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