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EHI Realty Associates v. Taco Bell Corp.

A-5399-05T5 (N.J. Super. App. Div. 2007) (Unpublished)

LEASES; CONDEMNATION — Where a lease has an explicit provision covering a partial condemnation, a court will not rewrite a better contract or lease for the landlord and tenant.

A restaurant had a twenty-year lease. The State gave notice to the restaurant that it intended, through condemnation, to take a portion of the property for the purpose of widening the adjacent state highway. Following negotiations between the state and the restaurant, the state plan allowed the building and most of the parking spaces to remain but blocked access to the restaurant from the highway. Access to the restaurant was allowed through a service road that extended beyond the former entrance way and past the restaurant itself. Following the negotiations, the property owner was awarded a sum of money from the state as a result of the condemnation, but rejected the restaurant’s request to renegotiate the lease in light of the condemnation.

Nearly five years later, the property owner brought an action against the restaurant seeking possession of the property for failure to pay rent. The restaurant brought a counterclaim against the property owner and a third party on several causes of action. The lower court granted the property owner’s motion for dismissal of all counterclaims on the grounds that no claim for relief existed since the lease anticipated the possibility of condemnation. The property owner’s complaint for possession was dismissed following the payment of outstanding rent by the restaurant. The restaurant appealed the dismissal of the counterclaims and of the third-party complaint.

On appeal, the restaurant argued that the provisions and remedies in the lease covering condemnation specifically addressed a complete or substantial taking. The restaurant contended that since the taking was only partial, its remedies for such a taking were not governed by the portions of the lease governing a complete or substantial taking. The Court invoked previously held principles that the role of a court in contractual matters is to determine the meaning of a contract’s language and the intent of the parties, not to rewrite a better contract or lease. The Court also pointed to the legal standard that allows a court to rule on a contract’s meaning as a matter of law if the language is clear and unambiguous. Here, the Court found that the lease’s provision covering a partial condemnation were explicitly stated and ruled that those provisions and remedies applied to the partial taking by the State.


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