JP CP INVESTORS, LLC, ETC. v. JC MCA CONSULTING, LLC (L-4517-19, BERGEN COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1754-20
JP CP INVESTORS, LLC 1
d/b/a CONTINENTAL PLAZA
ASSOCIATES JV,
Plaintiff-Respondent,
v.
JC MCA CONSULTING, LLC,
YOSEF CLAPMAN, and
YAFFA SILKES,
Defendants-Appellants.
____________________________
Argued December 15, 2021 – Decided February 7, 2022
Before Judges Sumners and Vernoia.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-4517-19.
Rickin Desai argued the cause for appellant (Zachter
PLLC, attorneys; Rickin Desai and Jeffrey Zachter, on
the briefs).
1
According to a February 12, 2021 order of judgment, the correct name is JD
CP Investors, LLC.
Michelle Conroy argued the cause for respondents
(Kessler Law, LLC, attorneys; Michelle Conroy, of
counsel; Henry Sanchez, on the brief).
PER CURIAM
In this commercial property dispute seeking unpaid rent, attorney fees,
and costs, defendants JC MCA Consulting, LLC (JC MCA), Yosef Clapman,
and Yaffa Silkes appeal orders denying their motion for summary judgment;
granting plaintiff JC CP Investors, LLC's cross-motion for partial summary
judgment; and entering judgment for plaintiff in the amount of $80,458.88. We
affirm because the motion judge applied the correct legal principles in his orders
and reached the appropriate determination based on the undisputed facts .
I
We discern the following facts from the record. In June 2017, JC MCA
entered into a seven-year agreement to commence on March 15, 2018, leasing
an office suite (suite) in a Hackensack commercial building (building) owned
by plaintiff. Clapman and Silkes agreed to personally guarantee the payment of
rent.
On January 1, 2019, approximately nine months into the lease, defendants
defaulted. Beginning in April, the suite was advertised and marketed for lease
with a commercial real estate agency and listing services.
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On May 3, plaintiff filed a complaint against JC MCA seeking possession
of the suite. Twenty days later, a judgment of possession was entered.
On June 14, plaintiff filed the within complaint against defendants
demanding unpaid rent, attorney fees, and costs. In response, defendants filed
an answer with counterclaims for breach of the lease, conversion, and unjust
enrichment.
On December 18, plaintiff sold the building and assigned their rights to
the building's leases to Continental Plaza Owner, LLC and Continental Plaza,
TIC LLC (collectively Continental). The assignment agreement, in pertinent
part, stated:
Leases. [Plaintiff] hereby transfers and assigns to
[Continental] any and all right, title[,] and interest
which [Plaintiff] may have, as landlord or otherwise, in
leases with tenants covering spaces in the [building]
. . . . [Continental] hereby (a) assumes all liabilities and
obligations of [Plaintiff] under the Leases arising or
accruing from and after the date hereof . . . and (b)
agrees to indemnify, defend[,] and hold harmless
[Plaintiff] from any and all damages, losses, costs,
claims, liabilities, expenses, demands[,] and
obligations under or with respect to the Leases arising
or accruing from and after the date hereof.
[Emphasis added.]
As of that date, defendants owed plaintiff $65,583.88 for rent.
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Defendants subsequently filed a summary judgment motion to dismiss
plaintiff's complaint, arguing plaintiff lacked standing because it forfeited its
rights to collect damages arising from the lease to Continental under the
assignment agreement. Plaintiff cross-moved for summary judgment relying
upon affidavits by plaintiff's and Continental's authorized signatories, asserting
the assignment only applied to liabilities and obligations arising from the
building's leases prior to the date of the assignment; thus, entitling plaintiff to
unpaid rent owed prior to the assignment. Defendant did not present any
competent evidence disputing the affiants' representations. Plaintiff also
submitted an affidavit from its leasing agent providing that since JC MCA's
eviction in May 2019 through December 2019, the suite was advertised for lease,
including, but not limited to, a widely used a commercial real estate listing
service, and was showed to brokers and prospective tenants. Despite these
efforts, plaintiff was unsuccessful in reletting the suite.
Judge Walter F. Skrod entered separate orders on January 4, 2021,
denying defendants' motion for summary judgment and granting plaintiff's
cross-motion for partial summary judgment, explaining his reasoning for the
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orders in an eleven-page rider.2 On February 12, the judge entered an order of
judgment against defendants totaling $80,458.88, inclusive of $65,853.28 for
unpaid rent, $13,032.50 for reasonable attorney fees, and $1573 for costs,
together with a rider detailing his reasoning.
II
We begin by describing the principles guiding our analysis. Our review
of an order granting summary judgment is de novo. Giannakopoulos v. Mid
State Mall, 438 N.J. Super. 595, 599 (App. Div. 2014). Under that standard,
summary judgment is appropriate if "the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact challenged and that the
moving party is entitled to a judgment or order as a matter of law." Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995) (quoting R. 4:46-2).
"An issue of material fact is 'genuine only if, considering the burden of
2
On the same day, the judge entered another order denying as untimely
plaintiff's motion for leave to file an amended complaint. On February 19, 2020,
the judge denied plaintiff's motion for reconsideration of that order but allowed
correction of plaintiff's name and Continental to file a complaint against
defendants "for alleged damages relating to the remainder of the lease term
which shall not be subject to the entire controversy doctrine." The order added
that "[Continental] is a different entity—[it] may file a complaint. It is
questionable that the entire controversy [doctrine] applies but the court is not
deciding that issue as it is not before the court."
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persuasion at trial, the evidence submitted by the parties on the motion, together
with all legitimate inferences therefrom favoring the non-moving party, would
require submission of the issue to the trier of fact.'" Grande v. St. Clare's Health
Sys., 230 N.J. 1, 24 (2017) (quoting Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)).
We must give the non-moving party "the benefit of the most favorable
evidence and most favorable inferences drawn from that evidence." Est. of
Narleski v. Gomes, 244 N.J. 199, 205 (2020) (quoting Gormley v. Wood-El, 218
N.J. 72, 86 (2014)); however, we owe no special deference to the motion judge's
legal analysis, RSI Bank v. Providence Mut. Fire Ins. Co., 234 N.J. 459, 472
(2018) (quoting Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224
N.J. 189, 199 (2016)).
In granting summary judgment and entering a judgment of $80,458.88 in
plaintiff's favor, Judge Skrod's reasoning was supported by credible evidence in
the record and is well-founded in the law. He determined, based on the
assignment's plain language and plaintiff's and Continental's mutually agreed
upon explanation of the assignment, there was no merit to defendants' argument
that plaintiff had no standing to pursue its claims because it assigned its rights
under the lease to Continental. Therefore, the judge held plaintiff retained its
right to sue defendants for unpaid rents prior to December 18, 2019, the date of
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the assignment. There was no factual basis for defendants' contention that they
were intended to be third-party beneficiaries of the assignment.
The judge also ruled plaintiff did not fail to mitigate damages based on
the two affidavits detailing its efforts to find a new tenant and providing a copy
of an advertisement for leasing the suite. He found defendants' only proofs for
their failure to mitigate defense—screen-shots of a real estate agency website
not advertising the suite—were "uncorroborated, unauthenticated hearsay." The
judge determined that, even assuming defendants' screenshot proofs were
admissible, plaintiff's evidence of advertisements that the suite was available for
lease and certified statements from "those with personal knowledge" firmly
demonstrated plaintiff's mitigation of damages.3 We affirm substantially for the
reasons given by the judge. We add the following comments.
The plain language of the assignment agreement clearly and
unambiguously provides that plaintiff retained the right to pursue claims arising
and accruing under the building's lease prior to the date of the assignment to
Continental. See Barila v. Bd. of Educ. of Cliffside Park, 241 N.J. 595, 615-16
3
Judge Skrod determined neither party was entitled to summary judgment on
plaintiff's demand for $276,375, representing unamortized costs of the original
buildout of the suite space and leasing commissions, because there was a
"genuine dispute as to material fact as to this claim." Neither party challenges
the judge's ruling on this issue.
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(2020) ("It is well-settled that '[c]ourts enforce contracts "based on the intent of
the parties, the express terms of the contract, surrounding circumstances and the
underlying purpose of the contract."'" (alteration in original) (quoting In re Cnty.
of Atlantic, 230 N.J. 237, 254 (2017))). Moreover, this interpretation was
confirmed by the affidavits, which were properly submitted in accordance with
Rule 4:46-2 and relied upon by Judge Skrod in determining the respective
summary judgment motions. The assignment gave Continental rights to claims
against defendants, prospectively, on and after December 18, 2019. Plaintiff
retained the right to pursue its claims against defendants that arose prior to the
assignment. Accordingly, we dismiss defendants' contention that the judge
misinterpreted the assignment agreement and mistakenly relied upon the
affidavits in deciding the motions.
Although unnecessary to our affirmance of the court's summary judgment
award to plaintiff, for the sake of completeness we address defendants' claim
that they are third-party beneficiaries to the assignment agreement. We find no
merit in the contention. Our court recently held:
Traditionally, third-party beneficiary status "focuses on
whether the parties to the contract intended others to
benefit from the existence of the contract, or whether
the benefit so derived arises merely as an unintended
incident of the agreement." Ross [v. Lowitz], 222 N.J.
494, 513 (2015) (quoting Broadway Maint. Corp. v.
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Rutgers, 90 N.J. 253, 259 (1982)). Where "there is no
intent to recognize the third party's right to contract
performance, 'then the third person is only an incidental
beneficiary, having no contractual standing.'" Ibid.(quoting Broadway Maint. Corp., 90 N.J. at 259). "The
contractual intent to recognize a right to performance
in the third person is the key. If that intent does not
exist, then the third person is only an incidental
beneficiary, having no contractual standing."
Broadway Maint. Corp., 90 N.J. at 253 (citing Standard
Gas Power Corp. v. New England Cas. Co., 90 N.J.L.
570, 573-74 (E. & A. 1917)).
[Crystal Point Condo. Ass'n, Inc. v. Kinsale Ins. Co.,
466 N.J. Super. 471, 482 (App. Div. 2021).]
Defendants were not parties to the assignment agreement, and they cite nothing
in the record showing that plaintiff and Continental intended for them to be
third-party beneficiaries to the agreement. Any perceived benefit from this
contract for defendants is merely an unintended incident of the agreement. Since
defendants are not third-party beneficiaries, they have no right to assert any
purported claims based on the assignment's terms.
For the first time on appeal, defendants contend that failure to allow them
third-party beneficiary status creates an "absurd result" of bifurcating litigation
under the lease and undermining the entire controversy doctrine. Since this
contention was not raised before the motion judge, we need not consider it on
appeal because it does not "'go to the jurisdiction of the trial court or concern
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matters of great public interest.'" Zaman v. Felton, 219 N.J. 199, 226-27 (2014)
(quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).
Nevertheless, we address the contention, concluding it has no merit.
"The entire controversy doctrine is an equitable principle[,] and its
application is left to judicial discretion." 700 Highway 33 LLC v. Pollio, 421
N.J. Super. 231, 238 (App. Div. 2011) (citing Allstate N.J. Ins. Co. v. Cherry
Hill Pain & Rehab. Inst., 389 N.J. Super. 130, 141 (App. Div. 2006)). It
"embodies the principle that the adjudication of a legal controversy should occur
in one litigation in only one court; accordingly, all parties involved in a litigation
should at the very least present in that proceeding all of their claims and defenses
that are related to the underlying controversy." Wadeer v. N.J. Mfrs. Ins. Co.,
220 N.J. 591, 605 (2015) (quoting Highland Lakes Country Club & Cmty. Ass'n
v. Nicastro, 201 N.J. 123, 125 (2009)). The doctrine applies when the claims of
all parties arise out of the same common string of facts or circumstances. Ibid.Essentially, the entire controversy doctrine is a claim mandate imposed
on all parties to a litigation.
The doctrine was conceived of as a claim-joinder
mandate, requiring all parties in an action to raise in
that action all transactionally related claims each had
against any other whether assertable by complaint,
counterclaim, or cross-claim.
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....
There is no mandatory party joinder requirement
under the entire controversy doctrine. Except in special
situations involving both inexcusable conduct and
substantial prejudice to the non-party resulting from
omission from the first suit, successive actions against
a person not a party to the first action are not precluded.
[Pressler & Verniero, Current N.J. Court Rules, cmt. 1
on R. 4:30A (2022) (citations omitted)].
Defendants' reliance on the entire controversy doctrine is misplaced.
Although plaintiff's complaint was filed before the assignment, it only sought
and was granted judgment for unpaid rent due before the effective date of the
assignment. Continental was not a party to the action and plaintiff had no
obligation to join it to the action so that it could prosecute its own damage claims
against defendants that arose as of the assignment date. The entire controversy
doctrine has no place in this dispute.
Finally, as for the entry of judgment, there is no merit to defendants'
contention that the judge erred by dismissing their affirmative defense that
plaintiff failed to mitigate damages. Plaintiff was required to make reasonable
efforts to mitigate its damages after JC MCA breached the lease agreement and
was evicted. See McGuire v. City of Jersey City, 125 N.J. 310, 320-21 (1991).
Defendants, however, failed to satisfy their burden of proving plaintiff did not
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mitigate its damages. See Cohen v. Radio-Elecs. Officers Union, 275 N.J.
Super. 241, 262 (App. Div. 1994) (citations omitted) ("[M]itigation is always an
element in a contract suit for damages, with the burden of proving facts in
mitigation of damages resting upon the party breaching the contract ."). Indeed,
the record demonstrated that plaintiff provided proofs of its attempts to market
the suite after JC MCA's eviction by retaining a leasing agent and sending a
marketing email advertising the available space in its building.
Affirmed.
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