ROBERT KELLEHER VS. PMD ENTERPRISES, INC. (L-5996-12, ATLANTIC COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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-4117-16T2
ROBERT KELLEHER and
BETH DEE BOB FV, INC.,
Plaintiffs-Respondents,
v.
PMD ENTERPRISES, INC.,
CAPE MAY CANNERS, INC.,
SURFSIDE PRODUCTS, INC.,
MICHAEL A. LAVECCHIA,
DANIEL LAVECCHIA, PETER
LAMONICA, JANIS LAMONICA,
and CAROLYN LAVECCHIA,
Defendants-Appellants.
_______________________________
Argued November 26, 2018 – Decided December 7, 2018
Before Judges Fasciale and Gooden Brown.
On appeal from Superior Court of New Jersey, Law
Division, Atlantic County, Docket No. L-5996-12.
Rudolph C. Westmoreland argued the cause for
appellants (Westmoreland Vesper Quattrone & Beers,
attorneys; Kathleen F. Beers and Rudolph C.
Westmoreland, on the briefs).
Daniel J. Gallagher argued the cause for respondents.
PER CURIAM
In this breach of contract case, defendants 1 appeal from an October 31,
2016 order entered on remand, which granted summary judgment to plaintiffs,
and an order filed on April 28, 2017, awarding counsel fees, costs, and
prejudgment interest in plaintiffs' favor. The judge read the parties' contract as
a whole, rejected defendants' impossibility defense, and entered the orders under
review. We affirm.
In our remand opinion, Kelleher v. PMD Enters., Inc., No. A-4409-12
(App. Div. Sept. 24, 2014) (slip op. at 2), we vacated the previous judge's order
severing the parties' contract and preliminarily rejected defendants' assertion
that the doctrine of impossibility relieved them of their contractual obligations.
In severing the contract, that judge had explained that
[d]efendants leased allocation tags, which permitted the
harvesting of three types of clams. It is undisputed that
the [d]efendants paid for all the federal inshore clams
(harvested and unharvested) and the [q]uahogs
(harvested and unharvested)[,] and [defendants]
completed all obligations for payment concerning the
leasing of the allocations for these two specific clams.
1
PMD Enterprises, Inc. (PMD); Cape May Canners, Inc. (CMC); Surfside
Products, Inc. (Surfside); Michael A. LaVecchia, Daniel LaVecchia, and
Carolyn LaVecchia (the LaVecchias); and Peter and Janis LaMonica (the
LaMonicas) (collectively referred to as defendants).
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However, [d]efendant[s] failed to make payment on the
New Jersey inshore clams because they no longer exist
in catchable quantities.
[Id. at 13 (alterations in original).]
We remanded, however, emphasizing plaintiffs' steadfast position that
defendants were contractually obligated to make annual payments for the right
to harvest all clams, not just inshore clams, rather than a specific apportionment
for a particular category of clams. We stated that:
The judge focused on the amount of rent that PMD paid
for each type of clam, rather than on the intent of the
parties gathered from the lease agreements and the
surrounding circumstances. The parties should be
afforded the opportunity to more fully develop the
record on severability so that the issue can be resolved
by the judge, or a jury if there are genuine issues of fact
as to the parties' intent.
[Id. at 13-14.]
We pointed out that the parties' agreement listed three sets of
"allocations," and that the agreement "[did] not indicate a clear 'definite
apportionment' of what the value of each collection of allocation was, or how
defendants' consideration of rent could be divided into the three categories." Id.
at 14 n.9. See Menorah Chapels at Millburn v. Needle, 386 N.J. Super. 100, 111
(App. Div. 2006) (stating "a contract is said to be divisible when performance
is divided in two or more parts with a definite apportionment of the to tal
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consideration to each part"). Such an exercise would have necessarily involved
consideration of defendants' defense of impossibility to harvest inshore clams –
under the terms of the contract – and the parties' intent as to defendants'
obligation to pay rent regardless of clam population.
On remand, defendants did not move to sever the part of the contract that
defendants argued was impossible to perform. Nevertheless, defendants
contended that they were relieved from their contractual obligations because it
was impossible to harvest inshore clams (twelve percent of the entire contract).
But defendants' counsel acknowledged at oral argument before the judge that if
the impossibility defense were to be applied to the entire contract, plaintiffs
would be entitled to summary judgment. The judge looked at the contract as a
whole, unsurprisingly rejected defendants' impossibility defense, and granted
summary judgment to plaintiffs.
On appeal, defendants rely on Restatement (First) of Contracts:
Impossibility § 464 (Am. Law Inst. 1932). They contend severability was
unnecessary to adjudicate the applicability of the defense of impossibility.
Defendants argue that even in the absence of severability of the contract, their
impossibility defense relieves them of their contractual obligations.
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Supervening events that make performance impractical may excuse
performance. M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171 N.J. 378, 389-90
(2002). We have previously stated that:
A successful defense of impossibility (or
impracticability) of performance excuses a party from
having to perform its contract obligations, where
performance has become literally impossible, or at least
inordinately more difficult, because of the occurrence
of a supervening event that was not within the original
contemplation of the contracting parties.
[JB Pool Mgmt., LLC v. Four Seasons at Smithville
Homeowners Ass'n, Inc., 431 N.J. Super. 233, 246
(App. Div. 2013).]
Here, the parties' agreement stated that "the amount of clams actually harvested
by [defendants] shall not impact upon [defendants'] rental sum due." Defendants
expressly agreed to continue to pay rent regardless of any declines in the clam
population. Courts give effect to defendants' acceptance of this absolute
obligation to pay rent in accordance with the contract terms. Marini v. Ireland,
56 N.J. 130, 143 (1970) (stating "[i]t is of course not the province of the court
to make a new contract or to supply any material stipulations or conditions
which contravene the agreements of the parties"). Thus, even if one were to
consider impossibility as a defense to the inshore clams – without severance –
defendants agreed to pay rent regardless of declines in the clam population.
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We conclude that the judge correctly read the contract as a whole.
Defendants offered no support that they could not perform under the entire
contract due to the decline in inshore clam population. Indeed, defendants
conceded that they continued to make a profit notwithstanding the issues
harvesting the inshore clams. Defendants did not establish the defense of
impossibility, especially under the contract as a whole.
We reject defendants' argument that the judge abused his discretion
awarding fees and costs to plaintiffs. Defendants urge us to reverse the award
as the litigation arose out of a legitimate contractual dispute rather than an issue
with nonpayment of rent. Defendants assert that imposing a fee here would
cause a "chilling effect" upon a litigant's reasonable pursuit of his or her rights.
Defendants do not appeal the specific fee amount, but argue that the fee award
impermissibly exceeds plaintiffs' damages amount.
The judge stated his reasons for granting plaintiffs' fee application on the
record, in pertinent part, as follows:
The threshold issue is whether . . . plaintiff[s are]
entitled to counsel fees and costs pursuant to the
language set forth above. In the [c]ourt's view . . .
plaintiff is ultimately entitled to counsel fees.
....
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Again, while defendant[s] correctly argue[] the
American rule generally does not provide for counsel
fees and the potential chilling effect that awarding
counsel fees can have, the [c]ourt cannot ignore the
clear case law that permits counsel fees to be awarded
in the context when the parties enter into an arm['s]
length transaction and agree to have counsel fees paid
by one side to the other.
....
Moreover, the defendant[s'] argument that this
case is about the existence or non-existence of
harvestable clams in the [c]ourt's view is not
persuasive. Of course that was certainly a key issue in
the matter, but the contract broadly permits . . .
plaintiff[s] to recover fees relating to any action
incurred by . . . plaintiff[s] in prosecuting or defending
a case related to this matter.
I'm just not persuaded . . . [r]arely do people
come before the [c]ourt where they say, "The lease says
$500 an hour. We're disputing about something else."
It's almost always a dispute about something else. The
heater is not working . . . the stove for the restaurant is
not working, but that's an issue to be litigated, but it's
not a reason to say it's not related to the lease itself
simply because it's some collateral issue that is
encompassed by the lease.
....
. . . In the [c]ourt's view these claims are intertwined
and both relate to the lease between the parties.
Moreover, as noted in the contract[,] it permits . . .
plaintiff[s] to recover fees with respect to any action
incurred in prosecuting or defending a case.
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Here, the agreement provides:
If Lessor be compelled to pay any expense, including
reasonable attorney's fees, in instituting, prosecuting or
defending any action by reason of any act or omission
of Lessee, the sums so paid by Lessor shall be
considered additional rent, and shall be immediately
due from Lessee upon written notice thereof.
"[F]ee determinations by trial [judges] will be disturbed only on the rarest
of occasions, and then only because of a clear abuse of discretion." Packard-
Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v.
Pantzer, 141 N.J. 292, 317 (1995)). Parties can contractually agree to pay
attorneys' fees. N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J.
561, 570 (1999). Here, defendants agreed to pay plaintiffs' costs, attorneys' fees,
and expenses.
To the extent that we have not addressed defendants' remaining
arguments, we conclude that they are without sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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