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JS Properties, L.L.C. v. Brown and Filson

December 27, 2006

JS PROPERTIES, L.L.C., JONATHAN SCHWARTZ AND SCOOTER JOLLEY, PLAINTIFFS-RESPONDENTS,
v.
BROWN AND FILSON, INC., T/A SHELBY'S, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. SSX-L-626-00.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued November 29, 2006

Before Judges Wefing, C.S. Fisher and Messano.

In this commercial tenancy matter, we consider but do not decide whether a tenant's claim of constructive eviction may legitimately be based upon the fact that the landlord has sued for possession because the tenant here continued in possession of the leased property for an unreasonable period of time after the filing of the landlord's suit. We, thus, affirm the dismissal of the tenant's novel constructive eviction claim but reverse and remand for a new trial on damages because the trial judge erred in excluding the tenant's expert testimony regarding the fair market sale or rental value of the leasehold, which was offered to show that the landlord did not take reasonable steps in mitigating damages.

The record reveals that the parties have been in conflict about the tenant's ability to enjoy the leased premises in Stanhope nearly from the onset of their relationship. For many years, plaintiffs Jonathan Schwartz and Scooter Jolley operated a business in the building in question. In June 1987, defendant Brown and Filson, Inc. (the tenant) purchased this business from plaintiffs; the plaintiffs retained ownership of the building and entered into a ten-year lease with the tenant.*fn1

The tenant began experiencing roof leaks within the first month of the lease term. A lawsuit was commenced in the Law Division by the landlord in 1989 as a result of the tenant's withholding of rent due to the roof leaks. In 1992, the parties entered into a written settlement agreement of that suit, which, among other things, included the landlord's "recogni[tion] [of] its obligation to keep the roof in repair with the intention of [l]andlord providing the [t]enant with a dry store." The agreement also included a method for testing the integrity of the roof as well as the landlord's promise to make any necessary roof repairs. In addition, the agreement declared that, in the event of future water damage, the Tenant shall be entitled to monetary recovery in the following manner (which may be deducted from the rent):

a) the current retail value of the damaged or wet merchandise;

b) said merchandise to be picked up by the Landlord within 72 hours of notice to Landlord;

c) Tenant shall be entitled to the costs of clean-up and repairs to the area affected by the leaks;

d) costs may include Tenant's own costs of labor required for said clean-up at $20.00 per man hour[;]

e) The Tenant agrees to act reasonably and responsibly in respect to a, b, c and d hereof.

In July 1997, the parties entered into a new ten-year lease agreement. Among other things, this new lease agreement expressly obligated the landlord "to provide a water tight roof and roof water removal system to satisfactorily remove water from the roof" and declared, absent the application of an exception not relevant here, that "[s]hould any leak occur . . . the Landlord ...


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