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Amy Ryan v. Gina Marie

June 7, 2011


On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket Nos. L-1290-08 and L-4484-08.

The opinion of the court was delivered by: Wefing, P.J.A.D.



Argued February 15, 2011 - Decided Before Judges Wefing, Baxter and Koblitz.

The opinion of the court was delivered by WEFING, P.J.A.D.

Plaintiff is a tenant in a multi-unit building in Hoboken that is owned by defendant Gina Marie, L.L.C. ("Gina Marie"). Plaintiff secured her apartment with the assistance of a Hoboken real estate broker and has resided there since October 1993. Her initial rent when she took up occupancy was $650 per month. There is no indication in the record that plaintiff received anyincrease in her rent until defendant Gina Marie purchased the building in 2005.

Plaintiff has had a number of landlords over the years. Defendant has only owned the building since December 2005, purchasing it from third-party defendant 608 Madison Street, L.L.C. ("608").*fn1 Prior to purchasing this building, Gina Marie had owned other properties in Hoboken and knew that the city had a rent control ordinance. We are informed that certain of the earlier contracts of sale for this property contained indemnification provisions under which the seller indemnified the purchaser with respect to the correctness of the building's rent roll. The contract between Gina Marie and 608 did not contain such indemnification language. Rather, an addendum to the contract of sale between Gina Marie and 608 included the following provision: 10. The buyer shall have ten (10) days from the end of attorney review to conduct its own due diligence as to the legality of the rents. Buyer and seller agree the seller makes no representations as to the legality of the rent and the buyer agrees to buy the property in its rents [sic] in an as is condition with any faults or illegalities. The rents are taken by the buyer without any recourse against the seller from the date of closing forward. This paragraph shall survive the closing of title.

Gina Marie's purpose in purchasing this building was to convert it from a rental property to a condominium, with an anticipation of earning a profit on the sale of the condominium units within the building. The contract addendum thus required as a condition of closing that at least six units be vacant.

According to a certification submitted by Gina Marie's principal, she went to the office of the Hoboken Rent Leveling and Stabilization Board ("the Board") to review its files in an effort to determine whether the tenants in the building were being charged a legal rent. She noted in her certification that she was familiar with the terms and procedures of the Hoboken rent control ordinance. She further certified that the administrator of the Board informed her that a prospective purchaser of a property was not entitled to receive an official calculation of legal rents for a subject property. Based upon that information, and her familiarity with the Hoboken ordinance, she performed her own calculations to determine whether the rents being charged the tenants in this building conformed to the Hoboken ordinance. Having satisfied herself that the rents were appropriate, she proceeded to close the transaction.

After Gina Marie assumed ownership of the building, plaintiff was notified that her rent would be $758 per month. Plaintiff disputed that amount and requested an official calculation from the Hoboken Board. In February 2008, the Board notified defendant that it had calculated plaintiff's legal base rent to be $289 per month. It urged the parties to come to an agreement with respect to how plaintiff would be reimbursed for the overage, whether through refund or credit.

The Board's urging was in vain. In March 2008, plaintiff filed a complaint, docket number L-1290-08, in the Law Division seeking a refund of the excess rent she had paid during the course of her entire tenancy and damages under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -195. She also exercised the right of self-help contained within the Hoboken ordinance and elected to cease paying rent, charging her rent to the accumulated refund to which she said she was entitled. From that point forward, the procedural history may generously be described as convoluted, and we attempt to summarize its salient points.

Gina Marie's attorney did not file a timely answer to this complaint, but on July 11, 2008, an order was entered permitting Gina Marie to file an answer and a third-party complaint, which was in fact filed on July 21, 2008. Gina Marie named its directpredecessor, 608, as a third-party defendant, together with certain of 608's predecessors. Despite naming these additional parties, Gina Marie's original attorney did not properly attend to service upon them with the result that, with the exception of 608, Gina Marie's third-party claims were later dismissed for lack of prosecution. R. 1:13-7(a). 608, in turn, filed cross-claims against its predecessors in title, including plaintiff's original landlords and others in the chain of title.

On July 14, 2008, three days after Gina Marie was granted leave to file its pleadings, and before it had done so, an order was entered in the trial court that granted what it referred to as plaintiff's motion for "default/summary judgment" and entered partial judgment against Gina Marie for excess rents paid by plaintiff as well as treble damages and counsel fees under the consumer fraud statute.

Gina Marie did not protest the entry of this order. It did, however, file an administrative appeal with the Board. Following a hearing, the Board adopted a resolution in September 2008 requiring Gina Marie to refund to plaintiff the excess rent paid "for the twelve (12) month period commencing from the date upon which . . . [she] filed the request for a legal rent calculation." The letter accompanying this resolution interpreted it to mean that Gina Marie was obligated to refund any excess rent for the one-year period prior to plaintiff requesting an official rent calculation, that is, from January 2007, and referred to the Board basing its decision to limit plaintiff's damages to this one-year period upon N.J.S.A. 2C:1-6b(2), limiting the prosecution for a disorderly persons offense or petty disorderly persons offense to the one-year period after it was committed.

Plaintiff, dissatisfied with this resolution, filed a separate action in lieu of prerogative writs, naming Gina Marie and the Board as defendants. This action was assigned docket number L-4484-08. Eventually, the two matters were consolidated in December 2008. As part of that consolidated litigation, Gina Marie's principal submitted a certification in which she asserted that when she signed the contract of sale, she agreed to forego any claim against 608 with respect to excessive rents that might arise in the future but had not agreed to forego any claim Gina Marie might have with respect to rents collected in the past that had not been computed in accordance with the Hoboken rent control ordinance.

In connection with her motion to consolidate, plaintiff also sought summary judgment that the Board had improperly limited her claim for a refund of excess rent to the one-year period prior to her seeking an official rent calculation. The order granting consolidation also granted her summary judgment on this issue, finding the Board lacked the authority to impose such a limitation, and it remanded the matter to the Board "for the ...

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