New Jersey Coalition of Rooming and Boarding House Owners v. Mayor and Council of City of Asbury Park, 97-5483

• Decision Date: 30 July 1998
• Docket Number: No. 97-5483,97-5483
• Citation: 152 F.3d 217
• Parties: NEW JERSEY COALITION OF ROOMING AND BOARDING HOUSE OWNERS; Louis Cook; John E. Brown; Leonard Levy; Carol Wise; Brenda Copeland; Michael Byrne; Beverly Deming; Eugene Hodas, Appellants, v. MAYOR AND COUNCIL OF the CITY OF ASBURY PARK; The City of Asbury Park, a Municipal Corporation of the State of New Jersey; Mayor and Council of the Township of Neptune; The Township of Neptune, a Municipal Corporation of the State of New Jersey; Mayor and Council of Keansburg; Borough of Keansburg, a Municipal Corporation of the State of New Jersey, Mayor and Council of the City of Asbury Park; The City of Asbury Park, Defendants/Third-Party Plaintiffs, v. STATE OF NEW JERSEY, Third-Party Defendant.
• Court: U.S. Court of Appeals — Third Circuit

Page 217

152 F.3d 217

NEW JERSEY COALITION OF ROOMING AND BOARDING HOUSE OWNERS;

Louis Cook; John E. Brown; Leonard Levy; Carol

Wise; Brenda Copeland; Michael Byrne;

Beverly Deming; Eugene Hodas, Appellants, v. MAYOR AND COUNCIL OF the CITY OF ASBURY PARK; The City of

Asbury Park, a Municipal Corporation of the State of New

Jersey; Mayor and Council of the Township of Neptune; The

Township of Neptune, a Municipal Corporation of the State of

New Jersey; Mayor and Council of Keansburg; Borough of

Keansburg, a Municipal Corporation of the State of New Jersey,

Mayor and Council of the City of Asbury Park; The City of

Asbury Park, Defendants/Third-Party Plaintiffs, v. STATE OF NEW JERSEY, Third-Party Defendant.

No. 97-5483.

United States Court of Appeals Third Circuit.

Argued May 4, 1998.

Decided July 30, 1998.

Robert C. Griffin (Argued), Griffin & Griffin, Randolph, NJ, for Appellants.

Glenn C. Motyczka (Argued), James J. Higgins, Boyar, Higgins & Suozzo, P.A. Morristown, NJ, Donald L. Beekman, Ocean Grove, NJ, for Appellees, Mayor and Council of the Township of Neptune, and Township of Neptune.

Peter Verniero, Attorney General of New Jersey, Joseph L. Yannotti, Assistant Attorney General, Cheryl R. Clarke (Argued), Deputy Attorney General, Office of Attorney General of New Jersey, Trenton, NJ, for Appellee, State of New Jersey.

Before: BECKER, Chief Circuit Judge, SCIRICA and COWEN, Circuit Judges.

OPINION OF THE COURT

EDWARD R. BECKER, Chief Circuit Judge.

The New Jersey Coalition of Rooming and Boarding House Owners (the "Coalition"), which represents owners of rooming and boarding houses ("R & B houses") in the Neptune, New Jersey area, together with a number of individuals who are residents of those R & B houses, sued in the district court to have the Rooming and Boarding House Municipal Licensing Law, N.J. Stat. Ann. § 40:52-9 et seq. (the "Licensing Law" or the "Act"), and Neptune Ordinances Nos. 1658 and 1661 (the "Ordinances"), declared invalid under the United States and New Jersey constitutions, the New Jersey Law Against Discrimination, N.J. Stat. Ann. § 10:5-1 et seq. ("NJLAD"), and the Fair Housing Amendments Act of 1988, 42 U.S.C. § 3601 et seq. ("FHAA"). Defendants are the Township of Neptune and the State of New Jersey. ¹

The FHAA declares that it is unlawful "to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap of--(A) that person; ... or (C) any person associated with that person." 42 U.S.C. § 3604(f)(2). ² The FHAA further provides that discrimination includes "a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling." 42 U.S.C. § 3604(f)(3)(B). It also stipulates that "any law of a State, a political subdivision, or other such jurisdiction that purports to require or permit any action that would be a discriminatory housing practice under this subchapter shall to that extent be invalid." 42 U.S.C. § 3615.

Plaintiffs challenged a number of provisions in the Act and Ordinances. The district court granted relief on several of the plaintiffs' claims and invalidated portions of the Act and Ordinances, specifically provisions that imposed onerous inspection, licensing, bonding, and zoning requirements. Defendants have not appealed from those aspects of the district court's order. The court denied relief on the plaintiffs' other claims because it determined that they lacked standing in view of certain grandfathering provisions in the Act. Plaintiffs seek here to overturn the district court's standing determination so that the court may reach the merits of the remaining provisions, especially the "distance and density" provisions, which limit the number of new R & B houses that can be licensed in a municipality and cap the total number of R & B house residents to one-half of one percent of the total population of each municipality in New Jersey. For reasons that will appear, we conclude that the district court made insufficient factual findings for us to review its standing determination. Because there are several plausible theories upon which standing may exist, we will vacate and remand for further factual development and a new determination by the district court regarding plaintiffs' standing.

To fully review this case, we must also address a number of dispositive rulings on various aspects of plaintiffs' claims that would be controlling on remand. In particular, we examine the district court's decisions not to award plaintiffs compensatory damages, punitive damages, or counsel fees, and we highlight several statutory and constitutional claims that may require further consideration by the district court. In the end, we will reverse the district court's determination that it need not award compensatory damages once actual damages have been shown; we will affirm on the punitive damages issue because the district court's factual finding that Neptune did not act outrageously or with reckless disregard for plaintiffs' federal rights is not clearly erroneous; and we will vacate and remand on the counsel fees issue for de novo consideration because of confusion surrounding certain procedural issues.

I.

The Act and Ordinances complained of here are the progeny of the Rooming and Boarding House Act of 1979, N.J. Stat. Ann. § 55:13B-1 et seq. ("RBHA") adopted by the New Jersey Legislature "to provide for the health, safety and welfare of all of those who reside in rooming and boarding houses in the State...." N.J. Stat. Ann. § 55:13B-2. Specifically, the legislature found that because R & B house residents were predominately elderly, disabled, and poor, they required protection from building and safety hazards, as well as from unscrupulous and predatory neighbors and owners. See id. To accomplish this, the RBHA requires any person who owns or operates an R & B house first to obtain a license from the Commissioner of the Department of Community Affairs (the "DCA"). See N.J. Stat. Ann. § 55:13B-7(a). It also provides standards to ensure that every R & B house is constructed in a manner that will protect the health, safety, and welfare of its residents while at the same time promoting a homelike atmosphere appropriate to such facilities. See N.J. Stat. Ann. § 55:13B6. Those standards include, for example: safety from fire; safety from structural, mechanical, plumbing and electrical deficiencies; adequate light and ventilation; physical security; protection from harassment, fraud, and eviction without due cause; clean and reasonably comfortable surroundings; the adequate rendering of personal and financial services in boarding houses; disclosure of owner identification information; and maintenance of orderly and sufficient financial and occupancy records. See id. To ensure compliance with these standards, the regulatory scheme provides for annual inspections by the State of all licensed R & B houses. See N.J. Stat. Ann. § 55:13B-9.

In December 1993, New Jersey enacted the Licensing Law, which gave the governing body of each municipality in New Jersey the option of assuming from the State the licensing responsibility for R & B houses. See N.J. Stat. Ann. § 40:52-10. Upon exercising that option, a municipality becomes responsible for ensuring compliance with State and local laws and therefore for protecting the health, safety, and welfare of the residents of those facilities. The Act requires that municipality to create an authority, in accordance with N.J. Stat. Ann. § 40:52-18, to assume the State's former duty of investigating applicants and their proposed R & B houses to determine, among other things, whether the facilities in question "are in compliance with all applicable building, housing, health and safety code regulations." N.J. Stat. Ann. § 40:52-13(a). Also, the licensing authority verifies that the applicant has never been convicted "of a crime involving moral turpitude, or any crime under any law of the State licensing or regulating a rooming and boarding house" and has never had its license revoked under the RBHA. N.J. Stat. Ann. § 40:52-13(b).

In early 1994, the Neptune Town Council, acting under the authority vested in it by the Licensing Law, adopted two Ordinances, Nos. 1658 and 1661, and assumed local control over R & B licensing in Neptune. Ordinance No. 1661 established a "Site Licensing Board" consisting of three persons and adopted virtually all of the essential elements of the Licensing Law. Ordinance No. 1658 required, among other things, that each R & B house owner secure a Certificate of Inspection prior to leasing, renting, or otherwise allowing the occupancy of any unit, room, or rental dwelling space within its facility.

II.

The district court found that a number of provisions of the Act and Ordinances violated the FHAA. The invalidated provisions had required: (1) R & B house owners to get Certificates of Inspection each time a new tenant occupied a room in their house; (2) public hearings before the Site Licensing Board would issue operating licenses to R & B house owners; (3) R & B house owners to secure bonding to cover relocation costs in the event that their R & B house was forced to close; and (4) applicants for site licensing to obtain zoning approvals for premises that had already been shown to have been properly zoned. See New Jersey Coalition of Rooming and Boarding House Owners v. Mayor and Council of the City of Asbury Park, Civ. No. 94-5134, at * 34 (D.N.J. Jul. 8, 1997) ("District Court Opinion"). The district court found that these provisions were freighted with discriminatory intent, were unduly burdensome to plaintiffs, and that the Township had failed to make reasonable accommodations to allow handicapped persons to live in the residences and...