On appeal from Superior Court of New Jersey, Law Division, Hudson County, No. L-628-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 15, 2009
Before Judges Wefing, Messano and LeWinn.
Plaintiff Lawyers Guild Realty, Inc. ("Lawyers Guild") owns the building located at 610 Newark Avenue in Jersey City, New Jersey. It leased a portion of the premises to defendant ICSD, L.L.C. ("ICSD"), an entity formed by defendants Isadore Capelouto and Samuel DeNorchia. ICSD, in turn, entered into a sublease with defendant Courthouse Medical Group, L.L.C. ("Courthouse"), an entity formed by defendant Alfred Mauro, M.D., and defendant Binod Sinha, M.D. Mauro and Sinha each held a fifty-percent interest in Courthouse. Disputes arose between and among the parties as to their respective rights and duties under this lease and sublease, and litigation ensued. Lawyers Guild, Courthouse and Mauro appeal and cross-appeal from various orders entered by the trial court during the course of this litigation.
The matter has a complex history, both factually and procedurally, which must be set forth for a proper analysis of the issues that the parties present to us. The building in question houses office space, and for many years Arthur Taubman, M.D., now deceased, leased a portion of the building for his medical practice. Several physicians worked for Dr. Taubman in his practice, which included conducting examinations and performing physical therapy. Defendant Capelouto, who is not a physician, had a nearby office from which he handled accounting and collecting receivables for Taubman's practice. Defendant DeNorchia leased adjoining space to Taubman's in which MRI examinations were conducted. A large number of the patients who received MRIs through DeNorchia were referred by Taubman's practice.
After a long illness, Dr. Taubman died in 2002, leaving a number of creditors, including Lawyers Guild, to whom he owed more than $600,000. Following Taubman's death, the practice continued to operate for a period of time, apparently under Capelouto's management.
Defendant Mauro had worked in Taubman's practice, and Capelouto introduced Mauro to Frank Guarini, the principal of Lawyers Guild, proposing that Mauro lease the space Taubman had rented until his death. Guarini was agreeable to this but wanted some methodology to reduce the debt Taubman had owed to Lawyers Guild at his death. From the portions of Guarini's deposition that have been provided to us, it is apparent that there were no substantive discussions between Guarini and Mauro with respect to the terms of the lease to be executed.
Some time after Guarini and Mauro met, Capelouto proposed that, rather than have Mauro lease the space from Lawyers Guild, he and DeNorchia would form ICSD, which would lease the premises from Lawyers Guild and then sublet it to Courthouse, an entity to be formed by Mauro and Sinha. Capelouto evidently believed this would help him retain the accounting and collection work he had performed for Taubman's practice while DeNorchia believed it would help him continue to receive MRI referrals as he had in the past. This structure was agreeable to all of the parties, and the attorneys for Lawyers Guild set about preparing the requisite lease and sublease.
Lawyers Guild had, in the interim, commenced suit against Taubman's estate for the money it was owed at his death. Guarini testified in his deposition that Capelouto and DeNorchia agreed, as part of this lease transaction, to compensate Lawyers Guild for any shortfall it might experience in its efforts to collect from Taubman's estate, capping their liability at $325,000. Guarini also testified at his deposition that he personally did not discuss that topic with defendant Mauro.
Multiple drafts were prepared of the proposed lease between Lawyers Guild and ICSD and the sublease between ICSD and Courthouse. ICSD was to lease Dr. Taubman's space, on the same terms and conditions as had been in Taubman's lease, for a period of ten years. Courthouse was to sublet that space, again for ten years. These drafts were prepared by counsel for Lawyers Guild and reviewed by counsel for ICSD and Courthouse and their principals, all of whom used the same attorney.
The final form of ICSD's lease with Lawyers Guild, executed in February 2003, contained the following language in an attached rider:
Tenant is aware that Landlord has asserted a claim against the prior tenant at the premises for unpaid rent, for loan repayments on credit advanced by the Landlord for physical improvements to the premises, designated as additional rent under the prior lease and its rider. Tenant is also aware that, as of February 15, 2003, the amount claimed by Landlord as due to it from the prior Tenant, Arthur E. Taubman, MD, PA, amounted to $620,078.17.
As further consideration for the creation of the leasehold interest herein, Tenant agrees to pay, upon the signing of the within Lease, the sum of $100,000 to the Landlord for immediate set up, which sum shall also be used to reduce the amount of Landlord's claim for unpaid rent and other indebtedness asserted in the above paragraph. Tenant further agrees to guarantee an amount up to $325,000 of the aforesaid sums under the terms and conditions set forth herein.
Tenant further agrees that, as security for its guarantee of the Landlord's recovery of its past due rent and other charges, Tenant shall obtain and furnish Landlord with security interests under a security agreement on all accounts receivable of the medical corporations or other entities which will operate at the premises under the within lease. Tenant warrants that it is empowered and authorized to pledge or to obtain pledges of the said accounts receivable and acknowledges that Landlord is relying upon such warrant in agreeing to lease the premises.
Landlord shall use its best efforts to recover and enforce a judgment against the prior Tenant for the aforesaid sums and to recover any assets claimed as collateral therefor. Should the funds recovered by Landlord amount to less than the entire sum due and owing to the Landlord, Tenant agrees to satisfy the Landlord in an amount up to $325,000 by advancing any sum or sums necessary to complete the Landlord's recovery of the amounts due.
Also attached to ICSD's lease with Lawyers Guild were separate guarantees, executed by both Capelouto and DeNorchia individually, which guaranteed "the punctual payment by the lessee [ICSD] . . . of all rents and other payments ...