December 6, 2007
CESAR S. ARREDONDO, PLAINTIFF-RESPONDENT,
NERYS PUJOLS, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. LT-1416-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued November 16, 2007
Before Judges Weissbard and Gilroy.
Defendant appeals from the March 28, 2006, decision*fn1 of the Law Division, Special Civil Part, Landlord-Tenant Division, that granted plaintiff judgment for possession. Defendant also appeals from the order of June 28, 2006, denying his motion for reconsideration. We reverse.
On November 16, 2001, William Doherty, as landlord, entered into a written lease agreement with Juan Gonzalez, as tenant, for the ground floor and part of the basement of commercial premises at 74 Bowers Street, in the City of Jersey City (City). The lease term was for fifteen years, ending November 30, 2016. Pursuant to the lease, Gonzalez operated a grocery store at the premises. On or about September 1, 2002, defendant purchased the business from Gonzalez. The sale included an assignment of the lease as approved by Doherty. At the time defendant commenced occupancy, the compressors for the store's refrigeration units were located in a detached garage on the property.
In April 2004, plaintiff acquired title to the property from Doherty, unaware of defendant's written lease. On November 24, 2004, plaintiff caused a notice to quit to be served on defendant, stating that the lease was terminated as of December 31, 2004, and demanding that defendant vacate the property on or before that date. The notice did not contain any reasons justifying the termination of the lease. After defendant failed to vacate the leased premises, plaintiff filed a complaint for possession. The action was subsequently dismissed in March 2005.
On November 5, 2005, plaintiff served defendant with a notice to cease for breach of the lease, contending that defendant had failed to: 1) provide insurance required by the lease; 2) "obtain the necessary permits in connection with the relocation of refrigeration [compressors] and an exhaust fan" in the basement of the building; and 3) obtain plaintiff's written approval before making the aforesaid "alterations" to the property. On November 27, 2005, plaintiff served defendant with a notice to quit and demand for possession based on defendant's failure to cure the three "defaults as set forth in the [n]notice to [c]ease." On January 6, 2006, plaintiff filed his complaint demanding judgment for possession.
The matter was tried on March 6, 2006, with the judge reserving decision. On March 28, 2006, the judge issued a written decision, entering judgment for possession:
The notice to quit alleged as grounds for eviction that defendant failed to provide insurance, failed to obtain necessary permits relating to relocation of refrigeration units and an exhaust fan, and made alterations to the property without the consent of the landlord - all contrary to the requirements of the lease.
1. THE REFRIGERATION UNITS/FAN:
I find the defendant's testimony to be credible, to wit[,] that he moved these units at the request of the landlord. However, that request by the landlord did not constitute the tenant's right to violate the law; as he acknowledged, he knew that the job needed a permit. Unfortunately, he left that up to the contractor whom he had hired, but apparently defendant did not follow up to be sure that the permit had issued. Although plaintiff apparently has not been cited for this violation, according to the testimony by Mr. Bruggemann, a permit was required, and the failure to have [obtained] the permit is a breach of paragraph 9 of the lease, justifying a judgment for possession.
2. ALTERATIONS WITHOUT CONSENT:
There was no testimony relating to alterations other than as covered above. Therefore, this allegation does not constitute a sufficient basis for a judgment of possession.
3. THE FAILURE TO HAVE PROVIDED INSURANCE TO COMPLY WITH THE REQUIREMENTS OF THE LEASE.
By the time that the trial had concluded, the insurance required had been provided. Therefore, although the lease had been technically breached, I find that the late compliance does not justify the eviction; the landlord has what he had lacked.
Based on the findings above, a judgment for possession has been entered, and plaintiff may either apply for a warrant of removal or allow defendant some additional time to obtain the required permit.
On April 12, 2006, defendant moved for a stay of the judgment, arguing that "the decision was incorrect, that it was based on an immaterial issue, and one that was not proven to be a default of the lease." Because the judge who tried the matter was not sitting that day, a second judge entered an order, staying the execution of the warrant for removal and directing the parties to appear before the original trial judge, after his return the following week.
On or about June 7, 2006, following discussions with the original trial judge, defendant filed a formal motion seeking reconsideration of the court's decision of March 28, 2006. R. 4:49-2. Because the original trial judge was no longer sitting on the bench, the motion was heard by the second judge. Although the judge considered the motion for reconsideration untimely, he addressed the motion on its merits in the interest of completeness of the record in the event of an appeal. The motion was denied, and a stay was entered pending appeal. A confirming order was entered on July 12, 2006.
On appeal, defendant argues:
THE TRIAL COURT ERRED WHEN IT GRANTED JUDGMENT OF POSSESSION TO THE [PLAINTIFF].
THE PLAINTIFF-LANDLORD DID NOT ACT IN GOOD FAITH BY DIRECTING THE WORK [AND] THEN SEEKING AN EVICTION FOR THAT WORK.
Reviewing courts "'do not disturb the factual findings and legal conclusions of the [motion] judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice . . . .'" Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), cert. denied, 40 N.J. 221 (1963)). However, "[a] [motion judge's] interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995).
We first address a procedural argument raised by plaintiff in opposition to the appeal. Plaintiff contends that the appeal is untimely because the notice of appeal was not filed within forty-five days of March 28, 2006, the date judgment for possession was entered. R. 2:4-1(a). Acknowledging that although the time to appeal may be tolled by the timely filing and service of a motion for reconsideration, R. 2:4-3(e), plaintiff asserts that defendant's motion for reconsideration was not timely filed. Plaintiff contends that defendant's formal motion for reconsideration was not filed until June 7, 2006, well beyond the twenty-day time constraint for the filing of a motion for reconsideration. R. 4:49-2. We disagree.
Defendant filed a motion on April 12, 2006. Although the motion was not captioned "a motion for reconsideration," and the primary thrust of the motion was for a stay pending appeal, defendant had asserted that the judgment was "incorrect, that it was based on an immaterial issue, and one that was not proven to be a default of the lease." Defendant challenged the trial judge's determination that the failure to obtain an electrical permit was a material breach of the lease that could not be cured, "justifying a judgment for possession." Because the motion of April 12, 2006, raised some of the same substantive arguments as raised in the formal motion for reconsideration, we determine that the former motion was in substantial compliance with the time restriction of R. 4:49-2. Corcoran v. St. Peter's Med. Ctr., 339 N.J. Super. 337 (App. Div. 2001); Nascimento v. King, 381 N.J. Super. 593, 601 (App. Div. 2005). The motion was filed within twenty days of the entry of judgment for possession, plaintiff was timely noticed of defendant's arguments challenging the judge's decision, and plaintiff suffered no prejudice by defendant's failure to caption the motion as one for reconsideration. Accordingly, we now turn to the merits of the appeal.
Because the judge only granted judgment for possession based on his determination that defendant had breached Paragraph No. 9 of the lease by failing to obtain an electrical permit from the City before relocating the compressors and installing the exhaust fan, we limit our discussion of the trial testimony to that issue.
Testifying at trial were plaintiff; defendant; Richard Bruggemann, an electrical inspector of the City of Jersey City; and Luis Cintrone, a friend of defendant. Plaintiff testified as follows. At the time plaintiff purchased the property, seven compressors, servicing the refrigeration units in the grocery store, were located in a garage that was not part of defendant's leasehold. The garage was simultaneously used by plaintiff and a third party. Although plaintiff denied instructing defendant to relocate the compressors from the garage to defendant's leased space in the basement of the main building, plaintiff stated that he had no objection to the relocation of the equipment. Plaintiff denied having received advance notice of defendant's intention to relocate the equipment, and had found out about the equipment's relocation at the time the work was being performed by defendant's contractor. Lastly, plaintiff acknowledged that he never received a summons from the City for any code violations relating to the work performed.
Defendant testified that when he purchased the store in 2002, the compressors were located in the garage. He denied voluntarily relocating the compressors to the basement because they "take up room," and only acquiesced to relocating the equipment after plaintiff had ordered him to do so about fifteen times and had locked the garage, denying defendant access to the compressors. Upon acquiescing to relocate the equipment, defendant engaged an independent contractor who relocated the compressors and installed the exhaust fan. It was defendant's belief that the contractor would obtain any and all necessary permits for the work. Finally, defendant testified that because he was relocating the equipment at the oral instructions of plaintiff, he had not obtained prior written approval from him before authorizing the contractor to commence the work.
Bruggemann testified that he made an inspection of the basement in January 2006, at the request of plaintiff. The inspection did not disclose any dangerous conditions relating to the compressors and the exhaust fan. Upon returning to his office, Bruggemann inspected his records and discovered that an electrical permit had not been taken out for the work, although one was required. If a summons was to have been issued for failing to obtain a permit before commencing work, the summons would generally have been issued to the property owner, not to the tenant or the contractor. Finally, in answering a question of whether the situation could have been remedied post-completion of the work, that is, whether "a person having performed such work can take out a permit to correct whatever deficiency in paperwork there has been," Bruggemann answered in the affirmative.
The last witness to testify was Cintrone, a friend of defendant for approximately three years. Cintrone testified that two years prior to trial, he had overheard plaintiff telling defendant through an interpreter, that defendant "had to change the motors to the basement," "[b]ecause the garage was not included in the lease contract of the bodega."
Following the trial court's written decision in the matter, defendant, either personally or through the contractor, made application to the City for the electrical permit on April 25, 2006. On May 11, 2006, the City approved the installation of the compressor units and the exhaust fan without the need of any additional electrical work.
Paragraph No. 9 of the November 16, 2001 lease provides in pertinent part that: "[t]he Tenant shall properly comply with all laws, ordinances, rules, regulations, requirements, and directives of all Governmental or Public Authorities and all of their subdivisions, applicable to and affecting the said premises, their use and occupancy . . . at the Tenant's own cost and expense." Although one could reasonably argue that defendant had breached that provision of the lease by failing to obtain an electrical permit prior to relocating the compressor units and installing the exhaust fan, we conclude under the present facts, that the breach was not material, thereby warranting defendant's forfeiture of his leasehold.
Plaintiff filed a summary disposition action to recover possession of commercial property, pursuant to N.J.S.A. 2A:18-53 that provides in pertinent part that a leasee may be removed from commercial rental premises "[w]here such person . . . shall commit any breach or violation of any of the covenants or agreements in the nature thereof contained in the lease for the premises where a right of re-entry is reserved in the lease for a violation of such covenants or agreements . . . ." N.J.S.A. 2A:18-53c. Before a judgment of possession may be entered in this action, the landlord must establish a breach of Paragraph No. 9 of the lease. Carteret Properties v. Variety Donuts, Inc., 49 N.J. 116, 125 (1967). The entry of a judgment for possession based on a breach of a lease provision is a forfeiture at law. "'A forfeiture is in the nature of a penalty for the doing or the failure to do a particular thing, e.g., using leased premises for a purpose prohibited by the lease, failing to pay rent, and the like.'" Lehigh Valley R.R. Co. v. Chapman, 35 N.J. 177, 188 (1961) (quoting Rankin v. Homestead Golf & Country Club, Inc., 135 N.J. Eq. 160, 165 (Ch. 1944)). Because the law does not favor forfeitures, a trial court is required to strictly review the provisions of a lease under which a landlord seeks to forfeit a tenant's leasehold, resolving all "ambiguous language against [the landlord]." Carteret Properties, supra, 49 N.J. at 127.
Here, it is undisputed that plaintiff reserved the right to declare a default for defendant's failure "in the performance of . . . conditions and covenants" contained in the lease, and upon default," terminate the lease and re-enter, possess and enjoy the said premises." However, because the law abhors a forfeiture, plaintiff must establish that the breach upon which he seeks possession is more than just a minor deviation from the lease terms. See Mandia v. Applegate, 310 N.J. Super. 435, 449 (App. Div. 1998). In Mandia, in affirming that part of a trial court's judgment, which had denied a landlord's demand for declaration that a tenant's leasehold interest be forfeited, id. at 442, we determined that the tenant's activities in displaying merchandise on that portion of a boardwalk outside the tenant's leasehold, "only constitutes a minor breach of [tenant's] lease obligations," not warranting a forfeiture of the leasehold. Id. at 449. In reaching our decision, we quoted Johnson v. City of Hackensack, 200 N.J. Super. 185, 190 (App. Div. 1985), "[w]here a forfeiture results from the failure to use property for the purpose specified in the deed, a minor deviation from that use will not effect the forfeiture as long as the specified use is substantially carried out." We conclude that the same principle is applicable here.
Defendant did not volunteer to relocate the compressors or install the exhaust fan in his leasehold portion of the basement. The work was undertaken on the direct orders of plaintiff. After acquiescing to plaintiff's demands, defendant arranged for an independent contractor to perform the work, believing that the contractor would obtain any and all necessary permits. It is not disputed that the work was performed in a good and workmanlike fashion, and that defendant was allowed to retroactively cure the City's code violation by obtaining the permit post-completion of the work. Moreover, plaintiff did not receive a summons or suffer any harm or damage as a result of defendant's failure to obtain the permit. Under these facts, we determine that defendant's failure to obtain an electrical permit before having the work performed was a minor deviation from the lease terms, not justifying a forfeiture of the leasehold.