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1266 Apartment Corp. v. New Horizon Deli, Inc.

368 N.J. Super. 456, 847 A.2d 9 (App. Div. 2004)

LEASES; EVICTION; RETALIATION—To show that a landlord refused to renew a lease because it was retaliating against a tenant who filed a personal injury action against the landlord, it is necessary to show that the disputed speech was a matter of public concern and was a substantial motivating factor in the non-renewal.

After the expiration of a four-year lease, a commercial tenant became a month-to-month tenant. A few years later, the owner of the commercial tenant fell in front of the premises, allegedly because of accumulated snow which had been inadequately cleared and had turned to ice. At about this time, unsuccessful negotiations were taking place between the tenant and the landlord about a possible three-year lease. The tenant’s owner then filed a personal injury complaint seeking compensation for his fall. Shortly thereafter, the landlord served the tenant with a Notice to Quit and Demand for Possession. The tenant’s owner offered to consider discontinuing his personal injury claim if acceptable lease terms could be negotiated. As a result, the landlord did not press its request, and negotiations continued during which the landlord said it would not enter into a lease if the personal injury action was pending. Negotiations once again failed, leading the landlord to enter into a five-year lease with another tenant. The landlord then served the current tenant with a second Notice to Quit and Demand for Possession. When the tenant failed to vacate, the landlord brought suit for eviction.

The tenant initially argued that the landlord breached an implied covenant of good faith and fair dealing and that the tenant was subjected to economic duress. A breach of an implied covenant may give rise to a cause of action for damages for a breach of contract. But the covenant was not applicable here because the landlord was not liable for retaliation, and therefore it was not a breach of covenant. In addition, economic duress does not provide for a defense in these circumstances because the doctrine is invoked not to compel entry into or maintenance of a contract, but rather to invalidate an otherwise enforceable contract.

The tenant also argued that the lower court erred in rejecting its equitable defense of retaliatory eviction. Case law disputed whether or not to apply this defense to non-residential tenants. Although the Appellate Division felt that there was no reason to deny non-residential tenants the remedy of this defense where it is equally applicable in terms of the protection of property interests, it believed that new causes of action should either be created by the Legislature or by the Supreme Court, and not by it, an intermediate appellate court. Therefore, it affirmed the holding of the lower court, granting possession to the landlord.

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