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Barbara Street, Jennifer Street, Mckevin Shaughnessy and Elena Lopez v. Hugh Hothem

October 4, 2012


On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. DC-0617-11.

Per curiam.


Submitted May 8, 2012

Before Judges Espinosa and Kennedy.

Plaintiffs Barbara Street, Jennifer Street, McKevin Shaughnessy, Elena Lopez, and Kenn Maareveld are all long-term pre-condominium conversion tenants of properties owned and managed by defendant.*fn1 Following a bench trial, the court found that defendant had committed various violations of the Truth in Renting Act (TRA), N.J.S.A. 46:8-43 to -50, but declined to find defendant liable for violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, because the violations had not been "intentional and outrageous." Defendant has not appealed the determination that he violated the TRA. Therefore, the principal question before us*fn2 is whether defendant's conduct, including the violations of the TRA found by the trial court, may constitute a violation of the CFA. For the reasons that follow, we conclude that it may.

The court found that defendant Hothem is "in the real estate business[,]" owning approximately ten to twelve buildings in Hoboken. Plaintiffs reside in three of those buildings, which, it is undisputed, are subject to Hoboken rent control ordinances. Defendant issued new leases and notices to quit to plaintiffs from September 29 through October 18, 2010.

The notices sent to plaintiffs stated they were month-to-month tenants and that their "present lease" would be terminated. Defendant demanded possession unless plaintiffs accepted the proposed lease changes in the enclosed lease. Although all of the plaintiffs resided in the premises before any conversion of the properties to condominiums, the lease enclosed was a "condominium lease" and included a "condominium statement" that required the tenant to acknowledge that his or her tenancy "can be terminated upon 60 days' notice if your apartment is sold to a buyer who seeks to personally occupy it."

Each of the plaintiffs objected to the proposed leases, noting that they did not reside in a condominium and had never received notice of conversion. Plaintiffs and their counsel protested provisions of the new leases to defendant and his counsel from September 30 through November 24, 2010. Defendant responded directly to plaintiffs Lopez and Maareveld in October and November 2010. Thereafter, defendant issued a second notice to quit to plaintiffs for their failure to sign the new leases on December 21, 2010, giving them a move out date of January 31, 2011. Plaintiffs filed a complaint challenging the validity of the leases and seeking statutory penalties and fees on January 8, 2011. Thereafter, defendant filed complaints against plaintiffs, seeking to evict them for failing to sign the leases. The eviction complaints were voluntarily dismissed thereafter.

The TRA provides in part:

No landlord shall offer to any tenant or prospective tenant or enter into any written lease after the effective date of this act which includes a lease provision which violates clearly established legal rights of tenants or responsibilities of landlords as established by the law of this State at the time the lease is signed. [N.J.S.A. 46:8-48.]

Further, "[a]ny landlord who violates any provision of [the TRA], contrary to the legal rights of tenants, shall be liable to a penalty of not more than $100.00 for each offense." N.J.S.A. 46:8-47.

Following a bench trial, the trial court issued an oral opinion finding defendant violated the TRA by including "certain provisions" in the leases. The provisions the trial court deemed to be violations, and the legal basis for such violations, are:

(1) sending a condominium statement to a pre-conversion tenant when he knew or should have known that such a tenant would not be subject to the statement/notice. Such notice is only to be provided to tenancies commenced after the Master Deed for a condominium is filed, see N.J.S.A. 2A:18-61.9, and it is against public policy to ask a pre-conversion tenant to waive his or her rights by signing a condominium statement. See N.J.S.A. 2A:18-61.36.

(2) the inclusion of an expired tax surcharge in the amount of rent set forth in the lease in violation of Hoboken, N.J., ...

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