Unless the lease expressly provides otherwise, a landlord is at risk in a commercial context if the landlord fails to act in a reasonable manner to mitigate damages upon a tenant’s default. In a recent unpublished case, Cheesequake Realty, L.L.C. v. Finkelstein, et al ., Superior Court of New Jersey, Appellate Division, Docket No. A-1877-08T3, 2010 WL 2991000 (N.J. Super. A.D.) (July 28, 2010), the landlord failed to do this and paid the price. The facts of Cheesequake are, in pertinent part, as follows. The tenant vacated its leased premises approximately two years before its lease expired. There was a dispute between the landlord and the tenant as to whether the tenant had the right to vacate the leased premises. In any event, upon the tenant’s vacating of the leased premises, the landlord made no effort for the balance of the term of the lease to relet the premises. More specifically, a subtenant at a portion of the premises had received many phone calls from persons expressing interest in leasing the leased premises that the subtenant relayed to the landlord. However, the landlord informed the subtenant that the landlord “could not do anything” until the tenant’s lease expired, and instructed the subtenant “not to bother telling him about future inquiries.” The landlord also admitted at its deposition that it had not tried to get new tenants for the property until the tenant’s lease was up. The trial judge granted summary judgment in favor of the tenant (and the Appellate Division, in this case, affirmed) on the ground that the landlord had not presented any evidence that would permit a jury to find that the landlord made any effort to mitigate its damages.
The court held that “a landlord’s total failure of effort to mitigate damages by seeking another tenant warrants entry of judgment in favor of the tenant on a landlord’s claim for rent due after surrender of the property.”
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