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LT Propco, LLC, v. Westland Garden State Plaza Limited Partnership

A-2529-09T1 (N.J. Super. App. Div. 2010) (Unpublished)

LEASES; SUBLEASES — Absent an express agreement to the contrary, a subtenant does not have privity with a master landlord and therefore cannot directly sue the master landlord for a breach of the master lease.

A commercial tenant had a twenty year lease that included an option to extend the term. It was a retail clothing company and operated its store under a trade name. The trade name was that of a division of the tenant. There were to be no third-party beneficiaries under the lease. The tenant had an expansion right and could withhold consent to any plan that reduced parking below a stated number. The lease allowed the tenant to sublet, and it did so to a subtenant for a five year term. The subtenant acquired the trade name division from the tenant and continued to operate the retail store. The sublease recognized that there was no privity of contract between the subtenant and the landlord; however, the subtenant, for a separate fee, could elect to take the lease by assignment. The subtenant did not make such an election.

The landlord and tenant subsequently agreed to an amendment giving the landlord the right to build a new mall addition, including additional retail space. The landlord applied for land use approval. It did not include any additional retail space for the subtenant’s store. After approval was given, the subtenant filed for emergent relief, seeking to enforce the lease and to prohibit the landlord from proceeding with its approved application. The lower court denied the request because there was no privity between the landlord and the subtenant. It found that the subtenant was not a signatory, assignee or third-party beneficiary of the lease. The lower court also noted that the sublease allowed for an assignment, the subtenant had not made that election. It granted the landlord’s motion to dismiss the complaint, and the subtenant appealed.

In the appeal, the Appellate Division affirmed, holding that the lower court had appropriately evaluated the motion to dismiss and, considered the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that formed the basis of the claim. Further, it held that the lower court properly evaluated the plain language of the leases when it concluded that the subtenant had no right to pursue its desired legal remedies.

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