HOLOBEAM, INC v. TANDY CORPORATION
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4619-08T2
HOLOBEAM, INC.,
Plaintiff,
v.
TANDY CORPORATION, COMPUTER
CITY CORPORATION,
Defendants,
and
RADIOSHACK CORPORATION,
Defendant-Respondent,
and
COMPUSA, INC.
Defendant-Appellant.
___________________________
Argued December 8, 2009 Decided March 25, 2010
Before Judges Grall, Messano, and LeWinn.
On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
7796-07.
Jonathan M. Zagha argued the cause for
appellant, CompUSA, Inc. (Greenberg Traurig,
LLP, attorneys; Mr. Zagha, of counsel and on
the brief).
Bradley M. Wilson argued the cause for
respondent, RadioShack Corporation (Nowell
Amoroso Klein Bierman, P.A., attorneys; Mr.
Wilson, of counsel and on the brief).
PER CURIAM
Holobeam, Inc. (Holobeam) owned commercial property in
Paramus, New Jersey, which it leased to Tandy Corporation,
presently known as RadioShack, on January 6, 1994. The term of
the lease was fifteen years; Section 18 contained the following
provision which is pertinent to the issues on appeal:
Tenant may assign this Lease or sublet the
whole or any portion of the Demised
Premises; provided, however, in the event of
any such assignment or subletting, Tenant
shall remain obligated under this Lease
unless and until its obligations are
terminated in writing by Landlord.
[(Emphasis added).]
On June 16, 1997, RadioShack assigned its lease with
Holobeam to CompUSA, Inc. (CompUSA). RadioShack thereupon
vacated the premises and CompUSA took occupancy. CompUSA never
entered into a lease directly with Holobeam.
Sometime in September 2007, CompUSA began experiencing
financial difficulties and vacated the property. Gordon Brothers
acquired the business in order to begin an orderly liquidation.
CompUSA subsequently went out of business nationwide.
On October 22, 2007, Holobeam filed a complaint against
RadioShack and CompUSA alleging that they had defaulted under
the terms of the lease by "failing, refusing and neglecting to
A-4619-08T2
2
timely make the monthly rental payments . . . ." On March 6,
2008, RadioShack filed a cross-claim against CompUSA for
indemnification and "under the Joint Tortfeasors Contribution
Act for any judgment [Holobeam] may recover."
Holobeam and Gordon Brothers negotiated a settlement as
part of CompUSA's liquidation workout. On March 31, 2008, the
parties executed an Assignment of Claim which contained two
paragraphs describing the value of Holobeam's claim against
CompUSA. In the first paragraph, Holobeam asserted a claim for
$1,227,335.25, which was later revised to $1,274,401.80. At the
conclusion of the document, however, appears the following
paragraph:
The undersigned [Holobeam] agrees to
assign its Claim to Gordon Brothers but
disputes the amount set forth above and
asserts that in a proceeding under the
United States Bankruptcy Code, including
through the application of section 502
(b)(6) of the Bankruptcy Code, the Claim
would be determined in the amount of
$2,016,534.10.
supporting its claim for
Holobeam appended a statement
$2,016,534.10, consisting of: (1) rent from September 1, 2007
through September 30, 2009; (2) property taxes from January 1,
2008 through September 30, 2009; (3) utilities for "Winter 2008"
and "Winter 2009"; and (4) maintenance and repair expenses.
A-4619-08T2
3
CompUSA settled with Holobeam for 34.22 cents on each
dollar of its defined claim of $1,274,401.80, resulting in a
settlement amount of $436,100.30. The Assignment of Claim
contained a "carve-out provision," preserving Holobeam's right
to pursue any claims it had against RadioShack.
On November 12, 2008, Holobeam and CompUSA entered into a
consent order stating that all of Holobeam's claims against
CompUSA were dismissed without prejudice, and providing further
that "any other claims by or against Defendant CompUSA . . . ,
including the cross-claim by Defendant RadioShack . . . as
against Defendant CompUSA, Inc., shall remain valid, effective
and undisturbed by this Consent Order . . . ."
RadioShack thereafter filed a motion for summary judgment
on its cross-claim for indemnification by CompUSA. On December
5, 2008, the trial judge entered an order granting the motion
and providing that "CompUSA shall indemnify and hold harmless
RadioShack from all loses [sic] arising from the Holobeam suit
. . . ."
On February 23, 2009, RadioShack settled with Holobeam for
$1,100,000. CompUSA requested a hearing before the trial judge
on the reasonableness of the settlement, and such a hearing was
held on April 6, 2009.
A-4619-08T2
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CompUSA contended that the settlement was unreasonable
because Holobeam had already assigned $1,274,401.80 of its claim
against RadioShack to Gordon Brothers in exchange for CompUSA's
settlement of $436,100.30. Therefore, according to CompUSA,
Holobeam's maximum recovery was in the range of $800,000 to
$900,000 ($2,016,534.10, the damages originally alleged, minus
$1,274,401.80, the amount assigned to Gordon Brothers). CompUSA
maintained that it should only be required to indemnify
RadioShack in that range and, therefore, the $1,100,000
settlement was unreasonable.
At the hearing, Holobeam's attorney, Richard J. Kapner,
testified as to the intent of the parties in executing the
Assignment of Claim. Kapner stated that CompUSA prepared and
presented the Assignment of Claim to Holobeam as a means to
quickly recoup some of Holobeam's losses since CompUSA was
considering filing for bankruptcy. Kapner further testified
that at the time of the negotiations, he was under the
impression that he had to participate in a settlement agreement;
otherwise CompUSA would be bankrupt and it would take years for
Holobeam to recoup its losses. Kapner further testified that
the original Assignment of Claim was modified, at Holobeam's
request, specifically to include the carve-out provision to
A-4619-08T2
5
preserve Holobeam's claims against RadioShack as guarantor of
the lease.
Kapner noted that Holobeam disputed the $1,274,401.80 claim
presented by CompUSA and asserted that the true claim amount was
$2,016,534.10. Therefore, Kapner stated, no claim for
$1,274,401.80 was ever assigned to Gordon Brothers.
At the conclusion of the testimony, the trial judge found
that the Assignment of Claim amounted to a contract of adhesion,
because Holobeam was forced either to accept the terms or to
risk never collecting any payment from CompUSA. Had Holobeam
rejected the contract, the trial judge noted, "they would have
possibly been engaged in protracted litigation possibly with an
empty building, possibly carrying on for years." The judge
ruled:
In this case, looking at this matter
from the landlord, they're presented with
getting some cents on the dollar or possibly
getting nothing and then pursuing the
ultimate guarantor in this matter which was
the original tenant which would be Radio
Shack [sic].
In addition, Mr. Kapner indicated that
the agreement or the contract was written by
prior counsel for CompUSA. The law is
clear, when an ambiguity appears in a
written agreement the writing is to be
strictly construed by the draftsman. . . .
In this case, viewing all the factors
and the totality of the circumstances,
looking at the potential claims that were
A-4619-08T2
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out there bearing in mind that the landlord
was almost compelled to enter into the
settlement with CompUSA, looking at what the
potential exposure was to . . . Radio Shack
[sic] which is rent for the entire term from
the time CompUSA vacated until the end of
the lease, property taxes, utilities, . . .
additional rent including landscaping,
electric, fire suppression, roof repairs,
. . . and attorney's fees, this [c]ourt
finds that the settlement of $1.1 million
was more than reasonable. That the credit
that should have been given to CompUSA was
not the $1.2 [million] as set forth in the
assignment, but rather the amount of money
that was actually received from CompUSA.
That being said, the [c]ourt deems that
the settlement is reasonable and will enter
the appropriate judgment.
The judge thus found that the appropriate credit to CompUSA was
$436,100.30. Therefore, Holobeam's remaining damages totaled
$1,580,433.80 -- $2,016,534.10, (overall damages) minus
$436,100.30 (amount paid by CompUSA). Consequently, the judge
found, the $1,100,000 settlement was reasonable.
On appeal, CompUSA raises the following contentions for our
consideration:
POINT I
THE TRIAL COURT INCORRECTLY INTERPRETED
HOLOBEAM'S ASSIGNMENT OF CLAIM, AND
CONSEQUENTLY INCORRECTLY HELD THAT THE
RADIOSHACK-HOLOBEAM SETTLEMENT WAS
REASONABLE AND RECOVERABLE FROM COMPUSA
A. RadioShack Must Prove Its
Settlement Was Reasonable to
Recover from CompUSA
A-4619-08T2
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B. The Trial Court's Rulings
C. Holobeam's Assignment of Claim
Operated to Reduce Its Potentially
Recoverable Damages, and thus
RadioShack's Settlement was
Unreasonable
D. The Trial Court's
Determinations as to the
Interpretation of the Assignment
of Claim and Reasonableness of
RadioShack's Settlement is [sic]
Subject to a De Novo Standard of
Review
RadioShack was not a party either to the Assignment of
Claim executed on March 31, 2008, or to the consent order
entered on November 12, 2008. In fact, both the assignment and
the consent order expressly preserved Holobeam's right to pursue
damages from RadioShack and RadioShack's concomitant right to
indemnification by CompUSA.
Under these circumstances, we reject CompUSA's arguments
regarding the interpretation of the Assignment of Claim as well
as the effect of that document upon CompUSA's indemnification
obligation to RadioShack. Those arguments "are without
sufficient merit to warrant discussion in a written opinion
. . . ." R. 2:11-3(e)(1)(E).
Suffice it to say, the trial judge found that the
Assignment of Claim was ambiguous; therefore, the judge properly
admitted extrinsic evidence to determine "the alleged proper
A-4619-08T2
8
interpretation of the language used [in that document]." Schor
v. FMS Fin. Corp.,
357 N.J. Super. 185, 192 (App. Div. 2002).
As noted, Kapner testified that Holobeam never assigned
$1,274,401.80 to Gordon Brothers in exchange for payment of
$436,100.30, asserting that such a contention would make no
sense in light of the carve-out provision preserving Holobeam's
claims against RadioShack.
In determining the reasonableness of the settlement between
Holobeam and RadioShack, the trial judge implicitly rejected the
argument CompUSA raises here, namely that a proper
interpretation of the Assignment of Claim would reduce
Holobeam's damages by $1,274,401.80. We concur with the trial
judge's determination that the Assignment of Claim contained no
clear agreement on the precise amount assigned.
Moreover, Holobeam had two independent claims: (1) a
debtor/creditor claim that was assigned to Gordon Brothers in
the Assignment of Claim; and (2) the contractual claim against
RadioShack pursuant to the lease provisions. The Assignment of
Claim was not a quid pro quo limiting Holobeam's right and
ability to recover from RadioShack. Therefore, the dollar
amount purportedly assigned is immaterial to Holobeam's claim
against RadioShack; only the amount actually paid by CompUSA is
pertinent to that claim.
A-4619-08T2
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Moreover, we are satisfied that the trial judge's finding
that Holobeam's settlement with RadioShack was reasonable is
"supported by adequate, substantial and credible evidence."
Rova Farms Resort, Inc. v. Investors Ins. Co. of Am.,
65 N.J.
474, 484 (1974). That determination is, therefore, binding on
appeal. Ibid.
Pursuant to RadioShack's lease with Holobeam, it was
obligated to pay the landlord for all costs, taxes and
maintenance. After CompUSA vacated the property, the rent
arrears alone amounted to $1,735,781.25. When property taxes,
utilities, maintenance and repair expenses were added, the total
amount of RadioShack's obligation to Holobeam under the lease
was $2,016,534.10.
When reduced by the sum of $436,100.30 that CompUSA paid to
Holobeam under the Assignment of Claim, the amount of
$1,580,433.80 was still owed to Holobeam. RadioShack was liable
for this amount by virtue of the lease terms. Therefore, the
judge determined, and we concur, that the $1,100,000 settlement
between Holobeam and RadioShack was reasonable.
Affirmed.
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