Court Opinion

ID: 4678817
Source: CourtListenerOpinion
Date Created: 2021-04-20 14:08:55.518814+00
Date Added: 2024-06-11T08:03:46.875870
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-2878-19

ABRAMSON-OBAL, LLC,

          Plaintiff-Appellant,

v.

SUKETU SHAH and
KEDAR SHAH,

     Defendants-Respondents.
__________________________

                   Argued February 25, 2021 – Decided April 20, 2021

                   Before Judges Whipple, Rose, and Firko.

                   On appeal from the Superior Court of New Jersey,
                   Law Division, Bergen County, Docket No. L-7636-17.

                   Jeffrey R. Kuschner argued the cause for appellant
                   (Jeffrey R. Kuschner and Steven J. Zweig, on the
                   briefs).

                   Michael J. Forino argued the cause for respondents
                   (Archer & Greiner, PC, attorneys; Patrick Papalia, of
                   counsel and on the brief; Michael J. Forino, on the
                   brief).

PER CURIAM
      Plaintiff Abramson-Obal, LLC, appeals from a February 28, 2020

judgment following a bench trial in this commercial landlord-tenant dispute.

We affirm in part, and reverse and remand for the reasons that follow.

      Plaintiff owns a vacant commercial property in Saddle Brook.          The

premises consist of two partitioned commercial spaces, a 7,200-square-foot

Bennigan's franchise restaurant, and a smaller adjacent restaurant, Steak and

Ale. The restaurant had been leased to a different Bennigan's franchisor since

1979 but was vacated in 2008. The adjacent unit had also been vacant since

2008. Defendants, Suketu Shah and Kedar Shah, believed that the Bennigan's

brand would be a successful venture, so plaintiff and tenant, Bennigan's

Saddlebrook, LLC—of which defendants were sole members and principals—

executed a twenty-year lease of the restaurant on November 9, 2011.

                                          I.

      Under the lease, tenant's first rent payment was due 150 days from

issuance of a certificate of occupancy (CO). The lease required tenant to pay

plaintiff $12,000 per month for the first twenty-nine months. In the thirtieth

month, rent would be reduced to $9,600 per month but would increase

annually thereafter.

                                                                         A-2878-19
                                      2
       In addition to monthly rent, tenant was responsible for fifty-five percent

of the premises' property taxes, common area maintenance (CAM) charges,

and a proportional share of plaintiff's insurance premiums. Plaintiff agreed to

provide a monthly estimate of total CAM, property tax charges, and tenant's

proportional share of insurance premiums as additional rent. At plaintiff's

option, tenant could be responsible for late charges of ten percent of any

monthly payment paid later than ten days after its due date. The lease also

obligated tenant to pay "as [a]dditional [r]ent, all attorney[s'] fees and other

expenses incurred by [plaintiff] in enforcing any of the obligations under this

[l]ease . . . ."

       The lease permitted plaintiff to terminate if tenant defaulted due to a

voluntary bankruptcy petition. Section 14.06 of the lease sought to waive

plaintiff's duty to mitigate related damages: "[Plaintiff] and [t]enant hereby

expressly agree that [plaintiff] shall have no obligation or duty to mitigate or

attempt to offset or reduce any damages which are or may be suffered by

[plaintiff] as a result of [t]enant's default."

       Further, Section 32.02(B) states:

               The receipt of [b]asic [r]ent or [a]dditional [r]ent by
               [plaintiff], with knowledge of any breach of this
               [l]ease by [t]enant or of any default on the part of
               [t]enant in the observance or performance of any of

                                                                          A-2878-19
                                          3
            the conditions or covenants of this [l]ease, shall not be
            deemed to be a waiver of any provision of this [l]ease.

      Section 32.16 of the lease contains a fee-shifting provision that allows a

prevailing party to "be entitled to recover from the non-prevailing party its

costs of court, legal expenses and reasonable attorneys' fees."

      Defendants signed the lease and executed a separate personal Guaranty

of Lease (Guaranty).     Article XXX of the lease references the Guaranty,

stating:

            This [l]ease is contingent upon the unconditional
            guarantee of the terms and conditions of this [l]ease
            [a]greement by Kedar Shah and Suketu Shah
            (collectively the "[g]uarantors"). . . . [T]he guarantors
            jointly, severally and unconditionally guarant[ee] all
            of the terms and conditions of the [l]ease. Thereafter,
            during the remainder of the [t]erm, [t]enant shall
            provide a "good guy" [g]uaranty.1

      The Guaranty was executed simultaneously with the lease and sets forth

the guarantors' obligations. It provides in relevant part:

            (a) During the period from the [c]ommencement [d]ate
            through the end of the twenty-ninth month of the
            [l]ease following the [r]ent [c]ommencement [d]ate,
            the [g]uarantors jointly, severally, and unconditionally
            guarantee to the [l]andlord . . . the full and punctual
            performance and observance by [t]enant of all of the
            terms, covenants and conditions in the said [l]ease

1
 A "good guy guaranty" provision limits the liability of a personal guarantor
when a lease is terminated early under certain conditions.
                                                                         A-2878-19
                                       4
              contained on [t]enant's part to be kept, performed or
              observed.

              (b) Notwithstanding any limitation set forth in
              paragraph 1(a) above, in the event that this lease is
              terminated as a result of [t]enant committing an
              [e]vent of [d]efault at any time from the
              [c]ommencement [d]ate through the end of the tenth
              [l]ease [y]ear, the [g]uarantors shall guaranty the
              repayment to [l]andlord of the unamortized cost of the
              commission payable to the [b]roker . . . .

      The Guaranty also holds          defendants responsible for plaintiff's

"reasonable attorneys' fees and all costs and other expenses incurred in any

collection or attempted collection or in any negotiations relative to the

obligations hereby guaranteed or enforcing this Guaranty of lease against the

Guarantor."

      In October 2014, plaintiff and tenant executed an Amendment to Lease

and Settlement Agreement (Lease Amendment), which allowed the parties to

resolve and settle in full all claims accruing through the date of signing. In

addition to settling disputes between the parties for various nominal charges,

the Lease Amendment provided a $5,000 monthly rent deferment for a one-

year period. After one year, tenant was required to pay back the deferred rent

in monthly $2,000 increments over thirty months.

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                                       5
        Defendants also executed an "Amendment to and Reaffirmation of

Guaranty" (Reaffirmation) that extended their Guaranty period until full

payment of the deferred rent. In that document, defendants "ratif[ied] and

confirm[ed] their agreement to guarantee the payment of each and every

liability of [t]enant and every other obligation" to plaintiff as set forth in the

Lease, Guaranty, and Lease Amendment.

                                            II.

        In January 2017, plaintiff received notice that tenant had filed a Chapter

11 bankruptcy petition. Plaintiff did not make efforts to relet the restaurant

upon learning of the bankruptcy filing. Defendants attempted to restructure

the business, hoping to keep the space but rebrand the restaurant. Defendants

continued to pay rent and additional charges between January 2017 and May

2017.

        However, in May 2017, tenant's Chapter 11 bankruptcy case was

converted to a Chapter 7 liquidation, and the bankruptcy trustee rejected the

lease. Tenant abruptly ceased operations, and defendants turned over the keys.

Plaintiff did not invoice defendants upon repossession of the restaurant.

Plaintiff lawfully removed and auctioned most of the kitchen equipment tenant

left behind, netting approximately $25,000.            After plaintiff regained

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                                        6
possession, in June 2017, it retained the Goldstein Group to market the

restaurant.

      Goldstein's President, Charles Lanyard, was responsible for marketing

the restaurant. Under the listing agreement between Goldstein and plaintiff,

Goldstein would receive a five percent commission based on the total rent

received for up to fifteen years, or four percent of any gross sales price for

obtaining a buyer.    Goldstein advised that the current market rate for the

restaurant was less than tenant's rent in the Lease and Lease Amendment. A

potential tenant would likely seek less space than the restaurant offered,

according to Goldstein, and plaintiff was unlikely to secure more than a five -

year commitment from any new tenant. Goldstein and Lanyard were familiar

with the difficulties of leasing space at that location, as they had been trying to

lease the adjacent unit for approximately four years to no avail.

      Within two months of repossession, plaintiff received a letter of intent

(LOI) from Brothers BBQ. 2 After some discussion, plaintiff countersigned a

2
   During the time immediately following the marketing of the restaurant,
plaintiff received inquiries from other interested parties. In June 2017,
plaintiff received an LOI for the adjacent unit and engaged in subsequent lease
discussions with a pet daycare facility, but plaintiff opted not to pursue the
deal, fearing it could dissuade potential lessees of the restaurant space. In
November 2017, the Meadowlands Transportation Brokerage Association
                                                                            A-2878-19
                                       7
revised LOI in August 2017.       Under the terms of the LOI, Brothers BBQ

would lease 10,000 square feet—the entire restaurant and part of the adjacent

unit, at rental rates within plaintiff's expected range—for a ten-year term with

two five-year renewal options, and with rent payment to commence as soon as

120 days after lease signing. Plaintiff's attorneys drafted a lease reflecting the

terms of the LOI.      The Brothers BBQ lease would have netted plaintiff

between $236,000 and $547,000 more than would have been due from tenant's

Bennigan's lease. However, when plaintiff received an LOI from a prospective

purchaser, plaintiff abandoned the Brothers BBQ deal.

      The prospective purchaser, Jack Daniels Motors (JDM), submitted an

LOI in September 2017. Under its initial terms, JDM would lease the entire

restaurant space for use as a vehicle storage facility. The LOI requested a

fifteen-year lease term with three five-year renewal options. JDM would pay

rental rates higher than those proposed by Brothers BBQ. Like Brothers BBQ,

the JDM deal would have netted plaintiff more than tenant's unbreached lease,

and rental payments would have commenced only sixty days after lease

signing. Plaintiff ultimately rejected the JDM lease discussions and opted

expressed interest in purchasing the premises for $5,250,000 to be used as a
bus parking site. Plaintiff did not further pursue that deal.
                                                                           A-2878-19
                                       8
instead to pursue an outright sale of the premises to JDM. JDM submitted an

LOI for purchase and sale of the premises in September 2017.

                                         III.

      In November 2017, plaintiff brought a complaint against defendants

seeking compensatory damages pursuant to the lease, Guaranty, Lease

Amendment, and Reaffirmation. Plaintiff sought $416,294.74 in unpaid rent

and additional rent from May 2017 to November 2019, $22,000 in deferred

rent due under the Lease Amendment; $58,135.61 in unamortized brokers'

commissions due under the Guaranty; legal fees for enforcement of the lease

and bringing the lawsuit, totaling $59,764.21; an upward adjustment of

$2,195.53, representing an unbilled portion of additional rent from 2016; and

$60,879.62 in unintentionally omitted charges for which tenant had not been

billed since 2015.

      Shortly thereafter, in December 2017, plaintiff and JDM executed a

purchase and sale agreement for a purchase price of $4,750,000, expressly

contingent upon JDM's receipt of non-appealable zoning approvals for the

premises.   Once under contract, plaintiff instructed Goldstein to cease its

marketing activities.

                                                                      A-2878-19
                                     9
      JDM sought a use variance and other bulk variances from the Township

of Saddle Brook. The Township Zoning Board of Adjustment held a hearing

in May 2018, and all variances and plans were approved in June 2018.

However, a neighboring property owner threatened to appeal the grant of the

variances to JDM. Under the threat of the complaint, JDM terminated the

sales agreement for failure to obtain a non-appealable approval.             The

neighboring property owner filed a complaint in lieu of prerogative writ in July

2018. JDM assigned its rights in the complaint to plaintiff, which in turn

settled with the property owner.     Plaintiff's attempts to resurrect the JDM

purchase afterward were unsuccessful.

      After the collapse of that deal, and after Goldstein resumed its marketing

of the premises, several additional entities expressed interest in purchasing the

property.3 Defendants' liability for breach of the lease was established in an

3
  In December 2018, Coremark Group, LLC, offered to purchase the premises
for $4,500,000. In January 2019, D&M Tours offered to purchase the property
for $4,500,000. Four different potential restaurants expressed interest between
December 2018 and January 2019. All four opted not to move forward with
lease negotiations when they were advised that all restaurant equipment had
been removed.

     In April 2019, Sitex Group offered to purchase the premises for
$2,500,000. Plaintiff rejected Sitex's offer because it was too low, and
demanded Sitex meet an asking price of $5,200,000. In May 2019, Zoltek
                                                                          A-2878-19
                                     10
award of partial summary judgment in October 2019. A four-day bench trial

on damage mitigation commenced soon after.

                                           IV.

      The trial court issued the judgment and accompanying written opinion

being appealed on February 28, 2020.         The court found the testimony of

Abramson "inconsistent" and "less than credible" concerning attempts to find

"a reasonabl[y] adequate replacement restaurant tenant." The court also found

Lanyard "[e]qually less credible" due to "inherent conflict because of [his]

financial interest in the outcome of this case."

      The court found plaintiff's mitigation efforts unreasonable due to a

history of inaction and indecisive actions by Abramson. Though the Brothers

BBQ lease "show[ed] a viable rental stream of income," plaintiff terminated

negotiations based upon the "sheer speculation" and inherently riskier nature

Realty offered to purchase the premises for $4,650,000. Plaintiff rejected this
offer because of a financing contingency.

        In June 2019, Manzo Doren Organization of Saddle Brook, LLC, offered
to purchase the premises for $4,795,000. Also in June 2019, East Ridge
Development, LLC, offered to purchase the premises for $4,000,000. In
August 2019, Freshline Produce, LLC, offered to purchase the premises for
$4,200,000. In September 2019, JSF Management, LLC, offered to purchase
the premises for $4,900,000. In October 2019, the Greater Bergen Association
of Realtors offered to purchase the property for $4,625,000. At the time of
trial, plaintiff was still engaged with purchase and sale negotiations.
                                                                        A-2878-19
                                      11
of the JDM sale. Despite Lanyard's credibility issues, the judge gave weight to

Lanyard's description that Brothers BBQ was the "ideal tenant for the

property." The judge stated that "[p]laintiff's actions were a total failure of

effort to mitigate damages by securing another restaurant tenant [and]

warrant[] entry of judgment in favor of the defendants on plaintiff's claim for

rent due after surrender of the property."

      The court concluded:

            Even accepting the analysis performed by and the
            testimony of [defendants' expert Louis Izenberg]
            limiting damages to one year, plaintiff failed to
            mitigate damages within one year of [tenant] vacating
            the property. Thus, plaintiff is not entitled to recover
            damages for base rent, additional rent, deferred rent
            and unamortized broker's commission . . . .

      The court likewise denied plaintiff's request for "previously omitted

charges" and all other damages. The court also denied plaintiff's request for

attorneys' fees but allowed plaintiff to retain tenant's $24,000 security deposit. 4

This appeal followed.

4
   The lease contained a provision attempting to waive plaintiff's duty to
mitigate; plaintiff pursued this issue at trial, though not on appeal. The trial
court rejected the argument, finding the provision is unenforceable given New
Jersey's strong public policy in favor of guaranteeing that landlords mitigate
damages, and based on accepted principles of contract law.
                                                                             A-2878-19
                                       12
                                           V.

      "Findings by the trial judge are considered binding on appeal when

supported by adequate, substantial and credible evidence."           Rova Farms

Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 484 (1974).         "We must give

deference to those findings of the trial judge which are substantially influenced

by his or her opportunity to hear and see the witnesses and have the 'feel' of

the case," as reviewing courts cannot. State ex rel. S.B., 333 N.J. Super. 236,

241 (App. Div. 2000) (quoting State v. Locurto, 157 N.J. 463, 471 (1999)).

Thus, when we "conclude[] there is satisfactory evidentiary support for the

trial court's findings, [the appellate court's] 'task is complete and it should not

disturb the result.'" Slutsky v. Slutsky, 451 N.J. Super. 332, 344 (App. Div.

2017) (quoting Beck v. Beck, 86 N.J. 480, 496 (1981)).

      Nevertheless, "[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, L.P. v. Twp. Comm. of Manalapan, 140 N.J.

366, 378 (1995). At the outset, although we defer to the trial judge's findings

regarding credibility and agree that her findings regarding the reasonableness

of plaintiff's efforts at mitigation are supported by the record, we are

constrained to remand for further consideration of the judge's ultimate

                                                                            A-2878-19
                                      13
conclusion that plaintiff is entitled to no recovery beyond its security deposit

of $24,000.

                                      A.

      Based on our review, we cannot overlook the conclusion that plaintiff

was unable to mitigate damages before regaining possession of the premises in

June 2017. Defendants' bankruptcy filing and the imposition of the automatic

stay barred plaintiff from attempting to mitigate any damages during that

period.

      The automatic stay precludes creditors, including landlords, from

undertaking "any act to obtain possession of property" from the debtor. 11

U.S.C. § 362(a)(3). The bankruptcy code naturally controls any potentially

contrary state doctrine pursuant to the Supremacy Clause. See A.H. Robins

Co., Inc. v. Dir., Div. of Taxation, 365 N.J. Super. 472, 478 n.3 (App. Div.

2004).

      The trial court found "plaintiff made no effort to find a tenant between

January 2017 and June 2017." It further concluded "[t]he record reveal[ed] a

history of inaction . . . by . . . Abramson." The very next sentence of the

opinion notes: "[u]pon receiving notice of the bankruptcy filing in January

                                                                         A-2878-19
                                     14
2017, plaintiff expended zero efforts in reletting the space between January

and June of 2017."

      Defendants' legal status between their January 2017 bankruptcy filing

until the rejection of the lease by the Chapter 7 Trustee in late May 2017

necessarily precludes any factual finding that plaintiff could have mitigated its

damages during this period. That the lease regards a tenant's bankruptcy filing

as a default-triggering event is of no moment.       Defendants made plaintiff

aware of their desire to retain the lease and rebrand the restaurant. Plaintiff

only served defendants with a notice of default after tenant missed the May

2017 rent payment. Even still, federal bankruptcy statutes prevented plaintiff

from taking any mitigation action. Thus, the trial court erred to the extent it

gave any weight to plaintiff's failure to mitigate between January and June

2017.5

      Plaintiff cites defendants' expert's claim that it would have taken one

year to obtain a new, rent-paying tenant for the restaurant, arguing the trial

court's failure to find non-mitigatable rental loss was error as a matter of law.

5
    There is little procedural history of defendant's bankruptcy proceeding
contained in the record. As such, there is no indication the automatic stay was
lifted at any time prior to rejection of the lease by the bankruptcy trustee.
                                                                          A-2878-19
                                     15
Plaintiff also claims the trial court erred in finding plaintiff's failure to mitigate

barred all recovery. We agree.

      The law imposes on landlords a duty to mitigate damages by expending

reasonable efforts to stem their losses. McGuire v. City of Jersey City, 125

N.J. 310, 320 (1991). The duty to mitigate damages relates to the amount of

loss the landlord "could reasonably have avoided." Ingraham v. Trowbridge

Builders, 297 N.J. Super. 72, 83 (App. Div. 1997) (emphasis added) (quoting

Restatement (Second) of Contracts § 350, cmt. b (Am. Law Inst. 1981)). A

landlord that fails to mitigate may nevertheless recover damages for

unavoidable losses, or losses that would have been incurred even with

reasonable mitigation efforts. Id. at 82-83. Therefore, a landlord's failure to

mitigate does not preclude all recovery.        Harrison Riverside Ltd. P'ship v.

Eagle Affiliates, Inc., 309 N.J. Super. 470, 473 (App. Div. 1998).

      The trial court explained "plaintiff failed to mitigate damages within one

year of [tenant] vacating the property. Thus, plaintiff is not entitled to recover

damages for base rent, additional rent, deferred rent and unamortized broker's

commissions. . . ." (emphasis added). Because mitigation failures do not

serve to bar all recovery, the trial court misapplied the law, and this matter

must be remanded.

                                                                              A-2878-19
                                        16
      Notwithstanding plaintiff's failure to reasonably mitigate after it retook

possession, plaintiff suffered unavoidable damages resulting from tenant's

breach. The trial court therefore wrongfully concluded that plaintiff's failure

to reasonably mitigate barred any recovery whatsoever. At a bare minimum,

plaintiff would be entitled to recovery for the period between tenant's breach

and the date at which the court determined a replacement tenant would have

been found.

      Defendants' expert, Izenberg, inspected the premises, reviewed market

data, and then addressed how long "it [should] typically take within the market

to rent a property and the amount to which it should rent for." The trial court

found defendants' expert credible in view of his credentials and knowledge of

the Northern New Jersey real estate market.

      The court accepted Izenberg's opinion that it would have taken one year

to relet the premises, but found "[e]ven accepting the analysis performed by

and the testimony of [Izenberg] limiting damages to one year, plaintiff failed

to mitigate damages within one year of [tenant] vacating the property." The

court made no explicit holding that it would have taken one year to relet the

premises because it erroneously decided plaintiff's failure to mitigate during

the bankruptcy period, coupled with its failure to mitigate upon repossession,

                                                                         A-2878-19
                                     17
barred all recovery.    Therefore, the trial court's acceptance of Izenberg's

conclusion about the one-year period forms a sufficient factual finding upon

which to base damages calculation on remand.

      If the trial court accepted Izenberg's testimony concerning the length for

which the property would have remained vacant, plaintiff would be entitled to

one year of rental damages for the period of unavoidable loss. Alternatively, if

the trial court's consideration of Izenberg's conclusions fell short of a concrete

factual finding about the length of time it should have taken plaintiff to relet

the premises, the trial court must make this determination on remand.

                                           B.

      Plaintiff also argues the trial court erred in denying recovery for the

deferred rent and the unamortized broker's commission. Additionally, plaintiff

asserts the trial court erred in holding plaintiff waived previously omitted

charges and an upward adjustment of past charges. Again, we agree. Because

the amounts were owed upon breach of the lease, they are not subject to or

affected by any mitigation efforts.

      "[A] lease is like any other written contract. When either party fails to

perform a covenant, the injured party may bring an action for damages for

breach of covenant." Ringwood Assocs., Ltd. v. Jack's of Route 23, Inc., 153

                                                                           A-2878-19
                                      18
N.J. Super. 294, 309 (Law Div. 1977). The "lessor of commercial property is

required to mitigate damages arising from breach of a lease. . . ." McGuire,

125 N.J. at 320. Contract damages are recoverable for loss when the breaching

party had reason to foresee as a probable result of the breach when the contract

was made. Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co.,

L.L.C., 191 N.J. 1, 13 (2007) (quoting Restatement (Second) of Contracts §

351 (1979)).

      Here, two separate contracts set forth the guarantors' legal repercussions

upon tenant's breach of the lease. The Guaranty obligated defendants to pay

the unamortized portion of the broker's commission.         Plaintiff presented

unrefuted evidence at trial that this amount—the total amount plaintiff paid the

broker who secured tenant's lease, divided by the percentage of time over a

ten-year span that tenant remained in the space—equaled $58,136.61.

Defendants had every reason to foresee owing this portion upon lease

execution in the event tenant breached the lease.

      Similarly, the Lease Amendment deferred a portion of rent for a year and

set a thirty-month repayment period.      Tenant stopped paying rent eleven

months from the expiration of this thirty-month time frame.          Unrefuted

testimony at trial indicated that defendants owed $22,000 in deferred rent.

                                                                         A-2878-19
                                     19
This amount, too, was reasonably foreseeable upon breach.          Accordingly,

common law contract principles dictate that because the tenant breached the

lease, defendants as guarantors owe the unamortized portion of the broker's

commission, as well as the balance of the deferred rent owed under the Lease

Amendment.

                                          C.

      Plaintiff also sought payment for charges it inadvertently did not seek

from tenant during its occupancy of the premises. After execution of the Lease

Amendment, plaintiff's in-house accountant altered the way in which it billed

certain charges, resulting in a "mistake" that led to plaintiff underbilling the

tenant by $60,879.62.     This amount includes tenant's "pro rata share of

insurance paid by the landlord, the quarterly sprinkler charge, and the

management fee." The amount also includes the late fee, ten percent of the

rent and additional rent due, for each month it went unpaid from May 2017 to

November 2019.

      The lease also called for a year-end accounting to adjust, upwards or

downwards, maintenance and tax charges either owed or due the tenant from

the prior calendar year. The lease required plaintiff to provide notice of same

to tenant "[w]ithin approximately 120 days of the end of each calendar year."

                                                                         A-2878-19
                                     20
Plaintiff did not provide notice to tenant or defendants of the $2,195.53 owed

to plaintiff prior to tenant's vacating the restaurant.

      Plaintiff's accountant explained it stopped sending invoices to tenant or

defendants when "they had vacated the premises, and it appeared to be an

exercise in futility. We had no expectation that they were going to make good

on any invoices that we would send them." "There was no intent on our part to

not . . . charge them. It was just . . . a fruitless exercise to be generating rent

bills when . . . they made it clear they weren't going to pay."

      The trial court denied plaintiff's claim for the omitted charges because:

             Plaintiff made no effort to provide [tenant] with
             corrected invoices during their tenan[cy] up to and
             including through the bankruptcy. Similarly, plaintiff
             made no effort to provide defendants with the
             corrected statements immediately after [tenant's]
             obligation was discharged due to bankruptcy. Finally,
             plaintiff failed to perform its obligation pursuant to
             the lease because the charges were not presented
             within 120 days of each calendar year.

                    Even more troubling is the fact that plaintiff
             never provided notice to defendants as personal
             guarantors of the accruing charges. Although plaintiff
             had no expectation that [tenant] would pay rent and
             expenses between May 2017 and November 2019,
             plaintiff was not relieved of the obligation to provide
             notice of the charges and commission due to
             defendants as personal guarantors on a monthly basis.
             Plaintiff cannot passively watch the charges accrue

                                                                            A-2878-19
                                       21
              and then wait until commencement of litigation to
              seek payment.

      "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." Knorr v. Smeal, 178 N.J. 169,

177 (2003).

      Here, plaintiff had rights to the above charges through tenant's

obligations under the lease.        The record does not reflect that plaintiff

abandoned those rights. Accordingly, the trial court incorrectly found plaintiff

was not entitled to the previously omitted charges.

                                            D.

      Finally, plaintiff argues it should have been awarded attorneys' fees as

additional rent for expenses incurred to enforce the lease. The lease required

tenant to pay "as [a]dditional [r]ent, all attorney[s'] fees and other expenses

incurred by [plaintiff] in enforcing any of the obligations under this lease. . . ."

Additionally, Section 32.16 of the lease provides:

              In the event any party to the lease, including any
              Guarantor hereunder, should bring suit against the
              other party in respect to any matters provided for
              herein, the prevailing party shall be entitled to recover
              from the non-prevailing party its costs of court, legal
              expenses and reasonable attorneys' fees.

                                                                             A-2878-19
                                       22
      At trial, plaintiff submitted proofs regarding legal fees incurred to

enforce tenant's breach of the lease. The trial judge accepted invoices from

two firms, one of which represented plaintiff's interests in the bankruptcy

proceeding, and she reserved plaintiff's ability to submit its invoices in the

event it prevailed.

      Because the court ruled for defendant, plaintiff was not awarded fees as

a prevailing party. The court decided plaintiff was "not entitled to attorneys'

fees related to the bankruptcy matter since plaintiff offered no proofs regarding

any determinations made by the bankruptcy trustee with regard to the fees and

costs associated with [tenant]."

      Typically, prevailing parties may recover reasonable attorneys' fees. N.

Bergen Rex Transp. v. TLC, 158 N.J. 561, 570 (1999); Singer v. State, 95 N.J.

487, 494 (1984).      A two-pronged standard determines when a party has

prevailed. First, the fee-seeking party "must demonstrate that its lawsuit was

causally related to securing the relief obtained." Kellam Assocs., Inc. v. Angel

Projects, LLC, 357 N.J. Super. 132, 139 (App. Div. 2003). This "requires a

factual causal nexus between the pleading and the result ultimately achieved."

Ibid. (citing N. Bergen Rex Transp., 158 N.J. at 570). Second, the fee-seeking

party must "demonstrate that the relief it obtained had some basis in law." N.

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Bergen Rex Transp., 158 N.J. at 571. Under the second prong, "[t]he party

seeking attorneys' fees need not recover all relief sought, but rather, there must

be 'the settling of some dispute that affected the behavior of the [party asked to

pay attorneys' fees] towards the [party seeking attorneys' fees].'"             Ibid.

(alterations in original) (quoting Davidson v. Roselle Park Soccer Fed'n, 304

N.J. Super. 352, 357 (Ch. Div. 1996)).

      When a prevailing party "has achieved only limited relief in comparison

to all of the relief sought, the [trial] court must determine whether the

expenditure of counsel's time on the entire litigation was reasonable in relation

to the actual relief obtained . . . and, if not, reduce the award proportionately ."

Id. at 572 (alterations in original) (citing Singer v. State, 95 N.J. 487, 500

(1984)).

      Based on the above, plaintiff will prevail in some presently

unquantifiable measure upon remand.          There is a causal nexus between

plaintiff's complaint and the relief it might obtain.      Thus, if plaintiff is a

prevailing party, pursuant to the lease and Guaranty, defendants owe plaintiff

reasonable attorneys' fees.    On remand, the court will have to assess the

reasonableness of these fees, likely reducing the total fee award by a

percentage of the total relief obtained versus the relief plaintiff sought.

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                                          VI.

      For these reasons, we do not disturb the trial court's finding regarding

the unreasonableness of plaintiff's mitigation efforts; however, we reverse the

order to the extent that it precluded all recovery, and remand the matter for the

trial court to calculate damages based upon the period of unavoidable loss.

      On remand, because the trial court already accepted expert testimony

limiting the unavoidable loss period to one year, it need only address the

narrow question of rental damages due to plaintiff for that discrete length of

time. As set forth, notwithstanding the rent and additional rent due for the

unavoidable loss period, defendants owe the deferred rent, unamortized

broker's commission, as well as the previously omitted charges. The trial court

should also determine the reasonableness of plaintiff's legal fees due under the

lease and the Guaranty.

      Reversed and remanded for further proceedings consistent with this

opinion. We do not retain jurisdiction.

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