Skip to main content

Crescent Trading, LLC v. Chera

A-3281-07T3 (N.J. Super. App. Div. 2010) (Unpublished)

LEASES — If a lease only requires that the landlord cooperate with its tenant as required by law and the landlord does so, such as by securing permits and constructing walls, it is the tenant’s risk that it will not obtain necessary building permits.

A commercial lease provided that in the event of the tenant’s default or breach, its landlord could terminate the tenant’s right to possession. The tenant’s president personally guaranteed the lease. On the date the lease was executed, two spaces were set up as one store without a floor-to-ceiling wall between the adjacent spaces. Thus, they had to be separated to create the tenant’s premises. At the time, the tenant’s president believed that the premises were legally subdivided. Numerous hurdles prevented the landlord from obtaining the appropriate building permits. The tenant withheld rent, eviction proceedings began, and the tenant voluntarily vacated the premises. The lower court found that the tenant breached the lease, and that its president breached the guarantee.

On appeal, the president alleged that the lower court abused its discretion by disregarding facts that proved that the landlord, and not the tenant, breached the lease; specifically, the president claimed that the landlord was in breach from the moment the lease was signed because it had not obtained planning board approval. The Appellate Division, however, found that the lower court’s decision was supported by substantial, credible evidence in the record. Under the terms of the lease, the landlord was obligated to cooperate with the tenant when required by law; and, the landlord fulfilled that obligation by securing permits and constructing walls. The tenant was obligated by the lease to obtain necessary permits, and failed to meet its obligation and thus breached.

In the appeal, the landlord argued that the lower court’s award was deficient because the lower court mistakenly concluded that the landlord had mitigated its damages and secured a new tenant when, in fact, it was unable to do so for a full year. The tenant argued that the landlord failed to mitigate; specifically, that the landlord’s agent lied under oath about mitigation efforts. The Appellate Division deferred to the lower court’s evaluation of the agent’s truthfulness. However, it found that the lower court made a clear clerical error in calculating damages and ordered an appropriate amendment to the lower court’s order.

66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 •