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The Leasing Hotline
Landlord Granted Summary Judgment in 'Technical' Breach Case
Where a tenant terminates a lease on a technical breach, the landlord may be granted summary judgment on its claim for failure to pay rent and also may be awarded attorneys' fees and interest, as long as the breach is not material. Spence v. 33 Halsted Street Associates, Bankruptcy Case No. 05-57552, Chapter 13, Adversary No. 06-2015, U.S. Bankruptcy Court for the District of New Jersey, June 6, 2007.
On Nov. 1, 2002, the landlord and tenant entered into a commercial lease for a five-year period. Under the terms of the lease, the tenant was required to pay $50,000 toward construction costs. The lease further provided that the $50,000 would be returned to the tenant as follows: $25,000 upon completion of 24 months, provided that for 20 of the 24 months the rent payments were timely. Thereafter, on Dec. 20, 2004 a check in the sum of $25,000 payable to the tenant was drawn on the landlord's account. The remarks section of the check indicated that the purpose of the check was for the return of the construction deposit. On Jan. 19, 2005, the tenant informed the landlord that she was terminating the lease because of a material breach of the lease for failure to return the construction deposit. Thereafter, the tenant commenced an action against the landlord for breach of contract for failure to return the construction deposit on time.
The landlord moved for summary judgment. The bankruptcy court denied summary judgment on the issue of breach of contract because the landlord was in technical violation of the lease for its failure to return the construction deposit in a timely fashion under the terms of the lease. However, the landlord was granted summary judgment on its counterclaim for failure to pay rent. The court held that because the breach was not a material breach, it did not interfere with the primary purpose of the lease, which was to lease commercial space. The court also awarded attorneys' fees to the landlord and interest because the lease between the parties was not justifiably terminated.
Landlord Granted Summary Judgment in 'Technical' Breach Case
Where a tenant terminates a lease on a technical breach, the landlord may be granted summary judgment on its claim for failure to pay rent and also may be awarded attorneys' fees and interest, as long as the breach is not material. Spence v. 33 Halsted Street Associates, Bankruptcy Case No. 05-57552, Chapter 13, Adversary No. 06-2015, U.S. Bankruptcy Court for the District of New Jersey, June 6, 2007.
On Nov. 1, 2002, the landlord and tenant entered into a commercial lease for a five-year period. Under the terms of the lease, the tenant was required to pay $50,000 toward construction costs. The lease further provided that the $50,000 would be returned to the tenant as follows: $25,000 upon completion of 24 months, provided that for 20 of the 24 months the rent payments were timely. Thereafter, on Dec. 20, 2004 a check in the sum of $25,000 payable to the tenant was drawn on the landlord's account. The remarks section of the check indicated that the purpose of the check was for the return of the construction deposit. On Jan. 19, 2005, the tenant informed the landlord that she was terminating the lease because of a material breach of the lease for failure to return the construction deposit. Thereafter, the tenant commenced an action against the landlord for breach of contract for failure to return the construction deposit on time.
The landlord moved for summary judgment. The bankruptcy court denied summary judgment on the issue of breach of contract because the landlord was in technical violation of the lease for its failure to return the construction deposit in a timely fashion under the terms of the lease. However, the landlord was granted summary judgment on its counterclaim for failure to pay rent. The court held that because the breach was not a material breach, it did not interfere with the primary purpose of the lease, which was to lease commercial space. The court also awarded attorneys' fees to the landlord and interest because the lease between the parties was not justifiably terminated.
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