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Seven Kids Retailers, Inc. v. Ark Road Associates, L.P.

A-6832-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

RELEASES—It is normally to be assumed that a settlement releasing a party is intended to release that party’s partners and successors and assigns.

A shopping center tenant sued its landlord for a rent abatement under the “major tenant continuous co-tenancy” provisions of its lease. The lease provided for a rent recalculation if a major tenant vacated the premises. A food store vacated the center and was replaced by stores the tenant deemed not to be of the same size, use, scope or quality as the food store. The tenant sued for a rent abatement. At trial, the landlord and tenant entered into a settlement agreement that released the landlord, its successors and assigns, from all claims and causes of action that accrued and/or arose out of events that occurred up to the date the release was signed. The trial judge entered the settlement on the record. The landlord prepared a release that released the landlord (a limited partnership), the landlord’s general partners, and the new owners of the shopping center from liability. The tenant claimed that it did not intend to release the new owners or the landlord’s general partners from liability and refused to sign the release. The landlord then moved to enforce the settlement. The lower court agreed with the landlord that the terms of the settlement on the record clearly intended to release the landlord and its successors or assigns, which would include any new owners of the shopping center. The Appellate Division affirmed. A court may enforce a settlement not reduced to writing if the parties agreed to essential terms. The Court found that the settlement on the record contained the essential terms. The tenant was to receive a payment in exchange for releasing the landlord and its successors from liability up to the date of the settlement. The Court rejected the tenant’s claim that it did not intend to release the landlord’s general partners or any new owners of the shopping center. The Court noted that the tenant knew from the outset of the case that the landlord was a limited partnership. Given the fact that general partners are jointly and severally liable for the acts of the limited partnership, the Court found the tenant’s argument to be absurd when it claimed that it intended to release the partnership but not the individual partners. It also found that any new owners of the shopping center were the landlord’s “successors and/or assigns” and were to be released from liability under the terms of the settlement.

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