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Golden Bagels, Inc. v. Fairway Plaza Associates

A-646-97T1 (N.J. Super. App. Div. 1998) (Unpublished)

LEASES; ATTORNEYS FEES—A lease provision granting a tenant what could have been interpreted to be a limited right to attorney’s fees was interpreted broadly to give the tenant a “reciprocal” right to such fees.

A landlord was held to have breached its covenant to a tenant, that, as landlord, it would not lease space in its shopping center to “another party whose business is in direct competition with [tenant].” The tenant sought attorney’s fees pursuant to a provision of the lease stating:

In any instance, when the lease or Addendum where the landlord may be entitled to attorney’s fees, in the event of a default by tenant, … the Tenant shall have a recognized right to assess the Landlord with reasonable attorney’s fees, in the event a Court … shall have adjudicated the landlord to be at fault.

The lower court denied attorney’s fees, basing its decision on the judge’s interpretation of the cited language as limiting such awards to cases where the tenant was alleged to have breached the lease.

The Appellate Division disagreed with this interpretation of the attorney’s fees provision. In its view, the purpose of the provision was to provide the tenant with “a reciprocal right” to obtain attorney’s fees from the landlord whenever a court or an arbitrator had “adjudicated the landlord to be at fault.” It held that by focusing solely on the tenant’s liability for the landlord’s attorney’s fees “in the event of default by the tenant,” the judge misperceived the counterbalancing effect of the reciprocal right granted by the second sentence. The Appellate Division read the first portion to be introductory, while finding the second portion to be the foundation of the right granted to the tenant.


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