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LMX Doubletree Center, Inc. v. Dries

A-1691-01T5 (N.J. Super. App. Div. 2002) (Unpublished)

LANDLORD-TENANT; DAMAGES—It is the Landlord’s burden to show that the rent charged to a replacement tenant following the original tenant’s lease default is commercially reasonable.

After a shopping center tenant abandoned its premises, its landlord relet the premises to another tenant at a substantially lower rent and sued the tenant for damages. The tenant counterclaimed, alleging that the landlord breached the lease and the covenant of quiet enjoyment because the anchor tenants vacated the shopping center. The lower court ruled in favor of the landlord and dismissed the tenant’s counterclaims. On appeal, the tenant argued that the landlord failed to prove that it was commercially reasonable to relet the premises for substantially less than the tenant was paying. The Court agreed, holding that there was a genuine dispute of a material fact and summary judgment was inappropriate because the landlord failed to demonstrate the efforts it undertook to relet the premises, including what steps it took to advertise the vacant premises. The landlord also failed to show why the new tenant’s rent was about one-half of the prior rent. The landlord had argued that summary judgment was proper because the tenant failed to show that the replacement tenant’s rent was commercially unreasonable. The Court rejected that argument, holding that it was the landlord’s burden to show that the rent was commercially reasonable and not the tenant’s burden to show it was not commercially reasonable. It also rejected the tenant’s counterclaim for breach of lease because the lease did not require the presence of an anchor tenant during the lease term and rejected the breach of the covenant of quiet enjoyment claims, finding that the premises were substantially suitable for ordinary commercial use, the purposes for which it was leased.

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