Opinion
DOCKET NO. A-3443-14T2
06-01-2016
HANA FINANCIAL INC., Plaintiff-Respondent, v. TONY JONES APPAREL, INC.; JUNG SOOK YI; 5 POINTZ, INC.; BIG BROTHERS SPORTSWEAR, INC.; Defendants, and ESTATE OF MILDRED ROTHMAN, Defendant-Appellant.
Christopher J. Koller, attorney for appellant. Michael W. Song, attorney for respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Espinosa and Currier. On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9077-14. Christopher J. Koller, attorney for appellant. Michael W. Song, attorney for respondent. PER CURIAM
Defendant, Estate of Mildred Rothman (Rothman), appeals the grant of summary judgment in favor of plaintiff, Hana Financial Inc. (Hana), permitting the removal of inventory from Rothman's premises and denying Rothman partial summary judgment seeking payment for "use and occupancy" of its property. For the reasons that follow, we affirm.
I.
Defendant Tony Jones Apparel Inc. (Jones) entered into a lease agreement with Rothman for warehouse and office space. When Jones failed to make its rent payments, Rothman filed a complaint seeking a judgment for possession. The parties subsequently entered into a consent order to enter judgment for possession allowing Jones to remain in tenancy provided it complied with the schedule for the overdue rent payments and stayed current with future payments. When Jones failed to pay the required monies, Rothman filed a certification stating the settlement had been breached and requesting the issuance of a warrant of removal. The warrant of removal was executed and Rothman came into possession of the leased property on October 7, 2014.
II.
Hana, as lender, and Jones, as borrower, executed a factoring, loan, and security agreement in 2006. Hana subsequently perfected its security interest on the assets of Jones by filing a UCC-1 statement. The collateral included the property and assets of Jones located in Rothman's warehouse.
When Jones and its guarantors failed to meet specific payment obligations required by the security agreement, Hana filed a complaint and writ of attachment on September 30, 2014 for the assets and merchandise located in the warehouse.
Jung Hwan Yi and Jung Sook Yi are individual guarantors. 5 Pointz Inc., Big Brothers Sportswear Inc., and Tony Jones Property LLC are corporate guarantors of the loan. Jung Hwan Yi's debt was discharged in a bankruptcy proceeding in 2014.
Judge Rachelle L. Harz entered an order on October 3, 2014 instructing that the property not be "sold, transferred, or removed otherwise" and the disposal of inventory or personal property located in the warehouse was prohibited "until further order of the bankruptcy court or this [c]ourt." When Hana attempted to enter the warehouse to remove Jones's merchandise, it learned that Rothman had evicted Jones and changed the locks. Rothman refused entry to Hana, claiming it held a statutory lien on Jones's property. Consequently, upon presentation of Hana's certification, Judge Harz issued an order permitting the removal of the inventory and personal property of Jones and forbidding its sale or liquidation as the result of Rothman's landlord-tenant action.
"The landlord, his heirs or assigns, may, where the agreement is not in writing, recover a reasonable satisfaction for the real estate, held or occupied by the defendant, in an action for the use and occupation of what was so held or enjoyed." N.J.S.A. 2A:42-13. --------
An amended complaint was filed by Hana on October 8, 2014 adding Rothman as a defendant. In its answer and counterclaim, Rothman sought a determination that: (1) Hana was responsible to pay use and occupancy for the storage of the collateral; (2) Hana owed the back rent; and (3) Hana owed indemnification in connection with the removal of the property from the premises. Later that month, Hana presented an order to show cause for the removal of the Jones merchandise that was denied.
In November 2014, Hana moved for summary judgment seeking access to the warehouse for the purpose of removing Jones's inventory situated within the building. Rothmann filed a cross-motion for partial summary judgment, asserting that "[Hana] is obligated to pay use and occupancy" and to provide both insurance and indemnification. Hana opposed the cross-motion, contending it never intended to use or occupy the warehouse, but instead only wanted to remove the merchandise contained within the premises which it had been prepared to do as of October 8, 2014.
Following oral argument on the motions, Judge Harz ruled that Hana was not responsible for any charges including use and occupancy. She found Rothman to be "estopped . . . from making such an argument that they're entitled to use and occupancy when the . . . clothes themselves were being held behind a locked door, the lock having been put there by the landlord and now they're looking for use and occupancy." Hana was permitted to remove all contents from the warehouse and ordered to deliver the premises in broom-clean possession by December 31, 2014. Hana's summary judgment motion was granted and Rothman's cross-motion for partial summary judgment was denied.
On February 25, 2015, Judge Harz certified the summary judgment orders as final for purposes of appeal pursuant to Rule 4:42-2.
III.
When reviewing an order granting or denying summary judgment, we apply the same standard that the trial court applies in ruling on a summary judgment motion. State v. Perini Corp., 221 N.J. 412, 425 (2015) (citing Town of Kearny v. Brandt, 214 N.J. 76, 91 (2013)); Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007). In considering a motion for summary judgment, "both trial and appellate courts must view the facts in the light most favorable to the non-moving party." Bauer v. Nesbitt, 198 N.J. 601, 604-05 n.1 (2009) (citing R. 4:46-2(c)); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Issues of law are subject to the de novo standard of review, and the trial court's determination of such issues is accorded no deference. Kaye v. Rosefielde, 223 N.J. 218, 229 (2015).
On appeal, Rothman asserts that summary judgment was improperly granted in favor of Hana and that the motion judge (1) erred in determining that Hana was not obligated to pay for the use and occupancy of the warehouse from October 7 to December 31, 2014, and (2) failed to award use and occupancy as measured by the terms of the lease signed by Jones and Rothman. We disagree.
Rothman's arguments are of necessity premised on the determination that Hana exercised use and occupancy of the warehouse space, thus entitling Rothman to payment. To support this argument, Rothman relies on N.J.S.A. 2A:42-13 and cites to cases which establish the proposition that a receiver is obligated to pay use and occupancy to a landlord while property that is the subject of the receivership is stored at the landlord's property. See Greenspan & Greenberger Co. v. Goerke Co., 112 N.J. Eq. 391, 392 (Ch.) aff'd, 114 N.J. Eq. 19 (E & A 1933); Farmers & Merchs. Nat'l Bank v. Boymann, 155 N.J. Super. 120, 122 (Law Div. 1977). However, in those cases, the receiver was in possession of the premises; here, Hana never possessed or controlled the warehouse space. In fact, as soon as Hana obtained the writ of attachment it sought to move the property out of the warehouse. Hana amended its complaint on October 8 seeking possession of the Jones property as Rothman had changed the locks to the warehouse doors. Later that month, Hana presented an order to show cause requesting access to the premises to remove its collateral. The property only remained in the warehouse because of Rothman's refusal to permit its removal.
We also reject Rothman's argument that Hana profited from the storage of Jones's property in its warehouse and therefore should be responsible for a reasonable rent. See Kruvant v. 12-22 Woodland Ave. Corp, 138 N.J. Super. 1, 25 (Law Div. 1975) (concluding that if "a person uses the land of another . . . for profit-making activities without permission, the landowner should be able to recover a reasonable rent") aff'd, 150 N.J. Super. 503 (App. Div. 1977). Hana did not profit from the merchandise remaining in the warehouse. To the contrary, Hana was unable to liquidate the goods to offset the debt owed by Jones as a result of Rothman's actions. As Judge Harz stated: "[Hana] has had absolutely no benefit by having the merchandise there. If they had the merchandise sooner they could have sold it sooner."
As we find no reason to disturb Judge Harz's ruling that Hana was not in "use or occupancy" of the warehouse and, therefore, not responsible for any payments to Rothman, we need not address Rothman's remaining argument that Hana's obligation should be measured by the underlying lease.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION