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Mangano v. Cantor

A-1398-97T5 (N.J. Super. App. Div. 1998) (Unpublished)

LANDLORD-TENANT; HOLDOVER TENANCIES—Holdover rent of triple the last month’s rent is upheld as an acceptable liquidated damage, but attorneys fees expended in a dispute over a subsequent unexecuted lease are not recoverable under the terms of the expired lease.

Following expiration of its lease, a tenant sought to enforce a new lease agreement that had been negotiated, but not executed. The lower court denied the claim, but entered a judgment allowing the tenant to remain in the premises for one month. The landlord filed a counterclaim for triple rent, attorney’s fees, and interest, which the lower court dismissed. On appeal, the lower court was reversed and the case was remanded for trial.

At trial, the landlord relied on various paragraphs of the expiring lease agreement for each of its claims. The lease contained a liquidated damages clause which provided that if the tenant remained in the demised premises after the expiration of the term of the lease, the landlord could treat the tenant as a holdover tenant with an obligation to pay three times the last month’s rent. The lease also set out the tenant’s obligations to pay attorney’s fees as additional rent for the landlord’s enforcement of the agreements, covenants, terms, conditions, and obligations under the lease. The tenant was also obligated to pay interest on any rent in default.

The lower court granted summary judgment in favor of the landlord holding that the tenant was a holdover tenant and awarded the triple rent for the one month plus attorney’s fees for the holdover action. It denied attorney’s fees to the landlord for defending the action by the tenant which unsuccessfully asserted the validity of the unexecuted lease. The lower court also lowered the interest rate and subtracted certain tenant’s credits. The tenant and landlord appealed and the Appellate Division upheld the lower court on most issues. It held that the tenant was a holdover tenant and that the triple rent liquidated damages clause was reasonable. It upheld the lower court’s denial of attorney’s fees, because the prior action involved a question of whether a new lease was entered into and therefore did not arise under the expired lease. The Appellate Division then remanded on the issue of interest and directed the lower court to provide findings regarding why the contract interest rate should have been disregarded.


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