September 22, 2008
VIDHYA PATEL, PLAINTIFF-RESPONDENT,
DANIEL MATHEWS, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1489-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 10, 2008
Before Judges Fisher and C.L. Miniman.
In this appeal we consider, among other things, the defendant-landlord's contention that the rent leveling board's determination, which declared the landlord had imposed an excessive and illegal rent on the plaintiff-tenant, bars the plaintiff-tenant's consumer fraud claim based on that finding. Because the goals of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, are not inconsistent with those of the rent leveling board in these circumstances, and because the rent leveling board's enforcement provisions are not nearly as extensive or effective as the CFA's, we affirm the summary judgment, which granted monetary relief in favor of the plaintiff-tenant based upon the rent overcharge.
The following facts are undisputed. In early 1999, plaintiff Vidhya Patel (the tenant) rented an apartment in North Bergen owned by defendant Dan Mathews (the landlord) at the monthly rate of $600. Upon taking possession, the tenant also tendered a $900 security deposit. Soon thereafter, the landlord increased the rent to $680 per month.
The tenant later complained to the North Bergen Rent Leveling Board (the board), which, on October 17, 2005, adopted a resolution based upon the municipality's rent control ordinance. The resolution declared the landlord "illegally collected rent" from the tenant in the amount of $4,240. The board ordered in its resolution that the landlord refund the overpayment and authorized the tenant to "deduct from her monthly rental payments until the amount is fully repaid." The resolution also stated that if the parties' relationship ended before tenant had been fully reimbursed, then "the entire balance shall be due and owing immediately." Lastly, the resolution indicated that if the landlord failed to comply, a municipal complaint would issue.
The tenant moved from the property soon after the adoption of the resolution. Her security deposit was not returned.
The tenant filed a two-count complaint in the Law Division on March 10, 2006. In the first count, the tenant alleged the circumstances outlined above and sought a recovery of the rent overcharge, plus treble damages, attorneys' fees and costs, pursuant to the CFA; in the second count, she sought a recovery of double the unreturned security deposit and attorneys' fees, pursuant to N.J.S.A. 46:8-21.1.
On October 13, 2006, the tenant moved for the entry of default judgment. The landlord responded that he had not been served with process. On the return date, the judge suggested that the tenant hand the summons and complaint to the landlord and that the landlord acknowledge its receipt in open court. With that, the judge vacated the prior default and denied the motion for default judgment; the landlord was given twenty days to answer the complaint.
The landlord filed an answer and the matter was assigned to a case management track that provided the parties with 150 days of discovery. The clerk apparently miscalculated this discovery period by deeming it to have commenced on September 1, 2006; accordingly, the discovery end date was set at January 29, 2007. At that time, neither party asserted that a mistake had been made.
After passage of the discovery end date, the tenant moved for summary judgment on both counts of the complaint. The landlord opposed that motion and cross-moved for both a correction of the discovery end date and leave to amend his answer to include a counterclaim. His proposed counterclaim alleged that the tenant had damaged the leased premises and failed to pay rent that had become due well over one year earlier.
The trial judge granted summary judgment in favor of the tenant in the amount of $12,720 on the consumer fraud claim, but denied summary judgment on the security deposit claim. The judge also denied the landlord's requests for the correction of the discovery end date and for leave to file an amended pleading.
On the scheduled trial date of May 30, 2007, the parties agreed to voluntarily dismiss the security deposit claim, and the judge entered an order that stated the dismissal was without prejudice. In a later order, the judge quantified the total damages caused by the landlord's CFA violation in the total amount of $16,939.95, which included an award of attorneys' fees and costs.*fn1
The landlord then filed this appeal, arguing that: (1) summary judgment was erroneously entered (a) because the CFA has no application here when a rent leveling board has an enforcement mechanism and (b) because there existed genuine issues of material fact; (2) the trial court erroneously failed to correct the discovery end date; and (3) the trial court erroneously refused the landlord's request for leave to assert a counterclaim for unpaid rent and damage to the leased premises. We find no merit in these arguments and affirm.
The landlord's argument that the CFA does not apply when a rent leveling board has adjudicated a landlord's violation is without merit. In Lemelledo v. Beneficial Mgmt., 150 N.J. 255, 268-69 (1997), the Court held that
[i]n determining whether the existence of other regulations creates an exemption to the CFA for particular conduct that otherwise would fall within its provisions, it should ordinarily be assumed that the CFA applies to the covered practice. That assumption is appropriate because of the strong and sweeping legislative remedial purpose apparent in the CFA. The CFA explicitly states that the "rights, remedies and prohibitions" that it creates are cumulative to those created by other sources of law. N.J.S.A. 56:8-2.13. . . . Eliminating CFA remedies for otherwise-covered practices may undermine that important and calculated legislative objective.
The Court further held that to overcome the presumption that the CFA applies to a particular activity, it must be found that a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes. [The court] must be convinced that the other source or sources of regulation deal specifically, concretely, and pervasively with the particular activity, implying a legislative intent not to subject parties to multiple regulations that, as applied, will work at cross-purposes. We stress that the conflict must be patent and sharp, and must not simply constitute a mere possibility of incompatibility. [Id. at 270.]
In applying these principles in Wozniak v. Pennella, 373 N.J. Super. 445, 457-58 (App. Div. 2004), certif. denied, 183 N.J. 212 (2005), we held that the presumption that the CFA applies to a landlord's breach of a rent control ordinance was not overcome because a rent leveling board had also determined that the landlord had overcharged the tenant.
Recognizing the impact of Wozniak on his arguments, the landlord nevertheless claims that we should distinguish Wozniak because we observed at that time that the board there "did not have authority to order a monetary award for the rent overcharges." Id. at 458. We find this argument unavailing. It may be that the board here imposed a method for compensating the tenant, i.e., its authorization of the tenant's deductions from future rent, but the board also recognized that the resolution was otherwise toothless and that the ultimate enforcement of its resolution would require further legal proceedings. At best, what occurred at the board level here, which distinguishes it from the situation in Wozniak, is the resolution's added indication that it would bring future legal proceedings if the landlord failed to comply. Notwithstanding that distinguishing factor, we are satisfied, despite the arguably limiting language in Wozniak upon which the landlord has seized, that the mere existence of the possibility that a rent leveling board might seek enforcement of its resolution is insufficient to foreclose a tenant's private cause of action pursuant to the CFA. This inessential circumstance cannot be the cause of the elimination of the tenant's right to invoke the CFA and its "strong and sweeping legislative remedial purpose." Lemelledo, supra, 150 N.J. at 268.*fn2
As we have already observed, it appears that the landlord is correct that the clerk miscalculated the discovery end date and that discovery should have ended on April 27, 2007 rather than January 29, 2007. Although true, however, the landlord has not indicated what discovery he would have sought had he been provided with all the time to which he was entitled. Accordingly, to the extent that there was an error in this regard, it was harmless and of no consequence to the fair adjudication of the issues.
Lastly, the landlord argues that the trial court erred in denying leave to file a counterclaim for damages. Submitting to the trial court only the certification of his attorney, the landlord asserted in his motion that the tenant owed rent for the months of July, August, September and December 2005, and that the tenant "caused significant damage to the apartment which required [the landlord] to spend about $10,000 to return the apartment to rentable condition."
As the record reveals, the landlord's answer was filed on November 27, 2006. Even assuming the truth of the hearsay assertions in the certification of the landlord's counsel that rent went unpaid or damage was done to the premises, the landlord would have known of those circumstances long before the answer was filed. Nowhere in his moving papers did the landlord indicate why he had failed to include a counterclaim at the time he filed his answer or why he had not sought leave to file the counterclaim at an earlier date. As a result, we find no abuse of the judge's discretion in refusing to permit a late amendment of the answer in light of the landlord's failure to assert these claims from the time of the filing of his answer on November 27, 2006 to the motion for leave that was filed on April 4, 2007. The landlord's delay was particularly egregious in light of the trial date scheduled for May 30, 2007.*fn3