Green v. Morgan Properties

73 A.3d 478, 215 N.J. 431, 2013 WL 5180483, 2013 N.J. LEXIS 848
CourtSupreme Court of New Jersey
DecidedSeptember 17, 2013
StatusPublished
Cited by145 cases

This text of 73 A.3d 478 (Green v. Morgan Properties) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Green v. Morgan Properties, 73 A.3d 478, 215 N.J. 431, 2013 WL 5180483, 2013 N.J. LEXIS 848 (N.J. 2013).

Opinion

Justice HOENS

delivered the opinion of the Court.

Plaintiffs Darnice Green, Mathew Blumberg, Michael Permenter and Beth Permenter assert that they were tenants in various apartment complexes that are owned by defendants East Coast the Willows, LLC, and East Coast Colonial Apartments, LLC, and [436]*436that are managed or operated by defendants Morgan Properties, Morgan Management, and Mitchell L. Morgan, Inc. Plaintiffs further assert that they were each the subject of an action to evict them from their apartments for non-payment of rent and that, in order to avoid eviction, they were required to pay attorneys’ fees in amounts fixed by a provision in their apartment leases.

Believing that the attorneys’ fees that were included in their leases and that they were required to pay to avoid eviction were unreasonable, plaintiffs initiated litigation in the Superior Court, both individually and as representatives of a class of similarly situated tenants, seeking recovery from the corporate defendants and from their in-house counsel, defendant Rosemary Spohn, Esq. In general, plaintiffs’ complaint alleged that the corporate defendants own or manage 131 apartment communities comprising more than 30,000 rental units in ten states, including New Jersey. They further assert that the lease provisions, which demand payment of $400 in attorneys’ fees for the filing of an eviction action as to which a court appearance is required and payment of $200 if the matter is resolved without a court appearance, are unreasonable. They contend that because defendants file an average of 200 eviction complaints each month in Camden County alone, and because all of the evictions are handled by the in-house attorney, the fees are excessive when compared to the actual attorneys’ fees that the corporate defendants incur.

Plaintiffs’ complaint included three separate counts. First, they asserted that the eviction complaints violated the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12, because defendants misrepresented that plaintiffs would be evicted if the attorneys’ fees were not paid. Second, plaintiffs asserted that they were entitled to relief pursuant to the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, because the attorneys’ fees provisions in the leases constituted an unconscionable business practice and because they can demonstrate that they have suffered an ascertainable loss. Third, plaintiffs allege that defendants are liable to them for negligently [437]*437misrepresenting the true amount of attorneys’ fees incurred in the eviction proceedings.

The defendants collectively filed a motion in lieu of an answer, seeking the dismissal of the complaint for failure to state a claim upon which relief may be granted. See R. 4:6-2(e). Following oral argument, that motion was granted by the trial court and the complaint was dismissed with prejudice.

Thereafter, the Appellate Division, relying on the well-established standard that governs motions to dismiss for failure to state a claim, see Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746, 563 A.2d 31 (1989), determined that the trial court had erred. In summary, the appellate panel concluded that the first count alleging unlawful eviction should have been dismissed without prejudice so as to permit plaintiffs to better articulate the elements of their claim, but that the second and third counts sufficiently set forth the elements of consumer fraud and negligence and that they should be permitted to proceed.

This dispute, which comes before us by way of defendants’ petition for certification, requires that we analyze the purpose of including provisions fixing attorneys’ fees in lease agreements, the manner in which such fees are to be tested for reasonableness, and the sufficiency of plaintiffs’ pleading as it relates to the claims against the corporate and individual defendants for consumer fraud and negligence.

I.

This appeal has its origins in several eviction proceedings emanating from two apartment communities, The Willows (Willows), which is located in Barrington, and East Coast Colonial Apartments (Colonial), which is located in Cherry Hill. At the time when the complaint was filed, Darnice Green was a tenant at Willows, Michael and Beth Permenter were tenants at Colonial, and Mathew Blumberg was a former Colonial tenant.

[438]*438Three of the corporate defendants, Morgan Properties, Morgan Management, and Mitchell L. Morgan, Inc., are Delaware corporations with principal places of business in Pennsylvania. According to the complaint, they manage 131 apartment communities in ten different states. The other corporate defendants, East Coast the Willows, LLC, and East Coast Colonial Apartments, LLC, own the two apartment complexes located in New Jersey that are relevant to this dispute. The individual defendant, Rosemary Spohn, is a New Jersey attorney who serves as a salaried in-house counsel for Morgan Properties. As part of her work, Spohn handles landlord-tenant disputes, including eviction proceedings, for the apartment communities owned or managed by Morgan Properties throughout New Jersey.

Although the complaint is lacking in detail, each of the plaintiffs was a party to a lease that included a provision requiring payment of attorneys’ fees in the event that the tenant failed to pay rent when due and the landlord took action as a result. Each of the original leases signed by plaintiffs included the following terms relating to attorneys’ fees that would be due in those circumstances:

If Tenant fails to pay the entire amount of rent due and owing, and the services of an attorney are thereby required to resolve the matter, either by court appearance, preparation of a consent to be filed with the court or for any other purpose, then a reasonable attorney’s fee of four hundred dollars ($400.00) is due and payable as additional rent by the Tenant. If the attorney’s fee exceeds four hundred dollars ($400.00) then the Tenant will be required to pay the entire amount of reasonable attorney’s fees due and owing to the attorney. In the event Tenant receives a Summons and Complaint and pays all rent due, including late charges and a legal fee of two hundred dollars ($200.00), by certified check or money order prior to the court date so that Landlord’s attorney is not required to make an appearance on behalf of the Landlord, Tenant shall not be liable for the remaining two hundred dollars ($200.00) legal fee. However, the four hundred dollars ($400.00) attorney’s fee is due and owing even if Tenant makes full payment on the day of the court appearance, because the attorney will be required to make an appearance on behalf of Landlord.

Plaintiffs Green and the Permenters executed new versions of the lease in 2010 that contained an alteration in the provision relating to attorneys’ fees. The 2010 leases provided:

[439]*439If the Landlord uses the services of an attorney (including in-house counsel) for any good cause in relation to the enforcement or defense of any terms of this Lease, or in any relation to this tenancy, whether or not litigation is commenced, Resident must pay Landlord’s attorney fees in the amount of four hundred dollars ($400) plus costs as Additional Rent for each cause in which the attorney’s services are engaged.

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Cite This Page — Counsel Stack

Bluebook (online)
73 A.3d 478, 215 N.J. 431, 2013 WL 5180483, 2013 N.J. LEXIS 848, Counsel Stack Legal Research, https://law.counselstack.com/opinion/green-v-morgan-properties-nj-2013.