NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1454-18
PORT-MAN-GB ASSOCIATES, LLC,
Plaintiff-Respondent/ Cross-Appellant,
v.
RENAISSANCE AT SCHANCK ROAD, LLC,
Defendant/Third-Party Plaintiff-Appellant/Cross- Respondent,
TRIDENT ENVIRONMENTAL CONSULTANTS,
Third-Party Defendant- Respondent,
and
ADMA, INC., KOO KIM, individual, and STEPHANIE KIM, individual, Third-Party Defendants,
BAIK YANG CLEANERS,
Third-Party Defendant/ Fourth-Party Plaintiff- Respondent,
KYUNGIN CLEANERS, INC.,
Fourth-Party Defendant. ______________________________
Plaintiff,
PORT-MAN-GB ASSOCIATES, LLC, and THE SYLVIA B. DEANGELO LIVING TRUST,
Defendants. ______________________________
Argued November 18, 2020 – Decided March 10, 2022
Before Judges Accurso, Vernoia, and Enright.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-2688-13 and L-2763-13.
A-1454-18 2 Dennis J. Krumholz argued the cause for appellant/ cross-respondent Renaissance at Schanck Road, LLC (Riker Danzig Scherer Hyland & Perretti, LLP, attorneys; Dennis J. Krumholz, of counsel; Michael S. Kettler, on the briefs).
Neal Herstik argued the cause for respondent/cross- appellant Port-Man-GB Associates, LLC (Gross, Truss & Herstik, PC, attorneys; Neal Herstik, of counsel; Anthony J. Monaco, on the briefs).
The opinion of the court was delivered by
ACCURSO, J.A.D.
This is a dispute over responsibility for the costs of an environmental
cleanup at a shopping center in Freehold. Defendant Renaissance at Schanck
Road, LLC appeals from a July 27, 2018 order, subsequently memorialized in
the August 21, 2018 judgment, requiring it to reimburse its landlord, plaintiff
Port-Man-GB Associates, LLC, $180,230 and to complete the remediation of
the shopping center property.1 Port-Man cross-appeals from a provision in the
August 21, 2018 judgment declaring Renaissance not liable to Port-Man for
1 Renaissance also appealed a January 30, 2017 order denying its motion to re- open discovery to permit it to file a supplemental expert report. As it failed to brief that issue, however, we deem it waived. See Sklodowsky v. Lushis, 417 N.J. Super 648, 657 (App. Div. 2011). A-1454-18 3 obligations arising before November 14, 2007, the date Renaissance became
Port-Man's tenant by way of assignment.
For reasons we explain below, we conclude the trial judge's construction
of the Renaissance lease assignment is correct, and thus affirm the provision of
the August 21, 2018 order declaring Renaissance responsible only for
contamination occurring after November 14, 2007. We find the court erred,
however, in deeming Renaissance judicially estopped from asserting the
environmental contamination did not occur after the effective date of its
assignment. And because it is undisputed plaintiff Port-Man has never offered
any proof as to when the contamination occurred, we conclude Port-Man failed
to establish Renaissance's liability under the lease by proving the
contamination occurred after Renaissance came into possession. We
accordingly reverse the judgment against Renaissance and remand for
dismissal of Port-Man's complaint.
This matter has a long and complicated history spanning several
different but related lawsuits involving a number of different entities and a
myriad of claims, most of which are not germane to the two questions we
address here. Because we write only for the parties, who are familiar with the
facts and the case history, we confine ourselves to what is essential to
A-1454-18 4 understand our holding. The property is owned by the Silvia B. DeAngelo
Living Trust. In 1971, the Trust entered into a ground lease with Lenco
Associates. Lenco, in turn, leased the property to Supermarkets General
Corporation, later known as Pathmark Stores, Inc. Pathmark developed a
shopping center on the property. Among the shopping center tenants from
1979 through 2009 was a dry cleaner.
In 1989, Lenco assigned its interest in the ground lease and its interest in
its 1971 lease with Pathmark to Port-Man. In 2007, Pathmark assigned its
interest in the 1971 Lenco lease, and its interest in the subleases with the
shopping center tenants, to Renaissance; Renaissance thereby becoming Port-
Man's tenant under the 1971 Lenco lease and the landlord under the subleases
with the shopping center tenants. The first paragraph of the 2007 agreement
between Pathmark and Renaissance states:
Assignor hereby agrees to assign the [Lenco] Lease and Subleases to Assignee and Assignee hereby agrees to accept such assignments and to assume all of the obligations of the tenant under the [Lenco] Lease which accrued from and after the date of the Assignment, and sub-landlord under the Subleases, subject to the terms and conditions of this Agreement.
[Emphasis added.]
A-1454-18 5 The actual assignments of the Lenco lease and the tenant subleases echo
that limitation on Renaissance's liability. Thus, the lease assignment provides
that Pathmark "does hereby sell, assign and transfer to Renaissance . . . all of
[Pathmark's] right, title and interest in the [Lenco lease]," and Renaissance, in
consideration,
hereby expressly assumes and agrees for the benefit of [Pathmark] and [Port-Man, as successor-in-interest to Lenco], their successors and assigns, to perform, observe and abide by all of the terms, covenants, conditions and obligations contained in [the Lenco lease] on the part of [Pathmark] to be kept, observed and performed thereunder . . . excluding obligations, actual or contingent, of the Lessee which may have arisen on or prior to the Effective Date. Nothing in this Agreement shall be construed to release [Pathmark] from liability under the [Lenco] Lease.
To the fullest extent permitted by law, [Pathmark] expressly agrees to indemnify [Renaissance] from and against any and all losses, claims, damages and expenses including reasonable attorney fees arising under the Lease at any time prior to the date hereof.
Similarly, in the sublease assignment, Pathmark transferred all of its
right, title and interest in the subleases to Renaissance, and Renaissance
accepted the assignment, acceded to Pathmark's rights and assumed all of its
obligations under the subleases, but for those that arose prior to the effective
A-1454-18 6 date of the assignment. The sublease assignment contained the same
indemnification provision included in the lease assignment, to wit: "[n]othing
in this Assignment shall be construed to release [Pathmark] from liability
under the Subleases."
In connection with its transaction with Pathmark, Renaissance hired
Trident Environmental Consultants to conduct a Phase I Environmental Site
Assessment of the property. Trident completed its investigation in May 2007,
and while noting a dry cleaner had been operating in the shopping center since
1979, opined "that no environmental concerns are anticipated."
In December 2007, Pathmark timely notified Port-Man of the lease
assignment by providing it an executed copy. Pathmark was not obligated
under the 1971 Lenco lease to obtain Port-Man's consent to the assignment.
Nevertheless, that lease provided that no assignment would be valid
unless it is evidenced by a written and acknowledged instrument executed by the assignor and the assignee whereby such assignee shall expressly accept and assume and agree to perform and be bound by all of the terms, covenants and conditions in this Lease to be kept, observed or performed by Tenant, and one executed original of such instrument, together with the address of the assignee, shall be delivered to Landlord.
A-1454-18 7 Although Port-Man filed suit to attempt to block Pathmark's assignment
to Renaissance, its application for an injunction was denied and it ultimately
acquiesced in the assignment, negotiating with Renaissance an amendment to
the 1971 Lenco lease the parties executed the following June. In the
amendment, Renaissance agreed to additional rent and repair obligations and
Port-Man expressly acknowledged Renaissance's assignment and agreed to
cooperate in Renaissance's land use applications to improve and operate the
shopping center.
In 2009, Port-Man embarked on a refinance and, at the request of its
lender, engaged Brennan Environmental, Inc. to perform a Phase I assessment
of the property. In the course of its site inspection, Brennan observed a ten-
gallon plastic drum in the dry cleaner tenant's space "labeled as containing
waste PCE" (tetrachloroethylene or Perchloroethylene, aka PERC), a dry
cleaning solvent. Although advised the dry cleaning machine operated by the
current dry cleaner tenant, Kyungin Cleaners, Inc., did not use PCE, Brennan
thought it likely a prior machine did. Soil and groundwater sampling revealed
PCE and trichloroethylene (TCE) at levels exceeding State standards, and New
Jersey Department of Environmental Protection records revealed a dry
cleaning operation in the space had "been a registered disposal facility"
A-1454-18 8 generating "spent solvents and solvent mixtures," i.e., TCE and PCE, since
1988.
Renaissance retained a new environmental consultant, Grelis
Environmental Services, LLC, which confirmed the presence of PCE-
contaminated soil beneath the dry cleaner tenant space and underneath the
pavement behind its premises. Grelis reported the contamination to the DEP in
November 2009, and Renaissance engaged a qualified site remediation
contractor to remove the contaminated soil.
In August 2010, Renaissance filed suit to recover those remediation
costs from Pathmark, Kyungin, and The Great Atlantic & Pacific Tea
Company, the entity that had purchased Pathmark's assets. Pathmark filed for
bankruptcy a few months later. In early 2011, Renaissance filed an amended
complaint asserting a claim against Kyungin for $303,948.41 in remediation
costs.
When Kyungin failed to answer, default was entered, and a proof
hearing was held before Judge Kapalko. Two witnesses testified. John Grelis,
testified about soil borings taken outside the building and below the concrete
floor in the areas of suspected contamination, including where the current and
former dry cleaning machines were located and the dry cleaner's spotting
A-1454-18 9 station. Grelis claimed the borings confirmed the soil beneath the floor of the
tenant space and below the pavement behind it had been contaminated with
PCE, and that he saw Kyungin using PCE at the facility during his
investigation.
Grelis testified a contractor retained by Renaissance removed the
contaminated soil from beneath the floor. Although the contractor had
excavated another area, twenty-five-foot square, behind the dry cleaners to a
depth of seven or eight feet, Grelis testified there remained "considerable
contamination" within that area that "still has to be addressed." Grelis added,
"[b]ut that's clearly not Renaissance's issue because they've only been involved
with the property as a sub-lessee for a year-and-a-half, two years and never
operated the dry cleaning." Asked whether the PCE contamination in that
outside area was related to the operation of Kyungin Cleaners, Grelis replied,
"no question."
The other witness to testify was Thomas Primavera, Renaissance's
general counsel. He explained Renaissance decided to purchase Pathmark's
leasehold interests after Trident advised the use of PCE in the dry cleaning
operation had ended in 2002 and "there were no telltale signs of contamination
at the property." He testified Renaissance's investigation into the history of
A-1454-18 10 the dry cleaning operation was incomplete. Primavera explained Renaissance
had evicted Kyungin from the shopping center for non-payment of rent at the
end of 2009, and Kyungin had not responded to the pleadings in the current
action. He testified the anecdotal evidence suggested Kyungin had operated
the dry cleaners since the shopping center opened in 1976.
According to Primavera, Renaissance's goal had been "to render the
building useful," leading it to jackhammer the floor of the dry cleaner as well
as some adjacent space, remove the soil underneath, and, upon being satisfied
the remaining level of contamination was to residential standards, replace the
floors. He testified to the costs incurred by Renaissance, identified the
sublease between Pathmark and Kyungin dated October 6, 1992, and the
sublease assignment, and testified the assignment and the sublease with
Kyungin permitted Renaissance to recover its remediation costs from Kyungin.
After hearing the testimony, Judge Kapalko put his opinion on the record
entering judgment against Kyungin for $303,948.41. The judge found
Kyungin had contaminated the premises by its use of tetrachloroethylene, a
substance "commonly identified with dry cleaning establishments and . . . one
no longer permitted to be utilized under the law." He accepted Grelis's
testimony that he saw Kyungin still using the "substance on its site even at that
A-1454-18 11 time in violation of the law and therefore, in violation of its [sub]lease
covenants," and that the sublease assignment and the terms of the sublease
permitted Renaissance to recover its costs to remediate the damage.
By the time of the default hearing, the DEP had already issued a Notice
of Violation to the DeAngelo Trust and Kyungin. Because Port-Man was
required to indemnify the DeAngelo Trust under the terms of the ground lease,
Port-Man hired a licensed site remediation professional to conduct a limited
investigation of environmental conditions at the property. It followed with the
complaint in this action alleging Renaissance breached the 1971 Lenco lease
by failing to fully remediate the contamination on the property and seeking an
injunction requiring Renaissance to complete all remediation required by the
DEP.
Renaissance followed with its own action against Port-Man and the
DeAngelo Trust. Port-Man answered and counterclaimed for a declaratory
judgment that Renaissance was obligated by the Lenco lease and its
assignment from Pathmark to complete the remediation. Renaissance also
filed a third-party complaint in the case brought by Port-Man against Trident,
for professional negligence, and three dry cleaner subtenants that had leased
the space before Kyungin for contribution under the New Jersey Spill
A-1454-18 12 Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.24. One of the
dry cleaners, Baik Yang, filed a fourth-party complaint against Kyungin for
contribution under the Spill Act. A new judge consolidated the cases.
During discovery in these matters, Grelis was deposed. He testified he
couldn't say when the contamination in the dry cleaner's tenant space occurred
but opined the extent of it suggested the discharge was not recent, and that he'd
reviewed documents leading him to believe "it could have occurred more than
20 years ago." He claimed the staining he observed on the floor behind the
spotting station in the course of his 2009 investigation was not fresh, and his
testimony at the proof hearing about Kyungin's then-current use of PERC was
based on seeing a bottle on the spotting station that listed PERC among the
ingredients.
Grelis believed the spotting station likely contributed to the PERC found
beneath the floor "[b]ut that certainly was not responsible for the gross
contamination found out behind the building." He testified the worst of the
contamination was directly outside the back door and believed it was most
likely caused by "dumping outside the back door, waste disposal and
dumpsters."
A-1454-18 13 In July 2016, the new judge denied a summary judgment motion by Port-
Man seeking to declare Renaissance liable to Port-Man for the cleanup and
granted summary judgment to Trident and Baik Yang dismissing Renaissance's
third-party complaint. Although neither Port-Man nor Renaissance has
pursued an appeal from those orders,2 the judge's findings on the motions
informed her subsequent decision resolving Renaissance's responsibility to
remediate the contamination at the shopping center — which is before us.
The judge found on the undisputed motion record that the dry cleaning
business had been operated by Adma, Inc. from August 1979 to February
1983, Baik Yang from February 1983 to August 1989, Koo and Stephanie Kim
from September 1989 until August 1992, and Kyungin from October 1992
until November 2009, and that "Port-Man and DeAngelo allege that these dry
cleaners used hazardous substances, including tetrachlorethylene, referred to as
PCE, as a dry cleaning solvent . . . [a]nd discharged PCE at the property."
The judge recounted that Chung Ang, the owner of Baik Yang, testified
at deposition that when he purchased the dry cleaning business in February
1983, the purchase included a dry cleaning machine that used PERC.
2 Renaissance appealed from the summary judgment in favor of Baik Yang but has since settled its claim against the dry cleaner and dismissed its appeal against it. A-1454-18 14 According to Ang, the PERC was delivered "in a big car." For two or three
years, he put the chemical waste remaining after the PERC was used in the
machine in a plastic bag and threw it in the garbage. Later, the waste was
stored in a container on the premises and periodically removed by a company.
Ang claimed that he was not aware of any discharge of PERC occurring during
his tenancy. The judge found Ang sold the machine that used PERC to the
Kims when he sold them the business.
The judge denied Port-Man's summary judgment motion, finding the
"agreements in question contain[ed] no specific reference to hazardous
substances, environmental contamination, or the allocation of responsibility
for environmental remediation," and they needed to be interpreted "in the
context of a full and complete record" at trial.
The judge granted the motions of Trident and Baik Yang, finding
although there was evidence "Baik Yang used PERC in its dry cleaning
operation for a period of two to three years, Renaissance [had] produced no
facts from which [the judge could] conclude that a spill occurred during Baik
Yang's leasehold." The judge noted Renaissance "established through Grelis's
testimony at the proof hearing that Kyungin was responsible for the PERC
contamination that was present in 2009" but had not "presented any competent
A-1454-18 15 facts which would tend to prove the contamination was also present during
Baik Yang's tenancy or in 2007 when the phase one was performed by
Trident." The judge noted Renaissance had not produced expert opinion
dating the contamination to Baik Yang's tenancy or to any time before 2007.
The judge concluded Renaissance "failed to raise an issue of material
fact regarding the existence of a PERC discharge by Baik Yang prior" to
Renaissance coming into possession in 2007, "or to come forward with facts
from [which] a reasonable fact finder could conclude that Trident's negligence
[bore] a causal relationship to the remediation costs that were incurred after
the date of its reports."
Following the denial of Renaissance's motion to reopen discovery to
permit it to obtain an expert report dating the contamination, Port-Man and
Renaissance went to trial on the limited issue of which of them bore
responsibility for the environmental remediation under their agreements.3
Port-Man presented the testimony of Carl P. Gross, the principal of its
management company, GB Limited Oper. Co., who described that entity as "a
3 Port-Man and Renaissance had asserted Spill Act claims against one another, but ultimately agreed the lease documents and assignment would control which of them should be responsible for the cleanup. Renaissance has conceded the approach makes it impossible for it to recover its voluntarily incurred remediation costs from Port-Man as the lease does not provide for it. A-1454-18 16 management company that manages all the entities I have an ownership in." A
former practicing lawyer, Gross negotiated the lease amendment with
Renaissance following Pathmark's assignment.
Gross testified Port-Man had no right to approve subleases or
assignments of the 1971 Lenco Lease, but only to be notified of any
assignment within thirty days. According to Gross, he "perused" the
assignment when he received it, a few weeks after its execution, and passed it
along to his lawyers. He understood "Pathmark had assigned 100 percent of
the lease to Renaissance, and that as between Pathmark and Renaissance their
side deal was that Pathmark would be responsible for anything prior to the
assignment, and Renaissance would be responsible for anything after."
As to the negotiations between Port-Man and Renaissance over the lease
amendment, Gross testified there had been discussion about whether the term
"consent" or "acknowledge" should be used to describe Port-Man's conduct
with respect to the assignment. He maintained Port-Man did not want to
consent to the assignment, and that its consent was not required. Port-Man
agreed to acknowledge "this was [Renaissance's] deal with Pathmark."
According to Gross, under the amendment, the 1971 Lenco lease remained in
place except to the extent modified by the amendment. He maintained the
A-1454-18 17 statement in the amendment acknowledging Renaissance's assignment was not
intended to bind Port-Man to the division of pre- and post-assignment
liabilities agreed to by Pathmark and Renaissance in the assignment.
Gross testified Port-Man was not aware of any contamination at the
property, and the parties had not discussed environmental contamination when
the lease amendment was executed. Port-Man only discovered the
contamination when it was planning to refinance, and its lender required a
Phase I investigation. After the DEP issued its Notice of Violation, Port-Man
determined its lease with the DeAngelo Trust required it to assume the trust's
responsibilities for remediation. Port-Man met with Renaissance, who refused
to undertake any further remediation, and the parties agreed Port-Man would
proceed with the compliance steps required by DEP without prejudice to its
rights against Renaissance.
On cross-examination, Gross testified he could not recall having any
discussions about the clause in the assignment excluding obligations arising
prior to its effective date with his partners, attorney or anyone from
Renaissance, but admitted he "most likely" discussed it with his attorney.
When asked how he acquired his understanding of the "side deal" between
Pathmark and Renaissance he testified to on direct examination, Gross
A-1454-18 18 explained he got it from the document, which in "the first full paragraph,
assigns all of the interests in the lease" and "[l]ater on, when it divides up as
between Pathmark and Renaissance, that was their deal." He testified he didn't
"specifically" recall discussing the assignment's indemnification clause with
anyone, "but to me, that made it clear that that was the deal between Pathmark
and Renaissance. That had . . . nothing to do with me."
Gross insisted he did not want to consent to the assignment because
Port-Man was not a party to the agreement between Pathmark and Renaissance
and was not involved in negotiating it. He claimed "[t]hat was their deal ."
Gross acknowledged the letters in evidence between Renaissance and Port-
Man exchanged during their negotiation of the lease amendment, in which
Renaissance requested and Port-Man agreed to "consent to and acknowledge
the assignment to Renaissance." He explained, however, that as the parties
"got through the negotiations, I said, what in the world am I consenting to,
because that's not my deal." He decided he would "acknowledge that they
have this arrangement. I'll acknowledge that they are the tenant, but . . . I'm
not consenting to any side arrangements they have between them." Asked
whether he ever communicated those thoughts to Renaissance, Gross admitted
he hadn't, but was "sure the attorneys did," because it "was a negotiated item."
A-1454-18 19 Robert McDaid, managing member of Renaissance, testified he
negotiated, with Renaissance's counsel, the 2007 agreement with Pathmark to
take over its interest in the Lenco lease. He understood the phrase in their
agreement stating Renaissance agreed to accept the assignment and to "assume
all of the obligations of the tenant . . . which accrued from and after the date of
the Assignment" to mean that Renaissance was not "responsible for anything
prior to the date of this agreement that occurred while Pathmark was in
operation." Similarly, language in the assignment and sublease assignment
"excluding obligations . . . which may have arisen on or prior to the Effective
Date," and providing for indemnification of Renaissance by Pathmark for any
losses or claims occurring before the effective date of those agreements, meant
that Pathmark would protect Renaissance "to the fullest extent possible" and
that Pathmark was responsible for anything occurring prior to the effective
date. According to McDaid, the indemnification clause was "the most
significant part of the agreement" for Renaissance.
As to his negotiations with Port-Man resulting in the lease amendment,
McDaid understood from the exchange of correspondence that Port-Man had
agreed to consent to and acknowledge the assignment. He did not recall
having any discussions with Port-Man regarding the limited nature of the
A-1454-18 20 assumption of liability expressed in the assignment and sublease assignment or
the indemnity provisions. McDaid confirmed Gross's testimony that there
were no discussions with Port-Man about environmental issues.
McDaid testified he was not aware of any contamination at the shopping
center during his negotiations with Port-Man because Trident hadn't reported
any environmental concerns. According to McDaid, Renaissance had already
begun construction on the property when the contamination was discovered
and was under some tight deadlines to complete it. He testified there was no
time at that point to figure out who was going to remove the contaminated soil,
so Renaissance undertook as much remediation as required to satisfy the
licensed site remediation professional and the town to allow construction to
continue.
Renaissance's general counsel, Primavera, testified he negotiated the
contracts with Pathmark on behalf of Renaissance. He explained the intent of
the language in the 2007 agreement whereby Renaissance agreed to accept the
assignment and assume all obligations "which accrued from and after the date
of the Assignment" was to permit Renaissance to "receive all of the remaining
rights under the lease for the term, but to only accept the liabilities which came
into being after the assignment became effective." He claimed he "didn't want
A-1454-18 21 Renaissance to be responsible for any liabilities that arose during Pathmark's
tenure," such as taxes, assessments, claims by vendors or invitees on the
property, and fines or claims by governmental entities.
Primavera claimed the same limiting language was included in the
assignment and sublease Assignment for the same reason. He testified that
without it, he wouldn't have advised Renaissance to execute the assignment
because "there would be too many unknowns in a situation like that where [a]
shopping center operator has been in business at a site for 27 years, 28 years."
According to Primavera, the purpose of the indemnification clause was to
protect Renaissance against claims by third parties that arose prior to the
assignment.
Primavera maintained that during the negotiations for the lease
amendment with Port-Man, there were no discussions as to environmental
rights and obligations, the limited assignment undertaken by Renaissance, or
the indemnification clause in that assignment. He also explained that when he
testified at the proof hearing before Judge Kapalko, he did not know the
identity of any of the entities that had operated the dry cleaners before
Kyungin, but only learned of them in the course of discovery in these
consolidated matters.
A-1454-18 22 Following the conclusion of the two-day trial, the judge put her findings
and legal conclusions on the record, noting "[t]he circumstances of this case
present a complex and often acrimonious series of transactions between
sophisticated businesspeople." Specifically, the judge found these experienced
and sophisticated real estate investors
were anxious to make a deal on terms that best suited their immediate interests. Once Port-Man realized that it could not re-take the property from Pathmark and that Renaissance was anxious to acquire the property, Port-Man set out to exact as many concessions as possible from Renaissance.
Renaissance ultimately agreed to a substantial increase in rent and to relieve Port-Man of ongoing costs for roof repair, structural repair, and replacement. In exchange, Port-Man gave virtually nothing other than the agreement not to interfere with the redevelopment and to cooperate in Renaissance’s application for site plan approval and financing.
The judge further found
[t]he credible evidence indicates that with all of these understandings, Renaissance wished to insulate itself from any preexisting claims or liabilities incurred by Pathmark before the assignment. The credible evidence also indicates that Port-Man had little concern about the arrangements between Pathmark and Renaissance, particularly when Port- Man still had the ability to pursue Pathmark, the deepest pocket in 2007, in the event of liability for a pre-assignment loss.
A-1454-18 23 The judge rejected Port-Man's argument "that it understood the
assignment and assumption of the lease to be a complete assignment of
Pathmark's lease to Renaissance with a private or 'side' agreement between
Renaissance and Pathmark regarding the allocation of potential liabilities
based upon time of accrual." Instead, she found "Port-Man's reliance on its
own interpretation of the assignment as a 'side deal' between Pathmark and
Renaissance was misplaced and contrary to the plain language of the
contracting parties." She accordingly concluded the assignment was valid and
binding, and Renaissance, by its clear and unambiguous terms, did not assume
obligations arising before its effective date.
The judge expressly rejected Port-Man's argument that the 1971 Lenco
lease's prohibition on partial assignments rendered the Renaissance assignment
invalid, finding Port-Man "acquiesced to the terms of the assignment without
reservation and [could] not now claim that Renaissance [was] responsible for
losses that predated the assignment." The judge noted the Lenco lease
permitted assignments without consent of the landlord, requiring only that
"there be a complete assignment of all obligations under the lease and that the
landlord be provided with a copy of the written assignment within 30 days o f
execution." She found the notice provision was obviously "intended to give
A-1454-18 24 the landlord an opportunity to review the assignment and a reasonable
opportunity to contest [its] validity . . . if the landlord so chose." See Garden
State Bldgs., L.P. v. First Fid. Bank, N.A., 305 N.J. Super. 510, 524 (App.
Div. 1997) (noting an anti-assignment clause may be waived by written
agreement, a course of dealing, or failing to take action to invalidate the
assignment).
The judge noted there was no dispute that Pathmark timely provided
Port-Man a copy of the assignment, which Gross reviewed and distributed to
Port-Man's partners and attorney. She found Port-Man never objected to or
challenged the terms of the assignment — either when it was first provided a
copy in December 2007 or at any time leading up to the execution of the lease
amendment six months later — notwithstanding Gross's admission that he
"most likely" discussed the language limiting Renaissance's obligations with
his counsel. The judge concluded
[t]he reasonable inference to be drawn from all these facts is that Port-Man was aware . . . Pathmark, and Renaissance had negotiated a liability retention by Pathmark as part of the assignment, but Port-Man was satisfied that Pathmark's continuing obligation would be sufficient to protect Port-Man in the event of a pre- assignment loss. Environmental contamination or other potential liabilities predating the assignment did not appear to be in the forefront of any of the parties' minds during the post-assignment negotiations.
A-1454-18 25 Rather, it appears that the driving force behind the actions of both Port-Man and Renaissance was the desire to 'seal the deal' with Port-Man receiving more rent and relief from its continuing obligation for roof and structural repairs, and Renaissance being able to move forward on its project without concerns about interference from Port-Man.
The judge further noted Port-Man accepted rent from Renaissance "and
acted in compliance with the [Lenco] lease and assignment" for nearly ten
years and only challenged the validity of the assignment in the current
litigation. She found it beyond question that "the issue of the assignment
would not have been raised but for Pathmark's subsequent insolvency," which
"left both Port-Man and Renaissance without recourse under the lease."
Although determining Renaissance was only responsible "for those
liabilities that arose after the assignment from Pathmark," and rejecting Port-
Man's claim that Renaissance was "judicially estopped from . . . claiming that
the environmental contamination occurred prior to 2007," the judge
nevertheless concluded Renaissance was "judicially estopped from now
claiming that contamination did not occur after the 2007 assignment" based on
the record at the proof hearing before Judge Kapalko.
The judge noted Renaissance had filed a lawsuit against Kyungin, which
had operated the dry cleaners from 1992 to 2009, for reimbursement of
A-1454-18 26 Renaissance's remediation costs. She rejected Port-Man's claim that
Renaissance should be judicially estopped from asserting the contamination
took place before 2007, because "proof of a release prior to 2007 was not an
element of Renaissance's breach of lease claim" against Kyungin. The judge
remarked she based her findings "upon the lack of proof establishing a pre-
2007 release, not the application of the doctrine of judicial estoppel."
Although rejecting Port-Man's theory, the judge nevertheless found
application of the doctrine of judicial estoppel appropriate based on the record
Renaissance created at the proof hearing before Judge Kapalko. The judge
noted at that hearing, Renaissance produced evidence that PCE contamination
was detected in 2009. She explained that while Renaissance offered evidence
"that Kyungin had operated the cleaners 'for many years,' the only evidence of
PCE use came from Grelis's testimony regarding his observations at the time
of his site inspection in 2009." "Accepting Renaissance's position that it did
not assume any liability under the assignment and lease for damages that
occurred prior to the assignment," the judge reasoned that "Renaissance could
only pursue a breach of lease claim against Kyungin if the contamination
occurred after the lease assignment in November of 2007." Accordingly, the
A-1454-18 27 court concluded Renaissance was judicially estopped from claiming in this
action that contamination did not occur after its 2007 assignment.
The judge accordingly dismissed Renaissance's complaint against Port-
Man in its entirety and granted Port-Man's claim against Renaissance for
reimbursement of Port-Man's remediation costs in the sum of $180,230 and
declared Renaissance responsible to complete the remediation of the property
in compliance with DEP requirements. Renaissance's motion for
reconsideration was denied, and this appeal and cross-appeal followed.
We begin our analysis by dispatching Port-Man's cross appeal. The
construction of contract language is generally a question of law unless its
meaning is unclear and turns on conflicting testimony. Bosshard v.
Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). Here,
the judge denied Port-Man summary judgment on its claim that Pathmark
assigned the entirety of its interest in the Lenco lease to Renaissance because
the Lenco lease prohibited partial assignments, finding the 1971 Lenco lease,
the Pathmark/Renaissance agreement and assignment, and the amendment to
the Lenco lease Port-Man and Renaissance executed in June 2008 needed to be
interpreted "in the context of a full and complete record" at trial.
A-1454-18 28 Having had the opportunity to hear the principals testify about the
negotiation of their serial agreements and what they intended and understood
them to mean, the judge had no hesitation in finding the language of the
assignment, by its "clear and unambiguous" terms, limited Renaissance's
assumption of liabilities under the Lenco lease to those accruing after the
effective date of the assignment. Reviewing the language de novo, see Kieffer
v. Best Buy, 205 N.J. 213, 222 (2011), we have no hesitation in concluding she
was correct. The language admits of no other interpretation. See Karl's Sales
& Serv. v. Gimbel Bros., 249 N.J. Super. 487, 493 (App. Div. 1991) (noting
"where the terms of a contract are clear and unambiguous there is no room for
interpretation or construction and the courts must enforce those terms a s
written"). Port-Man's argument that the circumstances surrounding execution
of the document — to which it was not a party — show Pathmark and
Renaissance intended something other than what they expressed in the plain
language, is without sufficient merit to warrant discussion in a written opinion.
R. 2:11-3(e)(1)(E).
The judge's factual finding that Port-Man knew "Pathmark, and
Renaissance had negotiated a liability retention by Pathmark as part of the
assignment," but was "satisfied that Pathmark's continuing obligation would be
A-1454-18 29 sufficient to protect Port-Man in the event of a pre-assignment loss" and thus
posed no objection to the partial assignment, and instead acknowledged its
validity, has ample support in the record and is thus binding on appeal. See
Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). We
accordingly affirm that provision of the August 21, 2018 judgment declaring
Renaissance not liable to Port-Man under the 1971 Lenco lease for obligations
arising before November 14, 2007.
We come to a different conclusion about the judge's application of
judicial estoppel. As our Supreme Court has explained, "[j]udicial estoppel is
an extraordinary remedy," one that "should be invoked only to prevent a
miscarriage of justice." Bhagat v. Bhagat, 217 N.J. 22, 37 (2014). Its purpose
"is to protect 'the integrity of the judicial process,'" Kimball Intern., Inc. v.
Northfield Metal Prods., 334 N.J. Super. 596, 606 (App. Div. 2000) (quoting
Cummings v. Bahr, 295 N.J. Super. 374, 387 (App. Div. 1996)), "by
preventing a party from abusing [it] through cynical gamesmanship, achieving
success on one position, then arguing the opposite to suit an exigency of the
moment," Teledyne Indus., Inc. v. NLRB, 911 F.2d 1214, 1218 (6th Cir.
1990).
A-1454-18 30 "Thus, the doctrine is not invoked unless a court has accepted the
previously advanced inconsistent position and the party advancing the
inconsistent position prevails in the earlier litigation." Bhagat, 217 N.J. at 37.
As we noted in Kimball, "[j]udicial estoppel is applied with caution to avoid
impinging on the truth-seeking function of the court because the doctrine
precludes a contradictory position without examining the truth of either
statement."4 334 N.J. Super. at 608 (quoting Teledyne, 911 F.2d at 1218). We
review its application for abuse of discretion. Terranova v. GE Pension Tr.,
457 N.J. Super. 404, 410 (App. Div. 2019).
The judge's application of the doctrine here was based on Renaissance's
proofs in the default hearing before Judge Kapalko in its action to recover its
voluntarily assumed remediation costs from Kyungin. The judge explained
that "[a]ccepting Renaissance's position that it did not assume any liability
under the assignment and lease for damages that occurred prior to the
4 As we also noted in Kimball Intern., Inc. v. Northfield Metal Prods. and the Court noted in Bhagat v. Bhagat, 217 N.J. 22, 37 (2014), the doctrine has come under strong criticism from some academics, see Douglas W. Henkin, Comment, Judicial Estoppel-Beating Shields Into Swords and Back Again, 139 U. Pa. L. Rev. 1711 (1991), because of "the harshness of claim or issue preclusion based solely on a party asserting inconsistent positions, without a showing of prejudice to another party," 334 N.J. Super. 596, 608 n.4 (App. Div. 2000). A-1454-18 31 assignment, Renaissance could only pursue a breach of lease claim against
Kyungin if the contamination occurred after the lease assignment in November
of 2007." She thus deemed Renaissance judicially estopped from asserting in
this action that the contamination did not occur after the effective date of its
But the judge's premise is not accurate. By the express terms of
Renaissance's 2007 agreement with Pathmark and the sublease assignment,
Renaissance acceded to all of Pathmark's rights under both the Lenco lease and
the subleases; those agreements only limited Renaissance's pre-assignment
liabilities. Pathmark's retention of those liabilities did not affect Renaissance's
right as landlord under the sublease to recover its remediation costs from its
tenant. See Lech v. State Farm Ins. Co., 335 N.J. Super. 254, 258 (App. Div.
2000) ("[w]hile an assignee's rights can be no greater than those of the
assignor, neither can they be any less" (internal citation omitted)).
Under the sublease assignment, Pathmark unquestionably assigned all of
its "right, title and interest" in the sublease with Kyungin to Renaissance . That
sublease required Kyungin to "comply with any and all federal, state and local
laws or regulations with respect to Hazardous Substances" as defined in the
Comprehensive Environmental Responses, Compensation and Liability Act of
A-1454-18 32 1980 and, "at its sole cost and expense," to comply with the provisions of the
Environmental Cleanup Responsibility Act and any orders or directives of the
DEP. The sublease also provided that in the event of a breach by the
sublessee, the sublessor "in addition to any other remedies it may have, . . .
may recover from Sublessee all damages it may incur because of such breach ."
It thus seems readily apparent Renaissance could sue Kyungin to recover the
remediation costs Renaissance incurred in 2009 on account of Kyungin's
alleged breach of its obligation to comply with the environmental laws —
without regard to whether the breach occurred before or after the assignment to
Renaissance in 2007.
Renaissance adduced no evidence at the proof hearing that any or all of
the contamination occurred post-assignment, but only that Kyungin was still
using PERC, illegally, in 2009. It made no effort at that hearing to date the
contamination and apparently was not required to do so to establish Kyungin's
liability under the sublease — which was done after default and without
opposition. Moreover, Renaissance's position at the hearing that Kyungin was
the sole discharger, based on Renaissance's erroneous belief that Kyungin had
been the only operator of the dry cleaners, is not inconsistent with its position
that some, or all, of the contamination occurred before November 2007,
A-1454-18 33 because Port-Man does not dispute Kyungin operated the dry cleaners from
1992 until 2009.
Accordingly, we find no fatal inconsistency between Renaissance's
positions in the two proceedings and thus no basis for the application of
judicial estoppel. In addition, application of this equitable doctrine, see Bahrle
v. Exxon Corp., 279 N.J. Super. 5, 22 (App. Div. 1995), was particularly
inequitable here. In the default hearing before Judge Kapalko, Renaissance
was attempting to recover the more than $300,000 it voluntarily spent to clean
up the property in 2009 — costs it concedes it cannot recover from Port-Man
under the Lenco lease.
Port-Man has thus already received a substantial benefit from
Renaissance's remediation efforts. Application of the doctrine here, allowed
Port-Man to parlay that voluntary act on Renaissance's part into Renaissance
having to assume the entire costs of cleanup without Port-Man having to
establish when the contamination occurred, notwithstanding the judge's
unequivocal finding that Renaissance is only responsible for lease liabilities
accruing after the effective date of its assignment.
In invoking judicial estoppel, the judge improperly relieved Port-Man of
its burden to establish a critical element of its cause of action to recover all of
A-1454-18 34 its remediation costs from Renaissance and require it to fund the remaining
cleanup — that all the contamination occurred after Renaissance assumed
possession in 2007. Port-Man has never asserted that's the case, and indeed
has several times in the course of these proceedings, including in its complaint,
asserted the opposite. 5 Indeed, as we confirmed with counsel at oral argument,
Port-Man never offered any proof regarding the timing of the discharge and
contamination because its theory — that the 1971 Lenco lease prohibited
partial assignments and thus obligated Renaissance to assume responsibility
5 Port-Man alleged in its complaint that Renaissance "knew or had reason to know at the time it purchased the leasehold in 2007, that hazardous materials had been discharged onto and into the Demised Premises" and that the "dry cleaner sub-tenant continued to discharge hazardous materials" after Renaissance took possession. In its brief in support of its failed summary judgment motion against Renaissance, Port-Man asserted Renaissance took its lease "assignment on November 14, 2007 — presumably after much of the contamination had occurred." Port-Man also argued on that motion that Renaissance had included "pre-assignment contamination in its damages judgment in the prior litigation" against Kyungin. In its pre-trial memorandum, Port-Man contended because "sub-tenants of Renaissance and Pathmark contaminated the Property," Renaissance is liable, making irrelevant "whether and to what extent the contamination occurred before or after the Assignment of the Lease from Pathmark to Renaissance."
A-1454-18 35 for liabilities pre-dating as well as post-dating the assignment — meant
Renaissance was responsible regardless of when the contamination occurred.6
We affirm the court's judgment that Renaissance is not liable to Port-
Man for any obligations under the Lenco lease arising on or prior to November
14, 2007. We reverse the application of judicial estoppel, and because Port-
Man failed to establish the contamination of the premises occurred after
November 14, 2007, we reverse the judgment in its favor and remand for
dismissal of its complaint. We do not retain jurisdiction.
Affirmed in part, reversed in part, and remanded.
6 Port-Man's assertion that Renaissance established the contamination occurred in 2009 at the default hearing based on Grelis's testimony that he saw Kyungin using PCE during his 2009 site inspection, fails for the same reason the judge stated she granted summary judgment to Baik Yang: establishing use of a hazardous substance does not prove a discharge and contamination. See Atl. City Mun. Utils. Auth. v. Hunt, 210 N.J. Super. 76, 96 (App. Div. 1986) ("The pouring of hazardous waste on the ground was a discharge. The placement of the waste stored in containers was not a discharge."). A-1454-18 36