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Window Shapes, Inc. v. Toma Realty

July 31, 2009

WINDOW SHAPES, INC., PLAINTIFF-RESPONDENT,
v.
TOMA REALTY, LLC, DEFENDANT-APPELLANT.
TOMA REALTY, LLC, PLAINTIFF-APPELLANT,
v.
WINDOW SHAPES, INC., DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-31-08. On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Union County, Docket No. LT-1623-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 20, 2009

Before Judges Axelrad, Messano and Kestin.

Window Shapes, Inc. (Window Shapes) entered into a five-year lease (the lease) with its landlord, Toma Realty, LLC, (Toma), for commercial space located at 1121-1125 Springfield Road in Union. The lease, which commenced January 1, 2003, contained an option to purchase, which Window Shapes exercised in writing prior to the lease termination date, December 31, 2007. When Toma refused to convey the property, Window Shapes filed a complaint in Superior Court, General Equity Part, seeking specific performance. Two days later, Toma filed a landlord/tenant complaint in the Law Division, Special Civil Part, seeking to evict Window Shapes for failing to pay January and February 2008 rent. The matters were consolidated, and, after discovery, both parties moved for summary judgment.

Concluding that 1) Toma was aware of technical violations of the lease but continued to accept rent; 2) it never issued default notices under the terms of the lease; and 3) it confirmed the validity of the purchase option, the judge granted Window Shapes summary judgment, ordered Toma to transfer the property for the option price of $2.4 million within sixty days, and further ordered any rent paid by Window Shapes to Toma or to the clerk of the court be credited against the purchase price. The order further denied Toma's motion, and dismissed its complaint and counterclaims. This appeal ensued.*fn1

Toma raises the following arguments on appeal: (1) the judge erred when he found that Toma waived the violations of the insurance provisions of the lease by accepting rent; (2) the judge erred when he found that Toma lulled Window Shapes into the belief that it was in compliance with the lease; (3) Window Shapes failed to faithfully perform its obligations under the lease, and, therefore was not entitled to exercise the option to purchase; (4) Window Shapes failed to strictly perform its obligations under the lease; (5) Toma's motive for refusing to honor Window Shapes' option to purchase was irrelevant; (6) Toma was not required to issue default notices in order to reject the option to purchase; and (7) Window Shapes did not demonstrate any hardship as a result of being denied the right to exercise the option. We have considered these arguments in light of the record and applicable legal standards. We affirm.

I.

The option to purchase was set forth in Paragraph 51 of a rider to the lease and provided in relevant part:

51. OPTION TO PURCHASE. The Landlord hereby grants to the Tenant an option to purchase... the Demised Premises... for the consideration and upon the terms and conditions set forth below:

a. Option Date, Term. The Tenant may purchase the Premises at any time during the fifth year of the initial term of this Lease, i.e., during the period from January 1, 2007 through and including December 31, 2007. If this option i[s] not exercised during such period, this option shall expire and thereafter be of no further force or effect.

b. Exercise of Option. The Tenant shall give notice of its exercise of this option in accordance with Paragraph 27, "Notices", of this Lease.

c. Option Price. Except as otherwise provided herein, the price to be paid by the Tenant to Landlord for the Premises if this option is exercised shall be Two Million Four Hundred Thousand Dollars ($2,400,000.00), payable in good funds at the closing of the purchase.

....

f. Performance of Lease. The right to exercise this option is conditioned upon the faithful performance by the Tenant of all its covenants, conditions and agreements under this Lease, and the payment by Tenant of all basic rent, additional rent and other special payments as provided in this Lease ...


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