon payment in full of the amount in arrears, judgment for possession shall be vacated upon application of the defendants. Plaintiff reserves the right to contest the factual basis of any such application.
5. Plaintiff agrees not to seek or obtain a money judgment against the defendants for any arrears or overdue rent prior to execution of a warrant of eviction. Plaintiff does not waive or release the defendants from any monies which may be due and owing from the defendants for any arrears or overdue rent prior to the execution of the warrant of eviction and should a warrant of eviction issue by the Court, then in that event plaintiff shall be entitled to all of plaintiff's rights and remedies pursuant to the Lease Agreement.
The Consent Order inadvertently labels two successive paragraphs as paragraph "3."
After Acino paid only eleven of the eighteen monthly $1,000 arrears installments due between February 2007 and November 2007 under the Consent Order, CBR filed a second summary dispossess action on March 14, 2008. Acino moved out of the premises in April 2008. According to CBR, the second summary dispossess action was consequently dismissed.
Still claiming that additional amounts were due, CBR filed a civil action against Acino in the Law Division in May 2009 for breach of the lease. Among other things, CBR sought so-called "front rent" from April 2008 through the originally-contemplated end of the lease term on March 31, 2009. In January 2010, CBR filed a contract action in the Special Civil Part seeking unpaid sums due under the Consent Order. The two cases were consolidated in the Law Division.
Acino filed a counterclaim, asserting a right of offset because of CBR's alleged delay in providing the premises in habitable condition at the outset of the lease, including the lack of electricity, gas heat, and working bathroom facilities. Acino sought monetary damages, including lost profits from its manufacturing business, due to Acino's alleged inability to fill customer orders until September 2004.
Both parties cross-moved for summary judgment. After hearing oral argument, the trial court issued an oral decision on June 2, 2011. The court granted Acino summary judgment dismissing CBR's claim for front rent, concluding that CBR had no right to collect rent for the remainder of the lease term after Acino vacated the premises. The court reasoned that the Consent Order had converted the arrangement into a month-to-month tenancy after February 5, 2007. Additionally, the court dismissed Acino's counterclaim with prejudice under entire controversy principles, holding that Acino's failure to bring its claims for damages earlier in the previous Special Civil Part lawsuits barred Acino from pursuing those claims in the consolidated Law Division action. The parties thereafter stipulated that Acino would pay CBR an unallocated sum of $29,590.29 for unpaid back rent and additional rent through the month of Acino's departure in April 2008.
CBR subsequently moved to recover counsel fees under paragraph 35 of the lease. Acino opposed that fee application. After considering the fee issue, the Presiding Judge of the Chancery Division issued a written decision dated January 8, 2014. The Presiding Judge ruled that CBR was not entitled to its fees attributable to the Special Civil Part proceedings because the February 5, 2007 Consent Order operated to resolve all outstanding issues arising in that case. The Presiding Judge further ruled that CBR was not entitled to fees incurred in the subsequent Law Division action because CBR had been unsuccessful in its claim for "front rent" in that case.
The original motion judge was no longer serving in the trial court by that point. The Presiding Judge of the Chancery Division apparently was assisting the Law Division in hearing this Law Division case.
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Acino now appeals the dismissal of its counterclaim. CBR cross-appeals the denial of its claims for front rent and counsel fees.
II.
We review de novo the trial court's order granting summary judgment to Acino on CBR's front rent claims. Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014). In doing so, we afford CBR as the non-moving party the benefit of all reasonable inferences from the record, determining whether the trial court correctly found that there were no genuine material issues of fact on those claims and that Acino was entitled to have them dismissed as a matter of law. See R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Likewise, we apply a de novo review standard to the dismissal of Acino's claims for non-compliance with the entire controversy doctrine. See Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005); Walker v. Choudhary, 425 N.J. Super. 135, 151 (App. Div.), certif. denied, 211 N.J. 274 (2012) (analogously applying a de novo standard of review to the trial court's application of principles of res judicata).
Having examined de novo the record as a whole in light of the applicable law, we are satisfied that the original motion judge did not err in denying relief to either of the parties on their affirmative claims. We do so substantially for the reasons articulated in the motion judge's June 2, 2011 oral opinion, albeit with one slight variation in the analysis.
The trial court properly invoked principles of entire controversy to bar Acino from pursuing a counterclaim for damages associated with Acino's initial occupancy of the premises. The court rightly found that Acino should have pursued those claims sooner, before CBR filed its third lawsuit in May 2009. Acino never attempted to raise its counterclaim in the summary dispossess filed against it in 2007.
We are mindful, as was the motion judge, that Rule 6:3-4(a) disallows the filing of a counterclaim in a summary dispossess action. However, as the judge also recognized, Acino could have moved under N.J.S.A. 2A:18-60 to transfer the case to the Law Division on the basis that the counterclaim was "of sufficient importance" to be litigated at the same time as the summary dispossess action. See also R. 6:4-1(g); Morrocco v. Felton, 112 N.J. Super. 226, 235 (Law Div. 1970). No such attempt was made here.
The February 2007 Consent Order, which was on a form apparently drafted by or with the participation of Acino's counsel, made no mention of Acino's desire to preserve a right to pursue a counterclaim, even though the events that produced Acino's alleged losses when it moved into the premises had already occurred. By contrast, the Consent Order in paragraph 5 explicitly preserved CBR's own ability to seek additional "rights and remedies" under the lease. Under these circumstances, we discern no unfairness in the trial court's decision precluding Acino's late attempt to plead and litigate its claims that arose at a much earlier time.
The entire controversy doctrine, as codified in Rule 4:30A, requires all parties to an action to raise all transactionally-related claims in that action. R. 4:30A; see also Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:30A (2015). "Underlying the [e]ntire [c]ontroversy [d]octrine are the twin goals of ensuring fairness to parties and achieving economy of judicial resources." Kent Motor Cars, Inc. v. Reynolds & Reynolds, Co., 207 N.J. 428, 443 (2011). The Supreme Court has articulated the goals of the doctrine to include "the needs of economy and the avoidance of waste, efficiency and the reduction of delay, fairness to parties, and the need for complete and final disposition through the avoidance of 'piecemeal decisions.'" Ibid. (quoting Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989)).
The court, rather than the parties, retains the ultimate authority to control the joinder of parties and claims. Kent Motor Cars, supra, 207 N.J. at 446. Application of the entire controversy doctrine is "'left to judicial discretion based on the factual circumstances of individual cases.'" Oliver v. Ambrose, 152 N.J. 383, 395 (1998) (quoting Brennan v. Orban, 145 N.J. 282, 291 (1996)). The doctrine's joinder requirements may be relaxed on the grounds of "equitable considerations." Id. at 395. We agree with the motion judge that such equitable considerations here did not warrant allowing Acino's belated counterclaim. See, e.g., Luppino v. Mizrahi, 326 N.J. Super. 182, 184-87 (App. Div. 1999) (holding that the tenants' failures to bring counterclaims for the return of their security deposits in two prior actions by the landlord for possession and past due rent barred their subsequent suit in the Special Civil Part to recover those deposits).
We are unpersuaded that Cafferata v. Peyser, 251 N.J. Super. 256 (App. Div. 1991), a case cited in Acino's brief, compels reversal in this case. In Cafferata, a patient and his wife had settled, self-represented, a collection action brought by their physicians for unpaid medical bills. Id. at 259. The patient and his wife, who were by that point represented by counsel, subsequently brought a medical malpractice complaint against the physicians in the Law Division. Ibid. We held that the medical malpractice action was not foreclosed under entire controversy principles, particularly emphasizing the unrepresented status of the patient and his wife in the collection action and the related settlement conference. Id. at 261-62.
By contrast here, Acino was represented by able counsel in the prior Special Civil Part proceedings and in the negotiation of the Consent Order. In addition, as we have already noted, there was a recognized mechanism by which Acino could have sought the transfer of a summary dispossession case to the Law Division to enable a tenant's counterclaim arising out of related tenancy issues. Cafferata is distinguishable because the scope and substance of a physician's collection action against a patient for unpaid bills and a medical malpractice action involving professional standards of care and causation are manifestly different in many respects. For these reasons, we affirm the dismissal of Acino's counterclaim.
On the flip side, the trial court's dismissal of CBR's claims for front rent also was sound. We do not adopt the motion judge's specific finding that Acino's tenancy converted to a month-to-month arrangement once the Consent Order was signed. As we read the Consent Order, Acino would have been entitled to continue to occupy the leasehold for the remainder of the five-year term, so long as it paid the agreed-upon $1,000 in monthly arrears, the regular monthly rent, and the additional rent charges in a timely manner. Even so, CBR's right to collect any additional rent expired after CBR filed its second summary dispossess action in March 2008 and Acino vacated the premises in April 2008. If Acino had not vacated voluntarily, CBR undoubtedly would have proceeded in the second dispossess action to pursue immediate possession of the premises by virtue of Acino's breach of the Consent Order that granted it a final judgment of possession.
In either event, CBR had resumed physical and legal control of the premises as of April 2008, and presumably could have sought to lease the property to another tenant at that point. It is well established that a judgment of possession terminates a tenancy and thus terminates the parties' obligations under a lease. Musselman v. Carroll, 289 N.J. Super. 549, 555 (App. Div. 1996).
Lastly, we briefly address CBR's appeal of the Presiding Judge's denial of its counsel fee claim. The judge correctly reasoned that the counsel fee claim associated with Acino's failure to pay the "additional rent" due should have been pursued in the Special Civil Part litigation, and it was not. The Consent Order resolving that litigation and the so-called "back rent" issues eliminated CBR's opportunity to pursue such past-incurred counsel fees. In addition, the judge correctly recognized that CBR had been unsuccessful on its claim for "front rent."
The trial court did not err in rejecting CBR's fee claim in its entirety, particularly in light of the considerable discretion we accord to trial judges with respect to fee-shifting requests. See, e.g., Rendine v. Pantzer, 141 N.J. 292, 316-17 (1995) (recognizing the discretion commonly exercised by trial judges in deciding counsel fee applications); see also Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009).
On the whole, we conclude that the trial court's various rulings which the parties appealed were consistent with the governing law and with the record. The court reached a net outcome here for both sides that was essentially fair, one which does not warrant appellate intervention.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION