316 49 Street Associates Ltd. Partnership v. Galvez

• Decision Date: 05 January 1994
• Parties: 316 49 ST. ASSOCIATES LIMITED PARTNERSHIP, A Limited Partnership of New Jersey, Plaintiff-Respondent, Cross-Appellant, v. Germania GALVEZ, Defendant-Appellant, Cross-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 481

269 N.J.Super. 481

635 A.2d 1013

316 49 ST. ASSOCIATES LIMITED PARTNERSHIP, A Limited Partnership of New Jersey, Plaintiff-Respondent Cross-Appellant, v. Germania GALVEZ, Defendant-Appellant, Cross-Respondent.

Superior Court of New Jersey Appellate Division.

Argued Nov. 3, 1993.

Decided Jan. 5, 1994.

Ira Karasick, Hoboken, for defendant-appellant, cross-respondent (Ira Karasick, attorney; Deborah Masker Edwards, on the brief).

Richard B. Nashel, West New York, for plaintiff-respondent, cross-appellant (Nashel & Nashel, attorneys; Mr. Nashel, on the brief).

Before PRESSLER, DREIER and BROCHIN, JJ.

The opinion of the court was delivered by

DREIER, J.A.D.

Defendant tenant appeals from a grant of summary judgment in favor of plaintiff landlord ejecting her from her apartment. Plaintiff cross-appeals from the trial court's refusal to include unpaid option charges and increased attorney's fees in the judgment.

Plaintiff, 316-49 St. Associates Limited Partnership, is the owner of an eleven-unit apartment building in Union City known as Thessalli Terrace. On June 28, 1988, plaintiff registered its conversion plan for the property with the Department of Community Affairs. Plaintiff has not yet however, established the condominium form of ownership for the property by recording the master deed. It is the recordation of the master deed that establishes the condominium form of ownership. N.J.S.A. 46:8B-8; Veltri v. Norwood, 195 N.J.Super. 406, 413, 479 A.2d 931 (App.Div.1984).

On September 1, 1990, defendant, Germania Galvez, signed an "Apartment Lease and Option to Purchase." The agreement provided that defendant would live in the apartment for a term of one year, and at the end of the term defendant would have the right to purchase the apartment for $110,000, receiving credit for her option payments. The agreement also provided that if defendant did not exercise the option at the end of the period, she would not be entitled to renew the agreement.

During the original term of the lease, defendant paid $387.85 per month in rent plus $229.17 a month for the purchase option, making her total monthly payment $617.02. The Rent Leveling Board of Union City has certified that the maximum allowable rent during this time was approximately $420. Defendant also paid a security deposit of $925.54, which represents approximately one and one-half times her combined monthly rent and option payment.

On August 31, 1991, defendant was presented with a renewal agreement for the one-year period beginning September 1, 1991 and ending August 31, 1992. Defendant refused to sign the agreement, but continues to occupy the apartment with her three children. Defendant has certified that at the time she entered into the agreement she was employed as a factory worker, but soon thereafter she was laid off and has since lived on public assistance. When the agreement was signed, the mortgage contingency clause was not completed, and no inquiry was made into defendant's financial status. The most cursory inquiry would have revealed defendant's total inability to pay $110,000 at the time of the initial lease, the renewal, or in the foreseeable future, with or without a resort to available credit.

On or about November 20, 1991, plaintiff mailed to defendant a notice to quit and demand for possession, demanding that defendant vacate the apartment by November 30, 1991. Defendant did not comply, and on January 13, 1992, plaintiff filed a complaint for ejectment, damages, attorney's fees and costs. Defendant did not answer and judgment by default was entered in favor of plaintiff on March 9, 1992. A writ of possession was subsequently issued.

On or about February 24, 1992, defendant filed a late answer and counterclaim alleging that plaintiff had violated the Union City Rent Control Ordinance as well as the Consumer Fraud Act. On April 27, 1992, the judge signed an order to show cause why the default judgment should not be vacated, and on June 24, 1992, the default judgment was vacated, conditioned on defendant's payment of all rent and option payments as well as attorney's fees.

Plaintiff then moved to vacate the June 24th order and defendant moved for reconsideration. Plaintiff's motion was denied; defendant's motion was granted, and the June 24, 1992 order was modified to relieve defendant of the obligation to make option payments during the pendency of the action.

After plaintiff filed an answer to defendant's counterclaim, the parties filed cross-motions for summary judgment which were heard on November 20, 1992. The trial court granted plaintiff's motion, finding that the parties entered into a binding lease and option agreement, that defendant breached that agreement by failing either to renew the agreement or vacate the apartment, and that no legal excuse existed for the breach. The judge stayed the order pending appeal, conditioned upon defendant paying all outstanding option payments.

We stayed the order of the trial court on defendant's interlocutory motion. The stay was conditioned on defendant's compliance with the modified June 24, 1992 order requiring defendant to pay only the base rent. As final judgment had not yet been entered, we remanded for its entry. The final judgment provided that possession of the apartment be returned to plaintiff and that defendant pay $6,718.40 (representing double defendant's rent, calculated at $419.90 a month, for December 1991 through March 1993) and $2,900 for attorney's fees and costs.

Although plaintiff successfully moved for summary judgment on its complaint for ejectment and damages, R. 4:46-2 provides that summary judgment is appropriate only if "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." See also Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 73-75, 110 A.2d 24 (1954). Here there were not only questions of fact regarding the nature and legality of the option payments sufficient to defeat plaintiff's motion for summary judgment, the facts were so clearly in defendant's favor on this issue that summary judgment should have entered for defendant.

Plaintiff's initial action was for ejectment. In New Jersey, an action of ejectment is governed by N.J.S.A. 2A:35-1. Marder v. Realty Constr. Co., 84 N.J.Super. 313, 320, 202 A.2d 175 (App.Div.), affirmed, 43 N.J. 508, 205 A.2d 744 (1964). N.J.S.A. 2A:35-1 provides "[a]ny person claiming the right of possession of real property in the possession of another, or claiming title to such real property, shall be entitled to have his rights determined in an action in the superior court."

Plaintiff argues that because defendant did not renew the agreement or vacate the premises, plaintiff is entitled to pursue an action in ejectment rather than under the Anti-Eviction Act, N.J.S.A. 2A:18-61.1. The trial judge agreed and granted summary judgment in favor of plaintiff. By so ruling, however, the trial judge erroneously gave effect to the nonrenewal provision of the agreement.

The nonrenewable nature of the lease is addressed at several places in the agreement. Paragraph 23 provides: "Tenant has absolutely no right to renew this lease and Tenant acknowledges that Landlord entered into this lease because of Tenant's express representation of an intention to purchase the apartment pursuant to the terms of paragraph 29." Also paragraph 5, which addresses the disposition of interest on the security deposit upon renewal of the agreement, states "however, the Landlord shall be under no obligation of any kind to renew this lease." The agreement does provide however, that the lease and option may be renewed upon the mutual agreement of the landlord and the tenant:

If, prior to the expiration date of the Lease, both Landlord and Tenant mutually agree to renew or extend the one (1) year term of the Lease, then in such event the Option to Purchase shall also be renewed or extended for the same period as the Lease extension or renewal, except that the Landlord may increase either or both the option purchase price and the monthly consideration to be paid for the option during each renewal or extension term.

Residential tenants are guaranteed the right to renew their leases. N.J.S.A. 2A:18-61.3a states that "[n]o landlord may evict or fail to renew any lease of any premises covered by [ N.J.S.A. 2A:18-61.1] except for good cause as defined in [ N.J.S.A. 2A:18-61.1]." Furthermore, N.J.S.A. 2A:18-61.4 provides that "[a]ny provision in a lease whereby any tenant covered by [ N.J.S.A. 2A:18-61.1] agrees that his tenancy may be terminated or not renewed for other than good cause as defined in [ N.J.S.A. 2A:18-61.1], or whereby the tenant waives any other rights under this act shall be deemed against public policy and unenforceable."

The premises and defendant's tenancy are clearly covered by N.J.S.A. 2A:18-61.1 which states:

No lessee or tenant or the assigns, undertenants or legal representatives of such lessee or tenant may be removed by the Superior Court from any house, building, mobile home or land in a mobile home park or tenement leased for residential purposes, other than (1) owner-occupied premises with not more than two rental units or a hotel, motel or other guest house or part thereof rented to a transient guest or seasonal tenant; (2) a dwelling unit which is held in trust on behalf of a member of the immediate family of the person or persons establishing the trust, provided that the member of the immediate family on whose behalf the trust is established permanently occupies the unit; and (3) a dwelling unit which is permanently occupied by a member of the immediate family of the owner of that unit, provided, however, that exception (2) or (3) shall apply only in cases in which the member of the immediate family has a developmental disability, except upon establishment of one of the following grounds as good cause....

Plainti...