GINA DENARDO individually and on behalf of all similarly situated, and 611 613, LLC, individually and on behalf of all similarly situated corporate entities v. THE CITY OF HOBOKEN HOBOKEN RENT LEVELING AND STABILIZATION BOARD, SUZANNE HETMAN MAYOR OF

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

GINA DENARDO, individually

and on behalf of all

similarly situated, and 611-

613, LLC, individually and on

behalf of all similarly

situated corporate entities,

Plaintiffs-Appellants,

v.

THE CITY OF HOBOKEN, HOBOKEN

RENT LEVELING AND STABILIZATION

BOARD, SUZANNE HETMAN, MAYOR OF

THE CITY OF HOBOKEN, CITY OF

HOBOKEN MUNICIPAL COUNCIL,

Defendants-Respondents,

and

THE CITIZENS FOR RETENTION OF

AFFORDABLE HOUSING IN HOBOKEN,

Defendant/Intervenor-

Respondent.1

________________________________________________________________

February 3, 2016

 

Argued April 27, 2015 Decided

Before Judges Lihotz, Espinosa and St. John.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-690-10.

Charles X. Gormally argued the cause for appellants (Brach Eichler L.L.C., attorneys; Mr. Gormally, of counsel and on the briefs; Sean A. Smith and Autumn M. McCourt, on the briefs).

Victor A. Afanador argued the cause for respondents (Lite DePalma Greenberg, LLC, attorneys; Mr. Afanador, of counsel and on the brief; Jeffrey A. Shooman, on the brief).

The opinion of the court was delivered by

ESPINOSA, J.A.D.

In 1996, a report by the Hoboken Task Force on Rent Control Revision and Modernization (Task Force) descried the deficiencies in enforcement and recordkeeping that undermined the purpose of Hoboken's rent control ordinance (RCO). Approximately fifteen years later, after two revisions to the RCO succumbed to defeats in referenda, the City of Hoboken adopted an ordinance, Z-88, that addressed inequities in the RCO and its enforcement affecting both landlords and tenants. This case calls for us to consider whether plaintiffs' class action lawsuit2 was a catalyst for the passage of Z-88, thereby providing a basis for the award of counsel fees under N.J.S.A. 10:6-2(f).

In their appeal, plaintiffs contend the evidence of a causal nexus between their lawsuit and the adoption of Z-88 was so strong that the City was required to refute the existence of a causal nexus. We disagree. Viewing the lawsuit in context, amidst a politically charged atmosphere and decades of controversy and litigation, we conclude its impact was insufficient to establish the causal nexus necessary to be a catalyst for this change.

Plaintiffs argue further that the trial court committed reversible error in finding the individual actors and the municipality enjoyed qualified immunity on all claims. Finally, plaintiffs argue the trial court committed reversible error in refusing to grant their motion for leave to amend the complaint. For the reasons that follow, we affirm.

I.

The City first introduced its RCO in 1973. Two aspects of a 1981 amendment (1981 RCO) are relevant here. First, landlords were required to register rental properties subject to rent control, a requirement satisfied by a one-time registration. The 1981 RCO also included a "vacancy decontrol" provision. The way this operated was that when an apartment was voluntarily vacated, the rent was temporarily "decontrolled" and the landlord was permitted to apply a 25% increase in rent when leasing to a new tenant. The amended ordinance imposed no limit on the number of vacancy decontrol increases a property owner could apply to each rental unit.

In 1985, the City Council repealed the 1981 RCO and adopted a new RCO (1985 RCO) that significantly altered the registration requirement, mandating the filing of annual registration statements with the Rent Leveling and Stabilization Board (Board). The 1985 RCO also restricted the number of vacancy decontrols a landlord could seek to one in any three-year period.

In 1987, Hoboken adopted Regulation 10:54(A), which established, for the first time, an administrative mechanism to calculate the "legal rent" that could be charged for a rental unit. The legal rent was calculated at the request of either the tenant or the landlord by determining the base year, allowing approved vacancy decontrol increases and applying consumer price increases. As a result, the amount of rent permitted was dependent upon the base year selected and the vacancy decontrol increases deemed to be valid. There was no restriction on the time period in which a tenant could seek a rent calculation.

In 1995, the Task Force was formed. Its final report noted concerns including lax enforcement of the Ordinance and the political obstacles to reform

In a town known for citizen-led battles with the City, the rent control issue has been arguably the most divisive and controversial over the years. There is no better illustration of this than the fact that most attempts to revise the current Ordinance over the last 10 years have been defeated by well organized tenant action.

The Task Force noted poor recordkeeping "hampered the Ordinance from realizing much of its intended purpose" and this was "partly due to inherent flaws" in the Ordinance, which lacked systems for monitoring and maintaining rental registrations and increases. The first recommendation made was to "[e]xpand the computerized record keeping in the Rent Control office to monitor rents, rental registrations and annual and special rent increases." The Task Force deemed this recommendation "THE SINGLE MOST CRITICAL RECOMMENDATION IN THIS REPORT." The Task Force report stated, "ALL EFFORTS TO ENFORCE ANY RENT CONTROL ORDINANCE WILL BE IN VAIN" without such a system, noting that before the introduction of a computer system, "these registrations were never recorded, checked or monitored and no violations were ever issued for not filing."

The Task Force made a number of recommendations, including the establishment of 1995 as the base year for rent control and a requirement that landlords provide tenants with a disclosure statement regarding the RCO.

Consistent with the Task Force's recognition of the political obstacles to reform, there were unsuccessful efforts to revise the 1985 RCO in the years from 1994 through 2005. In September 1994, the 1985 RCO was amended by the passage of Ordinance R-65. That ordinance was repealed three months later after a referendum petition was filed. Similarly, another ordinance, DR-207, was passed in 2005 and repealed two months later when a referendum petition was threatened. No other action was taken to adopt any of the Task Force's recommendations. In the five years from January 2006 through January 2011, no amendments to the 1985 RCO were considered or introduced.

The lax and uneven enforcement and poor recordkeeping noted in the Task Force report continued. Plaintiffs presented evidence that municipal officials not only failed to enforce the annual registration requirements, but actively discouraged property owners from filing registrations. Ravinder Bhalla, a Councilman who had served as counsel for the Board, acknowledged it was common practice, in the absence of filed vacancy decontrol certificates, for an administrator to accept informal, alternative documentation of vacancies and rental amounts to be used in rent calculations.3

The Board's practice of waiving the RCO's requirements that landlords file annual registrations and vacancy decontrol certificates was successfully challenged in lawsuits filed by tenants. In July 1998, one trial court ruled the Board acted arbitrarily and capriciously in allowing a landlord who had not filed vacancy decontrol certificates to receive rent increases based on alternative proofs. Tucci v. City of Hoboken Rent Leveling & Stabilization Bd., No. L756-95 (Law Div. July 24, 1998). In another case, decided in January 2006, the trial court similarly concluded the Board's decision to waive filing requirements and grant equitable relief in the form of a 25% vacancy decontrol was arbitrary and capricious. Lewis v. Mumma, No. L-2638-05 (Ch. Div. Jan. 13, 2006) (slip op. at 17-18). The court held that strict compliance with the annual registration statement and vacancy decontrol filing requirements of the RCO was a precondition for granting rent increases that could not be waived. Ibid. In an unpublished opinion, we also concluded the RCO required the filing of a current registration statement and a rent decontrol certificate as prerequisites to a grant of a rent decontrol increase. Rosen v. Hoboken Rent Leveling & Stabilization Bd., Nos. A-3188-06, A-3764-06 (App. Div. Sept. 12, 2008). In yet another challenge mounted by tenants, we invalidated a regulation that established a two-year time limit on a tenant's right to receive refunds on rents deemed to be overcharges by the Board as action that exceeded the authority granted by the RCO. Knight v. City of Hoboken Rent Leveling & Stabilization Bd., 332 N.J. Super. 547 (App. Div. 2000).

Although the Board pursued enforcement more vigorously, its efforts were tainted by a failure to distinguish between the requirements under the 1981 RCO and those under the 1985 RCO in determining legal rent. As we have noted, the annual registration requirement and the limit of one vacancy decontrol increase per three-year period did not exist under the 1981 RCO. Nonetheless, the 1985 RCO requirements were applied retroactively to disallow increases prior to the 1985 RCO that did not comply with those requirements.

This practice was a central issue in Bloomfield 206 Corp. v. City of Hoboken, Docket No. L-3112-07 (Law Div. Sept. 23, 2009) (slip op. at 13), aff'd, Docket Nos. A-4781-11T3, A-6075-11T4 (App. Div. Sept. 4, 2014). The tenants in Bloomfield 206 first leased the subject unit in July 1992 for a monthly rent of $975. Id. at 2. In August 2006, the tenants filed a request for a legal rent calculation.4 Id. at 3. Using 1981 as the base year, the Board rejected two vacancy decontrol forms filed by the predecessor property owner for the years 1983 and 1984 and also ignored information regarding the substantial enlargement of the subject unit. Ibid. The resulting legal rent calculation was $286. Ibid. The plaintiff landlord appealed. Among the arguments raised were that the unit had been properly decontrolled and registered pursuant to the requirements in existence prior to 1985; the City failed to properly maintain the registration and property files for the unit; the Board's roll-back of rent to the 1981 base year was arbitrary, capricious and unreasonable; and rental credits of more than two years were void and in violation of N.J.S.A. 2A:14-1. Ibid. When its appeal was denied, the plaintiff landlord filed an order to show cause, seeking to stop all legal rent calculations pending disposition of the trial. Id. at 4.

The Bloomfield 206 decision was rendered in September 2009. Although she denied the request for an injunction, the trial judge faulted the City for denying vacancy decontrol increases for years prior to 1985 on the ground that the landlord had failed to comply with the 1985 RCO's annual registration requirement. She concluded the City's failure to administer the RCO with administrative regularity constituted an unconstitutional exercise of its police powers.5

This class action complaint was filed on the heels of the Bloomfield 206 decision. Indeed, plaintiffs' counsel, who represented the property owners in that case, explicitly cited Bloomfield 206 when he approached the City's Corporation Counsel about "the need for the City to address rent control to avoid the filing of a class action."

The Bloomfield 206 decision also provided greater incentive to the City to move forward in its efforts to reform the RCO. A few months earlier, in June 2009, the Council's rent control subcommittee was reformed as the Rent Control and Affordable Housing Committee. This was a time of political uncertainty related to the election of new members to the Council and the mayor's hasty resignation following his indictment. The subcommittee became more active in the fall of 2009 after a special election, holding a series of public meetings in which landlords, tenants and their advocates were afforded the opportunity to discuss their experiences with the existing law and changes they wanted. This activity came after the decision in Bloomfield 206, but several months before the class action complaint was filed.

Significantly, Bloomfield 206 came after the decisions in Tucci, Lewis, Rosen and Knight, all of which enforced the principle that the requirements of the 1985 RCO could not be sidestepped by a regulation or waived. With those avenues unavailable to ameliorate the inequities caused by deficiencies in recordkeeping, enforcement and the Ordinance itself, amendment of the RCO more clearly emerged as the path to reform. Councilman Peter Cunningham testified Bloomfield 206 and the other cases "required [the Council] to take action to make these changes to rent control, mitigate risks to the City." The decisions also coincided with a change in the composition of the Council to include members who were described as more "reform minded."

The class action complaint, filed in February 2010, alleges the plaintiff class was victimized by the defendants' failure to uniformly and constitutionally administer the RCO and the 2006 retroactive change in procedures, in violation of: the New Jersey Civil Rights Act (CRA), N.J.S.A. 10:6-1 to -2; 42 U.S.C.A. 1983, 1988; the Hoboken RCO and regulations; the New Jersey Constitution; and the United States Constitution. The complaint sought injunctive relief against the defendants, "restraining and enjoining them from performing legal rent calculations by applying the Ordinance requirements for periods prior to 2007," the reversal of all rent calculations made by retroactively applying the procedures adopted in 2006, compensatory damages and attorneys' fees. To a significant degree, these prayers for relief echo those in Bloomfield 206.

Within one week of the filing of the class action complaint, Citizens for the Retention of Affordable Housing in Hoboken (CRAHH), a tenants organization, submitted a proposed RCO to the subcommittee. CRAHH remained an active voice as the subcommittee's work progressed.

Plaintiffs' counsel, Charles X. Gormally, sent a letter to the City's corporation counsel, dated March 5, 2010, that referred to the "ongoing legislative process" and noted his pleasure that the Council was "serious about addressing the numerous problems" in the enforcement and administration of the RCO. Gormally zeroed in on the "current rent calculation process [as] a root cause of the fundamental unfairness of the current administration of the ordinance," and advised that the class action suit would be voluntarily withdrawn if the pertinent regulation and future rent calculations were suspended.

The litigation and efforts to revise the RCO proceeded. The trial court certified this matter as a class action and appointed Gormally and his firm as class counsel on April 1, 2010. The City filed a motion to dismiss the class action complaint, joined in by CRAHH, which was granted leave to intervene as a defendant. The motion to dismiss was denied on May 18, 2010. The parties conducted discovery.

Two ordinances were drafted in April and August 2010 and circulated to Council members, Gormally and CRAHH. The April draft was a complete rewrite of the Ordinance and deemed too expansive. CRAHH responded to the August draft in several emails, one of which was sharply critical. Another email from CRAHH referred to the "consensus issues" to be discussed. Neither draft was introduced to the Council.

In October 2010, CRAHH filed a motion for summary judgment, later joined by the City, seeking the dismissal of the class action. While the summary judgment motion was pending, class counsel met with Victor A. Afanador, who, with his law firm, had been appointed special litigation counsel for the City in September 2010. Plaintiffs proposed "two separate concepts for settlement." "One would be a business practice change" that entailed applying the policies adopted in 2006-07 prospectively. The other "legislative change" recommended was to address the prior administration of the Ordinance by changing the base year to either 2006 or 2007, correcting the failure to maintain documentation, and ensuring "some form of uniformity in the Rent Control Office's files on a going forward basis."

In December 2010, the City's Law Department assigned Afanador to assist in drafting another revision to the RCO. Over the course of two months, Afanador and subcommittee members worked on this task, receiving input from both Gormally and tenant advocates regarding proposed amendments to the RCO and the class action litigation.

On January 3, 2011, the trial court denied defendants' motion for summary judgment.

A draft amendment was circulated on December 22, 2010. A proposed amendment to the RCO was listed for first reading on the City Council's next scheduled meeting on January 19, 2011. However, instead of proceeding on that date, a meeting of the subcommittee was scheduled for a public discussion of the proposed changes.

After reviewing the proposed amendment, Gormally sent an email to Afanador that included the following

[T]he Class Representatives believe that the proposed ordinance, particularly section C[6] addresses much of the core dispute as set forth in the complaint. . . . [I]f the ordinance is adopted and includes the provision as currently drafted in section C, substantial relief will be provided to the class which redresses their claims that the retroactive enforcement of the [vacancy decontrol certificate] and registration requirements violates the New Jersey Civil Rights Law.

Gormally also asserted plaintiffs' position that the class action "was the catalyst for resolution of the allegations," warranting an award of counsel fees.

The draft amendment7 was ultimately presented to the Council as Ordinance Z-88 and passed its first reading on February 16, 2011. Z-88 amended the RCO as follows

1. October 1, 1985 was established as the base year for rent control and legal rent calculations.

2. Landlords were required to provide each tenant with a disclosure statement that included a detailed description of the tenant's rights under the RCO and notice that a failure to request a legal rent calculation within two years of service of the disclosure statement barred a refund or credit for overpayment of rents.

3. A two-year statute of limitations, running upon service of the disclosure statement, was established for claims for refund or credit for excess rents.

4. A two-year period of repose was established for the collection of rent overcharges.

5. Landlords were permitted to submit "credible alternative proofs," in the absence of a filed registration statement or vacancy decontrol certificate, "[f]or the purpose of calculating the earliest date of a verifiable rent and determining the legal rent of the dwelling, including . . . the consideration of a vacancy."

6. The Board was granted "equitable authority to depart from the strict interpretation of the provisions of [the RCO] in instances where fairness requires equitable intervention."

After the vote, Gormally sent an email to Afanador and the City's corporation counsel in furtherance of settlement. Noting the passage provided "an opportune moment" for resolving the class action lawsuit, he identified a number of "other pending issues" that could be resolved in a settlement: (1) "a specific mechanism to perform rent calculations under the new ordinance"; (2) "'pipeline' relief to certain class members relating to their calculations"; (3) "a modest class representative stipend"; (4) "agreed upon language for the Disclosure Statement [to be supplied to tenants] as well as the format that it should take within a class member's lease agreement"; (5) "[c]lass release to the City"; and (6) attorney fees. CRAHH counsel also sent an email to Bhalla, raising what she termed "critical issues" regarding Z-88.

Z-88 passed unanimously following a second reading on March 2, 2011, was approved by the mayor and became effective on March 31, 2011. Although representatives of both tenants and property owners were consulted during the deliberative process that culminated in the passage of Z-88, there was yet another referendum seeking to repeal and litigation about that effort, as recounted in Tumpson v. Farina, 218 N.J. 450, 457-59 (2014). When the public question to repeal Z-88 was presented to the voters on November 8, 2011, it was defeated.

At trial, defendants countered plaintiffs' contention that the instant lawsuit was a catalyst for the passage of Z-88. The record includes evidence showing the importance of other factors that preceded or were otherwise independent of the lawsuit in effecting the changes implemented in Z-88.

Three of the major provisions were included in DR-207, the 2005 ordinance that was repealed within two months when a referendum petition was threatened. Like Z-88, DR-207 required landlords to provide tenants with a written disclosure statement regarding the RCO and the two-year period of limitations for filing an application for a rent rebate, which began upon service of the disclosure statement. Like Z-88, DR-207 limited the amount of any rebate for previously overpaid rent to two years' rent.

The record also included evidence of the nexuses between reforms in Z-88 and factors independent of the class action. By way of example, Bhalla testified that CRAHH's counsel had advised there would be no objection to a statute of limitations in Z-88 if the tenants received a written disclosure statement, setting forth their rights.

Neither the complaint nor any settlement offer sought the inclusion of an "equity provision" permitting the Board to deviate from the ordinance where "fairness require[d]." The grant of equitable authority explicitly cured the deficiency addressed in the trial court's decision in Lewis v. Mumma, supra, slip op. at 17-18, holding the Board lacked authority to waive filing requirements and allow rent increases as a form of equitable relief. Bhalla testified this provision was added at the suggestion of subcommittee members to ease tenants' concerns and make the ordinance more politically viable.

In late 2010, plaintiffs did suggest a change in the base year to 2006 or 2007. However, Bhalla testified the change effected in Z-88, from 1981 to 1985, had already been the subject of consensus in the subcommittee.

Although plaintiffs repeatedly asserted Z-88 satisfied their claims, a comparison of the requests made in settlement offers with the evolution of Z-88 fails to show that the reforms adopted were directly responsive to plaintiffs' requests. By way of example, two of the key suggestions in plaintiffs' October 2010 proposal were that the policies adopted in 2006-07 be applied prospectively or, alternatively, that the base year be identified as 2006 or 2007. The drafting that culminated in Z-88 began shortly thereafter, in December 2010. Neither of these suggestions were included. Similarly, after Z-88 was passed, plaintiffs' counsel identified several issues that remained unresolved as subjects for settlement.

II.

Plaintiffs contend the trial court erred in denying the class counsel fees pursuant to N.J.S.A. 10:6-2(f), which permits the award of reasonable attorney's fees and costs to the "prevailing party" in an action under N.J.S.A. 10:6-2(c).8 We disagree.

Under New Jersey precedent, a lawsuit need not result in a judgment or enforceable consent decree for a litigant to qualify as a "prevailing party" entitled to an award of attorney's fees under a fee-shifting statute. It is sufficient if the lawsuit "achieves the desired result because [it] brought about a voluntary change in the defendant's conduct." Mason v. City of Hoboken, 196 N.J. 51, 72 (2008) (citation omitted). Our Supreme Court adopted a standard for determining whether a litigant is a prevailing party that was articulated in Nadeau v. Helgemoe, 581 F.2d 275 (1st Cir. 1978), and described the catalyst theory as a two-part test

(1) there must be "a factual causal nexus between plaintiff's litigation and the relief ultimately achieved;" in other words, plaintiff's efforts must be a "necessary and important factor in obtaining the relief," and (2) "it must be shown that the relief ultimately secured by plaintiffs had a basis in law."

[Mason, supra, 196 N.J. at 73 (quoting Singer v. State, 95 N.J. 487, 495, cert. denied, 469 U.S. 832, 105 S. Ct. 121, 83 L. Ed. 2d 64 (1984)).]

See also D. Russo, supra, 417 N.J. Super. at 389-90.

The trial court must "conduct [a] fact-sensitive inquiry on a case-by-case basis, evaluating the reasonableness of, and motivations for, an agency's decisions, and viewing each matter on its merits." Mason, supra, 196 N.J. at 79. When "the extent and timing" of the relief obtained by a litigant "strongly suggests a causal link between the litigation and the actions taken by defendants, the burden shifts to defendants to show that plaintiffs' suit was not a catalyst for the actions taken." Jones v. Hayman, 418 N.J. Super. 291, 306 (App. Div. 2011); see also Nadeau, supra, 581 F.2d at 281 ("[T]he chronological sequence of events [is] an important, although clearly not definitive factor, in determining whether or not defendant can be reasonably inferred to have guided his actions in response to plaintiff's lawsuit."). When such a shift is appropriate, defendants may satisfy the burden "by producing evidence showing that the actions taken were wholly independent of plaintiffs' legal efforts." Jones, supra, 418 N.J. Super. at 306.

Judge Edward T. O'Connor, Jr. conducted a plenary hearing over eleven days, from mid-March to mid-September 2012, on the issue of whether the class action lawsuit was a catalyst for the adoption of Z-88. Judge O'Connor identified the applicable legal standard, made credibility assessments9 and findings of fact and concluded plaintiffs failed to meet their burden as to the first prong of the catalyst theory test. Although that deficiency was fatal to their cause, Judge O'Connor went on to conclude their lawsuit had a basis in law that would satisfy the second prong.10

In challenging the trial court's decision, plaintiffs argue the trial court applied an erroneous legal standard. They contend the court's consideration of whether any settlement agreement had been in place prior to adoption of the ordinance reflected the court's view that final settlement on all issues was required before they could be deemed the prevailing party. They also argue the court's references to their failure to prove the class action was "the" catalyst for change here conflicted with the applicable legal requirement, that the lawsuit only had to have been a catalyst, Mason, supra, 196 N.J. at 73-74. Finally, they assert the overwhelming weight of evidence showed that defendants had steadfastly declined to take any action over a period of twenty years to fix the ordinance, and finally decided to act only after many of their pretrial motions proved unsuccessful, settlement discussions with class counsel had been underway, open public meetings had afforded class members an opportunity to discuss the action with councilmembers, and defense counsel had drafted key aspects of the ordinance to address plaintiffs' claims. Although we review judgments and not analyses, Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (2001), we find no merit to plaintiffs' criticisms of Judge O'Connor's decision.

Each side in this lawsuit claimed credit for the passage of Z-88 and took the position that the opposing side did nothing of consequence to realize that goal. Based upon a careful review of the evidence, Judge O'Connor rejected both arguments.

Quite properly, Judge O'Connor noted the progress of plaintiffs' lawsuit within the context of "what was going on beside the class action." All these facts were relevant to an evaluation of "the reasonableness of, and motivations for," the City's decision to amend the RCO in a fact-sensitive inquiry. Mason, supra, 196 N.J. at 79.

Judge O'Connor acknowledged the progress of the class action. The class was certified; plaintiffs defeated motions by defendants and the intervenor to dismiss and to seek leave for appeal. But, he observed, "[t]he case was proceeding in the ordinary course," with no affirmative relief granted to plaintiffs. Although the judge did not view the award of such relief as necessary proof, he found the absence of such relief grounds for distinguishing Jones and D. Russo, because in those cases there was a direct correlation between relief granted in the action and corrective action by the defendant, providing compelling evidence of the requisite causal nexus. In contrast, "[n]othing of any critical significance happened in this case" that could be identified as "moving the Council to adopt Z-88." Judge O'Connor found that, "litigation wise," the Bloomfield 206 decision "more than anything . . . moved the City to realize that it was time to do something about the Rent Control Ordinance."

Judge O'Connor noted the various factors that had "set the stage" for reform of the RCO: twenty years of mismanagement of the RCO; "years of complaints; the 1996 joint task force report; the series of rent control lawsuits culminating in Bloomfield 206; and the 18 months of work by the Subcommittee."

To be sure, there were obstacles to the arrival at a consensus. However, the judge rejected plaintiffs' contention that it was their counsel's meetings with Afanador and settlement overtures that made the difference. Contrary to plaintiffs' argument on appeal, the judge did not opine that their proofs required a settlement be in place. Rather, the judge reasoned that, given the history of efforts to reform the RCO and the political risk to the Council members, it was unlikely that the posture of the settlement discussions provided sufficient incentive for all nine Council members to "fall[] on the sword" and "risk[] their political careers to vote in favor of Z-88."

Judge O'Connor supported his analysis with facts drawn from the record. The 2005 amendment was repealed "at the first mention of a referendum." The divided Council's response to Z-88 was "unprecedented," the result of "tremendous consensus building" that was unlikely to occur in the short period between plaintiffs' counsel's settlement offer in "the end of December 2010 and the third week of January 2011, when the major drafting of Z-88 was occurring." He noted further that, after Z-88 passed on first reading, plaintiffs' counsel still sought the resolution of issues not addressed in the ordinance as part of a settlement.

To support their arguments of legal error, plaintiffs cherry-pick snatches of the trial court's oral decision that, upon further scrutiny, fail to reveal reliance upon erroneous legal principles. Plaintiffs' challenge to the court's findings as to the sufficiency of the evidence fails as well.

A determination as to whether the class action was a "necessary and important factor" plainly requires consideration of all factors that contributed to the outcome and an assessment of the lawsuit's importance relative to other influences. If the lawsuit were viewed in isolation, the judge would be severely hampered in conducting a fact-sensitive inquiry as to "the reasonableness of, and motivations for" the City's actions in passing Z-88. Mason, supra, 196 N.J. at 79.

Here, Judge O'Connor dismissed defendants' assertion that the lawsuit "had nothing to do with the passage of Z-88," but concluded the action fell short of being a "necessary and important factor" in the passage of Z-88. Id. at 73 (quoting Singer, supra, 95 N.J. at 494). It is undisputed that the mismanagement of the RCO was a flashpoint for political strife and multiple lawsuits for decades. The record provides ample support for the judge's conclusions that the effect of prior lawsuits "set the stage" for reform before the class action was filed and that Bloomfield 206 was the most effective litigation in moving the process forward.

This was a legislative process that naturally called for the input of conflicting voices, which were heard and heeded in the process here. The record shows the Council embarked upon obtaining such input by forming a subcommittee in June 2009, holding public hearings and consulting with advocates for property owners and tenants before the class action was filed. The history of prior failed efforts to amend the ordinance as well as the challenge to Z-88 that followed - also supported the judge's finding that Council members faced political risk in supporting the amendment, requiring the shoring up of political will and a consensus among the members. These were all formidable factors that merited substantial weight in evaluating "the reasonableness of, and motivations for" the City's actions in passing Z-88. Mason, supra, 196 N.J. at 79. The record also provides credible support for a finding that the reform provisions of Z-88 had origins that pre-dated or were independent of the class action, such as the incorporation of provisions that mirrored those in DR-207, and Bhalla's testimony regarding the equity provision and the selection of 1985 as the base year for rent calculations.

The "timing and extent of relief" afforded here does not suggest a different outcome. The relief provided by Z-88 was intended to be a global resolution of issues affecting adverse groups tenants as well as the plaintiff property owners. Moreover, as the trial court noted, even after Z-88 was passed, plaintiffs' counsel identified major issues that needed to be addressed.

In sum, the class action lawsuit cannot be entirely discounted as having some influence in the legislative process here. However, a causal link was not so "strongly suggest[ed]" to warrant a shift in the burden of proof to defendants. See Jones, supra, 418 N.J. Super. at 306. When the effect of the lawsuit is assessed in the totality of the circumstances, the lawsuit was but one among many factors of equal or more compelling weight, such as the decision in Bloomfield 206, in promoting the changes implemented. Under these circumstances, we agree with Judge O'Connor that the lawsuit was not a "necessary and important factor" in the passage of Z-88 and that the first prong of the catalyst theory test was not satisfied. As a result, we affirm the order denying plaintiffs' request for counsel fees.

III.

In addition to the "catalyst" motion we have discussed, plaintiffs made motions after the passage of Z-88 relative to the complaint. In May 2012, plaintiffs sought the dismissal of Counts I and III as moot, asserting that the passage of Z-88 a year earlier provided the relief requested in their complaint.11 Count I sought declaratory, monetary and injunctive relief; Count III sought injunctive relief, "staying and enjoining the performance of future Rent Calculations pending the resolution of this matter."12

In October 2012, the trial judge13 granted plaintiffs' motion for leave to amend the complaint to withdraw the demand for compensatory damages, but declined to deem the remainder of their claims moot. He reasoned that although adoption of the new ordinance may have mooted their claims for injunctive relief as to future rent control calculations, claims for injunctive relief as to existing calculations remained viable.

In April 2013, plaintiffs filed a motion for partial summary judgment, seeking "an Order declaring that the City Defendants' enforcement (between 2006 and 2011) of the Hoboken Rent Control Ordinance's registration statement and vacancy decontrol certificate filing requirements to the period of 1981-1985 was unconstitutional as a matter of law." Defendants cross-moved for summary judgment on all claims on grounds of qualified immunity.

Plaintiffs filed another motion, in May 2013, seeking leave to file an amended complaint and to reinstate the request for compensatory damages.

The trial judge granted defendants' motion for summary judgment, denied plaintiffs' motion for the same relief,14 and denied their motion for leave to amend as moot. She later denied plaintiffs' motion for reconsideration in an order and written opinion.

We first consider plaintiffs' argument that the trial court erred in finding that all defendants, including the municipality, enjoyed qualified immunity on all claims. The trial judge found that qualified immunity applied to the individual defendants and that, because the City's liability could not be based upon their actions, immunity shielded the City as well. We review this question of law, Wildoner v. Borough of Ramsey, 162 N.J. 375, 387 (2000), de novo. Zabilowicz v. Kelsey, 200 N.J. 507, 512-13 (2009).

Although the argument before the trial court centered on whether the City could derive qualified immunity from its application to the individual defendants, we view the nature of the claims that existed at the time the motion was considered to be the threshold inquiry. The defense of qualified immunity is applicable to claims for money damages brought pursuant to 42 U.S.C.A. 1983 cases and the CRA, but not to claims for injunctive relief. Tumpson, supra, 218 N.J. at 485; Gormley v. Wood-El, 218 N.J. 72, 115-16 (2014); Ramos v. Flowers, 429 N.J. Super. 13, 24 (App. Div. 2012). The arguments presented on appeal do not identify any claim for money damages that survived the order granting plaintiffs' motion to dismiss the demand for compensatory damages and, we note, plaintiffs' subsequent motion sought the reinstatement of a demand for money damages. Therefore, if the only claims extant at the time of the motion sought injunctive relief, no further discussion is necessary. For the sake of completeness, we review the principles that would apply to a claim for money damages.

The doctrine of qualified immunity shields "government officials performing discretionary functions generally . . . from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Morillo v. Torres, 222 N.J. 104, 116 (2015) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396, 410 (1982)). We employ the test set forth in Saucier v. Katz, 533 U.S. 194, 200, 121 S. Ct. 2151, 2155, 150 L. Ed. 2d 272, 281 (2001), which has two elements: (1) viewing the facts in the light most favorable to the plaintiffs, a constitutional right would have been violated, and (2) "whether the right was clearly established." Id. at 201, 121 S. Ct. at 2156, 150 L. Ed. 2d at 281. It is within a trial court's discretion to consider the second of these criteria first, without resolving whether any legitimate constitutional right has been violated. Pearson v. Callahan, 555 U.S. 223, 236, 129 S. Ct. 808, 818, 172 L. Ed. 2d 565, 576 (2009). We choose to do so here.

For a right to be clearly established, "[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S. Ct. 3034, 3039, 97 L. Ed. 2d 523, 531 (1987). Officials are expected to "apply general, well-developed legal principles," in "analogous factual situations." Gormley, supra, 218 N.J. at 114 (citation omitted). "Although officials need not predic[t] the future course of constitutional law, they are required to relate established law to analogous factual settings." Ibid. (citation omitted). The inquiry "must be undertaken in light of the specific context of the case, not as a broad general proposition." Saucier, supra, 533 U.S. at 201, 121 S. Ct. at 2156, 150 L. Ed. 2d at 281. The "dispositive inquiry . . . is whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted." Id. at 202, 121 S. Ct. at 2156, 150 L. Ed. 2d at 282; see also Wood v. Moss, ____ U.S. ____, ____, 134 S. Ct. 2056, 2067, 188 L. Ed. 2d 1039, 1051 (2014).

Gormley is instructive as an example of a clearly established right. The plaintiff, an attorney, was brutally attacked at a state-run psychiatric hospital by a mentally ill patient whom she was assigned to represent. Gormley, supra, 218 N.J. at 84. In her civil action against the chief executive officer of the hospital and officials at the Department of Human Services, she alleged the defendants violated her constitutional right to be free from state-created danger, in violation of 42 U.S.C.A. 1983, and the CRA. Id.at 84-85. In determining whether the right claimed was "clearly established," the Court traced this right to a 1989 United States Supreme Court decision, DeShaney v. Winnebago Cnty. Dep't of Soc. Servs., 489 U.S. 189, 201, 109 S. Ct. 998, 1006, 103 L. Ed. 2d 249, 263 (1989), which first considered the existence of such a right, and the subsequent development of a test for establishing the elements of such a claim. Gormley, supra, 218 N.J. at 98-104; see Bright v. Westmoreland Cnty., 443 F.3d 276, 281 (3d Cir. 2006). The Court noted that, in 1992, the Court of Appeals for the Ninth Circuit applied the doctrine to an institutional setting like the facility where Gormley was attacked. Gormely, supra, 218 N.J. at 106; see L.W. v. Grubbs, 974 F.2d 119 (9th Cir. 1992), cert. denied, 508 U.S. 951, 113 S. Ct. 2442, 124 L. Ed. 2d 660 (1993). Finally, the Court observed that in 2003 and 2004, this court adopted and applied the federally defined state-created danger doctrine. Gormley, supra, 218 N.J. at 114; see Gonzales v. City of Camden, 357 N.J. Super. 339, 347 (App. Div. 2003) Estate of Strumph v. Ventura, 369 N.J. Super. 516, 525-26 (App. Div.), certif. denied, 181 N.J. 546 (2004). Thus, the Court concluded that the "right to be free from state-created dangers was clearly established" when Gormley was attacked in 2005. Gormley, supra, 218 N.J. at 114.

The "clearly established" right claimed by plaintiffs here is that defendants actions, beginning in 2006, applying the 1985 RCO's filing requirements retroactively were confiscatory. However, the legal authority they rely upon, the trial court's decision in Bloomfield 206, was not rendered until September 2009. Focusing on "the specific context of the case," Saucier, supra, 533 U.S. at 201, 121 S. Ct. at 2156, 150 L. Ed. 2d at 281, the trial court decisions regarding "analogous factual situations," Gormley, supra, 218 N.J. at 114, decided prior to Bloomfield 206, all required the enforcement of the 1985 RCO filing requirements but did not explicitly discuss how that ordinance should apply to past periods when those requirements did not exist. Unlike the cases establishing the right to be free of state-created danger, there was no binding precedent applicable to the retroactive enforcement of the 1985 filing requirements. See Id. at 114 (noting that prior Appellate Division decisions on state-created danger were binding precedent). Confronted with cases that required the application of the 1985 requirements, defendants were not obliged to predict that the practice followed in applying them retroactively would be deemed unconstitutional. See ibid. We find, under the facts here, it would not "be clear to a reasonable officer that [such] conduct was unlawful in the situation he [or she] confronted." Saucier, supra, 533 U.S. at 202, 121 S. Ct. at 2156, 150 L. Ed. 2d at 282. Therefore, the individual defendants were properly afforded qualified immunity.

Plaintiffs argue that, even if qualified immunity shields the individual defendants from liability, the City cannot avoid liability based on the good faith of its officers. We agree that the qualified immunity afforded officers based upon their good faith does not automatically confer immunity upon the municipality.

The actions of the municipality, rather than the conduct of its employees, determines whether it may be liable for an alleged constitutional violation. Just as a municipality will not be liable on a respondeat superior theory "for an injury inflicted solely by its employees or agents," Monell v. Dep't of Soc. Servs., 436 U.S. 658, 694, 98 S. Ct. 2018, 2037, 56 L. Ed. 2d 611, 638 (1978), it "may not assert the good faith of its officers or agents as a defense to liability" for such a claim. WHS Realty Co. v. Town of Morristown, 323 N.J. Super. 553, 576 (App. Div.) (quoting Owen v. City of Independence, 445 U.S. 622, 638, 100 S. Ct. 1398, 1409, 63 L. Ed. 2d 673, 685-86 (1980)), certif. denied, 162 N.J. 489 (1999). It is when the "execution of a government's policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts the [constitutional] injury that the government as an entity is responsible." Monell, supra, 436 U.S. at 694, 98 S. Ct. at 2037-38, 56 L. Ed. 2d at 638; see also WHS Realty, supra, 323 N.J. Super. at 576.

The case for finding that the retroactive application of the 1985 RCO requirements was the product of the City's policy is strong, if not undisputed. However, it remains the case that qualified immunity applies only to claims for money damages, which were apparently abandoned here. Therefore, qualified immunity presents no bar to the award of injunctive relief against the City on remaining claims.

IV.

Plaintiffs lastly argue that the court erred by denying them leave to amend their complaint in three ways: (1) to name Kristin Brown as an additional class representative; (2) supplement the original complaint to include transactions that occurred since the original complaint was filed; and (3) revive their compensatory damage claims. After granting summary judgment to defendants and disposing of the case, the trial court denied the motion as moot. Plaintiffs concede that if summary judgment was properly granted, their motion to amend was moot. However, they argue their motion to amend should have been granted and not deemed moot because the grant of summary judgment was erroneous. Defendants argue the claims plaintiffs sought to include in these amendments were not ripe, and, further, they would have been prejudiced if the motion had been granted so late in the proceeding, after discovery had concluded.15

The court rules permit a plaintiff to amend its complaint once an answer has been filed, "only by written consent of the adverse party or by leave of court which shall be freely given in the interest of justice." R. 4:9-1. Leave may be had at any stage of the proceedings, so long as the amendment does not unduly prejudice the opposing party and would not be futile. Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 500-01 (2006). Although motions to amend "are ordinarily afforded liberal treatment, the factual situation in each case must guide the court's discretion, particularly where the motion is to add new claims or new parties late in the litigation." Bonczek v. Carter-Wallace, Inc., 304 N.J. Super. 593, 602 (App. Div. 1997), certif. denied, 153 N.J. 51 (1998).

The motion to amend came over two years after Z-88 was passed. Plaintiffs have repeatedly asserted the passage of this ordinance satisfied the claims alleged in the class action lawsuit and voluntarily withdrew their claims for money damages, leaving only their claims for injunctive relief based upon the application of Z-88's provisions.

The impetus for the first of the proposed amendments was a February 2013 decision that Regulation 18:62(b), a regulation applicable to the decontrol of condominium and co-op units, was ultra vires and improper. The proposed amendment is a preemptive challenge to a harm that is only predicted. It alleges that Brown and other class members who relied upon that regulation and charged rents accordingly "will be advised that the rents being charged are non-compliant." The result alleged is "complete doubt and insecurity regarding the legal rent for condominium and/or coop [sic] units subject to rent control" and class members' exposure to liability. There is no representation that Brown or any other plaintiff exhausted the administrative remedies in the RCO for settling rent control disputes.

The second proposed amendment suffers from a similar defect. Plaintiffs previously filed a motion for a declaration that rent calculations performed under the prior RCO not be used to determine the legal rent for the unit. That motion was denied in March 2012 by Judge O'Connor, who found the issue was not ripe for declaratory relief because plaintiffs had not exhausted administrative remedies. Plaintiffs now ask to amend their complaint to allege that in relying upon rent calculated before Z-88, the Rent Regulation Officer and the Board are embedding the unconstitutional enforcement of the 1985 RCO into rent calculations, depriving the class of the curative provisions of Z-88. Again, the allegation is that plaintiffs will be barred from obtaining the protections of those provisions. There is no representation that they have exhausted administrative remedies under the RCO.

The proposed amendments concerned claims unripe for adjudication. The proposed new class representative and attendant claim would have launched an entirely new and substantially unrelated need for discovery, after discovery had already ended. We discern no abuse of discretion in the denial of this motion.

In sum, we affirm the trial court's decision that the class action lawsuit was not a catalyst for the passage of Z-88. We also affirm the ruling that the individual defendants are shielded by qualified immunity and note that, in the absence of any claims for money damages, qualified immunity is inapplicable to claims for injunctive relief. Finally, we affirm the trial court's decision to deny plaintiffs' motion to amend.

Affirmed.

1 Intervenor-Respondent has not filed a brief.

2 The complaint was filed on behalf of the named plaintiffs and as representatives of current and former multi-family property owners whose property was subject to the RCO.

3 The record in this case includes testimony given in Bloomfield 206 Corporation v. City of Hoboken, Docket No. L-3112-07 (Law Div. Sept. 23, 2009), aff'd, Docket Nos. A-4781-11, A-6075-11 (App. Div. Sept. 4, 2014). Diane Nieves, the principal clerk of the rent control office testified that prior to 2006, it was not required that a vacancy decontrol certificate be in the file in order to approve a previous vacancy decontrol.

4 The tenants had dismissed an earlier request for a legal rent calculation. Id. at 2-3.

5 For reasons not relevant here, the decision was not memorialized in an order until September 2010.

6 Section C of Z-88 provides a two-year period of repose, barring the collection of rental overcharges for a period in excess of two years.

7 A provision that authorized the Board to exercise equitable powers was added in a February 2011 revision.

8 Although plaintiffs made claims pursuant to 42 U.S.C.A. 1983 and 1988, only our statute permits a person to be deemed the "prevailing party" where he or she never formally obtained any relief by court order or consent decree, but rather, where a voluntary change in the defendants' course of conduct renders his or her claims moot, so long as the lawsuit was a "catalyst" for that change. D. Russo, Inc. v. Twp. of Union, 417 N.J. Super. 384, 388-91 (App. Div. 2010), certif. denied, 206 N.J. 328 (2011). Plaintiffs do not argue they are entitled to an award as a "prevailing party" under 1988.

9 Although the court found it "troubling" that the City defendants generally denied knowledge of the class action as having an impact on the legislative process, the court found the testimony of the witnesses otherwise "essentially" credible.

10 Defendants argue as an alternative basis for affirmance that Judge O'Connor erred in finding the second prong was satisfied. We need not address this argument in light of our decision.

11 In a February 2012 motion seeking a declaration that Z-88's amendments to the RCO "shall apply to all future rent calculations," plaintiffs also asserted that Z-88 "addressed each of the injunctive relief requested by the putative class as well as corrected many of the problems associated with the" RCO.

12 Count II alleged a violation of the federal statute.

13

Judge O'Connor ruled on these motions in an oral decision. The order was entered by another judge following his retirement.

14 Plaintiffs have not argued that the denial of their motion for partial summary judgment was error in this appeal.

15 Plaintiffs represent that defendants did not object to their motion to reinstate their claim for compensatory damages and defendants' opposition does not specifically address this issue.