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Twilo, LLC v. Patrinos, Inc.

2006 WL 2632762 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; OPTIONS — Where a property owner has given someone an option to purchase the property owner’s land and then fraudulently transfers the property to another person who did not have knowledge of the option and then transfers title to the property to another person with the intention of evading the optionee’s “protectable” option right, such a transfer of title shows malice on the part of the property owner.

An asset purchase agreement for a diner gave the buyer a five year option to acquire the real estate where the diner was located. The parties also executed a fifteen-year lease agreement for the premises of the diner with a rider setting forth each party’s maintenance obligations. After closing, the tenant sought to exercise his option to purchase the premises when he found a prospective purchaser. The prospective purchaser’s counsel mistakenly transmitted a facsimile to the landlord’s attorney which included details of the proposed sale between his client and the tenant. When the tenant’s counsel found out about the mistake, he contacted the landlord’s counsel and asked him to disregard the facsimile and not to take any related actions. A week later, the landlord transferred title of the property to his daughter. Thereafter, the landlord’s counsel sent a letter to the tenant’s counsel unilaterally terminating the tenant’s option to purchase.

The tenant sued its landlord alleging breach of contract, violation of the implied covenants of good faith and fair dealing, common law fraud, and consumer fraud. The lower court held that the landlord breached his contract with the tenant, and the Appellate Division agreed. The Court affirmed the lower court’s decision on damages awarded to the tenant for losing the sale with his prospective purchaser. The Court found that the tenant’s claim of the prospective sale constituted a “protectable right” and the landlord’s transfer of title showed malice.


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