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229-233 Phoenix Property, L.L.C. v. Rivera

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 7, 2008

229-233 PHOENIX PROPERTY, L.L.C., DANIEL M. COLLINS, AND EECCGROUP, L.L.C., PLAINTIFFS-RESPONDENTS,
v.
LUIS AND IXCIA RIVERA, DEFENDANTS-APPELLANTS.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. LT-12328-03.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 17, 2007

Before Judges Parrillo and Graves.

Defendants Luis and Ixcia Rivera, husband and wife tenants, appeal from three orders of the Special Civil Part:

(1) on January 20, 2004, entering judgment for possession in favor of plaintiffs landlord, 229-233 Phoenix Property, L.L.C., Daniel M. Collins and EECCGROUP, L.L.C. (collectively "landlord"), for the eviction of defendants from rent controlled premises under N.J.S.A. 2A:18-61.1(g)(2); (2) on January 20, 2006, finding that defendants did not exercise their right of first refusal to reoccupy the subject premises upon completion of renovations at market price rent pursuant to the court's January 20, 2004 order and denying defendants' motion for summary judgment; and (3) on July 31, 2006, denying defendants' motion for reconsideration. We affirm.

By way of background, the building in question is an eight-family, side-by-side, brick structure located at 231 Third Street, Jersey City, subject to the Jersey City Rent Control Ordinance, Jersey City, N.J., Municipal Code § 260-1 to -20 (1986). Defendants lived in apartment 2L for twenty-eight years until they were forced to relocate on April 30, 2004, because the building was scheduled for extensive structural renovations due to numerous municipal and State safety code violations. Ixcia Rivera is disabled and suffers from multiple sclerosis. According to the landlord's registration statement filed with the City of Jersey City Rent Control Agency, the last registered rent control rent paid by defendants for apartment 2L was $273.25 per month, the last registered base rent control rent being $632.19 per month.

To secure the eviction of defendants, plaintiffs filed a complaint in the Special Civil Part on July 14, 2003, pursuant to N.J.S.A. 2A:18-61.1(g)(2). Following trial on October 8, 2003, the court granted judgment for possession to plaintiffs and awarded defendants relocation expenses to be determined by the parties.

Defendants still occupied apartment 2L a few months later and another hearing was held on January 12, 2004 to finalize defendants' relocation plan. At the conclusion of that hearing, the court awarded defendants the maximum statutory relocation expenses to move to another building. Specifically, defendants were awarded a moving expense allowance, $300, plus a dislocation allowance, $200, pursuant to N.J.S.A. 20:4-4(b), totaling $500, and a $4000 rental stipend, pursuant to N.J.S.A. 20:4-6(b), for a total award of $4500. Defendants would be given until April 30, 2004 to vacate the apartment.

Defendants were further granted a right of first refusal to reoccupy apartment 2L, conditioned, however, on payment of market rent upon completion of the property's renovation and defendants' submission to a credit review to determine capacity to pay market rent. In fact, in rejecting defendants' objection to the credit check condition, the trial judge reasoned:

Yeah, but, but the problem is . . . that [Mr. Rivera] gets the right of first refusal, but he's now going into a unit that will have a market rent. And . . . the owner is entitled to, to an assurance that [Mr. Rivera] will be able to afford that market rent.

[T]he bottom line is there's a new landlord/tenant relationship that's being created [when the Riveras exercise their right of first refusal]. . . . I don't have the power or the authority to dictate to this landowner under what circumstances he is going to re-rent this unit to Mr. Rivera.

All I can do is get a consent from him that he will give [Mr. Rivera] a right of first refusal. [(emphasis added).]

Other colloquies between the court and counsel leave no doubt as to the termination of tenancy rights and the right to reoccupy at market rate:

MR. KURZEJA [defendants' counsel]: Your Honor . . . I want to add one thing on behalf of Mr. Rivera. He suggested to me that his desire to move back to 23[1 Third Street] when complete is so great that he would be willing to pay the freight. Even with a rehab . . . he acknowledges that the rent is going to be higher.

THE COURT [responding to above comment but directing statement to plaintiffs' counsel]: Yeah, well that was . . . I understood from statements made on the record the last time by your client [Collins], who is now present here in court, that that's no problem, he [Mr. Rivera] occupying that particular apartment. But he would have to pay market rent for that apartment. Isn't that my understanding?

[(emphasis added).]

In keeping with this understanding, plaintiffs' counsel noted on the record that the relocation was a "clean break" with regard to the Riveras' occupancy rights in the apartment; a clean break meaning "[defendants] no longer ha[ve] occupancy rights with respect to this apartment in this building." The trial judge responded to counsel's comment by stating that issue had "already been decided." Luis Rivera himself even acknowledged that there would be a termination of tenancy:

MR. MCNALLY [plaintiffs' counsel]: I'd like to be clear for the record regarding that issue. That if provided first refusal, at the market rent for the apartment --

THE COURT: Oh, yeah. Oh, no, no, --

MR. MCNALLY: -- when he returns. I don't want --

THE COURT: No, that's absolutely right.

MR. MCNALLY: -- I don't want -- I want to be clear that there's a, there's a termination of the tenancy now and there's no continuing right to be --

THE COURT: Okay.

MR. MCNALLY: -- enforcement of the, of the --

THE COURT: No exactly. You understand that Mr. Rivera.

MR. RIVERA: Yes, sir.

[(emphasis added).]

Accordingly, the judge's order of January 20, 2004, memorializing his oral decisions of January 12, 2004, specifically provides: that upon completion of the contemplated renovations to the Premises, Plaintiff shall provide to Defendant a right of first refusal to occupy the renovated Premises at market rent. . . . If Defendants choose to accept Plaintiffs' offer of rental at market rent, Plaintiff shall be permitted to examine and consider the Defendants' credit and capacity to pay in a manner consistent with the Plaintiff's [sic] examination and consideration of the credit and capacity to pay of other prospective tenants. [(emphasis added).]

Another matter discussed at the January 12, 2004 hearing concerned the prospective conversion of plaintiffs' apartment building to condominium ownership, although the court did not further address the issue. However, soon thereafter, on July 2, 2004, the building was conveyed to EECCGROUP, L.L.C. Almost one year later, on June 2, 2005, the new owners notified defendants in writing that they could exercise their right of first refusal and reoccupy apartment 2L at 231 Third Street, and that market rent would be set at $1600. Defendants were required to execute a standard lease agreement and pay the security deposit and first month's rent up front, $4000. Pursuant to the court's January 20, 2004 order, EECCGROUP also asked to examine the Riveras' credit history to determine their ability to pay market rent.

Defendants accepted the offer to reoccupy apartment 2L on June 17, 2005, but contested the rental price, believing rent for comparable premises in the area to be $500 or $600. Counsel for EECCGROUP requested defendants' financial information again on July 6, 2005, and defendants' counsel responded on August 11, 2005 that the rent charged should be the rent control amount and that defendants' credit check should only be based on their ability to pay the rent control amount.

On August 15, 2005, EECCGROUP moved to enforce the January 20, 2004 order. The motion judge initially rejected defendants' argument that they were entitled to rent control rent, finding their former tenancy had been terminated: the former tenancy had been terminated by virtue of the eviction action and the payment of relocation expenses to the defendant upon the termination of that former tenancy - and more significantly, that acceptance by the defendant of that relocation expense estops the defendant from denying the termination of that tenancy.

A hearing was scheduled to determine the only remaining issue of fair market rent. Because of the motion judge's subsequent retirement, the matter was reassigned to another judge who, on November 18, 2005,*fn1 issued a case management order identifying issues to be addressed, setting a time frame for the litigation to proceed, fixing a return date on defendants' interim motion for summary judgment seeking interpretation of the January 20, 2004 order, and referring the entire matter back to the original judge.

In support of their motion, defendants argued that the market rent provided for in the removal order of January 20, 2004 is limited by application of the Jersey City Rent Leveling Ordinance and, consequently, that the appropriate venue for the determination of the rent at which defendants may exercise the right of first refusal under the removal order is the Jersey City Rent Leveling Board. Following oral argument on January 13, 2006, the judge denied defendants' motion for summary judgment, holding:

Defendants argue that the only fair reading of the term "market rent" in this case is that rent less than or equal to the rent control rent. . . . However, the transcript as well as the clear language of the removal order leave no doubt that the tenancy created upon a valid exercise of the right of first refusal would be a new tenancy at market rent.

In the course of his oral decision, the judge noted that the prior tenancy had been terminated at the previous hearing and that defendants had been compensated for this through payment of moving and other related expenses. Since "a new tenancy was created . . . the rent levelling board of Jersey City does not have exclusive jurisdiction . . . ." The judge further noted that defendants never appealed the removal order of January 20, 2004, and never adhered, in material respects, to the terms of the right of first refusal in the removal order as well as the specific requirements of the case management order entered on November 18, 2005, particularly as to the provision of financial information to plaintiffs to enable plaintiffs to evaluate the credit and capacity of defendants to pay the market rent for the apartment. An order of January 20, 2006, memorializing the court's oral decision, fixed present market rent for apartment 2L at $1600; denied defendants' summary judgment motion; found defendants failed to effectively exercise the right of first refusal to rent apartment 2L at market rent as provided in the removal order; and declared the right of first refusal terminated. Defendants' subsequent motion for reconsideration was denied.

This appeal follows*fn2 in which defendants raise the following issues:

I. THE TRIAL COURT JUDGE IGNORED THE EXCLUSIVE JURISDICTION OF THE RENT CONTROL AGENCY WHEN HE PERMITTED THE RENT TO BE ANYTHING OTHER THAN RENT CONTROL RENT.

II. THE TRIAL COURT JUDGE ABUSED HIS DISCRETION BY IGNORING THE EXCLUSIVE JURISDICTION OF THE RENT CONTROL AGENCY AT THE TIME THE DEFENDANTS-APPELLANTS SOUGHT TO EXERCISE THE RIGHT TO RE-OCCUPY THE SUBJECT APARTMENT.

III. THE RIGHT TO RE-OCCUPY SHOULD NOT HAVE BEEN DEEMED WAIVED WITHOUT A DETERMINATION OF THE RENT CONTROL RENT BY THE CITY OF JERSEY CITY RENT CONTROL AGENCY.

IV. THE DEFEN[D]ANTS-APPELLANTS' CREDIT AND CAPACITY TO PAY SHOULD ONLY HAVE BEEN DETERMINED ONCE THE PROPER RENT FOR THE SUBJECT PREMISES WAS DETERMINED.

V. IXCIA RIVERA WAS EFFECTIVELY DENIED A PROTECTED TENANCY BECAUSE THE BUILDING WAS CONVERTED TO THE CONDOMINIUM FORM OF OWNERSHIP AFTER THE DEFENDANTS-APPELLANTS WERE GRANTED THE RIGHT TO RE-OCCUPY THE SUBJECT APARTMENT.

We have considered each of these issues in light of the record, the applicable law, and the arguments of counsel, and we are satisfied, separate and apart from issues of mootness and timeliness of appeal, that none of them is of sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). Accordingly, we affirm for the reasons stated by the judge in his oral decision of January 13, 2006 and his order of January 20, 2006. We add only the following comments.

Defendants were evicted pursuant to the New Jersey Anti-Eviction Act (Act), N.J.S.A. 2A:18-61.1 to -61.16a, which allows removal of tenants, such as the Riveras, where the landlord can establish "good cause." N.J.S.A. 2A:18-61.1. Good cause can be shown where

[t]he landlord or owner . . . (2) seeks to comply with local or State housing inspectors who have cited him for substantial violations affecting the health and safety of tenants and it is unfeasible to so comply without removing the tenant . . . .

[N.J.S.A. 2A:18-61.1(g)(2).]

The judge properly found plaintiffs had established good cause pursuant to N.J.S.A. 2A:18-61.1(g)(2) and therefore correctly ordered defendants to relocate. In order to assist in the relocation, the judge required plaintiffs to pay to defendants the maximum statutory relocation allowances possible, a total of $4500, N.J.S.A. 20:4-4(b) and 4-6(b), and plaintiffs agreed to grant defendants a right of first refusal to apartment 2L.

However, nothing in the Anti-Eviction Act commands that the new landlord-tenant relationship is governed by the terms of the old tenancy once terminated, or that defendants retain the right to reoccupy the premises at the previous rental price.

We also reject defendants' final argument that the trial judge failed to grant Ixcia Rivera a protected tenancy status under the Senior Citizens and Disabled Protected Tenancy Act (Act), N.J.S.A. 2A:18-61.22 to -61.39, because of her illness. The Act states that "[e]ach eligible . . . disabled tenant shall be granted a protected tenancy status with respect to his dwelling unit whenever the building or structure in which that unit is located shall be converted." N.J.S.A. 2A:18-61.25. The evident purpose of the Act is to prevent the forced eviction of the handicapped "because of their limited mobility and the limited number of housing units which are suitable for their needs." N.J.S.A. 2A:18-61.23.

Here, defendants' tenancy terminated by court order in October 2003, well before the building's conversion to condominium status. In fact, on January 12, 2004, the court determined a relocation plan for defendants that took into account Ixcia's disabled status and allowed the couple until April 30, 2004 to vacate the premises. Defendants were notified, and accepted, the right to reoccupy apartment 2L in June 2005, but failed to comply with the court-ordered requirements conditioning exercise of their right of first refusal, i.e. turning over financial statements to allow a credit check and payment of market rate rent. Litigation to determine the rental price commenced shortly thereafter, and the building was changed to the condominium form of ownership in September 2005. However, apartment 2L remained available for defendants to lease, at market price rent, until March 2007 when this appeal was dismissed due to defendants' failure to prosecute.

The relevant provision of the Act specifically states that a person may be granted "protected tenancy status with respect to his dwelling unit whenever the building or structure in which that unit is located shall be converted." N.J.S.A. 2A:18-61.25 (emphasis added). The statute does not define "dwelling unit," but, according to Black's Law Dictionary, a "dwelling-house" is defined as "[t]he house or other structure in which a person lives." Black's Law Dictionary 524 (7th ed. 1999). Obviously, the statute presupposes that the disabled or elderly tenant is "dwelling" in the "unit" at time of conversion. Such a construction furthers the purpose of the Act to prevent the relocation of disabled tenants because of difficulties in mobility.

Here, as noted, defendants were no longer dwelling in apartment 2L, at the latest, as of April 2004. The building was converted to condominium ownership over one year later, in September 2005. At time of conversion, apartment 2L was no longer defendants' "dwelling unit" in September 2005, because it was not the "structure in which [they] live[d]." Black's Law Dictionary 524 (7th ed. 1999). Therefore, defendants cannot now claim statutory protection under the Act for apartment 2L.

Affirmed.


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