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Garden State Nursing Home, Inc. v. North Grove Properties, LLC

Superior Court of New Jersey, Appellate Division

October 1, 2013

GARDEN STATE NURSING HOME, INC., Plaintiff-Respondent,
v.
NORTH GROVE PROPERTIES, LLC, Defendant-Appellant, and UNION CENTER NATIONAL BANK, Intervenor-Appellant.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued telephonically September 12, 2013

On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-33-11.

Peter R. Bray argued the cause for appellants (Gruen & Goldstein, attorneys for North Grove Properties, LLC and Bray and Bray, LLC, attorneys for Union Center National Bank; Samuel D. Bornstein and Mr. Bray, on the joint brief).

R. James Kravitz argued the cause for respondent (Fox Rothschild, LLP, attorneys; Jonathan D. Weiner, of counsel; Mr. Kravitz and Steven J. Link, on the brief).

Before Judges Parrillo, Harris, and Guadagno.

PER CURIAM

This dispute —— revolving around the ownership of an exemption to the certificate of need requirement under the Health Care Facilities Planning Act (the Planning Act), N.J.S.A. 26:2H-1 to -26, commonly referred to as bed rights —— is mainly between the landlord and tenant of property that has been used as a nursing home for more than forty years. After a bench trial, defendant North Grove Properties, LLC (North Grove) and intervenor Union Center National Bank (Union Center) appeal from an August 24, 2012 Chancery Division judgment that, among other things, declared plaintiff Garden State Nursing Home, Inc. (Garden State) "to be the owner of the 'Bed Rights.'" We affirm.

I.

Garden State is presently the tenant of North Grove, which owns real property on North Grove Street in East Orange. Since 1972, Garden State has operated a nursing home at the locale, presently known as New Grove Manor, [1] comprised of approximately 195 licensed beds. The property was previously a ramshackle hotel owned by Phillip and Naomi Kruvant (collectively, the Kruvants). On January 12, 1971, Garden State entered into a twenty-year lease with the Kruvants.[2] The principals involved in the negotiation of the lease are now deceased.

The lease describes the property as "the land, together with the buildings to be rehabilitated and improvements to be rehabilitated and erected thereon." For definitional purposes, the lease refers to the "Demised Premises" as including the foregoing, plus the "building service, furniture, furnishings, fixtures, and equipment to be installed therein by [the Kruvants] or any legal entity in which [the Kruvants are] a participant."

The Kruvants agreed to construct a 195-bed nursing home on the property, at their "own cost, risk and expense." The lease required the Kruvants to provide and install certain furniture, furnishings, fixtures, and equipment. Garden State was responsible for repair, maintenance, and replacement, as well as obligated to provide certain additional furniture, furnishings, fixtures, and equipment "necessary and/or proper for the operation of a nursing home with full qualification for [M]edicare and other governmental approval." All of the furniture, furnishings, fixtures, and equipment would become the property of the Kruvants at the end of the initial lease term or sooner, in the event of termination due to default.

The lease provided that Garden State "shall be organized and operated exclusively for the purposes of operating the Demised Premises and for no other purposes unrelated thereto." The lease further required Garden State to occupy and use the Demised Premises as a

propriety nursing home and/or . . . a health care or health related or extended care facility, senior citizens' home, home for adults or any institution caring for or catering to the sick, aged, infirm, disabled or to any other class of people unable fully to take care of ...

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