STATE OF NEW JERSEY VS. BENJAMIN CAPERSÂ (09-04-0384 AND 09-04-0385, UNION COUNTY AND STATEWIDE), A-5645-14T1

Background

Tenant Xiu Fang Liu assumed an existing triple-net lease in 2007 and executed a new lease in 2008 for a restaurant in Pilgrim Plaza; parties agreed the tenant would continue to pay a pro rata share of real estate taxes and CAM charges.
The new lease contained conflicting numerical tax-share provisions: a general calculation that produced a ~5.18% share but an express clause listing the Cedar Grove tax share as 2.23% (a mistake neither party spotted before execution).
An architect's 2009 remeasurement adjusted tenant's Cedar Grove tax share to 5.3%; landlord billed the tenant accordingly and tenant paid; later disputes arose about the erroneous 2.23% term in the lease.
Plaintiff landlord sued seeking reformation of the lease for scrivener's error, possession and damages; defendant claimed the landlord's negligence and unilateral mistake precluded reformation and also disputed denial of her lease renewal option.
After extensive litigation and trial, the Chancery judge reformed the lease to reflect the correct pro rata tax share, found the tenant failed to timely exercise the renewal option, awarded landlord damages for unpaid rent (but denied holdover rent, interest and most late fees), and granted a reduced attorneys' fee award.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the lease may be reformed for a scrivener's error	Lease language was a scrivener's error; parties agreed to continue prior triple-net allocation; reformation appropriate	Landlord negligently miscalculated and approved the wrong percentage; mistake was unilateral/negligent, precluding reformation	Reformation granted: court found parties intended the triple-net allocation and the 2.23% figure was a scrivener's error rather than a bar to reformation
Whether tenant timely exercised option to renew	Tenant did not timely notify landlord; time was of the essence; tenant was in default so had no right to extend	Tenant sent a timely notice (July 24, 2013) or, alternately, equitable relief should prevent forfeiture	Court held tenant did not properly exercise the option; landlord's witness found more credible and tenant was in default; equity did not relieve forfeiture
Whether landlord may recover holdover rent, interest, and late charges under reformed lease	Entitled to holdover rent, 18% default interest and 8% service fee as provided in lease	Tenant sought reduction/denial because litigation stemmed from landlord's error and tenant paid in good faith during litigation	Court denied holdover rent and most interest/late fees; awarded rent arrears and limited late fee—court exercised equitable discretion given landlord's error and course of litigation
Whether attorney fee award claimed by landlord was reasonable	Sought over $240,000 in fees and costs as contractual/appropriate	Requested reduction; argued fees excessive and disproportionate to recovery	Court awarded $35,000 plus modest expenses after finding hours and rates excessive given small recovery; appellate court affirmed as within discretion

Key Cases Cited

Crescent Park Tenants Ass'n v. Realty Equities Corp. of N.Y., 58 N.J. 98 (1971) (standing and proper party principles in property actions)
Dunkin' Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166 (1985) (equitable relief against forfeiture principles)
Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372 (2009) (standard for reviewing fee awards and proportionality between fees requested and recovery)
Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474 (1974) (appellate standard for reviewing factual findings)
Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210 (2005) (equitable relief and hardship considerations in contract enforcement)