Reste Realty Corp. v. Cooper Case Brief

Summary of Reste Realty Corp. v. Cooper, Supreme Ct. of NJ (1969)

Parties: PL/Appellee Lessor – Subsequent owner of the building vs. DF/Appellant – lessee Cooper – leased basement or first floor office space in PL’s building which flooded every time it rained.

Cause of action/remedy sought: The following is an equitable action for specific performance.

Procedural History: Lower court found for DF, sustaining DF’s defense of constructive eviction. Appellate division reversed. This court reverses the appellate court.

Facts: 5-13-58 DF leased from PL’s predecessor in title commercial office space.

DF found that due to an improperly graded driveway which ran along side the building, the space became flooded every time it rained. Donnigan, an officer in the corporate owner and resident manager, would clean up the water each time it rained, and was aware of the flooding. Donnigan corrected the problem, and 4-59 DF and PL enter into a new 5 year lease.

Donnigan told Wittman, ultimately his executor, about the flooding and how to correct it.

3-30-61: Donnigan dies. The flooding starts again, but now no one responds to DF’s complaints.

Big meeting gets flooded 12-20-61, and DF forced to flee to a nearby inn.

12-21-61 DF asks that it be cleaned up, it doesn’t get done.

12-30-61 DF notifies LL and vacates the premises.

1-19-62 PL acquires the building

3-31-64 Second lease would have expired.

11-31-64 PL institutes this action.

Issue(s): Under NJ property law, did the flooding violate the express covenant in the leases of quiet enjoyment such that it would constitute constructive eviction, and if so was DF’s covenant to pay rent dependent on the quiet enjoyment covenant?

Holding: Yes. This was a constructive eviction which relieved DF of the liability for the rent claimed under the lease.

Court’s Rationale/Reasoning: Lease stated DF accepted the place in its present condition. DF relied on the promise that the problem had been corrected in singing the new lease. This latent defect was external, based on the driveway and the foundation, and not a part of the premises.

PL’s breached the express (though it could be an implied) Covenant of Quiet Enjoyment. Trial court found sufficient evidence that DF’s departure from the premises was justifiable.

PL contends that by remaining so long, DF gave up her right to constructive eviction. A reasonable time depends on the circumstances. Tenants vacate at their own peril, and hence should be given some latitude. The trial court here found the vacating occurred within a reasonable time.

Possible effects: Covenants of Quiet enjoyment will be implied in commercial leases, and LL’s duty to maintain the usability of the premises is increased.

Rule: Constructive eviction: serves as a substitute for dependency of covenants; Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.

Did court avoid issues?: No.

Dicta: It is immaterial whether this was a breach of the quiet enjoyment covenant, material failure of consideration, or material breach of implied warranty against latent defects. The result was the same – DF was deprived of the benefit.

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