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Goodyear Tire and Rubber Co. v. Kin Properties

Decided: September 27, 1994.


On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County.

Before Judges Dreier, Villanueva and Wefing.


The opinion of the court was delivered by VILLANUEVA, J.A.D.

Defendants appeal from a declaratory judgment holding that plaintiff's notice of intent to renew a lease sent prematurely was effective to extend the subject lease. We reject defendants' contention that the notice was ineffective because it was sent prior

to the window time period specified in the lease and we therefore affirm.

Plaintiff, The Goodyear Tire and Rubber Company, is a manufacturer and marketer of automobile and truck tires. In 1961, plaintiff leased from Berkshire Properties, Inc. a thirty-acre tract of land.*fn1 A warehouse and office building were constructed on these premises, known as 1665 Jersey Avenue, North Brunswick, New Jersey, to serve as a distribution center for the Mid-Atlantic and Northeast region.

The lease was for a twenty-five year term and provided for ten five-year renewal options for a total of seventy-five years. The lease required that plaintiff

exercise its option to extend the Basic Term by giving written notice of such exercise to Lessor not less than 6 months nor more than 9 months prior to the expiration of the Basic Term or the extended term, as the case may be, then in effect. Should Lessee fail to exercise any option to extend the term hereof, Lessee shall have no right thereafter to exercise any succeeding option to extend the term hereof.

All notices required by the lease to be given to either party were required to be in writing sent "registered mail, postage prepaid."

The twenty-five year term expired on October 31, 1986. On February 5, 1986, plaintiff by registered mail, provided defendants with notice of its intent to exercise the first renewal option for a five-year extension of the lease.

On May 16, 1990, plaintiff exercised its second option to renew for another five-year period beginning on November 1, 1991. Wanda Hicks, an employee of plaintiff, indicated that the failure to send a renewal letter within the prescribed window time period was due to her being overworked. She testified that she knew she should have consulted the actual lease before mailing the renewal

letter but instead relied on a lease digest in her file (which did not include the window provision for renewal notices). Defendants do not deny receipt of the May 16, 1990 renewal notice nor that the plaintiff intended to renew the lease. Plaintiff did not send a new notice within the three-month period specified in the lease.

Plaintiff received no response to the renewal letter as had occurred when the first renewal option was exercised in 1986. However, Katherine Cokic, a Trust Officer at Mercantile Bank, testified at depositions that on or about May 25, 1990, she sent a letter by regular mail, addressed to "P. Smith, Goodyear, Akron, Ohio" suggesting that the renewal letter may have been ineffective and advising that a letter be filed in the appropriate period indicated in the lease. Plaintiff denied receiving the letter, and the court held as a fact that the letter had not been received.

After the time period for renewal passed, a representative of defendant Kin Properties, Inc. (Kin) contacted Goodyear to discuss Goodyear's vacating the premises. Goodyear responded that its letter of May 16, 1990 was effective to renew. Nonetheless, Kin began to investigate the possibility of marketing the property. Upon learning of these attempts, plaintiff filed a complaint seeking a declaratory judgment that plaintiff complied with the lease and the renewal option and was therefore entitled to remain in possession of the premises. Plaintiff claimed that the lease is worth millions of dollars to plaintiff particularly because the rent specified in the lease is now below the market rate. Additionally, plaintiff cited its continual adherence to the lease aside from this "inadvertent mistake" in prematurely requesting renewal as a reason for mandating a renewal of the lease. Defendants answered and filed a counterclaim for possession and damages.

On October 8, 1993, after a four-day trial, the trial Judge, Judge Bachman, rendered an oral decision granting judgment in favor of plaintiff and dismissing the counterclaim. On October 28, 1993, the Judge entered a written order declaring plaintiff's renewal of the lease effective and that the extension would expire October 31, 1996.

The trial court found that the renewal letter sent on May 16, 1990, was not in compliance with the lease terms but that plaintiff at all times intended to renew the lease. In his oral decision, the Judge referenced "Brick Plaza, Incorporated v. Humble Oil, " 218 N.J. Super. 101 (App. Div. 1987), and relied on that case for situations "in which equity has intervened to mitigate the hardship resulting from the tenant's failure to give timely notice . . . where it is found that the tenant's delay was slight, where it did not prejudice the landlord, and where failure to grant relief would cause the tenant unconscionable hardship." ...

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