TARTA LUNA PROPERTIES, LLC, ET AL. VS. HARVEST RESTAURANTS GROUP, LLC, ET AL. (C-000101-16, UNION COUNTY AND STATEWIDE) (A-4994-18T3)
This litigation arises out of the lease of a building in which defendants-tenants intended to open a restaurant. The lease agreement contemplated an extensive rebuilding and repair of the premises. During the renovations, plaintiffs-landlord raised numerous issues regarding the quality of the construction. They eventually instituted suit seeking the termination of the lease and imposition of a forfeiture as well as an increase in rent. After a bench trial, the Chancery court entered judgment in favor of defendants, finding plaintiffs' claims meritless.
Nevertheless, the Chancery court considered plaintiffs' application for counsel and expert fees. The Chancery court determined there was no contractual or statutory basis for an award of fees. The trial court also recognized that defendants relied on their professionals – architects and engineers – as well as the municipal officials who approved the construction, issued permits and a certificate of occupancy. However, because "the safety of the public" was compromised by the faulty construction, the Chancery court found that equitable principles demanded the remedy of counsel fees. Therefore, in determining an award of fees was warranted by principles of equity, the trial court awarded plaintiffs nearly $1,000,000 in counsel and expert fees.
This court concluded that the general concept of public safety has not been recognized as an exception to the American rule and the policy preventing fee-shifting. There was no statutory or contractual basis for the award nor did the litigation fit into any exception under Rule 4:42-9. In addition, the Chancery court found defendants had not acted willfully or engaged in any intentional misconduct. Therefore, the panel concluded the award was not supported by equitable principles. The order granting counsel and expert fees is reversed.
