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Sacks Realty Co., Inc. v. Shore

December 31, 1998

SACKS REALTY CO., INC., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT/CROSS-RESPONDENT,
v.
ESTELLE SHORE AND ZIAD AND SUSAN OLABI, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS, AND SOPHIE CURRAN, MAXINE ACEVEDO, MARGARET M. WARREN, MARY AND MARGARET TOOMEY, HELEN CAREY, HERBERT AND MARGARET KEEGAN, EDWARD AND PEARL FABER, JEANNE DOLAN, VICTOR AND DENISE DAVIS, HAROLD AND DOROTHY TURF, ETHEL GIBNEY, FRED AND ANITA PUCCIARELLI, MARIE STENDER, JOHN P. AND MARGARET NEALON, HARRY AND DOROTHY ZELLER, ANNE T. SHEEHY, THOMAS F. KELLY, EXECUTOR FOR ESTATE OF ELIZABETH ROACHE AND MICHAEL J. KELLY, EXECUTOR FOR ESTATE OF M. DELORES ROACHE, GERALD AND ELEANOR MUGNO, BETTY BERGER, MARIE MEDINA AND ELIZABETH ARRIETA, AND HELEN WYNNE, EXECUTRIX OF THE ESTATE OF MARGARET M. GERAGHTY, DEFENDANTS.



Before Judges Pressler, Brochin and Steinberg.

The opinion of the court was delivered by: The opinion of the court was delivered by Pressler, P.j.a.d.

[9]    Argued December 1, 1998

On appeal from the Superior Court of New Jersey, Law Division, Hudson County.

This appeal implicates the complex of legislation affording special protections to tenants of premises converted or proposed to be converted to condominium or cooperative ownership. The specific questions before us are first, whether as a matter of public policy a tenant may validly waive those protections without any offsetting consideration, and second, whether the retroactivity provisions of the Tenant Protection Act of 1992, N.J.S.A. 2A:18-61.40 to -61.59, may be constitutionally applied where, prior to its enactment, a consent judgment for possession has been entered but no warrant for removal has yet issued. We answer the first question in the negative and the second in the affirmative. Accordingly, we affirm that portion of the judgment from which plaintiff appeals affording defendant-tenants the protection against removal vouchsafed by the 1992 Act, and we reverse that portion of the judgment awarding plaintiff damages against defendant-tenants for the losses it sustained by reason of their non-removal.

These are the facts. In 1986 a condominium conversion of a 271-unit apartment building was proposed by 201 St. Paul's Conversion Corp., plaintiff Sacks Realty Co., Inc.'s predecessor in interest, who was the proposed condominium sponsor and the contract purchaser of the building. *fn1 A group of tenants, including defendant Estelle Shore, retained an attorney to advise and represent them. Others, including defendants Ziad and Susan Olabi, apparently opted not to join that group. Although a number of other tenants had been originally named as defendants in this action, Shore and the Olabis are the only defendants participating in this appeal.

In April 1986 an agreement was entered into between the sponsor and the tenant group's attorney as "authorized representative" of those tenants. The provision of that agreement material here is section 9, defining the rights of non-purchasing members of the tenant group. Defendant Shore was a non-purchasing tenant. Paragraphs (a) and (b) dealt with senior citizens and disabled tenants entitled to protection pursuant to N.J.S.A. 2A:18-61.22, et seq. Shore was then neither a protected senior citizen nor a protected disabled tenant. Her rights were, therefore, covered by paragraph (c) of that section, applicable to other non-purchasing members of the tenant group, which provided in full as follows:

"The Sponsor agrees that its right to such eviction under N.J.S.A. 2A:18-61.1(k) shall be postponed for a period of one (1) year with respect to any member of the Tenants' Group who does not purchase a Unit, does not qualify for protected tenancy status under subparagraphs (a) or (b) of this Paragraph 10 [sic] and who requests comparable housing in the manner specified by law. In consideration of this postponement, each applicable member shall not seek more than one (1) stay of eviction under N.J.S.A. 2A:18-61.11 and at the Conclusion of that stay shall not assert any other defense to eviction including, without limitation, N.J.S.A. 2A:42-10.1 et seq."

Thereafter, the conversion was completed, all necessary repairs were made to the premises and defendants continued in possession. Plaintiff then commenced summary dispossess actions in the Special Civil Part. Those actions were concluded by individual consent judgments entered in 1989, one consented to by Shore and one consented to by the Olabis. The Shore consent judgment recited the fact of the 1986 agreement as well as these additional facts:

"[D]efendant did timely and properly request plaintiff to furnish Estelle Shore with comparable housing as permitted by the Eviction Act and in lieu of furnishing such comparable housing plaintiff has agreed that the issuance of a warrant for removal in this case will be stayed for two years from the date of entry of this judgment and the plaintiff will provide the defendant with five (5) months hardship relocation compensation in full satisfaction of the requirements of N.J.S.A. 2A:18-61.16 and will waive payment of one month's rent for moving expense compensation in full satisfaction of the requirements of N.J.S.A. 2A:18-61.10, and the defendant has further agreed to waive the notice required under N.J.S.A. 2A:18-16.11 [sic] for payment of such compensation; and it further being made known to the Court that defendant waives all notices required by N.J.S.A. 2A:18-61.2; and it further being known to the Court that defendant waives the right to any additional stays under N.J.S.A. 2A:18-61.11 and N.J.S.A. 2A:42-10.1 et seq. or under the Court's general equitable powers; and it further being made known to the Court that defendant waives the right, if any, to a protected tenancy under the Senior Citizens and Disabled Protected Tenancy Act, N.J.S.A. 2A:18-61.22, et seq. ("the Act") whether or not defendant satisfies, now or at any time in the future, the criteria set forth in the Act; and it further appearing to the Court that the parties have mutually agreed to the entry of the within judgment; and good cause appearing therefore."

The consent order then went on to decree that plaintiff was entitled to a judgment of possession, that issuance of the warrant for removal would be stayed for two years from the date of the judgment rather than the one-year specified by the agreement, that upon defendant's vacation of the premises, plaintiff would pay defendant one month's rent for moving expense compensation and five months' rent for relocation compensation, and that plaintiff would return the security deposit within thirty days after vacation. The consent judgment signed by the Olabis was virtually identical except that the recitations omitted reference to the tenant group agreement and provided for only a one-year stay of the warrant, thereafter extended for a second year by a subsequent consent order.

Defendants did not vacate the premises prior to the two-year stay period provided for by the consent judgments, but plaintiff did not immediately apply for a warrant for removal because, prior to the expiration of the two-year period, the Legislature enacted L. 1991, c. 45, effective March 4, 1991. That legislation imposed a moratorium until June 1, 1992, on the removal by landlords of tenants proposed to be evicted because of a condominium or cooperative conversion. Section 2 of that legislation expressly prohibited the removal of such tenants against whom a judgment of possession had been obtained but who had not been actually removed as of the effective date of the Act. The Legislature then passed the Tenant Protection Act of 1992, effective on the date of the moratorium's expiration. The 1992 Act substantially extended the class of tenants that had been protected in the event of condominium or cooperative conversion by the 1981 Senior Citizens and Disabled Protected Tenancy Act, N.J.S.A. 2A:18-61.22 to -39. It also conferred protected status on those tenants covered by the 1992 Act from the date of the inception of the moratorium. That intention is made clear by its express retroactive provision, N.J.S.A. 2A:18-61.56. By that provision, the Legislature effectively prohibited the institution of an action for removal of a qualified tenant under the Act, the entry of a judgment against such a tenant in a previously instituted action for possession, and the removal of such a tenant except in accordance with the terms and conditions of the Act. Qualification for protection under the Act depends on a combination of factors, including the county in which the premises are located, the household income of the tenant, and the period of the tenant's occupancy. N.J.S.A. 2A:18-61.42, 61.43. It is not disputed that both Shore and the Olabis meet the qualification criteria. Nor is it disputed that under the terms of the Act, they are not eligible for removal.

After the passage of the Act, plaintiff commenced this action in the Law Division seeking, in effect, enforcement of its consent judgments by the issuance of warrants for removal and money damages against defendants because of the losses allegedly sustained by reason of their failure to comply with the terms of the consent judgment, and, in Shore's case, also with the terms of the 1986 agreement. Its essential contention was that the 1992 Act could not be constitutionally applied retroactively so as to abrogate both the 1986 agreement and the 1989 consent judgments. The trial court agreed and granted partial summary judgment to plaintiff adjudicating the inapplicability of the Act on the ground that it unconstitutionally affected vested property rights. We granted defendants' motion for leave to appeal, and in Sacks Realty Co., Inc. v. Shore, 276 N.J. Super. 621 (App. Div. 1994) (Sacks I), we reversed the partial summary judgment, without, however, addressing the constitutional issue. The basis for the reversal was our Conclusion that both the 1986 agreement and the 1989 consent judgments were void on their face because they included a waiver by the tenant of the protections of the 1981 Senior Citizens and Disabled Protected Tenancy Act in violation of the express prohibition of N.J.S.A. 2A:18-61.36 against such waiver by tenants. Plaintiff thereafter moved for reconsideration on the ground that defendants did not qualify for protection under the 1981 Act and hence that their "illegal" waiver of its protections was mere surplusage and a legal nullity. We then entered an order adhering to our opinion but permitting plaintiff to offer "further evidence relevant to the issues, including the issues considered in the appeal."

On remand, the trial Judge reconsidered the constitutionality issue. He concluded that there was no constitutional impediment to the retroactive application of the anti-removal provision of the 1992 Act and therefore denied plaintiff's application for warrants of removal. He held, however, that despite the prohibition against removal, defendants were bound by their respective agreement and consent judgments and therefore responsible for whatever economic losses plaintiff had sustained by not having been able to sell their apartments. The damages claims were thereafter tried to a jury which awarded plaintiff damages against Shore in the amount of $28,146 and against the Olabis in the amount of $27,876. Plaintiff appeals from the judgment insofar as it adjudicated the constitutionality of the 1992 Act's retroactive provision. *fn2 Defendants Shore and Olabi cross appeal from the determination that they are liable for damages and from the consequent jury award. We affirm that portion of the judgment appealed from by plaintiff. We reverse that portion of the judgment appealed from by defendants and vacate the jury verdict.

Before considering the constitutional issue, we address the validity, as a matter of public policy, of paragraph 9(c) of the 1986 agreement and the waiver provisions of the 1989 consent judgments. We are persuaded that defendants' respective waivers of the complex of statutory rights then afforded them was, in the circumstances, impermissible as a matter of public policy, rendering the agreement and consent ...


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