MGM JACKSON, LLC VS. JACKSON TOWNSHIP RENT LEVELING BOARD (L-1058-14, OCEAN COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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)).
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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
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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.
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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
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simply because they benefitted from the proposed changes or were
members of the Board.
Affirmed.
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