1266 APT. CORP. v. NEW HORIZON DELI

• Decision Date: 26 April 2004
• Citation: 368 N.J. Super. 456,847 A.2d 9
• Parties: 1266 APARTMENT CORP., Plaintiff-Respondent, v. NEW HORIZON DELI, INC., Defendant-Appellant.
• Court: New Jersey Superior Court

847 A.2d 9

368 N.J. Super. 456

1266 APARTMENT CORP., Plaintiff-Respondent, v. NEW HORIZON DELI, INC., Defendant-Appellant.

Superior Court of New Jersey, Appellate Division.

Argued March 30, 2004.

Decided April 26, 2004.

Mark K. Follender, Little Falls, argued the cause for appellant (Scarinci & Hollenbeck, attorneys, Lyndhurs; Mr. Follender, on the brief).

Joel M. Ellis, Hackensack, argued the cause for respondent (Nashel Kates Nussman Rapone & Ellis, attorneys; Mr. Ellis, on the brief).

Before Judges COBURN, WELLS and C.S. FISHER.

The opinion of the court was delivered by COBURN, J.A.D.

Plaintiff, 1266 Apartment Corp., filed this action in the Special Civil Part, seeking possession of commercial premises it had rented to defendant, New Horizon Deli, Inc. Defendant moved for a transfer of the case to the Law Division pursuant to R. 6:4-1(g). The trial judge denied the motion in an oral decision, tried the case, and entered a judgment of possession for plaintiff.

Defendant filed a notice of appeal that only sought relief from the judgment. However, in addition to briefing the validity of the judgment, it argued that the judge erred in refusing the transfer. The notice of appeal does not address the transfer decision. Since it is clear that it is only the judgment or orders designated in the notice of appeal which are subject to the appeal process and review, Sikes v. Township of Rockaway, 269 N.J.Super. 463, 465-66, 635 A.2d 1004, 1005-06 (App. Div.), aff'd o.b., 138 N.J. 41, 648 A.2d 482 (1994), defendant has no right to our consideration of this issue. Furthermore, no order was entered denying the motion for transfer, and since only orders are appealable, Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199, 773 A.2d 706, 710 (2001); Heffner v. Jacobson, 100 N.J. 550, 553, 498 A.2d 766, 767-68 (1985), we are obliged to limit our consideration to the question of whether the trial judge erred in entering the judgment of possession. We note that defendant suffered no prejudice from the denial of its transfer motion, and since the judgment of possession was warranted, we affirm it.

I

Defendant became a tenant of plaintiff pursuant to a written lease in 1993. In December 1997, the lease expired and, pursuant to an oral understanding between the parties, defendant became a month-to-month tenant at $2,500 per month.

On December 30, 2000, Russell Dizon, defendant's president and sole shareholder, fell in front of the leased premises, allegedly as a result of an accumulation of snow, which had been inadequately cleared and had turned to ice.

By letter dated May 31, 2001, plaintiff advised defendant that the monthly rent would be increased to $2,750 effective June 1, 2001. However, it appears that defendant only paid the increased rent for the months of January and February 2003. The trial court left unresolved the question of whether the parties had agreed to the rental payments being made at the old rate because resolution of that issue was not required. By January 18, 2002, defendant had received from plaintiff an offer for a three-year lease at $3,000 per month.

Around August 2002, Dizon filed his personal injury complaint against plaintiff seeking compensation for the injuries he suffered in the December 30, 2000, accident.

By letter dated October 15, 2002, defendant's attorney made a counter-proposal for a three-year lease to commence January 1, 2003, at an initial monthly rent of $2,650. Further negotiations were unsuccessful, and on or about December 9, 2002, plaintiff served defendant with a "Notice to Quit and Demand for Possession." Defendant's attorney responded by letter dated December 19, 2002, stating that Dizon was "willing to consider discontinuing his... [personal injury] action if acceptable lease terms can be negotiated." Plaintiff did not press its request for vacation of the premises, and further negotiations ensued during which plaintiff took the position that it would not enter into a lease with defendant so long as Dizon continued to maintain his personal injury action. Although Dizon testified that defendant offered to enter into a lease if the suit was withdrawn, he never testified that plaintiff was willing to accept his offer of less than $3,000 a month rent.

In early February 2003, plaintiff entered into a five-year lease for the premises in question with another entity, E.com Market, at $3,000 per month.

On February 28, 2003, plaintiff served defendant with a second "Notice to Quit and Demand for Possession." When defendant failed to vacate, plaintiff brought this action for eviction in the Special Civil Part.

II

Defendant argues initially that plaintiff breached an implied covenant of good faith and fair dealing and that it subjected defendant to economic duress. The implied covenant of good faith and fair dealing is used to measure a party's performance under a contract. See Wilson v. Amerada Hess Corp., 168 N.J. 236, 244-52, 773 A.2d 1121, 1126 (2001). Thus, a breach of the implied covenant may give rise to a cause of action for damages for breach of contract, see Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 422-23, 690 A.2d 575, 588 (1997), but the covenant is inapplicable here, despite the agreement for a month-to-month tenancy, because, as shall be discussed below, the landlord is not liable for retaliation, and therefore is not in breach of the covenant. Nor does the doctrine of economic duress provide a defense in these circumstances. This is so because the doctrine is invoked not to compel entry into or maintenance of a contract, but rather to "invalidate an otherwise enforceable contract." Cont'l Bank of Pa. v. Barclay Riding Acad., Inc., 93 N.J. 153, 175, 459 A.2d 1163, 1174, cert. denied, sub nom. Barclay Equestrian Ctr. Inc. v. Cont'l Bank of Pa., 464 U.S. 994, 104 S.Ct. 488, 78 L.Ed.2d 684 (1983). Thus, invocation of "economic duress requires `an assent by one party to an improper or wrongful demand by another under circumstances in which the former has little choice but to accede to the demand, i.e., to do what he otherwise would not have done.'" Id. at 176, 459 A.2d at 1175 (quoting Woodside Homes, Inc. v. Morristown, 26 N.J. 529, 544, 141 A.2d 8, 16 (1958)) (internal quotation marks omitted). Here, defendant has not acceded to any demands of plaintiff.

Defendant's primary argument is that the trial court erred in rejecting its equitable defense of retaliatory eviction. By way of relief, defendant demands that we "compel [plaintiff] to extend the lease upon the terms and conditions it was offering subject to the quid pro quo[;] i.e., a five (5) year lease at three thousand dollars ($3,000.00) per month."

In 1970, the Legislature created a defense of retaliatory eviction in summary dispossess proceedings, L. 1970, c. 210; however, the defense was limited to residential tenancies "except owner-occupied premises with not more than two rental units." N.J.S.A. 2A:42-10.13. In E. & E. Newman, Inc. v. Hallock, 116 N.J.Super. 220, 281 A.2d 544 (App.Div.1971), while declining to give the statute retroactive force, we nonetheless held that under principles of equity, "a landlord should not be permitted to evict a [residential] tenant, or to raise his rent, as reprisal for the tenant's exercise of a constitutionally protected right." Id. at 225, 281 A.2d at 546. We did not suggest that this principle should apply to commercial leases.

The American Law Institute confines its treatment of this defense to residential tenancies, stating that it "takes no position at this time as to whether or not the definition of retaliatory action ... should be extended ... to commercial or industrial property." Restatement (Second) of Property: Landlord and Tenant § 14.8 Caveat (1977). On the other hand, it has been recognized that "the doctrine of retaliatory eviction, as it has ... developed by statute and judicial decision, is not necessarily limited to the residential setting." 2 Powell on Real Property § 16B.05[1] (Wolf ed. 2003).

In William C. Cornitius, Inc. v. Wheeler, 276 Or. 747, 556 P.2d 666 (1976), the court held that "[i]n the commercial setting, we are unwilling to hold that the landlord's refusal to renew a lease for motives which are, or may be, improper gives the tenant the right to remain on the premises indefinitely." Id. at 671. In Espenschied v. Mallick, 633 A.2d 388 (D.C.App.1993), the court also refused to extend this defense to a commercial setting, noting that a number of other jurisdictions had reached the same conclusion. Id. at 394, n. 15 (collecting cases).

On the other hand, the defense was extended to the commercial context in Windward Partners v. Delos Santos, 59 Haw. 104, 577 P.2d 326 (1978), which involved eight tenants on "primarily agricultural land" of whom four qualified as residential tenants and four did not. Id. at 328. The landlord, in furtherance of an eventual development plan, petitioned to have the land re-designated from "agricultural" to "urban." The tenants, pursuant to their statutory right to do so, "publicly and vigorously opposed the redesignation and testified against the petition at the [State Land Use] Commission's public hearing. The Commission denied the petition in December, 1974." Ibid. The tenants defended against the resulting dispossess actions with retaliatory eviction. The Hawaii Supreme Court held the defense to be available despite the commercial nature of the tenancies:

We find no reason to deny non-residential tenants the remedy of raising a defense of retaliatory eviction where, as in this instance, the statutory right being exercised ...

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