160 W. Broadway Assocs., LP v. 1 Mem'l Drive, LLC
| Decision Date | 11 March 2021 |
| Docket Number | DOCKET NO. A-2454-18 |
| Citation | 466 N.J.Super. 600,248 A.3d 404 |
| Parties | 160 WEST BROADWAY ASSOCIATES, LP, Plaintiff-Respondent, v. 1 MEMORIAL DRIVE, LLC, Defendant-Appellant, and Amma Corp., NRVP, LLC, Boulevard Corp., and Antonio Perez, Defendants. |
| Court | New Jersey Superior Court — Appellate Division |
Justin D. Santagata, Fort Lee, argued the cause for appellant (Kaufman, Semeraro & Leibman, LLP, attorneys; Justin D. Santagata, on the briefs).
Peter R. Bray, Parsippany, argued the cause for respondent.
Before Judges Messano, Hoffman, and Suter.
The opinion of the court was delivered by
MESSANO, P.J.A.D.
Plaintiff, 160 West Broadway Associates, LP, owned a strip mall in Paterson and leased part of the premises to defendant Amma, Corp. (Amma), which operated a supermarket on the site using the trademarked name "Super Supermarket." Defendant Antonio Perez and his wife Mireya were equal shareholders in Amma, and both were salaried employees of the corporation; their son Jeffrey also worked at the supermarket.1 On April 29, 2014, Amma served notice that it was terminating the lease the next day and effectively ceased all business operations.
In June 2013, defendant 1 Memorial Drive, LLC (Memorial), a limited liability company formed in 2010 and owned equally by Perez, Mireya, and Jeffrey, opened its business less than one-half mile away, operating a supermarket also called "Super Supermarket." NRVP, LLC (NRVP), in which Perez and Mireya had equal interests, owned the real estate, and leased the store to Memorial.
Plaintiff filed a complaint alleging that Amma violated its lease, and it sought damages for the unpaid balance of rent for the lease term. Plaintiff also alleged that Perez was "[t]he common thread" between Amma, Memorial, and the other defendants, and it sought a declaration that Memorial was a "successor to Amma" and "liable for its debts." Plaintiff further alleged defendants violated the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34.
The balance of plaintiff's complaint was dismissed on summary judgment prior to trial.2 Following an extended non-jury trial before a different judge, the court entered judgment against Memorial "as the successor" to Amma in the amount of $327,927.11, and also awarded plaintiff $129,943.75 in counsel fees and costs.
We summarize the trial evidence as necessary to resolve the issues raised on appeal.
A FineFare supermarket was the anchor store in plaintiff's strip mall. In 1994, Amma purchased the supermarket, approximately 16,000 square feet, and operated it as "Super Supermarket." The Perez family owned several other supermarkets throughout New Jersey.
In 1995, Amma executed a fifteen-year lease with plaintiff. However, disputes arose over the renewal option, leading Amma to file suit and plaintiff to counterclaim for possession. After a non-jury trial, the judge found in Amma's favor and ordered the lease renewed for an additional five years, i.e., until September 30, 2015. The judge filed an extensive written opinion that included multiple factual findings based on the trial testimony.
Plaintiff's principal, James Nuckel, testified at this trial that Perez told him Amma intended to stay for the entire extended term. However, on April 29, 2014, Amma served written notice it would vacate the supermarket the following day and effectively did. Plaintiff immediately began advertising for a new tenant, but it was not until November 2014 that Moran Foods, LLC (Moran) executed a letter of intent to lease the space. In July 2015, plaintiff signed a lease with Moran but needed to obtain site plan approval from the Planning Board and building permits to fit out the space for Moran. In late 2015, contemporaneous with the Planning Board's hearing on the application, Perez, who also owned a car wash on adjacent property, objected. According to Nuckel, because the permit and approval process took so long, Moran rescinded the lease, and the space remained vacant through the end of Amma's lease term.
Perez, Mireya, and Jeffrey formed Memorial in December 2010, and built a 30,000 square foot supermarket from the ground up on land leased from NRVP. Construction began in 2012. Jeffrey testified that Memorial obtained $1.5 million in financing to construct the store from General Trading, a wholesale food distributor, which also financed the inventory for the new store. Perez, Mireya, and Jeffrey personally guaranteed the financing. Memorial began operating the supermarket as Super Supermarket in June 2013, nearly one year before Amma ceased operations.
Jose Bombino, Amma's accountant, testified that Perez and Mireya decided to dissolve Amma and advised him of their decision during discussions in March 2014. Perez said the decision was prompted by rising expenses and falling sales at the store. Bombino testified that Amma's supermarket was earning a profit, albeit less than other supermarkets the Perez family operated. Perez and his wife split approximately $66,000 in net annual income from Amma in 2013, and the corporation formally dissolved in December 2014.
Bombino identified Amma's total assets as reflected on its federal tax return at the end of 2013: $411,125 in inventory; $48,000 in other "current assets," which included lease and utilities security deposits and a liquor license; and $230,350 in intangible assets, which reflected "goodwill." The goodwill had been carried as an asset on Amma's books since it purchased the FineFare.3 At trial, Memorial's expert forensic accountant, Nicolas Cafaro, explained goodwill was an accounting term that simply reflected the premium Amma paid when it purchased FineFare's business, i.e., "the amount over and above the value of the assets purchased." Bombino agreed with this characterization of the asset.
Memorial produced an expert in trademarks, Daniel Roche, who testified that a trademark and goodwill are separate assets. Amma applied to register Super Supermarket as a trademark in 2002, and Amma's insurance agent, Mario Fernandez, testified the trademark expired in 2009 because Amma failed to pay for its renewal. Fernandez's efforts to renew the trademark were initially unsuccessful because the name was too "generic." With the assistance of counsel, Fernandez succeeded in June 2014 to register Super Supermarket's trademark. However, the attorney advised Fernandez that the trademark needed to be registered to an active company; knowing of Amma's impending dissolution, Fernandez had Amma assign the trademark to Memorial without compensation.
Roche explained that the initial denial of renewal was significant, because "descriptive" trademarks, like Super Supermarket, are of little or no value under trademark law. He opined that the value of the trademark in 2014 was $740, the costs of renewal, and nothing more. Roche noted that four other supermarkets in New Jersey used the same trade name. Furthermore, that there were no applications to trademark the name during the period it had lapsed demonstrated it had little value.
Jeffrey testified that he ran Memorial's supermarket, something his father confirmed during his testimony. Memorial was a "full-scale" supermarket that appealed to different clientele than Amma's smaller market, which Jeffrey described as a "bodega." Jeffrey said that none of Amma's fixtures, refrigerators or shopping carts were re-located to Memorial's store. He said Amma and Memorial never shared a bank account, and Amma provided no funds and transferred no assets to Memorial.
Daniel Resnick built Memorial's supermarket and was familiar with both stores. His company removed all the fixtures and equipment from Amma's store; Resnick, who also refurbished supermarket equipment for resale, said that Amma's property "was not reusable," and he took it to a junkyard. Resnick also characterized Amma's supermarket as a "bodega."
Although Jeffrey said only one or two employees moved to Memorial's store from Amma's store, plaintiff produced Katherine Alvarez as a witness. She was a cashier at Amma's store and moved to the same position at Memorial's. According to Alvarez, about seven other Amma employees out of eleven total employees moved to work at Memorial's supermarket. She acknowledged, however, that she was required to complete a new job application before starting her employment at Memorial's supermarket.
The judge rendered an oral decision after completion of the testimony and consideration of the parties' written summations.
Initially, the judge incorporated findings made by the judge in the prior lease renewal litigation. He noted the prior judge found that Perez realized the new supermarket would not be completed before Amma's lease with plaintiff expired, and Perez wanted to stay in plaintiff's strip mall "to prevent a competing supermarket from coming in, taking over that property, and therefore competing with him." The judge adopted the prior judge's conclusion that Perez intended to keep Amma's operation in place, "either as a supermarket or if need be as a warehouse." The judge determined Perez In adopting these earlier findings and reaching this conclusion, the judge said: "When I say Mr. Perez ... , I mean for now at least, I'm lumping Amma, [Memorial], Mr. Perez, the Perez family, I may use those terms interchangeably."
The judge discussed our decision in Woodrick v. Jack J. Burke Real Estate, Inc., particularly noting our identification of "four well-established exceptions" to the general rule that a corporate transferee is not liable for the corporate transferor's debts. 306 N.J. Super. 61, 72–73, 703 A.2d 306 (App. Div. 1997) (citing Ramirez v. Amsted Indus., Inc., 86 N.J. 332, 347–48, 431 A.2d 811 (1981) ). After identifying those four exceptions, the judge continued:
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