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Fischer v. Jhong

A-4429-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

LEASES; ARBITRATION—There is no special privilege for a nonprofit religious organization with respect to interpretation and enforcement of its lease or its lease’s arbitration provision.

A church rented commercial office space in a building. It began using the office space, but was forced to leave because the municipality “advised them that the use of the premises for church services was a violation of the local ordinances.” Under the lease, “the property was stated to be used for ‘general office space to be used for church purposes.’” The lease also contained a provision reading: “In the event of any dispute regarding the lease, exception [sic] eviction proceeding brought for cause against the Tenant by the Landlord, Landlord and Tenant agree” to arbitration. When the church vacated the premises, it demanded return of its security deposit and the landlord refused to return it. The church then sued and the landlord “moved to dismiss the complaint on the ground that the lease agreement had an arbitration clause and that the subject of the dispute was required to be arbitrated under the lease.” The tenant argued that the landlord should have demanded arbitration earlier and that failure to demand arbitration earlier constituted a waiver of the arbitration provision. The only prejudice it could show was a delay in receiving its refund. According to the Court, “[t]he fact that litigation has been instituted does not in and of itself constitute a waiver of arbitration.” Here, no discovery had commenced and the only motion was the landlord’s motion to compel arbitration. The arbitration clause was clearly and prominently disclosed in the lease agreement. It applied to “any dispute regarding this lease… .” It also rejected the church’s argument that because the church was “a nonprofit religious organization, and the [landlords were] a for-profit limited liability corporation [sic], public policy should preclude enforcement of the arbitration clause in a contract of adhesion lease agreement.” According to the Court, there is “no special privilege for a nonprofit religious organization with respect to the interpretation and enforcement of lease provisions.” Further, “that fact that the lease may be a contract of adhesion does not in itself render it unenforceable.”

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