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Mazaj Restaurant, LLC v. 1255-1257 Madison Ave., LLC

Superior Court of New Jersey, Appellate Division

June 4, 2013



Telephonically argued March 6, 2013.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-1291-12.

Brett A. Nadler argued the cause for appellants (Ballon Stoll Bader & Nadler, PC, attorneys; Mr. Nadler, of counsel and on the briefs).

Joseph A. Ferriero argued the cause for respondents.

Before Judges Messano and Lihotz.


Plaintiff Barakat Kiame is the managing member and majority shareholder of plaintiff Mazaj Restaurant, LLC, (collectively plaintiff). Plaintiff appeals from a May 22, 2012 Law Division order denying a motion to consolidate this earlier-filed action, which alleges defendants breached the lease agreement, with a summary dispossess action initiated by defendants 1255-1257 Madison Ave., LLC (Madison), Damascus Gate II Corporation (Damascus), and Zouheir Zidan, the owner of the premises (Docket No. LT-2668-12).[1] Further, the judge dismissed plaintiffs' Law Division complaint with prejudice and granted defendants a judgment of possession for the premises. We reverse.

These facts, taken from the motion record, are not disputed. In March 2009, Madison, Damascus and Zidan, "acting as a joint venture[, ]" executed a five-year commercial lease agreement (the lease) as the landlord; Mazaj executed the lease agreement as the tenant.[2] The lease described the leased premises as "the first floor and third floor[, ] but excluding the second floor of 1255 Madison Avenue, and the entire building at 1257 Madison Avenue and the adjacent yard at 1259 Madison Avenue, and the vacant lot at 1253 Madison Avenue[.]" The lease specified the premises would be used to operate "a restaurant and legally permissible ancillary activities."[3] In addition to the terms and conditions of rental, the lease included a right to extend the lease term for an additional five years and a right of first refusal with an option to purchase in the event the landlord sought to sell the premises.

Within six months, plaintiff sought to purchase the property. Plaintiff's attorney informed defendants he had checked records and learned several municipal citations for building code violations were issued against the premises during the period of defendants' and their predecessors' ownership, which remained outstanding. The claimed violations included construction of an addition without approval or permits, failure to obtain a certificate of occupancy prior to use, and constructing the building in violation of the property rights of the City of Paterson (City) and a backyard neighbor. Consequently, plaintiff was able to secure only a temporary certificate of occupancy. Despite these difficulties, plaintiff reasserted its desire to continue negotiations regarding its purchase of the property.

Over the ensuing months, plaintiff also learned the mortgage encumbering the realty was in default and a sheriff's sale was first scheduled for May 11, 2010.[4] The sale was adjourned by defendants and set for July 6, 2010. U.S. Bank informed plaintiff it had filed a lis pendens in January 2009, three months prior to the execution of the lease agreement, therefore the tenancy was not a basis to reopen final judgment.

Further, the real estate taxes and sewer assessments for the first quarter of 2010 were unpaid and a City-scheduled public auction was scheduled for June 9, 2010.[5] The City also notified plaintiff that 1255-1257 Madison Avenue lacked permits for use of the second and third floors, as well as the rear building, and "[a]pproval for upper floors and rear building [wa]s being held pending the submittal of documentation of approved use and construction."

Plaintiff initiated a Law Division action, under Docket No. L-4022-10, alleging defendants had committed fraudulent misrepresentation and concealment, and had breached the lease agreement, precluding plaintiff's lawful and continued use of the premises as a restaurant (initial complaint). The initial complaint also alleged defendants acted in bad faith in thwarting plaintiff's attempt to exercise the option to buy the property.

On June 13, 2011, the parties, each represented by counsel, advised the court the litigation was settled and read the terms of a handwritten settlement agreement titled "Contract for Sale of Property" on the record, marking the document as a joint exhibit. The settlement provided:

[P]laintiff shall pay to the defendant[s] the sum of $16, 000 within 24 hours[.]
. . . [D]efendant[s] shall sell and the plaintiff shall purchase the properties which [are] the subject matter of this litigation for a ...

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