On certification to the Superior Court, Appellate Division, whose opinion is reported at 250 N.J. Super. 11 (1991).
Brochin, Wilentz, Clifford, Handler, O'Hern, Stein, Stern
The opinion of the court was delivered by
BROCHIN, J.A.D., temporarily assigned.
Plaintiff Sadie Kelly owns approximately one acre of real estate adjacent to New Jersey Route 4 in Paramus, New Jersey. In 1954, defendant Alstores Realty Corporation leased the property from her for ninety-nine years to form part of the area that it intended to develop for a shopping center.
Ms. Kelly's real estate is now part of Bergen Mall, a giant shopping center containing more than one million square feet of leasable space and more than 100 mall tenants, a substantial number of which are nationally known retailers. Her one-acre parcel is the site of Sterns Auto Center, seventy-two parking spaces, and a major entrance into the mall.
The lease from Ms. Kelly to Alstores provides for a net rent of $10,500 a year for the first four years of the lease and $12,600 a year for the balance of the term. The parties to this law suit have stipulated that the currently "appropriate" annual rent for the property free of the lease would be $105,650. (In 1954, prior to the commencement of Alstores' tenancy, the annual rent paid by the occupants of the premises totaled $6060.)
Ms. Kelly commenced the present suit to terminate the lease. She claims that she is entitled to terminate it because, in 1986, Alstores Realty Corporation was dissolved as part of a complex corporate reorganization of its parent corporation, Allied Stores Corporation. Prior to the reorganization, Alstores owned five regional shopping centers, including the Bergen Mall. A subsidiary of Campeau Corporation acquired a majority, and then all, of the outstanding shares of Allied. Campeau caused Alstores to be dissolved and to distribute its assets and related liabilities to various subsidiaries of Campeau Corporation. Among the subsidiaries of Campeau Corporation to which the assets of Alstores were distributed were Bergen Mall I, Inc. and Bergen Mall II, Inc. Each of those corporations received a fifty percent interest in the assets of Bergen Mall and assumed fifty percent of the related liabilities. Those assets and liabilities included the ninety-nine-year lease from Ms. Kelly. Bergen Mall I, Inc. and Bergen Mall II, Inc. formed a partnership, the Bergen Mall Partnership, to which they contributed their assets and liabilities, including the Kelly lease. The stock of Bergen Mall I, Inc. was then sold to The Edward J. DeBartolo Corporation and the stock of Bergen Mall II, Inc. was transferred to Campeau Corporation (U.S.), Inc.
In support of Ms. Kelly's contention that the dissolution of Alstores Realty Corporation constituted a material breach of her lease which entitled her to terminate it, she relies principally on Sections 8.02(c) and 11.01 of the lease.
Section 8.02(c) reads as follows:
Any of the following events shall constitute an event of default:
(c) If Tenant, finally and without further right of appeal or review, is adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Tenant's reorganization under the Bankruptcy Act of the United States, known as the Chandler Act, or any future law of the United States having the same general purpose, or if the Tenant shall make an assignment for the benefit of its creditors or if Tenant's interest hereunder shall be levied upon or attached.
Ms. Kelly's argument based on this section is that there was some brief period of time between Alstores' assignment of its assets, including the lease that is the subject of this law suit, and the dissolution of the corporation. During that period of time, she contends, the corporation was ...