Benjoray, Inc. v. Academy House Child Development Center

100 A.3d 201, 437 N.J. Super. 481, 2014 N.J. Super. LEXIS 142

• Court: New Jersey Superior Court Appellate Division
• Decided: October 16, 2014
• Docket: A-5162-12
• Status: Published

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-5162-12T3

BENJORAY, INC., APPROVED FOR PUBLICATION Plaintiff-Respondent, October 16, 2014 v. APPELLATE DIVISION ACADEMY HOUSE CHILD DEVELOPMENT CENTER,

Defendant-Appellant.

______________________________

Submitted September 10, 2014 – Decided October 16, 2014

Before Judges Fuentes, Ashrafi and O'Connor.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. LT-4325-13.

Law Offices of Joseph Cicala, L.L.C., attorney for appellant (Mr. Cicala, on the brief).

Lonny Hirsch, attorney for respondent.

The opinion of the court was delivered by

O'CONNOR, J.A.D.

Following a summary dispossess hearing, plaintiff Benjoray,

Inc. (landlord) obtained a judgment of possession against

defendant Academy House Child Development Center (tenant), a child care center. Just before the hearing, the tenant

unsuccessfully moved to have the matter transferred from the

Special Civil Part to the Law Division. Defendant appeals the

denial of that motion and the judgment for possession. We

reverse.

I

On December 1, 2011, the landlord and tenant entered into a

commercial lease. The term of the lease, which commenced

January 1, 2012, is five-years, with an option to renew for two

additional five-year terms. The monthly lease payment was

$15,000 when the lease commenced but, under the lease, the rent

increases by three percent every year.

Paragraph 11 of the lease indicates that, before signing

the lease, the tenant inspected the premises, found them in

satisfactory condition, and accepted the rental space "as is."

A rider to the lease states in pertinent part:

The tenant acknowledges that it has inspected and examined the rental space and has entered into this lease without any representations on the part of the landlord . . . as to the condition thereof and is leasing and accepting the rental space "as is" and "where-is." No representations or promises, except as are specified herein, have been made on the part of the landlord . . . prior to or at the execution of this lease and the landlord is not bound by, and the tenant will make no claim on account of, any representation, promise, or assurance, expressed or implied, with respect to

2 A-5162-12T3 condition, repairs, changes, improvements, services, accommodations, concessions or any other matter, other than as contained herein.

The lease sets forth that the retail space comprises of

"approximately" 3800 square feet on the ground floor and

"approximately" 7400 square feet "below ground." Therefore,

according to the lease, the total square footage is about 11,200

square feet.

In January 2013, the tenant found plans of the premises

that revealed the square footage was only 9633.36 square feet, a

fifteen percent difference from what was represented in the

lease. Upon discovering this discrepancy, the tenant's attorney

sent a letter to the landlord requesting that its attorney

contact him. Not receiving a response, the tenant's attorney

sent another letter to the landlord two weeks later and advised

it was going to pay only $13,135.50 of the $15,450 rent due each

month and deposit the difference into court.

A week later the landlord responded, countering it had

retained an architect who determined that the square footage of

the premises was actually 11,725.70 square feet. In addition,

as the tenant had use of 401.04 square feet in the common area,

the landlord concluded the tenant had a total of 12,126.74 in

square feet, 926.74 more square feet than indicated in the

lease.

3 A-5162-12T3 On March 11, 2013, the landlord filed a complaint in the

Special Civil Part seeking possession on the grounds the tenant

failed to pay the full monthly lease payment of $15,450 in

February and March 2013. The tenant responded by filing a

motion to transfer the action to the Law Division. Attached to

its motion was a verified answer and counterclaim the tenant had

filed in the Special Civil Part, in which the tenant alleged

that the landlord had breached the lease agreement by failing to

provide premises as large as represented in the lease, and

negligently misrepresented the actual size of the premises to

induce the tenant to enter into the lease. The tenant sought

compensatory damages of about $29,000, punitive damages, counsel

fees and rescission of the lease agreement.

The trial court denied the motion to remove, finding the

landlord's action for possession routine in nature and the

issues raised by the tenant sufficiently uncomplicated to be

handled in a summary dispossess proceeding. Specifically, the

court concluded the tenant's concerns could be resolved by

merely examining the language in the lease to see if the rent

was to be based upon the square footage.

At the conclusion of the summary proceeding the court found

the rent was not correlated to the square footage. Further,

because the lease reflected that, before signing the lease, the

4 A-5162-12T3 tenant had inspected the premises, accepted the rental space "as

is," and was aware the square footage set forth in the lease was

a mere approximation, the court held the tenant could not have

been misled by what the lease represented were the dimensions of

the premises. A judgment for possession was entered in favor of

defendant.

II

On appeal, the tenant claims the trial court erred by

denying its motion to transfer the summary dispossess action to

the Law Division, because the issues were complex and thus not

amenable to adjudication in a summary proceeding. We agree.

The summary dispossess statute, N.J.S.A. 2A:18-51 to -61,

was designed to provide landlords with a swift and simple method

of obtaining possession. Carr v. Johnson, 211 N.J. Super. 341,

347 (App. Div. 1986). Nevertheless, either party to a summary

dispossession proceeding may move to have the matter transferred

to the Law Division. If it deems the issues before it of

"sufficient importance," the court may in its discretion grant

the motion for removal. N.J.S.A. 2A:18-60; Master Auto Parts,

Inc. v. M. & M. Shoes, Inc., 105 N.J. Super. 49, 53 (App. Div.

1969). "[D]iscretion means legal discretion in the exercise of

which the trial judge must take account of the applicable law

and the particular circumstances of the case, to the end that a

5 A-5162-12T3 just result is reached. If he goes wide of the mark, the

appellate court has a duty to act." Ibid.

In general, a motion for transfer should be granted whenever the procedural limitations of a summary action (other than the unavailability of a jury trial) would significantly prejudice substantial interests either of the litigants or of the judicial system itself, and, because of the particular facts and circumstances of a specific case, those prejudicial effects would outweigh the prejudice that would result from any delay caused by the transfer.

[Twp. of Bloomfield v. Rosanna's Figure Salon, Inc., 253 N.J. Super. 551, 563 (App. Div. 1992).]

In Morrocco v. Felton, 112 N.J. Super. 226, 235 (Law Div.

1970), nine factors were suggested as guidelines to be used when

determining whether a dispossess action should be transferred to

the Law Division. These nine factors were adopted by this court

in Carr, supra, 211 N.J. Super. at 349, at least five of which

remain viable. Twp. of Bloomfield, supra, 253 N.J. Super. at

563. These five factors are:

(1) The complexity of the issues presented, where discovery or other pretrial procedures are necessary or appropriate;

(2) The presence of multiple actions for possession arising out of the same transaction or series of transactions, such as where the dispossesses are based upon a concerted action by the tenants involved;

(3) The appropriateness of class relief;

6 A-5162-12T3 (4) The need for uniformity of result, such as where separate proceedings are simultaneously pending in both the Superior Court and the County District Court arising from the same transaction or set of facts, and

(5) The necessity of joining additional parties or claims in order to reach a final result.

[Id. at 562-63.]

Factors two through five are inapplicable here but the

first one does apply. The claims of negligent misrepresentation

and breach of contract alleged here are too complicated to be

disposed of in a summary dispossess hearing, not to mention

that, given the allegations, the parties should be given the

opportunity to conduct discovery.

The landlord argues the issues before the trial court were

simple and thus could be disposed of readily in a summary

dispossess hearing. As also perceived by the trial court, the

landlord claims the only issue in dispute was whether the rent

was based upon the square footage. We disagree. When it made

its motion, the tenant claimed it was induced to enter the lease

because of the landlord's representation of the size of the

premises. While the rent may not have been tied to the number

of square feet, the overall size allegedly caused the tenant to

enter into the lease. The tenant did reduce its monthly payment

7 A-5162-12T3 by fifteen percent when it discovered the premises were fifteen

percent smaller than represented in the lease, but this remedy,

employed after the alleged breach of contract, neither detracts

from nor alters the allegation that the tenant was enticed into

entering the lease given the approximate size of the premises

set forth in the lease.

The landlord further argues that the claims of negligent

misrepresentation and breach of contract were appropriately

given little weight by the trial court when the motion was made

because the tenant knew the dimensions in the lease were

approximations and, after inspecting the premises, agreed to

accept them "as is."

First, the word "approximate" means "nearly resembling [;]

near to correctness or accuracy [;] nearly exact [;] located

very close together [.]" Webster's Third New International

Dictionary 107 (Philip Babacock Gove et al. eds., 1981). If the

square footage is as the tenant claims, we question whether the

dimensions set forth in the lease are in fact an approximation.

Second, we question whether a visual inspection by a tenant —

unless an expert — enables it to determine the square footage of

a structure, especially when the premises are between nine and

twelve thousand feet. The parties have retained expert

8 A-5162-12T3 architects and even they hold significantly different views of

how many square feet are within the leasehold.

Further, a court hearing a summary dispossess action lacks

general equitable jurisdiction. WG Associates v. Estate of

Roman, 332 N.J. Super. 555, 563 (App. Div. 2000) (citing Carr,

supra, 211 N.J. Super. at 347). "Although the court may

consider equitable defenses, it is beyond the power of the court

to grant permanent injunctive or other equitable relief to

parties." Ibid.; see also Chau v. Cardillo, 250 N.J. Super.

378, 385 (App. Div. 1991)("[t]he equitable jurisdiction of the

Special Civil Part in a summary dispossess action is limited to

matters of defense or avoidance asserted by the tenant").

Rescission is a claim or remedy "rooted in considerations

of equity." Rutgers Cas. Ins. Co. v. LaCroix, 194 N.J. 515, 527

(2008) (citing Stambovsky v. Cohen, 124 N.J. Eq. 290, 295 (E. &

A. 1938)). "Where a party has gained an unfair advantage by

virtue of a fraudulent misrepresentation, and monetary damages

alone will not satisfy the injury sustained by the aggrieved

party, courts have looked to the equitable remedy of rescission

to eliminate the damage." Ibid. We regard the tenant's claim

for rescission as more than a defense or avoidance by the

tenant. The tenant did not merely assert a defense to the

eviction action. The tenant endeavored to assert affirmative

9 A-5162-12T3 claims of breach of contract and negligent misrepresentation

against the landlord, for which the tenant sought not just

damages and but also a full rescission of the contract.

Accordingly, the motion for transfer should have been

granted because otherwise substantial interests of the tenant,

none of which is outweighed by any prejudice to the landlord,

are jeopardized. Twp. of Bloomfield, supra, 253 N.J. Super. at

563. We vacate the judgment for possession and remand for this

matter to be transferred to the Law Division for further

proceedings not inconsistent with this opinion.

Reversed and remanded. We do not retain jurisdiction.

10 A-5162-12T3