Brunswick Hills Racquet Club, Inc., v. Route

18 SHOPPING CENTER ASSOCIATES 182 N.J. 210 (2005)

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Nature of the Case

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Facts

P owns and operates a tennis club on property that it leases D. In December 1976, the original landlords with the original tenants entered into a lease agreement. P and D have assumed those positions. The agreement was for an initial twenty-five-year term and permitted P to construct and operate an indoor tennis center. P built a tennis facility, investing approximately one million dollars in capital improvements. The lease provided for an automatic twenty-five-year extension unless P 'communicated not less than six (6) months prior written notice to D of its intention to terminate this Lease. . . .' The agreement also provided P with the option of purchasing the leased property or entering into a ninety-nine-year lease, both on very favorable financial terms. In order to exercise the option, the contract required P both to notify D of its intention and to pay $150,000 no later than September 30, 2001, six months before the expiration of the original lease term. Otherwise, the option would be lost. If P did not exercise the option or terminate the lease by that date, the rent would increase to more than triple what P had been paying during the original lease term. P repeatedly expressed in writing its intent to exercise the option. D remained silent during the nineteen-months leading up to the option deadline. P informed D but never paid the $150,000. P wrote numerous letters and desired to talk with D regarding the issues, but D remained silent. D’s attorney merely parroted that the letters had been forwarded to D. On January 16, 2001, P's attorney wrote yet again to D's attorney, noting that he had not received the information sought and as he had in prior letters, P's attorney requested the opportunity 'to receive and review the ninety-nine-year lease as soon as possible.' D never replied to P's letter. After a long illness, P's attorney died. Seven months after P's attorney's final letter, and with little more than a month remaining before the option deadline of September 30, 2001, the law partner, forwarded a letter to D via certified mail. The attorney reiterated a schedule of the prior attempts. There was no response and the option deadline passed. Four months after the deadline the attorney wrote once again. D's attorney responded, and they discussed the need to draft a new lease. D then took the position that the option had not been exercised. D cited the nonpayment. D rejected P's tender of the $150,000 option price. P deposited that amount in escrow and filed suit to compel specific performance of the option and to obtain damages. The court found that the contract clearly required P to exercise the option and pay the $150,000 in a timely manner. The court ruled that D had no duty to inform P that it had not properly exercised the option and that D had not misrepresented any fact causing P harm. P appealed. The appellate division affirmed. P appealed.