160 WEST BROADWAY ASSOCIATES, LP VS. 1 MEMORIAL DRIVE, LLC (L-4142-15, PASSAIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2454-18
160 WEST BROADWAY
ASSOCIATES, LP,
Plaintiff-Respondent,
v.
1 MEMORIAL DRIVE, LLC, APPROVED FOR PUBLICATION
March 11, 2021
Defendant-Appellant, APPELLATE DIVISION
and
AMMA CORP.,
NRVP, LLC, BOULEVARD
CORP., and ANTONIO PEREZ,
Defendants.
___________________________
Argued November 16, 2020 – Decided March 11, 2021
Before Judges Messano, Hoffman, and Suter.
On appeal from the Superior Court of New Jersey,
Law Division, Passaic County, Docket No. L-4142-15.
Justin D. Santagata argued the cause for appellant
(Kaufman, Semeraro & Leibman, LLP, attorneys;
Justin D. Santagata, on the briefs).
Peter R. Bray argued the cause for respondent.
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
1
To avoid confusion, we refer to Mireya and Jeffrey by their first names. We
intend no disrespect by this informality.
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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.
I.
A.
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.
2
Plaintiff has not cross-appealed from that order.
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3
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.
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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
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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
3
Bombino did not become Amma's accountant until 2010.
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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
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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.
B.
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
"would have loved to have just at the time when that five[-]year extension was
coming to an end . . . go right into the new location. But timing doesn't always
work that way." In adopting these earlier findings and reaching this
conclusion, the judge said: "When I say Mr. Perez . . . , I mean for now at
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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 (App. Div. 1997)
(citing Ramirez v. Amsted Indus., Inc., 86 N.J. 332, 347–48 (1981)). After
identifying those four exceptions, the judge continued:
I am . . . convinced by clear and convincing
evidence that the transaction amounts to a
consolidation or merger of the seller and the
purchaser. I am also clearly and convincingly
convinced that the proofs in this case establish that . . .
Memorial . . . is merely a continuation of Amma . . . .
I do find also that the fourth exception [to the
rule against successor liability] applies here by clear
and convincing standard. That the transaction, the
transfer from Amma to . . . Memorial . . . was done in
order to escape responsibility for the debts of Amma,
that being the [nineteen] months of rent.
The judge also found the two supermarkets were "certainly essentially
the same."
Obviously[,] it's not identical ownership, but to me it's
essentially the same ownership . . . . [I]nstead of just
husband and wife[,] it's husband and wife and child,
all within the same family. To me I don't see that as
separate or different ownership. I mean it's not like
it's some outsider, a third-party who is an investor.
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It's a family business. And the old operation was
family run, and so is the new operation. The
differences are minimal in my mind. In fact[,] the
only difference is instead of Super Supermarket being
owned by Amma, it's owned by . . . Memorial . . . .
It's exactly what the law talks about, changing the hat.
By way of similar factors . . . I find the same
people owning the operation. It's the same business.
The same type of business.
The judge rejected the assertion that Amma's supermarket was merely a
bodega, finding that 15,000 square feet was a "pretty large supermarket." H e
found the intent of the Perez family was to continue the same business in a
larger space.
[S]hort of going from one location in a shopping
center to another location, it's virtually impossible to
get these two entities as close as they are. It's about a
third of a mile . . . . [I]t's clearly within walking
distance, it's very close. The two entities have the
same customers. For the most part, the same
employees, the . . . same exact name . . . . [T]o me the
similarities that exist are heavy, and you know I'd
have to close my eyes to reality if I were to not
conclude that the intent . . . of the Perez family was to
continue this business.
The judge concluded that "the purchasing corporation [wa]s merely a
continuation of the selling corporation[,]" and defendants' efforts "were
designed to avoid having to pay those last nineteen months of rent." 4 The
4
There were seventeen months left in the lease term.
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judge found successor liability, stating "merely changing the corporate name
from Amma to . . . Memorial . . . was not enough." Because he found
successor liability, the judge declined to consider plaintiff's UFTA claims. 5
As to the value of the trademark, the judge stated:
I was impressed . . . with the testimony of Daniel
Roche . . . . I think he was very competent, but I don't
accept his opinion, or at least I'll make these
observations with respect to his opinion. He evaluated
the name Super Supermarket by applying the fair
market definition of fair market value from the IRS
revenue rulings . . . .
Now I believe that Mr. Roche did this on a
macro evaluation. In other words, I believe that he
looked at the trademark Super Supermarket and said
look, virtually this thing has zero value. And the way
I took his testimony was yeah, it has zero value in
Kentucky, Seattle, and maybe even in Cape May. But
in this neighborhood, this little pocket where those
people have to walk and come to know the name
Super Supermarket, it has value. It has more value
than the minimal amount that he was attributing to it.
. . . Maybe the name Meyer Brothers is
meaningless in San Diego, but in Paterson it's a
valuable name. Or Edwins . . . , the little sporting
5
Plaintiff has not filed a defensive cross-appeal from the trial judge's failure
to find violations of the UFTA or otherwise address them in his opinion, and
plaintiff has not requested we remand the UFTA causes of action to the trial
court. See, e.g., Reich v. Borough of Fort Lee Zoning Bd. of Adjustment, 414
N.J. Super. 483, 499 n.9 (App. Div. 2010) (declining to address respondent's
assertion of error because it was not properly raised by cross-appeal). Nor has
Memorial or plaintiff addressed the UFTA claims in their briefs. We therefore
do not discuss the issue in this opinion.
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goods store on Market Street. Or how about Falls
View, or Libby's? [T]hose names have value here that
may not apply somewhere else. And I would only say
. . . that although I was very impressed with him, I
don't think he was evaluating what the value of Super
Supermarket is in that neighborhood, but rather on a
nationwide approach.
The judge also found that plaintiff properly attempted to mitigate
damages, stating, "[It] found a tenant. And the reason that tenant did not take
over . . . was . . . because of the delay that occurred as a result of Mr. Perez's
objection." He added: "It was clear that Amma did not want competition. It's
evidence[d] by the fact that they objected to Moran Foods. They never
attempted to sell their [car wash business] . . . albeit there was only a short
amount of time left on the lease."
In a subsequent oral opinion on the record, the judge granted plaintiff's
request for counsel fees and costs based on the terms of the lease with Amma.
After reducing the number of billable hours to reflect time spent pursuing
plaintiff's unsuccessful claims, the court awarded plaintiff $129,943.75 in
counsel fees and costs.
II.
Memorial appeals, arguing that the motion judge wrongfully denied
summary judgment on the remaining counts of plaintiff's complaint, and the
trial judge wrongfully held Memorial liable for Amma's debt under the lease.
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Memorial contends it could not be liable because Amma did not transfer
"substantially all of its assets" to Memorial, a predicate, it says, for finding
successor liability. Additionally, Memorial asserts that the trial judge erred in
concluding the trademark, "Super Supermarket," had any meaningful value,
and, therefore, its transfer from Amma to Memorial could not support a
finding that Amma transferred substantial assets to Memorial. Memorial also
contends the trial judge erred in concluding plaintiff mitigated its damages and
in awarding counsel fees.
We set some guideposts for our consideration of these arguments. Most
importantly, our standard of review following a bench trial instructs:
Final determinations made by the trial court
sitting in a non-jury case are subject to a limited and
well-established scope of review: "we do not disturb
the factual findings and legal conclusions of the trial
judge unless we are convinced that they are so
manifestly unsupported by or inconsistent with the
competent, relevant and reasonably credible evidence
as to offend the interests of justice . . . ."
[Seidman v. Clifton Sav. Bank, SLA, 205 N.J. 150,
169 (2011) (alteration in original) (quoting In re Trust
Created By Agreement Dated December 20, 1961, ex.
rel. Johnson, 194 N.J. 276, 284 (2008)).]
In reviewing the judge's findings, "[w]e do not weigh the evidence, assess the
credibility of witnesses, or make conclusions about the evidence." Mountain
Hill, LLC v. Twp. of Middletown, 399 N.J. Super. 486, 498 (App. Div. 2008)
A-2454-18
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(alteration in original) (quoting State v. Barone, 147 N.J. 599, 615 (1997)).
However, we owe no deference to the judge's interpretation of the law and the
legal consequences that flow from established facts. Manalapan Realty, LP v.
Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citing State v. Brown,
118 N.J. 595, 604 (1990)); EnviroFinance Grp., LLC v. Env't. Barrier Co.,
LLC, 440 N.J. Super. 325, 339 (App. Div. 2015).
We have considered Memorial's arguments in light of the record and
these applicable legal standards. We reverse.
"[T]he general principle has been accepted in New Jersey that 'where
one company sells or otherwise transfers all its assets to another company the
latter is not liable for the debts and liabilities of the transferor, including those
arising out of the latter's tortious conduct.'" Ramirez, 86 N.J. at 340 (emphasis
added) (quoting Menacho v. Adamson United Co., 420 F. Supp. 128, 131
(D.N.J. 1976)); see also Stuart L. Pachman, Title 14A Corporations cmt.
5(b)(1) on N.J.S.A. 14A:10 (2021) ("Historically, a corporation purchasing
only the assets of another corporation was not liable for the debts and
liabilities of the selling corporation.").
Under this traditional approach, four well-established
exceptions exist: where (1) the purchasing corporation
expressly or impliedly agrees to assume such debts
and liabilities; (2) the transaction amounts to a
consolidation or merger of the seller and purchaser;
(3) the purchasing corporation is merely a
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continuation of the selling corporation; or (4) the
transaction is entered into fraudulently in order to
escape responsibility for such debts and liabilities.
[Woodrick, 306 N.J. Super. at 73 (citing Ramirez, 86
N.J. at 340).]
As noted above, the trial judge seemingly determined that exceptions two,
three and four applied.
Writing for our court in Woodrick, future Justice Virginia A. Long
explained what informed an analysis under the second and third exceptions:
In determining whether a particular transaction
amounts to a de facto consolidation or mere
continuation, most courts consider four factors: (i)
continuity of management, personnel, physical
location, assets, and general business operations; (ii) a
cessation of ordinary business and dissolution of the
predecessor as soon as practically and legally
possible; (iii) assumption by the successor of the
liabilities ordinarily necessary for the uninterrupted
continuation of the business of the predecessor; and
(iv) continuity of ownership/shareholders.
[Ibid. (quoting Glynwed, Inc. v. Plastimatic, Inc., 869
F. Supp. 265, 275–76 (D.N.J. 1994)).]
The second and third exceptions "tend to overlap, with much of the same
evidence being relevant to each determination." Ibid. (citing Glynwed, 869 F.
Supp. at 275). In Woodrick, citing numerous "legally relevant factors" in the
transferee's acquisition of the transferor's assets in a cash-for-assets purchase,
we held "the intent of the asset purchase . . . was to effectuate a merger of the
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two firms . . . . This . . . resulted in nothing more than a change of hat for [the
transferor-debtor.]" Id. at 76–77.
Memorial argues that Amma transferred none of its assets, much less "all
its assets," to Memorial. Ramirez, 86 N.J. at 340. According to Memorial, the
transfer of a substantial amount of Amma's assets is the sine qua non for
finding successor liability. Plaintiff argues, without a single citation in
support, that a court may find successor liability without a transfer of
substantial assets. It asserts that the judge properly found Memorial was
nothing more than a continuation of Amma — the third exception — and that
Amma fraudulently transferred assets to avoid its debts — the fourth exception
— to the general rule of non-liability.6
Here, however, except for the Super Supermarket trademark, there was
no evidence, nor did the judge find, that Amma sold or transferred any assets
to Memorial. Jeffrey's uncontradicted testimony was that Memorial financed
construction of its supermarket and obtained inventory for the new store with a
loan financed through General Trading. Plaintiff provided no evidence that
any funds in Amma's accounts were transferred to Memorial. The undisputed
6
Plaintiff makes no argument in support of the second exception to the
general rule of non-liability, i.e., that there was a de facto merger or
consolidation of Memorial and Amma, even though the judge made that
finding by clear and convincing evidence. As we explain, the evidence also
failed to support that basis for finding successor liability.
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testimony was that Amma's fixtures and equipment were essentially worthless
and were removed and scrapped by a third party. Perez testified that Amma's
inventory was given to its regular customers, and the balance in Amma's
lottery account was given to another Perez-owned store, not to Memorial.
Amma's liquor license was not transferred to Memorial.
We have found no published New Jersey decision that supports
plaintiff's contention that a court may find successor liability in the absence of
a sale or transfer of substantial assets by the transferee. In Woodrick, the
successor realtor company, Fox & Lazo, purchased the predecessor realtor's
"furniture, furnishings, fixtures and equipment[,]" "commissions" due under
pending listings, "all pending residential real estate sale contracts[,]" and all of
its "customer lists"; Fox & Lazo also "assume[d] certain specified obligations
of [the predecessor firm] under office leases, equipment leases and
maintenance agreements." 306 N.J. Super. at 69–70. The cases we cited in
Woodrick fully support the transfer of all or substantially all assets as a
necessary predicate to a finding of successor liability. See Glynwed, 869 F.
Supp. at 267–68 (explaining in detail the various transfers of assets, joint
production agreement and commonality of ownership that made the defendant
company a successor of the original defaulting assignee of a commercial
lease); Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 71, 73 (3d
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Cir. 1993) (also applying New Jersey law to consider successor liability of the
purchaser of predecessor company's assets).
The cases plaintiff cites in its brief only support this essential
precondition for successor liability. In Baker v. Nat'l State Bank, successor
liability was premised on a merger between the defendant-bank's parent
company and another bank that became statutorily liable for the defendant -
bank's "obligations and liabilities." 161 N.J. 220, 228 (1999). In Lefever v.
K.P. Hovnanian Enters., Inc., the question of successor liability involved a
corporation that had purchased the predecessor's assets at a bankruptcy sale.
160 N.J. 307, 310 (1999). In EnviroFinance, the predecessor company owned
100% of the successor company, which "was created for the sole purpose of
assuming and succeeding to [the predecessor's] rights with respect to the
[environmental mitigation] project" in question. 440 N.J. Super. at 348–49.
None of these scenarios even remotely approximate the facts in this case.
"Most jurisdictions hold that a prerequisite to the imposition of liability
against a corporation under any of the exceptions to the nonliability of
successors is a transfer or sale of all, or substantially all, the assets of the
predecessor to the successor." 15 William Meade Fletcher, Fletcher
Cyclopedia of the Law of Corporations § 7122 (2020) (emphasis added); see
also Carreiro v. Rhodes Gill & Co., 68 F.3d 1443, 1448 (1st Cir. 1995)
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(surveying treatises and case law and finding "no mention nor even any hint
that the 'mere continuation' or 'de facto merger' [exceptions] might apply in the
absence of an asset transfer.").
A sampling of authority from other jurisdictions only supports our
conclusion that successor liability is preconditioned on a sale or transfer of
substantial assets from the predecessor entity. As the Massachusetts Supreme
Judicial Court stated:
In order for one corporation to be deemed a
successor corporation in the first place, it must be a
successor to all, or substantially all, of another
corporation’s assets. In other words, a transfer of
assets is an essential prerequisite to successor liability.
Our decisions addressing successor liability have
recognized consistently that successor liability
depends on a transfer of all, or substantially all, assets
from predecessor to successor.
[Premier Cap., LLC v. KMZ, Inc., 984 N.E.2d 286,
292 (Mass. 2013) (citations and quotations omitted)].
In Edwards v. Black Twig Mktg. & Commc'ns, LLC, the court rejected
the argument that a sale of all or substantially all of a corporation's assets was
unnecessary for finding successor liability. 418 S.W.3d 512, 520 (Mo. Ct.
App. 2013). The court added:
We . . . hold that a transfer of all or substantially all of
the assets of one corporation to another is a
prerequisite to corporate successor liability under any
of the four exceptions to the general rule of
nonliability . . . . [O]ur cases neither mention nor
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even hint that the four exceptions might apply in the
absence of a transfer of all or substantially all assets.
Our holding is also a logical extension of the rule that
“[o]rdinarily, the separate legal identities of two
corporations will be protected.”
[Id. at 521 (alteration in original) (quoting Bank of
Belton v. Bogar Farms, Inc., 154 S.W.3d 518, 520
(Mo. App. W.D. 2005)).]
In Evanston Ins. Co. v. Luko, principals of a real estate firm formed a
new company because the existing firm was heading for bankruptcy and
eventually dissolved. 783 P.2d 293, 295 (Haw. Ct. App. 1989). The new firm
was sued for unpaid premiums of the old firm. Ibid. The court held that the
new firm was not a successor corporation because there was no transfer of
assets. Id. at 296. The court noted that when a corporation has been legally
formed, it is a separate and distinct entity, and is not responsible for the debts
of another corporation from the mere fact that the former has been organized
to succeed the latter. Id. at 295. Moreover, the exceptions to the general rule
against successor liability did not apply because there was no sale or transfer
of assets. Id. at 296.
As noted, the only asset Amma transferred to Memorial was the
trademarked name, "Super Supermarket." Memorial argues the trademark was
of de minimis value, as Roche explained, and the judge erred in concluding it
had any significant value. According to Memorial, the transfer of the
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trademark could not support a finding of successor liability. Plaintiff contends
this asset was of significant value and supported the finding of successor
liability. We disagree with plaintiff.
Initially, plaintiff offered no evidence as to the actual value of the
trademark, and the judge made no findings on the subject. Although the judge
accepted Roche's expertise in the subject area, he rejected Roche's opinion that
the trademark was only worth $740. Certainly, had the judge accepted Roche's
opinion as to value, the transfer of a trademark of such minimal value would
be insufficient evidence upon which to premise a finding of successor liability.
See, e.g., Nat'l Soffit & Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d 262,
266 (7th Cir. 1996) (finding that new company was not a successor corporation
where the only assets transferred were $700 worth of hand tools).
Particularly as to issues of valuation, "expert testimony is needed
[because] the factfinder would not be expected to have sufficient knowledge or
experience and would have to speculate without the aid of expert testimony."
Torres v. Schripps, Inc., 342 N.J. Super. 419, 430 (App. Div. 2001) (citing
Kelly v. Berlin, 300 N.J. Super. 256, 268 (App. Div. 1997)). While the
"factfinder is not required to accept an expert's opinion," E & H Steel Corp., v.
PSEG Fossil, LLC, 455 N.J. Super. 12, 29 (App. Div. 2018), "even if . . .
unrebutted by any other evidence," Torres, 342 N.J. Super at 431, the court's
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determination of value must be supported by substantial credible evidence.
Estate of Cohen ex rel. Perelman v. Boother Computers, 421 N.J. Super. 134,
154 (App. Div. 2011).
In rejecting Roche's opinion, the judge expressed a personal belief that
in Paterson, the name Super Supermarket had more than minimal value. He
named several other local businesses as evidencing his apparent conclusion
that Memorial acquired something of significant value from Amma, i.e., the
use of the trade name "Super Supermarket."
However, a judge may not rely on his or her out-of-court personal
observations or knowledge in forming an opinion unsupported by any other
evidence in the record. Wallington Home Owners Ass'n v. Borough of
Wallington, 130 N.J. Super. 461, 465 (App. Div.), aff'd o.b., 66 N.J. 30 (1974).
In addition to never assigning a particular value to the trademark, the judge
never explicitly found that the transfer of the trademark was sufficient to make
Memorial a successor corporation. Other than stating he believed Roche's
valuation opinion might be appropriate in other parts of the nation or other
parts of New Jersey, the judge never discussed why he rejected the abundance
of expert testimony Roche offered, or the fact that other supermarkets in New
Jersey were using the same name without any trepidation or concern. The
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judge's conclusion that the trademark had more than de minimus value was not
supported by substantial credible evidence in the record.
We conclude plaintiff failed to prove Memorial was a successor to
Amma and therefore liable for Amma's debt for the unexpired term of the
lease. We vacate the judgment, including the award of counsel fees. 7
Reversed.
7
For the sake of completeness, we reject Memorial's argument that plaintiff
failed to mitigate its damages caused by Amma's breach of the lease. The
contention lacks sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
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