MGM JACKSON, LLC VS. JACKSON TOWNSHIP RENT LEVELING BOARD (L-1058-14, OCEAN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: November 16, 2017
• Docket: A-2340-15T4
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2340-15T4

MGM JACKSON, LLC, FOUNTAINHEAD PROPERTIES, INC., SHADY LAKE PARK, INC., LAND O'PINES, INC., and JACKSON ACRES, LLC,

Plaintiffs-Appellants,

v.

JACKSON TOWNSHIP RENT LEVELING BOARD, TOWNSHIP OF JACKSON and TOWNSHIP COUNCIL OF THE TOWNSHIP OF JACKSON,

Defendants-Respondents. __________________________________________________

Argued September 18, 2017 – Decided November 16, 2017

Before Judges Messano and Accurso.

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1058- 14.

Lori C. Greenberg argued the cause for appellants.

Brian E. Rumpf argued the cause for respondent Jackson Township Rent Leveling Board. Robin La Bue argued the cause for respondent Township of Jackson, Township Council of Township of Jackson (Gilmore & Monahan, PC, attorneys; Ms. La Bue, on the brief).

PER CURIAM

Plaintiffs, MGM Jackson, LLC, Fountainhead Properties, Inc.,

Shady Lake Park, Inc., Land O'Pines, Inc., and Jackson Acres, LLC,

are the owners of mobile home parks located in the Township of

Jackson (Jackson). They filed a complaint in lieu of prerogative

writs against Jackson and the Jackson Township Rent Leveling Board

(the Board), challenging Ordinance 05-14.1 Prior to 2014,

Jackson's rent control ordinance for mobile home parks permitted

partial vacancy decontrol, allowing a landlord, upon the

occurrence of a vacancy, to charge the successor tenant the lower

of "$125 more than the prior tenant's rent, or a new rent which

[was] no higher than 7.5% more than the highest rent in the park."

Ordinance 05-14 capped the amount of any rental increase upon a

vacancy at "no higher than 7.5% of the highest rent in the park

added to the prior tenant's rent."

Additionally, plaintiffs challenged Jackson's passage of

Ordinance 08-15, which corrected an administrative oversight from

1 The Board's brief states that in 2001, the separate rent leveling boards for apartments and mobile home parks were dissolved and reconstituted as a combined board known as the Apartment and Mobile Home Park Rent Leveling Board.

2 A-2340-15T4 the passage of an earlier ordinance in 2010. Prior to 2010, the

ordinance prohibited owners and tenants of mobile home parks or

residential properties from serving on the Board. Essentially,

Ordinance 08-15 required one member and one alternate on the nine-

member Board to be tenants at mobile home parks and tenants in

rental or housing units.

Plaintiffs' complaint alleged both Ordinance 05-14 and

Ordinance 08-15 were invalid, arbitrary, and capricious, violated

the Equal Protection and Due Process Clauses of the Constitution,

and resulted in an unlawful taking of property without just

compensation, all violations enforceable by 42 U.S.C.A. § 1983.

Plaintiffs also alleged that two members of the Board, Garold

Miller and Ray Schleckser, tenants of plaintiff MGM Jackson's

mobile home park, had financially benefitted from the change in

the ordinance, for which they had provided public support. Jackson

and the Board filed their answers.

Plaintiffs called three witnesses at a hearing before Judge

Marlene Lynch Ford, after which the judge considered the oral

arguments of the parties. Judge Ford reserved decision for thirty

days to permit plaintiffs to supplement the record with official

minutes from the meetings of Jackson's governing body.2 Judge

2 Judge Ford received a CD containing the minutes of various Board meetings.

3 A-2340-15T4 Ford then issued a comprehensive written decision, concluding

plaintiffs' complaint lacked any merit and factual support. She

entered the order under review dismissing plaintiffs' complaint

with prejudice. This appeal followed.

Before us, plaintiffs renew many of the same arguments made

before Judge Ford. They contend the 7.5% cap is arbitrary,

capricious and unreasonable, lacks any reasonable relationship to

a "proper legislative purpose," and violates equal protection

because it subjects one class of tenants to burdens not imposed

on other tenants. Lastly, plaintiffs allege the two tenant Board

members were in a direct conflict of interest.

We have considered these arguments in light of the record and

applicable legal standards. We affirm.

Our courts have long recognized a municipality's authority

to enact rent control ordinances pursuant to its police powers.

Inganamort v. Bor. of Fort Lee, 62 N.J. 521, 535-36 (1973).

"However, all 'police-power legislation is subject to the

constitutional limitation that it be not unreasonable, arbitrary,

or capricious, and that the means selected by the legislative body

shall have real and substantial relation to the object sought to

be attained.'" N.J. Shore Builders Ass'n v. Twp. of Jackson, 199

N.J. 38, 54-55 (2009) (quoting 515 Assocs. v. City of Newark, 132

N.J. 180, 185 (1993)).

4 A-2340-15T4 Every "ordinance is entitled to a presumption of validity,

and the 'party challenging the ordinance bears the burden of

overcoming that presumption.'" 388 Route 22 Readington Realty

Holdings, LLC v. Twp. of Readington, 221 N.J. 318, 339 (2015)

(quoting Rumson Estates, Inc. v. Mayor & Council of Bor. of Fair

Haven, 177 N.J. 338, 350 (2003)).

The presumption of validity "can be overcome only by proofs that preclude the possibility that there could have been any set of facts known" or assumed to be known by the drafters that would, in the exercise of reason and common sense, have allowed them to conclude that the enactment would advance the interest sought to be achieved.

[N.J. Shore Builders, supra, 199 N.J. at 55 (quoting Hutton Park Gardens v. Town Council of West Orange, 68 N.J. 543, 565 (1975)).]

"The job of a reviewing court is not to weigh the evidence for or

against an enactment, or to evaluate the wisdom of the policy

choice made." Id. at 55-56 (citing Hutton Park Gardens, supra,

68 N.J. at 565).

The Supreme Court has adopted a three-part analysis for any

challenge to a rent control ordinance. Orange Taxpayers Council

v. City of Orange, 83 N.J. 246, 255 (1980). First, we examine

"whether the legislative body could rationally have concluded that

the unrestrained operation of the competitive market was not in

the public interest." Ibid. (quoting Hutton Park Gardens, supra,

5 A-2340-15T4 68 N.J. at 564). Second, we consider "whether the regulatory

scheme when examined in its entirety permits a 'just and reasonable

return' to the owners of rental properties." Ibid. (quoting Hutton

Park Gardens, supra, 68 N.J. at 568-69). Lastly, we examine

whether the means adopted to accomplish the ordinance are

rationally related to its purpose. Ibid.

Here, Jackson enacted rent control for the first time in 1973

because of "exorbitant, speculative, and unwarranted" rental

increases. In 2008, it enacted complete vacancy decontrol, but

soon thereafter, in 2010, adopted the vacancy decontrol formula

that permitted increases that were the lower of $125 or 7.5% of

the highest rent in the park. Although not entirely clear from

the record, this quick turnaround obviously reflected discontent

with the consequences of total vacancy decontrol, and plaintiffs

acknowledged, in their complaint, this partial vacancy decontrol

formula adopted in 2010 was "the subject of much debate and

negotiation" with Jackson.

Applying the three-part analysis mandated by Orange Taxpayers

Council to these facts, Ordinance 08-15 reflects Jackson's

continued determination that the "unrestrained operation of the

competitive market was not in the public interest." Orange

Taxpayers Council, supra, 83 N.J. at 255. Thus, limiting the

amount of increase permitted when there was a vacancy, as opposed

6 A-2340-15T4 to total vacancy decontrol, was "rationally related" to the purpose

of rent control. Ibid. Plaintiffs never asserted or proved the

increase permitted by Ordinance 08-15 denied them a fair rate of

return. Ibid.

Rather, plaintiffs' argument is that the increases permitted

by Ordinance 08-15 will never equalize the rents within a given

mobile home park. Perhaps, but neither would the formula

plaintiffs negotiated with Jackson in 2010, and to which they

never objected. Nor is there any authority cited by plaintiffs

that a rent control ordinance must, as one of its goals, move all

rents closer to the same amount. In short, plaintiffs'

dissatisfaction with Jackson's decision to scuttle the 2010

negotiated partial vacancy decontrol provision in favor of a

different formula does not prove the municipal action was

arbitrary, capricious and unreasonable.

Plaintiffs' constitutional claims are also unavailing. They

contend Ordinance 05-14 violates equal protection because it

"subjects some similarly situated tenants to burdens not imposed

on other members of the same class." In other words, those tenants

at a higher rent within a given mobile home park who wish to sell

their home are disadvantaged compared to owners at a lower rent

who also might wish to sell.

7 A-2340-15T4 This argument lacks sufficient merit to warrant extensive

discussion. R. 2:11-3(e)(1)(E). We add only the following.

As the Court said many years ago:

The equal protection clause of the Fourteenth Amendment does not deprive the State of the power to classify in the adoption of police laws, but allows wide discretion, precluding only that done without any reasonable basis and therefore purely arbitrary. The constitutionality of a legislative classification is presumed, and one who assails the classification must carry the burden of showing its arbitrariness. A classification having some reasonable basis is not invalid merely because it is not made with mathematical nicety or because in practice it results in some inequality. And the classification must be upheld if any set of facts can reasonably be conceived to support it. In short, the equal protection clause forbids only invidious discrimination.

[Pleasure Bay Apartments v. City of Long Branch, 66 N.J. 79, 93 (1974) (quoting David v. Vesta Co., 45 N.J. 301, 314-15 (1965)).]

In Property Owners Association v. Township of North Bergen, 74

N.J. 327, 330-32 (1977), a case plaintiffs cite, the owners of

rental properties challenged an ordinance that created a special

class of tenants, i.e., those over the age of sixty-five whose

income did not exceed $5000. The Court held that while a class

of "economically needy senior citizens is sound, proper and

sustainable as a rational classification," "compell[ing]

subsidization by landlords or by tenants who happen to live in an

8 A-2340-15T4 apartment building with senior citizens is an improper and

unconstitutional method of solving the problem." Id. at 339.

Here, however, Ordinance 05-14 creates no classification

amongst mobile home park dwellers. It imposes the same limit on

rental increases whenever there is a vacancy. The ordinance did

not create whatever differences existed between two tenants in the

same park prior to its enactment.3

We construe the arguments plaintiffs make in Points IV and V

of their brief as asserting that Ordinance 05-14 violates

substantive due process rights. The Court defined the issue in

Hutton Park Gardens:

It follows . . . that legislative enactments regulating prices, including municipal rent control ordinances, are subject to the same narrow scope of review under principles of substantive due process as are other enactments under the police power: could the legislative body rationally have concluded that the enactment would serve the public interest without arbitrariness or discrimination?

In the context of price regulation the question is whether the legislative body could rationally have concluded that the unrestrained operation of the competitive market was not in the public interest. [Hutton Park Gardens, supra, 68 N.J. at 563- 64 (citations omitted).]

3 We fail to understand, and plaintiffs do not explain, why some of these disparities in rent were not the natural effect of total vacancy decontrol, which existed in Jackson between 2008 and 2010.

9 A-2340-15T4 In order to prevail, plaintiffs needed to prove that no set

of facts would rationally support a conclusion that the enactment

of Ordinance 05-14 was in the public interest. Id. at 565.

Plaintiffs failed to prove that Jackson's continued decision to

curb "exorbitant, speculative, and unwarranted" rent increases in

the mobile home market that existed forty years ago, by continuing

rent control but permitting limited vacancy decontrol, lacked any

rational basis.

Lastly, plaintiffs argue that members of the Board improperly

influenced passage of the ordinances at issue. They claim that

as residents of a mobile home park, Miller and Schleckser had

inherent personal conflicts of interest with the other tenants in

mobile home parks. This argument also lacks sufficient merit to

warrant discussion. R. 2:11-3(e)(1)(E).

Plaintiffs do not claim that Miller and Schleckser

inappropriately exercised their powers as Board members, for

example, on applications that came before the Board filed by

plaintiffs or other mobile home park owners. Moreover, the

ordinances were passed by the municipal council, not the Board.

Plaintiffs also provide no authority supporting the proposition

that Miller and Schleckser were required to forfeit their rights

as citizens to speak freely and petition their municipal government

10 A-2340-15T4 simply because they benefitted from the proposed changes or were

members of the Board.

Affirmed.

11 A-2340-15T4