Reste Realty Corp. v. Cooper
251 A.2d 268 (1969)

  • Cooper had a 5-year lease for the basement and ground floor of an office building. After one year, she signed a new 5-year lease, increasing the square footage she rented.
  • There were problems with the way the property was graded and Cooper’s office was flooded every time it rained.
    • For three years, Cooper repeatedly sent complaints to the landlord, and they promised to fix the problem, but very little was done.
  • After a particularly bad flood, Cooper sent notice of vacation and abandoned the premises 9 days later.
  • One month later, Reste bought the building and accepted assignment of the leases. Reste sued Cooper to recover rent for the rest of Cooper’s 5-year lease.
  • The Trial Court found for Cooper, Reste appealed.
    • The Trial Court found that Cooper had adequately established a defense of constructive eviction.
      • Constructive eviction means that the premises didn’t meet minimum livability standards so they should not be forced to continue to pay rent.
      • Note that when you elect to exercise constructive eviction, then you tear up the lease, but you have to move out (which Cooper did). If you don’t, then you’ll be a trespasser.
  • The Appellate Court reversed. Cooper appealed.
    • The Appellate Court found that Cooper did not prove a wrongful act or omission sufficient to constitute a constructive eviction.
      • Aka a breach of the covenant of quiet enjoyment.
    • The Court found that even if an act or omission were found, Cooper waived her rights by failing to leave the premises within a reasonable time. If the flooding really bothered her she shouldn’t have stayed as long as she did before taking action.
  • The New Jersey Supreme Court reversed and found for Cooper.
    • Reste unsuccessfully argued that the lease pointed out that the premises were to be accepted as-is. But the New Jersey Supreme Court found that it wasn’t obvious that the building would flood, so Cooper hadn’t implicitly agreed to lease a flooded office.
      • The landlord had a duty to disclose the flooding problem to Cooper before she signed the lease, which they didn’t do.
    • Reste unsuccessfully argued that since Cooper signed a new lease after being flooded for a year, she assumed the risk of flood damage. However, the Court found that the landlord had made repeated promises to fix the problem. Cooper was relying on that promise when she signed the new lease.
    • The Court found that the repeated flooding was enough to sustain Cooper’s constructive eviction.
      • Reste unsuccessfully argued that only permanent problems justify constructive eviction, and the flooding was only occasional. However, the Court found that permanent does not mean unending, and that the continued periodic flooding met the standard.
    • Reste unsuccessfully argued that the flooding problem was a promise and not a condition of the lease (remember Contract law?), and Cooper was not excused from performance by Reste’s failure. She should have paid rent and then sued Reste for any water damage.
    • Reste unsuccessfully argued that Cooper lived with the water damage for 3 years and that was an implicit assumption of the situation. But the Court found that Cooper was free to choose constructive eviction at any time during the lease.
  • In general, a constructive eviction is only allowed if there is a breach of the covenant of quiet enjoyment. That breach can occur either because of something that the landlord did, or something they neglected to do. In this case, it was an omission, not something that Reste actively did.
    • A covenant of quiet enjoyment would be breached only when the landlord’s conduct had the effect of depriving the lessee of the beneficial use of the demised premises, whether by positive acts of interference or by withholding something essential to full enjoyment and within the terms of the lease.
      • That could include things that expressly written into the lease, things that are imposed by Statute.
  • This case was decided before the implied warrantee of habitability doctrine.
    • See Hilder v. St. Peter (478 A.2d 202 (1984)).