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R.C. Search Co., Inc. and Richard Cecere v. Howard Silver

July 19, 2012


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3453-09.

Per curiam.


Submitted February 14, 2012

Before Judges Parrillo, Skillman and Hoffman.

This is a convoluted commercial landlord-tenant appeal. Defendant 34 Label Street Associates is the owner of a large property in Montclair, which contains several buildings and is put to multiple uses. This action involves leases for three separate areas of the property, which are referred to by the parties as the Office, the Garage and the Restaurant.

On or about October 1, 1986, 34 Label leased the approximately 6,300 square foot area referred to as the Office to Perdue Radio Company, which is not a party to this action. The lease was for a ten-year term, subject to renewal for an additional ten years. The parties agreed that the rent for that potential renewal term would be "the fair market value" as agreed to by them or, in the absence of such agreement, as determined by appraisers.

On or about February 7, 1987, 34 Label and Perdue entered into an amendment of their original lease, referred to in this litigation as the "First Amendment," under which 34 Label agreed to partially finance certain improvements to the premises, which Perdue was to repay by the payment of additional rent to 34 Label over the initial ten-year term of their lease.

On or about July 27, 1989, Perdue sublet the Office premises to Woodbridge Stereo Center, Inc., which is not a party to this action. The record does not indicate the terms of that sublease, which do not appear to be relevant to the issues presented by this appeal.

On or about December 6, 1991, Woodbridge Stereo entered into a further sublease of the Office premises to plaintiff R.C. Search Co., Inc. The principal of R.C. Search is plaintiff Richard Cecere. 34 Label consented to, but was not a party to, the sublease from Woodbridge Stereo to R.C. Search.

On or about September 22, 1993, 34 Label and R.C. Search entered into a written agreement, referred to by the parties as the "Extension Agreement," pursuant to which 34 Label accepted R.C. Search as the principal tenant of the Office premises, effective upon the expiration of Woodbridge Stereo's and R.C. Search's subleases on December 31, 1996, for the ensuing ten-year renewal period (i.e., from January 1, 1997 through December 31, 2006) provided for in the original lease between 34 Label and Perdue. The Extension Agreement also provided that the original lease "with all its terms and conditions except those modified herein shall be continued through December 31, 2006." The Extension Agreement provided that "[t]he rent as agreed to in the sublet document effective January 1, 1992 ($6,989.00 monthly) subject to the agreed thirty-month CPI increases, including the common area maintenance charge adjustments and real estate property tax adjustments (current monthly rent and common charges amount to $7,149.) will continue through December 31, 2006."

On December 31, 2006, the ten-year renewal period expired, at which time R.C. Search began a month-to-month tenancy of the Office premises pursuant to one of the terms of the original lease continued in effect by the Extension Agreement.

For the entire period of the Extension Agreement and the first nine months of its holdover tenancy through September 2007, R.C. Search paid rent for the Office premises in accordance with the terms of the Extension Agreement. However, R.C. Search stopped paying rent for the Office premises in October 2007.

In addition to its lease of the Office premises to R.C. Search, on April 30, 1996, 34 Label also entered into a lease of the Garage area with Cecere personally. Cecere stopped paying the rent for the Garage premises at the same time R.C. Search stopped paying rent for the Office premises, which was October 2007.

On June 22, 1995, Cecere entered into an agreement with 34 Label pursuant to which Cecere began renting the Restaurant, which was then a vacant brick building, for a ten-year term, with renewal options.

However, before the expiration of that initial ten-year term, on June 24, 2002, Cecere and 34 Label entered into a ninety-nine-year lease agreement, automatically renewable in one-hundred-year increments, for the Restaurant premises. The sum of $387,199.20, representing the total rent for the ninety-nine-year period, was paid by Cecere at the time of execution. Additionally, the parties agreed that Cecere would assume responsibility for payment of 7.83% of the taxes assessed against

34 Label and 100% of any increase in taxes resulting from the improvements to the Restaurant premises. Cecere stopped making those tax payments when R.C. Search and he stopped paying rent on the Office and Garage premises, in October 2007.

34 Label subsequently brought summary dispossessions against plaintiffs in the Special Civil Part for possession of the Office and Garage premises. On appeal from the judgment for possession of the Office premises, we affirmed. 34 Label St. Assocs. ...

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