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Johowern Corp. v. Affiliated Interior Designers

Decided: November 29, 1982.

JOHOWERN CORP., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
AFFILIATED INTERIOR DESIGNERS INC., A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT



On appeal from the Superior Court, Law Division, Essex County.

Michels, Pressler and Trautwein. The opinion of the court was delivered by Pressler, J.A.D.

Pressler

Defendant Affiliated Interior Designers, Inc. appeals from a judgment of the Law Division confirming an arbitration award in favor of plaintiff Johowern Corp.

Plaintiff, as landlord, and defendant, as tenant, entered into a five-year commercial lease in 1978. The agreed annual rent for the first three years of the lease was $24,000, payable in monthly installments of $2,000. The annual rent for the last two years was to be $26,400 payable in monthly installments of $2,200. The landlord's right, however, to the receipt of the full rent originally reserved and to the full escalated rent was made dependent upon its completion of specified improvements and repairs of the premises. The lease also required defendant's payment of a security deposit in the amount of $2,200, only $800 of which was ever paid. Finally, the lease contained a provision

requiring all disputes arising thereunder to be submitted to arbitration, each of the parties to choose one arbitrator and the two arbitrators to choose a third.

Some time after commencement of the tenancy a dispute arose between the parties regarding the landlord's right to the full rent. Insofar as we can determine from the record, the tenant was of the view that it was not obliged to pay the full rent, and in fact did not do so, because of the landlord's failure satisfactorily to complete the improvements and repairs. In February 1980 the landlord filed a demand for arbitration by a three-member panel pursuant to the commercial arbitration rules of the American Arbitration Association. It appears that the demand was by mutual consent and that the parties agreed to the manner of selection of the arbitrators.

Despite the swift and expeditious relief which arbitration is presumed to afford, the arbitration hearing was not held until some 16 months later. At least a portion of the intervening time was consumed by discovery procedures in the form of a bill of particulars furnished by the landlord and the service of interrogatories, the parties having agreed to exchange their answers thereto by October 15, 1981. The tenant, receiving the landlord's answers to interrogatories on that date, moved to adjourn the hearing, which had been scheduled for October 19, on the ground that it required additional time to review and respond to the interrogatory answers. The adjournment application was denied by the arbitrators and the two-day hearing commenced as scheduled.

Some three weeks later the arbitrators submitted their award. The award recited their consideration of the parties' respective proofs and allegations and, without stating any findings of fact, made the following lump-sum determinations:

1. The tenant owed the landlord the sum of $33,350, without interest, as unpaid back rent for the tenancy period through October 31, 1981.

2. The tenant owed the landlord the sum of $1400, without interest, as the balance due on the stipulated security deposit.

3. The tenant's rent obligation commencing November 1, 1981, was the ...


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