Judge Scott Fairgrieve
ATN Fulton sued tenant Deep Dale Grocery (DDG) in this commercial holdover action contending it properly terminated its tenancy. DDG argued it was not a month to month tenant, but held a valid lease it entered into with prior owner Malik for a 10-year term with two, five-year options to renew. ATN attacked the validity of the subject lease claiming paragraph 14, stating owner had no right to terminate the lease for any reason, was unconscionable, and part of a fraudulent scheme between Malik and his brother, Galafano, DDG’s owner, to defraud ATN. The $2.4 million contract of sale between Malik and Rahman, ATN’s principal, did not require Malik to provide copies of any leases of commercial tenants, and ATN purchased the property "as is," subject to the tenancies. The court stated evidence showed ATN’s principals knew of the tenants at the premises, and never inquired with DDG of its lease, finding ATN failed to exercise due diligence by not obtaining DDG’s lease and taking the property "as is." Thus, ATN was estopped from trying to void the DDG lease. Yet, the court found paragraph 14 of DDG’s lease unconscionable and unenforceable as it appeared contrived to provide an unfair advantage for DDG, thus voided.
