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Satellite Gateway Communications Inc. v. Musi Dining Car Co.

Decided: May 17, 1988.

SATELLITE GATEWAY COMMUNICATIONS, INC., PLAINTIFF-RESPONDENT,
v.
MUSI DINING CAR CO., INC., MUSI MANUFACTURING CO., INC. AND RALPH MUSI, DEFENDANTS-APPELLANTS



On certification to the Superior Court, Appellate Division.

For affirmance in part and reversal in part -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- none.

Per Curiam

The sole issue in this appeal is whether the trial court properly awarded Satellite Gateway Communications, Inc. (Satellite) counsel fees of $45,264 against Musi Dining Car Co., Inc. (Musi). The trial court awarded counsel fees in an action brought by Satellite against Musi for possession, injunctive relief, and damages arising out of Musi's failure to vacate certain commercial real property. The Appellate Division affirmed. We reverse.

I

Musi, a manufacturer of dining cars, was a tenant at 27 Randolph Street in the Borough of Carteret, New Jersey, for several years. On January 31, 1983, Musi and Philip Mandelbaum,*fn1 agent for the landlord, executed a renewal lease for a term of ten years. The lease included a renewal option for an additional ten years. By sublease dated February 1, 1983, Musi sublet a portion of the premises to a Ronald R. Simon, who in

turn sublet the premises on the same day to Satellite's corporate predecessor in interest.

Satellite is engaged in the business of operating an earth station facility and all phases of audio, video, and data satellite communications. In mid-1983 Musi and Satellite began discussions of an assignment to Satellite of all Musi's interests under the January 31, 1983, lease. On August 30, 1983, Musi and Satellite entered into an "Agreement for the Assignment of Lease" under which Musi assigned to Satellite "all of its right, title and interest in and to a certain Lease Agreement between Philip Mandelbaum, agent, and Musi Dining Car Co., Inc., dated January 31, 1983." The Assignment Agreement incorporated by reference all the terms and provisions of the January 31, 1983, lease and terminated all existing sublease agreements. Under the Assignment Agreement, Satellite would pay directly to the landlord the rent due under the January 31, 1983, lease and as consideration for the assignment would pay Musi additional monthly payments during the term of the lease. The Assignment Agreement also provided that if Satellite did not exercise the renewal option under the January 31, 1983, lease, it had to advise Musi so that if it so chose, Musi could exercise the renewal option. The landlord, by letter dated July 20, 1983, agreed to the Assignment Agreement "so long as Musi Dining Car Co., Inc. remains responsible under the terms of the Lease, and further, so long as the assignee assumes full liability under the Lease." However, the landlord was not a party to the Assignment Agreement nor was he a party in this suit.

The Assignment Agreement also provided that Musi and Satellite would share the premises until January 1, 1984, at which time Musi would relocate its existing business to another site. Throughout the remainder of 1983, Musi negotiated with the landlord in an attempt to find other property to which Musi could relocate. It was contemplated that Musi would rent a portion of that additional property to Satellite.

Musi did not vacate the premises on January 1, 1984, as originally agreed. By letter dated March 16, 1984, Satellite agreed to pay Musi rent for January, February, and March, 1984, with the understanding that Musi would vacate the premises by March 21, 1984. The letter also provided that Musi would assign to Satellite all of its rights to the rear two acres of adjoining property at a monthly rental of $1,800, which acres Musi intended to lease from Mandelbaum. Although the parties contemplated that Musi would lease these two acres from Mandelbaum and sublet a portion to Satellite, Musi and Mandelbaum never executed a lease for that property.

Musi did not vacate the premises on March 21, 1984. Instead Musi, without paying rent to Satellite, continued to conduct its business at the premises as usual. In August 1984, Satellite filed a complaint for possession, injunctive relief, and damages by reason of Musi's wrongful possession, which interfered with Satellite's expansion program. Musi filed a counterclaim alleging that Satellite had interfered with its negotiations with the landlord. Musi eventually vacated the premises on November 30, 1984.

The first count for possession was tried summarily pursuant to Rule 4:67-1. The trial court found that the parties were sophisticated businessmen who executed the Assignment Agreement on August 30, 1983; that the agreement provided that Musi would vacate the premises by January 1, 1984; and that the parties consented to continued occupancy until March 21, 1984, by virtue of the March 16, 1984, letter. Further, the court found that while there was an anticipation of a deal with Mandelbaum, it was not a sine qua non of the Assignment Agreement, and that the relocation of Musi was not a material part of the ...


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