Drier, Skillman and Villanueva. The opinion of the court was delivered by Villanueva, J.s.c. (temporarily assigned).
Plaintiff appeals from a Special Civil Part judgment dismissing its summary dispossess action, which was based upon the tenant's theft of money from the plaintiff, because the Judge found that the action was commenced in retaliation for defendants' filing a complaint before the Rent Leveling Board. Defendants have cross-appealed*fn1 from the court's determination that such conduct constitutes a sufficient ground for eviction pursuant to N.J.S.A. 2A:18-61.1(c). We affirm.
Defendants Carmen Walko and her son, Joseph Walko, were tenants in the apartment complex owned by plaintiff Les Gertrude Associates. On June 2, 1991, through surveillance, Joseph Walko ("Walko") was observed unlawfully taking money from the coin boxes of a coin-operated washer and dryer machine in the laundry room of the apartment complex. At no time during the commission of the theft did Walko cause any damage to the machines, coin boxes or any of the plaintiff's property. When confronted, he admitted the theft. Walko and plaintiff reached an agreement to settle the theft wherein it was agreed that to satisfy the loss Walko would make restitution
for the amount of the theft and the cost of surveillance. As part of the agreement, a new lease was to be signed.
On June 19, 1991, plaintiff sent defendants a proposed one-year lease which was to commence on September 1, 1991. This lease, however, provided for a rent increase of $182.88 per month, an amount far in excess of that allowed by the local Rent Leveling Board. In fact, defendants' rent under the new lease would be $750, an amount equivalent to what a new tenant would have to pay if he replaced defendants as a tenant. Thus, despite Walko's theft, the plaintiff, via the proposed lease, indicated a willingness to continue their landlord/tenant relationship for an additional lease term as long as the tenants were willing to pay the increased rental.
Due to the substantial rent increase proposed by the plaintiff, defendants refused to sign the proposed lease and filed a complaint with the Borough of Red Bank Rent Leveling Board on or about July 18, 1991, duly mailing a copy of the complaint to the plaintiff. Although plaintiff denied receiving the complaint, the Judge found otherwise.
On July 23, 1991, plaintiff filed a complaint in Red Bank Municipal Court charging Joseph Walko with the theft. On July 24, 1991, plaintiff, without explanation, sent the defendants a letter stating that their current lease would not be renewed upon its expiration on September 15, 1991.
Despite a determination by the Rent Leveling Board that plaintiff was duly notified of said complaint, plaintiff failed to appear at the scheduled September 26, 1991 hearing. By decision dated October 24, 1991, the Rent Leveling Board determined that plaintiff's attempted rent increase of $182.88 per month was unlawful, and that the maximum allowable increase was only $18.14 per month.
On October 15, 1991, Walko appeared in Municipal Court and pled guilty to the theft. Walko attempted to have the guilty plea entered conditionally so that it could not be used in a civil proceeding. However, the municipal court Judge would not
allow such a condition. See R. 7:4-2(b). At that time, plaintiff acknowledged that it had received full restitution.
On October 21, 1991, plaintiff served defendants with a notice to quit based upon an alleged violation of N.J.S.A. 2A:18-61.1(c). On October 25, 1991, plaintiff filed this ...