49 Prospect Street Tenants Ass'n v. Sheva Gardens, Inc.

• Citation: 547 A.2d 1134,227 N.J.Super. 449
• Parties: 49 PROSPECT STREET TENANTS ASSOCIATION, Lucinda Curry, Colinwood Benjamin, Victor Herrera, Marleni Herrera, Frank Branch, Beverly Branch, Edwin Simon, Beryl Simon, Doris Faircloth, Shirley Ashe, Barbara Brodie and Joseph Smith, Plaintiffs-Respondents-Appellants, v. SHEVA GARDENS, INC., A New Jersey Corporation; Bat-Sheva Halperin, and Natalie Development, A New York Corporation, Defendants-Appellants-Respondents.
• Decision Date: 22 August 1988
• Court: New Jersey Superior Court – Appellate Division

Page 449

227 N.J.Super. 449

547 A.2d 1134

49 PROSPECT STREET TENANTS ASSOCIATION, Lucinda Curry Colinwood Benjamin, Victor Herrera, Marleni Herrera, Frank Branch, Beverly Branch, Edwin Simon, Beryl Simon, Doris Faircloth, Shirley Ashe, Barbara Brodie and Joseph Smith Plaintiffs-Respondents-Appellants, v. SHEVA GARDENS, INC., A New Jersey Corporation; Bat-Sheva Halperin, and Natalie Development, A New York Corporation, Defendants-Appellants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued May 2, 1988.

Decided Aug. 22, 1988.

Lawrence P. Platkin, Newark, for defendants-appellants-respondents (Robinson, Wayne, Levin, Riccio & LaSala, attorneys; Lawrence P. Platkin, on the brief)

Cindy McKee, Montclair, for plaintiffs-respondents-appellants (Joan Pransky, attorney, Joan Pransky and Cindy McKee, on the brief).

Margery F. Nathanson, Deputy Atty. Gen., for appellant-intervenor Atty. Gen. of New Jersey (W. Cary Edwards, Atty. Gen., attorney; Andrea Silkowitz, Deputy Atty. Gen., of counsel; Margery F. Nathanson, on the brief).

Rutgers Urban Legal Clinic filed a brief for amici curiae, New Jersey Tenants Organization, East Orange Tenants Ass'n, Orange Tenants Ass'n and Consumers League of New Jersey (Patricia E. Rousseau, South Orange, of counsel; Elizabeth J. Miller, on the brief).

Before Judges J.H. COLEMAN, O'BRIEN and HAVEY.

The opinion of the court was delivered by

O'BRIEN, J.A.D.

These three appeals, generated by the same landlord-tenant relationship and arising out of the same trial, have been consolidated for all purposes. In their complaint plaintiff tenants assert various causes of action against their landlord, including violation of the Consumer Fraud Act, breach of warranty of habitability and intentional infliction of emotional distress. We affirm in part and reverse in part.

THE FACTS

Plaintiff 49 Prospect Street Tenants Association is an association comprised of tenants residing at 49 Prospect Street, East Orange. Although named as an appellant in plaintiffs' notice of appeal and respondent in defendants' notice of appeal, no judgment was entered in the association's favor and no argument is made on its behalf. The individually named plaintiffs were all tenants at 49 Prospect Street, a 55-unit, four-story apartment building which was purchased at an auction held by the city by defendant Sheva Gardens, Inc. (Sheva) on March 14, 1984 for $158,000. Title was transferred to defendant Bat-Sheva Halperin (Halperin) on October 4, 1984. Defendant Natalie Development, Inc. (Natalie) is a New York corporation qualified to do business in New Jersey, which has held itself out as According to the tenants, at the time Sheva purchased the building it was in livable condition, had an adequate heating system, hot and cold water, some security, and the grounds were for the most part well maintained. On the other hand, according to defendants, the building was partially vacant, infested with vermin, its heating system in a severe state of disrepair, and there was a significant lack of security. One witness described the building as being in a "shambles." Even one of the plaintiffs, M. Herrera, testified that her apartment was dirty and infested with bugs when she moved into it in December 1983.

landlord of the building. The sole shareholder of both corporations is Bat-Sheva Halperin. Her husband Jack Halperin is president of both corporations.

At the end of the summer of 1984, leases were sent to the tenants which required security deposits. The particular lease received into evidence was sent to plaintiffs Frank and Beverly Branch, providing for a monthly rental of $375 with the tenant to pay for electricity, gas, hot water and heat. Previously, the Branches had paid $269 per month with utilities included. At a meeting between the landlord and the tenants after the new leases had been sent to them, the tenants were informed that the owners were considering converting the apartments to condominiums. Defendant's property manager testified that he believed the tenants would have to sign the new leases to stay in the building after rehabilitation.

The city's rent leveling administrator testified that the apartments were rent controlled. After she had received several complaints from the tenants regarding excessive rent increases, she met with representatives of defendants and advised them that such increases violated the city ordinance. By amendment to the rent control ordinance adopted in May 1984, "substantially rehabilitated" properties are permanently exempt from rent control. The amendment further exempts units from rent control when a tenant voluntarily vacates the unit. The rent In the spring of 1984, defendants engaged Shawn Construction Co., Inc. (Shawn) to rehabilitate the building, including installation of a new heating system. However, because of a dispute between defendants and Shawn as to payment, the project was substantially delayed. By that time Shawn had totally dismantled the central heating system. Defendants concede that employees of Shawn broke a significant number of windows and removed several hot water boilers and other fixtures from the building. A new contractor, Davis Construction (Davis), was hired purportedly "to get the building completed as soon as possible within the code." However, for a substantial period of time the building was without heat and some apartments were without water. The building was infested with vermin, had many broken windows, had been invaded by squatters since doors and door locks were broken and was totally lacking any security.

control administrator testified that defendants' representatives told her they were spending a lot of money on the property because they were under the impression they could decontrol the rent. An application filed by defendants for hardship rent increases beyond the 6% permitted by the ordinance was denied by the board since Sheva had not owned the property for one year before making the application as required by the ordinance.

During this period, subsequent to defendants' acquisition of the property, many of the tenants moved from the building. The individual plaintiffs, however, remained for various periods of time until the last of them were compelled to vacate by the city on August 9, 1986, since the building had been declared unfit for human habitation.

In the interim, these tenants were subjected to substantial deprivations and hardships. As noted, they had no heat, except for space heaters provided by the landlord for which the tenants received a $2 per day abatement of their rent during the period the heaters were used. However, the cost of operating As noted, some of the tenants were deprived of water during a portion of the time. Plaintiff Colinwood Benjamin testified that in July and August 1984 he had water for only about one week and he had no water in his apartment in September, October and November 1984. He noted that during that period he was unable to cook, use the toilet or shower in his apartment. Other tenants testified to water damage which they suffered when sinks were removed from vacant apartments. Some of the tenants claimed their apartments were burglarized when all the locks were removed from the front doors. The mailman testified that he stopped going to the building's mailroom since it became flooded with sewage in the fall of 1984. New mail boxes provided by the post office prior to Sheva's purchase of the building were stolen.

the space heaters was ultimately borne by plaintiffs by way of an additional charge on their utility bills, which had been switched from the landlord to the tenants. The landlord had previously provided heat and paid for utilities. A representative from Public Service Electric & Gas Company testified to the substantial increase in the tenants' utility bills.

Many of the tenants testified to illnesses suffered by them and their families during the winter 1984-1985. There was testimony that even during the trial, in December 1985 and January 1986, the apartments had no heat. Although the tenants had been given a list of other apartments owned by defendant to which they could move, a representative of the Essex County Tenants' Resource Committee testified that all of the other buildings were in bad condition and in bad neighborhoods, whereas 49 Prospect Street is in one of the best areas of East Orange. The record is unclear as to how many of the other tenants accepted the offer to move to other buildings.

Testimony relating to the condition of the building and hardships suffered by the tenants consumed a substantial number of trial days. Because of the inexperience of plaintiffs' counsel, much trial time was consumed by objections to her failure to

provide sufficient foundation for the introduction of evidence. There is no need to further recount in detail the deprivations and hardships suffered by the tenants. Suffice it to say that the jury found them to be substantial.

PROCEDURAL HISTORY

On May 28, 1985, plaintiffs filed an 11-count verified complaint. The complaint charged, (a) applicability and violation of the Consumer Fraud Act ( N.J.S.A. 56:8-1 et seq.) (first and fourth counts); (b) plaintiffs Lucinda Curry and Marleni Herrera were induced to move from their apartments on the basis of fraudulent representations by defendants (second count); violation of the Anti-Eviction Act ( N.J.S.A. 2A:18-61.1) (third count); negligent misrepresentation (fifth count); breach of the warranty of habitability (sixth count); negligent violation of their duty to provide safe and sanitary living conditions to plaintiff (seventh count); defendants' failure to provide, maintain and operate safe and sanitary living conditions was intentional or in wanton and reckless disregard for plaintiffs' health, safety and welfare (eighth count); intentional infliction of emotional distress in the nature of the tort of outrage (ninth count); the rent increases...