Shopping Center Tenant Not Liable for Pre-Assignment Environmental Contamination

What Happened: In 2007, Renaissance signed a lease assignment and took over as tenant of property in a shopping center. When the landlord sought to refinance the property two years later, it discovered that the below-ground space contained excessive amounts of Perchloroethylene (PERC), courtesy of the dry cleaner that had leased the space decades earlier. The lower court ruled that Renaissance had to reimburse the landlord for the $180,000 it had already spent to clean up the contamination and finish the remediation work out of its own pocket.

Ruling: The New Jersey appeals court agreed that Renaissance was on the hook for remediation costs but only for the environmental damage caused after it signed the assignment in 2007.

Reasoning: The key to the case was the wording of the assignment agreement providing that Renaissance:

assume[s] all of the obligations of the tenant under the Lease which accrued from and after the date of the Assignment, subject to the terms and conditions of this Agreement. [emphasis added]

The lower court judge agreed that the language “clearly and unambiguously” limited Renaissance to liabilities accrued after the assignment date but barred the argument on the basis of a technicality. That was an error, the appeals court concluded, and the case had to go back down for a determination on how much of the PERC contamination occurred after the date of assignment.

• Port-Man-GB Assocs. v. Renaissance at Schanck Rd., 2022 N.J. Super. Unpub. LEXIS 388