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Monmouth Real Estate Investment Trust v. Manville Foodland Inc.

Decided: October 4, 1984.


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

Matthews, Furman and Cohen. The opinion of the court was delivered by Furman, J.A.D.


Plaintiffs appeal from judgment of dismissal on motion, R. 4:37-2(b), at the close of their proofs in a jury trial on the issue of liability only. Defendants cross-appeal from the denial of costs other than taxed costs.

This litigation arises out of a lease assignment followed by a sublease of a 33,000 square foot building in a shopping center on Route 527 in Franklin Township outside the City of New Brunswick. The building was occupied by a supermarket between

1967 and 1981 and is flanked by a separate 10,000 square foot building, which is partitioned for eight satellite stores.

Plaintiffs are Monmouth Real Estate Investment and D & E Realty Company (Monmouth), owners of the shopping center, and Edward M. Nelson, Jr., a customer of the former supermarket. Defendants are Foodarama Supermarkets, Inc. and its wholly owned subsidiaries Manville Foodland, Inc. and New Linden Price Rite, Inc. (Foodarama), who leased the building from Monmouth and operated the supermarket; and Mayfair Supermarkets, Inc., its subsidiary Easton & Houston Corp. (Mayfair), and its chief executive officer Stanley Kaufelt. Foodarama assigned the lease to Mayfair for $140,000 in March 1981. Mayfair in turn subleased the building at the same rent to Unclaimed Salvage & Freight, a corporation, in July 1981. Unclaimed Salvage & Freight, which is not a party to this litigation, has maintained a store for the sale of unclaimed goods.

Foodarama's supermarket business declined by 20 percent or more upon the construction by the State of a concrete median divider on Route 527 in the fall of 1979. Pursuant to the lease Foodarama had paid Monmouth overage rentals totaling slightly over $40,000 based upon a percentage of gross receipts in excess of eight million dollars per year during the six preceding years. Gross receipts fell below eight million dollars annually thereafter. Meanwhile approvals were granted by the State and the municipality in January and February 1981 for design and construction of a jughandle to provide access to and from the shopping center across Route 527. The jughandle was completed and open for traffic in the late fall of that year.

Mayfair owns a supermarket about half a mile from the former Foodarama supermarket, on the opposite side of Route 527, and in competition with it for several years preceding 1981. Aware of the precipitous fall-off in Foodarama's business and of Foodarama's interest in assigning its lease, Mayfair negotiated with Foodarama for a sublease to it and with a firm referred

to in the record as Drug Fair for a sublease, in turn, from it of half the building. Foodarama ceased retail supermarket operation on March 7, 1981 and assigned its lease to Mayfair on March 17, 1981. Mayfair's negotiations with Drug Fair broke off unsuccessfully. The former supermarket premises were closed for retail business from March 7 until about July 15, 1981, when Unclaimed Salvage & Freight opened its store. Foodarama employees were present in the building on a regular basis detaching and removing fixtures and equipment from March until late June 1981.

Monmouth's complaint sought a declaration of rights and obligations under the lease; compensatory damages for breach of the lease against both Foodarama as lessee and Mayfair as assignee of the lease; and compensatory and punitive damages for the intentional tort of tortious interference with prospective economic advantage, primarily against Mayfair. Nelson as co-plaintiff sought an injunction, N.J.S.A. 56:9-10(b), and treble damages, N.J.S.A. 56:9-12, against both Foodarama and Mayfair for violation of the New Jersey Antitrust Act, N.J.S.A. 56:9-1 et seq., specifically N.J.S.A. 56:9-3 and 56:9-4(a). A prior antitrust action brought by Monmouth against Foodarama and Mayfair was dismissed in the United States District Court for lack of standing in October 1981. In the litigation before us, a trial judge dismissed the State antitrust claim brought by Monmouth, also for lack of standing. That pretrial ruling is not challenged.

The standard for appellate review of the dismissal of the various causes of action is whether the evidence, together with the legitimate and favorable inferences therefrom, could sustain a judgment in any of the plaintiffs' favor, Dolson v. ...

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