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January 2, 1980

CLARIDGE HOUSE ONE, INC., et al., Plaintiffs,
BOROUGH OF VERONA, a Municipal Corporation, Defendant.

The opinion of the court was delivered by: LACEY

The facts are not disputed. On August 13, 1979, defendant enacted Ordinance No. 15-79. Violations of the ordinance are punishable by a fine of not more than $ 200 per day or imprisonment for not more than 30 days, or both. The preamble of the ordinance recites that the Mayor and Council of the Borough of Verona have determined that an emergency exists within the Borough due to the unavailability of rental housing, and that removing existing rental units from the housing market would intensify the emergency,

thereby adversely affecting the health, safety and general welfare of the citizens of the Borough of Verona, and (that) the conversion of existing rental units to condominiums would result in a displacement of those tenants unable to purchase said condominiums for want of adequate resources or unwilling to purchase because of their advanced years of (sic) other valid considerations.

 Therefore, the Council

declared a moratorium of (sic) the conversion of any rental unit in the Borough of Verona to a condominium.
This moratorium shall last for a period of one year, commencing with the effective date of this ordinance.
During the existence of this moratorium, no one can request a tenant to vacate a unit as a consequence of a conversion of said unit to a condominium.

 According to an uncontradicted affidavit filed by James Keane, its vice-president, Claridge House owns a twelve-story luxury apartment building in Verona. Plaintiff acquired the apartment building on December 20, 1978, for the purpose of converting the apartment into a condominium. P 2. Claridge House filed an Application for Registration as a condominium with the Division of Housing and Urban Renewal of the State of New Jersey pursuant to the Planned Real Estate Development Full Disclosure Act. N.J.S.A. 45:22A-21, et seq. P 3. This registration became effective November 21, 1979. Claridge House intends to serve upon all tenants its Notice of Intention to convert. P 4. Tenants will have, for 90 days, the exclusive right to purchase their unit; if the right is exercised within that period the tenant will receive a 10% discount from the listing price. Id. Plaintiff Anthony Ferragame, it is alleged, is a tenant who would exercise his right to purchase. P 3 of the Complaint.

 In his affidavit Keane further states that converting a rental building to a condominium involves up to nine different steps, each of which he describes. P 7. He adds that the Verona ordinance is sufficiently vague so that he cannot tell which of these steps can be taken without subjecting himself to prosecution under the ordinance. P 8a. Additionally, Keane avers that Claridge House will suffer substantial financial hardship including the loss of a large part of $ 145,000 already expended in preparing for conversion if the moratorium is upheld. P 8c.

 Based on these facts, plaintiffs have set forth several constitutional claims that cannot be regarded as frivolous. Although defendant says that the meaning of the word conversion is self-explanatory, the court notes that defendant has not offered to define the word except to quote from the dictionary. Thus, defendant has not responded to any of the concerns voiced by James Keane, other than to assert that his concerns are baseless. Therefore, the vagueness argument cannot be dismissed out-of-hand.

 Similarly, the equal protection argument cannot be discarded as frivolous. Classifications are drawn by the ordinance in question, and while a municipality has much leeway in creating categories, they may not be totally arbitrary or unreasonable. Plaintiffs forcefully contend that singling out owners of apartment buildings bears so little relationship to the goals the ordinance seeks to advance that the equal protection clause is violated.

 In view of the court's disposition of the matter, it is entirely unnecessary to determine whether, in fact, any of plaintiffs' constitutional claims would actually prevail. What is of critical importance is that these claims can scarcely be dismissed as frivolous or totally devoid of merit.

 While reviewing plaintiffs' brief, the court encountered numerous references to claims that defendant lacked the power under New Jersey law to enact the ordinance and, if such power did exist, that the field had been preempted by the state legislature, although these claims were not explicitly stated in the original complaint herein. The court's research revealed that there was, indeed, a serious question of the validity of the ordinance as a matter of state law. Accordingly, the court requested counsel to submit briefs on the state preemption issue and on the issue of whether the court had jurisdiction to hear that issue; the court also directed the attention of counsel to the recently decided case of Township of Little Falls v. Bardin, Civ. A-3280-74 (App.Div. Sept. 27, 1979). Both sides responded with letters addressing the question of subject ...

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