Cohen v. Courtesy Truck Stop, Inc.

A-7169-95T2 (N.J. Super. App. Div. 1997) (Unpublished)
  • Opinion Date: August 28, 1997

LEASES—Substantial compliance with a lease term requiring a certain level of insurance coverage isn’t good enough. A tenant’s coverage was less than that required, and the tenant was evicted.

In April 1992, a landlord and tenant entered into a commercial lease which required tenant to obtain liability insurance of at least $500,000.00 and to provide landlord with a copy of the policy. Tenant procured insurance for only $360,000.00 and failed to provide a copy to landlord. In 1995, tenant informed landlord it could not pay the full amount of rent and threatened to walk away from the lease if landlord did not agree to a modification of its terms. Landlord unwillingly agreed, and a modification letter was executed wherein landlord agreed to reduce tenant’s monthly rental payment. Landlord discovered that tenant had sublet the premises in 1992, and ordered tenant to surrender the premises. When tenant refused, landlord filed a complaint alleging: violation of the lease because of tenant’s failure to comply with the insurance provisions, modification of the lease through fraud, and failure to quit the premises. The trial judge dismissed the complaint, finding substantial compliance with the lease, ample insurance coverage and a valid modification. Landlord appealed, claiming: (1) failure to procure the required amount of liability insurance was a violation of the express terms of the lease, and (2) modification of the rent provision was obtained through fraud, and was therefore unenforceable.

The Appellate Division stated that its function was to enforce the lease as written, not to write a different lease. The Appellate Court found a material breach in tenant’s failure to comply with a bargained for lease provision. This alone was sufficient for the Court to find a default entitling landlord to terminate the lease and evict the tenant. As to tenant’s fraud in obtaining the modification, the Court found that an intentional, knowing misrepresentation was made by tenant, and relied upon by landlord, regarding an inability to pay the full amount of rent. Tenant claimed it could not pay the rent, while in fact it was receiving $200 more per month from the subtenant than its own rent obligations. The Court granted landlord’s request for termination of the lease and removal of the tenant from the premises.