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175 Broad Street, L.L.C v. the Nead Organization

January 10, 2013

175 BROAD STREET, L.L.C., PLAINTIFF-APPELLANT,
v.
THE NEAD ORGANIZATION, INC., NEAD ELECTRIC, INC., NEAD ELECTRIC OF NEW JERSEY, INC., NEAD INFORMATION SYSTEMS, INC., AND DOROTHY M. MARZIOTTO, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-8143-11.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 11, 2012

Before Judges Fuentes, Ashrafi and Hayden.

In this appeal, we must determine the scope of an arbitration clause in a commercial lease. Plaintiff 175 Broad Street, L.L.C., the landlord, appeals from a March 14, 2012 order of the Law Division that dismissed its lawsuit against the tenant in favor of arbitration of the dispute. We affirm.

Plaintiff alleged that defendants breached the written lease agreement by vacating the premises without notice, by failing to pay rent and other charges, and by neglecting to remove their fixtures and to restore the premises to their original condition. Plaintiff sought damages for lost rent and "additional rent," late charges, expenses of repairing and restoring the premises, loss of future use of the property, and attorney's fees and expenses of the lawsuit. Defendants filed an answer denying plaintiff's allegations and a counterclaim for refund of their security deposit. Shortly after the pleadings were filed, defendants moved to dismiss the complaint, citing the mandatory arbitration clause of the lease. The court granted defendants' motion by its order of March 14, 2012.*fn1

The pleadings and related documents demonstrate the following facts.

On March 15, 2001, plaintiff as landlord and Nead as tenant entered into a five-year lease for 12,017 square feet of a commercial building located at 175 Broad Street, Carlstadt, New Jersey. In September 2005, the parties executed a written addendum expanding the leased space and extending the term for an additional five years, to March 31, 2011. The base rent was $7,360.41 per month during the first year of the lease and increased each year to a high of $9,603.68 during the tenth year. In addition, Nead was obligated to pay monthly "additional rent" consisting of its net proportional share of taxes, insurance premiums, maintenance costs, and other specified charges.

The lease addressed installation of fixtures and alteration of Nead's interior space. At the end of the lease term, Nead was required to restore the premises to their original condition except for fixtures that the landlord chose to retain.

A "holdover" provision stated that, if Nead continued occupancy after March 31, 2011, without the landlord's consent, it would pay double the amount of base rent per month. The holdover provision also required Nead to give sixty days' written notice of its intent to vacate the premises and to terminate the resulting month-to-month rental term.

The lease granted to the landlord several alternative remedies in the event of the tenant's default or other breach of the agreement. It preserved the landlord's right to sue in court, as well as to declare default and insist on cure by the tenant without suing or terminating the lease. The landlord was also entitled to reimbursement of its reasonable attorney's fees and other enforcement expenses in the event of the tenant's default or breach. A separate provision of the lease, however, provided for mandatory arbitration of disputes.

In March 2011, as the end of the lease term approached, Nead was not ready to vacate the premises. Plaintiff notified Nead that it would not consent to an extension of the lease term and that Nead would be required to pay double the monthly base rent as a holdover tenant. From April through July 2011, Nead made the required payments. It also issued a check for the August rent, but it later stopped payment on the August rent check. Nead vacated the premises as of August 16, 2011.*fn2

By its amended complaint filed in December 2011, plaintiff sought the following damages:

a) $28,126.25 August 2011 base and additional rent;

b) $1,418.32 Late fee for August;

c) $28,160.76 September 2011 base and additional rent;

d) $1,408.04 Late fee for September;

e) $27,036.15 October 2011 base and ...


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