AMN, Inc. of New Jersey v. South Brunswick Tp. Rent Leveling Bd.

• Decision Date: 12 July 1983
• Citation: 93 N.J. 518,461 A.2d 1138
• Parties: AMN, INC. OF NEW JERSEY, a New Jersey Corporation, Plaintiff-Respondent, v. TOWNSHIP OF SOUTH BRUNSWICK RENT LEVELING BOARD, a municipal agency of the Township of South Brunswick, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 518

93 N.J. 518

461 A.2d 1138

AMN, INC. OF NEW JERSEY, a New Jersey Corporation, Plaintiff-Respondent, v. TOWNSHIP OF SOUTH BRUNSWICK RENT LEVELING BOARD, a municipal

agency of the Township of South Brunswick,

Defendant-Appellant.

Supreme Court of New Jersey.

Argued April 19, 1983.

Decided July 12, 1983.

Mark L. Antin, Roseland, for defendant-appellant (Gennet & Kallmann, Roseland, attorneys).

Christopher S. Tarr, Princeton, for plaintiff-respondent (Smith, Stratton, Wise, Heher & Brennan, Princeton, attorneys; Richard J. Pinto, Princeton, on the brief).

Kenneth E. Meiser, Acting Director, Div. of Public Interest Advocacy, Trenton, for amicus curiae, N.J. Dept. of the Public Advocate (Joseph H. Rodriguez, Public Advocate, attorney; Kenneth E. Meiser and David Sciarra, Asst. Deputy Public Advocates, on the briefs).

The opinion of the Court was delivered by

GARIBALDI, J.

The sole issue here is the proper interpretation of the Rent Control Ordinance (Ordinance) of the Township of South Brunswick. Specifically, does the language of the Ordinance that exempts "housing units of two units or less" apply to owners of two or fewer condominium units in one building? In determining the scope of the Ordinance, we consider its language, the probable intent of its drafters, the reasonableness of our interpretation and the condominium conversion policy of the State as expressed in our statutes.

Prior to its conversion into condominium ownership in 1973 or 1974, ¹ Carnegie Commons was a single story garden apartment complex owned by one corporation. It consisted of two buildings with a total of 36 units, 20 units in one building and 16 units in the other building.

By 1976, 10 of the 36 condominium units had been sold to individuals who became owner-occupiers. The remaining 26 condominium units were sold to one individual, John MacFarlane, who subsequently sold two of those units. ²

In late 1979 or early 1980, MacFarlane sold the 24 remaining condominium units to plaintiff AMN, Inc. (AMN), and during 1980 AMN sold 23 condominium units to 14 individuals. AMN retained one condominium unit. These 24 condominiums are the subject of the litigation. Each owner now owns no more than two units and rents his units to tenants. ³ AMN acts as managing agent for these owners with respect to the rental of the units. ⁴

In 1975 the Township of South Brunswick enacted a Rent Control Ordinance. The second paragraph of section 13-2 of the Ordinance specifically exempts from rent control "housing units of two units or less." From time to time the Township has amended the Ordinance, and in 1979 the Township specifically amended the second paragraph of section 13-2, but did not amend the language in question.

On or about January 1, 1981, AMN, on behalf of itself and the other owners, increased the rents for the condominium units without seeking the approval of defendant Township of South Brunswick Rent Leveling Board (Board). Certain of the tenants affected then applied to the Board for a determination of whether the Ordinance was applicable to the condominium units. The Board held hearings and subsequently adopted a resolution stating that the condominium units were subject to the Ordinance and that the proposed rent increases were, therefore, null and void.

AMN, again on behalf of itself and the other owners, filed in the Superior Court, Law Division, a verified complaint in lieu of prerogative writs and an order to show cause, seeking declaratory and injunctive relief against the Board and against enforcement of the Board's resolution. Defendant filed a notice of cross-motion for summary judgment. ⁵ After a hearing, the trial court held in a letter opinion that the Ordinance was applicable to the condominium units, and thereby granted defendant's cross-motion for summary judgment.

Plaintiff appealed. The Appellate Division in an unreported opinion reversed the trial court's decision and remanded the case to the trial court to enter an order precluding enforcement of the Ordinance against owners of two condominium units or less in a particular structure.

We granted the defendant's petition for certification. 91 N.J. 262, 450 A.2d 576 (1982). We affirm the Appellate Division's judgment of remand, but modify the terms of the remand to include a determination of the number of preconversion tenants and to adjudicate the tenants' status as protected tenants under N.J.S.A. 2A:18-61.1 through .21 and N.J.S.A. 2A:18-61.22 through .39.

I

Plaintiff does not contest the constitutionality of the Ordinance or its application to owners of three or more condominium units in one building. Rather, plaintiff claims that a condominium unit is a separate dwelling, like a single family house, and should be treated under the law as a separate dwelling.

The trial court focused on the physical structure of the building, rather than on the character of condominium units themselves. The court found that the language of the Ordinance was unambiguous and clearly applied to buildings containing three or more condominium units. Thus, whether a dwelling or a unit was subject to the Ordinance depended solely on how many units were in one building or were otherwise attached. As long as there were more than two units in a structure, then each unit would be subject to the Ordinance.

The Appellate Division rejected the trial court's conclusion that the text of the Ordinance was unambiguous and found the Ordinance unclear in its application to condominiums. We agree.

It is undisputed that the drafters of the Ordinance did not consider or even contemplate whether condominium units should be included under the Ordinance. In construing the language of an ordinance, it is well established that courts apply the same rules of judicial construction as they apply when construing statutes. Camarco v. City of Orange, 61 N.J. 463, 466, 295 A.2d 353 (1972); 1A Sands, Sutherland, Statutory Construction § 30.06 (4th ed. 1972). Generally, a court's duty in construing a statute is to determine the intent of the Legislature. In cases such as this, where it is clear that the drafters of a statute did not consider or even contemplate a specific situation, this Court has adopted as an established rule of statutory construction the policy of interpreting the statute "consonant with the probable intent of the draftsman 'had he anticipated the situation at hand.' " J.C. Chap. Prop. Owner's etc. Assoc. v. City Council, 55 N.J. 86, 101, 259 A.2d 698 (1969) (quoting Dvorkin v. Dover Tp., 29 N.J. 303, 315, 148 A.2d 793 (1959)); Safeway Trails, Inc. v. Furman, 41 N.J. 467, 197 A.2d 366, appeal dismissed and cert. den., 379 U.S. 14, 85 S.Ct. 144, 13 L.Ed.2d 84 (1964). Such an interpretation will not "turn on literalisms, technisms or the so-called rules of interpretation; [rather] it will justly turn on the breadth of the objectives of the legislation and the commonsense of the situation." J.C. Chap. Prop. Owner's, 55 N.J. at 100, 259 A.2d 698.

The adoption of a test that relies on the physical structure of the building to determine whether it is subject to rent control can lead to unfair, illogical, and anomalous results. An owner of two condominium units in a building consisting of two or fewer condominium units would not be subject to rent control, but the owner of a single condominium unit in a building consisting of three or more condominium units would be subject to rent control. Likewise, although the owner of a detached single family house would not be subject to rent control, if three or more single family dwellings were attached, as is often the case with town houses, each would be subject to rent control.

For purposes of rent control, we perceive no reason why the drafters of the Ordinance would have intended to treat owners of single dwelling units differently, based solely on whether their units are attached or unattached to other units. As stated supra at 1141, when a court interprets an ordinance that was drafted without the situation in question having been considered by the drafters, the court should interpret the ordinance in a reasonable manner. A determination of rent control applicability that turns on the physical structure of the building bears no reasonable relationship to the purposes underlying rent control.

It is well established in New Jersey that municipalities, in the exercise of their police power, may enact rent control ordinances. Harry's Village, Inc. v. Egg Harbor Tp., 89 N.J. 576, 446 A.2d 862 (1982); Helmsley v. Borough of Fort Lee, 78 N.J. 200, 394 A.2d 65 (1978), appeal dismissed, 440 U.S. 978, 99 S.Ct. 1782, 60 L.Ed.2d 237 (1979); Brunetti v. Borough of New Milford, 68 N.J. 576, 350 A.2d 19 (1975); Inganamort v. Borough of Fort Lee, 62 N.J. 521, 303 A.2d 298 (1973). Following this Court's decision in Inganamort, rent control ordinances proliferated. Sheldon, Rethinking Rent Control: An Analysis of "Fair Return," 12 Rutgers L.J. 617, 624 (1981). Many municipalities have chosen, however, to cover only multiple dwellings and have exempted from rent control single-family or two-family rental units.

Various reasons for exempting housing units of two units or fewer have been advanced by the proponents of rent control. Professional landlords of large apartment complexes were perceived as being less caring or responsive to tenants' demands than landlords of single-family or two-family rental units. There was less fear of unequal bargaining power between tenants and landlords of single-family or two-family rental units. Further, it was recognized that municipalities are reluctant to subject landlords of single-family or two-family rental units to the burden of complying with the complicated and burdensome provisions existing in most rent control ordinances. See generally David v. Vesta, 45 N.J. 301, 315, 212 A.2d 345 (1965); Albigese v. Jersey City, 127 N.J.Super. 101, 116, 316 A.2d 483 (Law Div.), modified on other grounds, 129...