April 8, 2010
34 LABEL STREET ASSOCIATES, PLAINTIFF-RESPONDENT,
R.C. SEARCH CO., INC. AND BUYER DEFENDER, INC., DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Essex County, Docket No. LT-10030-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 22, 2010
Before Judges Reisner and Chambers.
In this commercial tenancy case, defendants R.C. Search Co., Inc. (R.C.) and Buyer Defender, Inc. appeal from a May 4, 2009 order for possession in favor of the landlord, plaintiff 34 Label Street Associates. We affirm.
On March 9, 2009, plaintiff filed a verified complaint in the Special Civil Part alleging the following facts. Defendants rented commercial space from plaintiff under the terms of a written lease dated September 21, 1993. When the lease expired on December 31, 2006, by its terms defendants became month-to-month tenants. Plaintiff served a notice to quit on January 29, 2009, demanding possession as of March 2, 2009, but the tenants failed to move out. The complaint also alleged that defendants had not paid rent since October 2007 and owed $156,000 in unpaid rent. However, the complaint only sought possession based on a holdover tenancy and reserved plaintiff's right to pursue the back rent in the Law Division.
Defendants did not dispute that the lease had expired. However, they filed a motion to transfer the case to the Law Division. The motion was supported by a certification of Richard Cecere, the sole shareholder of both defendant corporations. Cecere attested that R.C. was a sub-tenant of Woodbridge Stereo, which in turn was an assignee of a 1986 lease held by Perdue Radio Company. Cecere contended that based on his review of the lease documents, he had been overcharged on the rent. He contended that the rent initially included the repayment of a loan, which was fully paid off in 1996; however, he contended that unknown to him, the landlord continued to include the loan repayment amount in the rent after 1996.
Cecere further contended that he had brought this situation to the attention of Howard Silver, the landlord's general partner, and that, although they had not agreed on the amount of the overcharges, "[b]ecause I am owed so much money by the plaintiff, my tenancy was not disrupted and it was agreed orally between Mr. Silver and me that we would negotiate a credit to be offset against future rents." Cecere further contended that he had "effectively prepaid rent for many years which the landlord has accepted."*fn1 Cecere did not provide any written agreement with Silver extending the lease. Nor did Cecere's certification specifically state that Silver had orally agreed to extend the lease.
Plaintiff opposed the motion to transfer the case. Plaintiff contended that the parties had a dispute over the amount of rent due, with defendants claiming a rent credit and plaintiff claiming $156,000 in back rent. However, plaintiff contended that it was not seeking to evict defendants for non-payment of rent, but rather sought to evict defendants as a commercial holdover tenant whose lease had expired. Under the written terms of the lease, once it expired, the landlord had the right to evict the tenant by serving a notice to quit, and the landlord had made timely service of the notice. Plaintiff's opposition also included copies of plaintiff's attorney's correspondence refuting the self-serving letters that defendants had attached to their motion papers. Briefly, plaintiff's position was that the parties had re-negotiated the rent at fair market rental value, in an amount having nothing to do with the earlier loan payments from the former tenant.*fn2
In a reply certification, Cecere alleged that on or around September 4, 2008, Silver had acknowledged to him that "(1) he owed me credits against rent (although that amount is disputed); and (2) that I could stay in possession of the premises until we worked out an agreed credit." Again, he did not provide any written agreement confirming these alleged conversations, and his contemporaneous correspondence to Silver did not refer to any agreement to extend the lease.
After hearing oral argument on May 4, 2009, Judge Fast placed an oral opinion on the record. He concluded that the issue of the dispute over the amounts of rent due, or credits due, was not properly before him, because the case involved "the very simple ground for eviction, N.J.S.A. 2A:18-53(a), month-to-month holdover tenancy, there is no real defense to it except deficient notice to quit, or failure to have service, or, perhaps . . . premature filing of the complaint." He concluded that none of those defenses applied to the case. Therefore, he entered judgment for possession. However, by order dated June 16, 2009, the judge stayed the eviction pending appeal, conditioned on defendants paying use and occupancy charges in lieu of rent.
Where a written lease expires, it is converted to a month-to-month tenancy, absent "any agreement to the contrary." N.J.S.A. 46:8-10. Thereafter, a holdover tenant of commercial space may be evicted on thirty days notice. N.J.S.A. 2A:18-53(a). Further, a lease of three years or more in duration must either be established by a writing or must be proven by clear and convincing evidence establishing, among other things, "the term of the lease." N.J.S.A. 25:1-12b.
On this appeal, defendants contend that they overpaid the rent and that Silver orally agreed to extend the lease and treat the overpayment as a rent credit.*fn3 Defendants thus contend that their lease was in effect extended until the credit was exhausted. However, those contentions are not supported by legally competent evidence. The spreadsheets, on which defendants base their argument, do not refer to any extension of the lease or any rent credits. Nor do Cecere's contemporaneous letters to Silver, self-serving as they are, refer to any agreement to extend the lease.
Although defendants' brief asserts a right to a forty-month tenancy extension, none of the materials provided to the trial court set forth the alleged agreed term of the oral lease. See N.J.S.A. 25:1-12b. Moreover, even under defendants' "rent credit equals tenancy extension" theory, there could be no agreed term because there was no agreement as to the amount of the alleged rent credit. Further, an alleged oral extension would be contrary to Article XXX, section 31.12 of the lease, which stated that if the tenant held over "such holding over shall not be deemed to create an extension of the Term, but . . . shall . . . create a month-to-month tenancy." It would also be contrary to section 31.08 of the lease, stating that any modification must be in writing.
We conclude that the trial court correctly denied defendants' application to transfer the case to the Law Division, because the case did not present a complex tenancy issue. See N.J.S.A. 2A:18-60. Rather, the case presented a straightforward commercial tenant holdover, with a collateral dispute over the amount of rent due. The latter dispute properly belonged in the Law Division. We affirm the trial court's order granting possession to the landlord.