Commercial Resource Group, LLC v. The J.M. Smucker Co.

The J.M. Smucker Co. (defendant) leased a commercial building in North Dakota from Commercial Resource Group, LLC (CRG) (plaintiff). After an initial period, the lease would automatically renew for one-year periods on January 1. However, the lease also gave Smucker the option to terminate the lease early if it provided notice to a listed address before the January 1 renewal date. Several years into the lease, CRG sent written notice to Smucker that “all future rent payments and lease correspondence” should be sent to a new address. Smucker then sent rent payments to the new address. Later, Smucker decided that it wanted to terminate the lease. On December 22, Smucker sent written notice of its intent to terminate the lease via FedEx, but Smucker sent it to CRG’s old address. On December 23 and 30, FedEx sent emails to Smucker that the notice was undeliverable at the listed address. On January 4, Smucker sent a second lease-termination notice to CRG’s correct address. CRG received this notice on January 5. The parties disagreed about whether this second notice was too late to terminate the lease, and the dispute ended up in federal district court. The district court found that: (1) time was not of the essence for the lease’s deadline to cancel the lease, (2) Smucker had substantially performed its obligation to notify CRG of its lease cancelation, and (3) CRG had not been prejudiced by the delay. Based on these findings, the district court ruled that Smucker had not materially breached the lease and had effectively canceled it. CRG appealed.