La. Boil, LLC v. Hortense Assocs.

• Docket Number: A-3072-21
• Decision Date: 28 December 2023
• Parties: LOUISIANA BOIL LLC, d/b/a THE BOILING HOUSE, ALDO DEDJA, and PREMTIM DEDJA, Plaintiffs-Appellants, v. HORTENSE ASSOCIATES, LP, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

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LOUISIANA BOIL LLC, d/b/a THE BOILING HOUSE, ALDO DEDJA, and PREMTIM DEDJA, Plaintiffs-Appellants,
v.
HORTENSE ASSOCIATES, LP, Defendant-Respondent.

No. A-3072-21

Superior Court of New Jersey, Appellate Division

December 28, 2023

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.

Argued December 6, 2023

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2422-20.

Samuel Brad Fineman argued the cause for appellants (Cohen Fineman LLC, attorneys; Samuel Brad Fineman, on the brief).

Todd R. Bartos (Spruce Law Group, LLC) argued the cause for respondent.

Before Judges Currier, Firko, and Susswein.

PER CURIAM

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This appeal arises out of a dispute between a commercial landlord and the guarantors of a tenant's lease obligations during the COVID-19 pandemic. Plaintiffs Louisiana Boil LLC (Louisiana Boil), Aldo Dedja, and Premtim Dedja, his son, (plaintiffs or tenants) appeal from the Law Division's September 24, 2021 order granting defendant Hortense Associates, LP's (defendant or landlord) motion for partial summary judgment dismissing the complaint with prejudice, granting summary judgment on the counterclaim, and an April 29, 2022 consent order stipulating to the amount of damages and entering final judgment for purposes of appeal.^[1] Because we conclude there are no genuine issues of material fact that precluded judgment as a matter of law under Rule 4:46-2(c), we affirm.

I.

The following material facts are viewed in the light most favorable to plaintiffs as the non-moving parties. Templo Fuente De Vida Corp. v. Nat'l Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). The Boiling House was an existing Cherry Hill based seafood-themed restaurant owned by Aldo and

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Premtim. They sought to expand the restaurant's "footprint" and "provide greater exposure to promote the brand" in a higher traffic area. On November 4, 2019, Louisiana Boil entered into a forty-nine-page commercial lease with defendant. Premtim^[2] was a member of the company and signed the lease on Louisiana Boil's behalf. Aldo and Premtim executed personal guarantees making them jointly and severally liable for rent, additional rent, and debts incurred under paragraph 4 of the lease. The lease was the subject of extensive negotiations between counsel.

Paragraph 3(a) of the lease provided for an initial lease term of ten years. The rental payments were $5,187 per month for the first five years and $5,569.20 for the second five years. The first ten years represented the minimum tenancy. The expected rent commencement date was April 1, 2020. According to the lease terms, Louisiana Boil was also required to pay a proportionate share of the taxes, assessments, and a percentage of its sales as additional rent. The premises were vacant and required interior fix-ups and exterior renovations to convert it to a nautical style restaurant-decor.

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Section 8(i) of the lease provided for a $150,000 tenant improvement allowance (TIA) payable in two $75,000 installments. The renovations included a full demolition, new kitchen, custom walls, seating, furniture, redesigned bar area, new flooring, lighting, plumbing, HVAC system, and a "self-contained submarine." Plaintiffs estimated the improvements would cost in excess of $500,000. They planned to pay for the capital improvements not covered by the TIA with their own funds.

If Louisiana Boil failed to pay rent, the lease provided for payment of late fees and interest. Section 7(a), under "Tenant Default and Landlord's Remedies," defined the non-payment of rent as a default of the lease obligations.

Under the lease, defendant's remedies are cumulative and include acceleration of rent due for the balance of the lease term as set forth in Section 7(a)(4):

At any time after any Event of Default shall occur, Landlord, at its option, may serve notice upon Tenant that this Lease and the Term hereof shall cease and expire and become absolutely void on the date specified in such notice; and thereupon, and at the expiration of the time limited in such notice, this Lease and the Term, as well as all of the right, title and interest of the Tenant hereunder, shall wholly cease and expire and become void in the same manner and with the same force and effect (except as to Tenant's liability) as if the date fixed in such notice were the date herein specified for expiration of the Term but Tenant shall nevertheless

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remain liable for the payment of Rent and all other sums due and payable and/or owing by it hereunder, which obligations shall expressly survive the termination of' this Lease. Thereupon, Tenant shall immediately quit and surrender to Landlord the Premises, and Landlord may enter into and repossess the Premises by summary proceedings, detainer, ejectment or otherwise, and remove all occupants thereof and, at Landlord's option, any property thereon without being liable to indictment, prosecution or damage therefor[e].

Defendant's remedies also included filing a lawsuit to collect monies owed and re-entering and/or re-possessing the premises under paragraph 7(a)(2) of the lease.

After the lease was executed, plaintiffs contend they "encountered problems "with defendant over construction permits and a delay in the release of the first $75,000 TIA, which was not paid until late December of 2019. The parties also disagreed about who was responsible for obtaining the permits. Plaintiffs maintained construction delays resulted from defendant requiring them to use its contractor and defendant's construction manager, Joseph Cianfrani, had the contractor stop work on the interior improvement to perform other exterior construction work for defendant. Plaintiffs also contended that defendant required the contractor to obtain interior and exterior permits simultaneously, which delayed completion of construction. They also attribute part of the delay in opening to custom furniture plaintiffs had ordered.

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Consequently, plaintiffs contended The Barclay Boiling House was "nonfunctional" because it lacked a working kitchen, which was essential to operating the restaurant, and the fit-out was never completed. Plaintiffs never had the opportunity to generate income from their new location.

By March 2020, plaintiffs claimed a significant amount of the interior renovations had been completed. However, with the onset of COVID-19 restrictions implemented through Governor Murphy's Executive Orders (EOs), plaintiffs' contended their concept restaurant had to be "scrapped" and "reimagined at a considerable cost." According to plaintiffs, moving ahead with the original concept "became impossible" due to COVID-19 and "its attendant uncertainties." However, Aldo and Premtim both testified at their depositions that the original restaurant was open and operating during COVID-19.

Beginning in early March 2020, Governor Philip D. Murphy issued a series of EOs to address the COVID-19 pandemic. EO 104 limited the scope of service and hours of operation for restaurants. Exec. Order No. 104 (Mar. 16, 2020), 52 N.J.R. 550(a) (Apr. 6, 2020). Five days later, on March 21, EO 107 was issued, which permitted restaurants and other "dining establishments" to operate their normal business hours but limited the services to food delivery and take-out.

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Plaintiffs claim they attempted to re-negotiate the lease terms in May 2020, requesting to begin paying rent "when the restaurant is able to open," but defendant was unwilling to accept these terms. Defendant countered at the beginning of the pandemic, it proactively sought to amend the lease to provide for a twelve-month rent abatement and change the rent to "percentage rent" rather than "fixed lease rent." Defendant claims Aldo refused to negotiate an amendment to the lease unless he was removed as a personal guarantor leaving Premtim, who had insufficient assets, as the sole guarantor. Consequently, on May 7, 2020, plaintiffs' attorney sent a lease termination notice to defendant's attorney stating:

Please be advised that, after careful consideration and in light of the unforeseen and unprecedented effects of COVID-19 on the restaurant business, my client regretfully provides formal notice that it is terminating the subject [l]ease on the grounds of impossibility, frustration of purpose and commercial impracticability.

Given the uncertainty of future space restrictions that will be imposed upon restaurants, including, but not limited to, HVAC modifications, food handling, service rules, customer quotas and the like, my client submits that moving forward as "The [Barclay] Boiling House," a destination-based, eat-in-driven, seafood-themed restaurant is unwise and commercially impracticable now and in the foreseeable future.

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In response, on May 8, 2020, defendant's attorney informed plaintiffs' attorney that: (1) plaintiffs had no right to attempt to terminate the lease, and (2) plaintiffs were in default under the terms of the lease for their failure to begin paying "minimum rent on April, 2020[,] as required by Section 3(a)(A) of the [l]ease."

On July 10, 2020, defendant's attorney sent another letter to plaintiffs' attorney confirming the continuing default and providing one week-until July...