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Bay Acquisition, LLC v. Heller

2010 WL 3211146 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

CONTRACTS; LEASES; CONDEMNATION — Where the buyer of a property has not yet suffered any actual injury as a result of an undisclosed (at closing) project that might involve relocation of properties, it has no claim against the seller, especially where the property was sold in an “as-is” condition, without any warranties of any kind.

Absentee landlords based in New Jersey owned real estate in Kentucky leased to the United States Postal Service under a long-term lease. The landlords sold the property subject to the lease. The price factored in the long-term lease. A year before the sale, the United States Army had initiated a project involving the relocation of properties in the area due to frequent flooding. The Army began appraising properties in connection with the project, but due to funding problems, the project stalled. The Army inspected, but did not appraise, the subject property.

Seven years after purchase, the new landlord learned of the federal project when attempting to resell the property. The new landlord sued the former absentee landlords, claiming the federal government intended to condemn the property in conjunction with the project and claimed that the absentee landlords had knowledge of this intention when they sold the property. The landlord asserted claims for breach of contract, express and implied, breach of warranty, common law fraud, and a violation of the New Jersey Consumer Fraud Act (CFA).

The United States District Court dismissed the complaint, finding the new landlord did not have standing to bring the claims as it had yet to suffer any actual or imminent injury of a legally protected interest. It said that the federal project was put on hold, and the funding to move the project forward was anything but certain. The Court also found the landlord continued to receive rent from the postal service, and therefore had not established any injury from lost rent. In short, the court held the relocation of the subject property might never occur, and it would not entertain a lawsuit that was based on a speculative harm.

The Court indicated that even if it did have standing to hear the case, it would summarily dismiss the matter on the merits. The current landlord admitted to the Court that it had no knowledge of any pending condemnation, and no proofs were submitted that it had received a federal government offer to purchase the property. Additionally, the governing contract indicated the property was sold in an “as-is” condition, without any warranties of any kind. Lastly, as to the CFA, the landlord was still receiving all rents from the postal service under lease, and therefore could not prove an ascertainable loss as required to establish a claim under the CFA.

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