HOBOKEN RENT CONTROL ORDINANCE SUBJECT OF CLASS ACTION LAWSUIT

FROM: Charles Gormally
Brach Eichler LLC
101 Eisenhower Parkway
Roseland, NJ 07068

CONTACT: Catie Tupper
201 348 8998

HOBOKEN RENT CONTROL ORDINANCE SUBJECT OF CLASS ACTION LAWSUIT

Action builds on judge’s finding of unconstitutionality in prior suit

Damages in hundreds of millions

HOBOKEN, NJ – FEBRUARY 3, 2010 – Representing the owners of as many as 8,000 rent controlled units in Hoboken, a class action has been filed on behalf of property owners victimized by what a judge in a previous case called the “arbitrary and subjective” application of the rent control ordinance by city officials.

The lawsuit seeks damages, injunctive and declaratory relief against the Defendants, including The City of Hoboken, Hoboken Rent Leveling and Stabilization Board (the “Board”), Suzanne Hetman, Mayor of the City of Hoboken and the City of Hoboken Municipal Council.

“Hoboken has completely neglected its duty to fairly and competently administer its rent control law,” says Charles Gormally, attorney for the class. “Rather than follow the Ordinance or appeal to the Council to properly amend it, the Rent Leveling Board and its Administrators have improvised well beyond their authority and any acceptable legal standard. The direct damages to property owners, which were realized in the form of inappropriate rent rollbacks, fines and settlements, are in the tens of millions. However, the implied damages are in the hundreds of millions in lost property value to the entire Class.

“The sad part of this is that the Council and the Administration have been aware of the unjustness of these problems for years, and they have had ample legislative and administrative remedies but declined to use them,” says Mr. Gormally.

“The most recent three Rent Leveling Officers have testified that their policies varied and acknowledge that the retrospective application of the law left owners unable to establish legal rents, availing them to unjust losses,” says Mr. Gormally. “Judge Tolentino found the law unconstitutional in a case where the facts are operatively identical to those of the Class. Still, the City did nothing to remedy the situation. It could have stayed future rulings pending a clarification of the law or it could have awaited the conclusion of litigation that would have clarified the law. The City has done nothing of the sort, in fact encouraging additional unjust suits by providing information about technical violations to attorneys who have brought additional suits.”

The class action describes how the Class was deprived of its rights “by the Defendants’ systematic failure to uniformly and constitutionally administer and enforce the Rent Control Ordinance” in violation of the New Jersey and US Constitutions:


For more than twenty-five years, the defendants, through inefficiency, inaction, and the administration of unwritten policies and procedures, enforced the Rent Control Ordinance in a manner inconsistent with its express language. <<For example, despite that the ordinance required registration and filing of certain forms, the office accepted other evidence of conforming leases, including cancelled checks.>>

However, in 2006, the defendants, despite the full knowledge of its prior policies and procedures, retrospectively changed their policies and procedures. In so doing, the defendants now enforce the Rent Control Ordinance in a manner that the plaintiffs, and the Class, are unable to comply with….This egregious retrospective enforcement of the Rent Control Ordinance violates the basic principles of due process and has resulted in an intolerable burden on the Plaintiffs and those similarly situated.

<<The class action points to a lawsuit the Defendants lost in 2006,>> when a rent calculation performed by the Administrator and affirmed by the Board in which they applied their long standing unwritten policies and procedures was overturned. The Court found that those policies were inconsistent with the precise language of the Rent Control Ordinance, and thereafter, the Board and the Administrator began to retrospectively enforce the Rent Control Ordinance in an entirely different manner than they had for the previous 25 years without regard to their long standing practices upon which the class members relied.

Due to this arbitrary, capricious and manifestly unjust change in policies, the Plaintiffs and the Class, who have relied upon the Board's longstanding prior policies, find themselves in the untenable position of complete uncertainty of the legal rents in their properties. This arbitrary and capricious economic regulation of Plaintiffs and the Class’s property has resulted in: complete doubt and insecurity regarding the legal rent for apartments subject to rent control; exposure to significant liability to current and former tenants based on their inability to comply with the current retrospective application of the Rent Control Ordinance; exposure to liability to tenants for periods of time when the Class did not even own the property; inability to convey title to their properties without the cloud of regulatory uncertainty regarding the legality of rents that have been charged for their apartments; and the likelihood that Plaintiffs and the Class can not obtain a fair and reasonable rate of return on their investment.

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