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Department of Community Affairs v. 7 Rail Road Avenue

March 11, 2011


On appeal from a Final Decision of the Department of Community Affairs, Docket No. BHI-421-8.

Per curiam.


Argued October 5, 2010

Before Judges Carchman and Messano.

N. Ari Weisbrot argued the cause for appellant (Phillips Nizer, LLP, attorneys; Mr. Weisbrot, of counsel and on the brief). George N. Cohen, Deputy Attorney General, argued the cause for respondent (Paula T. Dow, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Jonathan J. Greenberg, Deputy Attorney General, on the brief).

Washington Norse, LLC (WNL), appeals from the final decision of the Department of Community Affairs (DCA) that affirmed the initial decision of the administrative law judge (ALJ). The ALJ concluded that multiple continuing violations of the Hotel and Multiple Dwelling Act (HMDL), N.J.S.A. 55:13A-1 to -28, remained unabated at WNL's property, and she assessed a $49,000 penalty. WNL contends the agency's decision was arbitrary, capricious and unreasonable, and was not supported by substantial credible evidence in the record. We affirm, but remand for the limited purpose of entering an amended order regarding the penalty imposed.

WNL owns a multi-family building containing fourty-five dwelling units at 7 Railroad Avenue in Washington Borough. On March 22, 2007, William C. Kokas, a licensed multiple-dwelling inspector for the Bureau of Housing Inspection (BHI), inspected the property. Kokas discovered 164 violations of the HMDL and recorded them on an inspection report. WNL was served with the report and advised that the violations had to be abated by June 2.

Kokas returned to the property on October 5 to reinspect. He found that the majority of the violations remained open and unabated. Kokas recorded these on his report by placing an "O" next to any open violations, and noting the date at the bottom of the column. On February 28, 2008, BHI issued a "Notice of Statutory Violation and Order to Pay" in the amount of $6,300 to defendant.

WNL contested the order and the matter was transferred to the Office of Administrative Law (OAL) for an adjudicatory hearing as a contested case. Prior to the hearing, however, the parties reached a settlement that was reduced to writing and executed on April 29, 2008 by the representative of WNL, its counsel and BHI's compliance officer.

The terms of the written settlement agreement provided that WNL would "abate the violations . . . by June 1, 2008," and call for a re-inspection appointment thereafter. WNL further agreed to pay a "reduced penalty of $2500[]" in installments over the next several months. The settlement also provided that "[i]n consideration of the above terms [WNL] withdraws [its] request for an Administrative Hearing." Lastly, the agreement provided the following:

Regarding the violations . . . in the instant proceedings, this Settlement Agreement fully disposes of these issues and [WNL] by entering into this agreement relinquishes [its] right to contest the existence of the instant violations and/or the appropriateness of the instant penalties. However, the [BHI] . . . reserves the right to issue orders or assess penalties where the owner has failed to comply with this Settlement Agreement and the owner reserves the right to request an Administrative Hearing concerning the abatement of any violations cited by [DCA] and any subsequent penalties assessed by the Department for the unabatement of violations. [Emphasis added.]

Kokas re-inspected the property on July 8. He again determined that a number of violations remained unabated and noted them on his report. On August 14, BHI issued two orders. The first was a "NOTICE OF CONTINUING UNABATED VIOLATIONS AND ORDERS TO ABATE VIOLATIONS AND TO PAY PENALTY"; the total penalty assessed was $49,000, and the order further required WNL to abate the violations by September 8. The second order assessed $1,872 in re-inspection fees. WNL requested an administrative hearing to contest the orders, and a hearing was held before the ALJ on January 13, 2009.

At the hearing, Kokas testified as to the procedure he used in conducting his inspection of the property. He further testified that he took notes as he performed the inspection and then prepared the actual report, which was computer-generated. Kokas' inspection report was introduced into evidence, and he explained the notations and entries on it.

Kokas was subject to extensive cross-examination. He conceded that he did not have a clear memory of many of the violations or details of the property. Kokas testified that when he conducted re-inspections, he generally compared the condition of the property at re-inspection to the original inspection report, and explained open and unabated violations to the property owner or manager when conducting the re-inspection. At the July re-inspection, Kokas was accompanied by the local fire inspector, the property's ...

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