Dome Realty, Inc. v. City of Paterson

• Decision Date: 17 June 1980
• Citation: 83 N.J. 212,416 A.2d 334
• Parties: , 20 A.L.R.4th 1219 DOME REALTY, INC., Fargo Realty, Inc., Gray Realty, Inc., Zoom Realty, Inc., Keen Realty, Inc., Stone Realty, Inc., Meyer Lobsenz and Theodore A. Lobsenz, Plaintiffs-Appellants, v. CITY OF PATERSON, a Municipal Corporation of New Jersey, and the Paterson Division of Community Improvements, Defendants-Respondents.
• Court: New Jersey Supreme Court

Page 212

83 N.J. 212

416 A.2d 334, 20 A.L.R.4th 1219

DOME REALTY, INC., Fargo Realty, Inc., Gray Realty, Inc.,

Zoom Realty, Inc., Keen Realty, Inc., Stone

Realty, Inc., Meyer Lobsenz and Theodore

A. Lobsenz, Plaintiffs-Appellants, v. CITY OF PATERSON, a Municipal Corporation of New Jersey, and the Paterson Division of Community Improvements,

Defendants-Respondents.

Supreme Court of New Jersey.

Argued Feb. 5, 1980.

Decided June 17, 1980.

Theodore A. Lobsenz, Paterson, for plaintiffs-appellants (Meyer Lobsenz, Paterson, attorney).

Henry Ramer, Corp. Counsel, Paterson, for defendants-respondents.

The opinion of the Court was delivered by

PASHMAN, J.

This case and two others decided today ¹ concern the means by which local governments may attempt to solve the problems of deteriorating urban housing problems one court has called "almost insoluble." See Samuelson v. Quinones, 119 N.J.Super. 338, 343, 291 A.2d 580 (App.Div.1972). In the present appeal we consider whether a municipality may require substantial compliance with the standards of habitability contained in its housing code before a new tenant may take possession of rented residential premises. ²

On February 10, 1978, the City of Paterson enacted "An Ordinance Requiring a Certificate of Occupancy for Re-Rental of Dwelling Units." In its "Statement of Policy" the ordinance declared that "existing programs have not kept pace with the need for (housing) code enforcement" and that "an appropriate opportunity to intervene in the downward cycle of housing deterioration is presented on the re-renting of a housing space * * *." The city accordingly invoked its police power "in order to protect the health, safety and welfare of the citizens of the City of Paterson" to prohibit landlords from allowing a new tenant to occupy a dwelling until the city issued a new "certificate of occupancy" for the premises.

The ordinance applied to all rented residential dwellings except two-family structures where one of the dwellings was occupied by the owner. Under the ordinance the landlord of an affected dwelling was required to obtain a "Certificate of Occupancy" from the city's Division of Community Improvements, Department of Community Development, "immediately prior to allowing a new tenant to take possession of a housing space." ³

Upon a landlord's application, the city department would only grant a certificate after an inspection of the dwelling to determine its compliance with the building, plumbing, electrical and fire codes of the City of Paterson. A violation of any of the codes would be cause for withholding a certificate. However, the ordinance provided for issuance of a temporary certificate if the inspection revealed only "minor violations * * * which * * * may be corrected within thirty (30) days with tenants in occupancy * * *." "Minor violation" was defined as any departure from housing code standards having "no or insignificant impact on the health, safety or welfare of the occupants" of the dwelling. If an inspector found that minor violations still existed at the end of the 30-day period, the temporary certificate would be revoked.

The ordinance required that the city conduct an inspection within three business days after a request by the landlord. If an inspection was not performed within such time, the landlord could consider himself the recipient of a temporary certificate until the inspection had been completed.

Under the ordinance an inspection before re-renting was unnecessary when the entire building in which the "housing space" was located had been inspected within the preceding 12 months. If the entire building had received a certificate of occupancy after such a general inspection, a certificate for an individual apartment would issue automatically. Inspections of entire buildings were subject to the same time limitations on municipal action three business days as inspections of individual dwellings. The city would also issue a temporary certificate for a building if inspectors found violations that could be eliminated within 30 days. ⁴

The original version of the ordinance contained a schedule of fees for the issuance of the various types of certificates. ⁵ It also required the landlord to distribute to all tenants copies of the pertinent certificates supplied by the city. Violations of any provision of the ordinance were punishable by a fine of not more than $500, imprisonment of not more than 90 days, or both. Plaintiffs ⁶ commenced this action on February 23, 1978, by filing a complaint in lieu of prerogative writs, R. 4:69, in the Superior Court, Law Division. They claimed that the ordinance as originally enacted in February was unconstitutional for several reasons. They asserted that the ordinance was confiscatory, that it deprived them of the use of their property without due process and without compensation, that the standards of the ordinance were impermissibly vague, and that the exemption of owner-occupied dwellings deprived plaintiffs of the equal protection of the laws. Among the other alleged grounds of invalidity were that State legislation had preempted municipal regulation, that prohibiting occupancy without the issuance of a certificate constituted a penalty exceeding the limit permitted for municipal ordinances, and that the ordinance illegally prohibited landlords from passing on the costs of inspections to their tenants.

On April 4, 1978, while the plaintiffs' complaint was pending, the City of Paterson amended the ordinance. This amendment required that an individual dwelling unit be inspected while vacant. It further provided that an inspection would not be considered "immediately prior" unless it occurred no more than ten days before the new tenant's occupancy. The amendment also eliminated from the ordinance all provisions for advance inspections of entire buildings.

The April amendment established an expedited inspection procedure. It was available if a tenant needed to move in before the expiration of the normal period of three business days and if the landlord had not delayed in making a request for an immediate inspection. Given those circumstances, the city would perform an inspection by the end of the next business day following the request.

Under the amended ordinance, the city would mail or make available the results of an inspection on the same day the Division of Community Improvements determined them. Any aggrieved person could appeal a denial of a certificate in writing to the Director of the Department of Community Development. The director would "hear the appeal, render a decision thereon and file his decision with a statement of the reasons therefor with the Division not later than 5 business days following the submission of the appeal." A failure to respond to an appeal within five business days would be deemed a denial for purposes of further judicial review.

The amendment substituted a new fee schedule, ⁷ and required that the fees accompany applications for inspection. It also provided that a landlord could impose the costs of an inspection upon a tenant if his failure to take possession when agreed made a second, "immediately prior" inspection necessary.

After the city enacted the April amendment, plaintiffs amended their complaint to challenge the amended ordinance as well as the original version. The trial court then heard arguments on cross-motions for summary judgment.

In an oral opinion delivered on April 24, 1978, the trial court generally upheld the ordinance in its amended form as a valid exercise of municipal police power. ⁸ The court declared two provisions invalid: the requirement that an inspection occur within ten days before a new tenant takes possession, and the qualification that only a temporary certificate would be granted by reason of the city's failure to inspect promptly. The court held that the ten-day limitation unfairly imposed upon landlords the consequences of the city's failure to prevent vandalism in unoccupied rental dwellings. By excising references to temporary certificates, the court reformed the ordinance to grant landlords a permanent certificate by operation of law if the city did not complete an inspection within three business days. The court's rationale was that landlords should not be penalized with merely provisional permission to rent because of deficiencies in the city's housing inspection procedures.

Plaintiffs appealed to the Appellate Division on June 13, 1978. On July 18, 1978, while that appeal was pending, the City of Paterson again amended the ordinance. This second set of amendments lengthened the period during which the landlord must obtain an inspection from ten days to thirty days before occupancy. It re-defined "minor violation" as "a departure from the City's Basic Housing Property Maintenance Code ⁹ which still leaves the housing space in substantial compliance with such Code" (footnote added). The July amendment also provided that the temporary discontinuance during vacancy of electricity, gas or water service would not be grounds for denying a certificate.

In an unreported opinion, the Appellate Division vacated the judgment of the trial court and remanded. In view of the "issues of significant policy considerations" and the potential impact of even partial invalidation of the ordinance, the court held that summary judgment had been inappropriate. Retaining jurisdiction, the Appellate Division directed the trial court to hold a plenary hearing on the reasonableness of the ordinance and its enforcement. It also ruled that the trial court should make its findings in the light of the most recent amendments to the ordinance in July 1978.

After two days of hearings, the trial court rendered written findings of fact and conclusions of law. The court made the following pertinent findings regarding general housing conditions in Paterson:

1. In 1977 approximately 70 percent of the housing units in the City of Paterson were...