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Kilmer Building Realty Holdings, L.P. v. Eateam, Inc.

A-1067-06T2 (N.J. Super. App. Div. 2007) (Unpublished)

LEASES; LATE FEES; ATTORNEYS FEES — Even though a tenant may have a legitimate argument as to why it believes that rent was not due, if its lease provides for late fees and attorneys fees, then once a court finds that the tenant has failed to pay rent on time, it is obligated to award those items even though it might seem unfair to a tenant who legitimately believes it has reason not to pay.

A commercial lease provided that if “rent was not received by the landlord within five days after its due date, a late charge of ten-percent would be levied on the unpaid amount. The late charge was to be ‘immediately due and payable, as additional rent, together with the rent payment.’” The lease also provided for a late interest charge on sums due to the landlord from and after when they become due and payable.

The landlord and tenant had a dispute as to when possession was actually delivered by the landlord. That dispute resulted in a lawsuit where the lower court determined that the tenant had failed to pay one month’s rent. “However, concerning the late fee and counsel fees, the court, rather cryptically, stated as follows: With reference to a late fee—because it is a matter in controversy, and counsel fees—because this is a matter of controversy, I am not assessing counsel fee or—fees. The reality is that both sides have legitimate arguments and given that, the Court finds that it would be inappropriate to assess counsel fees against one or the other.” The landlord appealed this “denial of its request for both late fees and attorneys’ fees.”

The Appellate Division agreed with the landlord. It looked at the language of the lease and pointed out that “[i]t is not the function of the court to write a different or better contract for the parties but to enforce the contract as written.” Once the lower court found that the rent was due and unpaid, the lease required payment of the late fee. In addition, the lease provided for attorney’s fees and given that the landlord “was required to institute suit for the payment of rent,” it was clear that the landlord was entitled to attorney’s fees. The “quantum of attorney’s fees” was left to be determined by the lower court on remand.

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