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Harrison Associates v. Rent Leveling Board of Township of Franklin

Decided: December 29, 1986.

HARRISON ASSOCIATES, A NEW JERSEY PARTNERSHIP, PLAINTIFF-APPELLANT,
v.
THE RENT LEVELING BOARD OF THE TOWNSHIP OF FRANKLIN, SOMERSET COUNTY, AND JEFF STARBUCK AND JILL STEIN, DEFENDANTS-RESPONDENTS



On Appeal from the Superior Court of New Jersey, Law Division, Somerset County.

King, Deighan and Havey. The opinion of the court was delivered by Havey, J.A.D.

Havey

The issue raised by this appeal is whether a provision in a rent leveling ordinance requiring 60-days' notice of increase in rent is preempted by the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 and -61.2, which provides for only one month's notice to quit and notice of rent increase as a condition precedent to an eviction proceeding. We hold that there is no preemption and therefore reject plaintiff's claim that the 60-days' notice provision under the Franklin Township Rent Leveling Ordinance is invalid. We affirm.

Plaintiff owns and operates a 20-story high-rise luxury apartment building in Franklin Township known as "Harrison Towers". Defendants Jeff Starbuck and Jill Stein have been tenants on an annual lease basis during the period relevant to this action. Their annual lease commences on the first day of November of each year.

Franklin Township has, since 1973, controlled rents in multi-family complexes by means of a rent leveling ordinance. The ordinance provides that notice of a rental increase must be served upon tenants at least 60-days prior to the effective date of the proposed increase. Prior to 1979, the ordinance provided for a 3 1/2% maximum rental increase per annum. In 1979, plaintiff challenged the ordinance and in 1980 a Law Division judge entered judgment in plaintiff's favor declaring the ordinance unconstitutional as it applied to plaintiff, and "enjoined" enforcement of the ordinance against it. The judgment was appealed.

During August 1981, plaintiff noticed Starbuck and Stein of its intention to increase their annual rent by 4.8% effective on the renewal date of their lease, November 1, 1981. The parties executed the lease at the end of August 1981. Effective

October 1, 1981, the ordinance was amended raising the permitted maximum annual rental increase from 3 1/2% to 6 1/2%.

In February 1982, in an unreported opinion, the Appellate Division reversed the judgment declaring the ordinance invalid as against plaintiff. As a consequence of the reversal, plaintiff recalculated the rents charged "during the injunction period" and made appropriate repayments to tenants of the difference between what was collected and the 3 1/2% to which it was entitled. However, in calculating the repayment, it applied the 6 1/2% increase to the November 1, 1981 renewal.

In 1985 Starbuck and Stein filed a complaint with the rent leveling board alleging that plaintiff had violated the 3 1/2% increase provision of the ordinance for rents collected for the November 1, 1981-1982 lease term. The board agreed, concluding that when plaintiff gave notice of the increase and signed the lease in August, it was bound by the 3 1/2% pre-amendment cap under the ordinance. It ordered plaintiff to adjust the base rent for the lease years commencing November 1, 1981 through 1984 and to refund overpayments made during that period. The trial judge affirmed the board's determination.

Plaintiff first argues that since the November 1, 1981 lease renewal was subsequent to the October 1, 1981 ordinance amendment, it should derive the benefit of the 6 1/2% increase in calculating the rebate for the renewal year. We reject the argument since the effect of the Appellate Division decision was to reinstate the ordinance retroactively and to restore the parties to their status prior to the suit being instituted. See Landy v. Lesavoy, 20 N.J. 170, 176 (1955). Consequently, plaintiff was subject to the 3 1/2% rate when it gave notice of an increase and signed the lease in August 1981. Thus plaintiff was obligated when it calculated the repayments for the November 1, 1981 lease term to apply the 3 1/2% rate which was in effect when the lease was executed.

Plaintiff next contends that the Anti-Eviction Act, which requires only one month's notice of ...


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