Benjoray, Inc. v. Academy House Child Development Center

NOT FOR PUBLICATION WITHOUT THE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
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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.
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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
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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
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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;
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(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
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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
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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
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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.
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