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Newark Beth Israel Medical Center v. Bala Ganapati

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 13, 2012

NEWARK BETH ISRAEL MEDICAL CENTER, PLAINTIFF-RESPONDENT,
v.
BALA GANAPATI, INC., DEFENDANT-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. LT-2174-11.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 24, 2012

Before Judges Messano and Espinosa.

Defendant Bala Ganapati, Inc. appeals from the judgment of possession entered in favor of plaintiff Newark Beth Israel Medical Center following trial. For the reasons explained below, we dismiss the appeal.

Defendant leased space in the lobby of plaintiff's hospital and operated Bergen Pharmacy pursuant to a written lease between the parties executed on April 13, 2004. Under the lease terms, defendant had the option to renew the initial five-year term upon 180 days' written notice to plaintiff. Defendant exercised the option on April 15, 2009.

The lease also provided that if defendant exercised the renewal option, plaintiff had the right to terminate the lease "at any time after the expiration of the [i]nitial [t]erm," upon "at least 365 days' prior written notice." Within thirty days of providing such notice, plaintiff was obligated to pay defendant "the then unamortized costs" associated with improvements plaintiff made at the start of the lease on defendant's behalf, and for which defendant had tendered payment (the Landlord's Work).

On January 5, 2010, plaintiff notified defendant that it was terminating the lease effective January 6, 2011. On January 19, 2010, plaintiff forwarded a check to defendant's attorney representing the unamortized balance due for the Landlord's Work, and requesting that the check not be released to defendant "unless your client is in agreement that the lease has been terminated and [it] will vacate in accordance with our January 5, 2010 letter." Although in a letter dated February 16, defendant disputed the amount of the check and claimed more money was due, defense counsel advised "[o]ur client will comply with the terms of the lease."*fn1

On January 6, 2011, when defendant had not vacated the premises, plaintiff filed a complaint for eviction.*fn2 Meanwhile, in the interim, on December 28, 2010, defendant and another corporation, Siddhidhata, Inc. (Siddhidhata), filed a complaint in the Law Division against plaintiff, the chairman of its board of trustees, and its vice-president of operations. Defendant sought to remove the landlord-tenant case and consolidate it with the Law Division case. See R. 6:4-1(a) and (g). The trial judge heard the motion and denied it.

The eviction complaint proceeded to trial on April 19 and plaintiff adduced, through the testimony of Leroy Boone, its assistant vice-president of support services, much of what we set forth above. Defendant's president, Rasik M. Nagrecha, testified.*fn3 When plaintiff objected to Nagrecha's description of the services Bergen Pharmacy provided, the judge asked for a proffer. Defense counsel said the evidence was relevant to establish the "equitable defense of the good will that might have been established in the course of the tenancy between the pharmacy . . . [and] the community of South Newark." The judge overruled the objection, essentially deciding to admit the testimony conditionally so that the record was complete.

Nagrecha then testified about the pharmacy's operation that included servicing "sick and elderly patients" and "charity care patients." Nagrecha further testified regarding the allegations contained in the Law Division complaint.

Nagrecha was also the owner of Siddhidhata. In 2007, that company successfully bid on land across the street from plaintiff's hospital, which Nagrecha intended to possibly develop as an alternative location for his pharmacy. Nagrecha alleged that plaintiff's attitude changed after the sale. He was forced to remove a Bergen Pharmacy sign and plaintiff otherwise interfered with the operation of his business. Nagrecha claimed that plaintiff's representative told him directly that "[he] shouldn't have bought the property[,] and . . . threatened . . . that [plaintiff] would take away the property in eminent domain" and stop Nagrecha from building a pharmacy at the location.*fn4

Nagrecha applied for a variance, which was approved by the municipal planning board. Plaintiff filed a complaint in lieu of prerogative writs challenging the approval. Nagrecha attempted to amend his application while the suit was pending, which plaintiff opposed, and Nagrecha ultimately filed a third application with the planning board. According to Nagrecha, it was not until November 2010 that he was able to proceed with development of the property.

After Nagrecha completed his testimony, defendant offered to call a witness to "provide testimony as to the uniqueness of the pharmacy." Plaintiff objected "on relevance grounds." The judge ultimately sustained the objection, reasoning "the consequence of the eviction is really not . . . material. What is material in this case is whether the lease is properly terminated, not the consequence of it."

In summation, defense counsel argued that defendant was "proactively developing the property across the street [from the hospital] with the intention of vacating . . . as soon as [it] can." Defendant sought to remain in possession as a "holdover" tenant, subject to paragraph eighteen of the lease.*fn5

The judge concluded plaintiff "compl[ied] with the lease" and had "the right to terminate . . . without cause." The judge characterized "[t]he defense in this action . . . [as] a claim that there is a lack of good faith and fair dealing by the plaintiff . . . by interfering with the defendant's right to relocate." He concluded that "where a party has an absolute right . . . without any cause to terminate a tenancy . . . [lack of] good faith and fair dealing on the allegation of retaliation are not applicable." He entered the judgment for possession and this appeal followed.

Defendant contends the trial judge erred by concluding that a tenant "forfeits its right to assert equitable defenses in an eviction proceeding if a party has an absolute right to terminate a tenancy without cause." Plaintiff argues that the appeal should be dismissed because the judgment of possession was "not . . . appealable except on the ground of lack of jurisdiction," see N.J.S.A. 2A:18-59, and it is undisputed that the court properly exercised jurisdiction over the dispute. Alternatively, plaintiff argues that equitable defenses, or claims of breach of the implied covenant of good faith and fair dealing in the lease, while capable of being asserted in a landlord-tenant case, are inapplicable under the facts presented here. In particular, plaintiff argues that defendant cannot assert such a defense "where [it] has no right to continue in possession."

"The grounds for appeal of a summary dispossess action are quite limited. In fact, such actions 'shall not be appealable except on the ground of lack of jurisdiction.' N.J.S.A. 2A:18-59. Jurisdiction includes subject matter jurisdiction . . . ."

Vill. Apartments of Cherry Hill, N.J. v. Novack, 383 N.J. Super. 574, 577 (App. Div. 2006) (citing Marini v. Ireland, 56 N.J. 130, 137 (1970); Hous. Auth. of E. Orange v. Mishoe, 201 N.J. Super. 352, 358 (App. Div. 1985)).

"[T]he effect of Marini, at least for purposes of the right of appeal by tenants, was substantially to eliminate th[e] distinction between meritorious errors and jurisdictional defects." Mishoe, supra, 201 N.J. Super. at 358. But that is so because defenses routinely asserted by tenants challenge the landlord's proofs upon which jurisdiction of the court is vested in the first instance. See Mishoe, 201 N.J. Super. at 358 (recognizing that a "determination in a dispossess proceeding that the proofs fail to evidence a default under the rental agreement provides an appealable issue for the tenant") (citing Marini, supra, 56 N.J. at 140)).

Here, defendant did not contest the jurisdiction of the Special Civil Part to grant a judgment of possession pursuant to N.J.S.A. 2A:18-53(a), which provides for the removal of a tenant "[w]here such person holds over and continues in possession of . . . the demised premises after the expiration of his term." Indeed at trial, defendant affirmed that plaintiff had fully complied with the notice requirements under the lease.

As a result, defendant's appeal is not cognizable pursuant to N.J.S.A. 2A:18-59. We therefore dismiss the appeal.


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