Grill, Schieber and Honig Secure the Dismissal of Tenant’s Fraudulent Inducement Claim

August 24, 2018 | Real Estate, Zoning & Land Use | Commercial Litigation

A commercial tenant commenced an action against a landlord asserting, in the main, that the landlord, through its broker, misrepresented the square footage of the demised premises and fraudulently induced tenant to enter into the lease based upon the representation that the useable square footage of the demised premises was much greater than it ultimately turned out to be.  As a result, because the rent was allegedly calculated based upon square footage, tenant alleged that it had been paying too much rent and should be awarded a refund based upon the true square footage of the demised premises.  Landlord moved to dismiss the complaint, asserting that the express terms of the lease served as a complete bar to tenant’s claims.  In opposition, tenant asserted that, because the lease only purportedly contained a general merger clause, it should not be precluded from prosecuting a fraudulent inducement claim, especially at this preliminary stage of the litigation and on a pre-answer motion to dismiss.

The Court granted the landlord’s motion to dismiss the complaint in its entirety based upon the express language contained in the lease, holding that:

  1. the lease is completely silent regarding the square footage of the demised premises and makes absolutely no representations with respect to the square footage of the  demised premises;
  2. the lease contains a disclaimer whereby tenant represents and concedes that “no oral statements or representations or prior written matter in respect thereof not contained in this Lease shall have any force and effect”;
  3. the lease contains a specific representation by tenant that it is leasing the  demised premises “… after a full and complete examination thereof and Tenant is accepting same “as is” in their condition as of the date of this Lease without any representation or warranty (express or implied) by Landlord or its agents and without recourse to Landlord or its agents as to the condition, title, usability, zoning…”; and
  4. tenant is precluded from arguing that it relied upon misrepresentations of fact if such facts would have been discovered by the exercise of ordinary due diligence prior to executing the lease – in the lease, tenant specifically represents that it only executed the lease after a full and complete examination of the demised premises.

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