On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2410-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges R. B. Coleman, Sabatino and Simonelli.
This matter arises out of a summary dispossession action in which the landlord contended, pursuant to N.J.S.A. 2A:18-61.1(l)(3), that he planned to occupy the apartment personally after the tenant was evicted. After a bench trial, the trial court concluded that the landlord's claimed intention to occupy the premises was insincere, and denied the landlord possession. The trial court then awarded the tenant counsel fees and costs under the Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1.
The landlord appeals the trial court's denial of summary dispossession, principally arguing that the court misapplied the eviction statute in an unprecedented manner. The landlord also appeals the award of counsel fees and costs, contending that his action was not frivolous, and that his legal contentions concerning the proper construction of N.J.S.A. 2A:18-61.1(l)(3) had, at the very least, a reasonable basis in the law, or was supported by a good faith argument for the extension, modification or reversal of existing law. The tenant cross-appeals the award of counsel fees as insufficient.
For the reasons stated in this opinion, we affirm the entry of the judgment dismissing the landlord's summary dispossession action. However, we vacate the counsel fee award, thereby mooting the tenant's cross-appeal as to the insufficiency of the fee. Lastly, the award of costs to the tenant as the prevailing party is affirmed, pursuant to Rule 4:42-8.
These are the relevant facts that emerged in the two-day bench trial in the Law Division.
Plaintiff, John Zaklama, is the present owner of a three-story brownstone located at 1204 Garden Street in Hoboken. At the times relevant to this litigation, defendant, Susanne Ziegler, resided in an apartment on the third floor of the brownstone. Her tenancy commenced in or about April 1997. The premises are rent-controlled.
As the trial court found, the relevant history of efforts to evict defendant from her apartment stems back to an earlier time frame when plaintiff's father, Esmat Zaklama,*fn1 a physician, directly or indirectly owned the premises. Plaintiff's father purchased the building in December 1998 through the Trust.
Following acquisition of the premises, plaintiff's father and/or the Trust unsuccessfully attempted on three separate occasions in 1999, 2002 and 2004*fn2 to evict defendant from the premises. In each of those attempts, the landlord filed an action in the Special Civil Part seeking to dispossess defendant. The landlord relied each*fn3 time on an assertion that he intended to occupy the premises personally, thereby constituting grounds for eviction under N.J.S.A. 2A:18-61.1(l)(3). All of those complaints were dismissed before trial for lack of prosecution. When the 2004 action was dismissed, defendant successfully obtained an order awarding $6,222.17 as reimbursement for her counsel fees, lost wages, and other expenses.
In November 2005, plaintiff's father, as trustee of the Trust, conveyed the property through a quitclaim deed to plaintiff for $1000. The transfer to plaintiff occurred at this modest price, despite the fact that the premises had been advertised for sale in a local newspaper in April 2005 for $1.295 million.
On January 31, 2006, plaintiff served upon defendant a "Notice Terminating Lease." The Notice announced that defendant's "lease is terminated because[:] this new owner has purchased the building to personally occupy it, with his wife to be as their marriage nest." (Italics in original).
The present litigation commenced on April 17, 2006, when plaintiff, represented by counsel, filed a complaint in the Special Civil Part, under Docket No. LT-5941-06, seeking possession of defendant's apartment. The complaint attached the Notice of Termination previously issued on January 31, 2006. The complaint also alleged that defendant was in arrears the sum of $700 for the April 2006 rent.*fn4
Defendant, also represented by an attorney, moved to transfer the Special Civil Part action to the Law Division. In support of that motion, defendant relied upon the chronology of the landlord's three prior attempts to evict her from the premises on the same statutory grounds. The trial court granted the transfer application, noting that "there are issues that are complex [here] that deal with ownership, that deal with fraudulent conveyance, and that deal with possible abuse of process."
After the case was transferred to the Law Division, defendant filed an answer and affirmative defenses. Defendant also asserted, in combined form, a counterclaim against plaintiff and a third-party complaint against plaintiff's father and the Trust.
In Count One of the counterclaim/third-party complaint, defendant sought a judgment "declaring the ownership rights in the Property between and among Plaintiff John Zaklama and Third Party Defendants, Esmat Zaklama and the Zaklama Irrevocable Trust." In Count Two, defendant asserted that plaintiff's complaint is frivolous because "there has never been a genuine intention on behalf of the Zaklamas to personally occupy [defendant's] apartment." Defendant claimed that her landlord has been harassing her for the past seven years, despite the fact that she allegedly has always paid her rent on time. Defendant also noted that there was a larger two-bedroom apartment available in the building, which the landlord did not occupy when it became vacant. Defendant maintained that the complaint is therefore "without any reasonable basis in law or equity and is therefore frivolous."*fn5
Plaintiff filed an answer to the counterclaim, which maintained, among other things, that he acted "reasonably and in good faith at all times with due care as to the rights of others." Plaintiff asserted that defendant's counterclaim itself was frivolous. Plaintiff's attorney filed a similar answer on behalf of the Trust as a third-party defendant. Plaintiff's father, pro se, also filed a similar answer as to the third-party claims against him personally.
After the trial court issued various orders to compel and extend discovery, the case was tried as a non-jury case in July 2007. Plaintiff, plaintiff's father, and defendant all testified, as well as several third parties.
Plaintiff testified that he personally wanted to occupy the property with his then-fianceé after they got married.*fn6 He asserted that he wanted his future wife, a medical resident, to live in a safe area like Hoboken since she kept irregular hours. Plaintiff stated that the property only contained two apartments, with the "[b]asement, first floor, [and] second floor being one apartment, and the third floor being the second apartment." He contended that the third-floor apartment was an optimal size for him and his fianceé, and that they both "loved it."
Plaintiff confirmed that he served defendant with the "Notice Terminating Lease" on January 30, 2006, stating that he and his fianceé wanted to use the third floor "as their marriage nest." He stated that they were willing to remain in the apartment for more than six months,*fn7 noting that his wife's residency would not end for at least two more years.
Plaintiff was questioned about when he first visited the property. Plaintiff replied that he had first visited it prior to serving the eviction notice in January 2006 However, plaintiff's deposition testimony contradicted this assertion, because at the deposition he stated that he had first visited the apartment at a later time, between January and May 2006.
Plaintiff's father also testified. He acknowledged that within ten days of arranging for the Trust to purchase the property, he served a notice on defendant in 1999 to vacate the premises because he had then planned to move his entire family into the building. He also acknowledged that this eviction complaint was eventually withdrawn.
Plaintiff's father also admitted that on January 31, 2000, and again on October 31, 2001, he served eviction notices on defendant, again asserting an intent to occupy the entire premises. His eviction complaint based upon these notices was withdrawn in April 2002. Plaintiff's father could not recall ever serving an eviction notice on any other tenant in the building while the Trust owned it.
Additionally, plaintiff's father indicated that he served another notice to terminate the lease on July 31, 2002, again with the professed intent to move his family into the building. No complaint was filed as a result of this particular eviction notice.
The father acknowledged that on March 31, 2004, another notice was issued stating that he, as beneficiary of the Trust, intended to move into defendant's apartment. An eviction complaint was then filed, but, as we previously noted, the court dismissed this third action for failure to prosecute.
On cross-examination, plaintiff's father admitted, despite his notice to defendant in 1999 that his family planned on moving into the apartment, the property had been listed for sale in March 1999, three months after the first notice to quit. Although plaintiff's father does not admit authorizing it, he conceded that there was a published advertisement offering to sell the property for a price of $1,295,000.00, and that an open house was advertised for April 16 and April 17, 2005. In addition, plaintiff's father admitted that in the spring of 2006, the basement apartment in the premises was made available for rental.
Defendant presented testimony from Carol McLaughlin, a rent regulation officer with the City of Hoboken. McLaughlin stated that plaintiff's father had registered defendant's base rent with the City at $1500, when, in fact, defendant was only paying $700 per month.
Defendant also called Mark Meyer, a next-door neighbor. Meyer testified to the "continuing deterioration in the number of things that you can see from the outside" of defendant's unit, including falling "concrete sides of the windows" and parts of the "façade of the building."
In addition, the defense called Robert Darish, who lived in the basement of the property. Darish claimed that his unit is a completely separate apartment from the other floors of the building. Darish testified that he came to live there in May 2006 after responding to an advertisement. He contended that plaintiff and plaintiff's father had asked him to sign a false certification stating that the property was a two-family residence, but Darish refused to do so because he knew that this was not true.
Another third-party witness, Sharon Guynup, provided particularly damaging testimony against plaintiff. She testified that she had been looking for a temporary short-term lease and met with plaintiff's father in April 2005 to explore the prospect of living at the property. According to Guynup:
We met at the Dunkin Donuts in Hoboken, and I reiterated to him, you know, my need for not a yearly lease, but a month-to-month lease because it would take, you know, two, three, four more months for the construction [of Guynup's condominium] to be finished.
He said that the only way he would rent it to us was with a month-to-month lease because he just wanted to get rid of the building. And then he -- he went into a rant and just said that, you know, the building had been nothing but a problem since he bought it, and he particularly mentioned the woman in the upstairs apartment, that he had been trying to get rid of her since he bought the place because she paid a very low rent, and, pardon my vernacular, but because she was a pain in the ass. [(Emphasis added).]
Defendant then called Elizabeth Terrill, who lived in the property from 1999 until the spring of 2004. Terrill testified that she had the following conversation with plaintiff's father about the third-floor tenancy, just before she left in the spring of 2004:
Q: Did you ever have occasion to have conversations with Dr. Zaklama [plaintiff's father] regarding the third-floor tenancy?
A: Yes. You know, just before I left in 2004, I overheard Zak [plaintiff's father] say to [defendant] that he planned to move into her apartment, and when he came ...