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Gina Marie, L.L.C v. City of Hoboken


October 11, 2011


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2146-09.

Per curiam.


Argued September 13, 2011

Before Judges Carchman, Fisher and Baxter.

Plaintiff Gina Marie, L.L.C. (Gina Marie) appeals from a July 19, 2010 Law Division order that upheld a February 25, 2008 decision of the Hoboken Rent Stabilization Board (Board). The Board concluded that in the calculation of the maximum rent plaintiff was entitled to charge on the subject property, plaintiff was not entitled to the benefit of any changes in occupancy unless plaintiff, or its predecessors, had filed the annual registration forms and vacancy decontrol certificates required by the applicable Hoboken Rent Control ordinance. We reject plaintiff's claim that the Board's application of the ordinance was arbitrary and capricious, and affirm the Law Division order under review.


On December 1, 2005, Gina Marie purchased a multi-unit apartment building at 608 Madison Street in Hoboken. At the time Gina Marie's principal purchased the building, she was aware that the building was rent-controlled, and that the setting of rents was subject to the provisions of the Hoboken Rent Control ordinance. See Hoboken Municipal Code §§ 155-1 to 155-34 (2009) (RCO).*fn1 The tenant in apartment #10 was defendant Amy Ryan, who had been living there since 1993.

On December 1, 2005, Gina Marie notified Ryan that it had recently purchased the building and that Ryan's rent would be increased to $758 per month, effective immediately. Two years later, on January 23, 2008, Ryan requested the Hoboken Rent Control Administrator (Administrator) to calculate the maximum legal rent Gina Marie was entitled to charge. On February 25, 2008, the Administrator notified Ryan that the maximum rent for her apartment was $289 per month.

Upon receiving such notice from the Board, the principal of Gina Marie met with the Administrator to review the Administrator's file concerning Ryan's apartment, and to determine whether there were any vacancy decontrol certificates in the file. Whenever a tenant has vacated a residential apartment under circumstances specified by the RCO, the RCO authorizes a "vacancy decontrol," which in turn allows for a twenty-five percent increase in the rent; however, the benefit of the vacancy decontrol is not available unless the required certificates are present in the file. Gina Marie asserted that it was entitled to the benefit of vacancy decontrols for both 1982 and 1985, when existing tenants had moved out and new tenants had moved in, and also for 1993, when a prior tenant had vacated the premises and defendant Ryan had moved in. The file contained no vacancy decontrol certificates. The annual registration statements in the file were limited to 1981, 1985, 1994, 2001, 2002, 2003 and 2004.

Because there were no vacancy decontrol certificates in the file, the Administrator advised Gina Marie that the only increases in the initial rent of $114 that she would permit were annual cost-of-living increases. The Administrator specifically rejected Gina Marie's effort to provide extrinsic evidence that tenants had voluntarily moved out in 1982, 1985 and 1993.

Having received an adverse decision from the Administrator, Gina Marie sought a hearing before the Board. After some intervening proceedings between the parties that are not relevant to the issues on appeal, the Board conducted a hearing. At the conclusion of that hearing, the Board affirmed the Administrator's determination that the maximum allowable rent was $289 per month.*fn2

On April 27, 2009, Gina Marie filed a complaint in lieu of prerogative writ challenging the Board's February 11, 2009 decision. Gina Marie argued before the Law Division, as it argues before us on appeal, that during the twenty-five years preceding Ryan's request for a calculation of the legal rent, the Board routinely accepted extrinsic evidence of vacancy decontrols without insisting that the vacancy decontrol certificates required by section 155-33 of the RCO be present in the file. Gina Marie contended that the Board's abrupt change of position, and its sudden insistence that the vacancy decontrol certificates be present in the file before the landlord could achieve the twenty-five percent rent increase, constituted arbitrary and capricious Board action.

At the conclusion of oral argument, Judge DeCastro issued a comprehensive written opinion in which she concluded that: the RCO serves a valid public purpose by preventing exorbitant rent increases; the filing of the vacancy decontrol certificates required by section 155-33 of the RCO ensures that the tenant vacated the premises only under the circumstances that entitle a landlord to the benefit of the twenty-five percent vacancy decontrol; without the filing of such certificates, a vacancy decontrol might be applied in error; and the Board's February 11, 2009 decision "was based upon a correct interpretation of the ordinance and thus it was not arbitrary, capricious or unreasonable nor did it violate legislative policies." On July 19, 2010, the judge issued a confirming order dismissing Gina Marie's complaint in lieu of prerogative writ.

On appeal, Gina Marie argues:




As Gina Marie correctly argues, our review of the trial judge's legal conclusions is plenary, as no deference is owed to a trial judge's determination of the law. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). We do, however, accept the trial judge's findings of fact, Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974), namely, her finding that for the twenty-five years preceding the subject rent calculation, the Board accepted extrinsic evidence of vacancy decontrols without insisting that the required documents be present in the file.

Although the City of Hoboken (City) enacted its first rent control ordinance in 1973, the amendments enacted in 1985 govern the calculation of the legal rent for any rent-controlled apartment. The RCO provides that all rental properties in the City, with a few exceptions not applicable here, are subject to the RCO. RCO, supra, § 155-2. "[N]o rental increases shall be . . . demanded, paid or accepted, except as provided in [the RCO]." Id. at § 155-4. The RCO requires landlords to file a registration statement each year with the Rent Control Administrator stating the name of the tenant and the amount of rent being paid. Section 155-30 provides:

Registration statement; fee.

All dwellings which are subject to the provisions of this chapter shall file . . . a registration statement and a filing fee of twenty-five dollars ($25) with the Division of Rent Leveling and Stabilization. This registration statement shall include the following information[:] . . . the name of each tenant and the apartment number; the number of rooms for each apartment; the current rent for each apartment; the amount of the last increase for each apartment unit; the date of the last increase for each apartment unit; [and] the date of lease expiration for each apartment unit[.] . . . This statement must be maintained on a yearly basis by filing with the Division of Rent Leveling and Stabilization, with a filing fee of twenty-five dollars ($25) [commencing] on October 1, 1985, and each anniversary date thereafter. Failure to register or reregister or [the filing of] false registrations shall be punishable by a fine[.]

[Id. at § 155-30.]

The calculation of the legal rent a landlord may charge a tenant is set at the "base rent level received by the landlord as of January 11, 1973," the date of expiration of federal rent control. Id. at § 155-4. Thereafter, landlords are entitled to an annual cost-of-living increase, § 155-5; a water and sewerage surcharge, § 155-6.1; a surcharge based upon capital improvements made to the premises, § 155-13; and a hardship rental increase if the landlord is able to demonstrate an inability to derive a fair return on his or her investment, § 155-14.

In addition to those provisions, a landlord is permitted, as we have noted, to impose an increase of twenty-five percent over the rent paid by the prior tenant if the prior tenant "voluntarily vacated the rental unit." Id. at § 155-31. The next section, § 155-32, defines the term "voluntarily" as follows:

The landlord shall be entitled to decontrol the apartment unit under this Article, only under the following circumstances:

A. If the tenant vacates the apartment voluntarily without harassment, duress or unreasonable pressure from the landlord or his agents or if the tenant is legally evicted.

B. . . . Whenever there is an issue as to the circumstances under which a tenant has vacated an apartment unit, that issue shall be determined by the Rent Control Board after a hearing. If the Board finds that a landlord is seeking to decontrol or has decontrolled an apartment unit and the tenant has vacated the unit under circumstances other than those set forth in this section, the Rent Board may rescind the decontrol of the apartment unit, and the rent shall revert to that rental on the apartment unit prior to the vacation of the apartment[.] [Id. at § 155-32.]

Another section, § 155-33, requires the landlord to file a vacancy decontrol certificate whenever there is a vacancy decontrol. The vacancy decontrol certificate must be on a form provided by the Board and must specify:

[T]he name of the vacating tenant, the existing rental, the circumstances under which the tenant vacated the apartment unit, the name of the new tenant, the new rental [amount] and the effective date of the new rental. [Id. at § 155-33.]

No landlord shall be entitled to the benefit of the twenty-five percent vacancy decontrol more than once in any three-year period. Id. at § 155-34.

We now address Gina Marie's claims. Even though most of the registration forms were missing, and despite the absence of any vacancy decontrol certificates for the vacancies that occurred in 1982, 1985 and 1993, Gina Marie asserts that the Law Division erred when it upheld the legal rent calculation approved by the Board. It maintains that the Board is obliged -- consistent with its prior practice spanning the preceding twenty-five years -- to give it the benefit of three vacancy decontrols despite the failure to file the required registration statements and vacancy decontrol certificates. For several reasons, we disagree.

The law presumes that a municipal quasi-judicial body "will act fairly and with proper motives and for valid reasons." Kramer v. Bd. of Adj., Sea Girt, 45 N.J. 268, 296 (1965). For that reason, and because public bodies such as the Board possess particular knowledge of the subject matter entrusted to them for decision, courts are obliged to afford the decision of such bodies considerable deference. Ibid. Here, as we have noted, the Law Division concluded that because the Board had applied the RCO as written, and had complied with all of the requirements of the RCO, the Board's interpretation of those provisions was not arbitrary, capricious or unreasonable.

When interpreting an ordinance, courts are obliged to analyze its plain meaning. Mays v. Jackson Twp. Rent Leveling Bd., 103 N.J. 362, 376 (1986). Municipal ordinances are construed using the same standards that apply to the interpretation of statutes. Nuckel v. Borough of Little Ferry Planning Bd., ___ N.J. ___, ___ (2011) (slip op. at 20). When interpreting or applying a statute, if the plain language of the statute is clear and unambiguous, courts are obliged to enforce the statute as written. In re Young, 202 N.J. 50, 63 (2009). Here, by its unequivocal language, the RCO requires both a registration statement and a vacancy decontrol certificate prior to the granting of a vacancy decontrol. The Board, like any public agency, is required to "exercise its powers in strict conformance with the governing ordinance." Knight v. Hoboken Rent Leveling & Stabilization Bd., 332 N.J. Super. 547, 551-52 (App. Div 2000) (internal quotation marks and citation omitted).

Indeed, an administrative agency such as the Board, is without the inherent power, and may not "arrogate to itself the authority to accomplish ends not envisaged by the legislative grant or to employ means not fairly within the powers that have been bestowed." Id. at 551 (citation omitted). The actions of a local administrative body are invalid when that body exceeds the scope, and literal language, of its own ordinance. Id. at 554. Here, because the RCO requires the filing of annual registration statements, supra, § 155-30, and vacancy decontrol certificates, id. at § 155-31, before a vacancy decontrol may be granted, the Board lacked the authority to do anything other than deny Gina Marie's request to be granted the benefit of the twenty-five percent vacancy decontrol.

Second, even if the Board believed that Gina Marie was entitled to equitable relief from the strict requirements of the RCO, the Board lacked the authority to do so. Local administrative bodies, such as the Board, are prohibited from granting equitable relief where the governing ordinance or statute does not provide such authority. Knight, supra, 332 N.J. Super. at 554 (holding that the Hoboken Rent Leveling Board lacked authority to impose a two-year limitation on a tenant's right to receive a refund on rent overcharges when the ordinance itself imposed no such limitation).

This conclusion is strengthened by the long-standing principle that equitable estoppel should rarely be invoked against a public official or public entity. Middletown Twp. Policemen's Benev. Ass'n v. Twp. of Middletown, 162 N.J. 361, 367 (2000). Here, while asking the Law Division to conclude that the Board acted in a manner that was arbitrary, capricious and unreasonable, Gina Marie also sought to enjoin the Board from applying the RCO as written.

To reap the benefit of equitable estoppel, Gina Marie must establish that the Board engaged in conduct, either intentionally or under circumstances that induced reliance, and that Gina Marie thereafter relied on the Board's conduct to its detriment. Knorr v. Smeal, 178 N.J. 169, 178 (2003). The burden is on the party claiming equitable estoppel to establish its elements. Ibid. Here, no such showing was made.

Gina Marie did not take title to the property at 608 Madison Street until 2005 and owned no other property in Hoboken any earlier than 2004, when it purchased a building on Willow Avenue. Gina Marie presented no proofs demonstrating that at the time it purchased the Madison Street property, it relied on the prior practices of the Rent Control Administrator. Indeed, the record demonstrates the contrary, as each owner of an apartment building in Hoboken is sent a reminder, along with the annual tax bill, that rental registration statements must be filed annually. Viewing the record as a whole, we are satisfied that Gina Marie failed to demonstrate detrimental reliance. Its claim that the Law Division should have imposed equitable estoppel against the Board must therefore fail.

We are also satisfied that Gina Marie has been able to derive a fair return on its investment in the subject property. In an unreported decision, we recently approved the grant of a hardship rent increase in the amount of $1605 per month for Ryan's unit. Ryan v. Hoboken Rent Leveling & Stabilization Bd., No. A-4413-09 (App. Div. June 7, 2011) (slip op. at 9, 17). We reject Gina Marie's claim that the rent calculation of $289 was confiscatory and a violation of due process.

Lastly, we are satisfied that the strict enforcement of the RCO served a valid public purpose. As Judge DeCastro held:

The purpose of the Ordinance is to stabilize rents and to provide a public record system so that landlords, tenants and the Rent Leveling Officer can quickly ascertain the "legal" rent for any apartment. The requirements of an annual registration statement and a vacancy decontrol certificate advance that goal. Non-compliance with these registration requirements will impede the Ordinance's purpose and objective.

As we have noted, one of the purposes of the filing of a vacancy decontrol certificate is to ensure that any previous tenants left the premises under circumstances that satisfy § 155-32. If a landlord is granted the benefit of a vacancy decontrol, without having filed the required vacancy decontrol certificates, the Rent Control Administrator, and the present tenant, run the risk that a vacancy decontrol will be wrongly applied based on anecdotal, and potentially incorrect, evidence.

The annual registration statement likewise serves a valid purpose, for it enables the Rent Control Administrator to accurately determine the base rent. Were we to accept Gina Marie's contention that the Board acted arbitrarily and capriciously when it refused to dispense with the express requirements of the RCO, we would, in effect, be undermining the salutary provisions of the RCO. We decline to do so.


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