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Ottomano v. Aronov

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 7, 2008

CHIARA OTTOMANO, PLAINTIFF-APPELLANT,
v.
IGOR ARONOV, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, LT-1845-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 4, 2008

Before Judges Winkelstein and Yannotti.

Defendant, Igor Aronov, rented an apartment in Jersey City that was later converted to a condominium. He lives there with his wife and child. Plaintiff, Chiara Ottomano, purchased the condominium with the intention of residing in it. Four months after the purchase, she attempted to increase defendant's rent by approximately eighty percent. Defendant refused to pay and plaintiff filed a complaint for possession of the property.

On April 19, 2007, the trial court issued a written opinion and order dismissing plaintiff's complaint. The court found that because defendant was a preconversion tenant, he was protected by N.J.S.A. 2A:18-61.31, which limits rent increases to the amount permitted by the rent control ordinance in effect in the municipality where the premises is located. Consequently, the court dismissed plaintiff's complaint, and denied her motion for reconsideration. We affirm.

The material facts are substantially undisputed. Defendant rented a two bedroom apartment, unit 1801, in the "Portofino" building, a twenty-six story apartment building located at 1 Second Street, Jersey City. The initial thirteen month lease term began on January 7, 2004, and ended on February 6, 2005, at a rent of $2000 per month plus a $300 per year amenity fee. Defendant renewed his lease twice for additional one year terms, with the final renewal term to expire on February 6, 2007. His first renewal increased his rent to $2,275 per month, and the subsequent renewal increased it to $2,475 per month and increased the amenity fee to $500 per year. According to the Jersey City Rent Leveling Administrator, because the building was constructed in 1999, it is exempt from the City's rent control ordinance.

In 2005, the owner of the Portofino building converted the apartments into condominiums. On March 29, 2006, plaintiff purchased unit 1801 with the intention of personally occupying it. In July 2006, she served defendant with a notice of rent increase which provided, in part:

3. TERMINATION OF LEASE. Your present lease is terminated as of February 7, 2007[.] You must quit and vacate the property as of that date . . . .

4. Rent. You may rent this property after the date of termination for $4,450.00 per month. . . .

5. OTHER CHANGES IN YOUR LEASE.

Security deposit to be increased to $4,450.00 In accordance with your lease you must provide your landlord with sixty (60) days notice of your intent to renew your lease at the new rent. This notice must be received by your landlord or by this office by November 7, 2006.

After defendant informed plaintiff that he objected to the rent increase and did not intend to vacate at the end of the lease term, plaintiff served defendant with a notice to quit which stated that the lease was terminated "as of March 7, 2007." Defendant responded that a three-year notice to quit was required pursuant to N.J.S.A. 2A:18-61.1k and N.J.S.A. 2A:18- 61.2g. On February 20, 2007, plaintiff served defendant with a three-year notice to quit that required him to vacate the premises by March 31, 2010.

Meanwhile, on February 8, 2007, plaintiff sought to evict defendant for nonpayment of rent. In its written decision granting defendant's motion to dismiss, the court found that under the circumstances, plaintiff could not increase defendant's rent by more than that provided by the City's rent control ordinance. Although the court recognized that the City's rent control ordinance did not apply to plaintiff's unit because the ordinance did not apply if the owner of the unit owned fewer than five units, the court reasoned that N.J.S.A. 2A:18-61.31 protected a preconversion tenant such as defendant against rent increases above those permitted by the rent control ordinance because the City had a rent control ordinance "in effect." In other words, the court found that in municipalities in which a rent control ordinance was in effect, the ordinance limited the amount of rent increases for preconversion tenants, whether or not the tenant's apartment was specifically subject to rent control. We conclude that the statute and the case law support the court's conclusion.

N.J.S.A. 2A:18-61.31 of the Senior Citizens and Disabled Protected Tenancy Act (Act), N.J.S.A. 2A:18-61.22 to -61.39, restricts rent increases for preconversion tenants.

In a municipality which does not have a rent control ordinance in effect, no evidence of increased costs which are solely the result of the conversion, including but not limited to any increase in financing or carrying costs, and which do not add services or amenities not previously provided shall be used as a basis to establish the reasonableness of a rent increase under section 2f. of P.L.1974, c. 49 (C. 2A:18-61.1).

In a municipality which has a rent control ordinance in effect, a rent increase for a tenant with a protected tenancy status, or for any tenant to whom notice of termination pursuant to section 3g. of P.L. 1974, c. 49 (C. 2A:18-61.2) has been given, shall not exceed the increase authorized by the ordinance for rent controlled units. Increased costs which are solely the result of a conversion, including but not limited to any increase in financing or carrying costs, and which do not add services or amenities not previously provided shall not be passed directly through to these tenants as surcharges or pass-throughs on the rent, shall not be used as the basis for a rent increase, and shall not be used as a basis for an increase in a fair return or hardship hearing before a municipal rent board or on any appeal from such determination. [Emphasis added.]

Though defendant is not a protected tenant - neither a "senior citizen" nor a "disabled" tenant - N.J.S.A. 2A:18-61.31 is applicable to him because he is a "tenant to whom notice of termination pursuant to section 3g. of P.L.1974, c. 49 (C. 2A:18-61.2) has been given[.]" He was a preconversion tenant entitled to a three-year notice to quit. Kabakian v. Kobert, 188 N.J. Super. 517, 520 (App. Div. 1983); N.J.S.A. 2A:18-61.2.g ("For an action alleging any grounds under subsection k. of section 2, three years' notice prior to the institution of action, and provided that where there is a written lease in effect, no action shall be instituted until the lease expires."); N.J.S.A. 2A:61.1k (limiting conditions under which preconversion tenants may be evicted).

The rights of precoversion tenants were discussed by the Court in AMN Inc. of New Jersey v. Township of South Brunswick Rent Leveling Board, 93 N.J. 518 (1983). The Court stated that

[w]hen enacting the [Anti Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12], the Legislature realized that it would be futile to give a preconversion tenant protection from eviction for a certain period of time if during that time rent could be increased without limitation. As a practical matter, a landlord's unrestricted right to increase rent results in the landlord's ability to force a preconversion tenant out of the unit, thus rendering the eviction protection laws meaningless. [Id. at 530-31.]

Under the Anti Eviction Act, tenants who were entitled to a three-year notice were protected against "unreasonable rent increases." Id. at 531.

As is applicable to the facts here, the Court stated that:

Prior to the 1981 Act, preconversion tenants entitled to three years' notice of termination were protected against unreasonable rent increases. N.J.S.A. 2A:18-61.11. In the Senior Citizen and Disabled Protected Tenancy Act in 1981, the Legislature provided that with respect to both preconversion tenants subject to three years' notice and senior citizens and disabled tenants with protected tenancy status, no rent increase could exceed the rent increase allowed by the municipality's rent control ordinance. N.J.S.A. 2A:18-61.31. For those municipalities without rent control ordinances, rent increases continue to be judged by a general reasonableness standard. Id.

Municipalities can choose whether or not to control rent. If a municipality chooses to control rent, all preconversion tenants during the period in which they are protected from eviction are also protected by the rent control ordinance. If there is no rent control ordinance in effect, then these preconversion tenants are protected against unreasonable rent increases.

N.J.S.A. 2A:18-61.31. [Ibid. (emphasis added).]

Put another way, the Supreme Court did not limit the applicability of N.J.S.A. 2A:18-61.31 to units that were themselves rent controlled, but applied the statute to all converted units in a rent controlled municipality that are entitled to the three-year notice to quit. AMN, supra, 93 N.J. at 531. And here, Jersey City is a rent-controlled municipality, even though defendant's apartment was not subject to the rent control ordinance. Thus, even though the affected unit may be exempt from rent control, N.J.S.A. 2A:18-61.31 requires that rent increases for all preconversion tenants be constrained by the City's rent control ordinance.

The judiciary's role in interpreting a statute is to give effect to the legislature's intent. Brooks v. Odom, 150 N.J. 395, 401 (1997). A "statute is to receive a reasonable construction, to serve the apparent legislative purpose." Alexander v. N.J. Power & Light Co., 21 N.J. 373, 378 (1956). Here, plaintiff's interpretation of the statute would defeat the evident legislative intent of protecting preconversion tenants for a minimum three-year period.

Plaintiff asserts that even though defendant is entitled to a three-year notice to quit as a preconversion tenant, N.J.S.A. 2A:18-61.31 simply imposes a reasonableness test for rent increases if the affected unit was not subject to the City's rent control ordinance. That argument, however, would put a preconversion tenant in a rent-controlled municipality on the same footing as a preconversion tenant in a non rent-controlled municipality, which would be contrary to the plain language of N.J.S.A. 2A:18-61.31, as well as the broad construction of the statute applied by the AMN Court. In enacting N.J.S.A. 2A:18-61.31, the Legislature could have imposed a reasonableness test to increases for those units, though located in a rent-controlled municipality, to which the rent control ordinance did not apply. But it did not do so. For us to do so would be tantamount to rewriting the statue. Aetna Ins. Co. v. Gilchrist Bros., Inc., 85 N.J. 550, 566 (1981) (judiciary is not to rewrite a statute).

We are mindful that a factual dispute exists as to whether the Portofino building was subject to rent control prior to its conversion to condominiums. The Jersey City rent leveling administrator said it was not, but the trial judge concluded that it was because he was presented with no evidence to show that the owner of the Portofino complied with the requirements of N.J.S.A. 2A:42-84.3 and N.J.S.A. 2A:42-84.4 to exempt the property from rent control. Nevertheless, whether the building was or was not exempt from rent control under those statutes, or whether the owner of the affected unit owned fewer than five units, which would also exempt the unit from rent control, are not the dispositive factors. What is controlling is that the City had a rent control ordinance in effect, which, under N.J.S.A. 2A:18-61.31, constrains rent increases for all preconversion tenants.

Affirmed.

20080407

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