Opinion
DOCKET NO. A-4495-12T3
07-30-2014
LAK LEASING, INC. d/b/a LAK, INC., a New Jersey Corporation, Plaintiff-Appellant, v. MARK IV TRANSPORTATION & LOGISTICS, INC. a New Jersey corporation, Defendant-Respondent/Third-Party Plaintiff, v. QUALITY CARRIERS, INC., and SADDLE PHELAN, LLC, Third-Party Defendants, and QUALITY CARRIERS, INC., Fourth-Party Plaintiff, v. LAK LEASING, INC. d/b/a LAK, INC., a New Jersey corporation, Fourth-Party Defendant.
Lauren B. Cohen, attorney for appellant. White and Williams, L.L.P., attorneys for respondent (Paul Piantino, III, of counsel and on the brief; Amanda E. McKinlay, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano and Sumners. On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-11146-10. Lauren B. Cohen, attorney for appellant. White and Williams, L.L.P., attorneys for respondent (Paul Piantino, III, of counsel and on the brief; Amanda E. McKinlay, on the brief). PER CURIAM
Plaintiff LAK Leasing, Inc., doing business as LAK, Inc. (LAK), appeals from two orders of the Law Division dated April 22, 2013. One order granted defendant Mark IV Transportation & Logistics, Inc. (Mark), summary judgment, dismissing LAK's complaint and entering judgment in favor of Mark on its counterclaim against LAK in the amount of $14,585.53. The second order denied LAK's cross-motion for partial summary judgment against Mark.
LAK asserts a variety of arguments which we have considered in light of the record and applicable legal standards. We affirm the denial of LAK's motion for partial summary judgment and the dismissal of LAK's complaint. However, we reverse that portion of the order granting Mark judgment on its counterclaim and remand the matter to the Law Division for further proceedings.
I.
We confine our review to the evidence in the record before the motion judge. Lombardi v. Masso, 207 N.J. 517, 542 (2011).
The dispute centered around the parties' respective responsibilities for certain utility charges incurred by their businesses while both were occupying a commercial building located at 106 Kenny Place in Saddle Brook (the building). The building was owned by Saddle Phelan LLC and leased in its entirety to Quality Carriers, Inc. (Quality), pursuant to a lease agreement dated July 2, 2001, and extended thereafter.
Quality, in turn, executed a sublease with Mark dated January 31, 2002, that provided in Section 7 that Quality would "pay for the cost of all utility services rendered or furnished to the Premises during the Sublease Term, including without limitation electric, gas, water and sewer . . . ." The parties subsequently signed a four-year extension on May 26, 2006, which modified this particular portion of the sublease and provided:
Notwithstanding the provisions of Section 7 of the Sublease, as additional rent during the Extended Term, [Mark] shall pay to [Quality], thirty percent (30%) of [Quality's] actual costs of the following utilities and services for the Property: electricity, gas, water and sewer services, and pest control services ("Additional Rent"). [Mark] shall pay [Quality] the Additional Rent within twenty (20) days of receipt from [Quality] of invoices therefore during the Extended Term. [Mark's] failure
to pay Additional Rent when due shall be an Event of Default.
[(Emphasis added).]
In June 2008, Quality began shutting down its operations at the building, and on August 4, 2008, it subleased that portion of the building it still occupied to LAK, for a term commencing August 1, 2008, and expiring on June 30, 2010. LAK's portion of the premises was substantially larger than that occupied by Mark. The sublease between Quality and LAK provided:
9. UTILITIES AND SERVICES. [LAK] shall pay for all water rents, rates and charges, all sewer rents and similar charges, all charges for electricity, gas, heat, steam, hot water and all other utilities supplied to the Subpremises during the term in accordance with the terms and conditions set forth in Paragraph 17 of the Lease. [Quality] agrees that it shall, to the extent possible, cause all such utilities to be separately metered, and [LAK] shall pay any charges for same directly to the applicable utility company. . . . In the event any such utilities cannot be separately metered, [Quality] shall use commercially reasonable methods to calculate [LAK's] proportionate share of same, and [LAK] agrees that it shall pay such proportionate share directly to [Quality].
Lori Krawczuk, LAK's president and sole shareholder, testified at her deposition that after signing the sublease, Quality told her to "put all the utilit[y bills] in [LAK's] name and . . . work it out with [Mark]." LAK placed the utilities in its name and continued Quality's practice of invoicing Mark for thirty percent of the utility charges. Krawczuk acknowledged that this allocation "seemed to mirror the pro rata square footage" actually occupied by the parties.
Around October 2008, LAK hired electrician Douglas Palen of Kenneth Hyman Electric Company to assess LAK's and Mark's respective share of the electricity used on the premises, which continued to be singly-metered. Palen "found that approximately 75% of the electrical load was drawn by [Mark]."
On January 16, 2009, Steve Krawczuk, LAK's vice-president, sent a letter to Mark. Krawczuk noted that Mark operated "168 hours per week where [LAK] [was] only open [sixty] hours per week . . . ." He also noted that Mark heated a larger portion of its space and its trucks used more electricity. Krawczuk claimed that, "[b]ased on [LAK's] calculations[,] the invoice should be paid 26.3% LAK and 73.7% Mark[]." However, because the parties "work[ed] well together," Krawczuk proposed that Mark pay 65% of the monthly bill. LAK claimed in its answers to interrogatories that Mark had its own electrician verify that it was using much more electricity than LAK.
On December 28, 2009, Mark sent LAK an email with respect to the ongoing utility bill dispute, indicating that it "w[ould] work with [LAK] to get the electric bill more in line." The parties met in January 2010, and, according to Lori Krawczuk, Mark "agreed that [it] used much more than 30% and . . . was willing to pay 50% of the bills from 'this point on.'" In an email sent to Quality dated January 20, 2010, Lori Krawczuk confirmed the agreement reached with Mark, in particular its willingness to "adjust [its] payments to 50% from this point on[.]" However, Krawczuk noted that Mark would "not pay the 65% that [LAK had] been invoicing [it] and . . . advised [her] that [LAK] need[ed] to go back to Quality . . . for retribution [sic] on all the previous invoices . . . . The outstanding amount to date is $41,085.19." Over the next seven months, Mark paid LAK 50% of the amount invoiced, but then ceased sending any reimbursement to LAK.
As the conclusion of its lease with Saddle Phelan neared, Quality informed both parties that it would not be renewing its lease, and their subleases with Quality would not be renewed, causing them to become holdover tenants. LAK entered direct negotiations with Saddle Phelan to lease the entire building commencing July 1, 2010. On June 17, Mark told LAK that it intended to vacate the building on September 1, and it would remit rental payments to LAK in the interim.
On July 22, Quality served Mark with a notice of termination, effective August 31, 2010. On September 8, 2010, a court officer executed a lock-out of Mark from the building. On September 9, Saddle Phelan informed LAK that it was now delivering possession of the building pursuant to a lease agreement those parties had entered on June 18, 2010.
On November 16, 2010, LAK filed its complaint against Mark, alleging a variety of causes of action and seeking damages of $49,301.36, the alleged outstanding balance on invoices it had served on Mark for electric and gas consumption. Mark filed its answer, a counterclaim against LAK, and a third-party complaint against Quality. In its counterclaim, citing its sublease with Quality that required it to pay only 30% of all utility charges, Mark alleged LAK had unjustly enriched itself, and it sought the "return of the excess electric expenses paid [] beyond its 30% share . . . ."
We have been advised that although Saddle Phelan and Quality became parties to the litigation, all claims against them have been dismissed pursuant to a stipulation entered by the parties, and the only claims remaining are those by and between LAK and Mark.
After considering oral argument, the judge entered the orders under review, along with a short written statement of reasons. The judge cited Lori Krawczuk's deposition testimony, in which she acknowledged there never was a "finalized . . . agreement whereby [Mark] would be obligated to pay more than 30% of the utility expenses." The judge concluded that there was never any written or oral agreement, or any "meeting of the minds which modified [Mark's] contractual obligation" under the sublease with Quality.
Accepting Mark's argument that Palen's certification was in the nature of expert opinion, and LAK had failed to comply with applicable discovery rules, the judge refused to consider it. She concluded that "nothing otherwise . . . demonstrates there exists a genuine issue of material fact with respect to defendant's liability under quasi-contract/quantum meruit principles." She therefore dismissed LAK's complaint.
As to Mark's counterclaim, the judge simply stated:
[J]udgment on [the] counterclaim against [LAK] is granted. Based on the proofs submitted, it appears that plaintiff was compensated above and beyond the 30% that defendant was contractually obligated to pay under the 2006 Sublease. The court finds based on the above analysis that plaintiff has been unjustly enriched, and accordingly, judgment is granted for [Mark] . . . .This appeal ensued.
II.
In reviewing a grant of summary judgment, we apply the same standard as the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006).
[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to 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.We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J. Super. at 231. In so doing, we owe no deference to the motion judge's conclusions on issues of law, and review those de novo. Ibid.; see Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]
A.
We first consider the issues LAK raises regarding the grant of summary judgment dismissing its complaint. Before turning to the substance of its arguments, we consider LAK's claim that the judge erred by refusing to consider Palen's certification as proof that Mark was in fact using significantly more electricity than LAK.
Even though Palen performed his inspection in 2008, it is undisputed that LAK never identified him as an expert witness in discovery. Palen's certification was first provided on April 9, 2013, in direct response to Mark's motion for summary judgment. In that certification, Palen states that he is a "licensed electrician," who LAK consulted "for the purpose of assessing the electric usage by" Mark and by LAK, and that he "took the necessary steps to measure the electric usage in the [b]uilding" and concluded that "approximately 75% of the electrical load was being drawn by [Mark]." In her written statement of reasons, the judge rejected LAK's claim that Palen was only a fact witness, noting that the certification "d[id] not merely contain facts that Palen observed, but also contain[ed] statements based on his purported experience as a licensed electrician that are tantamount to an expert opinion . . . ."
We review both discovery and evidentiary rulings under an abuse of discretion standard. See, e.g., Bender v. Adelson, 187 N.J. 411, 428 (2006) (applying abuse of discretion review to exclusion of expert reports based on violation of discovery rules); Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008) ("In reviewing a trial court's evidential ruling, an appellate court is limited to examining the decision for abuse of discretion."). Rule 4:17-4(e) requires a party to identify and attach a copy of any expert's report to its answers to interrogatories. Rule 4:17-7 requires a party to amend its answers to interrogatories no later than twenty days before discovery ends, unless it certifies "that the information requiring the amendment was not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date." "In the absence of said certification, the late amendment shall be disregarded by the court and adverse parties." Ibid.
In this case, we defer to the judge's conclusion that Palen's certification was in the nature of expert testimony. Indeed, contrary to LAK's assertion that Palen's conclusion only required a simple mathematical calculation any lay person could perform, the entire purpose for having Palen provide the certification was because LAK's principals were unable to quantify Mark's electrical usage. We also see no reason to disturb the judge's conclusion that LAK's failure to furnish a report prior to the end of discovery rendered any proffer thereafter inadmissible.
In any event, even if Palen's certification is considered, LAK's complaint against Mark was properly dismissed. Initially, we note that, "[t]he interpretation of contracts and their construction are matters of law for the court subject to de novo review." Sealed Air Corp. v. Royal Indem. Co., 4 04 N.J. Super. 363, 375 (App. Div. 2008) (citation omitted). We apply basic contract principles to interpretation of leases. N.J. Indus. Props., Inc. v. Y.C. & V.L., Inc., 100 N.J. 432, 456 (1985).
"A contract arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (citations omitted). "Thus, if parties agree on essential terms and manifest an intention to be bound by those terms, they have created an enforceable contract." Ibid. "It is requisite that there be an unqualified acceptance to conclude the manifestation of assent." Ibid. (citation omitted). "An offeree may manifest assent to the terms of an offer through words, creating an express contract, or by conduct, creating a contract implied-in-fact." Id. at 436.
It is undisputed that both Mark and LAK had written agreements with Quality, but they had no written agreement between themselves. Mark's clear and unequivocal sublease with Quality required that it reimburse Quality for only 30% of the utility charges for the building.
LAK nonetheless argues that an implied contract existed with Mark. Specifically, LAK contends the judge applied the wrong standard on summary judgment and failed to accept the favorable testimony of Lori Krawczuk that Mark agreed to pay, and did pay for a period of time, 50% of the utilities.
However, even if we were to agree with that contention, there was no contract between LAK and Mark, implied or otherwise, because no consideration supported the agreement. "As a basic premise, it is true that no contract is enforceable . . . without the flow of consideration — both sides must get something out of the exchange." Oscar v. Simeonidis, 352 N.J. Super. 476, 484 (App. Div. 2002) (quotation omitted). "That premise applies equally to agreements to modify existing contracts as to new contracts." Id. at 484-85 (citing County of Morris v. Fauver, 153 N.J. 80, 100 (1998)).
Mark had a binding contractual agreement with the sublandlord, Quality, that by its terms provided for Mark's quiet enjoyment and use of the premises if it paid the rent and any additional rent in the nature of utility expenses. LAK did not provide anything to Mark in consideration that would support an implied-in-fact contract because LAK was not the sublandlord; it was simply another subtenant. We note that LAK does not argue it was the assignee of Quality's lease with Saddle Phelan, and there indeed is nothing in the record that would support such a claim. In short, LAK could not assert any contractual claim against Mark.
We turn then to LAK's claims that summary judgment was improperly granted on its equitable claim of quantum meruit. Quantum meruit is "a form of quasi-contractual recovery and 'rests on the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another.'" Starkey v. Estate of Nicolaysen, 172 N.J. 60, 68 (2002) (citing Weichert Co. Realtors, supra, 128 N.J. at 437). "Courts generally allow recovery in quasi-contract when one party has conferred a benefit on another, and the circumstances are such that to deny recovery would be unjust." Ibid. (emphasis added) (citing Weichert Co. Realtors, supra, 128 N.J. at 437). To recover under a theory of quantum meruit, a plaintiff must establish "'(1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services.'" Ibid. (citation omitted); accord Weichert Co. Realtors, supra, 128 N.J. at 437-38.
In its brief, LAK does not address the dismissal of its claim for unjust enrichment. An issue not briefed is deemed waived on appeal. Drinker, Biddle, & Reath, LLP v. N.J. Dep't of Law and Public Safety, 421 N.J. Super. 489, 496 n.5 (App. Div. 2011); Pressler & Verniero, Current N.J. Court Rules, comment 4 on R. 2:6-2 (2014).
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Here, LAK provided no benefit to Mark other than what Mark was otherwise entitled to receive under its sublease with Quality. Under the sublease, Mark was entitled to utility services if it paid 30% of those expenses as additional rent. LAK did not provide any services to Mark except to send it invoices, but this was something LAK unilaterally assumed responsibility for since, pursuant to its agreement with Quality, LAK agreed to put the service accounts in its name. Additionally, there was nothing unjust in permitting Mark to receive what it was legally entitled to receive if it paid 30% of the utility charges.
Lastly, LAK asserted a separate claim for damages caused by Mark's alleged failure to vacate the premises on June 30, 2010, when its sublease with Quality ended. As we understand the theory espoused by LAK, because Mark held over, its new direct lease with Saddle Phelan, which should have commenced on July 1, did not become effective until Mark was actually locked out in September. LAK claims that because Mark failed to vacate, LAK continued to pay $2000 per month more than it eventually did under its lease with Saddle Phelan.
The judge did not address this claim in her written statement of reasons. Nevertheless, LAK's argument lacks sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E). It suffices to say that LAK contends it was entitled to recover for the "tort of negligent conduct causing economic loss," citing People Exp. Airlines, Inc. v. Consolidated Rail Corp., 100 N.J. 246, 263 (1985). However, nothing in the record supports a claim of negligence against Mark. Mark's sublease ended. It held over, subject to the rights and remedies of its sublandlord, Quality, including the eventual remedy Quality asserted, i.e., eviction.
We affirm those portions of the two orders under review that denied LAK's motion for partial summary judgment and dismissed its complaint against Mark.
B.
LAK contends that the judge erred in granting summary judgment on Mark's counterclaim for unjust enrichment because it lacked evidential support, and because Mark's payment of fifty percent of the utilities, as compared to the original thirty percent, "constitute[d] a waiver of . . . [its] right to seek reimbursement." We agree with LAK that based on the motion record, there was a genuine factual dispute whether Mark waived its rights under the sublease agreement with Quality.
"Waiver is the voluntary and intentional relinquishment of a known right." Knorr v. Smeal, 178 N.J. 169, 177 (2003) (citation omitted). "An effective waiver requires a party to have full knowledge of his legal rights and intent to surrender those rights." Ibid. (citation omitted). "The intent to waive need not be stated expressly, provided the circumstances clearly show that the party knew of the right and then abandoned it, either by design or indifference." Ibid.
Here, viewing the motion evidence in a light most favorable to LAK as the non-moving party, Brill, supra, 142 N.J. at 540, a reasonable fact finder could conclude that Mark waived its right to pay only 30% of the utility costs and voluntarily agreed to pay more, thereby negating any claim it had against LAK for unjust enrichment. First, the exchange of correspondence in the record indicates Mark's representative was willing to consider modifying the arrangement. Second, Mark in fact paid more than 30% for several months immediately before its sublease terminated. Under these circumstances, granting summary judgment to Mark on its counterclaim was inappropriate. We therefore reverse that portion of one of the orders under review that entered judgment in favor of Mark on its counterclaim and remand the matter to the Law Division for further proceedings.
Affirmed in part, reversed in part and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION