Restaurant charges fraud in mall leases

By:Charlie Olsen
   The owner of New Fortune Restaurant, one of the three holdout tenants in the Rustic Mall, filed a lawsuit against Rustic Mall LLC last week, claiming the landlord deceived him by withholding information about the need to raze the building for the EPA Federal Creosote cleanup.
   The lawsuit, filed on Oct. 3 in Superior Court, alleges that when Zi Jin Chen obtained the leasehold from previous owner Ye Lin in the summer of 2003 the landlord didn’t disclose the information to either of them about the plans and signed a lease to Jan. 31, 2009.
   Matthew Earle, an attorney representing Mr. Chen from Wong, Wong & Associates in Princeton, said that his client invested money in the restaurant without knowing that it would be demolished.
   "As early as 1999 the landlord knew it was going to be remediated by the EPA," Mr. Earle said. "In 2003, my client comes in from out of town and buys the lease … our guys sank a lot of money into it and the landlord didn’t tell them."
   The suit asks for $160,000 for breach of lease agreement, plus interest and attorneys fees; it also includes two counts of fraud.
   One count claims fraudulent inducement, claiming the landlord misrepresented that the premises would be available for the term of the lease (until Jan. 2009). The second count claims fraudulent concealment of a latent defect, because the landlord "concealed a latent and fatal defect of the premises."
   "It’s not about how long they’re going to stay at Rustic Mall, it’s about being justly compensated," Mr. Earle said. "They can’t afford to not be in business, they have to keep going."
   Both counts of fraud seek monetary compensation for damages from fraud, punitive damages, and recovery of attorney’s fees and any other damages.
   The lawsuit isn’t the first time New Fortune and Rustic Mall have been scheduled to go to court: New Fortune was scheduled for an eviction hearing in Landlord-Tenant court on June 9, but the Rustic Mall sent a letter June 8 dropping the case.
   Since then, Mr. Chen has been relocating his business to South Main Street — a move described in the lawsuit as "expensive" and "on short notice." Mr. Earle said that New Fortune would move into their new location on South Main Street as soon as it is ready and the lawsuit isn’t a stalling tactic.
   "Our hand is being forced because of the condemnation and everything else they’re throwing at them," Mr. Earle said. "It’s not a tactical move — you don’t file a lawsuit until you have to."
   The pretrial judge for the lawsuit is Superior Court Judge Fred H. Kumpf, the same judge who heard the Manville Pizza case over the summer.
   Mayor Angelo Corradino said that Mr. Chen was just trying to make a "fast dollar."
   "We just want to get them out as fast as they can. This has been going on for six years, but you’ve got to go to court for some reason," Mayor Corradino said.
   Rustic Mall project manager Joe Korn said that the lawsuit came as a surprise.
   "The guy was negotiating with us and then all of a sudden he slaps us with a lawsuit," Mr. Korn said. "We’ve been negotiating — at this point we can’t negotiate anymore."
   Mr. Earle said the landlord has known the demolition was coming for a long time.
   "They’ve had years to get they’re ducks in a row and they extended the leases in 2004 with people from out of town," Mr. Earle said. "Why should the little guy get crushed, when they just stumbled into it? That’s not fair."
   Mayor Corradino said that he hopes the lawsuit doesn’t slow down the moving process.
   "They’d better do it quickly," Mayor Corradino said. "If the EPA pulls out they get nothing and there’s only going to be three businesses there for the next 100 years."