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Florham Village, LLC v. New Jersey Cvs Pharmacy, LLC

United States District Court, D. New Jersey

June 11, 2014

FLORHAM VILLAGE, LLC, Plaintiff,
v.
NEW JERSEY CVS PHARMACY, LLC and CVS CAREMARK CORP. d/b/a CVS CORP., Defendants.

OPINION

KEVIN McNULTY, District Judge.

This matter comes before the Court on the motion of Defendants, New Jersey CVS Pharmacy, LLC and CVS Caremark Corp., to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, Defendants' motion is DENIED.

I. BACKGROUND

Plaintiff, Florham Village LLC, brings this lawsuit against New Jersey CVS Pharmacy, LLC and CVS Caremark Corp. (collectively, "Defendants") for breach of contract regarding Defendants' failure to pay rent under a lease agreement for a CVS Pharmacy store in Florham Park, New Jersey. Compl. (Docket No. 1-1). The facts alleged in the Complaint are assumed to be true for the purpose of this motion to dismiss.

Plaintiff Florham Village is the owner of real property in a retail shopping center at 187 Columbia Turnpike, Florham Park, New Jersey. Comps. ¶ 5. A portion of that shopping center was leased by New Jersey CVS for a retail drugstore and pharmacy pursuant to a lease dated November 11, 2008. Id. Under ¶ 2(a) of the lease, the terms and obligations of the lease took effect upon delivery of the premises to New Jersey CVS. Lease (Docket No. 4-4) ¶ 2(a);[1] Compl. ¶ 8. The lease defines "delivery" as the point in time when the landlord's work is "substantially completed." Id. ¶¶ 2(a), 2(g). New Jersey CVS's obligation to pay rent commenced 120 days after the date of delivery of the premises. Id. ¶2(a).

Plaintiff alleges that the premises were "delivered" on April 3, 2007. Delivery was memorialized in a letter sent to Mike Buckless, the New Jersey CVS regional director of real estate, and copied to CVS Corp. Compl. ¶ 8. Delivery of the premises occurred, according to plaintiff, when Frederic Kruvant, a principal of Florham Village, notified New Jersey CVS that the construction work was "substantially complete" as of April 3, 2007. Id. Based on that delivery date, the rent obligation would have commenced 120 days later, on August 1, 2007. Id. ¶ 10.

On April 18, 2007, however, Brenna Jordan of New Jersey CVS transmitted a letter to Kruvant via UPS overnight delivery. That letter notified Florham Village that New Jersey CVS disputed the delivery date, and asserted that delivery had not yet occurred. Id. ¶ 11. In a second letter to Kruvant dated December 10, 2007, New Jersey CVS asserted that the delivery date of the premises was July 2, 2007, and that therefore its rent obligation commenced on October 30, 2007. Id. ¶ 12. New Jersey CVS did not commence rent payments until October 30, 2007. Id. ¶ 13.

The dispute, then, is whether the obligation to pay rent began on August 1, 2007, or October 30, 2007. Florham Village alleges it demanded the rent for the 90 days between August 1, 2007 and October 30, 2007, totaling approximately $129, 465. Id. ¶¶ 15-16. New Jersey CVS refused to pay the rent for that period. Florham Village contends that Defendants are in default of their obligations under the lease. Id. ¶ 15.

The dispute over the delivery date also affects the effective date of a negotiated rent increase. Under the terms of the lease, the rent increased by $4, 315 per month at the start of the sixth year. Id. ¶¶ 17, 18. Because the parties disagree as to the start date, they also disagree as to the date of the sixth-year rent increase. Florham Village alleges that as of April 2013, New Jersey CVS was obligated to, but did not, pay the increased monthly rent amount. Defendants, it anticipated, would take the position that the rent increase would not become effective until July 2, 2013. Id. Also in dispute, then, is the additional rent for April, May, and June, which amounts to approximately $12, 946.50.

Plaintiff, citing the terms of the lease, also claims a monthly late charge of 4% per month on all unpaid rent, as well as attorney's fees and costs. Id. ¶¶ 19, 20.

Pursuant to a Guaranty of Lease dated November 7, 2006, CVS Caremark guaranteed that in the event New Jersey CVS defaulted on any of its obligations under the lease, CVS Caremark would cure the default, and would be responsible for interest, legal fees, and costs. CVS Caremark also consented to be joined as a party in any lawsuit against New Jersey CVS arising out of any default by New Jersey CVS. Id. ¶ 21.

Plaintiff filed a one count complaint in Morris County Superior Court on April 18, 2013. (Docket No. 1-1). The complaint seeks payment of all unpaid rent plus any applicable interest, penalties, and legal fees and costs; compensatory damages; consequential damages; and punitive damages. Compl. at 4-5. Defendants removed the case to this Court on May 17, 2013. (Docket No. 1).

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because there is diversity of citizenship and the amount ...


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