AYMAN ASAAD FARES ALHAGALY VS. MEGA PROPERTIES AT 100-104 ROMAINE AVENUE (L-4279-19, HUDSON COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-4287-19
AYMAN ASAAD FARES
ALHAGALY and SAFAA
BEKHIT,
Plaintiffs-Appellants,
v.
MEGA PROPERTIES AT
100-104 ROMAINE AVENUE,
L.L.C., and AVRAHAM FUCHS,
a/k/a AVRI FUCHS,
Defendants-Respondents.
____________________________
Submitted March 9, 2021 – Decided July 14, 2021
Before Judges Fisher and Gummer.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-4279-19.
Houston & Totaro, attorneys for appellants (Madeline
L. Houston and Melissa J. Totaro, on the briefs).
John V. Salierno, attorney for respondents.
PER CURIAM
Plaintiffs, who filed a complaint alleging their landlord, defendant Mega
Properties at 100-104 Romain Avenue, L.L.C. (Mega), had violated the New
Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -226 (CFA), by charging them
more than the maximum rent permitted by the Jersey City rent-control
ordinance, appeal an order granting defendants' cross-motion for summary
judgment and dismissing the complaint with prejudice, based on prior litigation
between the parties. Because the motion judge erred in granting summary
judgment based on a finding of accord and satisfaction in a summary-dispossess
consent order and estoppel by a rent-leveling administrator's determination, we
reverse.
On or about September 1, 2018, plaintiff Ayman Asaad Fares Alhagaly
signed a lease for and moved into one of Mega's apartments with his wife Safaa
Bekhit, and their children. Mega charged plaintiff a monthly rent of $1,500.
Eight months later, on May 21, 2019, Mega filed a complaint in the Law
Division, Special Civil Part, seeking a judgment of possession based on
plaintiff's failure to pay the May rent.
In response to the summary-dispossess complaint, plaintiff, who was
represented by counsel, raised a habitability defense, identifying at least fifteen
items that needed to be addressed, including an insect infestation, a
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malfunctioning toilet, and electrical fixtures needing repair. Plaintiff also filed
a complaint on June 6, 2019, with Jersey City's Department of Housing,
Economic Development, and Commerce, Division of Housing Preservation,
Office of Landlord Tenant Relations, seeking a rent reduction and alleging Mega
had charged rent in an amount exceeding the rent permitted by the City's rent-
control ordinance.
In a June 13, 2019 hearing in the summary-dispossess case, the parties
entered into a "mediation agreement," which provided Mega would complete all
repairs by June 29, 2019, and plaintiff would pay into court all rent due. Plaintiff
subsequently deposited $1,500 into court on June 13, July 31, and August 5,
2019, for a total of $4,500. A court-appointed inspector issued a report dated
July 13, 2019, finding Mega had not completed all of the repairs.
In the rent action, a rent-leveling administrator issued a preliminary
determination on July 17, 2019, finding the permitted rent for March 1, 2018, to
February 28, 2019, was $1,158.17 and beginning on March 1, 2019, was
$1,180.17. The administrator advised the parties if no objection was received
by August 5, 2019, plaintiff would be "entitled to a refund for the months that
the rent was overcharged." On August 6, 2019, the administrator issued a final
determination, repeating the prior rent findings; ordering Mega to refund
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plaintiff the excess rent he had paid; and setting an August 28, 2019 deadline to
appeal the final determination.
In the summary-dispossess case, the court on August 7, 2019, entered an
order requiring Mega to complete the remaining repairs by August 19, 2019, and
scheduled a hearing date. At the August 22, 2019 hearing, the parties entered
into a consent order in which they agreed Mega would receive $4,050 and
plaintiff would receive $450 of the funds plaintiff had deposited in court, even
though based on the rent-leveling administrator's determination, Mega had
overcharged plaintiff $3,969.96. They also agreed Mega would investigate and,
if necessary, repair a bathroom-ceiling leak by September 9, 2019. The parties
made no reference to the August 6, 2019 final determination, the requirement in
the final determination that Mega refund plaintiff the excess rent, or the release
of any other claims. The court issued an order releasing the funds plaintiff had
paid into court as set forth in the consent order.
In an October 2, 2019 "Notice to the Parties of Final Determination," the
City's Bureau of Rent Leveling confirmed neither party had appealed the final
determination, advised that the rent set forth in the final determination "is the
allowable rent" for plaintiff's apartment, and directed the parties to "adjust the
rent and refund/credit based on payments made and received."
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On November 5, 2019, plaintiffs filed a complaint 1 in the Law Division,
alleging that by charging plaintiffs more than the maximum rent permitted by
the Jersey City rent-control ordinance, Mega had engaged in "deceptive,
unconscionable and/or otherwise illegal acts" in violation of the CFA. Plaintiffs
asserted they had suffered an ascertainable loss and sought treble damages and
attorneys' fees and costs. In answering the complaint, Mega admitted it had "not
refunded any of [p]laintiff's rent payments," claiming it did not have "knowledge
and information sufficient to form a belief as to the legal rent."
After plaintiffs moved to suppress defendants' answers for failure to
provide discovery, defendants cross-moved for summary judgment. Claiming
plaintiffs' complaint was barred by the doctrines of res judicata and collateral
estoppel, defendants argued plaintiffs could have and should have litigated the
"legal issue of owed rent" in the summary-dispossess matter, which was based
on Mega's assertion plaintiff owed it rent; plaintiff acted in bad faith by not
raising the overcharge claim during negotiations in the summary-dispossess case
and in signing the consent order resolving that case without raising it; and
plaintiffs' claim was barred by the doctrine of accord and satisfaction because
1
Two days later, plaintiffs filed an amended complaint, adding as a defendant
Avraham Fuchs, whom plaintiffs identified as an officer of Mega.
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consent judgments in landlord-tenant court attempt to achieve a global
resolution of the parties' issues, barring the parties from raising any issues in
subsequent litigation. Plaintiffs opposed the cross-motion, arguing, among
other things, that their CFA claim was not barred: by res judicata because it
could not have been raised in the summary-dispossess action; by collateral
estoppel because Mega's violation of the rent-control ordinance was not litigated
in the summary-dispossess action; or by accord and satisfaction because in their
resolution of the summary-dispossess action, the parties did not manifest a clear
intent to reach a global settlement of issues between them.
After hearing oral argument, the motion judge granted the cross-motion
and dismissed the complaint with prejudice. In a written opinion, the motion
judge found plaintiffs' complaint was "barred by the doctrine of accord and
satisfaction as applied to the consent order" in the summary-dispossess action.
Relying on Raji v. Saucedo, 461 N.J. Super. 166 (App. Div. 2019), and the fact
that the overcharge issue had been adjudicated before the parties executed the
consent order, the motion judge concluded the parties had intended to reach a
global resolution of the issues between them with the consent order. The motion
judge also held that plaintiffs were collaterally estopped from pursuing their
CFA claim by the rent-leveling administrator's preliminary determination. The
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motion judge found "the issue to be precluded is Mega's overcharging of rent in
violation of" the rent-control ordinance and the rent-leveling administrator had
determined that issue, finding in plaintiff's favor. Characterizing this case as
plaintiffs' "third bite at the apple," the motion judge concluded it "would be
unfair and inconsistent with the [collateral estoppel] doctrine's objectives to
permit this claim to continue based on the totality of the circumstances simply
because [p]laintiffs want their shot at treble damages."
We review a trial court's summary-judgment ruling de novo, applying the
same standard as the trial court. Conley v. Guerrero, 228 N.J. 339, 346 (2017);
see also Nelson v. Elizabeth Bd. of Educ., 466 N.J. Super. 325, 336 (App. Div.
2021). We consider whether the evidence, when viewed in a light most
favorable to the non-moving party, raises genuinely disputed issues of material
fact sufficient to warrant resolution by the trier of fact, or whether the evidence
is so one-sided one party must prevail as a matter of law. Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995). A dispute of material fact is "genuine
only if, considering the burden of persuasion at trial, the evidence submi tted by
the parties on the motion, together with all legitimate inferences therefrom
favoring the non-moving party, would require submission of the issue to the trier
of fact." R. 4:46-2(c); see also Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). We
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review a trial court's legal conclusions de novo. Clark v. Nenna, 465 N.J. Super.
505, 511 (App. Div. 2020).
Applying that standard, we conclude the motion judge erred in granting
summary judgment based on the doctrine of accord and satisfaction because a
genuine issue of material fact exists as to whether the parties intended with the
consent order in the summary-dispossess case "to reach a global resolution of
the issues between them," as the motion judge found. The motion judge also
erred in finding plaintiffs' CFA claim was estopped by the rent-leveling
administrator's determination.
We begin by noting "a summary dispossess action does not permit either
a landlord or tenant to plead a claim for damages." Raji, 461 N.J. Super. at 170;
see also Green v. Morgan Props., 215 N.J. 431, 449 (2013) (recognizing "no
money judgment can be awarded in the Landlord/Tenant Part"). The "only
judgment" entered in a "summary dispossess proceeding is a judgment for
possession of the premises," though "part of the court's findings [may] include
the amount of rent . . . that is due and owing," thereby "fix[ing] the amount that
the tenant may . . . pay . . . in order to prevent the eviction from taking place."
Green, 215 N.J. at 449; see also Hous. Auth. of Morristown v. Little, 135 N.J.
274, 280 (1994) (stating "[t]he only remedy that can be granted in a summary-
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dispossess proceeding is possession; no money damages may be awarded"). "By
confining itself to the landlord's right to possession, and fixing of the amount of
rent due to afford the tenant the opportunity to avoid eviction by its payment,
. . . the statutory summary dispossess device provides a quick disposition of the
landlord's claim for possession." Raji, 461 N.J. Super. at 170; see also Green,
215 N.J. at 447 (finding a purpose of the Anti-Eviction Act, N.J.S.A. 2A:18-
61.1, was to "protect[] landlords by providing an efficient and inexpensive way
to evict a tenant and regain possession of the leased premises when
appropriate"); Benjoray, Inc. v. Acad. House Child Dev. Center, 437 N.J. Super.
481, 486 (App. Div. 2014) (finding "[t]he summary dispossess statute, N.J.S.A.
2A:18-51 to -61, was designed to provide landlords with a swift and simple
method of obtaining possession").
In a summary-dispossess action based on nonpayment of rent, the claimed
amount of unpaid rent must actually be "legally owing." Housing Auth. of
Passaic v. Torres, 143 N.J. Super. 231, 236 (App. Div. 1976). An available
defense to a summary-dispossess action based on non-payment of rent is that the
rent is not legally owed; that defense may be supported by a decision of a
municipal rent-leveling board. Chau v. Cardillo, 250 N.J. Super. 378, 384 (App.
Div. 1990); see also 316 49 St. Assocs. Ltd. P'ship v Galvez, 269 N.J. Super.
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481, 488 (App. Div. 1994) (noting "[i]t is well settled that a landlord may not
charge rent in excess of that fixed by the applicable rent control ordinance").
Plaintiff defended the summary-dispossess case based on habitability and
never raised a defense based on the claimed unpaid rent not being legally owed
under a rent-control ordinance. Although plaintiff could have raised that
defense, he could not have filed a counterclaim or sought damages based on
Mega's purported CFA violation. See R. 6:3-4(a) ("[s]ummary actions between
landlord and tenant for the recovery of premises shall not be joined with any
other cause of action, nor shall a defendant in such proceedings file a
counterclaim or third-party complaint").
In finding plaintiff's complaint was barred by the doctrine of accord and
satisfaction based on the consent order entered in the summary-dispossess
action, the motion judge relied on Raji, 461 N.J. Super. 166. In Raji, the parties
resolved a summary-dispossess action based on nonpayment of rent by
consenting to a pay-and-go judgment pursuant to which the plaintiff was entitled
to immediate possession, but the defendants could remain in the premises for
ten weeks provided they made scheduled payments totaling $7,368 to the
plaintiff. Id. at 168-69. After the defendants failed to make the initial payment
and were locked out, the plaintiff filed an action for enforcement of the monetary
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aspects of the pay-and-go judgment; the defendants filed a counterclaim,
alleging unjust enrichment and seeking nearly $9,000 for having replaced a pool
liner and other costs. Id. at 169. Nothing in the case indicates the defendants
had made that claim previously or that the plaintiff was aware of that claim when
the parties entered into the pay-and-go judgment. At trial, the defendant testified
the parties understood the pool charges would be an offset against any rent due;
the plaintiff testified the lease agreement imposed on the defendant an obligation
to replace the pool liner or maintain the property. Ibid. Rejecting the
defendants' counterclaim, the trial judge found the plaintiff, not the defendant,
credible and held if the defendants had believed they were entitled to a set off,
they should have asserted that claim "as a set off against the rent plaintiff
claimed due during the summary dispossess action and at the time the pay-and-
go judgment was negotiated." Ibid. In denying a subsequent motion for a new
trial, the trial judge "iterated his view that the parties had reached an accord and
satisfaction, which was embodied in the pay-and-go judgment, and that all their
rights and liabilities concerning the tenancy were then fixed." Id. at 170. The
trial judge again noted his finding that the defendant was not credible. Ibid.Based on that extensive record, we affirmed. Rejecting the defendants'
argument that the trial judge had dismissed their counterclaim based on a
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misapplication of the entire controversy doctrine, we concluded the parties had
"reached an accord and satisfaction and that their claims in this second action
could only be based on a breach of the pay-and-go judgment that memorialized
their agreement." Id. at 172. We were able to render that decision after the trial
judge had conducted a trial, heard the parties' testimony as to what they had
agreed, and rendered credibility determinations.
We don't have that record here. Having taken no testimony from the
parties as to what they had agreed and having made no credibility
determinations, the motion judge on summary judgment concluded the parties
"intended by [the consent] order to reach a global resolution." She made that
determination based solely on the language of the consent order, which said
nothing about the rent-leveling administrator's determination that Mega had
illegally overcharged rent, the directive requiring Mega to refund plaintiff the
excess rent, Mega's remaining time to appeal that determination, or any other
possible claim.
The motion judge faulted only plaintiff for not addressing the overcharge
claim during the negotiation of the consent order or in the language of the
consent order. But, unlike the plaintiff in Raji, Mega was equally aware of the
overcharge claim and had the same opportunity to address it in the negotiation
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of the consent order or in the language of the consent order. The implied
covenant of good faith and fair dealing applies to all parties to a contract, not
just one. Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420 (1997); Raji,
461 N.J. Super. at 171.
The motion judge applied our holdings about the Raji pay-and-go
judgment to the parties' consent judgment, finding "no material difference
between the two types of judgments." But there are material differences. A
pay-and-go judgment ends the parties' relationship. Accordingly, as we stated
in Raji,
when negotiating and consenting to a pay-and-go
agreement, parties inherently intend to resolve all
differences arising out of the tenancy and enter into
what the law refers to as an accord and satisfaction: a
mutual exchange of interests that fully discharges all
claims, replacing them with the judgment's express
terms.
[461 N.J. Super. at 171.]
Moreover, a pay-and-go judgment must be approved by the court pursuant to
Rule 6:6-4(a).
A "pay and go" settlement provides that although a
judgment for possession is being entered, customarily
on the day that the settlement is made, the tenant must
nevertheless make some agreed-upon payment and
must move out by an agreed-upon date. Pursuant to R.
6:6-4(a), these judgments for possession by consent
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must be approved by a judge in open court (unless the
agreement is signed by an attorney representing the
tenant, see R. 6:6-4(b)). The premise for approval by a
judge is that the court must determine that the
settlement is fair, and the premise for requiring
approval in open court is so that the judge may question
the parties to assist the judge in determining the
fairness. At that inquiry, the judge may be advised that
the tenant did not fully understand his/her rights and
would not have entered into the settlement if the tenant
had fully understood his/her rights, or that the
settlement for some reason violates the public policy of
the State.
[Franco v. Rivera, 379 N.J. Super. 273, 274 n.1 (Law
Div. 2005).]
Here, the consent order was not a final resolution of the parties' landlord-
tenant relationship. Unlike the pay-and-go judgment in Raji, the consent order
did not give possession to the landlord and did not require plaintiff to vacate the
premises. Without the finality of a pay-and-go judgment, we cannot assume the
parties "inherently intend[ed] to resolve all differences arising out of the
tenancy." Raji, 461 N.J. Super. at 171. And without the protection of court
approval, we cannot be sure plaintiff knowingly waived his right to a refund of
the overpaid rent as ordered by the rent-leveling administrator or to assert a CFA
violation claim.
The "essential elements of accord and satisfaction" are: (1) "a bona fide
dispute as to the amount owed"; (2) "a clear manifestation of intent by the debtor
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to the creditor that payment is in satisfaction of the disputed amount"; (3)
"acceptance of satisfaction by the creditor." Loizeaux Builders Supply Co. v.
Donald B. Ludwig Co., 144 N.J. Super. 556, 564-65 (Law Div. 1976). "[A]n
accord and satisfaction requires a clear manifestation that both the debtor and
the creditor intend the payment to be in full satisfaction of the entire
indebtedness." Zeller v. Markson Rosenthal & Co., 299 N.J. Super. 461, 463
(App. Div. 1997). The consent order, on its face with nothing more, is not
sufficient to establish the required "clear manifestation" that plaintiff and Mega
intended for the resolution of the summary-dispossess action to resolve also the
illegal rent matter and any possible CFA claim. Without that "clear
manifestation," the motion judge erred in granting summary judgment based on
the accord-and-satisfaction doctrine.
The motion judge also erred in finding plaintiffs' CFA claim was
collaterally estopped by the rent-leveling administrator's preliminary
determination. The collateral-estoppel doctrine "bars relitigation of issues
previously litigated and determined adversely to the party against whom [it] is
asserted." Kortenhaus v. Eli Lilly & Co., 228 N.J. Super. 162, 164 (App. Div.
1988); see also Matter of Adoption of Amends. to N.J.A.C. 11:22-1.1, 459 N.J.
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Super. 32, 38-39 (App. Div. 2019). Collateral estoppel is established if five
essential elements are met:
(1) the issue to be precluded is identical to the issue
decided in the prior proceeding . . . ; (2) the issue was
actually litigated in the prior proceeding . . . ; (3) the
court in the prior proceeding issued a final judgment on
the merits . . . ; (4) the determination of the issue was
essential to the prior judgment . . . ; and (5) the party
against whom the doctrine is asserted was a party to or
in privity with a party to the earlier proceeding.
[In re Est. of Dawson, 136 N.J. 1, 20-21 (1994).]
See also Adelman v. BSI Fin. Servs., Inc., 453 N.J. Super. 31, 40 (App. Div.
2018).
Mega failed to establish those five essential elements in its summary-
judgment motion. The issue Mega seeks to preclude is not, as the motion judge
found, the rent-leveling administrator's finding Mega had overcharged plaintiff
rent, but whether the rent overcharge was a violation of the CFA. Whether Mega
violated the CFA by overcharging plaintiff rent is not identical to the issue
decided by the rent-leveling administrator – whether Mega violated Jersey City's
rent-control ordinance – and was not actually litigated before or decided by the
rent-leveling administrator. Thus, plaintiffs' CFA claim was not collaterally
estopped by the rent-leveling administrator's preliminary determination.
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Reversed and remanded for proceedings consistent with this opinion. We
do not retain jurisdiction.
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