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Diane Fink Management Co. v. Rios

A-6063-99T5 (N.J. Super. App. Div. 2001) (Unpublished)

CONTRACTS; SAVINGS CLAUSES—A savings clause in a contract protects against the invalidation of the contract when a subsequent amendment turns out to be invalid.

A landlord and a tenant entered into a six month lease for commercial space in New York. A rider to the lease contained a provision that automatically renewed the lease for an additional six month period at a substantially higher rent, unless it was canceled by the landlord or tenant. At the expiration of the first renewal term, another amendment to the lease was executed by the landlord and someone purporting to be the tenant. That tenant held over after the expiration of the lease term and the landlord filed a dispossess action and a complaint for payment of back rent. The landlord and tenant entered into a consent judgment, but when the tenant failed to pay the sums due, the landlord filed a lawsuit in New Jersey, where the tenant resided and owned property. The Landlord sued for enforcement of the New York judgment, misrepresentation, and breach of contract. At the closing of the landlord’s case, the lower court dismissed the misrepresentation and enforcement claims. He presented two questions of fact to the jury: (1) whether the tenant signed the original lease; and (2) whether the tenant signed the second amendment to the lease. When the jury determined that the tenant did sign the lease but did not sign the amendment (because it was forged), the lower court found in favor of the tenant. It also found that the invalid second amendment to the lease canceled the tenant’s obligations under the original lease. The Appellate Division affirmed the dismissal of the fraud and enforcement claims, but reversed the lower court as to the breach of contract claim. It found that the original lease had a “savings” clause which said that if any provision of the lease was deemed to be invalid, the remaining provisions of the lease remained in full force and effect. Therefore, despite the invalidity of the second amendment, the tenant remained liable as a holdover tenant under the original lease and under the first amendment to the lease. The Appellate Division remanded the case.

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