Pinewood Estates of Michigan v. Barnegat Township Rent Leveling Board

618 A.2d 927, 261 N.J. Super. 357, 1992 N.J. Super. LEXIS 455
CourtNew Jersey Superior Court Appellate Division
DecidedOctober 21, 1992
StatusPublished

This text of 618 A.2d 927 (Pinewood Estates of Michigan v. Barnegat Township Rent Leveling Board) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pinewood Estates of Michigan v. Barnegat Township Rent Leveling Board, 618 A.2d 927, 261 N.J. Super. 357, 1992 N.J. Super. LEXIS 455 (N.J. Ct. App. 1992).

Opinion

ROSALIE B. COOPER, J.S.C.

The issue presented for consideration by this court is whether an appraiser’s fees for a report and testimony in support of a landlord’s application for a hardship rent increase should be allowed by the Barnegat Township Rent Control Board as reasonable and necessary operating expenses.

Hardship rent increases are governed by Section 64-8A of the Barnegat Township Rent Leveling Ordinance which states:

A landlord who finds that present rental income and additional charges from the mobile home park on which he seeks relief hereunder are insufficient to cover the cost of payments on a first mortgage and any subsequent mortgages directly used to improve and upgrade the mobile home park and/or payments for maintenance and/or all operating costs, and at the same time ensure the landlord a just and reasonable return, may appeal to the Rent Leveling Board for an increase in rental income. Following a hearing, the Board may grant the landlord a hardship rent increase to meet these needs after considering the proofs presented by the landlord, the condition of the mobile home park and the degree of hardship to the landlord.

Because of the great number of hardship applications involving appraisers’ opinions, it is surprising that this issue is one of first impression not only in New Jersey but throughout the country, so far as the exhaustive research of counsel and this court has revealed.

It was the initial impression of this court that appraisers’ fees would be an adjunct to or derive through the applicant’s attorney’s fees since an attorney, in support of an application for a hardship rent increase would, of necessity, be obligated to offer expert testimony to support the landlord’s application. After studying this matter, this court has concluded that not only are such fees ancillary to attorney’s fees but they also have inde[360]*360pendent standing as reasonable and necessary operating expenses.

The only New Jersey case in which professional fees were considered in a rent control context as operating expenses is Park Tower Apartments, Inc. v. City of Bayonne, 185 N.J.Super. 211, 447 A.2d 1359 (Law Div.1982) where the court stated “Reasonable legal fees, if actually paid, must similarly be allowed as a proper part of administrative and miscellaneous expenses.” Id. at 224, 447 A.2d 1359. It is significant that there was no indication in the Park Tower Apartments, Inc. case that the decision designating legal fees, actually paid by a landlord, as allowable administrative or miscellaneous expenses, included legal fees incurred with regard to the proffering of a hardship application to a rent control board. In fact, in the case at bar, counsel for the applicant/landlord has conceded that Park Tower Apartments, Inc. is not a precedent in that regard.

Because there is no guiding precedent with respect to considering appraisal fees as auxiliary to attorney’s fees in New Jersey, it is appropriate to consider out-of-state cases.

The out-of-state cases studied by this court consider the justification for allowing attorney’s fees as reasonable and necessary operating expenses and afford the rationale for this court’s decision in holding that appraisers’ fees are allowable as reasonable and necessary operating expenses. The cases considered are: Allen J. Realty Co. v. Herman, 31 Misc.2d 861, 221 N.Y.S.2d 1017 (Sup.Ct.1961); Litman v. Weaver, 20 Misc.2d 1032, 190 N.Y.S.2d 910 (Sup.Ct.1959), aff'd 10 A.D.2d 865, 201 N.Y.S.2d 497 (N.Y.App.Div.1960); and Mara v. Abrams, 142 N.Y.S.2d 200 (Sup.Ct.1955). Premised on the conclusion that a “landlord requires legal assistance to present an application for increases” in rent applications based on hardship, the consensus of opinion in these cases is that attorney's fees should be awarded as reasonable and necessary operating expenses. See Allen J. Realty Co., supra, 31 [361]*361Misc.2d 861, 221 N.Y.S.2d at 1019; Litman v. Weaver, supra, 20 Misc.2d 1032, 190 N.Y.S.2d at 913; and Mara v. Abrams, supra, 142 N.Y.S.2d at 204.

For example, in Mara v. Abrams, supra, a tenant appealed from ruling in favor of a landlord regarding a hardship application which increased the tenant’s rent. The tenant disputed several of the Board’s determinations including the fact that there was an allowance for “[l]egal fees paid to landlord’s attorneys for services rendered in the previous [yearly] ... application for [a] rent increase[].” Id. at 204. In affirming the award the court reasoned that the application considered was so complex that special legal skills were required to adequately prepare and present the landlord’s application for the rent increase. This reasoning was found to be particularly applicable in cases involving large properties. It should be noted that there are 321 units presently existing on the property in Pinewood Estates.

Similarly, in the case of Allen J. Realty Co. v. Herman, supra, the court held that a landlord in need of legal assistance has the unqualified right to claim attorney’s fees as necessary operating expenses. In addition, it has also been determined that it would be inequitable to diminish the constitutionally guaranteed fair and reasonable rate of return on investment by the amount of legal fees necessarily incurred to establish that which is permitted by law. Litman v. Weaver, supra, 20 Misc.2d 1032, 190 N.Y.S.2d at 913.

It should be noted that as to the present appeal, the issue of allowable attorney’s fees as operating expenses is not before this court:

Although the Board questions legal fee expenses resulting from rent increase applications as reasonable and necessary operating expenses, the Board was unable to determine an accurate costs [sic] for this expenditure and left it in tact [sic].
In re Pinewood Estates Mobile Home Park Rent Increase Hearing Before the Bamegat Twp. Rent Leveling Bd., July 22, 1991, at 27.

[362]*362However, it is clear that these cases are relevant to a determination of whether appraisers’ fees are reasonable and necessary operating expenses. Obviously, an attorney cannot testify as a professional appraiser. It is the opinion of this court that the cost for an expert retained to provide an opinion to assist an attorney in presenting his case to a rent control board, for the purpose of supporting a landlord’s application for a hardship rent increase is a reasonable and necessary expense.

In reviewing the Bamegat Ordinance and its legal ramifications, on an appeal from the Board, this court is not bound by the Board’s determination on a question of law and may consider the issue before this court de novo on the record below. Terner v. Spyco, Inc., 226 N.J.Super. 532, 539, 545 A.2d 192 (App.Div.1988); Grancagnola v. Planning Bd., 221 N.J.Super. 71, 533 A.2d 982 (App.Div.1987).

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Related

Parks v. Hazlet Tp. Rent Control Bd.
526 A.2d 685 (Supreme Court of New Jersey, 1987)
Helmsley v. Borough of Fort Lee
394 A.2d 65 (Supreme Court of New Jersey, 1978)
Mayes v. Jackson Township Rent Leveling Board
511 A.2d 589 (Supreme Court of New Jersey, 1986)
Terner v. Spyco, Inc.
545 A.2d 192 (New Jersey Superior Court App Division, 1988)
Grancagnola v. Planning Bd. of Tp. of Borough of Verona
533 A.2d 982 (New Jersey Superior Court App Division, 1987)
Burbridge v. Governing Body
568 A.2d 527 (Supreme Court of New Jersey, 1990)
Park Tower Ap'ts Inc. v. Bayonne
447 A.2d 1359 (New Jersey Superior Court App Division, 1982)
Reid v. Township of Hazlet
486 A.2d 940 (New Jersey Superior Court App Division, 1985)
Brunetti v. Borough of New Milford
350 A.2d 19 (Supreme Court of New Jersey, 1975)
Troy Hills Vil. v. Tp. Council Tp. Parsippany-Troy Hills
350 A.2d 34 (Supreme Court of New Jersey, 1975)
Hutton Pk. Gardens v. West Orange Town Council
350 A.2d 1 (Supreme Court of New Jersey, 1975)
Litman v. Weaver
20 Misc. 2d 1032 (New York Supreme Court, 1959)
Allen J. Realty Co. v. Herman
31 Misc. 2d 861 (New York Supreme Court, 1961)

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Bluebook (online)
618 A.2d 927, 261 N.J. Super. 357, 1992 N.J. Super. LEXIS 455, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pinewood-estates-of-michigan-v-barnegat-township-rent-leveling-board-njsuperctappdiv-1992.