119 59 WNY, LLC VS. GUSTAVO MARTINEZ (LT-012328-17, HUDSON COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4523-17T1
119 59 WNY, LLC,
Plaintiff-Appellant,
v.
GUSTAVO MARTINEZ,
Defendant-Respondent.
_________________________
Submitted April 2, 2019 – Decided May 15, 2019
Before Judges Yannotti and Rothstadt.
On appeal from Superior Court of New Jersey, Law
Division, Hudson County, Docket No. LT-012328-17.
John V. Salierno, attorney for appellant.
Kathleen A. Walrod, attorney for respondent.
PER CURIAM
Plaintiff appeals from the trial court's March 15, 2018 decision to vacate
a consent judgment in this landlord-tenant dispute, and the subsequent dismissal
of its complaint. We affirm.
I.
We briefly summarize the relevant facts and procedural history. Since at
least 2009, defendant has leased apartment eleven in a building in the Town of
West New York (the Town). During that time, defendant was the superintendent
of the building and, as a result, paid a discounted monthly rent.
The building's prior owner, Jose Arze, sent defendant a notice to quit, and
subsequently filed a complaint on June 15, 2016, seeking a judgment for
possession under N.J.S.A. 2A:18-61.1(m) (landlord conditioned tenancy upon
tenant's employment as a superintendent, janitor, or other capacity and such
employment is being terminated). Defendant and Arze thereafter entered into a
consent to enter judgment, whereby they agreed that defendant would "resume
his duties as superintendent of the property and resume paying the discounted
rent of $315.00."
In 2017, Arze informed the tenants in the building that he sold the
premises to plaintiff. Thereafter, plaintiff sent defendant a notice to quit, which
stated that defendant's employment as superintendent was terminated as of June
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11, 2017. Plaintiff subsequently sent defendant another notice to quit which
stated that the new monthly rent would be $984.89, and required defendant to
sign an attached lease by September 30, 2017. Defendant did not sign the lease.
On October 3, 2017, plaintiff filed a verified complaint seeking a
judgment of possession for failure to pay rent, N.J.S.A. 2A:18-61.1(a), for
failure to pay rent after a rent increase, N.J.S.A. 2A:18-61.1(f), and for refusing
reasonable changes in the terms and conditions at the end of the lease term,
N.J.S.A. 2A:18-61.1(i).
On December 12, 2017, plaintiff and defendant executed a consent to enter
judgment, which the parties placed on the record in court the same day. The
settlement required defendant to file a grievance with the Town's Rent Control
Board (RCB) to determine his apartment's legal rent. Defendant agreed to pay
$646 monthly, without prejudice, until the RCB determined the legal rent for
the apartment.
On January 5, 2018, plaintiff filed a certification pursuant to Rule 6:7-1(e)
to enforce the settlement. Plaintiff asserted that defendant had not filed a
grievance with the RCB and failed to pay the agreed-upon rent for January 2018.
On January 16, 2018, defendant filed a certification with the court, in which he
asserted that the RCB would not accept his grievance because he "do[es] not
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contest [the] legal rent." He also stated he "tried to pay rent[, but plaintiff]
w[ould] not accept it." On the same date, the judge ordered plaintiff to show
cause why the previously-entered consent judgment should not be vacated.
The parties appeared in court on January 24, 2018. After hearing oral
arguments from counsel, the judge found that it was impossible for defendant to
comply with the consent judgment. The judge noted that the most recent rent
registration that plaintiff filed with the RCB listed defendant's total rent as $320
per month. The judge stated that defendant could not ask the RCB to determine
if monthly rent of $646 is permitted.
The judge required plaintiff to submit an application to the RCB within
thirty days for a determination as to the monthly rent plaintiff could charge for
defendant's apartment. The judge continued the matter for thirty days, and left
the remaining settlement terms in place. On March 15, 2018, after hearing
further argument by the parties' attorneys, the judge vacated the consent
judgment and scheduled the matter for trial.
The parties appeared for trial on April 12, 2018. Plaintiff's attorney called
David Sulimoni, one of plaintiff's managing members. Sulimoni testified that
when plaintiff purchased the property, defendant was employed as the
superintendent for the building. He stated that plaintiff terminated defendant's
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employment as the superintendent and thereafter proceeded to collect the full
rental amount for the apartment.
Sulimoni also identified the 2017 rent registration statement that plaintiff
had filed with the RCB, which listed plaintiff as the owner, Sulimoni as the
superintendent, and defendant's monthly rent as $984.89. Sulimoni also
identified the 2002 rent registration statement for the building, filed by a
different owner before defendant's tenancy, which listed the monthly rent for a
different apartment occupied by the superintendent, as $639.23.
The trial resumed on April 23, 2018. Defense counsel asked the judge to
allow defendant's witness, Ana Luna, to testify before plaintiff completed the
presentation of its case because she was the Town's rent control secretary and
had been in court all morning. Plaintiff's counsel initially objected, but
withdrew the objection and the judge allowed defendant to call Luna.
Luna testified that the RCB generally accepts a landlord's annual rent
registration statement and the RCB does not review the statement unless
requested to do so. She said the registration statements set forth the rent that
the owner is collecting, and the annual increases that are permitted under the
Town's rent control ordinance, which are based on the Consumer Price Index
(CPI). Luna noted that the 2016 registration statement for plaintiff's building
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reported that the monthly rent for defendant's apartment was $320, and the
statement for 2017 reported that the new rent was $984.89. Luna stated that the
2017 statement does not "show the appropriate rent" and a matter was pending
before the RCB to determine what the rent should be. She noted that the RCB
was scheduled to hear the matter on May 21, 2018.
Plaintiff's counsel was cross-examining Luna, when the judge questioned
whether plaintiff could establish the rent that it could lawfully charge for
defendant's apartment. Defendant's attorney thereafter moved to dismiss the
complaint, arguing that plaintiff could not prevail on its action for possession of
the leased premises.
The judge pointed out that plaintiff had not completed the presentation of
its case. The judge suggested that plaintiff's counsel speak with his client and
consider accepting defendant's settlement offer of payment of an increased rent
without prejudice, pending a decision by the RCB as to the amount of rent that
plaintiff could lawfully charge. Plaintiff's counsel advised the judge that his
client would not accept the offer.
Thereafter, defendant's attorney renewed her application for dismissal of
the complaint. The judge stated that he was exercising his authority under Rule
611, and could curtail the matter in order "to avoid [the] needless consumption"
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of time. The judge noted that an application was pending before the RCB to
determine whether plaintiff could charge defendant rent in the amount of
$984.89 per month. The judge stated
This is a complaint for eviction based upon a failure to
pay a rent increase and a refusal of reasonable changes
in terms and conditions, a new lease – in essence,
signing a new lease, failure to sign a lease with
reasonable lease terms, one of which is agreeing to
$984.89 rent increase.
There's been no determination by the West New
York [RCB] as to whether this landlord is, indeed,
entitled to $984.89 rent. It appears, and the facts seem
to be on the landlord's side[,] that there was a credit
given to this defendant for his services as a
super[intendent]. The problem, however, is that
whoever owned this building before this present
landlord, instead of putting the base rent on the form,
listed the discounted rent as the base rent. And that now
has to be corrected. [It is] not for the [c]ourt to
determine what the rent is; the [c]ourt has to wait and
give full deference to the West New York [RCB],
[which] on May 21st, 2018, will be . . . having a hearing
for [the] purpose of [reviewing] all the rents for this
building.
[It is] not the [c]ourt's job to make that decision
before the West New York [RCB] or to make that
decision period. There are mechanisms in place to
address what the rent should be. The parties can avail
themselves of those administrative proceedings in the
cities [before] the rent leveling boards if they ch[o]ose
to. . . . [U]ntil [the] time these parties get a decision,
the last legal rent in this case that has not been
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challenged by anyone was $320 for apartment number
[eleven].
So the complaint to evict [defendant] for failure
to accept that rent has to be dismissed because the
landlord has the burden to prove that the [$]984.89 is a
legal rent and [the landlord cannot] do that today. [The
landlord does not] have a determination from the
[RCB]. The last time [the owner] had a legal rent was
the [$]320 that had actually not been contested to by
any party.
The judge added that he understood that ultimately plaintiff may be
entitled to more than $320 per month in rent for defendant's apartment. The
judge stated, however, that until the RCB hears the matter and makes a
determination, plaintiff may not "move forward" with its action for possession
of the premises.1 This appeal followed.
II.
On appeal, plaintiff argues the trial court erred by vacating the consent
judgment memorializing the agreement between the parties. Plaintiff contends
defendant failed to show that the consent judgment was entered fraudulently or
that vacation of the judgment was warranted due to compelling circumstances.
1
According to defendant, the RCB considered the matter in October 2018, and
determined that the rent that plaintiff could lawfully charge for the apartment
was $299.73 per month.
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Plaintiff also contends defendant failed to establish that he was unable to comply
with the settlement terms.
"A consent judgment has been defined as an agreement of the parties
under the sanction of the court as to what the decision shall be." Cmty. Realty
Mgmt., Inc. v. Harris, 155 N.J. 212, 226 (1998) (quoting Stonehurst at Freehold
v. Twp. Comm. of Freehold, 139 N.J Super. 311, 313 (Law Div. 1976)). A
consent judgment is "both a contract and a judgment[;] it is not strictly a judicial
decree, but rather in the nature of a contract entered into with the solemn
sanction of the court." Ibid. (alteration in original) (quoting Stonehurst, 139
N.J. Super. at 313).
"[A] consent judgment may only be vacated in accordance with R[ule]
4:50-1." Ibid. (quoting Stonehurst, 139 N.J. Super. at 313). Rule 4:50-1
provides that:
[T]he court may relieve a party or the party's legal
representative from a final judgment or order for the
following reasons: (a) mistake, inadvertence, surprise,
or excusable neglect; (b) newly discovered evidence
which would probably alter the judgment or order and
which by due diligence could not have been discovered
in time for a new trial under R[ule] 4:49; (c) fraud
(whether heretofore denominate intrinsic or extrinsic),
misrepresentation, or other misconduct of an adverse
party; (d) the judgment or order is void; (e) the
judgment or order has been satisfied, released or
discharged, or a prior judgment or order upon which it
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is based has been reversed or otherwise vacated, or it is
no longer equitable that the judgment or order should
have prospective application; or (f) any other reason
justifying relief from the operation of the judgment or
order.
"Courts should use Rule 4:50-1 sparingly, in exceptional situations; the
Rule is designed to provide relief from judgments in situations in which, were it
not applied, a grave injustice would occur." Hous. Auth. of Morristown v. Little,
135 N.J. 274, 289 (1994). Moreover, a trial court's decision under Rule 4:50-1
"warrants substantial deference, and should not be reversed unless it results in a
clear abuse of discretion." US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467
(2012) (citing DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009); Little,
135 N.J. 274, 283 (1994)).
Here, the trial court did not cite Rule 4:50-1 when it vacated the consent
judgment. Defendant argues, however, that Rule 4:50-1(a) and (e) authorized
the court to set aside the judgment.
Rule 4:50-1(a) "encompass[es] situations in which a party, through no
fault of its own, has engaged in erroneous conduct or reached a mistaken
judgment on a material point at issue in the litigation." DEG, 198 N.J. at 262.
The Rule "is intended to provide relief from litigation errors 'that a party could
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not have protected against.'" Id. at 263 (quoting Cashner v. Freedom Stores,
Inc., 98 F.3d 572, 577 (10th Cir. 1996)).
Rule 4:50-1(a) does not apply in these circumstances. Here, the parties
entered into an agreement with the understanding that defendant could petition
the RCB for a determination that the rent plaintiff intended to charge for his
apartment was not authorized under the Town's rent control ordinance. It is
undisputed that defendant attempted to file that petition, but the RCB refused to
accept it. Defendant may have been mistaken in agreeing to seek review by the
RCB, but this was a mistake he could have avoided by becoming familiar with
the RCB's procedures.
Relief from the consent judgment was, however, permitted under Rule
4:50-1(e). To afford relief under this subsection of the rule, there must be a
showing "of changed circumstances, and '[t]he party seeking relief bears the
burden of proving that events occurred subsequent to the entry of a judgment
that, absent the relief requested, will result in 'extreme' and 'unexpected'
hardship.'" DEG, 198 N.J. at 265-66 (alteration in original) (quoting Little, 135
N.J. at 285).
As noted previously, defendant entered into the settlement agreement with
the understanding that he could apply to the RCB and obtain a determination as
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to the amount of rent plaintiff could lawfully charge for the premises. Defendant
attempted to comply with this requirement, but the RCB refused to accept his
petition. Defendant's inability to seek review by the RCB of the rent that
plaintiff was lawfully permitted to charge for defendant's apartment was a
"changed circumstance," which justified relief under Rule 4:50-1(e).
Furthermore, failure to vacate the judgment would leave defendant with no
recourse. He would either be required to pay the substantially higher rent or be
removed from the leased premises.
On appeal, plaintiff argues that defendant could have filed a complaint
with the RCB asserting that he was being overcharged, and that the RCB's staff
erred by refusing to accept the petition. However, the record shows that the
RCB's staff refused to accept the complaint. Whether the RCB's staff did so in
error is beside the point. Because the RCB's staff refused to accept defendant's
petition, defendant could not comply with the consent judgment.
We therefore reject plaintiff's contention that the trial court erred by
vacating the consent judgment.
III.
Plaintiff further argues that the trial court erred by dismissing its
complaint because it had not finished Luna's cross-examination and it had not
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completed the presentation of its case. Plaintiff argues that it was denied due
process as a result of the court's premature dismissal of the complaint.
On appeal, plaintiff argues that in dismissing the complaint, the court
failed to comply with Rule 4:37-2(b), which states that:
After having completed the presentation of the
evidence on all matters other than the matter of
damages (if that is an issue), the plaintiff shall so
announce to the court, and thereupon the defendant,
without waiving the right to offer evidence in the event
the motion is not granted, may move for a dismissal of
the action or of any claim on the ground that upon the
facts and upon the law the plaintiff has shown no right
to relief. Whether the action is tried with or without a
jury, such motion shall be denied if the evidence,
together with the legitimate inferences therefrom, could
sustain a judgment in plaintiff's favor.
We apply this standard when reviewing a trial court's dismissal under the Rule.
See Hitesman v. Bridgeway, Inc., 218 N.J. 8, 26 (2014) (citing Fox v. Millman,
210 N.J. 401, 428 (2012)).
As we have explained, during the presentation of plaintiff's case,
defendant asked to present testimony from Luna, who had been waiting in court
to testify. The judge exercised his authority under Rule 611(a), and allowed
defendant to present testimony from Luna before plaintiff had completed the
presentation of its case. Rule 611(a) provides that:
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The court shall exercise reasonable control over the
mode and order of interrogating witnesses and
presenting evidence so as to (1) make the interrogation
and presentation effective for the ascertainment of the
truth, (2) avoid needless consumption of time, and (3)
protect witnesses from harassment or undue
embarrassment.
[N.J.R.E. 611(a).]
Thus, Rule 611(a) allowed the judge to hear Luna's testimony before
plaintiff completed the presentation of its case, but the Rule did not authorize
the court to dismiss plaintiff's complaint. See Peterson v. Peterson, 374 N.J.
Super. 116, 125 (App. Div. 2005). The dismissal of a complaint during trial is
governed by Rule 4:37-2. Here, the court erred by dismissing the complaint
before plaintiff completed its cross-examination of Luna and before plaintiff
completed the presentation of its case. See Perth Amboy Iron Works, Inc. v.
Am. Home Assurance Co., 226 N.J. Super. 200, 215 (App. Div. 1988), aff'd o.b.,
118 N.J. 249 (1990).
We are nevertheless convinced the error was harmless. See R. 2:10-2. As
stated previously, the annual registration statement for 2016 reported that the
total rent for defendant's apartment was $320, and the statement that plaintiff
filed for 2017 reported that the total rent had increased to $984.89. Luna
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testified that annual increases are generally limited to the increase in the CPI,
and the new rent reported for 2017 was not "the appropriate rent."
In cross-examining Luna, plaintiff's counsel apparently sought to establish
that the rent reported for 2017 was lawful because defendant had been paying a
discounted rent while he was serving as the building's superintendent. Plaintiff's
counsel also may have been attempting to show that the rent for 2017 was lawful,
based on the rent charged for the apartment before defendant began to reside
there. Luna could not, however, provide any definitive interpretations of the
Town's rent control ordinance, nor could she offer an opinion as to the amount
of rent that plaintiff could lawfully charge for defendant's apartment.
We note that ordinarily, a property owner in a municipality subject to rent
control is not required to obtain the approval of a RCB every time the owner
tenders a new lease to a tenant with an increase in rent. In this case, however,
the annual registration statements for 2016 and 2017 showed an increase in rent
for defendant's apartment, which exceeded the increase permitted under the
Town's rent control ordinance. Furthermore, a matter was pending before the
RCB, and it was expected to determine the rent that plaintiff could lawfully
charge for defendant's apartment.
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The trial judge correctly found that, under these circumstances, there was
an issue as to the lawful rent plaintiff could charge for defendant's apartment,
and that the RCB should make that determination in the first instance, based on
its interpretation and application of the Town's rent control ordinance. The
judge correctly decided that plaintiff should exhaust its administrative remedies
before the RCB before seeking to remove defendant from the premises. See
Brunetti v. Borough of New Milford, 68 N.J. 576, 588-91 (1975).
Affirmed.
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