NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4876-14T1

FRIENDS OF THE LOEW'S, INC.,
Plaintiff-Respondent,
v.
CITY OF JERSEY CITY,
Defendant-Appellant,
and
JERSEY CITY REDEVELOPMENT AGENCY,
Defendant.
__________________________________________
Submitted March 21, 2017 – Decided April 24, 2017
Before Judges
Peterson.

Yannotti,

Gilson

and

Sapp-

On appeal from Superior Court of New Jersey,
Chancery Division, Hudson County, Docket No.
C-32-14.
Jeremy Farrell, Corporation Counsel, attorney
for appellant (Jason T. Watson, on the
briefs).
Roberta L. Tarkan, attorney for respondent.

 PER CURIAM
The City of Jersey City (City) appeals from orders filed by
the trial court on June 3, 2015, granting summary judgment in
favor of plaintiff, Friends of The Loew's, Inc. (FOL), and denying
the City's motion for summary judgment. We affirm in part, reverse
in part, and remand for further proceedings.
I.
This appeal arises from the following facts. Loew's Jersey
Theater is located in Journal Square in the City. The theater
opened in 1929. It was one of several so-called "movie palaces"
built in the New York City area. The theater later fell into
disrepair.

The

theater

was

closed

and

the

City

considered

demolishing it. FOL, a non-profit organization, was established
to save the theater, restore it, and renew its operation.
In 1993, the City purchased the theater. Acting through the
Jersey City Redevelopment Agency (JCRA), the City spent its own
funds, plus monies obtained from the New Jersey Historic Trust,
to stabilize the building and make it available for special events.
Several years later, FOL made additional repairs and renovations,
using

its

own

funds

and

volunteer

labor.

FOL

also

assumed

responsibility for the ordinary maintenance of the theater.
On

October

15,

2004,

the

City

and

FOL

entered

into

an

agreement under which FOL leased the theater for the purpose of
2

A-4876-14T1

 restoring, operating, and maintaining the theater as a multi-use
cultural arts, entertainment, and event center, with nominal rent
of one dollar per year, payable yearly in advance. The initial
term of the lease was sixty-three months from the date of its
execution.
Under the terms of the lease, FOL has full and exclusive
authority for the theater's management and planning. In the lease,
FOL agreed to seek funds to perform certain construction projects,
which would be undertaken in two phases. The City agreed to make
a good faith effort to secure funding and undertake certain capital
improvements. The parties also agreed to seek funds from the County
of Hudson (County) for certain work, and to share responsibility
for the building's repairs and maintenance.
Among other things, the lease states that FOL has an option
to renew the term for two, five-year renewal periods. In addition,
the lease sets forth certain events of default, which include the
failure by FOL to pay any installment of basic or additional rent,
within twenty days after such payment is due. In the event of
default, the City may avail itself of certain remedies including
termination of the lease.
On November 10, 2004, the City's Municipal Council adopted
Ordinance 04-073. The ordinance authorized the Mayor or the City's
Business Administrator to enter into the lease with FOL for the
3

A-4876-14T1

 theater, at a nominal rate of one dollar per year, pursuant to
N.J.S.A. 40A:12-14(c), a provision of the Local Lands and Building
Law, N.J.S.A. 40A:12-1 to -38.
The ordinance states that the lease shall be for an initial
term of five years, which runs from the date of approval by the
Council. The ordinance also states that subject to the mutual
consent of the parties, the lease could be extended for two
additional five-year periods, for a "total maximum term of not
more than" fifteen years.
Thereafter, certain differences arose between the City and
FOL,

including

Accordingly,

a

the

dispute
City

and

as

to

FOL

the

validity

entered

into

a

of

the

lease.

memorandum

of

understanding (MOU), dated January 30, 2009, to resolve those
differences and continue their working relationship with regard
to the theater.
Among other provisions, the MOU states that the relationship
between the City and FOL is governed by the terms of the lease
dated October 15, 2004, "which remains in full force and effect."
The MOU states that "[t]he parties agree that the [l]ease is valid
and binding." The MOU also states that the parties agree "that the
terms and conditions of the [l]ease apply to both parties and that
each party will abide by the terms and conditions of the [l]ease."

4

A-4876-14T1

 In addition, the MOU provides that if there is any inconsistency
between the lease and MOU, the provisions of the MOU govern.
In the MOU, the City committed to make a good faith effort
to secure funding for capital improvements and other purposes, and
to make such capital improvements in coordination with FOL. The
parties further agreed to cooperate in the design, planning, and
execution of the work on the theater's structure and systems. FOL
also

agreed

to

keep

the

City

fully

advised

of

any

contract

negotiations, and to comply with all applicable laws.
On May 20, 2009, the City's Council adopted Ordinance 09-061,
which authorized the MOU. Ordinance 09-061 states that the City
and FOL had executed the original lease, which had been approved
by the Council by the adoption of Ordinance 04-073. Ordinance 09061 also states that "[a]ll ordinances and parts of ordinances
inconsistent herewith are hereby repealed."
The term of the original lease was scheduled to end in
February 2010. In October 2009, FOL wrote to the City's Business
Administrator, providing notice that it intended to exercise its
option to extend the term of the lease for five years. The City
asserts that plaintiff presented no proof that FOL's letter was
actually delivered to the City.
In 2013, the City announced its intention to bring in new
management to operate the theater, and the JCRA issued a request
5

A-4876-14T1

 for proposals for the redevelopment and management of the facility
(RFP), in accordance with a redevelopment plan adopted by the
Council. According to FOL, the City then directed the theater's
architect to cease construction on work being undertaken with
funds provided by the County.
In March 2014, FOL filed a verified complaint against the
City and the JCRA, alleging that defendants breached the lease and
MOU by failing to provide funds for construction; acting to
displace FOL as the theater's manager; failing to act on FOL's
applications for funds; and directing the theater's architect to
stop construction.
FOL also claimed the City breached the implied covenant of
quiet enjoyment; breached the implied covenant of good faith and
fair dealing; slandered title; and interfered with its prospective
economic

advantage.

FOL

sought

an

injunction

enjoining

and

restraining the City and the JCRA from acting contrary to the
terms of the lease and MOU. It also sought the award of damages,
costs of suit, and attorney's fees.
In addition, FOL sought a preliminary injunction, seeking to
restrain defendants from representing to any party that FOL was
not the tenant and manager of the theater, precluding defendants
from taking any action concerning the RFP, and requiring defendants
to notify certain third parties about this litigation. The court
6

A-4876-14T1

 entered an order requiring defendants to show cause why the
preliminary injunction should not be granted.
On

March

28,

2014,

FOL

filed

a

first

amended

verified

complaint. Defendants responded on April 24, 2014, by filing
answers

and

counterclaims,

alleging

that

the

lease

and

any

extension of the lease are void because they were not authorized
by ordinance, as required by N.J.S.A. 40:12-14; and because FOL
breached the lease by failing to submit annual financial reports
to the City, provide proof of liability insurance, and pay the
annual lease payments.
On April 28, 2014, the City filed a motion for summary
judgment, and on April 29, 2014, the JCRA filed a motion to dismiss
the claims against it. On the return date of the order to show
cause, the court entered a consent order restraining the JCRA from
proceeding with the redevelopment until the motions were resolved.
On June 4, 2014, the court entered an opinion and order,
granting the City's motion to dismiss the complaint. The court
found that because the City never ratified the purported lease
extension and never consented to it, the City had the right to
treat the lease and the extension as void and to refuse to comply
therewith. On June 6, 2014, the court entered an order granting
the JCRA's motion to dismiss.

7

A-4876-14T1

 On June 20, 2014, FOL filed a motion for reconsideration of
the June 4, 2014 order, and the court entered an order dated July
25, 2014, which granted the motion and restored FOL's complaint
against the City. On April 14, 2015, the City filed its second
motion for summary judgment, and FOL thereafter cross-moved for
summary judgment.
The trial court heard oral argument on the motions on May 29,
2015. The court granted FOL's motion and denied the City's motion.
The court found that the original lease remains in full force and
effect

and

has

not

been

invalidated

in

any

way.

The

court

memorialized its decision in orders filed on June 3, 2015.
The order granting FOL's motion states that the City is
enjoined and restrained from taking any action contrary to the
lease and the MOU, and from withholding any action required under
the agreements. The order also enjoins the City from preventing
access to the theater or otherwise interfering with FOL's quiet
enjoyment, possession, management, or operation of the theater.
In addition, the order states that FOL had withdrawn all other
requests for relief in the complaint, including the request for
damages and attorney's fees.
The City's appeal followed. On appeal, the City argues that
the trial court erred by: (1) refusing to adjudicate the issue of
whether plaintiff breached the lease; (2) rejecting the City's
8

A-4876-14T1

 contention that the lease is void because any purported extension
of the lease was not ratified by ordinance, as required by N.J.S.A.
40A:12-14(c); and (3) finding that Ordinance 09-061 repealed in
part provisions of Ordinance 04-073, and modified certain lease
terms in the earlier ordinance.
II.
We turn first to the City's contention that the trial court
erred by granting summary judgment to FOL. The City contends that
the original lease is void because any purported extension of the
lease was not authorized by an ordinance, which the City contends
is required by N.J.S.A. 40A:12-14(c).
A trial court may grant summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that 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." R. 4:462(c). We apply the same standard when reviewing a trial court's
order granting summary judgment. Globe Motor Co. v. Igdalev, 225
N.J. 469, 479 (2016) (citing Bhagat v. Bhagat, 217 N.J. 22, 38
(2014)).
Here, the parties agree that N.J.S.A. 40A:12-14(c) applies
to the lease between the City and FOL. The statute provides in
relevant part that, "[i]n the case of a lease to a nonprofit
9

A-4876-14T1

 corporation or association for a public purpose, the lease shall
be authorized by resolution, in the case of a county, or by
ordinance, in the case of a municipality, and may be for nominal
or other consideration." Ibid. The statute also requires that the
ordinance or resolution specify "the term of the lease." Ibid.
FOL asserts that, on October 2, 2009, it sent a letter to the
City's Business Administrator advising that it was exercising its
option to renew the lease for five years. The City argues that,
assuming FOL sent such a letter, the letter was ineffective to
extend the lease term for the five-year period. The City argues
that

N.J.S.A.

40A:12-14(c)

required

the

Council

to

adopt

an

ordinance expressly authorizing the extension of the lease. The
City contends that because the Council never adopted an ordinance
approving the extension, the lease was not extended and has been
void since the end of the initial lease term.1
In support of its argument that another ordinance was required
to approve the extension, the City relies upon City of Jersey City
v. Roosevelt Stadium Marina, Inc., 210 N.J. Super. 315 (App. Div.
1986), certif. denied, 110 N.J. 152 (1988). We are convinced,
however, that the City's reliance upon Roosevelt Stadium Marina,
Inc. is misplaced.

We note that in 2014, FOL informed the City that it was exercising
its option to extend the lease for the second five-year extension.
1

10

A-4876-14T1

 In that case, the City filed a lawsuit, seeking rescission
of a thirty-year lease with private parties, based on alleged
breaches of the lease. Id. at 318-19. The parties then entered
into negotiations, which resulted in a settlement that provided
for a fifteen-year extension of the lease. Id. at 321, n. 2. The
settlement was incorporated in a judgment, which the City later
sought to vacate on various grounds, one of which was that the
settlement required approval of the City's Council. Id. at 32324.
We noted that the settlement would clearly have violated
N.J.S.A. 40A:12-14, which was in effect at the time. Id. at 328.
We pointed out that N.J.S.A. 40A:12-14(a) required public bidding
for a lease to a private person, and the City's governing body had
to accept or reject the bids. Ibid. We stated that the statute
applied "equally to extensions of leases or new leases" and failure
to comply with the statute "renders any purported lease extension
illegal and void." Ibid. (citations omitted). We added, however,
"[t]here

was

no

claim

made

by

any

party

of

any

preexisting

entitlement to an extension of the lease, such as by option." Id.
at 329.
In this case, the parties recognize that N.J.S.A. 40A:1214(c) applies to the lease with FOL. The statute authorizes the
City to lease property to non-profit entities for a nominal
11

A-4876-14T1

 consideration without public bidding, but requires a municipality
to authorize the lease by ordinance. Ibid. The 2004 ordinance
specifically approved the lease with FOL for an initial term of
five years, with two lease extensions, each consisting of five
years. Because the 2004 ordinance approved the initial term of the
lease, as well as two five-year extensions, the City was not
required to adopt another ordinance authorizing the extensions of
the lease.
The City further argues that the lease did not comply with
the 2004 ordinance, which states that the initial term shall be
for five years, commencing on the date of the Council's approval,
and any extension of the lease was "subject to the mutual consent
of the parties." As we noted previously, the lease states that the
initial

term

was

for

sixty-three

months,

from

the

date

of

execution. In addition, the lease provides that FOL had the option
to renew the lease for two five-year periods, which FOL could
exercise by providing written notice to the City.
However,

the

Council

adopted

Ordinance

09-061,

which

authorized the Mayor or the City's Business Administrator to
execute the amendment to the lease, in the form of the MOU. The
2009

ordinance

stated

that

"[a]ll

ordinances

and

parts

of

ordinances inconsistent herewith are hereby repealed."

12

A-4876-14T1

 Therefore, the MOU expressly reaffirms the validity of the
October 15, 2004 lease, and states that the lease remains in full
force and effect. To the extent any provision of the October 15,
2004 lease or the MOU was incorporated with the 2004 ordinance,
that part of the 2004 ordinance was repealed by Ordinance 09-061.
The City further argues that the 2009 ordinance does not
satisfy the requirements of N.J.S.A. 40A:12-14(c) because the
ordinance does not include a new or amended term of the lease.
Again, we disagree. The 2004 ordinance authorized the October 15,
2004 lease, and expressly set forth the term of the initial lease
and

the

two

five-year

extensions.

Since

the

2004

ordinance

specified the approved lease term and the extensions, the statute
did not require the City to adopt another ordinance including a
new or amended term of the lease.
We

therefore

determined

that

extension

thereof

conclude

the

October

complied

that

the

trial

court

15,

2004

lease

and

with

the

requirements

correctly

the
of

initial
N.J.S.A.

40A:12-14(c) and the ordinances adopted by the Council in 2004 and
2009.
III.
Next, the City argues that the trial court erred by refusing
to adjudicate its counterclaim that FOL violated the lease. The
City contends that, based on FOL's alleged breaches of the lease,
13

A-4876-14T1

 it had the right to terminate the agreement. The trial court
refused to adjudicate this claim. The court stated that these
issues had not been properly pled.
Here, the City filed a counterclaim in which it alleged that
FOL breached the lease by, among other things, failing to: submit
annual financial reports to the City, and semi-annual reports to
the City's Business Administrator; provide the City with proof of
liability insurance; and pay annual lease payments.
We agree that the trial court erred by failing to address the
City's counterclaim for breach of contract. The court erroneously
suggested that the claim had not been properly pled. We remand the
matter to the trial court for further proceedings on the City's
claim that, because FOL allegedly breached certain terms of the
lease, it has the right to terminate the lease.
In summary, the trial court correctly determined that the
lease and the initial extension thereof had been properly approved
pursuant

to

N.J.S.A.

40A:12-14(c),

and

complied

with

the

ordinances adopted by the Council in 2004 and 2009. The court
erred, however, by failing to address the City's claim that,
because FOL allegedly breached the agreement, it had a right to
terminate the lease. We remand the matter to the trial court to
address that claim.

14

A-4876-14T1

 Affirmed in part, reversed in part, and remanded to the trial
court for further proceedings in conformity with this opinion. We
do not retain jurisdiction.

15

A-4876-14T1