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Vanguard Associates v. Fernandez

A-1437-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

EVICTION; LEASES — Under the law, although a landlord may propose reasonable changes of substance in the terms and conditions of a lease after that lease has expired, its tenant has a statutory right to contest the reasonableness of the lease terms and a court may not rely on the ruling of reasonableness reached in another case that did not involve the same tenant, even though it involved the same form of lease and the same landlord.

Tenants lived in a mobile home park since 1997. The term of their lease was one year. “At the expiration of that lease they remained in possession and became month-to-month tenants by virtue of N.J.S.A. 46:8-10.” They moved to two different locations within the park, but “[n]o lease was signed with respect to these new locations.” In early 2006, they received a notice to quit from their landlord requiring that they either “sign an attached lease or vacate the property ‘33 days from the date of this letter.’” The proposed lease “contained eighty-seven paragraphs.” The tenants refused to sign, claiming that many of the clauses were unreasonable. The landlord continued to accept rent, but several months later it served another notice of quit ordering the tenants to leave within thirty days after the notice. The tenants remained and the landlord sought to evict them, claiming that the tenants failed to pay the last three months’ rent and “refused to sign a lease.” The tenants responded that they tendered the rent but that the landlord refused to accept it.

In “an in-chambers conference with attorneys only,” the landlord’s attorney argued that by reason of the doctrine of res judicata, the tenant could not argue that the lease was unreasonable. It appeared that there was an unpublished opinion concerning the same landlord and the same lease, but a different tenant, and the result of that opinion was a ruling that the lease was reasonable. Even though the lower court asked the parties to brief the res judicata issue, on the return date, no testimony was taken. Instead, relying on the unpublished opinion by another court, the lower court granted judgment for the landlord. In effect, the lower court “concluded that the lease, viewed in a vacuum, was reasonable as a matter of law.” The lower court ordered the tenant to either sign the lease within ten days or move out.

On appeal, the Appellate Division found “several procedural due process mishaps and a substantial flaw that require[d] reversal.” It ruled that “[n]either the doctrine of res judicata nor law of the case appl[ied] to the decision reached” by the lower court. For one, the other case did not involve the same parties. “Therefore, as between Landlord and Tenants, the issues were not previously litigated. Moreover, the dispute the [lower court] had to resolve was factual, not legal. Therefore, [the] Tenants were not given an opportunity to defend the action.” According to the Court, this was a denial of procedural due process.

Under New Jersey law, although a termination of the lease, a landlord or owner may propose “reasonable changes of substance in the terms and conditions of the lease,” and a landlord may only evict its tenant for the “tenant’s refusal to accept ‘reasonable changes of substance in the terms and conditions of the lease.’” A tenant, however, has “a legal right pursuant to statute to contest the reasonableness of the lease terms.” Thus, a lower court is required “to make findings of fact regarding the reasonableness of the changes.” The Court found it “axiomatic that one judge cannot merely adopt the findings of another judge in a different case.”

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