SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-6184-93T3
GREGORY PARK COOPERATIVE
CORPORATION,
Plaintiff-Appellant,
vs.
CROWN PARKING CORPORATION,
280 GREGORY CORPORATION AND
PMC MANAGEMENT OF N.Y., INC.,
Defendants-Respondents.
________________________________________
Argued October 30, 1995 - Decided December 27, 1995
Before Judges Petrella and P.G. Levy.
On Appeal from Superior Court of New Jersey,
Law Division, Hudson County.
Clifford B. Frish argued the cause for
appellant (Michael O'Connor, on the brief).
Gary F. Werner argued the cause for
respondents (Crummy, Del Deo, Dolan,
Griffinger & Vecchione, attorneys; Mr. Werner
and Carole White-Conner, on the brief).
The opinion of the Court was delivered by
P.G. LEVY, J.A.D.
Plaintiff brought this action to recover unpaid rent for a parking lot it had leased to defendants, located in a redevelopment area of Jersey City. Defendants or their assignees had operated a commercial parking lot on the site for the entire five year term of the lease and the succeeding twelve months. On
a motion for summary judgment, the judge ruled that the lease was
void ab initio because it had never been approved by the local
redevelopment agency. Plaintiff's claim for $506,427 was dismissed
and plaintiff was ordered to return $30,000 previously paid by
defendants as additional rent. We reverse.
Plaintiff owned Gregory Park, a tract of land in Jersey
City with two large residential towers, an adjoining mall with
commercial rental units and a parking lot. Plaintiff agreed to
lease the parking lot to defendant Crown Parking Corporation
(Crown) for a term running from May 1, 1985 to April 30, 1990;
the agreed rent was $150,000 per year as base rent with defendant
to pay all real estate taxes, assessments, ... and other
governmental levies and charges as additional rent. Crown
assigned its interest to co-defendant, 280 Gregory CorporationSee footnote 1
(the tenant), which operated a commercial parking lot on the site
for six years, the last twelve months as a holdover month-to-month
tenant.
During the five-year term of the lease, the tenant
faithfully paid the base rent each month. For the first three
years, plaintiff did not bill for property taxes which amounted to
$8,736 for the last half of 1985, $20,744 for 1986 and $23,744 for
1987. In 1988 the property was reassessed and the annual taxes
jumped to $193,545. At that point plaintiff and the tenant began
to negotiate an amendment to the lease terms. During those
negotiations, the tenant paid $30,000 in November 1988 in partial
satisfaction of past due taxes and continued to pay the monthly
base rent. The lease was never amended.
After the term ended, the tenant continued to pay the
base rent monthly but failed to pay anything for September and
October 1990. Plaintiff brought an action for unpaid rent which
was soon settled. The tenant continued to pay the monthly base
rent until February 1991 and paid nothing thereafter. This action
was filed when the arrears reached three months. Plaintiff alleged
that $54,249 was due for unpaid base rent and $452,178 for unpaid
taxes for the term of the lease and the holdover period when the
tenant continued to use and occupy the premises. Defendants
responded by denying the validity of the lease for failure to
satisfy a mandatory condition precedent, and by asserting a
counterclaim against plaintiff for misrepresentation regarding the
$30,000 paid as additional rent for real estate taxes.
After completion of discovery, defendants moved for
partial summary judgment on the complaint, claiming there was a
constitutional and statutory requirement that the lease was
contingent on approval of the JCRA and that plaintiff knew this was
an absolute prerequisite to the validity of the lease. Plaintiff's
response was based on theories of laches, waiver, estoppel and
unjust enrichment. Bypassing these fact intensive issues, the
judge observed that "the complaint relies completely and
exclusively on the lease agreement." He found that "the agreement
is unenforceable because Gregory Park [lacked] the original
capacity to enter into this lease without the prior written consent
of the Jersey City Redevelopment Agency pursuant to the State
Constitution and statutes," and granted partial summary judgment to
defendants, dismissing the complaint. Defendants moved for summary
judgment on their counterclaim, the only remaining pleading. They
contended that the $30,000 payment made as additional rent for
taxes should be returned because the lease upon which it was based
was void ab initio. No opposing papers were filed and final
summary judgment was granted for $30,000 plus pre-judgment
interest, premised upon the same findings of fact and conclusions
of law as those supporting the earlier ruling for partial summary
judgment.
The Redevelopment Agency Law (RAL) was in force during
the entire time the tenant operated the parking lot.See footnote 2 The Gregory
Project Area Redevelopment Plan, enacted in 1952, required prior
written consent of the Jersey City Redevelopment Agency (JCRA)
for all leases, and the lease between plaintiff and Crown specifies
that this Lease is contingent upon such approval by the Jersey
City Redevelopment Agency. The parties stipulated that the
approval was not procured. Nevertheless, first Crown and then the
tenant took possession of the site and operated the parking lot for
the term of the lease and one additional year.
The RAL was the legislative scheme governing the
acquisition, clearance, planning, reconstruction and redevelopment
of areas of a community deemed blighted in order to promote the
public health, safety, morals and welfare, stimulate the proper
growth of urban, suburban and rural areas of the State, preserve
existing values and maintain taxable values of properties within or
contiguous to such areas, and encourage the sound growth of
communities. N.J.S.A. 40:55C-2. Redevelopment agencies, such as
the JCRA, were to be created as governmental agencies to administer
the development of the involved areas. The parking lot which
defendants operated was a development contemplated by the Gregory
Project Area Redevelopment Plan. N.J.S.A. 40:55C-20 required that
any agreement between the agency and the redeveloper contain (1) a
covenant running with the land requiring any improvements shall
only be used for the purposes designated in the redevelopment plan
and (2) a provision that the redeveloper lacked power to lease any
part of the redevelopment area without the prior written consent
of the agency.
Defendants never contended the parking lot was not a
permitted use under the plan, and the agency never indicated that
either. Nor is there a claim that the lease between plaintiff and
Crown was contrary to the purposes of the RAL listed in N.J.S.A.
40:55C-2. Instead, the defense to the allegations of unpaid rent
was based on plaintiff's failure to obtain approval of JCRA
pursuant to Article XL of the lease which stated this lease is
contingent upon such approval by the [JCRA]. While the
counterclaim sought damages based essentially on defendant's
payment of $30,000 on account of real estate taxes, they never
demanded reimbursement for the base rent they had paid, including
what they paid for their continued tenancy from May 1990 through
February 1991.
The Redevelopment Agency Law does not require that a
lease from a redeveloper to a user be contingent on the prior
approval of the agency. We perceive nothing in that law
conditioning the payment of rent between a redeveloper and a user
of property in the redevelopment area, as long as the use is
permitted by the plan.
When plaintiff opposed the motion for summary judgment,
it was entitled to have its allegations deemed true and all
inferences flowing therefrom to be made in its favor. If those
allegations and the evidence offered to support them 'could
sustain a judgment in favor of the non-moving party' summary
judgment would have to be denied due to a genuine dispute of fact.
Brill v. Guardian Life Ins. Co.,
142 N.J. 520, 538 (1995). In its
amended complaint, plaintiff claimed the tenant was estopped from
denying its obligations under the Lease because it operated the
parking lot and paid the rent regularly. Defendants admitted the
terms of the lease but denied liability under the lease because
plaintiff failed to satisfy a condition precedent under the
Lease, that being the consent of the JCRA. Defendants raised
several defenses, most noticeably that plaintiffs were equitably
estopped from seeking the additional rent based on taxes because
they failed to advise defendants of the extent of the taxes, thus
breaching their covenant of good faith and fair dealing.
There is no dispute that plaintiff allowed defendants to
operate a parking lot on the property and that defendants paid for
that use and occupancy according to the rental agreements stated in
the written lease, except for the additional rent called for by
ARTICLE VII. Moreover, in the face of disclaiming liability on
this allegedly void lease, the defendants relied on the viability
of part of that lease in the fifth separate defense which asserts
that plaintiff's claim should be decided by arbitration, pursuant
to ARTICLE XXXIX of the lease.
If the lease is void ab initio as defendants claim,
plaintiff can still recover under either a theory of unjust
enrichment or quantum meruit. See Hudson City Contracting v.
Jersey City Incinerator Auth.,
17 N.J. 297, 309 (1955). The
defendants cannot ignore their use and occupancy of the parking
lot, and it can be inferred from the regular payment of $150,000
each year for five years that the arrangement was made in good
faith on both sides. Defendants certainly benefitted from the
continued operation of the parking lot business after the five
years ended, and keeping all the profits without paying some fair
rental to plaintiff would be unjust. Similarly, the rental that
was paid during the original five years might not have been enough
to provide a fair rate of return and all or some of the additional
rent based on taxes might be just. Those undecided issues are
genuine and do not permit disposition summarily by motion.
Discovery is warranted to develop more facts, and the extensive use
of the property and the payment of a significant amount of rent
require consideration by the fact finder. Summary judgment was
premature.
Reversed and remanded for trial.
Footnote: 1 Apparently Crown occupied the site for less than three months at the inception of the relationship; PMC did not use the site. Footnote: 2 1. N.J.S.A. 40:55C-1 to -39 was repealed by L. 1992, c. 79, § 59 and N.J.S.A. 40:55C-40 to -108 was repealed by L. 1991, c. 431, § 20, eff. April 17, 1992.