NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NOS. A-5067-15T3 A-5615-15T3 A-0443-16T3
CHRISTOPHER C. CONA, individually and as a class representative on behalf of APPROVED FOR PUBLICATION others similarly situated, August 29, 2018 Plaintiff-Appellant, APPELLATE DIVISION
v.
TOWNSHIP OF WASHINGTON,
Defendant-Respondent. _______________________________
SHARON DOWNS, individually and as a class representative on behalf of others similarly situated,
Plaintiff-Appellant,
BOROUGH OF PAULSBORO,
Defendant-Respondent. ______________________________
WILLIAM R. BRODY and KATHLEEN D. O'HARA, individually and on behalf of others similarly situated,
Plaintiffs-Appellants,
v. CITY OF WOODBURY, BOROUGH OF WESTVILLE, BOROUGH OF GLASSBORO, BOROUGH OF NATIONAL PARK, and TOWNSHIP OF DEPTFORD,
Defendants-Respondents. _____________________________________
Argued May 24, 2018 – Decided August 29, 2018
Before Judges Simonelli, Haas and Rothstadt.
On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket Nos. L-1602-15, L-0180-16, L-0487-16 and L-1102- 15.
Lewis G. Adler argued the cause for appellants (Lewis G. Adler, attorney; Lewis G. Adler, Roger C. Mattson and Paul DePetris, of counsel and on the briefs).
Brian P. Shotts argued the cause for respondents Township of Washington (in A- 5067-15) and Township of Deptford (in A- 0443-16) (Grace, Marmero & Associates, LLP, attorneys; Brian P. Shotts, on the briefs).
M. James Maley, Jr. argued the cause for respondent Borough of Paulsboro (in A-5615- 15) (Maley Givens, PC, attorneys; M. James Maley, Jr. and Erin E. Simone, on the brief).
James P. Pierson argued the cause for respondent City of Woodbury (in A-0443-16) (Angelini, Viniar & Freedman, LLP, attorneys; James P. Pierson, on the brief).
Gary M. Marek argued the cause for respondents Borough of Westville and Borough of Glassboro (in A-0443-16) (Law Office of Timothy D. Scaffidi, attorneys; Gary M. Marek and Timothy D. Scaffidi, on the briefs).
2 A-5067-15T3 Walter F. Kawalec, III argued the cause for respondent Borough of National Park (in A- 0443-16) (Marshall Dennehey Warner Coleman & Goggin, attorneys; Walter F. Kawalec, III and Ashley L. Toth, on the brief).
The opinion of the court was delivered by
ROTHSTADT, J.A.D.
In these matters, which we considered back-to-back and have
consolidated for purposes of writing one opinion, plaintiff
landlords rely upon our opinion in Timber Glen Phase III, LLC v.
Township of Hamilton, 441 N.J. Super. 514 (App. Div. 2015) in
their appeals from orders1 entered in the Law Division dismissing
their complaints that alleged defendant municipalities'
ordinances that required plaintiffs to pay certain license fees
are ultra vires. In Timber Glen, the ordinance we reviewed
required landlords to obtain a license before any residential
rental unit could be occupied and pay an annual license fee of
$100 per unit.2 Id. at 519. The municipality contended it had
1 Plaintiffs Kathleen O'Hara and William R. Brody also appeal from the Law Division's orders denying their motions for partial summary judgment and reconsideration of the dismissal of their complaint. 2 The ordinance invalidated in Timber Glen, provided in pertinent part: "[N]o person shall occupy any Residential Rental Unit nor shall the owner permit the occupancy of any[] residential rental unit within the Township of Hamilton if said unit has not been Licensed by the Bureau of Fire Prevention on (continued)
3 A-5067-15T3 authority under the Licensing Act, N.J.S.A. 40:52-1, to require
such licenses and that its authority was compatible with its
regulatory power under N.J.S.A. 40:48-2.12m. Id. at 523. The
stand-alone license fee it charged was in addition to fees it
required for mandatory "annual habitability inspections . . . ."
Id. at 519.
We rejected the municipality's position in Timber Glen,
noting, "the powers to regulate and to license, although
related, are discrete" and that the power to regulate did not
include the power to require a license and payment of a fee.
Id. at 526 (citation omitted). We concluded that a 1998
amendment to the Licensing Act prohibited the licensing of
rental units rented for 175 days or more and that any ordinance
attempting to impose such a requirement was "invalid as ultra
vires and unenforceable." Id. at 532. However, we noted that
"[o]ur opinion [was] confined to the authority to license and
[did] not address [a municipality's] regulatory or inspection
authority granted by other statutes designed to assure rental
premises remain safe, building and fire code compliant and
structurally sound." Id. at 532 n.4 (citation omitted).
(continued) forms which shall be provided for that purpose." 441 N.J. Super. at 519 (second alteration in original).
4 A-5067-15T3 The issue raised in the present appeals is whether fees
imposed by defendant municipalities are for revenue generation
as prohibited under Timber Glen, or if they are reasonably
related to the municipalities' exercise of their regulatory
powers as authorized by statute. The plaintiffs' complaints
alleged the municipalities violated the New Jersey Civil Rights
Act (CRA), N.J.S.A. 10:6-1 to -2, and that the ordinances
requiring the payment of license fees were ultra vires under
Timber Glen, entitling them to damages and a declaratory
judgment awarding them injunctive relief. The municipalities
responded by filing motions to dismiss under Rule 4:6-2(e). The
trial court judges who considered the matters found that the
challenged ordinances were distinguishable from the ordinance
invalidated in Timber Glen, as the fees were permissible under a
municipality's regulatory powers in order to defray costs for
inspections or registration of rental units. For the reasons
that follow, we affirm.
The challenges raised by each plaintiff are summarized as
follows. O'Hara brought her challenges against defendants City
of Woodbury and the Borough of Glassboro where she maintained
properties for rent. The Woodbury ordinance3 requires landlords
3 Woodbury, N.J., Landlord/Tenant Licensing ch. 114, art. I, §§ 114-1 to -20 (2000). (continued)
5 A-5067-15T3 to secure a license that "attest[ed] that the rental unit had
been properly registered" under the ordinance. Before a unit
can be registered and occupied, the ordinance requires an
inspection "for the purpose of determining Woodbury City Code
compliance and compliance with [the ordinance's] Housing
Standards . . . ." Annual registration of rental units and
payment of a $100 "license fee" have to be completed before the
city will issue a license to permit their rental.
The Glassboro ordinance4 also requires annual registration
and the payment of a fee before it will issue a license
permitting the rental of a unit. In addition, if there is a
change in occupancy, a new registration and an additional fee
have to be paid. A license will not be issued, however, unless
the unit passes an inspection to insure there are no "safety
violations" and that the units meet the ordinance's "performance
standards . . . ." The $160 "annual registration fee [that the
ordinance requires] include[s] all inspections and one re[-
]inspection at no additional fee."
Brody, a landlord who maintains rental properties in
defendants Borough of Westville, Borough of National Park and
(continued) 4 Glassboro, N.J., Rental Housing ch. 379, §§ 379-1 to -10 (2004).
6 A-5067-15T3 the Township of Deptford, challenged each of those
municipality's ordinances. The Deptford ordinance5 contains a
registration and licensing requirement, but does not require re-
registration upon a change in occupancy, although it requires
re-inspection. Inspection is required "to determine the
condition of rental facilities, rental units and
rooming/boarding houses in order . . . to safeguard the health,
safety, welfare of the occupants . . . and of the general
public." The ordinance further provides that a fee has to be
paid upon registration before a license will be issued. It also
provides for a re-inspection fee upon a change in occupancy. No
separate licensing fee is imposed.
Westville's and National Park's ordinances also require
annual registration and the payment of a fee before licenses
will be issued to landlords. Westville's ordinance6 imposes an
"annual registration fee and first inspection fee" of fifty or
sixty dollars per rental unit depending on the number of rental
units on a property. It also has a re-inspection fee and late
fee that it charged for untimely payments. The ordinance
provides that "inspection shall be for the purpose of
5 Deptford, N.J., Ordinance O.16.12 (Oct. 16, 2012). 6 Westville, N.J., Rental Property ch. 272, art. I, §§ 272-1 to -27 (2006).
7 A-5067-15T3 determining . . . Land Use and Development compliance and, to
the extent applicable, to determine if the property complies
with the Property Maintenance Code, Uniform Construction Code,
Housing Code and/or Building Code and/or Uniform Fire Safety
Act." Westville's ordinance does not designate any of its fees
as license fees.
Similarly, National Park's ordinance7 provides "[u]pon the
filing of a completed registration form and payment of the
prescribed fee and a satisfactory inspection, the owner shall be
entitled to the issuance of a license . . . ." Payment of the
fee was due "[a]t the time of the filing of the registration
form . . . ." The ordinance calls for "inspections to determine
the condition of rental facilities, rental units, and
rooming/boarding houses in order [to] . . . safeguard the
health, safety, welfare of the occupants . . . and of the
general public." Periodic inspections are also required to
ensure "zoning, [and] compliance . . . with Property
Maintenance, the Uniform Construction Code, Housing Code,
. . . the Building Code and the Uniform Fire Safety Act."
National Park's ordinance also does not mandate the payment of a
separate fee for the issuance of a license.
7 National Park, N.J., Code of National Park Rental Units ch. 97, art. I, §§ 1 to 19 (2007).
8 A-5067-15T3 O'Hara and Brody filed an initial complaint in August 2015,
which they amended in April 2016. Judge David W. Morgan granted
the municipalities' motions to dismiss on June 28, 2016. 8 In his
oral decision placed on the record on that date, Judge Morgan
discussed our holding in Timber Glen, the significance of
footnote four in that case, and the distinction between a fee
charged by a municipality to offset costs of regulation as
compared to generating revenue, as discussed in Timber Glen and
Daniels v. Point Pleasant, 23 N.J. 357 (1957). The judge then
framed the issue before him as being, "Do we have a license-type
of ordinance or is it a regulation–type of . . . ordinance?" He
defined a license as being the granting of "authority to go out
and conduct [the subject] activity" and "[r]egulations
. . . . [as] relat[ing] to the manner by which the activity is
to be conducted." Relying on N.J.S.A. 40:48-2.12a, N.J.S.A.
40:48-2.12a1, N.J.S.A. 40:48-2.12c,9 and N.J.S.A. 40:48-2.12m10
8 Plaintiffs filed cross-motions for partial summary judgment as to liability that the judge denied. 9 N.J.S.A. 40:48-2.12c provides:
Any ordinance adopted pursuant to this act may provide for the registration of the owners and management of every building and structure in the municipality which is occupied by [two] or more families as tenants of the owner or lessor. Such registration shall be with the clerk of the (continued)
9 A-5067-15T3 the judge noted that municipalities are authorized to regulate
buildings in order to insure the public's health and safety and
(continued) municipality upon forms prescribed by and furnished by the municipality. Every such registration form shall include the name and address of the owner, the name and address of the lessor if other than the owner, and the name and address of an agent in charge of the premises residing in the municipality. 10 The statute provides:
The governing body of a municipality may adopt ordinances regulating the maintenance and condition of any unit of dwelling space, upon the termination of occupancy, in any residential rental property for the purpose of the safety, healthfulness, and upkeep of the structure and the adherence to such other standards of maintenance and condition as are required in the interest of public safety, health and welfare. Such ordinances shall require the owner of any residential rental property, prior to rental or lease involving a new occupancy of any unit of dwelling space in such property, to obtain a certificate of inspection or occupancy for the unit of dwelling space. Such certificate of inspection or occupancy shall be issued by the municipality upon the inspection of the unit of dwelling space by a municipal inspector and his findings that such unit meets the standards provided by law. The municipality may charge a fee to fund the costs of the inspections and the issuance of the certificates. . . .
[N.J.S.A. 40:48-2.12m.]
10 A-5067-15T3 make inspections for that purpose, require registrations, and
issue certificates of occupancy (CO) and charge fees for those
certificates.
Turning to the challenged ordinances, he observed that the
municipalities' "ordinances have very similar framework." He
found that the ordinances were different from the one addressed
in Timber Glen because in order to get a license under the
framework of the challenged ordinances, a landlord had to comply
with various regulations that were authorized by statute, not
just pay a fee as was the case in Timber Glen. The distinction,
he concluded, gave the challenged ordinances "the appearance of
. . . regulation, as opposed to simply a licensing act." After
reviewing in detail the specific contents of the ordinance
challenged in Timber Glen, and commenting on what parts related
to regulation versus licensing, the judge turned to the subject
ordinances, which he also discussed in detail.
During his review, Judge Morgan observed that unlike Timber
Glen, Woodbury's ordinance required landlords to pay a fee and
comply with various regulations before being able to obtain a
license. He stated:
[W]hen you read . . . [the] ordinances they're . . . a very integrated set of ordinances that basically regulate the conduct, the operations of the apartment.
11 A-5067-15T3 And charge a fee for the license that you get, once you've demonstrated after an inspection that you're in compliance with those regulations.
So it becomes much more of a regulatory –type of adoption, as opposed to what you see in [Timber Glen.] . . .
I'm satisfied that the ordinances that we have, . . . are much more in the form and framework of a regulation that [has] as their component the issuance of a document, which indicates that [you have] complied with the regulation.
The judge followed the Court's decision in Nelson Cooney &
Son, Inc. v. South Harrison, 57 N.J. 384 (1971) and found
persuasive the Law Division's decision in Devine v. Mantua
Township, 28 N.J. Super. 299 (Law Div. 1953), and concluded that
the fees being charged by the municipalities were reasonably
"relate[d] to that regulation and [was] not being utilized as a
tax revenue." He turned to plaintiffs' CRA claim and found that
since the fees paid were for regulatory purposes, there was no
taking in violation of their constitutional rights.11
Brody and O'Hara filed a motion for reconsideration. In
their motion, they argued that contrary to Judge Morgan's
findings, Woodbury's ordinance did not require inspections
11 In the remainder of his oral decision, the judge reviewed each of the other municipalities' ordinates in detail and explained how they were the same or similar to Woodbury's as compared to the one in Timber Glen.
12 A-5067-15T3 before issuing a license. They also contended that the fees
associated with inspections required by other municipalities'
ordinances were already charged in connection with the
applications for a CO. As Judge Morgan described their
position, "plaintiff[s'] argument [was that] landlords are
required to pay a higher fee for the combination rental
license/[CO] than a non-landlord would have to pay for just the
[CO], but with the municipality expending the same amount of
work." Finally, relying on the United States Supreme court's
opinion in Brown v. Legal Foundation of Washington, 538 U.S. 216
(2003), plaintiffs argued the motion judge overlooked the
Court's determination that the government's taking of money,
like real or other personal property, was a taking for
constitutional purposes.
Judge Morgan considered the parties' oral arguments on
September 2, 2016, and on September 6, 2016, he entered an order
denying plaintiffs' motion, supported by a written statement of
reasons. The judge conducted a detailed analysis of Woodbury's
ordinance, conceded that on "first blush [it] appear[ed] to be
an 'apply and pay' type of ordinance" similar to the one in
Timber Glen, but upon closer examination it was clear that a
satisfactory inspection was a condition to the issuing of the
license. Addressing the municipalities' charging of a premium
13 A-5067-15T3 inspection fee in addition to charging one for issuing a CO, the
judge found the argument unpersuasive because plaintiffs did not
plead in their complaint that the fee being charged was
excessive. Moreover, he concluded that "the licensing
ordinances require the municipality to engage . . . in work over
and above that encompassed by a [CO] review, most notably the
review of tenant screening submissions and compliance with
standards for occupants of the rented unit." Finally, the judge
rejected plaintiffs' argument "that requiring a fee for a
license required under an ultra vires ordinance creates a
constitutional taking supporting a civil rights claim" under
Brown because unlike "when the government appropriates money
from a specifically identified fund of money[,] . . . a law
imposing the obligation to pay a generalized monetary liability
such as a tax or fee . . . is not a taking."
We turn next to plaintiff Christopher C. Cona's challenge
to defendant Township of Washington's ordinance12 that requires
landlords to submit annual registrations, as well as upon a
change of occupancy, and to pay a fee "prior to the issuance of
a license . . . ." It also provides that "[e]ach rental unit
shall be inspected at least once every twelve-month period."
12 Washington, N.J., Rental Property and Landlord Registration ch. 185 §§ 185-1 to -21 (2005).
14 A-5067-15T3 Inspections are required to determine "[z]oning, compliance and,
to the extent applicable, to determine if the property complies
with . . . Property Maintenance and Housing Standards, and
Uniform Construction Code, . . . and the Uniform Fire Safety
Act." If the inspection is unsatisfactory, the property cannot
be registered "nor shall a license issue" and the premises
cannot be occupied "until the necessary corrections have been
made so as to bring the property and rental unit into compliance
with the applicable code and the property is thereafter
subsequently inspected, registered, and licensed." In addition,
the ordinance prohibits the registration or licensing of any
rental unit "unless all municipal taxes, water and sewer charges
and any other municipal assessments are paid on a current basis"
and all units are in compliance with all applicable codes and
regulations. The only fee imposed, which was to be paid upon
registration of the rental unit, is based on the number of units
on a property.
On November 25, 2015, Cona filed a complaint challenging
Washington Township's ordinance. Judge Morgan granted
Washington's motion to dismiss on July 8, 2016 after considering
oral argument. The judge found the "ordinance . . . doesn't
have a combination of what would appear licensing and
regulatory-type requirements" because "it integrates regulation
15 A-5067-15T3 with the issuance of the registration and licensing, which[ is]
different[ from] the[] ordinance[ challenged in Timber Glen],
which simply was, pay your money, get your license . . . and
that was not permitted, authorized, enabled by the licensing
act." The judge explained that the ordinance in Timber Glen
required "a whole separate fee as it relates to the inspections
and . . . there is no tie-in between the two; there's no, you
don't get your license if your inspection isn't so good." He
concluded the ordinances had "regulatory qualities to them" that
addressed "tenant screening" and registration, inspections, unit
occupation limits, payment of taxes and other municipal
obligations.
Judge Morgan also addressed Cona's CRA claim. He concluded
that "the money that's taken can't be considered a takings under
the Constitution." Addressing Cona's contention that a fee
being charged for a CO and a landlord's license was improper,
Judge Morgan stated: "[T]he fact that there[ are] two
requirements . . . does not necessarily negate the ability" to
require both fees to address inspections and registrations in
satisfaction of "regulation as opposed to pure licensing."
16 A-5067-15T3 Finally, we review plaintiff Sharon Downs challenge to
defendant the Borough of Paulsboro's March 1, 2016 ordinance13
governing rental properties that removed all licensing
requirements from an earlier version of the same ordinance. 14
Under the 2016 ordinance, owners of rental units are required to
file a registration application annually and with each change in
occupancy for any rental unit, and pay a $100 inspection fee per
unit to ensure compliance with the applicable codes and
regulations. It also imposes a re-inspection fee, stating: "In
the event that a re-inspection of a rental unit is deemed to be
necessary . . . the owner . . . must pay a [fifty dollar] re-
13 Paulsboro, N.J., Rental Property ch. 59B, art. I, §§ 59B-1 to -19 (2016). 14 In 1997, Paulsboro adopted an ordinance, see Paulsboro, N.J., Rental Property ch. 59B, art. I, §§ 59B-1 to -20 (1997), that required the registration, inspection and licensing of residential rental units. That ordinance, was adopted "to [e]nsure that residential rental units are properly maintained, to require landlords to comply with the Property Maintenance Code and to protect the lives and property of the Borough residents." To achieve this purpose, "rental unit[s were required to be] registered, inspected and licensed in accordance with [the o]rdinance." It provided: "Upon the filing of a completed registration form, and payment of the prescribed fee, and a satisfactory inspection[,] the owner shall be entitled to the issuance of a license . . . ." There was no separate fee required for the issuance of the license. The ordinance required periodic inspections stating "[e]ach rental unit shall be inspected at least once every [twelve-month] period[,]"and there was no fee required to be paid for the inspections. The 2016 ordinance makes no mention of a licensing requirement.
17 A-5067-15T3 inspection fee." The ordinance provides that a rental unit that
fails inspection cannot be registered. A "rental unit may [also
not] be registered unless all municipal taxes, water and sewer
charges and any other municipal assessments are paid . . . ."
The ordinance mandates that the rental of any residential unit
is prohibited "unless the rental unit is registered in
accordance with" the ordinance.
On April 15, 2016, Downs filed her complaint challenging
the 2016 ordinance validity.15 Judge Jean B. McMaster granted
Paulsboro's motion and dismissed Downs' complaint with prejudice
on July 28, 2016, for the reasons stated in her oral decision
placed on the record on the same date, after considering the
parties' earlier written submissions and oral arguments on May
3, 2016. The judge first acknowledged that municipalities may
charge fees to defray the costs of the exercise of their power
to regulate, but such fees cannot be charged simply "for revenue
purposes" and must be reasonable and related to the exercise of
15 After we issued our opinion in Timber Glen, Downs initially filed an earlier action challenging Paulsboro's 1997 ordinance. In response, on March 1, 2016, Paulsboro adopted its current ordinance, which removes all licensing requirements. This prompted Downs to file a separate action challenging the 2016 ordinance as also being invalid pursuant to Timber Glen. Judge McMaster dismissed both actions on July 28, 2016, and Downs filed separate appeals. On September 28, 2016, we granted Downs' motion to consolidate the appeals from the dismissal of both of her complaints.
18 A-5067-15T3 a municipality's police power. The judge concluded the $100 fee
charged by Paulsboro was reasonable and "clearly [related to]
advanc[ing] a substantial public interest[,] . . . public health
and . . . . insuring that rental premises remain safe." As
such, charging the fees did not constitute a taking in violation
of the CRA and, further, that because the fee charged were for
"registration and inspection" they did not violate Timber Glen's
holding that prohibited using fees as "a revenue-generating
tax."
The judge supplemented her reasons in the order she entered
on July 28, 2016, in which she stated:
Under Bernardsville Quarry v. Bernardsville, 129 N.J. 221 (1992) a municipality has [a right] to charge fees which are incidental to its police power to regulate pursuant to [N.J.S.A.] 40:48-2. [Timber Glen] does not affect the municipality's ability to regulate for the health [and] safety of its residents ([f]ootnote [four] is duly noted). [The] municipality remains empowered to conduct inspections [and] register units for [the general] welfare. Timber Glen is distinguishable from ordinances at issue in these matters.
On appeal, each of the plaintiffs essentially argues the
same points. Brody and O'Hara argue it was error for Judge
Morgan to deny their cross-motions for summary judgment and
dismiss their complaint because contrary to the judge's finding,
the ordinances they challenged were similar to the one in Timber
19 A-5067-15T3 Glen and therefore ultra vires. According to plaintiffs,
"[u]sing the guise of licensing tenancies, defendants try to
illegally levy a tax for revenue purposes without legislative
authority . . . ." They contend that the judges' reliance on
case law the judges found controlling or persuasive was
inapposite and that they made out viable claims under the CRA
and were entitled to a declaratory judgment in their favor.
According to plaintiffs, the municipalities did not establish
they were entitled to dismissal of plaintiffs' complaint under
Rule 4:6-2(e). They assert their "complaints were amply pled[
and t]he trial court permitted no discovery to test the view
that the ordinance fees were reasonable in comparison to the
expenses defendants incurred and services defendants provided
. . . ." Brody and O'Hara also contend it was error for Judge
Morgan to deny their motions for reconsideration because
"Woodbury also charges a separate fee for a [CO] inspection
. . . ."
Cona also argues that it was error to dismiss his complaint
because "comparing the [Washington] ordinance and the [Timber
Glen] ordinance[,] which the Appellate Division ruled was ultra
vires[,] leads to the conclusion that the [Washington] ordinance
is likewise ultra vires[.]" He contends that the fees imposed
by the Washington ordinance are unreasonable in light of
20 A-5067-15T3 Washington's CO requirement, which also requires a fee for
inspection. He also argues "the order dismissing the complaint
is deficient" because it "fails to provide a place for the
[c]ourt to note that the motion was opposed . . . ." Last, in
his reply brief, Cona asserts for the first time that
Washington's ordinance's registration fee is unreasonable
because the information collected through the registration is
duplicative of what landlords already provide through the New
Jersey Landlord Registration Statute, N.J.S.A. 46:8-28.
Downs argues that it was error for the court to dismiss her
complaints because Paulsboro's 1997 and 2016 ordinances, "like
the [Timber Glen] ordinance . . . [are] ultra vires[.]" Downs
also contends "the trial court erred by holding that the
licensing fees are merely lawful registration and inspection
fees[.]" She asserts that "[t]his is a 'takings' and/or
confiscation [CRA] case" and that "the complaint pleads viable
CRA takings and/or confiscation violations[.]" Downs also
argues that the ordinances found valid in State v. Mill Village
Apartments, No. A-0522-14 (App. Div. Feb. 10, 2016),16 Lake
16 In Mill Village, we reviewed the validity of an ordinance that required rental units to be annually registered at a cost of $100 and to be inspected annually and with each change in occupancy. slip op. at 4-5. We rejected arguments that "the registration requirement was a de facto licensing requirement and therefore invalid[,]" id. at 9, and concluded "[t]he (continued)
21 A-5067-15T3 Valley Associates, LLC v. Township Of Pemberton, 411 N.J. Super.
501 (App. Div. 2010),17 and Dome Realty, Inc. v. Paterson, 83
N.J. 212 (1980)18 are distinguishable from the ordinances here.
She further contends that the "the volunteer [payment] rule
doesn’t apply to the CRA or the facts of this case[.]"
According to Downs, "the 1998 amendment to the Licensing Act and
[Timber Glen] are retroactive[.]" Last, she argues her
"complaints pled viable [Uniform Declaratory Judgment Law]
claims[,] which the trial court failed to address[.]"
We review de novo a trial court's order dismissing a
complaint under Rule 4:6-2(e), applying the same standard as the
trial court. See Stop & Shop Supermarket Co. v. Cty. of Bergen,
(continued) fees . . . were imposed for functions related to the City's exercise of regulatory power that was authorized by statute." Id. at 10. 17 In Lake Valley, we reviewed an ordinance that required the registration of all rental units and "at least one inspection every three years or upon change of occupancy[,]" 411 N.J. Super. at 502, and rejected plaintiff's argument that the requirements imposed by the ordinance exceeded those explicitly delegated by the legislature and were not permitted, id. at 504, holding that the ordinance was not preempted by legislative action. Id. at 506-07. 18 In Dome Realty, the New Jersey Supreme Court upheld a municipal ordinance requiring landlords to have their rental units inspected and to obtain a CO immediately prior to allowing a new tenant to take possession as a valid exercise of authority pursuant to N.J.S.A. 40:48-2.12a and N.J.S.A. 40:48-2. 83 N.J. at 219, 229-30.
22 A-5067-15T3 450 N.J. Super. 286, 290 (App. Div. 2017). That standard
requires us to examine the challenged pleadings to determine
"whether a cause of action is 'suggested' by the facts."
Teamsters Local 97 v. State, 434 N.J. Super. 393, 412 (App. Div.
2014) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp.,
116 N.J. 739, 746 (1989)). We search the pleading "in depth and
with liberality to determine whether a cause of action can be
gleaned even from an obscure statement." Seidenberg v. Summit
Bank, 348 N.J. Super. 243, 250 (App. Div. 2002) (citing Printing
Mart-Morristown, 116 N.J. at 746). "[I]t is the existence of
the fundament of a cause of action . . . that is pivotal[.]"
Teamsters Local 97, 434 N.J. Super. at 412-13 (second alteration
in original) (quoting Banco Popular N. Am. v. Gandi, 184 N.J.
161, 183 (2005)).
"A pleading should be dismissed if it states no basis for
relief and discovery would not provide one." Rezem Family
Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103, 113
(App. Div. 2011) (citing Camden Cty. Energy Recovery Assocs.,
L.P. v. N.J. Dep't of Envtl. Prot., 320 N.J. Super. 59, 64 (App.
Div. 1999), aff'd, 170 N.J. 246 (2001)). Ordinarily, dismissal
for failure to state a claim is without prejudice, and the court
has discretion to permit a party to amend the pleading to allege
additional facts in an effort to state a claim. See Hoffman v.
23 A-5067-15T3 Hampshire Labs, Inc., 405 N.J. Super. 105, 116 (App. Div. 2009).
Although leave to amend should be liberally granted, "without
consideration of the ultimate merits of the amendment," it need
not be granted where, an amendment would be a "futile" and
"useless endeavor." Notte v. Merchs. Mut. Ins. Co., 185 N.J.
490, 501 (2006) (citation omitted); see also Prime Accounting
Dep't v. Twp. of Carney's Point, 212 N.J. 493, 511 (2013).
The result of these appeals turn on whether the challenged
ordinances are valid. "A municipal ordinance under review by a
court enjoys a presumption of validity and reasonableness."
State v. Clarksburg Inn, 375 N.J. Super. 624, 632 (App. Div.
2005) (citing First Peoples Bank of N.J. v. Twp. of Medford, 126
N.J. 413, 418 (1991)). "Municipal ordinances are normally
liberally construed in favor of the municipality and are
presumed valid, with the burden of proving otherwise placed upon
the party seeking to overturn the ordinance." State v. Golin,
363 N.J. Super. 474, 481-82 (App. Div. 2003) (citations
omitted); Dome Realty, Inc., 83 N.J. at 235 (stating that
"courts place a heavy burden on the proponents of invalidity").
Only a showing of "clear and compelling evidence" may overcome
this presumption. Spring Lake Hotel & Guest House Ass'n. v.
Spring Lake, 199 N.J. Super. 201, 210 (App. Div. 1985).
24 A-5067-15T3 Applying these guiding principles, we conclude from our de
novo review that all of the plaintiffs' complaints were properly
dismissed under Rule 4:6-2(e), as none of the challenged
ordinances were ultra vires in that the fees charged under them
were reasonably related to the municipalities' exercise of their
obligation to promote the safety and welfare of their residents.
We therefore affirm each order under appeal substantially for
the reasons expressed by Judge Morgan and Judge McMaster in
their cogent oral and written statements of reasons. We add
only the following comments.
As we observed in Timber Glen, "licensing is a distinct
function authorized by [N.J.S.A.] 40:52-1" and, as we held, a
municipality "may not mandate by ordinance licensure of
residential rentals for 175 days or more, accompanied by an
annual licensing fee[,]" 441 N.J. Super. at 532, because to
require a "license [for such] rental properties . . . by its
nature includes a revenue generating component, [which] is
circumscribed by the provisions of the Licensing Act." Id. at
527 (citing Bernardsville Quarry, 129 N.J. at 229).
The prohibition against requiring licenses did not abrogate
a municipality's power to regulate rental property within its
jurisdiction, including requiring that they be inspected before
being occupied by a new tenant or its ability to "charge a fee
25 A-5067-15T3 to fund the costs of the inspections and the issuance of the
certificates." N.J.S.A. 40:48-2.12m; see also Dome Realty,
Inc., 83 N.J. at 227-28. A municipality is also granted
specific authority to regulate local "buildings and structures
and their use and occupation to prevent and abate conditions
therein harmful to the health and safety of the occupants of
said buildings and structures and the general public in the
municipality." N.J.S.A. 40:48-2.12a. "Specific statutes
[authorize] imposing registration requirements for residences
containing two or more families, and regulating 'the maintenance
and condition of any unit of dwelling space, upon termination of
occupancy[.]'" Timber Glen, 441 N.J. Super. at 526 (citations
omitted).
Landlords are also subject to ordinances that require that
they obtain COs under certain circumstances, which might include
the payment of a separate fee.19 See, e.g., N.J.A.C. 5:23-2.23;
19 "[T]he conventional occasions for requiring" a CO includes:
(1) the completion of a building - - the purpose being to confirm that it has been constructed in accordance with the building code, the building permit and any other applicable municipal regulation; (2) the alteration of a building - - the purpose being the same as in (1) above; (3) the use of vacant and hitherto unused land -- the (continued)
26 A-5067-15T3 N.J.A.C. 5:23-2.23A. A municipality may regulate rental units
and buildings as a whole, and the combination might involve some
degree of overlap. For example, a rental unit is inspected for
compliance with tenancy regulations, and the building in which
it is located is inspected to insure it is sound and constructed
in accordance with required building permits. See N.J.A.C.
5:23-2.23A. That overlap does not limit a municipality's
ability to offset its costs for providing those services by
charging fees, as long as they are not simply exercises in
revenue production. We discern no such exercise in these cases
as we did in Timber Glen.
(continued) purpose being to insure that the intended use conforms to the zoning ordinance and any other pertinent regulation; (4) any change of use -- whether the land be improved or not -- the purpose being as last stated.
. . . [T]his list [is not] exclusive: "[t]here may be, or there may later develop, other occasions when such a certificate will serve a useful and valid end in land use control."
[Dome Realty, Inc., 83 N.J. at 231 (fourth alteration in original) (citations omitted) (approving the requirement for a CO upon a tenant vacating an apartment).]
27 A-5067-15T3 Similarly, the fact that an ordinance calls for additional
information to be provided for registration than what the State
mandates, see N.J.S.A. 46:8-28, and charges a reasonable,
associated fee does not deem the ordinance ultra vires.20 "[T]he
Legislature has empowered [municipalities with the authority] to
adopt an inspection and certification scheme for rental
housing[,]" Dome Realty, Inc., 83 N.J. at 232, and it is within
a municipality's authority to charge a reasonable fee to defray
the costs it incurs in carrying out that authority. Nelson
Cooney & Son, Inc., 57 N.J. at 390 n.4.
Turning to the remaining argument that plaintiffs should
have been allowed to proceed to discovery in order to determine
the reasonableness of the fees charged by the ordinances, we
conclude that it is without merit and does not warrant further
discussion in a written opinion. R. 2:11-3(e)(1)(E). Suffice
it to say, that plaintiffs have made no showing that the fees
were unreasonable and they are "not entitled to turn the
discovery process into a fishing expedition." Ellis v. Hilton
20 We observe that Cona raised this argument for the first time in his reply brief. Although "[r]aising an issue for the first time in a reply brief is improper[,]" and may lead to our decision not to consider it, Borough of Berlin v. Remington & Vernick, Eng'rs, 337 N.J. Super. 590, 596 (App. Div. 2001) (citing State v. Smith, 55 N.J. 476, 488 (1970)); Quigley v. Esquire Deposition Servs., 409 N.J. Super. 69, 74 (App. Div. 2009), we choose to address Cona's argument, and conclude it is without merit.
28 A-5067-15T3 United Methodist Church, ___ N.J. Super. ___, ___ (2018) (slip
op. at 9) (citing State v. Broom-Smith, 406 N.J. Super. 228, 239
(App. Div. 2009), aff'd, 201 N.J. 229 (2010)).
In light of our determination that plaintiffs' respective
complaints were properly dismissed, we need not address Brody
and O'Hara's contention that the court erred by denying their
cross-motion for summary judgment or their motion for
reconsideration.
We will acknowledge, however, that a municipality calling
the fees being properly charged "license fees" flies in the face
of Timber Glen and causes considerable confusion. In order to
correct that problem in these cases and hopefully prevent
similar claims in the future, we remand these matters to Judges
Morgan and McMaster for entry of an order directing that the
affected municipalities strike the reference to their fees as
being license fees and changing the designation of any
requirement for registration or inspection from being part of a
licensing requirement. See United Prop. Owners Ass'n of Belmar
v. Borough of Belmar, 343 N.J. Super. 1, 39 (App. Div. 2001)
(stating that "[t]he trial judge had the authority to engage in
'judicial surgery,' or narrow construction of a statute or
ordinance, to free it from constitutional doubt or defect"
(citations omitted)). With that deletion, "the remaining
29 A-5067-15T3 provisions present . . . viable legislative action,
constitutionally sound, and capable of lawful enforcement."
Ibid.
Affirmed.
30 A-5067-15T3