34 LABEL STREET ASSOCIATES VS. RICHARD CECEREÂ (L-0496-12, ESSEX COUNTY AND STATEWIDE)Â (CONSOLIDATED), A-0836-14T1/A-0183-15T1/A-0307-15T1

Background

34 Label owned property in Montclair and in 2002 entered a 99-year ground lease with Richard Cecere for a restaurant parcel; Cecere prepaid rent in 2002 but was required to pay taxes/expenses, maintain insurance, and pursue subdivision to obtain fee simple.
From 2007 Cecere stopped paying taxes/expenses and did not obtain required insurance or pursue subdivision; 34 Label paid the taxes and sought relief.
In March 2011 the court entered a judgment against Cecere and his company for unpaid rents/taxes/expenses; Cecere did not pay and in May 2011 granted Cozzarelli Law a mortgage/security interest in the restaurant property for legal fees.
34 Label sued for rescission in 2012; after delays (bankruptcy, contempt finding for failure to pursue subdivision) the trial court entered a conditional judgment in Aug. 2014 giving Cecere until Jan. 1, 2015 to cure defaults.
Cecere failed to cure; the court held further proceedings, denied belated intervention by Cozzarelli, extinguished the Cozzarelli mortgage, and after a 2015 trial entered final rescission and monetary judgments restoring parties as near as possible to pre-lease positions.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether rescission of the ground lease was an appropriate remedy	34 Label: material, continuing breaches (taxes, insurance, subdivision) and failure to cure meant money damages were inadequate; rescission required to prevent unjust enrichment	Cecere: rescission improper; asserted procedural defenses (jurisdiction, laches, statute of limitations, judicial estoppel); contested factual findings and evidence	Court affirmed rescission as equitable remedy; factual findings supported by substantial credible evidence and rescission properly molded (Aug 2015 judgment affirmed)
Whether the trial court had jurisdiction to proceed while an appeal from the Aug. 2014 conditional judgment was pending	34 Label: trial court retained continuing jurisdiction to enforce and implement conditional judgment and to hold further proceedings when conditions were unmet	Cecere: trial court lacked jurisdiction because of pending appeal	Court: Rule 2:9-1(a) and the conditional nature of the Aug. 2014 judgment meant the trial court retained jurisdiction to enforce and conduct rescission proceedings; appeal did not divest enforcement jurisdiction
Admissibility and sufficiency of evidence (expert valuation and expense summaries)	34 Label: expert testimony and accounting summaries were proper and established rents/expenses and present value calculations	Cecere: challenged admissibility and weight of expert testimony and summaries; contended sanctions and evidentiary rulings prejudiced him	Court: evidentiary rulings reviewed for abuse of discretion; record supported admission and credibility findings; findings upheld
Whether Cozzarelli could intervene and preserve its mortgage/security interest	34 Label: Cozzarelli had notice of rescission claim and delays; intervention untimely; mortgage extinguished as part of rescission	Cozzarelli: lacked personal jurisdiction, timely intervention, and had defenses to extinguishment; asserted priority claims	Court: denied belated intervention for lack of timeliness/waiver; trial court did not abuse discretion; Cozzarelli lacked standing to raise alternative arguments because it never timely became a party

Key Cases Cited

First Am. Title Ins. Co. v. Lawson, 177 N.J. 125 (2003) (rescission is equitable and committed to court's discretion; remedy may be shaped to do equity)
Sears Mortg. Corp. v. Rose, 134 N.J. 326 (1993) (standard of review for equitable relief—abuse of discretion)
MacKinnon v. MacKinnon, 191 N.J. 240 (2007) (factual findings in equity upheld if supported by substantial credible evidence)
Cesare v. Cesare, 154 N.J. 394 (1998) (deference to trial court on credibility-based factual findings)
Rutgers Cas. Ins. Co. v. LaCroix, 194 N.J. 515 (2008) (discussion of rescission principles and shaping equitable remedies to achieve substantial justice)
Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599 (1989) (rescission and equitable relief to prevent unjust enrichment)
Notch View Assocs. v. Smith, 260 N.J. Super. 190 (Law Div. 1992) (grounds for rescission include material breach or failure of consideration)