981 BERGEN STREET, INC. v. NEW WAVE INVESTMENT DEVELOPMENT CORP., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1196-05T31196-05T3

981 BERGEN STREET, INC.,

Plaintiff-Appellant,

v.

NEW WAVE INVESTMENT DEVELOPMENT

CORP., and ERIC HAWKINS and

RONALD PARKER, JR.,

Defendants-Respondents.

_______________________________________

 

Submitted September 13, 2006 - Decided October 20, 2006

Before Judges Stern and Sabatino.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, L-1795-04.

J. Clifton Wilkerson, attorney for appellant.

Respondent have not filed a brief.

PER CURIAM

In February 1998 plaintiff 981 Bergen Street, Inc. ("981 Bergen") entered into a ten-year commercial lease with defendant New Wave Investment Development Corp. ("New Wave") for premises in Newark where New Wave has operated a laundromat business. The monthly rent was initially $1150, increasing annually based upon an established schedule through September 2008.

Paragraph 18 of the lease, which is set forth in a form document with various modifications, requires New Wave to pay "when due" all of the rents or charges for water and other utilities used in connection with its tenancy. In typewritten language inserted on the form at the end of paragraph 18, the lease further recites that the "[w]ater bill must be paid up to date. If water bill gets in arrears of six months behind [sic], Landlord has the right to terminate the lease." A further addendum to that same paragraph, typewritten on a separate sheet attached to the lease, states in relevant part that the "Landlord shall pay for no utilities or other services." The lease also provides in paragraph 21 that in the event of a default the landlord may terminate the tenancy with five days written notice to the tenant.

As the lease progressed, New Wave fell substantially behind on various payments, including rent, water bills, ad valorem tax charges, and other items. The landlord transmitted default notices to New Wave in September 2000 and in January 2002 complaining about New Wave's persistent non-payment and lateness. In 2002, the landlord attempted to evict New Wave, however, it paid the back rent and the case was dismissed.

In early 2003, New Wave was once again more than six months behind in the water charges and other payments. Consistent with paragraph 21 of the lease, 981 Bergen provided New Wave with written notice of termination on March 20, 2003. The notice indicated that because of New Wave's continued arrears in rent and other items, 981 Bergen would be terminating the lease on May 1, 2003 and that New Wave needed to vacate the premises on or before that date. After the arrears persisted without vacation of the premises, 981 Bergen filed an eviction action on June 4, 2003 in the Special Civil Part.

The Special Civil Part judge transferred the case to the Law Division on July 18, 2003, pursuant to R. 6:4-1, based upon a perception that the issues in the case were potentially complex. As part of the conditions of the order transferring jurisdiction, New Wave was required to make the rent current by July 31, 2003, and 981 Bergen was expressly allowed to accept those sums as use-and-occupancy payments "without prejudice, preserving all rights as landlord." Due to an apparent administrative oversight, court staff erroneously dismissed the case, but ultimately it was restored to the Law Division docket and listed for trial in September 2005. By that point New Wave had become current on the rent and other charges.

After a two-day nonjury trial at which both parties were represented by counsel, the Law Division judge denied 981 Bergen's eviction claim, but did order New Wave to pay $4,291.22 in out-of-pocket costs incurred by 981 Bergen as the result of New Wave's previous late payments. The trial judge specifically found that New Wave had been in default on the water bill for more than six months, in violation of paragraph 18 of the lease. However, the court noted that the lateness identified in the notice to quit had occurred more than three years prior to its decision. The trial judge also noted that, in his view, the equities justified continuation of the tenancy, given that both the tenant and the landlord are small businesses, that the tenant had made substantial investments to install washers and dryers on site, and that the laundromat was contended by defendant to be "a vital part of that particular neighborhood."

The landlord now appeals that portion of the Law Division's decision denying it the remedy of eviction. We reverse.

Preliminarily, we observe that commercial tenancy evictions are governed by N.J.S.A. 2A:18-53. In this instance, 981 Bergen had the right to remove New Wave from the premises under both subsection (b) of that statute, which concerns a default in the payment of rent, and under subsection (c)(4), which concerns a tenant's breach of lease covenants for which the landlord has preserved a right of re-entry. N.J.S.A. 2A:18-53(b) and (c)(4).

The Law Division judge noted that New Wave had cured its deficiencies by the time the case came to trial, as it had been ordered to do by the Special Civil Part judge when he transferred the case in July 2003. That observation was made in September 2005 some two and one-half years after 981 Bergen had served its notice of termination. Nonetheless, as a matter of law, those late payments of rent, utility charges and taxes did not assure New Wave of a right to remain in possession of the premises.

Specifically, N.J.S.A. 2A:18-55 does provide that, in an eviction action based solely upon non-payment of rent under N.J.S.A. 2A:18-53(b), a commercial tenant remaining in possession of the demised premises may cure the default until the entry of judgment by paying the overdue rent to the clerk of the court and thus remain in possession. There is no equivalent right of cure, however, for eviction actions filed under N.J.S.A. 2A:18-53(c) founded upon breaches of other aspects of the lease, such as delinquent water bills and tax charges. Cf. Olympic Industrial Park v. P.L., Inc., 208 N.J. Super. 577 (App. Div.), certif. denied, 104 N.J. 453 (1986)(vacating a judgment of possession where a commercial tenant paid overdue rent within twenty four hours of the final judgment, and where the eviction was based solely upon nonpayment of rent and not based upon breaches of any other covenants in the lease). Here, paragraph 36 of the lease defined the rent as a specified dollar amount escalating from $1150 to $1653 per month.

Nor is there such a right of cure contained in the parties' lease itself, which very clearly specifies in paragraph 18 that the tenant faces eviction if it has allowed the water bills to remain unpaid for six months. Moreover, the Special Civil Part judge's July 2003 transfer order explicitly preserved, "without prejudice . . . all rights" of the landlord. That proviso would be meaningless if all New Wave had to do to maintain its tenancy was to make its accounts current before the end of July 2003 or before trial.

We recognize that our courts do retain the authority, even in a commercial lease context, to consider equitable factors that at times may warrant the denial of the remedy of eviction. For instance, in Olympic Industrial Park, supra, we vacated an order of eviction where the commercial tenant's sole owner was unable to appear at trial because he was tending to his sick mother in Italy and he thereafter paid the one-month overdue rent within twenty-four hours of judgment. Id. at 580. Likewise, in Ivy Hill Park Apartments v. GNP Parking Corp., 236 N.J. Super. 565, 570 (Law Div. 1989), aff'd, 237 N.J. Super 1 (App. Div. 1989), the Law Division recognized in dicta that a commercial tenant who receives a notice to quit possession may "contest an alleged breach of covenant or may raise equitable defenses."

The record before us, however, contains insufficient equitable grounds to deny the landlord the benefit of its bargain. The repeated and persisting lateness of New Wave's payments under the lease, stretching back to the year 2000, distinguish the circumstances here from the compelling equities favoring the tenant in Olympic Industrial Park. Moreover, the fact that New Wave was current in its payments by the time the case was eventually tried--nearly three years after 981 Bergen's termination notice in March 2003--is of little significance, particularly because New Wave was obligated to do so by an outstanding court order. The landlord, having initially sought a prompt eviction in the Special Civil Part, should not be penalized here by the delays attendant to the Law Division's trial calendar and the unfortunate inadvertent administrative dismissal of its complaint before the case was re-listed for trial.

Lastly, we respectfully disagree with the trial judge's assessment that the shared status of both litigants as small businesses, New Wave's capital investment in equipment for its laundromat operation, and the neighborhood residents' use of the laundromat justify New Wave's repeated breaches of the lease and its continued tenancy.

We thus reverse the order of October 7, 2005 denying eviction, and direct the Law Division to issue forthwith an appropriate order granting 981 Bergen judgment of possession.

 

Although it is not central to our analysis, the record suggests that New Wave, after making the rent and utility charges current pursuant to the Special Civil Part's July 2003 order, continued to have periods of lateness on rent and utility charges before it once again made them current before trial.

We also note that New Wave has not filed a respondent's brief on appeal, which suggests the possibility that it presently may be indifferent to a reversal of the trial court's order denying eviction, even if it is still in possession of the premises.

(continued)

(continued)

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A-1196-05T3

October 20, 2006