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Smart Realty, Inc. v. 986 River Road

August 26, 2010


On appeal from Superior Court of New Jersey, Bergen County, Chancery Division, Docket No. C-253-08.

Per curiam.


Argued March 17, 2010

Before Judges Fisher and Espinosa.

The issue at the heart of this declaratory judgment action is whether plaintiff Smart Realty, Inc. (Smart) validly exercised an option to renew the lease it had with defendant, 986 River Road, Inc. (986). Defendant appeals from the judgment declaring that Smart validly exercised its option to renew the lease in a timely manner and that said option was binding on 986. We affirm.

Judge Ellen L. Koblitz, P.J. Ch., presided over the trial of this matter and set forth detailed findings of fact in her oral opinion, which need not be repeated at length here. The salient facts can be summarized as follows.

Lennard Charles (Charles) is a licensed New Jersey real estate broker and the sole shareholder and president of Smart. In 1995, Smart moved its offices to 986 River Road, in Edgewater, New Jersey. Initially, Smart leased the property from Ingold Realty Co. (Ingold). Through the course of the years, Smart and Ingold were parties to a number of agreements regarding the leasehold that included provisions for how notice was to be given and options for renewal.

In 2003, Ingold sold the property to 986, a corporation owned by Hugo Im. 986 never entered into a new agreement with Smart or provided Smart with instructions regarding the exercise of the renewal option or how notice was to be given to the landlord. 986 never notified Smart of its status as the new landlord and just sent invoices for rent that listed "986 River Road, Inc., c/o MADHATTER REALTY, INC., 2417 Third Ave., Bronx, NY 10451" at the top left of the invoice and instructed that the check for rent should be made payable to "986 River Road, Inc." The return envelope for this correspondence was on stationery of Madhatter Realty, Inc. (Madhatter) at the Bronx address.

Smart's action to exercise its renewal option consists of the following. By letter dated April 4, 2007, Charles wrote to Ingold's attorney, Jack Zakim. Charles explained that he was providing notice to Zakim because David Watkins, the attorney for 986, had not responded to his prior correspondence. The letter advised:

In accordance with paragraph 15 of the First Amendment to Business Lease I am providing Notice that I, Lennard Charles, on behalf of SMART Realty, am exercising the FIVE YEAR OPTION to renew as identified in the Compromise and Settlement Agreement and the Lease dated August 1, 19[9]8.

The letter was hand-delivered to Zakim's former law office but, because he had changed firms, Zakim did not receive the letter. Carbon copies were sent to Madhatter and to Charles's attorney, Jeffrey Bronster. On April 16, 2007, Charles called Im to confirm that he had received the letter exercising the renewal option. Im told him that he had received the letter.

At trial, Im testified that he did not receive the letter sent to Madhatter. However, he admitted that he received and cashed the check for that month's rent payment that was sent in the same envelope. The trial court explicitly found Im's testimony on this point "was not believable" and that he "was not truthful." Im also initially denied having the conversation with Charles on April 16, 2007. After telephone records reflected a call between Im's and Charles's telephone numbers, Im gave varying accounts as to what was discussed. However, he still denied confirming receipt of the letter to Charles. The trial court found this testimony to be false as well. The court found the following facts: Charles made the call to confirm that Im had received the letter and that he was aware that Smart was exercising the renewal option and further, Im had confirmed receipt.

Despite these facts establishing that 986 received actual notice that Smart was exercising the renewal option, 986 argues that this effort was insufficient. 986 contends that a valid exercise of the renewal option required "strict compliance" with "an appropriate written notice, delivered and directed to the then landlord (986) and to its attorney David Watkins ("Watkins"), all as set forth in the leasehold and settlement documents ("the renewal requirements")." 986 contends that these requirements were established in Articles 4 and 15 of a 2003 amendment to the lease.

Smart and Ingold entered into the "First Amendment to Business Lease" (the Amendment) referred to by 986 as part of their October 2003 settlement of a dispute over real estate taxes. The Amendment set forth the required procedure for the exercise of a renewal option for ...

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