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Golden Peak, LLC v. Melgar


September 11, 2009


On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. LT-16416-07.

Per curiam.


Argued January 26, 2009

Before Judges Carchman and R. B. Coleman.

Defendants Maria Melgar and her son, "John Doe Occupant" Hector Mencos, appeal from a judgment of possession entered on January 31, 2008, in favor of plaintiff Golden Peak, LLC. By their appeal, Melgar and Mencos seek to extend the Supreme Court's decision in Maglies v. Guy, 193 N.J. 108 (2007) to a non-Section 8 tenancy. Maglies involved a Section 8 tenancy where the Court concluded that the New Jersey Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12, might protect from eviction without cause a "functional co-tenant," the daughter of the tenant of record, if she could show that she was continuously in residence in the subject apartment, that she substantially contributed to the financial obligations of the tenancy and that the landlord had acquiesced in that tenancy arrangement. Id. at 122-23. After reviewing the record in this appeal in light of the contentions advanced, we agree with defendants that the holding in Maglies is not limited solely to Section 8 tenancies. We, therefore, reverse the judgment of possession entered in this case.*fn1

The critical facts of this case were stipulated by the parties and may be concisely stated. Essentially, the tenant of record, Maria Melgar, who had lived in a rent-controlled apartment with her adult son for many years, moved into an assisted living senior housing facility. That move left the son as the sole resident of the rent-controlled apartment the two had theretofore occupied.

Melgar was designated as the tenant in a lease agreement with the landlord RCG Urban Housing Partners, LLC, predecessor of plaintiff Golden Peak, LLC. Paragraph four of that lease agreement specified that Melgar's son, Hector Mencos, was permitted to reside in the premises with the tenant. In its verified landlord/tenant complaint, Golden Peak asserted that it was a violation of the lease for Melgar to have left Mencos as the sole resident of the apartment. Relying on the alleged non-residence of the primary occupant and an illegal sublet, the landlord moved for possession. The parties agreed there was no need for a plenary hearing.

In rendering its decision on January 31, 2008, the court set forth on the record the agreements and stipulations of the parties:

[T]here are two defendants. One is Maria Melgar and she is identified as the named tenant on a lease which governs the relationship between plaintiff and defendant in this case. The other one is on the complaint is [sic] identified as John Doe, an occupant of the premises but however as it was explained to the court the other defendant is actually Hector Mencos who is the son of Maria Melgar.

. . . The plaintiff landlord found out that the defendant Melgar had vacated the apartment in question around December of 2006 and that the occupant, Mr. Mencos, remained in the apartment after Ms. Melgar left.

Now I'm going to refer to Mr. Mencos as the occupant of the apartment because the court finds that Mr. Mencos was not named as a tenant on the lease and he did not sign the lease as a tenant. He is listed as someone who lived with the named tenant, Ms. Melgar, who is the only person to actually sign the lease. So Mr. Mencos remained in the apartment after Ms. Melgar left the apartment.

There is no . . . claim by the landlord in this case of violation of any rule or non payment of rent. The only cause of action in this case is that the named tenant, Ms. Melgar, left the apartment and the occupant, Mr. Mencos, who remained behind, was not a tenant and did not have the right to continue to reside in this apartment because the landlord did not consent in any way, shape or form to declare or accept Mr. Mencos as a tenant in the apartment, therefore the possession of the apartment by Mr. Mencos was a breach of the lease provisions which require that the landlord can consent to any assignment or subletting of the lease.

The lease in question is a 1999 lease. Paragraph four of that lease which was I believe marked as P-3 states that Mr. Mencos could reside in the apartment with the tenant and paragraph fourteen of the lease states that there can be no assignments or subletting of the lease without the written consent of the landlord.

It was stipulated and I incorporate that as part of my findings of fact that the notices which were served upon the defendant -- defendants in this case, are sufficient and adequate under the law. There was no objection to the notices themselves and those notices are attached to the complaint.

Continuing with my fact findings, Mr. Mencos was a substantial contributor to the payment of the rent to the landlord based upon the facts that were stipulated and also based upon a group of checks which were shown to the court, checks in payment of the rent from a joint account belonging to Ms. Melgar and Mr. Mencos so there are many checks that were used to pay rent from that joint account.

And it is also stipulated that Mr. Mencos has lived in this apartment during the entire duration of from the date of the lease which is 1999 and even beyond that so at least ten years and I believe that there was a reference that perhaps for as long as twenty years or more he has lived as an occupant of the apartment as permitted by the lease signed by Ms. Melgar.

It is also -- the court finds and it was stipulated that as I mentioned Ms. Melgar no longer resides in the apartment, she left the apartment and Mr. Mencos remained residing in the apartment and I think it's also important to incorporate as part of the court's findings of fact that this building is a multiple dwelling building. This is a building which is subject to rent control and this is a building to which the Anti Eviction -- so called Anti Eviction Act, 2A:18-61.1 and sections that follow applies to this building and to the tenants in this building.

After having thus set forth the factual context of the case, the court rejected the argument of defendant Mencos that he was the functional equivalent under a co-tenant of the three-prong test of Maglies. That test calls for a tenant seeking protection under the Anti-Eviction Act to establish that (1) there was a continuous, uninterrupted residency by the functional equivalent co-tenant; (2) there was substantial contribution by the functional equivalent co-tenant to the payment of the rent; and (3) there was an acquiesce or acceptance by the landlord of the functional equivalent co-tenant. Maglies, supra, 193 N.J. at 126.

The trial court rejected defendant's arguments characterizing it as, "an unwarranted and unjustified extension of the holding of Maglies v. Guy without any foundation or any reason for such extension to be justified." The court observed that the Maglies case had "unique facts and a very narrow holding based on those unique facts that are totally different from those that exist in this case." The court further emphasized that "this is not a Section 8 case and of course this is not a situation where the main tenant had passed away."*fn2

According to the reasoning of the trial judge, the plain language of the agreement controls, and the plain language in this case "says that Mr. Mencos is not a tenant." Thus, the court concluded that Mencos's occupancy is made "contingent upon the tenancy of Ms. Melgar who is no longer in the premises." We disagree with that conclusion, and notably, as was true in Maglies, "[b]ecause the issues raised herein require the interpretation of law, the lower courts' 'interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Maglies, supra, 193 N.J. at 116 (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

The trial judge observed the view that "the [C]court in [Maglies] did not erode the contractual principle that the landlord has the right to choose the tenant," but rather "upholds the right of a landlord to choose the tenant." While that observation is true, we note that the Court drew a distinction between the landlord's prerogatives at the inception of the rental relationship and at a point when the issue is whether a "consented-to financially contributing family-member occupant of a Section 8 household has any right to the continued possession of the leased premises after the death of the named tenant." Id. at 117-18. Here, as in Maglies, the central issue is whether the family-member occupant has a continuing right of possession after the named tenant has left the premises, whether as a result of death or the need for assistance and care not available in the home.

In the view of the trial judge, the Maglies Court "used the section eight procedure . . . to show that the landlord had acquiesced in the equivalent functional co-tenancy of the daughter," emphasizing that there was an agreement in writing by virtue of the landlord's agreement to enter into a new Housing Assistance Plan (HAP) contract with the State Department of Community Affairs which took into account the social security income of the tenant's daughter as contribution to the household's income. Id. at 113. That was merely a matter of proof, evidence of the substantial contribution by the remaining family member toward the tenancy's financial obligation. In this case, such proof was acknowledged in the stipulations made to the court and evidenced by checks admitted to substantiate Mencos's contributions.

As the trial court found, Mencos is not the named tenant in the lease agreement. Still, Mencos contends that, notwithstanding the terms of the lease, he is entitled to the protections of the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 -12. Without regard to the label utilized to describe his status under the lease, we agree that under the facts stipulated by the parties and found by the trial judge, Mencos meets the three-part test set forth in Maglies.

In Maglies, the Court sought to answer "whether household members listed on a lease and Housing Assistance Payment (HAP) contract would be included in the broad group of" persons protected by the Anti-Eviction Act. Id. at 122 (citing N.J.S.A. 2A:18-61.1). In response to the landlord's characterization of the defendant as an occupant, the Court stated that "[a] label imposed by the landlord cannot and should not control [judicial] analysis of the law." Ibid. Rather, the Court noted that New Jersey courts "long have recognized the need to look beyond labels in order to explore the true character of a transaction or relationship." Ibid. Accordingly, the Court determined that a family member occupant or "functional co-tenant," or "tenant-in-fact," may be protected by the Anti-Eviction Act, provided that such a person who can show: (1) continuous residency; (2) substantial contribution towards satisfaction of the tenancy's financial obligations and (3) that his or her "contribution has been acknowledged and acquiesced to by [the] landlord." Id. at 122, 126.

In the case at bar, the trial court narrowly interpreted the standards articulated in Maglies to apply only to Section 8 recipients. A review of the Court's opinion as a whole supports a much broader application. See, e.g., id. at 145-46 (Hoens, J., dissenting) (observing that "[i]n effect, the majority extends a unilateral option to a tenant's co-habiting family members," and "created a new status," (at 146), "a broad new category that, it would appear, includes every occupant and family member listed on every lease"). While the full breadth of the Court's opinion need not be circumscribed in this case, we are confident that the view taken by the trial court was too narrow. The factual context of Maglies necessitated that the Supreme Court discuss the implications of the subsidies provided under Section 8, however, the Court did not say directly or indirectly that only Section 8 recipients can meet the test. Nor did the Court say that it was setting forth the test exclusively for Section 8 recipients. Rather, it explored the intent and purpose of the Anti-Eviction Act, which is "to protect residential tenants against unfair and arbitrary evictions by limiting the bases for their removal." Id. at 121, see also Franklin Tower One, LLC v. N.M., 157 N.J. 602, 614 (1999); 3519-3573 Realty, LLC v. Law, 406 N.J. Super. 423, 426 (App. Div. 2009).

Indeed, in concluding that functional co-tenants are protected by the Act, the Court stressed that the Anti-Eviction Act is remedial legislation and, as such, should be liberally construed. Id. at 123 (citing 447 Assocs. v. Miranda, 115 N.J. 522, 529 (1989); Norman J. Singer, Sutherland Statutory Constr. § 60:1 at 183 (6th ed. 2001) ("'Remedial statutes are liberally construed to suppress the evil and advance the remedy.'")). Accordingly, "'[t]he reason and spirit of the statute controls in its interpretations.'" Id. at 124 (citing Schierstead v. Brigantine, 29 N.J. 220, 231 (1959); State v. State Troopers Fraternal Ass'n., 134 N.J. 393, 418 (1993)).

In Maglies, the Court noted that the Anti-Eviction Act was created to eliminate a landlord's ability to arbitrarily oust residential tenants "from housing quarters in which they have been comfortable and where they have not caused any problems," which had been a serious problem particularly in light of the "critical shortage of rental housing space in New Jersey." Id. at 124 (quoting Introduction Statement to Assembly Bill No. 1586, at 4 (Apr. 16, 1974), enacted by L. 1974, c. 49). Subsequently, the Legislature amended the Act and declared "that '[i]t is in the public interest of the State to maintain for citizens the broadest protections available under State eviction laws to avoid such displacement and resultant loss of affordable housing.'" Ibid. (quoting N.J.S.A. 2A:18-61.1a(d)) (noting that "homelessness," and family and social disruption were among the ills the Act was designed to prevent). The Court also noted that New Jersey is "quite protective" of residential tenants. Ibid. (quoting Taylor v. Cisneros, 102 F.3d 1334, 1337 (3d Cir. 1996)).

Under the facts, as stipulated in the case at bar, Mencos has resided in the apartment since 1982, and his residency in the apartment was acknowledged in the written lease executed in 1999. Mencos testified that he was the primary contributor to the funds in the account used to pay the rent and since 1992, when Melgar moved into the assisted living facility, he has been solely responsible for paying rent. The court expressly found that Mencos was a substantial contributor to the payment of the rent to the landlord. Finally, plaintiff and its predecessors have accepted payment in the form of checks from an account jointly held by Mencos and Melgar, often times signed by Mencos, a known resident of the apartment. Thus, the three requirements for protection under the Act were established.

In the brief submitted by the Northeast New Jersey Legal Services Corp. (NNJLS) as Amicus Curiae, it is argued that Mencos is protected under the Anti-Eviction Act based on his status as an occupant at the time when plaintiff purchased the building. NNJLS argues that Mencos is entitled to Succession of Possession of the apartment because he had lived in the apartment prior to plaintiff's purchase of the building.

Additionally, NNJLS contends Mencos never accepted the unreasonable changes to the terms of his tenancy contained in the signed lease between his mother and the landlord. In other words, NNJLS urges us to conclude that "at the time the current lease was proposed, the current landlord was obliged to make inquiry of the rights of any person in open, notorious and exclusive possession of the premises, citing Martinique Realty Corp. v. Hull, 64 N.J. Super. 599, 604 (App. Div. 1960) (citations omitted), and the landlord did not have a right to exclude Mencos from his pre-existing rights as a tenant, by way of entering into an agreement solely with the other tenant. We question whether Mencos's occupancy was notorious or exclusive, but we need not decide those issues, and we decline to do so. We are satisfied that Mencos's right to continued possession is firmly established under the standard announced in Maglies.

The Anti-Eviction Act enumerates seventeen grounds for eviction and places the burden on the landlord to establish good cause. N.J.S.A. 2A:18-61.1; Maglies, supra, 193 N.J. at 121. "When a person is protected by the Act, 'the effective term of the lease is for as long as the tenant wishes to remain, provided he pays the rent . . . and provided there is no other statutory cause for eviction under [the Act].'" Maglies, supra, 193 N.J. at 121 (quoting Ctr. Ave. Realty, Inc. v. Smith, 264 N.J. Super. 344, 350 (App. Div. 1993)). The Act requires "a showing of good cause to terminate a residential tenancy." Franklin Tower One v. N.M., supra, 157 N.J. at 614.

In the present case, plaintiff does not claim that Mencos violated any rule or failed to pay rent. The trial court, applying the language of the lease, observed that "the plain language of the lease says that Mr. Mencos is not a tenant." The inquiry should not have ended there. Maglies recognizes a "functional co-tenancy" which is to be assayed by the three-pronged test established in that opinion. The trial court should have analyzed Mencos's right to continued possession under that test.

While the trial court emphasized a landlord's right to choose its tenants, it gave insufficient consideration to the fact that Mencos had been living in the apartment for more than twenty years, and he was the sole tenant for more than five years.*fn3 The issue in this case is not one of plaintiff's right to accept or reject Mencos as a tenant. Rather, the question is whether Mencos had the continued right of possession, protected from eviction without cause.

New Jersey has a strong public policy of protecting tenants from unjustified evictions. Franklin Tower One v. N.M., supra, 157 N.J. at 614. "At this stage of the development of case law surrounding the Act, it is well recognized that '[t]he legislation was designed to protect residential tenants against unfair and arbitrary evictions by limiting the bases for their removal.'" Maglies, supra, 193 N.J. at 121 (quoting 447 Assocs., supra, 115 N.J. at 528). "Although the Anti-Eviction Act 'is in derogation of the landlord's common-law rights of ownership, . . . landlord rights must to some extent and on general welfare grounds defer to the needs of the tenant population in this state.'" Franklin Tower One, supra, 157 N.J. at 614 (quoting Morristown Mem'l Hosp. v. Wokem Mortgage & Realty Co., 192 N.J. Super. 182, 188, 469 A.2d 515 (App. Div. 1983)). "Given the continued shortage of residential housing and the related threat of homelessness, the substantial public interest in preventing the eviction of blameless tenants is indisputable." Chase Manhattan Bank v. Josephson, 135 N.J. 209, 234 (1994).

Considering Mencos's problem-free, long-term residency in the rent-controlled apartment*fn4 , his undisputed contribution to the financial obligations of the tenancy, and the landlord's acknowledgement and acquiescence in his residency in the apartment, we conclude Mencos is entitled to the protection of the Anti-Eviction Act, either as a functional co-tenant, tenant equivalent or a tenant-in-fact. Such conclusion is consistent with the Act's purpose to prevent displacement and loss of affordable housing by residents who have not caused any problems.

The judgment for possession is reversed.

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