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Rachamallu v. Bureau of Housing Inspection

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 10, 2009

MURALI RACHAMALLU, APPELLANT,
v.
BUREAU OF HOUSING INSPECTION, RESPONDENT.

On appeal from the Department of Community Affairs, Docket No. BHI-364-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 10, 2009

Before Judges Skillman and Grall.

Appellant Murali Rachamallu appeals from a final decision of the Commissioner of Community Affairs, dated January 9, 2008, which ordered him to abate violations of regulations adopted under the Hotel and Multiple Dwelling Law, N.J.S.A. 55:13A-1 to -28, relating to lead-based paint hazards in multiple dwellings, N.J.A.C. 5:10-6.6, and imposed aggregate penalties of $27,500 for violations of those regulations.*fn1 We affirm the part of the Commissioner's decision that ordered the abatement of violations of the lead-based paint regulations. We reverse the part of the decision that imposed penalties upon appellant and remand that part of the case to the Commissioner for reconsideration in conformity with this opinion.

The Bureau of Housing Inspection in the Department of Community Affairs issued three separate notices to appellant ordering him to abate violations and imposing penalties. The first, dated May 22, 2007, imposed penalties of $2,500 ($500 per violation); the second, dated July 31, 2007, imposed penalties of $15,000 ($3,000 per violation); and the third, dated September 4, 2007, imposed penalties of $10,000 ($5,000 per violation).

Appellant contested those orders and the Commissioner referred the matter to the Office of Administrative Law. An Administrative Law Judge (ALJ) conducted a hearing at which appellant and the two inspectors who had charged him with the violations testified. The ALJ found in a written decision dated November 30, 2007 that appellant had committed the violations of the lead-based paint regulations charged by the Bureau of Housing Inspection. Based on those findings, the ALJ ordered appellant to "comply with N.J.A.C. 5:17 et seq. and hire a certified lead-based abatement contractor to fix the two remaining violations" charged in the September 4, 2007 notice and order. The ALJ also ordered appellant to "hire a professional evaluator to conduct the dust wipe samplings."

However, the ALJ concluded that the penalties that the Bureau of Housing Inspection had been imposed upon appellant were excessive. In reaching this conclusion, the ALJ stated that "[t]here is no evidence that [appellant] had knowledge of a violation" of the lead-based paint regulations prior to the Bureau's inspections of the apartment building he had purchased in 2006. The ALJ also noted that appellant had "completed the certification course [for remediation of lead-based paint hazards] and had tried in good faith to fix the violations." Accordingly, the ALJ reduced the penalties imposed upon appellant to $1,000 for the first notice of violations, $5,000 for the second, and $2,000 for the third.

The Commissioner adopted the part of the ALJ's initial decision that ordered appellant to abate violations of the lead- based paint regulations and directed that such abatement be completed within fifteen days. However, the Commissioner summarily modified the part of the ALJ's initial decision that reduced the amount of penalties, stating:

I find that the penalties assessed by the Bureau were authorized by law and were appropriate under the circumstances of this case. I therefore uphold the penalties in the amounts assessed by the Bureau and reject the reductions recommended by the Administrative Law Judge.

The Commissioner's decision contained no discussion of the ALJ's findings and conclusions regarding the appropriate penalties to be imposed upon appellant or any independent findings of fact and conclusions of law regarding those penalties.

Appellant has not directed any arguments at the ALJ's findings, which were adopted by the Commissioner, that violations of the lead-based paint regulations had been established or the part of the order that required abatement of those violations. Moreover, we are satisfied that those findings are adequately supported by the record. R. 2:11-3(e)(1)(D). Accordingly, we affirm the findings of those violations and the part of the Commissioner's final decision that ordered their abatement.

We turn to the only real issue in this appeal, which is the amount of the penalties. In its answering brief, the Bureau of Housing Inspection states that it "withdraws the penalty" imposed in the September 4, 2007 notice and order. Therefore, the only penalties still in dispute are the initial $2,500 penalty imposed by the May 22, 2007 notice and the additional $15,000 imposed by the July 31, 2007 notice.

The Hotel and Multiple Dwelling Law provides that any person who violates its provisions "shall be liable to a penalty of not less than $50 nor more than $500 for each violation, and a penalty of not less than $500 nor more than $5,000 for each continuing violation." N.J.S.A. 55:13A-19(b). To implement the authority conferred by this provision, the Commissioner has adopted an administrative regulation that prescribes standards for determining the appropriate penalty in a particular case. N.J.A.C. 5:10-1.17. This regulation provides in pertinent part:

(c) Absent any mitigating or aggravating circumstances, the initial penalty for each violation area shall be as follows:

1. In a dwelling unit for which a life hazard violation is cited: $325.00;

2. In an interior common area or building exterior for which a life hazard violation is cited: $500.00; and

3. In any area for which none of the violations cited is a life hazard violation: $175.00.

(d) Absent any mitigating or aggravating circumstances, the first continuing violation penalty shall be as follows:

1. For each violation area in which a life hazard violation is cited: $1,500; and

2. For each violation area in which no life hazard violation is cited: $1,000.

Neither the ALJ nor the Commissioner cited this administrative regulation in determining the appropriate amount of the penalties to impose upon appellant.

An appellate court's authority to review the sanction imposed by an administrative agency is limited. In re Herrmann, 192 N.J. 19, 28-29 (2007). However, in determining an appropriate sanction, as in rendering any other administrative decision, an agency must comply with the governing statutes and regulations. See County of Hudson v. Dept. of Corr., 152 N.J. 60, 70-71 (1997). Moreover, the agency must make appropriate findings of fact and provide an explanation of its reasons for imposing a particular sanction. See In re Polk, 90 N.J. 550, 579 (1982); Mayflower Sec. v. Bur. of Sec., 64 N.J. 85, 96 (1973).

The Commissioner's decision failed to satisfy these requirements. His decision did not even refer to N.J.A.C. 5:10-1.17, which contains specific standards for determination of the amount of a penalty for a violation of the Hotel and Multiple Dwelling Law.*fn2 This administrative regulation establishes presumptive penalties for each type of violation specified therein, subject to increase or decrease based upon findings of "aggravating or mitigating circumstances." Consequently, the Commissioner had an obligation to determine the type of violations appellant had committed and to make appropriate findings of fact based on the record developed at the administrative hearing as to any aggravating or mitigating circumstances that would warrant an increase or decrease in the presumptive penalties for those violations.

Accordingly, we affirm the part of the Commissioner's final decision that ordered appellant to abate the violations of the lead-based paint regulations that had not been corrected at the time of the last inspection. We reverse the part of the decision that imposed penalties. The part of the decision that imposed a $10,000 penalty in accordance with the September 4, 2007 notice is reversed outright based on the stipulation in the Bureau's brief. The part of the decision that imposed the remaining $17,500 in penalties is remanded to the Commissioner for redetermination in conformity with this opinion. Because the ALJ also did not determine the appropriate penalties in light of N.J.A.C. 5:10-1.17, the Commissioner, if he deems it appropriate, may remand the matter to the ALJ for a new initial decision.


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