Heyert v. Taddese, A-4801-10T2; Appellate Division; opinion by Parrillo, P.J.A.D.; decided and approved for publication June 25, 2013. Before Judges Parrillo, Sabatino and Fasciale. On appeal from the Law Division, Hudson County, L-1247-10/L-1460-10 (consolidated). DDS No. 27-2-0421 [65 pp.]

This consolidated appeal arises from a landlord-tenant dispute. The tenants, Brian Heyert, Jude Noel, Diana Weiner, Peter Schoepe Jr. and Karl Mawhinney, claimed that the landlords, Menassie Taddese and Yayine Melaku, violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -195, by charging rent in excess of that allowed by local rent-control ordinances and that the municipality erred in granting the landlords a hardship rent increase. The landlords claimed that the rent-control ordinance is unconstitutional and that the legal base rent calculated under the ordinance was arbitrary, capricious and unreasonable.

The Law Division vacated the hardship rent increase and dismissed the landlords' challenge to the legal base rent calculations; dismissed the landlords' constitutional claims against the municipality; and found in favor of the tenants on their CFA claim, awarding them treble the excess rent and attorney fees and costs.

On appeal, the landlords argue that the court erred in finding the CFA applicable to this dispute, and even if it were, the court erred in finding that there were no genuine issues of material fact as to their violation of it; in dismissing their constitutional claims; in refusing to entertain their challenge to the legal base rent calculation, and in reversing the hardship rent increase. They also claim that the attorney fee award was excessive.

Held: Charging the tenants a rent that exceeded that allowable under the rent-control ordinance was an affirmative act of misrepresentation that subjected the landlords to liability under the Consumer Fraud Act, regardless of their intent. The rent-control ordinance is not unconstitutionally vague either on its face or as applied to the landlords' property. The landlords' appeal of the base rent calculation was properly rejected as untimely. The tenants had standing to challenge the grant of the hardship rent increase but the board erred in not considering the landlords' second mortgage, requiring a remand.

The panel first addresses the applicability of the CFA. To state a private claim under the CFA, a consumer must allege unlawful conduct; an ascertainable loss; and a causal relationship between the unlawful conduct and the ascertainable loss and that the alleged violator was acting in a professional, commercial capacity. Unlawful practices include affirmative acts and misrepresentations. An intent to deceive is not a prerequisite to the imposition of liability for an affirmative act.

The panel says leasing an apartment is a commercial transaction contemplated by the CFA and that no genuine issue of material fact existed concerning whether the landlords were in the business of renting apartments. The landlords committed an affirmative act of unlawful conduct by charging the tenants rent in excess of that allowed by the rent-control ordinance. That act subjected them to liability under the CFA. Because intent is not a prerequisite to the imposition of liability, their claim that their attorney advised that the ordinance did not apply to condominiums is irrelevant.

The tenants were not required to make a presuit demand for reimbursement, and even if such a requirement existed, they satisfied it.

Further, the landlords cite no legal authority to support their argument that the proper measure of ascertainable loss should be the time loss of money from when the tenants filed suit. Applying an out-of-pocket approach, the panel says the tenants' loss was the difference between the amount they actually paid in rent and the amount allowed by the rent-control ordinance. That is the calculation that the Law Division made.

As to causation, the panel says the tenants' loss is neither speculative nor attenuated. The landlords' overcharge caused the tenants to lose money every month that they paid the illegal rent. Such loss was direct and personal to each tenant.

Thus, the panel concludes that the grant of summary judgment in favor of the tenants on their CFA claim and the calculation of treble damages were entirely proper.

The panel rejects the landlords' claim that the rent-control ordinance is unconstitutionally vague on its face and as applied to their property. To be facially vague, the ordinance would need to be vague to all persons in all conceivable contexts. It is not. Thus, the only plausible argument is that the ordinance is impermissibly vague as applied to the landlords. This argument fails because, inter alia, the ordinance establishes rent for "housing space in dwellings," and a condominium unit is a housing space within a condominium building and thus falls under the ordinance.

The panel says the board did not err by refusing to hear their appeal of the base rent calculation in the board's letter of April 18, 2005, and the court did not err by upholding that decision, because the appeal was grossly out of time. Further, the 2005 determination was not, as the landlords claim, an ultra vires act that was void ab initio but merely voidable and by the time the landlords appealed, it had long since been ratified.

Nor did the tenants lack standing to challenge the board's grant of a hardship rent increase where the board's decision was based on a regulation designed to protect the tenants' interests, their position was adverse to that of the landlords, and they were directly affected by the grant of a hardship increase.

However, the board erred in not considering the landlords' new mortgage in evaluating the hardship application and remand is therefore appropriate.

The court also rejects the landlords' claims for violation of their civil rights under 42 U.S.C.A. § 1983, impairment of contract, and regulatory taking. It finds that the § 1983 claims were untimely and that the discovery rule did not operate to toll that statute of limitations. It says that other than a bare assertion, the landlords set forth no argument to explain how the ordinance impaired their right of contract. Moreover, they failed to address their impairment claim before the court below and, therefore, the claim should not be considered on appeal.

The panel says the landlords' claim of a regulatory taking lacks merit. The argument that the 2000 amendment, which applied rent control to their property, is facially invalid is contrary to well-established law that upholds the power of municipalities to enact rent-control ordinances. Their argument that the 2005 base rent determination deprived them of rental income is unripe, because they failed to use all procedures available to them to maximize their rental income.

Finally, the panel finds no abuse of discretion in the award of attorney fees, finding that the landlords' vague assertions that the sums submitted by plaintiffs were aggregated, failed to segregate as to issues, and included grossed-up figures for emails are not supported by the records.

For appellants/cross-respondents — Richard W. Mackiewicz Jr. (Mackiewicz & Associates). For respondents/cross-appellant-tenants — Cathy C. Cardillo. For respondents Hoboken Rent Leveling & Stabilization Board and the City of Hoboken — Victor A. Afanador (Lite DePalma Greenberg; Susana Cruz Hodge and Marissa L. Quigley on the brief).