SATENDRA NARAYAN v. STATE OF NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

SATENDRA NARAYAN and

SUDHA NARAYAN,

Petitioners-Appellants,

v.

STATE OF NEW JERSEY DEPARTMENT

OF COMMUNITY AFFAIRS, BUREAU

OF HOUSING INSPECTION, and

COMMISSIONER OF DEPARTMENT

OF COMMUNITY AFFAIRS,

Respondents-Respondents.

_____________________________

November 3, 2014

Before Judges Sabatino and Simonelli.

On appeal from the Department of Community Affairs, Agency Reference No. R445683.

Jeff Thakker, attorney for appellants.

John J. Hoffman, Acting Attorney General, attorney for respondents (Lewis A. Scheindlin, Assistant Attorney General, of counsel; Debra A. Allen, Deputy Attorney General, on the brief).

PER CURIAM

Appellants Satendra Narayan and Sudha Narayan (the Narayans) owned a multiple dwelling in Paterson (the property) which was regulated by the Hotels & Multiple Dwellings Law (HMDL), N.J.S.A. 55:13A-1 to -28, and regulations promulgated thereunder. The Narayans appeal from the August 22, 2012 final agency decision of respondent State of New Jersey Department of Community Affairs (DCA) denying a hearing regarding notices of continuing unabated violations and orders to abate violations and pay a penalty. The DCA determined the Narayans' hearing request, made in July 2012, was untimely pursuant N.J.S.A. 55:13A-18. We affirm.

We derive the following facts from the record. On April 7, 2004, the DCA's Bureau of Housing Inspection (BHI) inspected the property and found numerous violations of the HMDL. On May 19, 2004, the BHI issued an inspection report and order requiring the Narayans to abate all violations by July 18, 2004, or face penalties. The order advised the Narayans of their right to contest the order at an administrative hearing and instructed that they must request a hearing, in writing, within fifteen days after the orders were delivered and served. The Narayans received the inspection report and order but did not request a hearing.

A September 15, 2004 re-inspection revealed that all of the violations at the property were unabated. On January 19, 2005, the BHI issued a notice of statutory violation and orders to abate by February 12, 2005 and pay a $2300 penalty within thirty days of receipt of the order. The notice and orders advised the Narayans of their right to contest the orders at an administrative hearing and that they must request a hearing, in writing, within fifteen days after receipt of the orders. The Narayans received the notice and orders by certified mail but did not request a hearing or pay the penalty.

In an October 15, 2004 letter to the BHI, the Narayans claimed that they had completed all repairs. However, a May 19, 2005 re-inspection revealed that all of the violations were unabated. On August 25, 2005, the BHI issued a notice of continuing unabated violations and orders to abate by September 26, 2005 and pay an $8500 penalty within thirty days. The notice and orders advised the Narayans of their right to contest the orders at an administrative hearing and that they must request a hearing, in writing, within fifteen days after receipt of the orders. The Narayans received the notice and orders by certified mail but did not request a hearing or pay the penalty.

On December 22, 2005, the BHI notified the Narayans it would file a docketed judgment in the Superior Court in the amount of $10,800 for the January 19, 2005 and August 25, 2005 orders to pay a penalty. Thereafter, a November 30, 2006 re-inspection revealed that numerous violations were unabated. On January 25, 2007, the BHI issued a notice of continuing unabated violations and orders to abate by February 26, 2007 and pay a $9500 penalty within thirty days.1 The notice and orders advised the Narayans of their right to contest the orders at an administrative hearing and that they must request a hearing, in writing, within fifteen days after receipt of the orders. The Narayans received the notice and orders by certified mail but did not request a hearing or pay the penalty.

A May 2, 2007 re-inspection revealed there were still numerous unabated violations. On August 9, 2007, the BHI issued a notice of continuing unabated violations and orders to abate by September 10, 2007 and pay a $75,500 penalty within thirty days. The notice and orders advised the Narayans of their right to contest the orders at an administrative hearing and that they must request a hearing, in writing, within fifteen days after receipt of the orders. The BHI attempted to serve the notice and orders on the Narayans by certified mail, but the mail was returned undelivered and marked "unclaimed." In accordance with N.J.S.A. 55:13A-20(b)(1)(ii), on September 17, 2007, the BHI effectuated service on the Narayans by substitute service on the New Jersey Secretary of State.

In letters to the BHI dated June 25, 2007, August 14, 2007, December 20, 2007, January 21, 2008, June 30, 2008, and March 2, 2009, the Narayans claimed they had made all repairs and requested re-inspections and letters from the BHI to their tenants instructing the tenants to cooperate with the re-inspections. The Narayans did not assert there was a settlement agreement or request a hearing.

On January 27, 2009, the BHI docketed a judgment in the amount of $75,102 for the August 9, 2007 order to pay a penalty, and on March 13, 2009, notified the Narayans of the docketed judgment. The BHI then commenced a rent levy action and began collecting rental monies directly from the Narayans' tenants to satisfy the judgments. In a November 11, 2009 letter, the Narayans demanded that the BHI instruct the tenants to pay the rent to them. They did not assert there was a settlement agreement or request a hearing.

In a September 9, 2010 letter to the BHI, the Narayans offered to settle the judgments for $500. The BHI countered with a $65,000 offer, which the Narayans rejected. On July 28, 2011, the Narayans filed a verified complaint in the Superior Court, alleging there was a settlement agreement whereby the parties agreed that the Narayans would make the required repairs and contact the BHI to schedule re-inspections, thus avoiding fines and penalties. The Narayans claimed they subsequently made the repairs, but the BHI continually ignored their requests for re-inspections and obtained judgments against them for the penalties in violation of the alleged settlement agreement. Alternatively, they asserted their letters to the BHI constituted substantial compliance with the fifteen-day time requirement of N.J.S.A. 55:13A-18, and there were equitable grounds to extend the time requirement based on the repairs they made and the settlement agreement.

In a June 18, 2012 order and written opinion, the trial judge dismissed the complaint with prejudice, finding the Narayans failed to exhaust their administrative remedies. The judge held the Narayans must request an administrative hearing and present their arguments to the DCA regarding their claim of substantial compliance with N.J.S.A. 55:13A-18. The judge did not determine whether the hearing request should be deemed timely; rather, the judge stated the DCA must make that determination.2

On July 13, 2012, the Narayans filed a verified petition requesting an administrative hearing, raising the same arguments they raised before the trial judge. In an August 22, 2012 written decision, the DCA denied the Narayans' request. The DCA found the Narayans never requested a hearing before July 13, 2012, and their letters did not constitute a request for a hearing, as the letters made no reference to the penalties imposed. The DCA determined that even if it liberally construed the letters as informal requests for a hearing, they were sent well beyond the statutory fifteen-day period to contest the violations and penalties. The DCA concluded it lacked authority to relax the statutory filing deadline. This appeal followed.

On appeal, the Narayans contend: there was a binding settlement agreement and no evidence to the contrary; the DCA improperly refused to consider equitable grounds to extend the time requirement to file a request for a hearing; the DCA ignored the alleged spirit and intent of the trial judge's order to have a hearing; and N.J.S.A. 55:13A-6(g)3 is invalid to the extent it permits the DCA to decide whether a claim was settled without standards for the development of a factual record. We disagree with all of these contentions.

Our review of agency decisions is limited. In re Stallworth, 208 N.J. 182, 194 (2011). "[A] 'strong presumption of reasonableness attaches to [an agency decision].'" In re Carroll, 339 N.J. Super. 429, 437 (App. Div.) (quoting In re Vey, 272 N.J. Super. 199, 205 (App. Div. 1993), aff d, 135 N.J. 306 (1994)), certif. denied, 170 N.J. 85 (2001). "In order to reverse an agency's judgment, [we] must find the agency's decision to be 'arbitrary, capricious, or unreasonable, or [] not supported by substantial credible evidence in the record as a whole.'" Stallworth, supra, 208 N.J. at 194 (alteration in original) (quoting Henry v. Rahway State Prison, 81 N.J. 571, 579 (1980). The burden of proving an agency action is arbitrary, capricious, or unreasonable is on the challenger. Bueno v. Bd. of Trs. of the Teachers' Pension & Annuity Fund, 422 N.J. Super. 227, 234 (App. Div. 2011) (citation omitted).

To determine whether agency action is arbitrary, capricious, or unreasonable, we must examine

(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.

[Stallworth, supra, 208 N.J. at 194 (quoting In re Carter, 191 N.J. 474, 482-83 (2007)).]

We "'may not substitute [our] own judgment for the agency's, even though [we] might have reached a different result.'" Ibid. (quoting Carter, supra, 191 N.J. at 483). "This is particularly true when the issue under review is directed to the agency's special 'expertise and superior knowledge of a particular field.'" Id. at 195 (quoting In re Hermann, 192 N.J. 19, 28 (2007)). Furthermore, "[i]t is settled that '[a]n administrative agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference.'" E.S v. Div. of Med. Assistance & Health Servs., 412 N.J. Super. 340, 355 (App. Div. 2010) (second alteration in original) (quoting Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001)). "Nevertheless, 'we are not bound by the agency's legal opinions.'" A.B. v. Div. of Med. Assistance & Health Servs., 407 N.J. Super. 330, 340 (App. Div.) (quoting Levine v. State Dep't of Transp., 338 N.J. Super. 28, 32 (App. Div. 2001)), certif. denied, 200 N.J. 210 (2009). "Statutory and regulatory construction is a purely legal issue subject to de novo review." Ibid. (citation omitted). Applying the above standards, we discern no reason to disturb the DCA's decision.

N.J.S.A. 55:13A-18 provides, as follows, in pertinent part

Any person aggrieved by any ruling, action, order, or notice of the commissioner pursuant to this act, except any order or notice issued by the commissioner pursuant to [N.J.S.A. 55:13A-12(d), -15(e) and -17] of this act shall be entitled to a hearing before the commissioner. The application for such hearing must be filed with the commissioner within 15 days of the receipt by the applicant thereof of notice of the ruling, action, order or notice complained of. No such hearing shall be held except upon 15 days' written notice to all interested parties, and each such hearing shall be held within 30 days of the receipt of the application therefor.

[N.J.S.A. 55:13A-18 (emphasis added.]

Because the fifteen-day requirement is statutorily mandated, the DCA lacked authority to extend the time period and consider the Narayans' untimely request for a hearing. Dep't of Cmty. Affairs v. Wertheimer, 177 N.J. Super. 595, 599 (App. Div. 1980).

In addition, there were no equitable grounds for extending the time requirement here. The Narayans' misapply Svilokos v. Dep't of Cmty. Affairs, 220 N.J. Super. 441 (App. Div. 1987) to argue the contrary. In Svilokos, the DCA served a notice of violation and order of abatement on the property owner by substituted service on the Secretary of State. Id. at 444. The owner claimed he only became aware of the violations when he received an order to pay an inspection fee and penalty approximately five months after the DCA served the notice and order, and filed a request for a hearing within fifteen days thereafter. Id. at 443. We remanded on equitable grounds based on evidence that the DCA previously considered and adjudicated many of the violations the owner contested. Id. at 445. Because the DCA did not deny this fact, we determined the commissioner should be afforded the opportunity to reconsider his decision on equitable grounds in the interest of justice. Ibid.

Unlike in Svilokos, the Narayans received the May 9, 2004 inspection report and order to abate and were well aware of the violations within time to comply with the fifteen-day requirement of N.J.S.A. 55:13A-18. Because the Narayans never requested a hearing, the violations were uncontested and appropriately were not considered for their substance on review by the Commissioner.

Further, the record confirms there were four re-inspections, numerous violations remained unabated as of the last re-inspection on May 2, 2007, the Narayans received all of the notices of continuing unabated violations and orders to abate and pay a penalty within time to comply with N.J.S.A. 55:13A-18, they received notice of the docketed judgments, and they never asserted there was a settlement agreement or requested a hearing in any of their letters to the BHI. We are satisfied there was no competent proof of a mutually-executed settlement agreement and the Narayans' letters do not constitute substantial compliance with N.J.S.A. 55:13A-18. As a matter of law, the DCA's counteroffer to settle the case for a reduced $65,000 penalty, which the Narayans did not accept, rendered the Narayans' $500 settlement offer a nullity. Berberian v. Lynn, 355 N.J. Super. 210, 217 (App. Div. 2002), aff'd in part and modified in part, 179 N.J. 290 (2004). We conclude that the DCA's decision to deny the Narayans' untimely request for a hearing was amply supported by the record and was not arbitrary, capricious, or unreasonable.

Affirmed.

1 The $9500 penalty was included in a corrected judgment the BHI docketed on January 27, 2009.

2 The Narayans did not appeal the trial court's dismissal order.

3 N.J.S.A. 55:13A-6(g) empowers the Commissioner

[t]o assess penalties and to compromise and settle any claim for a penalty for any violation of the provisions of [N.J.S.A. 55:13A-1 to -28] in such amount in the discretion of the commissioner as may appear appropriate and equitable under all of the circumstances of said violation in any of the actions or proceedings mentioned in [N.J.S.A. 55:13A-6(f)].