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476 Grand, LLC v. Dodge of Englewood

March 2, 2012


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7734-09.

Per curiam.


Submitted November 7, 2011

Before Judges Parrillo and Grall.

This appeal is from a grant of summary judgment awarding plaintiff landlord $252,752.17 for base rent, interest, late charges, attorney fees and costs owed by defendant tenant under the terms of their commercial lease. Defendant does not challenge that amount of the damage award. Defendant contends that principles of impracticability of performance and frustration of purpose and, in the alternative, the contract's force majeure clause require discharge of its obligation under the lease agreement. We conclude that defendant failed to establish a basis for the relief under the terms of the lease and principles of impracticability and frustration.

The facts are not disputed. Plaintiff, 476 Grand, LLC, and defendant, Dodge of Englewood, Inc., executed a five-year lease agreement on December 12, 2006. The lease provides that the premises, which is located at 476 Grand Avenue in Englewood, is to be used for "a new automobile showroom and office incidental to that purpose and for no other use or purpose."

The lease requires defendant to pay "minimum rent" at a fixed rate throughout the term of the lease, "additional rent" through assumption of responsibility for property taxes, maintenance, and insurance and utilities. It entitles plaintiff to interest on late payments and, in the event of defendant's failure to cure a default in payment of minimum or additional rent, damages in "an amount equal to the difference between the Minimum Rent and Additional Rent reserved in this Lease from the date of such default to the Expiration Date, and the then fair and reasonable rental value (inclusive of Minimum Rent and Additional Rent) of the property for the same period." In addition, the lease provides for an award of fees and costs to the prevailing party in any action commenced by plaintiff to collect rent.

When the lease was executed, defendant was in the business of selling cars through a dealership agreement with Chrysler, LLC. The lease is not conditioned on defendant's arrangement with Chrysler, and the lease's permitted use clause, quoted above, does not refer to Dodge or Chrysler vehicles or to defendant's dealership agreement with Chrysler.

Defendant's agreement with Chrysler was terminated on June 9, 2009, by order of the United States Bankruptcy Court for the Southern District of New York entered in Chrysler's bankruptcy proceeding. Defendant has provided no information about that proceeding other than the order itself. Based on the Court's findings set forth in the order, one can discern that the "Debtors" reached an agreement with "New Chrysler" concerning purchase of assignments of some, but not all, of Chrysler's agreements with its dealers. "New Chrysler" identified the assignments it would not accept, which were designated as "Rejected Dealer Agreements" and "'Excluded Contracts'" under the "Purchase Agreement." The Court found that the rejections were an "exercise of sound business judgment . . . made in good faith and for legitimate commercial reasons," "appropriate and necessary" and "warranted and permissible."

Defendant's agreement with Chrysler was among the designated "Rejected Agreements." As a dealer with a "Rejected Agreement," under the terms of the order, defendant may not hold itself out as an authorized dealer of Chrysler for any purpose, or use Chrysler's "trademarks, tradenames and servicemarks, except that it may use [Chrysler's] descriptive brand and vehicle model names solely for the purpose of identifying and advertising its inventory for sale," as would be lawful for a "party that is not an Authorized Dealer of [Chrysler]." Nothing in the order prohibits defendant from selling vehicles independently or by agreement with one or more manufacturers of other vehicles.

The lease includes a broad "force majeure" provision applicable to a series of designated calamites and "other causes beyond [the defaulting] party's control." The final sentence of that provision states, "Nothing herein shall be deemed to relieve Tenant of its obligation to pay Rent when due."

Prior to entry of the Bankruptcy Court's order, defendant missed three payments of rent in 2008. In June 2009, defendant notified plaintiff it was terminating the lease because of the loss of its agreement with Chrysler and vacated the premises.

On June 23, plaintiff declared defendant in default, demanded rent due and stated its intention to take legal action. Receiving no payment, plaintiff filed a complaint alleging breach of contract, unjust enrichment and entitlement to recovery on an account. The ...

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