CENTURY 21-MAIN STREET REALTY, INC. VS. ST. CECELIA'S CHURCH(L-4635-15, MIDDLESEX COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-2506-15T2
CENTURY 21-MAIN STREET
REALTY, INC., a New Jersey
Corporation,
Plaintiff-Appellant,
v.
ST. CECELIA'S CHURCH, ISELIN,
NEW JERSEY a/k/a ST. CECELIA'S
CATHOLIC CHURCH OF ISELIN a/k/a
ST. CECELIA'S R.C. CHURCH a/k/a
ST. CECELIA'S ROMAN CATHOLIC
CHURCH OF ISELIN, NEW JERSEY
a/k/a R.C. DIOCESE OF METUCHEN,
Defendants-Respondents.
___________________________________
Argued February 14, 2017 – Decided September 6, 2017
Before Judges Ostrer, Leone and Vernoia.
On appeal from the Superior Court of New
Jersey, Law Division, Middlesex County, Docket
No. L-4635-15.
David M. Hutt argued the cause for appellant
(Hutt & Shimanowitz, PC, attorneys; Mr. Hutt
and Bryan D. Plocker, of counsel and on the
briefs).
Nicholas J. Dimakos argued the cause for
respondents (Norris McLaughlin & Marcus, PA,
attorneys; David C. Roberts, of counsel and
on the brief; Bradford W. Muller, on the
brief).
PER CURIAM
Plaintiff, Century 21-Main Street Realty, appeals from the
trial court's order dismissing its complaint with prejudice for
failure to state a claim upon which relief can be granted. R.
4:6-2(e). Century and defendant St. Cecelia's Church entered into
a listing agreement for Century to assist in the sale, lease or
rental of a school building in the Iselin section of Woodbridge
Township. The Church ultimately entered into a no-rent lease with
the Edison Board of Education. The lease obliged the Board to
bear the cost of any improvements it deemed necessary. The costs
turned out to be substantial. After the Church refused Century's
demand for a commission based on the Board's expenditures, Century
asserted claims of breach of contract and unjust enrichment.
The Church persuaded the trial court that the agreement's
plain terms did not entitle Century to a commission on a rent-free
lease. Based on the allegations of the complaint, we agree. But,
we modify the dismissal order to provide that it is without
prejudice to Century filing an amended complaint.
I.
We discern the following facts from the allegations in the
complaint and the terms of the documents that the complaint
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referenced, extending all favorable inferences to Century. See
Tisby v. Camden Cty. Corr. Facility, 448 N.J. Super. 241, 247-48
(App. Div.), certif. denied, ___ N.J. ___ (2017).
The May 21, 2012 exclusive listing agreement pertained to the
Church's property at 1300 Oak Tree Road, Iselin, New Jersey, which
the parties agree contained an inactive school building. The
parties extended the agreement's one-year term to June 30, 2014,
without otherwise modifying it. The agreement granted Century the
exclusive right, on the Church's behalf, to sell the property,1 or
"to lease or rent the property at a monthly rate of $25 sq. ft.
. . . ." (Emphasis added on the handwritten provisions). The
agreement acknowledged the terms of Century's commission was a
product of their agreement, and not any governmental authority or
listing service:
3. COMMISSION ON SALE, LEASE OR RENT, OR
EXCHANGE:
AS SELLERS OR LANDLORDS, YOU HAVE THE RIGHT
TO INDIVIDUALLY REACH AN AGREEMENT ON ANY FEE,
COMMISSION OR OTHER VALUABLE CONSIDERATION
WITH ANY BROKER. NO FEE, COMMISSION OR OTHER
CONSIDERATION HAS BEEN FIXED BY ANY
GOVERNMENTAL AUTHORITY OR BY ANY TRADE
ASSOCIATION OR MULTIPLE LISTING SERVICE.
Nothing herein is intended to prohibit an
individual broker from establishing a policy
regarding the amount of fee, commission, or
1
The agreement left the sale price blank, but stated the terms,
in a handwritten insert, as "cash." A second word following "cash"
is indecipherable.
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other valuable consideration to be charged in
transactions by the BROKER.
The agreement then set the commission as follows:
SELLERS agree to pay BROKER a Sale Commission
of 6%: a Lease or Rental Commission of 1 Month
and a Lease Renewal Commission of 1 Month on
each one-year renewal of the lease if, the
sale or exchange, or lease of this property
or any part of it, is made by BROKER,
cooperating agent, SELLERS, or any person
during the term of this listing agreement.
This commission shall be payable on closing
of title or signing of lease.
[(Emphasis added on handwritten provisions).]
In April 2014, shortly before the extended agreement expired,
the Church entered into a twenty-six-month lease with the Board,
which intended to use the property for an elementary school. The
parties agree the Board needed a temporary location for the pupils
and staff of the James Monroe Elementary School that was severely
damaged in a fire the previous month.
The Board was entitled to use the school "rent free" for the
initial twenty-six months, but was required to pay the Church
$900,000 for each of two six-month "hold over terms" if the Board
continued to occupy the school after the initial term:
2.01 Rent. Tenant shall enjoy the use
and occupancy of the Premises subject to the
terms of this Lease rent free for the Term.
If Tenant should occupy the Premises beyond
the Term (the "Holdover Term") Tenant shall
be bound to pay Landlord the sum of $900,000
(the "Holdover Rent") for each additional six
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months of holdover by Tenant payable monthly
for six months, regardless of whether Tenant
actually occupies the Premises for the entire
six month Holdover Term. Tenant shall be
entitled to no more than two Holdover Terms.
The Board was also obliged to pay any real or personal property
taxes — the Church paid none — and any land-use-related fines.
The Church leased the school "as-is, where-is, with all
faults." In its sole discretion, the Board could cancel the lease
by October 1, 2014. The lease also authorized the Board to conduct
various inspections. The lease was subject to approval of local
zoning and State education officials.2
The Board was required, at its sole cost and expense, to
repave the parking lot. It was also permitted — not compelled —
to make any other improvements to the school it deemed necessary
or desirable, including, specifically, replacing or repairing the
roof, and replacing the boiler. The Board was also responsible
for all utilities, building and landscape maintenance, and snow
removal and for obeying governing laws. The parties warranted to
each other that they had not dealt with a broker in connection
with the lease, and would indemnify the other for any broker's
claims.
2
The lease included a provision of questionable enforceability,
which generally obliged the Board not to disclose to the Church,
or anyone else, the results of its environmental investigation.
5 A-2506-15T2
On June 18, 2014, Century sought payment of a commission
based on the asserted cost of the Board's repairs. The bill sought
$115,384.62, stating "$1,500,000 repairs for rental of St.
Cecelia's School, based on a 26 month lease, 2 months commission
due. Two (2) month's rent due based on rental, repair
evaluation."3 The Church refused to pay, and Century's complaint
followed in August 2015. Century alleged, "Pursuant to the Listing
Agreement, [the Church] agreed to pay [Century] a commission in
the event of any sale or sale of the Subject Property," and it was
entitled to a commission based on theories of breach of contract
and unjust enrichment. The Church answered that the agreement
spoke for itself and Century was not entitled to damages under
either theory.
In its motion to dismiss for failure to state a claim, the
Church provided the court with the referenced documents.4 At oral
3
We assume Century took 1/26th of the $1,500,000 to calculate an
alleged "monthly rent" of $57,692.31, then multiplied that by two,
which equals $115,384.62.
4
In opposition, Century expanded the record beyond the complaint,
by providing what counsel claimed, in a certification, was the
Board's response to an Open Public Records Act request for
documentation of "the Board's expenditures in connection with the
repairs and/or renovations of the St. Cecelia's School." The
document includes multiple categories of expenses under various
numbered accounts without explicit reference to St. Cecelia's
School, except for one account described as "Building Improvements
- St. Cecelia's", which included payments of $943,417 for the
6 A-2506-15T2
argument, the Church contended: the plain terms of the agreement
— which authorized a commission of one month's rent on leases at
$25 a square foot — did not entitle Century to a commission under
the Board's rent-free lease; Century sought to "expand the meaning
of commission and rent to something that the contract . . . doesn't
contemplate"; and the unjust enrichment claim was barred since the
parties contractually agreed to the terms of a commission.
Century argued that instead of the Board paying rent on a per
square footage basis, the parties to the lease agreed, based on
the condition of the building, that the Board would pay for capital
improvements in lieu of rent. Regardless of the form of
consideration, Century argued, it should be entitled to a
commission based on the consideration the Board paid for the right
to utilize the property.
In an oral decision, the trial court held that the commission
was based on rent — "something that you pay once a month." The
court acknowledged that if the Board held over and incurred the
$900,000 rent for one or both of the six-month periods, then
period April 2014 through December 2014, including roof and boiler-
related expenditures. The total of all expenditures on the
document exceeded $3.2 million. Although the document may have
qualified as a business record, or public record, it was not self-
authenticating, nor was a proper foundation laid. See R. 1:6-6.
Nonetheless, the court noted, as we do, that only roughly $900,000
of expenditures were clearly attributed to the school.
7 A-2506-15T2
Century would be entitled to a commission based on that rent.
However, Century was not entitled to a commission based on the
value of capital improvements the Board made. The parties to the
agreement could have based a commission on other forms of
consideration, but did not. In support of its conclusion that
capital improvements should not be deemed a form of rent, the
court observed that the lease addressed rent separately from the
provisions on capital improvements, and nothing in the lease
characterized the improvements as payments in lieu of rent. Also,
the court resolved any ambiguity in the agreement against Century,
as the drafter.
II.
A.
We begin by reviewing governing principles of law. We review
de novo an order dismissing a complaint under Rule 4:6-2(e). See
Stop & Shop Supermarket Co. v. Cty. of Bergen, 450 N.J. Super.
286, 289-90 (App. Div. 2017). "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 Elecs. Corp., 116 N.J. 739, 746
(1989). "The essential test is simply whether a cause of action
is suggested by the facts, and plaintiffs are entitled to every
reasonable inference of fact." Green v. Morgan Props., 215 N.J.
8 A-2506-15T2
431, 451-52 (2013) (internal quotation marks and citation
omitted). "A motion to dismiss a complaint for failure to state
a claim 'may not be denied based on the possibility that discovery
may establish the requisite claim; rather, the legal requisites
for plaintiffs' claim must be apparent from the complaint itself.'"
Teamsters Local 97 v. State, 434 N.J. Super. 393, 413 (App. Div.
2014) (quoting Edwards v. Prudential Prop. & Cas. Co., 357 N.J.
Super. 196, 202 (App. Div.), certif. denied, 176 N.J. 278 (2003));
see Printing Mart-Morristown, supra, 116 N.J. at 768.
We review de novo a trial court's contract interpretation,
as it presents a legal issue. See Kieffer v. Best Buy, 205 N.J.
213, 222 (2011). We seek to ascertain "the reasonably certain
meaning of the language used, taken as an entirety, considering
the situation of the parties, the attendant circumstances, the
operative usages and practices, and the objects the parties were
striving to achieve." George M. Brewster & Son, Inc. v. Catalytic
Constr. Co., 17 N.J. 20, 32 (1954); see also Pacifico v. Pacifico,
190 N.J. 258, 267 (2007) (stating that a court examines contract
terms "in light of the common usage and custom"). We enforce
contracts as written, and decline to make a better contract than
the parties made for themselves. Kampf v. Franklin Life Ins. Co.,
33 N.J. 36, 43 (1960); see also Kieffer, supra, 205 N.J. at 223
("The judicial task is simply interpretive; it is not to rewrite
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a contract for the parties better than or different from the ones
they wrote themselves.").
Moreover, we construe any ambiguity against the drafter,
because we presume it protected its own interests, and "chose the
words that may be susceptible to different meanings . . . ."
Kieffer, supra, 205 N.J. at 224. Where an ambiguity exists,
meaning the contract is susceptible to two reasonable alternative
interpretations, M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171
N.J. 378, 396 (2002), its resolution is a fact question. Michaels
v. Brookchester, Inc., 26 N.J. 379, 388 (1958). But, a jury need
not resolve an ambiguous term's meaning if, after considering all
competent relevant materials, a genuine issue of material fact
does not remain. In re Teamsters Indus. Emps. Welfare Fund, 989
F.2d 132, 137 (3d Cir. 1993).
B.
The parties acknowledge that the agreement entitled Century
to a commission equal to one month's rent, although the listing
agreement does not actually use the word "rent" in defining the
amount of a commission for a lease. The agreement simply states
"1 month" as the amount of commission.
The parties dispute whether the Board's lease with the Church
obliged the Board to pay rent for the initial twenty-six month
term. Century asserts that the Board's "renovations [were]
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consideration paid in lieu of rent[,]" which triggered an
obligation to pay a commission. The Church argues that the
spending was not rent, and that it provided the building rent-free
for the initial term.
"Ordinarily when a lease is made we find an agreement by the
owner-lessor to turn over specifically-described premises to the
exclusive possession of the lessee for a definite period of time
and for a consideration commonly called rent." Thiokol Chem.
Corp. v. Morris Cty. Bd. of Taxation, 41 N.J. 405, 416 (1964).
"Rent is a fixed sum, or property amounting to a fixed sum, to be
paid at stated times for the use of property . . . ." M. E. Blatt
Co. v. United States, 305 U.S. 267, 277, 59 S. Ct. 186, 189, 83
L. Ed. 167, 170 (1938) (internal quotation marks and citations
omitted). However, "rent is not essential to a lease; for, from
favor, or valuable consideration, the tenant may have a lease
without any render." Thiokol Chem. Corp., supra, 41 N.J. at 418
(internal quotation marks and citation omitted); see also Powell
on Real Property § 16A.01 (2017) ("Since a landlord may
gratuitously create a lease, however, not every tenant is liable
for its [rent] payment.").
Rent may be payable "in kind," such as in the form of crops
raised from the leased land. See, e.g., Reeves v. Hannan, 65
N.J.L. 249, 251 (E. & A. 1900); Van Dyke v. Anderson, 83 N.J. Eq.
11 A-2506-15T2
568, 570 (Ch. 1914). However, improvements are generally not
rent. "Even when required, improvements by lessee will not be
deemed rent unless intention that they shall be is plainly
disclosed. Rent . . . does not include payments, uncertain both
as to amount and time, made for the cost of improvements . . . ."
M.E. Blatt & Co., supra, 305 U.S. at 277, 59 S. Ct. at 189, 83
L.Ed. at 170. In determining the nature of the parties'
relationship, the court considers "the intention of the parties
as revealed by the language employed in establishing their
relationship, and, where doubt exists, by the circumstances
surrounding its making as well as by their course of operation
under it." Thiokol Chem. Corp., supra, 41 N.J. at 417.
We need not firmly plant our flag on one side or the other
of the legal question whether "rent" is wholly a product of the
expressed intent of the parties to a lease. Cf. Shum v. Gaudreau,
562 A.2d 707, 713 (Md. 1989) (in a case involving landlord's
summary remedies for nonpayment of rent, the court declined to
follow authorities that "indicate that rent may be defined to be
whatever the parties intend"). The issue here is what the parties
to the agreement intended "rent" to mean, since that definition
would then apply to the lease between the Church and Board, in
order to calculate the commission owed, if any. Inasmuch as
Century and the Church did not adopt any special definition of
12 A-2506-15T2
rent in its agreement, we adhere to commonly understood notions
of rent. As discussed above, we are left to conclude that
improvements are generally not rent, and rent does not include
payments that are uncertain as to amount and time, and are entirely
discretionary.
Applying these principles, Century's asserted claim for
commissions must fail. The Board's lease with the Church did not
provide for the payment of cash rent during the initial twenty-
six-month term, nor did it require payment of rent in-kind.5
Rather, according to its terms, it left it to the Board, in the
exercise of its discretion, to decide whether to make improvements
or repairs. The lease did not specify the extent of those
improvements, their cost, or when they had to be finished.
We acknowledge one exception. The lease required the Board
to pave the parking lot "[p]rior to the expiration of the Term"
and at the Board's "sole cost and expense . . . ." The parties
left the work's "reasonable specifications," and its timing, to
the parties' later agreement. Yet, even this mandated improvement
5
Had the agreement pertained to the sale or lease of farmland,
and the landowner entered into a lease with a tenant farmer that
provided for payment not in cash, but in the form of half the
yield of the land, that landowner would, we presume, be liable to
the broker for one month's in-kind payment (although we need not
address whether the broker would be payable in-kind, or whether
the broker would be entitled to cash equivalent).
13 A-2506-15T2
— of uncertain scope — does not constitute "rent" as commonly used
and understood, and upon which Century predicated its commission.
It is of no moment whether or not the Board enhanced the
value of the building by the end of the lease. Any enhancement
is not a basis for calculating Century's commission. Thus, there
is no need for discovery to determine the improvements' precise
cost and value.
We also reject Century's contention that, since the parties
present differing interpretations of the agreement, discovery is
needed to ascertain its meaning. Having applied the common meaning
and usage of rent, we discern no ambiguity that would create a
fact issue warranting discovery. Also, any remaining ambiguity
must be resolved against Century, which drafted the agreement.
See Kieffer, supra, 205 N.J. at 224.
Century's alternative claim for unjust enrichment was also
properly dismissed. If a contract exists between the parties,
unjust enrichment is generally inapplicable. Shalita v. Twp. of
Washington, 270 N.J. Super. 84, 90-91 (App. Div. 1994)
("[G]enerally, the parties are bound by their agreement, and there
is no ground for imposing an additional obligation where there is
a valid unrescinded contract that governs their rights."); see
also Caputo v. Nice-Pak Prods., Inc., 300 N.J. Super. 498, 507
(App. Div.) (stating "unjust enrichment is an equitable remedy
14 A-2506-15T2
resorted to only when there was no express contract providing for
remuneration"), certif. denied, 151 N.J. 463 (1997). Instead,
Century is confined to its contractual remedies. Cf. Nat'l
Amusements, Inc. v. N.J. Tpk. Auth., 261 N.J. Super. 468, 478 (Law
Div. 1992), aff'd, 275 N.J. Super. 134 (App. Div.), certif. denied,
138 N.J. 269 (1994). Weichert Co. Realtors v. Ryan, 128 N.J. 427
(1992), upon which Century relies, does not compel a different
result because those parties did not execute a binding written
agreement. Id. at 441.
We also decline to reach Century's contention, raised for the
first time in its reply brief, that the Church breached the
covenant of good faith and fair dealing. "We do not ordinarily
consider an argument that is raised for the first time in a reply
brief." Quigley v. Esquire Deposition Servs., 409 N.J. Super. 69,
74 (App. Div. 2009), certif. denied, 201 N.J. 154 (2010).
Furthermore, we "will decline to consider questions not properly
presented to the trial court when an opportunity for such a
presentation is available." Nieder v. Royal Indem. Ins. Co., 62
N.J. 229, 234 (1973).
C.
Although we affirm the trial court's dismissal of the
complaint, we modify that aspect of the order that did so with
prejudice. Generally, "[i]f a complaint must be dismissed after
15 A-2506-15T2
it has been accorded the kind of meticulous and indulgent
examination [required] . . . then, barring any other impediment
such as a statute of limitations, the dismissal should be without
prejudice to a plaintiff's filing of an amended complaint."
Printing Mart, supra, 116 N.J. at 772. However, it is appropriate
to dismiss a complaint with prejudice where the "plaintiff conceded
that he had no further facts to plead" and instead "hope[d] that
he could use the tools of discovery to uncover evidence of
wrongdoing." Nostrame v. Santiago, 213 N.J. 109, 128 (2013). The
court should state its reasons if it departs from the general rule
that a plaintiff should have an opportunity to amend. See Hoffman
v. Hampshire Labs, Inc., 405 N.J. Super. 105, 112, 116 (App. Div.
2009).
Here, we lack a basis for concluding that Century has no
further facts to plead, nor can we exclude the possibility that
it may have a well-founded basis for alleging a breach of the
covenant of good faith and fair dealing, or refining and bolstering
the claims we find have fallen short. Furthermore, the Church
conceded that Century was entitled to a commission if the Board
availed itself of one or both "holdover" periods.
Affirmed as modified.
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