Tenant Entitled to Time to Gather Evidence in Breach-of-Lease Claim

Facts: A used car dealership breached its six-year lease for a one-acre commercial lot where it sold trucks. It failed to pay the full amount of rent and other charges when they were due. The lot’s owner terminated the lease and sent the tenant an eviction notice.

Later, the owner and tenant settled the eviction action, executing a “consent to enter judgment,” which would allow the tenant to stay on the premises. The judgment permitted the tenant to continue its occupancy on the condition that it pay the owner the past-due amount of $66,687.20 in installments and monthly rent. If the tenant complied with the agreement, the consent judgment would be vacated and the lease would be reinstated when the entire past-due balance had been paid off. Until that time, the lease was considered cancelled.

For several months, the tenant didn’t pay the agreed-upon amounts. The owner found a replacement tenant and notified the tenant that it would have to move as of a specific date. The tenant agreed, but later refused to move the dealership.

The owner sued the tenant, asking a trial court for a judgment in its favor without a trial. The owner supported its request with spreadsheets showing a summary accounting of the tenant’s charges and the partial amounts it had paid. The owner also provided proof that it had been charged a penalty by the replacement tenant because it had been unable to move in when its lease began. The trial court granted the owner’s request. The tenant appealed.

Decision: A New Jersey appeals court reversed the trial court’s decision.

Reasoning: The appeals court concluded that the judgment in the owner’s favor without a trial was granted prematurely. It said that, before rejecting the tenant’s defenses and counterclaim and ruling in favor of the owner, the trial court should have permitted the tenant more time to gather evidence and to conduct discovery, including a deposition of the owner’s representative and an examination of the owner’s financial documents supporting its claims. Therefore, the appeals court reversed the decision in favor of the owner and sent the case back to the trial court for further proceedings.

• 577 Tonnele Avenue, L.L.C. v. C&S Truck Sales, Inc., September 2013