Court Opinion

ID: 4428218
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:02:42.331759+00
Date Added: 2024-06-11T14:50:48.434487
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NOT FOR PUBLICATION WITHOUT THE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-1719-17T1

18 RT. 22 EAST, LLC,

          Plaintiff-Respondent,

v.

ONE STOP AUTO SALES, LLC,

          Defendant/Third-Party
          Plaintiff-Appellant,

v.

LOUIS S. AIELLO and FRANCIS
C. KRAUS,

          Third-Party Defendants/Fourth-
          Party Plaintiffs-Respondents,

v.

LEON LEWINSON,

          Fourth-Party Defendant-
          Respondent,

and

ENVIRONMENTAL EVALUATION
GROUP, INC. and PHILIP
I. BRILLIANT,

     Fourth-Party Defendants.
______________________________

            Argued February 11, 2019 – Decided June 24, 2019

            Before Judges Haas, Sumners and Mitterhoff.

            On appeal from the Superior Court of New Jersey, Law
            Division, Union County, Docket No. L-2842-13.

            Wolfgang G. Robinson argued the cause for appellant.

            Richard J. Kapner argued the cause for respondent 18
            Rt. 22 East, LLC.

PER CURIAM

      In this breach arising from the failure to make installment payments for

the purchase of a real estate contract, defendant One Stop Auto Sales, LLC,

appeals from a bench trial judgment in favor of plaintiff 18 Rt. 22 East, LLC,

for damages of $483,775.86, inclusive of attorney's fees. Because the trial

judge's factual findings are based upon credible evidence in the record and he

correctly applied the law, we affirm substantially for the reasons set forth in his

thorough oral decision.

                                                                           A-1719-17T1
                                        2
                                         I

        We briefly summarize the facts adduced at the one-day bench trial. On

March 9, 2010, plaintiff entered into a contract to sell a property – previously

operated as a gas station 1 – on Route 22 East in Union County to defendant for

$350,000. Nine days after the agreement was entered into, the New Jersey

Department of Environmental Protection (DEP) initiated another investigation

concerning the possibility of contamination related to a single underground oil

tank, which was identified as incident number 10-03-21-2157-38. A previous

DEP investigation, related to the need to remove six oil tanks and contaminated

soil had been identified as incident number 98-12-09-1139-50.

        Francis Kraus, a member of plaintiff, made verbal assurances to defendant

that the remediation work related to the DEP investigation should be completed

shortly, and that a No Further Action (NFA) letter from the DEP would be issued

and provided to defendant. Based on the promises, defendant proceeded with

the purchase, subject to an indemnification agreement.

        The indemnification agreement specifically acknowledged that "the

property . . . contain[ed] contaminated soil" and provided that plaintiff would

"do everything in its power . . . in order to obtain" a NFA letter from the DEP.

1
    Property had ceased being used as a gas station in 1998.
                                                                         A-1719-17T1
                                         3
The agreement also explicitly provided that plaintiff would "indemnify and hold

[defendant] harmless for any costs and fees" that defendant "incur[ed] in order

to obtain" the NFA letter. If a NFA letter was not obtained within a year,

plaintiff would place $25,000 in an escrow account, and, if this sum was

"insufficient to cover the costs," Louis S. Aiello – another member – and Kraus,

in their personal capacities, would "agree to indemnify and hold [defendant]

harmless" for any additional costs and fees incurred.

      At the May 17, 2010 closing, it was agreed that defendant pay $100,000,

to be followed by twelve monthly interest only payments of $1250 for a year –

the timeframe allotted to obtain the NFA letter – followed by a balloon payment

of $250,000. On May 17, 2011, defendant could not make the balloon payment

and was granted an extension, on the condition that the monthly interest payment

would double to $2500. When defendant defaulted on the loan again and owed

$20,143.12 in property taxes, plaintiff served notice of default and intention to

foreclose upon the property to defendant.       Plaintiff sought compensatory

damages due to defendant's default on the mortgage note, as well as attorney's

                                                                         A-1719-17T1
                                       4
fees and costs under the mortgage note. 2 Defendant filed a counterclaim for

breach of the indemnification agreement due to the property's contamination.

      Aiello testified that in 1999, six oil tanks and contaminated soil were

removed from the property. At the time of the sale, Aiello stated there were no

environmental issues as the oil tanks had been removed, and plaintiff was merely

awaiting a NFA letter from the DEP.          Eventually, Krause testified that

defendant's representative verbally agreed to the extension at an increased

interest amount, and produced defendant's checks that confirmed the agreement.

Kraus received a NFA letter for incident number 10-03-21-2157-38, dated

August 31, 2010.

      Leon Lewinson, defendant's sole owner, testified that Krause represented

to him that plaintiff would obtain a NFA letter from the DEP. He claimed he

received a call from the DEP advising him that there were still open

environmental issues on the property dating back to 1999. Lewinson also

asserted that his company incurred over $100,000 in contamination remediation

costs, yet he failed to provide any expert testimony regarding the property's

condition, or the amount of work, if any, that needed to be done. He further

2
  In a separate action in the Chancery Division, which is not the subject of the
appeal, plaintiff filed a foreclosure action.
                                                                        A-1719-17T1
                                       5
failed to provide any documentary evidence to support the assertion that the

remediation costs were paid.

      At the conclusion of the trial, the judge reserved decision. 3 Less than a

month later, the judge issued an oral decision, making the following factual

findings:

            Pursuant to the terms of [the mortgage] note, the
            defendant, . . . agreed to make monthly, interest-only
            payments at an interest rate of 6 percent for one year[,
            and a]t the end of the year, the principal amount of
            $250,000 would be payable in a balloon payment.

                   . . . [T]he parties . . . agree[d] to extend the terms
            of the [mortgage] note for one year . . . [and to increase
            the] interest . . . to 12 percent . . . .

                  The Court further finds that the defendant
            defaulted on the mortgage note by failing to pay the
            balloon payment in [a] timely manner.

      By defaulting on the mortgage note, the judge held that the note's terms

obligated defendant to pay plaintiff's attorney's fees and costs. In so holding,

the judge found:

3
  Prior to trial, defendant moved for summary judgment. The motion was denied
by a different judge, who determined there were material factual disputes as to
whether: defendant was entitled to enforce the indemnification agreement as it
had already transferred the property; defendant's payments were compensable
under the indemnification agreement; and the extent of the property's
environmental contamination.
                                                                            A-1719-17T1
                                         6
           [P]laintiff has credibly proven by a preponderance of
           the evidence that damages include the $250,000
           principle due on the [mortgage] note together with
           interest at a rate of 12 percent, since . . . the default on
           the note in May of 2013.

                 In addition, . . . plaintiff has proven that there is
           presently owed a tax lien of $20,143.12, together with
           interest.

                  Finally . . . plaintiffs are entitled to [attorney's]
           fees and costs. . . . Accordingly, . . . counsel for the
           plaintiff to submit . . . a certification of services to be
           considered in awarding [attorney's] fees.

     With respect to defendant's counterclaim, the judge dismissed it because

plaintiff obtained and provided defendant with the NFA letter from the DEP.

The judge reasoned:

           [T]he indemnification agreement was satisfied by
           plaintiff[] in obtaining the [NFA] letter from the [DEP,]
           . . . dated August 31st, 2010. . . .

                  Further, the defendant[] ha[s] provided no
           evidence that the [NFA] letter was not satisfactory, nor
           ha[s defendant] provided any evidence that -- any
           credible evidence that defendant[s] incurred any costs
           or expenses to do any environmental work for which
           the plaintiff w[as] contractually obligated. The only
           evidence was the testimony of [Lewinson] that was a
           hearsay statement from a [representative from the DEP]
           that there were problems with the property and that he
           spent a significant amount of money to clean up the
           property.

                                                                          A-1719-17T1
                                        7
            The Court finds [Lewinson]'s testimony to be
            absolutely not credible, particularly given the fact that
            the fact-finder would expect that if he spent significant
            amounts of money to clean up the property that there
            would have been proofs, documentary proofs,
            testimony from people who did the work, and none of
            that was provided.

      Thereafter, plaintiff's counsel submitted a certification of services seeking

attorney's fees totaling $81,043.28. On October 31, 2017, the judge entered an

order of judgment awarding plaintiff $403,249.58, plus attorney's fees totaling

$80,265.00, and costs totaling $261.28.

                                        II

      Defendant argues before us that we should reverse the judge's order of

judgment because he made errors of law and his decision was unsupported by

the evidence in the record. In essence, defendant makes five contentions.

      First, defendant argues the judge erred as a matter of law because he

"reformed the plain and unambiguous terms of the mortgage note [extra-

judicially] in the absence of clear and convincing evidence." In particular,

defendant argues that section one of the mortgage provides: "[defendant]

promise[s] to pay $0.00 (called "principal"), plus interest to the order of the

[plaintiff]." Defendant contends the principal was set at $0 because the parties

had already agreed that the balance of the purchase price, $250,000, would be

                                                                           A-1719-17T1
                                        8
placed in defendant's attorney's IOLTA non-interest-bearing trust account,

which would be turned over to plaintiff once it provided defendant with a NFA

letter from the DEP. Defendant maintains that "in spite of this clear expression

of the parties' contractual intent," the judge rewrote the contract terms by finding

that the "principle due" under the mortgage note was not $0, but actually

$250,000.

      Second, defendant argues that the judge's determination that the NFA

letter satisfied the indemnification agreement was unsupported by, and

inconsistent with, competent, relevant, and reasonably credible evidence in the

record. It claims the NFA letter only concerned the DEP investigation identified

as incident number 10-03-21-2157-38, related to a single 1,000-gallon heating

oil underground storage tank, and not incident number 98-12-09-1139-50,

concerning the contamination from six underground storage tanks that

collectively could hold 11,550 gallons of gasoline and waste oil. Defendant

alleges plaintiff was aware of the DEP investigation incident number 98-12-09-

1139-50 when the indemnification agreement was executed and, therefore,

agreed "to do everything in its power . . . in order to obtain" a NFA letter from

the DEP with respect to that incident number. Since plaintiff never did so,

                                                                            A-1719-17T1
                                         9
defendant maintains that plaintiff is still obligated to cover the remediation costs

for the property under the indemnification agreement.

        Third, defendant argues the judge failed to recognize the credible evidence

that the $250,000 Lewinson deposited in its attorney's trust account was "used

to pay attorney’s fees and environmental cleanup" on the property as allowed by

the indemnification agreement.

        Fourth, defendant argues that the damages awarded to plaintiff exceeded

the amounts compensable under the terms of the mortgage note. Defendant

reasons that pursuant to the mortgage note, upon its default, plaintiff would be

entitled to collect, "the full amount of all unpaid principal, interest, other

amounts due [under] the[m]ortgage and [the mortgage n]ote and the plaintiff's

costs of collection and reasonable attorney's fees." Defendant calculates the

damages plaintiff could have collected as of the date of default as $286,636.78.4

Defendant further alleges it is undisputed that after it defaulted, it made twenty-

four subsequent payments of $2,500 each, totaling $60,000, and therefore the

4
    Unpaid Principal                                     $ 250,000.00
    Unpaid Interest                                      $       0.00
    Taxes Plaintiff Paid                                 $ 20,143.12
    Late Charge                                          $ 13,507.16
    Attorney's fees                                      $   2,986.50
       Total                                             $ 286,636.78

                                                                            A-1719-17T1
                                        10
judgment should be further reduced taking account of these payments. Thus, it

argues at most the $403,249.58 judgment should be reduced by $60,000.

        Fifth, defendant alleges the attorney's fees award exceeded the permissible

limits of Rule 4:42-9(a)(4).5 The maximum attorney's fees allowed should be

$4,182.50, which is $76,082.50 less than what was awarded.

        Our review of the trial court's determinations following a non-jury trial is

a limited one. Petrozzi v. City of Ocean City, 433 N.J. Super. 290, 316 (App.

Div. 2013) (citing Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 484,

(1974)). We must "give deference to the trial court that heard the witnesses,

sifted the competing evidence, and made reasoned conclusions." Griepenburg

v. Twp. of Ocean, 220 N.J. 239, 254 (2015) (citing Rova Farms, 65 N.J. at 483-

84).    Reviewing courts "should 'not disturb the factual findings and legal

conclusions of the trial judge' unless convinced that those findings and

conclusions were 'so manifestly unsupported by or inconsistent with the

5
    Rule 4:42-9(a)(4) limits attorney's fees as follows:

              In an action for the foreclosure of a mortgage, the
              allowance shall be calculated as follows: on all sums
              adjudged to be paid . . . amounting to $5,000 or less, at
              the rate of 3.5%, . . . upon the excess over $5,000 and
              up to $10,000 at the rate of 1.5%[,] and upon the excess
              over $10,000 at the rate of 1%, provided that the
              allowance shall not exceed $7,500[.]
                                                                            A-1719-17T1
                                        11
competent, relevant and reasonably credible evidence as to offend the interests

of justice.'" Ibid. (quoting Rova Farms, 65 N.J. at 484). Review on appeal "does

not consist of weighing evidence anew and making independent factual findings;

rather, our function is to determine whether there is adequate evidence to support

the judgment rendered at trial." Cannuscio v. Claridge Hotel & Casino, 319 N.J.

Super. 342, 347 (App. Div. 1999) (citing State v. Johnson, 42 N.J. 146, 161,

(1964)).

      We, however, owe no deference to the trial court's "interpretation of the

law and the legal consequences that flow from established facts." Manalapan

Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citations

omitted). We review such decisions de novo. 30 River Court E. Urban Renewal

Co. v. Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006) (citing Rova

Farms, 65 N.J. at 483-84; Manalapan Realty, 140 N.J. at 378).

      Guided by these principles, we affirm substantially for the reasons the

judge expressed in his thorough oral opinion. We add the following brief

comments.

      Applying the clear and convincing evidence standard of proof as argued

by defendant, we conclude this standard was satisfied based upon the judge’s

finding that defendant breached the contract in defaulting on payments, thereby

                                                                          A-1719-17T1
                                       12
entitling plaintiff to damages. After defendant was given an extension to pay

off the principal of $250,000, the parties agreed to double the interest payments

to $2500 a month. Defendant's subsequent $2500 monthly interest payments

clearly evidence the mortgage and note terms, and that the principal had not

been paid. Moreover, defendant's claim that there was no debt as demonstrated

by the fact that $0 was specified in the note as the principal amount owed was

not raised at trial. Because the issue does not go to the jurisdiction of the trial

court or concern matters of substantial public interest, we shall not consider the

argument. Nieder v. Royal Indemnity Ins. Co., 62 N.J. 229, 234 (1973).

      As for the dismissal of defendant's counterclaim regarding the property

clean up, we discern no reason to disturb the judge's findings.                The

indemnification agreement explicitly states that the property was contaminated

by an abandoned underground storage tank and this is the same area of concern

referenced in the NFA letter saying it was remediated. Defendant's claim that

Aiello knew there was an open DEP case on the property identified as incident

number 98-12-09-1139-50 was not supported by any trial testimony that there

was the alleged contamination from six underground storage tanks.            Thus,

defendant failed to provide any evidence that the NFA letter was not compliant

with the indemnification agreement.

                                                                           A-1719-17T1
                                       13
      Equally important, we take no issue with the judge's finding that defendant

failed to prove that it incurred any remediation expenses for which plaintiff was

obligated to pay in accordance with the indemnification agreement. Lewinson's

representation that remediation expenses were paid from the $250,000 placed in

the attorney's trust account was not supported by any documentary proof.

      Finally, turning to the damages assessed by the judge, there is no reason

to disturb his findings. The judge relied upon the adequate proofs plaintiff

presented concerning its losses due to defendant's default. See Lane v. Oil

Delivery, Inc., 216 N.J. Super. 413, 420 (App. Div. 1987) ("Proof of damages

need not be done with exactitude . . . . It is . . . sufficient that the plaintiff prove

damages with such certainty as the nature of the case may permit, laying a

foundation which will enable the trier of the facts to make a fair and reasonable

estimate."); see also Totaro, Duffy, Cannova and Co., L.L.C. v. Lane, Middleton

& Co., L.L.C., 191 N.J. 1, 14 (2007). With respect to the award of attorney's

fees, the judge properly relied on the terms of the mortgage and note that allowed

for plaintiff to receive reasonable attorney's fees in the event of defendant's

default, and was not limited by Rule 4:42-9. See Satellite Gateway Com. Inc.

v. Musi Dining Car Co., 110 N.J. 280, 285-86 (1988).

      Affirmed.

                                                                                A-1719-17T1
                                         14