CHERRY HILL RETAIL PARTNERS, LLC VS. MARINO'S BISTRO TO GO CHERRY HILL, LLC (L-2692-17 AND L-3355-17, CAMDEN COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-4639-18
CHERRY HILL RETAIL
PARTNERS, LLC,
Plaintiff-Respondent,
v.
MARINO'S BISTRO TO
GO CHERRY HILL, LLC,
CONRAD BENEDETTO,
and JAMES MARINO,
Defendants-Appellants.
__________________________
MARINO'S BISTRO TO
GO CHERRY HILL, LLC,
Plaintiff-Appellant,
v.
CHERRY HILL RETAIL
PARTNERS, LLC, CHERRY
HILL RETAIL MANAGERS,
LLC, JSM AT CHERRY HILL,
LLC, JACK MORRIS, JOSEPH
MARINO, MMG CHERRY
HILL, LLC, CARMICHAEL
RESTAURANT SERVICES,
LLC, t/a MUSCLE MAKER
GRILL, and MICHAEL
DIPLACIDO, SR.,
Defendants-Respondents.
__________________________
Argued January 13, 2021 – Decided March 16, 2021
Before Judges Whipple, Rose, and Firko.
On appeal from the Superior Court of New Jersey, Law
Division, Camden County, Docket Nos. L-2692-17 and
L-3355-17.
Michael R. Hahn argued the cause on behalf of
appellants (Simeone & Raynor, LLC, attorneys; I.
Dominic Simeone, of counsel and on the briefs; Bryan
T. Eggert and Michael R. Hahn, on the briefs).
Richard D. Wilkinson argued the cause on behalf of
respondents Cherry Hill Retail Partners, LLC, Cherry
Hill Retail Managers, LLC, JSM at Cherry Hill, LLC,
Jack Morris, and Joseph Marino (The Weingarten Law
Firm, LLC, attorneys; Richard D. Wilkinson, of
counsel and on the brief; Meir S. Kalish, on the brief).
PER CURIAM
Defendants Marino's Bistro To Go Cherry Hill, LLC (MBTGCH), Conrad
Benedetto, and James Marino appeal from eight orders entered by the Law
Division: (1) the November 17, 2017 order dismissing counts two through five
of defendants' counterclaim; (2) the January 18, 2018 order entering final
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2
judgment by default against them; (3) the April 26, 2018 order vacating default
judgment; (4) the June 8, 2018 order awarding counsel fees to plaintiff; (5) the
February 5, 2019 order reopening and extending discovery; (6) the June 5, 2019
order granting plaintiff's motion for partial summary judgment and denying
defendants' motion for summary judgment; (7) the June 25, 2019 order entering
judgment against defendants; and (8) the August 1, 2019 order awarding counsel
fees to plaintiff. For the reasons that follow, we affirm all of the orders, and we
exercise our original jurisdiction under Rule 2:10-5 to modify the counsel fee
amount set forth in the August 1, 2019 order.
I.
We derive the following facts from the record and view them in the light
most favorable to the parties in respect of their summary judgment motions.
Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224
N.J. 189, 199 (2016).
Marino is a chef, restauranteur, and the sole owner of MBTGCH and
Marino's Bistro To Go, LLC (MBTG). Benedetto is Marino's father-in-law and
an investor in both entities. In late 2014, MBTGCH was looking for a new
location and had the opportunity to assume an existing lease in the Market Place
at Garden State Park (the Market Place) shopping center. Plaintiff, Cherry Hill
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Retail Partners, LLC (CHRP), owns and operates the Market Place. Carmichael
Restaurant Services, LLC (Carmichael), t/a Muscle Maker Grill (MMG), was
the existing leaseholder in the Market Place. Michael DiPlacido, Sr. (DiPlacido,
Sr.), is a principal of MMG. 1 DiPlacido, Sr. was also a guarantor of the CHRP
to MMG lease.
MBTGCH assumed the existing MMG lease on December 31, 2014.
Marino and Benedetto purported to execute a personal guarantee of Tenant's
Performance (Guaranty) under the lease. However, as was later discovered, the
lease was actually assigned to MBTGCH while the Guaranty was for the
obligations of MBTG.
The assumed lease was set to expire on April 30, 2016; however,
paragraph four of the assignment extended the term of the lease until April 30,
2021. MBTGCH failed to pay rent in November and December 2016, as well
as January and February 2017. On February 2, 2017, plaintiff initiated eviction
proceedings against MBTGCH by filing a verified complaint for non-payment
of rent in the Special Civil Part. In April 2017, MBTGCH executed a consent
1
Various records and filings contain different spellings. "DiPlacido" and
"DePlacido" are used interchangeably. We use "DiPlacido" in this opinion,
which is the spelling used by the parties in their briefs.
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order to enter a judgment of possession and agreed to vacate the premises by the
end of that month.
On July 5, 2017, plaintiff filed a complaint in the Law Division, docket
number L-2692-17, against MBTG, Marino, and Benedetto, alleging breach of
contract (count one), estoppel (count two), and breach of the covenant of good
faith and fair-dealing (count three), emanating from defendants' breach of the
lease and failure to abide by the Guaranty. Plaintiff sought compensatory and
statutory damages as well as counsel fees. Defendants answered plaintiff's
complaint on August 23, 2017, and contended they were not liable under the
personal guarantee because the tenant's name identified in the Guaranty was
MBTG, while the assignment listed the tenant as MBTGCH. Defendants also
filed a counterclaim alleging that plaintiff's complaint constituted frivolous
litigation because the drafting error rendered the contract nonexistent.
On August 25, 2017, defendants filed their own complaint in the Law
Division under docket number L-3355-17 against plaintiff; Cherry Hill Retail
Managers, LLC; JSM at Cherry Hill; Jack Morris and Joseph Marino who are
related to plaintiff (the "Related Entities"); Carmichael Restaurant Services,
LLC t/a Muscle Maker Grill; MMG Cherry Hill, LLC; and Michael DiPlacido,
Sr. The eleven-count complaint alleged: bad faith and frivolous litigation (count
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one); breach of contract (count two); fraud (count three); fraud in the
inducement (count four); conversion (count five); breach of fiduciary duty
(count six); unjust enrichment (count seven); conspiracy (count eight); breach
of the covenant of good faith and fair dealing (count nine); negligent
misrepresentation (count ten); and violations of the Consumer Fraud Act,
N.J.S.A. 56:8-1 to -226 (count eleven).
On August 30, 2017, plaintiff filed a motion for leave to file and serve an
amended complaint to assert reformation claims based on mutual mistake, or in
the alternative, unilateral mistake based on fraud. Thereafter, on September 13,
2017, plaintiff filed a motion to dismiss defendants' counterclaim pleading
frivolous litigation for failure to state a claim, pursuant to Rule 4:6-2(e). On
September 29, 2017, Judge Francisco Dominguez granted plaintiff's motion to
dismiss defendants' counterclaim alleging frivolous litigation for failure to state
a claim, noting that the claim required the filing party to be the prevailing party ,
which had not yet been ascertained.
On October 10, 2017, plaintiff filed a motion to dismiss defendants'
complaint under docket number L-3355-17 for failure to state a claim upon
which relief can be granted. In the alternative, plaintiff requested the matters be
consolidated to address any remaining claims. On October 13, 2017, Judge
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Dominguez granted plaintiff's motion for leave to file and serve an amended
complaint to assert reformation claims based on either mutual mistake, a
scrivener's error, or unilateral mistake based on fraud. Defendants moved to
dismiss plaintiff's amended complaint for failure to state a cognizable claim,
which was denied, and plaintiff subsequently filed same on October 17, 2017.
On November 17, 2017, Judge Steven J. Polansky heard oral argument on
plaintiff's motion to dismiss defendants' complaint under docket number L-
3355-17, or in the alternative to consolidate the matter with L-2692-17. Judge
Polansky dismissed count one, frivolous litigation, as premature, finding that
defendants were collaterally estopped from asserting a claim for frivolous
litigation as a result of Judge Dominguez's September 29, 2017 dismissal of the
frivolous litigation counterclaim in the related matter.
Judge Polansky also dismissed count six, breach of fiduciary duty, with
prejudice, finding no fiduciary duty existed as a matter of law. Counts two
through five, and seven through eleven were dismissed without prejudice, and
the judge granted defendants' motion to amend the pleading within twenty days.
Finally, the judge consolidated the matters under docket number L-2692-17 for
the purpose of conducting discovery and for trial.
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Defendants did not avail themselves of the twenty days' leave to amend
their complaint granted by Judge Polansky in his November 17, 2017 order.
Additionally, defendants failed to file an answer or otherwise move as to
plaintiff's amended complaint. Consequently, plaintiff moved for the entry of
default against all defendants as to its amended complaint, which was granted
and entered on December 7, 2017.
On January 8, 2018, plaintiff applied to the clerk of the court for the entry
of final judgment by default. Pursuant to Rule 4:43-2(a), the application was
made without a request for a proof hearing because liquidated damages were
sought. On January 18, 2018, judgment by default was entered by the clerk of
the court in the amount requested by plaintiff.
On February 14, 2018, defendants filed a motion to vacate the default
judgment, arguing excusable neglect in failing to answer the amended
complaint. Plaintiff filed opposition to the motion on February 22, 2018. On
March 2, 2018, defendants' motion was denied on procedural grounds. On
March 9, 2018, defendants moved again to vacate the default judgment, arguing
excusable neglect in failing to answer plaintiff's amended complaint. Plaintiff
filed opposition to the motion on March 20, 2018.
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On April 13, 2018, in an oral decision following argument, Judge
Dominguez granted defendants' motion to vacate the default judgment, but
predicated the relief on two conditions: (1) an award of attorneys' fees to
plaintiff; and (2) a bar to defendants filing any additional counterclaims, thus
preventing them from refiling the claims previously asserted under docket
number L-3355-17, where they chose not to file an amended complaint despite
Judge Polansky's granting of twenty days' leave to amend. Judge Dominguez's
April 13, 2018 oral decision was memorialized in a written order on April 26,
2018.
Plaintiff subsequently filed an affidavit of services seeking $15,000 for
counsel fees incurred in obtaining the judgment by default and opposing
defendants' motion to vacate the default judgment. At the June 8, 2018 hearing,
Judge Dominguez ordered defendants to pay $2500 to plaintiff for counsel fees
incurred in opposing defendants' motion to vacate default judgment. The judge
also granted plaintiff's motion to compel outstanding discovery, which was
served in November 2017. A memorializing order was entered that day.
Because defendants were recalcitrant and failed to comply with the June
8, 2018 order with respect to counsel fees, plaintiff filed a motion to enforce
litigant's rights. On August 17, 2018, Judge Dominguez ordered defendants to
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be held in contempt for failing to pay the $2500 counsel fee to plaintiff. In
addition, the judge entered judgment in the sum of $2500 against Benedetto
personally.
The record shows that discovery was a laborious and drawn-out process.
Consequently, plaintiff moved to compel the depositions of Marino and
Benedetto. On November 30, 2018, Judge Thomas T. Booth, Jr. denied
plaintiff's motion. On December 26, 2018, plaintiff moved to extend the
discovery end date, which was denied by Judge Booth on January 11, 2019.
Thereafter, plaintiff filed a motion for reconsideration, which was granted in
part. On February 15, 2019, Judge Booth granted plaintiff's motion to reopen
and extend the discovery period for the sole purpose of deposing Marino and
Benedetto.
Marino and Benedetto refused to appear for their depositions. On March
15, 2019, plaintiff moved to compel Marino and Benedetto to appear for their
depositions and hold them in contempt of the February 15, 2019 order. On April
26, 2019, Judge Booth ordered Marino and Benedetto to appear for their
depositions on May 3, 2019, or be faced with sanctions if they failed to comply.
Ultimately, Marino and Benedetto were deposed. Plaintiff claims they recalled
"virtually nothing" about the negotiation of the Assignment and Guaranty.
A-4639-18
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At the close of discovery, defendants filed a motion for summary
judgment arguing the Guaranty had to be enforced strictly as written since it was
clear and unambiguous, and liability against MBTGCH was legally impossible.
Marino and Benedetto did not submit a responding statement either admitting or
disputing each of the facts set forth in defendants' motion as required by Rule
4:46-2(b). Plaintiff filed a cross-motion for summary judgment on the issue of
liability and sought reformation of the Guaranty. In support of its cross-motion,
plaintiff submitted a certification from Charles Sheard, the attorney who
represented plaintiff in the transaction and the draftsperson of the Assignment
and Guaranty.
In his certification, Sheard stated he was informed by plaintiff's leasing
agent, John Birnbaum, that MBTGCH was going to take over an existing lease
between plaintiff and MMG. Sheard also certified that an email from Marino,
or someone writing on his behalf, advised that the tenant was going to be MBTG,
and he was never told that the name of the tenant/assignee would change. All
of the drafts of Sheard's documents identified the tenant/assignee as MBTG and
were sent to defendants or their counsel. None of the versions of Sheard's
documents ever identified the tenant/assignee as MBTGCH. Sheard certified he
did not see the documents again until after they were signed and only saw the
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Assignment and not the Guaranty, and therefore, he did not notice the
discrepancy. Additionally, Sheard highlighted that paragraph nine of the
Assignment cross-references the Guaranty and therefore, conditioned plaintiff's
consent to the Assignment upon Marino and Benedetto signing as Guarantors of
the new tenant's obligations. Defendants did not challenge Sheard's
certification.
On June 5, 2019, Judge Booth heard oral argument on defendants' motion
for summary judgment and plaintiff's cross-motion for partial summary
judgment and reformation. The record shows plaintiff clarified it was only
seeking relief at this juncture on its theory of reformation and withdrew its
claims based on fraud and unilateral mistake. In his oral opinion, the judge
denied defendants' motion for summary judgment and granted plaintiff's motion
for partial summary judgment on the issue of personal liability against Marino
and Benedetto.
Judge Booth reasoned:
Here, I find that the—lack of any other possible
explanation for why Benedetto and Marino would have
executed a [G]uarant[y], other than they were executing
a [G]uarant[y] of the [A]ssignment between the
plaintiff and [MBTG], there's—there's—is dispositive
of the issue. So, it's—it's the lack of any evidence
before the [c]ourt of any other agreement that would
have been guaranteed.
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Moreover, one of two things happened: Either the
defendants or somebody altered the [A]ssignment
purposefully knowing that the [G]uarant[y] guaranteed
a different—the payments of a different entity or it was
a mistake. But, either way, reformation is available and
is the appropriate remedy here because if it was
purposeful, then that means that it was a unilateral
mistake with unconscionable conduct or fraud on
behalf of the defendants. Or if it wasn't that, then it was
a mutual mistake to not have the—the documents, the
assignment and the guarantee, match up perfectly.
So, for those reasons, I am going to deny the
motion for summary judgment of the defendants,
Benedetto and Marino, and I'm granting the cross-
motion for summary judgment on reformation to the
plaintiff . . . .
At the onset of trial on June 11, 2019, plaintiff moved to amend its
complaint to substitute MBTGCH in place of MBTG as the tenant-defendant in
accordance with the judge's June 5, 2019 decision. Plaintiff's motion to amend
was granted. Judge Booth concluded that reformation was necessary, and
therefore, his order could not have applied to MBTG. A memorializing order
was entered that day, and trial was scheduled for June 11, 2019, on the issue of
damages only as to MBTGCH, Marino, and Benedetto.
At trial, plaintiff presented testimony from three witnesses: (1) Michael
McDermott, the commercial leasing manager for the Market Place, regarding
plaintiff's efforts to mitigate and re-let the premises; (2) Andrea Cintron, a
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commercial lease accountant, as to the issue of damages pre- and post-
dispossession; and (3) Greg Bohn, as to the issue of damages to be assessed
relative to defendants' vacating the premises. Defendants called no witnesses
and presented no evidence. After considering the parties' proposed findings of
fact and conclusions of law, Judge Booth rendered a comprehensive oral
decision on June 13, 2019.
The judge found plaintiff's witnesses to be "credible" and their testimony
was "worthy of belief." Specifically, the judge found plaintiff "engaged in
multiple" efforts to mitigate its damages and concluded "the proper method of
calculating plaintiff's damages is the period from April 30th, 2017 when [it]
regained possession of the property following the defendants' default to
December 7, 2018, the day before the new tenant's rent commencement date[,]
which was December 8, 2018 due to its build-out period." The judge awarded
$278,002.07 in damages, inclusive of pre-judgment interest, and noted "all three
defendants are liable" for those damages. In addition, Judge Booth indicated he
would consider an application for counsel fees for plaintiff's counsel. On June
25, 2019, final judgment was entered against MBTGCH, Marino, and Benedetto,
jointly and severally, in the sum of $278,002.07.
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In accordance with the judge's instruction, plaintiff submitted an affidavit
of services seeking $94,216 in fees and costs, which was opposed by defendants.
On August 1, 2019, the judge entered an order granting plaintiff $93,556 in fees
and costs. This appeal ensued.
On appeal, MBTGCH, Benedetto, and Marino argue the judges erred: (1)
in finding MBTGCH failed to state a claim for relief under Rule 4:6-2(e) with
respect to counts two, three, four, five, seven, eight, nine, ten, and eleven of
their complaint filed under docket number L-3355-17; (2) by failing to establish
just terms for granting relief from the default judgment entered on January 11,
2018, by the clerk of the court under Rule 4:50-1; (3) in denying Benedetto and
Marino's motion for summary judgment and granting plaintiff's cross-motion for
partial summary judgment; (4) by finding that the Guaranty was subject to
reformation; (5) by awarding judgment to plaintiff without evidence being
presented on every element of its claim; (6) by permitting plaintiff to amend its
complaint on the day of trial to include MBTGCH as a party; (7) in finding
plaintiff mitigated its losses and awarding damages from May 2017 to
September 2018; (8) by awarding pre-judgment interest of three and one-half
percent to plaintiff pursuant to Rule 4:42-11; and (9) by awarding an
unreasonable amount of attorney's fees to plaintiff. For the first time on appeal,
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MBTGCH, Benedetto, and Marino also request that we remand the matter to
determine if it was proper to proceed without the inclusion of a necessary party ,
that is Michael DiPlacido, Sr.
II.
"A trial court's interpretation of the law and the legal consequences that
flow from established facts are not entitled to any special deference."
Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995). A trial
court's interpretation of the law is generally reviewed de novo. Occhifinto v.
Olivo Constr. Co. LLC, 221 N.J. 443, 453 (2015).
An appellate court reviews motions to dismiss under a de novo standard.
Castello v. Wohler, 446 N.J. Super. 1, 14 (App. Div. 2016). Specifically, in
reviewing a trial court's dismissal of a complaint pursuant to Rule 4:6-2(e), an
appellate court applies a plenary standard of review. Stop & Shop Supermarket
Co., LLC v. Cnty. of Bergen, 450 N.J. Super. 286, 290 (App. Div. 2017). "An
appellate court reviews de novo the trial court's determination of the motion to
dismiss under Rule 4:6-2(e)." Dimitrakopoulos v. Borrus, Goldin, Foley,
Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019).
A few days after defendants' answer was filed under docket number L-
2692-17, they filed a separate action, L-3355-17, against CHRP, its alleged
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members, the ostensible individual owners of these entities, and the parties who
purportedly assigned the lease to MBTGCH (MMG, Carmichael, DiPlacido, Sr.,
and Michael DiPlacido, Jr.). In their complaint, defendants asserted claims for:
(1) bad faith and frivolous litigation (count one); (2) breach of contra ct (count
two); (3) fraud (count three); (4) fraud in the inducement (count four); (5)
intentional and malicious interference and disruption of business operations
(count five); (6) breach of fiduciary duty (count six); (7) unjust enrichment
(count seven); (8) conspiracy (count eight); (9) bad faith (count nine); (10)
negligent misrepresentation (count ten); and (11) consumer fraud and deceptive
business practice (count eleven). 2 Plaintiff moved to dismiss all of defendants'
claims, and to consolidate any remaining claims under matter L-2692-17.
In granting a motion to vacate, trial courts are to exercise their sound
discretion. Reg'l Constr. Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div.
2003) (citing Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966)). Absent an
abuse of discretion, their decisions will not be disturbed by a reviewing court.
Ibid. We conclude that Judge Polansky properly dismissed defendants' claims
two through five, and seven through eleven, without prejudice, for failure to
2
A second "count eleven" was pled in defendants' complaint against potential
fictitious entities and individuals, which is not germane to our opinion.
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state a claim. Judge Polansky aptly noted that a number of the claims made by
defendants in their complaint failed to meet the heightened pleading
requirements necessary to make a claim because they failed to identify the
specific party the claims were made against. Specifically, counts three, four,
eight, ten, and eleven were subject to statutorily proscribed heightened pleading
requirements, which defendants failed to satisfy. The remaining claims also
failed to plead with specificity although no statutorily proscribed heightened
standard applied.
Judge Polansky specifically addressed each of defendants' eleven claims
against plaintiff and made thorough findings. He concluded that the claims were
legally deficient because they did not provide sufficient notice to the party the
claim was asserted against. Our review of the record from oral argument reveals
Benedetto argued the motion on behalf of defendants and did not answer the
majority of the judge's questions, but instead, he merely referred to vague
theories based on fraud being made against plaintiff. Therefore, we find no error
in Judge Polansky's decision.
Moreover, even if the judge erred in dismissing counts two through five
and seven through eleven, it was harmless error because the dismissal was
without prejudice and with twenty-days leave to amend granted. Rule 2:10-2
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states "[a]ny error or omission shall be disregarded by the appellate court unless
it is of such a nature as to have been clearly capable of producing an unjust
result . . . ." See generally Willner v. Vertical Reality, Inc., 235 N.J. 65, 79-81
(2018) (applying harmless error in a civil case). Defendants chose not to take
advantage of the opportunity to cure any defects in their pleadings and failed to
present any evidence of the affirmative defenses they raised, fraud and unclean
hands, at trial. Therefore, we see no basis to disturb Judge Polansky's decision.
III.
We next address defendants' argument that Judge Dominguez abused his
discretion by imposing terms for vacating the final judgment by default. The
trial court has discretion to impose terms in connection with vacating a default
judgment. ATFH Real Prop. v. Winberry Realty, 417 N.J. Super. 518, 526-529
(App. Div. 2010). Rule 4:50-1 authorizes the trial court to condition an order to
vacate default judgment "upon such terms as are just." However, "[t]he
imposition of terms pursuant to [Rule] 4:50-1, while discretionary, should be
judged against the relative strength or weakness of the prejudice suffered by
plaintiff." Reg'l Constr. Corp. v. Ray, 364 N.J. Super. 534, 543 (App. Div.
2003). Terms should not be used to punish or sanction the party seeking relief.
Ibid.A-4639-18
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With respect to awarding counsel fees as a condition, we have stated that
a defendant seeking to vacate default may be required to reimburse the plaintiff
for the fees and costs "in pursuit of the default judgment or in responding to the
motion to vacate." Ibid. Here, Judge Dominguez only awarded plaintiff $2500
in fees of the requested $15,000 amount. And, the judge highlighted in his order
that allowing defendants to file a counterclaim would reward their inaction in
the matter. There was clear authority for the judge to sanction defendants in the
manner prescribed, and we discern no abuse of discretion.
IV.
Defendants also contend Judge Booth erred in denying Benedetto and
Marino's motion for summary judgment and granting plaintiff's cross-motion for
partial summary judgment. Again, we disagree.
In ruling on a summary judgment motion, a trial court must "consider
whether the competent evidential materials presented, when viewed in the light
most favorable to the non-moving party, are sufficient to permit a rational
factfinder to resolve the alleged disputed issue in favor of the non-moving
party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). An
appellate court reviews a grant or denial of summary judgment de novo, using
the same standard as the trial court. N.J. Transit Corp. v. Certain Underwriters
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at Lloyd's London, 461 N.J. Super. 440, 452 (App. Div. 2019). Thus, we must
determine whether a genuine issue of material fact is present and, if not, evaluate
whether the trial court's ruling on the law was correct. See Prudential Prop. &
Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167-69 (App. Div. 1998). We also
view the evidence in the light most favorable to the non-moving party. Murray
v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012).
Reformation of a contract is justified only where there has been "mutual
mistake or unilateral mistake by one party and fraud or unconscionable conduct
by the other." St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of
Camden, 88 N.J. 571, 577 (1982). "The doctrine of mutual mistake applies when
a 'mistake was mutual in that both parties were laboring under the same
misapprehension as to [a] particular, essential fact.'" Bonnco Petrol, Inc. v.
Epstein, 115 N.J. 599, 608 (1989) (alteration in original) (quoting Beachcomber
Coins, Inc. v. Boskett, 166 N.J. Super. 442, 446 (App. Div. 1979)). The party
seeking reformation must present "clear and convincing proof that the contract
in its reformed, and not original, form is the one that the contracting parties
understood and meant it to be." Cent. State Bank v. Hudik-Ross Co., 164 N.J.
Super. 317, 323 (App. Div. 1978) (citation omitted).
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Moreover, reformation of a contract is not a modification, but rather a
recognition that the writing failed to accurately convey the intent of the parties.
Aarvig v. Aarvig, 248 N.J. Super. 181, 186 (Ch. Div. 1991). Here, the record
showed there was clear and convincing proof that Sheard, the scrivener of the
Assignment and Guaranty, erred in drafting the instruments in a manner that
manifested the intention of the parties. See St. Pius X House of Retreats, 88
N.J. at 581. Sheard's certification and testimony detailed how the discrepancy
between the name of the tenant listed on the Assignment and Guaranty occurred.
Defendants did not present any contradictory facts or testimony to proffer that
the Guaranty was improperly drafted.
"To defeat a motion for summary judgment, the opponent must 'come
forward with evidence that creates a genuine issue of material fact.'" Cortez v.
Gindhart, 435 N.J. Super. 589, 605 (App. Div. 2014) (quoting Horizon Blue
Cross Blue Shield of N.J. v. State, 425 N.J. Super. 1, 32 (App. Div. 2012)).
"[C]onclusory and self-serving assertions by one of the parties are insufficient
to overcome the motion[.]" Puder v. Buechel, 183 N.J. 428, 440-41 (2005).
Applying these standards, we discern no reason to reverse the granting of partial
summary judgment to plaintiff on the issue of reformation.
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Our careful review of the record shows the judge reviewed the evidence
in a light most favorable to defendants relative to plaintiff's cross-motion for
partial summary judgment. Judge Booth conducted oral argument and placed
his findings of fact and conclusions of law on the record. Based upon our de
novo review, we conclude defendants presented no evidence to refute plaintiff's
proofs on mutual mistake. Sheard credibly certified that he never received a
signed copy of the Guaranty and thus was unable to identify the discrepancy
between the named entity on the Assignment and the Guaranty. Paragraph nine
of the Assignment clearly provides that plaintiff's consent to the Assignment
was conditioned on Marino and Benedetto's execution of personal guarantees.
Indeed, the parties agreed to "execute[] and deliver[] to [l]andlord a [G]uaranty
of [t]enant's obligations under the lease." We conclude reformation was both
appropriate and warranted based upon the circumstances and undisputed
evidence.
V.
In a two-sentence argument in their brief, defendants assert that plaintiff
failed to provide evidence of each element of its claim. We disagree and add
the following brief comments.
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At trial, Judge Booth aptly noted "[e]veryone agrees that there was a
default on the [l]ease." Moreover, defendants voluntarily entered into a consent
judgment for possession of the premises and admitted they were in default. The
judge heard from witnesses and considered the evidence. Consequently, the
judge adopted the proofs on damages submitted by plaintiff and entered
judgment in its favor as described earlier. We see no shortcomings with the
presentation or quality of plaintiff's proofs and see no reason to intervene in the
judge's disposition of the issues. There was no evidence to the contrary. So
long as the judge's findings were based on evidence in the record—our
obligation is to defer to those findings. Rova Farms Resort, Inc. v. Inv'rs Ins.
Co. of Am., 65 N.J. 474, 483-84 (1974).
VI.
Defendants next argue that Judge Booth erred by permitting plaintiff to
amend its complaint on the day of trial to include MBTGCH as a party. Our
Court has "made clear that 'Rule 4:9-1 requires that motions for leave to amend
be granted liberally' and that 'the granting of a motion to file an amended
complaint always rests in the court's sound discretion.'" Notte v. Merchs. Mut.
Ins. Co., 185 N.J. 490, 501 (2006) (quoting Kernan v. One Washington Park
Urban Renewal Assocs., 154 N.J. 437, 456-57 (1998)). Although motions to
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amend "are ordinarily afforded liberal treatment, the factual situation in each
case must guide the court's discretion, particularly where the motion is to add
new claims or new parties late in the litigation." Bonczek v. Carter-Wallace,
Inc., 304 N.J. Super. 593, 602 (App. Div. 1997) (emphasis added).
Here, the substitution of MBTGCH for MBTG was little more than a name
change and simply fulfilled the judge's granting of partial summary judgment on
the issue of reformation to plaintiff. Saliently, defendants conceded on the
record "[w]e agree with Your Honor that there would be no prejudice in simply
substituting the name [MBTGCH for MBTG] . . . ." Therefore, we conclude the
judge did not abuse his discretion in allowing plaintiff to substitute MBTGCH
for MBTG on the day of trial. See Bonczek, 304 N.J. Super. at 602.
VII.
Defendants also argue that Judge Booth erred in finding plaintiff mitigated
its damages. We reject this argument.
The trial judge's findings on the issue of mitigation of damages must be
upheld if supported by "sufficient, credible evidence." State v. Ernst & Young,
LLP, 386 N.J. Super. 600, 616 (App. Div. 2006). Generally, the "burden of
proving facts in mitigation of damages rest[s] upon the party breaching the
contract." Cohen v. Radio-Elecs. Officers Union, Dist. 3, 275 N.J. Super. 241,
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262 (App. Div. 1994) (citing Roselle v. La Fera Contracting Co., 18 N.J. Super.
19, 28 (Ch. Div. 1952)). However, landlords generally have the burden of
proving that they made reasonable efforts to re-let their premises where a tenant
breaches a lease. Sommer v. Kridel, 74 N.J. 446, 458-59 (1977); see also
McGuire v. Jersey City, 125 N.J. 310 (1991) (extending residential landlord's
duty to mitigate to commercial landlords). Courts generally find efforts to re -
let reasonable where the landlord takes some affirmative action to find a new
tenant. Sommer, 74 N.J. 458-59 (listing potential efforts such as advertising in
publications, showing the premises to other prospective tenants, employing a
realtor, and more).
McDermott testified as to plaintiff's efforts to re-let the premises
following defendants' default and eviction up to the time it signed a lease with
Playa Bowls in September 2018. The judge found McDermott was credible
when he testified he was personally involved with finding a new tenant after he
learned the space was vacant; reached out to the broker community; distributed
marketing brochures at events held at the International Convention of Shopping
Centers and electronically; made telephone calls; and sent emails to brokers and
on CoStar, an online platform for commercial real estate space. Although Playa
Bowls was first shown the property in May 2017, it did not sign a lease until
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September 2018 because Playa Bowls decided to switch from opening a
"corporate store" to a "franchised store" at the location. In December 2018,
Playa Bowls began paying rent.
According to McDermott's unrefuted testimony, he continued to market
the property until Playa Bowls was ready to commit. The judge considered
defendants' argument that nineteen months of rental income—$158,647.04—
should be subtracted from plaintiff's damages claim because Playa Bowls was
introduced to the premises in May 2017. The record reveals the judge properly
accounted for this argument and disavowed it. The judge's decision was based
upon substantial, credible evidence in the record, and we see no reason to disturb
his determination.
VIII.
Next, defendants contend that Judge Booth abused his discretion in
awarding pre-judgment interest under Rule 4:42-11 at three and one-half
percent. At trial, Cintron conceded during her testimony that the interest figures
set forth in the Statement of Amount Due she prepared were not calculated
correctly as per Section 25.11 of the lease. Defendants assert that the judge
could only award post-judgment interest pursuant to Rule 4:42-11, and not pre-
judgment interest.
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Our Court has made quite clear that "[a]lthough prejudgment interest in a
tort action is expressly governed by [Rule] 4:42-11(b), 'the award of
prejudgment interest on contract and equitable claims is based on equitable
principles.'" Litton Indust. v. IMO Indus., 200 N.J. 372, 390 (2009) (quoting
Cnty. of Essex v. First Union Nat'l Bank, 186 N.J. 46, 61 (2006)). Further, the
"award of prejudgment interest in a contract case is within the sound discretion
of the trial court." Ibid. "Similarly, the rate at which prejudgment interest is
calculated is within the discretion of the court." Ibid. (citing Musto v. Vidas,
333 N.J. Super. 52, 74-75 (App. Div. 2000)). "Unless the allowance of
prejudgment interest 'represents a manifest denial of justice, an appellate court
should not interfere.'" Ibid. (quoting First Union Nat'l, 186 N.J. at 61).
The judge weighed and considered the testimony and resolved the pending
issue. The Guaranty provided that "If Guarantor fails to pay any amount payable
under this Guaranty when due, interest on such amount shall accrue at the
highest legal rate chargeable to Guarantor in the State of New Jersey." The
judge's decision is entitled to deference. Having undertaken a thorough analysis
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of the record, we conclude the judge's decision to award pre-judgment interest
at three and one-half percent was not an abuse of discretion. 3
IX.
Defendants also argue Judge Booth erred in awarding counsel fees to
plaintiff, that the award was unreasonable, and an abuse of discretion. However,
the parties agree there is no rule against contracting to pay another party's
counsel fees.
"[Rule 4:42-9] does not preclude a party from agreeing by contract to pay
attorneys' fees." Kellam Assocs. v. Angel Projects, LLC, 357 N.J. Super. 132,
138 (App. Div. 2003). Our Court has noted that "a party may agree by contract
to pay attorneys' fees." N. Bergen Rex Transp. v. Trailer Leasing Co., 158 N.J.
561, 570 (1999). Awards of attorneys' fees are only disturbed upon a clear abuse
of discretion. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001).
Here, both the lease and Guaranty contained provisions making
defendants responsible for plaintiff's counsel fees in the event of a default under
3
We have previously noted that absent unusual circumstances the appropriate
rate of prejudgment interest is the rate of return earned by the State Treasurer,
as contemplated by Rule 4:42-11(a)(ii). Benevenga v. Digregorio, 325 N.J.
Super. 27, 34-35 (App. Div. 1999). As of January 2019, that rate was one and
one-half percent, see Publisher's Note to Rule 4:42-11, plus two percent per
annum, Rules 4:42-11(b) and 4:42-11(a)(iii), for a total interest rate of three and
one-half percent in this matter. See R. 4:42-11.
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the terms of the lease. Section 15.2(b) of the lease provides for "Default Costs"
and Section 25.9 states reasonable attorneys' fees shall be paid to the prevailing
party by the losing party. Moreover, the Guaranty shifted the responsibility of
payment of counsel fees to defendants holding them liable for "[l]andlord's legal
expenses and reasonable attorneys' fees and disbursement" arising from a default
by the tenant. Therefore, the judge did not abuse his discretion in awarding
counsel fees to plaintiff.
We also reject defendants' argument that the judge erred in awarding
counsel fees without conducting a hearing. Our Court has noted that "appellate
courts will not disturb the decision to deny a plenary hearing unless there is a
'clear abuse of discretion.'" Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 25
(2004) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)). Further, our
Court has emphasized that "a plenary hearing should be conducted only when
the certifications of counsel raise material factual disputes that can be resolved
solely by the taking of testimony. We expect that such hearings will be a rare,
not routine, occurrence." Id. at 24 (emphasis added).
In the matter under review, plaintiff's counsel submitted a detailed
affidavit of service dating back to 2017 in support of the counsel fee application
to Judge Booth. The affidavit set forth who performed the work, the hourly rate
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charged, the date the service was rendered, and a description of the professional
work performed. Defendants were provided the opportunity to file opposition.
Therefore, we conclude there was no abuse of discretion in Judge Booth denying
a plenary hearing on the counsel fee issue.
During appellate oral argument, plaintiff's counsel stipulated there was a
mathematical error and that $15,000 should be deducted from the $93,566
counsel fee award for an adjusted award of $78,566. Because we have the
necessary information to determine the reasonable attorney fees, we exercise
original jurisdiction in this matter, Rule 2:10-5, and determine the amount
payable by defendants to counsel for plaintiff following trial to be $78,566. We
remand to the trial judge to enter an order accordingly. We otherwise affirm
Judge Booth's award of counsel fees.
Similarly, we find no abuse of discretion in Judge Dominguez's order
awarding $2500 in counsel fees to plaintiff in connection with defendants'
motion to vacate the default judgment. Certainly, the judge had the ability to
award counsel fees as a condition to vacating default judgment and only awarded
$2500 of the $15,000 requested by plaintiff. Given our opinion, Judg e Booth
was well within his discretion in considering plaintiff's request for the balance
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of the fees, $12,500, previously submitted to Judge Dominguez, and we see no
reason to reverse.
X.
Finally, for the first time on appeal, defendants contend that DiPlacido,
Sr., a principal of the prior tenant MMG, and a guarantor of plaintiff on the
MMG lease, was a necessary party to these proceedings. Defendants assert that
the trial judges should have sua sponte considered the necessity of including
DiPlacido, Sr. as a party before allowing the matters to proceed.
We generally decline to address issues not presented to the trial court,
unless the issues pertain to the trial court's jurisdiction or "matters of great public
interest." State v. Robinson, 200 N.J. 1, 20-22 (2009); see also State v. Arthur,
184 N.J. 307, 327 (2005); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234
(1973). Nonetheless, we add the following brief remarks.
The Guaranty signed by Marino and Benedetto provided in relevant part:
This Guaranty is an absolute and unconditional
guaranty of payment (and not of collection) and of
performance. The liability of [g]uarantor is co-
extensive with that of [t]enant and any other guarantor
of [t]enant's obligations under the [l]ease and this
Guaranty shall be enforceable against [g]uarantor
without the necessity of any suit or proceeding on
[l]andlord's part of any kind or nature whatsoever
against [t]enant or any other guarantor and without and
without the necessity of any notice of nonpayment,
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nonperformance or nonobservance or of any notice of
acceptance of this [G]uaranty or of any notice or
demand to which [g]uarantor might otherwise be
entitled, all of which [g]uarantor hereby expressly
waives, provided that notice shall have been given to
[t]enant (but only if and to the extent required by the
[l]ease).
[(Emphasis added).]
There is no question that Marino and Benedetto were on notice and agreed
to be jointly and severally liable to plaintiff in conjunction with all other
guarantors by the plain terms of this provision. Under the terms of the Guaranty,
plaintiff clearly had no obligation to seek contribution from DiPlacido, Sr. either
before or concurrently with any action seeking payment from Marino and
Benedetto.
When evaluating whether a party is necessary, the defendants do not
dictate who should or must be added to the litigation, necessary parties are
determined from the perspective of the absent party, or the plaintiff. See, e.g,
LaMar-Gate, Inc. v. Spitz, 252 N.J. Super. 303 (App. Div. 1991) (from absent
party's standpoint); Schaeffer v. Strelecki, 107 N.J. Super. 7 (App. Div. 1969)
(from plaintiff's standpoint). Because plaintiff chose to file a complaint against
Marino and Benedetto, DiPlacido, Sr.'s interests were not being "necessarily
affected." See Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 394 N.J.
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Super. 71, 82 (App. Div. 2007) (quoting Jennings v. M&M Transp. Co., 104
N.J. Super. 265, 272 (Ch. Div. 1969)). Therefore, we reject defendants'
argument that DiPlacido, Sr. should have sua sponte been made a necessary
party by the judge.
To the extent we have not specifically addressed some of defendants'
contentions, it is because we find they have insufficient merit to warrant further
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed as modified.
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