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BENDERSON-WAINBERG v. ATLANTIC TOYS

September 17, 2002

BENDERSON-WAINBERG, L.P., PLAINTIFF,
V.
ATLANTIC TOYS, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Eduardo C. Robreno, United States District Judge.

  MEMORANDUM

I. INTRODUCTION

In this breach of contract action, plaintiff, Benderson-Wainberg, L.P. ("Benderson"), the landlord of a commercial property located at Wrangleboro Consumer Square in Hamilton, New Jersey, seeks damages resulting from the failure of defendant Atlantic Toys, Inc. ("Atlantic Toys"), the tenant at the leased property, to make rental payments under a lease agreement, and from Atlantic Toys' subsequent abandonment of the leased property. Defendants counterclaimed for alleged breaches of certain oral promises concerning the lease agreement. The court bifurcated for trial the issues of liability and damages.

After a bench trial, and pursuant to Federal Rule of Civil Procedure 52(c), the court entered partial judgment on the issue of liability only in favor of Benderson on Benderson's complaint and Atlantic Toys' counterclaim and against Atlantic Toys on Benderson's complaint and defendants' counterclaim. Thereafter, the court held a second bench trial solely on the issue of damages. What follows constitutes the court's findings of fact and conclusions of law as to damages. See Fed.R.Civ.P. 52(a).

Benderson contends that it is entitled to damages in the amount of $453,991.92, a figure which includes "past damages" in the amount of $216,876.58 and projected "future damages" in the amount of $220,280.54, plus $16,800 in attorney's fees.*fn1 As to past damages, Atlantic Toys contests the amount of liquidated damages, late fees, and charge for final inspection and repair that Benderson claims is owed. Atlantic Toys has also advanced its own future damage calculations, pointing out that the leased premises were relet by Benderson to a new tenant, who, had it stayed for the full term of five years, and exercised one of its two five-year options, would make Benderson $48,319.80 better off under the new lease than under the Atlantic Toys lease.*fn2

Above and beyond the claimed amount of total damages, the parties clash over whether the lease agreement's plain language, which refers to "[a]ll costs charged to or incurred by [Benderson] in the collection of any amounts owed," Pl's Ex. A, ¶ 48 [hereinafter "Lease"], entitles Benderson to claim attorney's fees in the amount of $16,800.

For the reasons stated below, the court concludes that Atlantic Toys owes Benderson a total of $414,568.48 as follows. For the time after Atlantic Toys vacated the premises, and before the new tenant took possession, Atlantic Toys must pay Benderson $79,448.20 in unpaid rent, $77,844.40 in liquidated damages, $9,612.46 in unpaid common area maintenance fees, $559.35 for utilities and insurance, and $12,812.20 in unpaid taxes, and $21,632.67 in late fees that accrued on these items in accordance with the terms of the lease. Moreover, based on a comparative valuation of Atlantic Toys' lease and that of the replacement tenant, the court finds that Benderson is entitled to $220,280.54, an amount that represents the net loss of future rent reduced to present value.

Benderson is not entitled to collect $1,250 as a final inspection fee, because this fee was not set out under the terms of its lease. Moreover, although Benderson is entitled to collect from Atlantic Toys $77,844 in liquidated damages, Benderson may not collect late fees on top of and in addition to this amount, nor is Benderson entitled to $16,800 in attorney's fees. The court also finds that Atlantic Toys is entitled to a credit of $5,621.34, the amount of its security deposit, against all amounts owed to Benderson.

II. BACKGROUND

On or about September 23, 1997, Benderson and Atlantic Toys entered into a ten year lease agreement ("lease") whereby Atlantic Toys agreed to lease store space located at Wrangleboro Consumer Square, a shopping center in Hamilton, New Jersey ("premises"). Benderson is the owner and operator of numerous shopping centers throughout the country. Atlantic Toys owns and operates several toy stores in the Philadelphia and South Jersey area. Defendants James R. Levy and Barry Shefsky are the principals of Atlantic Toys and guarantors under the lease. Levy holds a bachelor's degree in accounting from Villanova University.

Under the lease, which term commenced November 5, 1997 and which was to be governed by New Jersey law, Atlantic Toys agreed to make a security deposit, and to pay monthly rent, as well as to pay a pro rata share of local taxes, common area maintenance (CAM), common utilities and insurance. Any rent or other charge that remained unpaid more than ten days after it became due was subject to a flat late charge of two percent, accruing monthly on the balance of the unpaid bill. The lease also contained an acceleration clause, which provided that, should Atlantic Toys default on required payments and fail to cure the default after Benderson gave notice of it, the entire balance of the unpaid lease obligations for the full term of the lease would become immediately due and payable.

In the event that Atlantic Toys vacated the premises before the end of the lease term, the lease entitled Benderson to liquidated damages in an amount equal to the minimum monthly rent for every month that the premises remained vacant. These liquidated damages were to be paid over and above all rent and other damages that Atlantic Toys already owed as a result of any breach of the lease. Moreover, Atlantic Toys agreed to pay "[a]ll costs charged to or incurred by [Benderson] in the collection of any amounts owed pursuant to [the] lease." Lease ¶ 48.

Beginning on or around December, 2000, Atlantic Toys failed to make the required payments under the lease as they became due. On or about January 5, 2001, Benderson notified Atlantic Toys that it was in default. Atlantic Toys failed to cure the default, and since December, 2000 has paid no rents or required charges. On or about March 11, 2001, Atlantic Toys vacated the premises.

The premises remained vacant for a year until a new commercial tenant, Dots, took possession on April 17, 2002. The Dots lease runs for five years, plus two five-year options to be exercised by Dots. Moreover, Dots has a right to terminate the lease after three years if sales at the premises fail to exceed $900,000 per year.

II. DISCUSSION

A. Applicable Law

The parties agree that under the lease the calculation of damages is to be made under New Jersey law. Under New Jersey law, a landlord seeking to recover damages for a tenant's breach of a lease must "establish the existence and continuance in effect of the contract of lease . . ., a breach of conditions, and the resultant damage flowing from such breach." Clark v. Byrne, 187 A. 165, 167 (N.J. 1936). Damages must be proved by a preponderance of the evidence, Caputo v. United States, 157 F. Supp. 568, 569 (D.N.J. 1957). The calculation of damages must be reasonably certain. See Lane v. Oil Delivery, Inc., 524 A.2d 405, 409 (N.J. Super. Ct. App. Div. 1987) (noting that plaintiff must prove damages "with such certainty as the nature of the case may permit, laying a foundation ...


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