In re Cohen
Decision Date | 19 June 1995 |
Docket Number | Bankruptcy No. 90-25340. Adv. No. 91-2094. |
Citation | 185 BR 180 |
Parties | In re Edward S. COHEN, Debtor. Hilda DE LA CRUZ, Nelfo C. Jimenez, Maria Morales, Gloria Sandoval, Hector Santiago, Santia Santos, Elba Saravia, Elvia Siguenzia, Enilda Tirado, Plaintiffs, v. Edward S. COHEN, Defendant. |
Court | U.S. Bankruptcy Court — District of New Jersey |
Hudson County Legal Services Corp. by Gregory G. Diebold, Jersey City, NJ, for plaintiffs.
Monaghan, Rem & Zeller, P.C. by Robert Zeller, Hackensack, NJ, for debtor-defendant.
The matter before the Court is to determine damages in the instant adversary proceeding. The following constitutes the Court's findings of fact and conclusions of law.
On November 12, 1993, the Court conducted a trial in the matter of Hilda De La Cruz et al. v. Edward S. Cohen, Adv. No. 91-2094.
On October 24, 1994, the Court issued a written opinion, 185 B.R. 171 (the "Opinion"),1 rendering the debt in question nondischargeable under § 523(a)(2)(A). As to damages, the Court noted that a hearing would be held to make the determination on the amount.
For purposes of the damages hearing, the following parts of the Opinion are pertinent:
The Court ruled the debt in question nondischargeable under § 523(a)(2)(A) because the Court found, inter alia, that: (i) the Debtor made a misrepresentation regarding the amount of rent, see id., at p. 177; (ii) the Plaintiffs reasonably relied on the representation that the amount of rent they were asked to pay was within the bounds of the law, see id., at p. 177; and (iii) the Debtor's reckless disregard for the truth satisfied both the knowledge and intent to deceive elements of actual fraud, see id., at pp. 178-79.
On December 9, 1994, the Plaintiffs filed a brief with respect to damages ("Plaintiffs Brief"). Firstly, the Plaintiffs note that there is a dispute as to the total amount of rent the Plaintiffs paid, and thus, the total overpayment. See Plaintiff's Brief, at 1. The Plaintiffs, however, concede that the amount should be reduced and have attached a table setting forth the reduced calculations. See id., at 1-2 and Appendix A (damages table).
The Plaintiffs argue that the principle legal issue is the applicability of the New Jersey Consumer Fraud Act (the "Act").2 The Act provides for imposition of treble damages for violations of the Act. The Plaintiffs contend that the Act is applicable to the instant case, and therefore, ask this Court to award them treble the amount of the overpayments.
On March 17, 1995, the Debtor submitted a brief with respect to damages ("Debtor's Damages Brief"). First, the Debtor argues that the overpayment calculation previously determined by the Hoboken Rent Leveling Board (the "Board") was in error. Next, the Debtor asserts that the "sole legal issue" before the Court is the applicability of the Act. Id. The Debtor argues that the Act is inapplicable for the following two reasons: (1) the Act has not been applied to landlord-tenant matters where the violation involves excessive rents charged in violation of a rent control ordinance; and (2) the Plaintiffs cannot establish the elements of fraud under the Act.
On March 27, 1995, a hearing was conducted on these issues. At the hearing, the parties submitted a Stipulation As To Rental Overpayments that was dated March 21, 1995. The Stipulation provided, in pertinent part, that:
See Stipulation dated March 21, 1995, filed March 27, 1995, at ¶ 6.
Due to the Stipulation, the only remaining issue before the Court was the applicability of the Act and the Court reserved decision on the matter.
As explained by the Sheva court, the Act originally provided that a "sale" included "any sale, offer for sale, or attempt to sell". Id. at 463, 547 A.2d 1134. In 1967, the term "sale" was amended to apply to "any sale, rental or distribution, offer for sale, rental or distribution or attempt directly or indirectly to sell, rent or distribute." Id. at 464, 547 A.2d 1134. Notably, the 1967 amendment also broadened the scope of the Act by inserting the language "or with the subsequent performance of such person as aforesaid." Id. Thus, as pertains to the rental of real estate, condemned practices relate not only to the initial sale or advertisement, but also to the landlord's subsequent performance. New Mea Const. Corp. v. Harper, 203 N.J.Super. 486, 501, 497 A.2d 534 (App.Div.1985). The requisite standard mandates in part the maintenance of basic requirements of habitability. Sheva, 227 N.J.Super. at 468, 547 A.2d 1134.
Arguments asserting conflict between the Act and existing landlord-tenant statutes were considered inapt by the Sheva court. The Sheva court agreed that "there should not be duplicative recoveries for the same ascertainable loss, but concluded that the existence of other statutory remedies for some of defendants' conduct does not bar applicability of the Consumer Fraud Act to this landlord-tenant relationship." Id. at 467, 547 A.2d 1134 (citations omitted). Moreover, the Sheva court distinguished cases wherein the treble damages were not imposed4 by citing the absence of both a singular administrative agency regulating landlord-tenant practices as well as a designated forum for relief. Id. at 468-69, 547 A.2d 1134. Lastly, in response to concern that its decision would invite abuse by tenants, the Sheva court emphasized that the Act would apply only in cases where the landlord's extreme conduct is deemed to satisfy the condemned commercial practices standard set forth in N.J.S.A. 56:8-2. Id. at 469, 547 A.2d 1134.
Therefore, under New Jersey case law, this Court finds, as argued by the Plaintiffs, that the Act can be applied to the type of landlord-tenant relationship present in the case at bar because Edward S. Cohen, the Debtor, was in the business of managing and operating real estate housing. See Opinion, at 172. The Debtor has argued that the Act is inapplicable to the type of landlord-tenant matter involved in the present case, namely, excessive rents charged in violation of a rent control statute. The Debtor contends that the Sheva ruling, which expressed that the Act was applicable to the landlord-tenant relationship, should be interpreted as limited to the circumstances of the Sheva case.
In Sheva, the court held that the Act applied where the conduct of the landlord, specifically the landlord's failure to comply with habitability...
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