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Wozniak v. Pennella

373 N.J. Super. 445, 862 A.2d 539 (App. Div. 2004)

CONSUMER FRAUD ACT; LEASES; RENT CONTROL—A landlord may be in violation of the Consumer Fraud Act by charging rent in excess of that permitted by an applicable rent control ordinance.

A landlord charged rent beyond what was allowed by a municipality’s rent control ordinance. Its tenants sued for refund of the excessive rent and sought treble damages and attorney fees under the Consumer Fraud Act (CFA). After the suit was filed, the landlord filed a criminal complaint against the tenants, charging them with false swearing before the rent leveling board. While the charge was pending, the landlord tried to use the criminal complaint as leverage to coerce the tenants to drop their civil suit. A grand jury refused to indict. The tenants then amended their complaint to include claims for malicious prosecution and abuse of process. The lower court found that the landlord had committed an unconscionable commercial practice barred by the CFA by charging unlawful rents. It awarded treble damages and attorney fees. A jury awarded damages to the tenants for the landlord’s malicious prosecution.

On appeal, the landlord argued that the CFA was inapplicable to a violation of the municipality’s rent control ordinance because the CFA does not specifically cover such violations and because rent control should not be regulated through both municipal ordinances and the CFA. The Appellate Division disagreed, holding that the CFA is applicable to the landlord/tenant relationship. The CFA prohibits the act, use or employment by any person of any unconscionable commercial practice, deception or fraud. The lower court had found that it was the landlord’s intention to commit an unconscionable commercial practice as demonstrated through the landlord’s charging rent higher than allowed under the rent control ordinance. That was an affirmative act, and, in such cases, a plaintiff does not have to prove that the defendant intended to commit the unconscionable commercial practice. No showing of actual deceit or fraud is required.

The Court also held that the landlord’s conduct was not insulated from the CFA simply because the CFA makes no reference to violations of a rent control ordinance. The CFA has been liberally construed. It could not possibly list all of the areas that it covers without severely limiting its broad remedial power. Finally, the Court concluded that there was no conflict between the rent control ordinance and the CFA. In determining whether the existence of another regulation takes an act out from under the CFA, it should ordinarily be assumed that the CFA applies to the covered practice. To overcome this presumption, a direct and unavoidable conflict must exist between the regulation in question and the CFA. Here, there was nothing in the rent leveling ordinance that implied it to be exclusive. For these reasons, the Appellate Division affirmed the lower court’s decision, holding that the CFA applied, and the landlord had violated it.

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