Barclays Bank P.C. v. 865 Cent. Ave. Assocs. Ltd.
| Decision Date | 23 June 1998 |
| Docket Number | No. 96-5747 (JAG).,96-5747 (JAG). |
| Parties | BARCLAYS BANK P.C., NEW YORK BRANCH, Plaintiff, v. 865 CENTENNIAL AVENUE ASSOCIATES LIMITED PARTNERSHIP, a New Jersey limited partnership and Mazda Motor of America, Inc., a California corporation, Defendants. MAZDA MOTOR OF AMERICA, INC., Counterclaimant, v. BARCLAYS BANK P.C., NEW YORK BRANCH, Counterclaim-Defendant. |
| Court | U.S. District Court — District of New Jersey |
A. Dennis Terrell, Shanley & Fisher, P.C., Morristown, NJ, for Barclays Bank PLC, New York Branch.
Paul H. Schafhauser, Berger & Bornstein, Morristown, NJ, for 865 Centennial Ave. Associates Ltd. Partnership.
Peter Michael Burke, Cooper, Rose & English, Summit, NJ, for Mazda Motor of America, Inc.
This matter comes before the Court on the motion for partial summary judgment of Cooper, Rose & English, LLP, counsel for defendant/counterclaimant Mazda Motor of America, Inc. ("Mazda"). The other motion before the Court is the cross-motion for summary judgment of Berger & Bornstein, P.A., counsel for defendant/cross-claimant 865 Centennial Avenue Associates Limited Partnership ("865 Centennial").
The following facts are undisputed. 865 Centennial is the owner or former owner of a certain industrial building and premises located at 865 Centennial Avenue, Piscataway, New Jersey (the "Site"). The Site consists of a 49,450 square foot industrial building on a lot of approximately 10.006 acres. On August 15, 1988, 865 Centennial as landlord and Mazda as tenant entered into a written lease (the "Lease"). The lease agreement provided that Mazda would lease the industrial building and 5.00 acres of the 10.006 acre parcel (the "Leased Premises") for ten years until October 31, 1998. The Lease called for monthly rent payments of $45,833.33 and additional rent payments representing 100 percent of the taxes on improvements and 50 percent of the property taxes.
Plaintiff Barclays Bank P.C., New York Branch ("Barclays") is the mortgagee of the Leased Premises. In August 1989, Barclays and 865 Centennial entered into a financing arrangement pursuant to which 865 Centennial assigned all rights and interest in the Lease to Barclays (the "Assignment"). On February 17, 1994, Barclays declared 865 Centennial in default of its obligations under the financing. Consequently, Barclays informed Mazda of 865 Centennial's default and demanded, pursuant to the Assignment, that Mazda pay all future rents directly to Barclays. Shortly thereafter, Barclays commenced a foreclosure action against 865 Centennial which resulted in a final judgment of foreclosure which the Superior Court entered on January 16, 1996. In December 1996, the Superior Court appointed Barclays mortgagee-in-possession of the Leased Premises.
On June 20, 1995, the New Jersey Commissioner of Transportation filed a Declaration of Taking seeking 24.6 percent of the Leased Premises. Section 12(b) of the Lease provides that:
If twenty (20%) percent or more of the Land or Building [is] involved in the taking, then, as a result of any such event, Tenant may elect, at its option, to terminate the Lease by giving notice to Landlord within sixty (60) days after the date of vesting of title as a result of the taking.
On August 11, 1995, Mazda sent a letter to Barclays and 865 Centennial1 which stated in relevant part:
This letter is intended to provide the Landlord with notice of Mazda's intent to terminate the Lease pursuant to its rights under Section 12(b) of the Lease. At this point in time, Mazda is actively pursuing other potential sites and it is Mazda's current projection that it will be vacating the Premises sometime during the first quarter of 1996. However, we will of course keep you advised of our plans as they develop and anticipate being able to provide the landlord with no less than thirty (30) days notice of the actual date that Mazda will vacate the Premises.
.2
On August 16, 1995, Mr. Berger, the principal of 865 Centennial, forwarded Mazda's letter to George Ritter, 865 Centennial's land planner, adding:
Enclosed please find a letter from Mazda terminating their lease, which they have a right to do if 20% of the land area is taken.
(Burke Aff., Ex. C).
On September 22, 1995, Mr. Berger advised Mazda that its attempted termination was invalid, or alternatively that if Mazda maintained that its termination was valid, it would be a holdover tenant by virtue of its continued possession of the Leased Premises. The letter stated in relevant part:
Pursuant to the terms of the Lease, if your right to terminate arose as a result of the condemnation proceedings ... Mazda must make the election to terminate the Lease, in which event the Lease is over as of the date of the taking and Mazda must move out.... Accordingly, as Mazda has not vacated the premises after its proported [sic] termination of the Lease on August 11, 1995, we hereby declare that Mazda has waived its right of termination as a result of its actions in remaining in possession.
Alternatively, if Mazda persists in maintaining the validity of its termination, which by the terms of the Lease was effective as of the date of the taking, your company would be a holdover tenant at the property. Accordingly, ... Landlord hereby elects to terminate your tenancy and hereby demands possession of the subject premises by the end of the day on October 31, 1995....
(Berger Cert., Ex. C).3
On September 25, 1995, Sandra Marshall, Mazda's in-house counsel, wrote to counsel for Barclays advising that Mr. Berger's position was without merit and unsupported by the language of the Lease. On October 11 1995, Ms. Marshall advised Mr. Berger of the same.
In December 1995, Mazda and Barclays discussed the possibility of Mazda not relocating the training center portion of the Leased Premises.4 On December 20, 1995, Mazda confirmed to Barclays that "it is mutually understood that Mazda will continue to utilize the approximately 12,000 square foot Service Training portion" of the Site.5 (Schafhauser Cert., Ex. D). In this letter Mazda set forth its terms for a proposed new lease. Mazda would lease 12,000 square feet in the industrial building for an initial term of five years. On January 3, 1996, before Barclays replied to Mazda's proposed terms, Mazda notified Barclays that it was no longer interested in having the training center remain on the Site.
On January 16, 1996, Mazda informed Barclays and 865 Centennial that it would vacate its administrative offices on or about January 19, 1996 and would vacate the remaining areas by late March or April 1996. Mazda vacated the administrative office portion of the Leased Premises on January 19, 1996. On March 14, 1996, Mazda notified Barclays and 865 Centennial that it would completely vacate the Leased Premises by April 15, 1996 which it did.6 Mazda has not made any rent payments as of February 1, 1996.
In 1992, Mazda constructed an additional thirty-six (36) space parking lot on the Leased Premises, costing Mazda $130,000. When Mazda constructed the lot, it had 76 months remaining on its Lease over which Mazda intended to use the lot and amortize its cost. However, the lot was completely destroyed by the State's taking in June 1995. Mazda seeks reimbursement for the unamortized cost of constructing the parking lot. The parties agree that the unamortized expense for construction of the parking lot is $71,000.
Barclays commenced the instant action as the assignee of the Lease to collect rent and tax monies allegedly due for the balance of the Lease term. Barclays contends that Mazda's August 11, 1995 letter does not constitute notice of termination of the Lease. In the alternative, Barclays argues that even if the notice was proper, Mazda waived its rights to terminate the Lease by remaining in possession of the Leased Premises until April 1996.
865 Centennial filed a cross-claim against Mazda contending that it has a continuing interest in the Leased Premises and essentially asserting the same claims as Barclays against Mazda. Mazda filed a counterclaim against Barclays and a cross-claim against 865 Centennial seeking (1) a pro rata rent abatement from the date of taking for the portion of the Leased Premises affected by the taking; and (2) reimbursement of the unamortized cost of constructing the parking lot.
Pursuant to a settlement agreement, in December, 1997, Barclays assigned to 865 Centennial all of its "right, title and interest" in the present action against Mazda. (Burke Aff., Ex. BB).
Mazda has moved for partial summary judgment seeking (1) dismissal of the complaint and 865 Centennial's cross-claim; and (2) reimbursement for the unamortized cost of constructing the parking lot.7 865 Centennial filed a cross-motion for summary judgment seeking an order (1) declaring that the termination of the Lease was invalid and is of no force and effect; (2) dismissing Mazda's counterclaim and cross-claim for a pro rata rent abatement and for reimbursement for the unamortized cost of the parking lot; and (3) dismissing Barclays as a party.
Fed.R.Civ.P. 56(c) provides for summary judgment when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir.1996). Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103, 1109 (3d Cir.1985). The party opposing the motion for summary...
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