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NJ Supreme Court Finds Consumer Fraud, Negligence Causes of Action Exist In Class Action Against Landlords

By Jennifer L. Alexander, Esq. December 11, 2013 Posted in Landlord/Tenant Law

Landlords, take note--a recent ruling made by the New Jersey Supreme Court in Darnice Green, et al. v. Morgan Properties, et al. might be opening the door to New Jersey renters pursuing consumer fraud claims against their landlords. Given the ruling, a well-versed New Jersey landlord tenant lawyer is likely to suggest that landlords double and triple check the language of their leases. The case came to the NJ Supreme Court on the defendants' petition for certification of the Appellate Division's ruling which reversed the lower court's decision to dismiss the complaint with prejudice.

What Happened

There were several tenants who lived in various apartment complexes that were owned or managed by the named corporate defendants. The tenants were the subjects of eviction actions due to nonpayment of rent. Included in each of the tenants' leases were provisions that required the tenants to pay $400 in attorneys' fees if a court appearance was necessary and $200 if the nonpayment issues were resolved prior to going to court. Additionally, the tenants were expected to pay actual attorneys' fees, which were more than $400.

Ultimately, the tenants filed a complaint against several corporate defendants, as well as an individual, on the basis of negligence and violations of the Anti-Eviction Act and the Consumer Fraud Act. The New Jersey Supreme Court heard the case in order to resolve the issue of whether or not the tenants' complaint was sufficient with respect to the claims regarding consumer fraud and negligence that were based on certain lease provisions that forced tenants to pay fixed attorneys' fees that were not related to the in-house attorneys' actual fees.

The Court's Findings

The Court, after applying the indulgent standard that is used to review Rule 4:6-2(e) motions to dismiss, found that the tenants had alleged sufficient facts to state causes of action with respect to consumer fraud and negligence against the corporate defendants; however, they did not allege sufficient facts to support such claims against the individual who was also named as a defendant.

More specifically, the Court noted that, technically, landlords who are looking to evict tenants on the basis of nonpayment of rent "can only look to the amount of rent that is due and owing;" however, landlords are permitted to include fees, such as late fees and attorneys' fees, that are related to the payment of rent if such fees are described as "additional rent" in the lease and not otherwise prohibited under the law.

With regard to the consumer fraud claim, the Court found that landlords bear the burden of proof to show that their lease clauses are reasonable. The attorneys' fees provisions of the leases, particularly as they pertained to evictions, were considered additional rent terms, not liquidated damages, as the defendants claimed.

With regard to the negligence claim, the Court concluded that, based on a reading of the complaint, the corporate defendants may have misrepresented the actual costs of the legal fees, which might amount to negligent misrepresentation.

If you have any questions about the provisions of your lease or any other landlord/tenant law question, feel free to contact a New Jersey landlord tenant lawyer at Griffin Alexander today.

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