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Shin v. Bergenfield Senior Housing LLC

August 17, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-275-08.

Per curiam.


Submitted: August 3, 2010

Before Judges Axelrad and Espinosa.

Plaintiff Pastor Joseph Shin, individually and on behalf of an unincorporated association of senior citizen Korean-American tenants residing at 47 Legion Drive, Bergenfield (collectively referred to as "plaintiffs"), appeals from a judgment entered following a bench trial which awarded plaintiffs monetary damages, arguing they were entitled to additional monetary damages. We affirm.

There is a lengthy history in this case but we recite only the procedure and facts relevant to this appeal, pertaining to claims under the Security Deposit Act (SDA), N.J.S.A. 46:8-l9 to -50, and the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195. Plaintiffs are tenants in a senior-restricted residential condominium building in Bergenfield. They filed an amended complaint against defendants, hereinafter identified, as follows:

Fourth Count: A claim under the CFA, alleging "defendants engag[ed] in a systematic scheme and plan to defraud the plaintiffs [and to] convert[] [their] lease payments, security deposits and alleged 'operating expenses' to their own use and benefit . . . ."

Fifth Count: A claim under the SDA, alleging "defendants engaged in a systematic scheme and plan to defraud the plaintiffs and to convert their security deposits to their own use and benefit . . . ."

A four-day trial was conducted with the assistance of Korean interpreters. The following relevant testimony and evidence were adduced at trial. The subject building consists of ninety individual units. On January l6, 2008, Bergenfield Senior Housing, LLC ("BSH") entered into an agreement of sale with defendant, SM Global Group ("SM Global"), signed by its principal, defendant Shang Chong Kim ("Elder Kim"), and his wife, Munhui Pak ("Pak"), to purchase the eighty-eight unoccupied units in the building. An undated rider identifies the buyer as Elder Kim and is signed by him without any reference to the entity SM Global. An expedited closing was contemplated to occur on March 7, 2008. Among its terms, the agreement permitted the buyers to rent out the units pre-closing, but required they post a one and one-half months' rent security deposit with their attorney on each lease or sublease until closing of title, after which the deposits were to be released to the buyers.

Defendant John Kim ("Kim"), Elder Kim and Pak's son, evidently formed a management company with defendant Chung Hoon Shin ("Shin") known as A&O Healthcare ("A&O"). This company, under Shin's leadership, was to manage the property and handle the tenant applications, rent monies and security deposits. On February 15, 2008, a lease agreement was entered into between BSH (identified as landlord) and tenants identified as Elder Kim (listed as "Shang Kim, et als" on the lease), "Chong Kim," A&O, SM Global and Pak, effective from February 1, 2008 through June 7, 2008. Elder Kim and Shin signed as "tenants." A rider to the lease identifies BSH as lessor and as lessees, Elder Kim and Pak (Personal Guarantors), Shin, A&O and SM Global. The rider was signed on behalf of lessees, designated as "primary tenants," by Elder Kim and Shin. With regard to subtenant rental deposits, the rider contains similar language to the sales agreement, i.e., requiring the unit's security deposit to be held in escrow in buyers' attorney's trust account, and further required proof of the deposit to be given within five days of its receipt.

The buyers then entered into about eighty subleases with elderly members of the Korean-American community, mostly below market, allowing them to move in with the expectation the tenants would qualify for public assistance. The tenants were charged rent and a security deposit, of which BSH was aware. Unbeknownst to BSH, however, the tenants were also charged monthly "co-rent" and "co-security," representing additional rent of $100 to $300, based on the size of the units, to bring the actual rent closer to the market rate pending receipt of the rental subsidies and as a loan to A&O to help with the building operations, respectively. After a few months in their apartments, some of the tenants also loaned money to A&O for "operating expenses," again without BSH's knowledge. Ultimately, Shin misappropriated the tenants' rent and security deposits and placed them into the business account of A&O, then depleted the account. Shin also misappropriated the "co-rent," "co-security" and other loan payments received from the tenants, totaling about $190,000, which he deposited into his own bank account and used for personal expenses. The buyers did not close, and BSH declared a default, claimed the buyers' nonrefundable deposits and ousted the buyers and representatives from the premises.

Pursuant to an order to show cause filed by BSH, by order of March 24, 2008, SM Global, Elder Kim and Pak were, in part, compelled to provide BSH with copies of the leases and proof of the security deposits. This suit ensued by way of an initial complaint filed on or about July 30, 2008. Thereafter, BSH filed over seventy dispossess actions against the tenants, which were consolidated with this suit, and have since been resolved. The tenants remained in the building.

Following trial, Chancery Judge Robert P. Contillo issued a twenty-seven page written opinion filed on September 21, 2009, memorialized in an order and final judgment dated October 22, 2009. According to the court, the focus of the trial was about the leasing of the units to the Korean-American seniors, "the collection of security deposits and other monies from those tenants, the consumption and dissipation of all said monies, and the responsibilities of the various defendants for the consumption and dissipation of said monies."

In summary, the court dismissed all claims against Pak; entered judgment in favor of plaintiffs against defendants BSH, SM Global, A&O, Shin, Elder Kim and Kim in an amount equal to that which each had paid as a security deposit; permitted plaintiffs to take a credit against their monthly rental obligations to BSH in an amount equal to their security deposits plus interest, with BSH to then recoup those losses against the other defendants; dismissed all claims of plaintiff relating to extra-rental monies paid to defendants; entered judgment in plaintiffs' favor for the loan monies and interest against A&O and SM Global; and dismissed plaintiffs' claims for the loan monies against the individual defendants. In terms of monetary damages, final judgment was entered in the amounts of: (1) $25,559.09, representing the total of the tenants' security deposits, against BSH, SM Global, Elder Kim, Kim, A&O and Shin; (2) $190,844, representing the loan from the tenants referred to as "co-security" ...

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