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Self-Help Commercial Evictions: A Viable Remedy During COVID-19?

Article

New Jersey Law Journal

May 3, 2021

Over a year has passed since Governor Murphy declared a State of Emergency in response to the COVID-19 pandemic. As expected, the pandemic has slowed litigation in the New Jersey courts, with no part of the judiciary impacted more than the landlord-tenant court. Tens of thousands of cases remain backlogged, and with no restart announced and no plan yet in place to deal with that backlog, a return to normalcy in the eviction process likely remains in the distant future. Commercial landlords are eager to remove non-paying tenants in order for their properties to once again become revenue generators. Do these landlords have a viable self-help option under New Jersey law?

The Court Backlog

On March 14, 2020, the New Jersey Supreme Court authorized the temporary suspension of all landlord-tenant trials (both residential and commercial) as of March 16, 2020. Two weeks later, it extended that suspension through April 26, 2020. In subsequent orders, the suspension of all proceedings has been continued “until further notice.” On March 19, 2020, Governor Murphy issued Executive Order No. 106 (“EO 106”), which halted lockouts of residential tenants until two months after the State of Emergency ended. EO 106 did not bar lockouts of commercial tenants. Nevertheless, with landlord-tenant court suspended, there is no practical way for a commercial landlord to obtain the judgment of possession and warrant of removal necessary to have a lockout effectuated through the judicial system.

The governor’s executive order and Supreme Court orders did not, however, prevent landlords from filing eviction complaints against both residential and commercial tenants. It is estimated that more than 60,000 evictions have been filed since the start of the pandemic, with thousands more yet to be filed. While the vast majority of these pending complaints concern residential tenancies, a substantial number seek eviction of commercial tenants.

In later orders, the Supreme Court made some modest accommodations for commercial landlords. First, in July 2020, the court modified its intake procedures, requiring landlords to identify whether the evictions concerned residential or commercial tenancies so court staff could better track each case to potentially lead to an earlier resolution. Then, in February 2021, the Supreme Court allowed commercial evictions to proceed in certain circumstances, such as where the tenant’s business permanently closed and resulted in the property’s vacancy. While this expanded a commercial landlord’s ability to get before the court beyond the previously narrow “emergency” situations (i.e., “documented violence” or “criminal activity”), the courts remain largely closed for run-of-the-mill non-payment cases.

The Common Law Remedy of Self-Help

Historically, “at common law … a landlord could dispossess peaceably a holdover tenant.” Vasquez v. Glassboro Serv. Assoc., 83 N.J. 86, 105 (1980). In other words, self-help eviction was a valid remedy, and a judgment of possession was not absolutely necessary in order to remove a tenant. See Mershon v. Williams, 62 N.J.L. 779, 784 (1899) (holding that “the defendant landlord had a right to take possession and remove the goods, provided he did so without committing a breach of the peace, was in accord with the law of this state”). Modern courts have commented that self-help remedies are generally disfavored and that “the contemporary belief [is] that society is better off if adversaries who cannot otherwise settle their differences proceed before an impartial third party such as a … judge.” Callen v. Sherman’s, Inc., 92 N.J. 114, 120 (1983).

Recognizing that an “inherent” problem with self-help was that it “can lead to confrontations and breaches of the peace,” Vasquez, 83 N.J. at 105, the legislature enacted various measures to prohibit unlawful entry of real property used as a residence, and required that residential evictions be done only through the judicial summary dispossess process. N.J.S.A. 2A:39-1; N.J.S.A. 2A:18-51, et seq. See also Maglies v. Estate of Guy, 193 N.J. 108, 135 (2007) (Hoens, J., dissent) (noting that prior to 1969, “there were no statutes governing landlord-tenant relations, with the effect that, in large measure, only common law principles were operative”).

While the legislature did not strictly forbid self-help commercial evictions, the Forcible Entry and Detainer Act sought to dissuade unlawful self-help evictions—both residential and commercial—by prohibiting entry or holding of real property through the use of “force,” “violence,” or threats. N.J.S.A. 2A:39-2. An action by a tenant for unlawful forcible entry can restore the tenant to possession or award treble damages. N.J.S.A. 2A:39-8. See also Truesdell v. Carr, 351 N.J. Super. 317, 321 (Law Div. 2002) (“[T]he purpose of the treble damage provision of [N.J.S.A. 2A:39-8] … is obviously to deter ‘self-help’ by landlords[.]”).

Modern Self-Help in New Jersey

In light of the courts’ general disfavor toward all self-help remedies, and the legislature’s substantial penalties for an unlawful forcible self-help, the self-help eviction has been used and tested sparingly. Thus, cases commenting on the remedy are few and far between, and those that discuss it have not delineated a clear standard for when the remedy may be lawfully employed.

For example, in Porter & Ripa Assocs. v. 200 Madison Ave. Real Estate Grp., 159 N.J. Super. 317, 320 (Ch. Div. 1978), aff’d 167 N.J. Super. 48 (App. Div. 1979), “the landlord took possession of [the tenant’s] property in the demised premises and locked the tenant out … because of nonpayment of two months[’] rent.” The tenant filed an order to show cause, claiming wrongful eviction and distraint of its property. The court granted the tenant’s motion for summary judgment, finding that the landlord failed to give the notice required under the lease prior to retaking possession, but did not otherwise comment on the viability of the remedy. 167 N.J. Super. at 52-53.

A provision giving the landlord the right to repossess upon tenant’s default, and compliance with notice provisions, were similarly at issue in Liqui-Box Corp. v. Estate of Elkman, 238 N.J. Super. 588 (App. Div. 1990). There, the landlord entered and retook possession upon a belief that the tenant had vacated or abandoned the space, notwithstanding that the tenant continued to pay rent. While the majority of the case dealt with whether or not the tenant had, in fact, actually vacated or abandoned, the court noted that “[n]othing in Callen acts to restrict the conduct of a commercial landlord, acting on its own, to reenter its own property following a tenant’s breach, in accordance with the agreed-upon provisions of a mutually negotiated and private lease agreement.” Id. at 600. The Appellate Division seemed to endorse (or at least condone) commercial self-help evictions, so long as the lease clearly granted the landlord such a right, and the notice provisions were strictly followed.

More recently, in Wall St. Inv. Grp. v. Plevy & Plevy Real Estate Holdings, 2016 N.J. Super. Unpub. LEXIS 2042, at *2 (App. Div. Sep. 7, 2016), the landlord “decided to take matters into his own hands by locking [the tenant] out of the office,” after the lease expired and the “rent was unpaid for several months.” After changing the locks, the landlord belatedly filed an eviction complaint, and the tenant filed a separate action for wrongful distraint of property. The court held that the landlord breached a provision of the lease that required eviction to be done through a summary dispossess action, id. at *7, and thus refused to award the landlord any damages for the back rent. The Appellate Division affirmed the decision, and commented that the landlord’s “self-help measures in locking out [the tenant] and withholding their property because of outstanding rent was not authorized by law.” Id. at *15. The Appellate Division, like the trial judge, relied on the clear language of the lease, which stated that “[a]fter obtaining a judgment for possession and compliance with the warrant of removal, the Landlord may re-enter and take back possession … .” Id. at *16. Once again, the trial and appellate courts found it compelling that the landlord did not specifically reserve a self-help eviction right in the lease.

Self-Help During COVID

In light of the seemingly insurmountable backlog of eviction cases, New Jersey landlords would be well-served by a clear judicial opinion outlining the permissible uses of self-help commercial eviction. Other states, such as New York, have provided more definitive guidance and a clear standard:

[C]ommercial landlords may utilize self-help where (1) the subject lease specifically reserves the landlord’s right to reenter and regain the premises upon the tenant’s breach of its obligation to pay rent, (2) prior to reentry, landlord serves upon a tenant valid rent demand, (3) reentry was effectuated peaceably, and (4) tenant is in fact in default of its obligation to pay rent.

Sol De Ibiza v. Panjo Realty, 911 N.Y.S.2d 567, 569 (N.Y. App. Term 2010); see also Bozewicz v. Nash Metalware Co., 725 N.Y.S.2d 671, 671 (App. Div. 2nd Dept. 2001). Even so, during the COVID pandemic, the courts are maintaining a close watch on self-help evictions. See Smart Coffee v. Sprauer, 2021 NY Slip Op 21004, ¶ 6 (N.Y. Civ. Ct. Jan. 8, 2021) (applying New York’s eviction moratorium and holding “[w]hile there may be some instances in which a commercial landlord may re-enter a rented space and take back possession, this is not one of them,” and landlords are not permitted to “behave like they are in the Wild West and resort to self-help.”).

While the current law in New Jersey seemingly does allow (or at least does not explicitly bar) commercial self-help evictions, New Jersey would be well-served by adopting a clear standard and monitoring it closely for compliance—particularly as the COVID-19 pandemic and the court backlog continue. For commercial landlords with leases that specifically preserve a right of repossession after default, self-help eviction may be a remedy worth consideration; however, until the court provides clearer guidance, landlords should exercise caution before proceeding, given the steep penalties imposed against landlords that improperly utilize self-help.


Reprinted with permission from the May 3, 2021 issue of the New Jersey Law Journal. © 2021 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved. For information, contact 877-257-3382 or reprints@alm.com or visit www.almreprints.com.