AVALON BAY COMMUNITIES INC v. ALAN SARE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

AVALON BAY COMMUNITIES, INC.,

d/b/a FOX RUN APARTMENTS,

Plaintiff-Respondent,

v.

ALAN SARE,

Defendant-Appellant.

___________________________________________

October 28, 2014

Argued September 29, 2014 Decided

Before Judges Guadagno and Leone.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. LT-12022-12.

Alan Sare, appellant, argued the cause pro se.

Steven G. Mlenak argued the cause for respondent (Griffin Alexander, P.C., attorneys; Jennifer L. Alexander, of counsel; Mr. Mlenak, on the brief).

PER CURIAM

Alan Sare appeals from the November 7, 2013 Law Division order denying his motion for reconsideration of the May 24, 2013 order denying his motion for sanctions.1 We affirm.

Sare has resided in a Plainsboro apartment complex since 2002. Sare's last written lease was executed with a prior owner, Fox Run Apartments (Fox Run), and called for a monthly rent of $943.95. Sare signed that twelve-month lease on April 1, 2009. The lease appeared to retroactively apply a start date of October 1, 2008 and an expiration date of September 30, 2009. In the event a month-to-month term commenced following the expiration of the twelve-month term, the lease provided that the rent would become "$300 plus . . . the current monthly Rent being paid by [Sare] immediately prior to the commencement of the month-to-month tenancy." After the lease expired, Sare did not execute a subsequent lease and became a month-to-month tenant but continued paying $943.95 per month.

In December 2010, Avalon Bay Communities, Inc. (Avalon) purchased the apartment complex and attempted to have Sare execute a written lease with a rent increase. When that attempt failed, Avalon filed a complaint to evict Sare on March 21, 2011 (Docket No. LT-3069-11), but voluntarily withdrew the complaint. On August 2, 2011, Avalon served Sare a "Notice to Quit/Notice of Rent Increase." The notice provided that Sare's month-to-month lease would terminate on October 31, 2011 and offered a twelve-month lease to commence on November 1, 2011, with a monthly rent of $1,020. When Sare failed to respond or pay the increased rent, Avalon filed a complaint (Docket No. LT-13547-11) on December 27, 2011, to collect nonpayment of rent for November and December 2011. Sare filed an answer contending the new rent was unconscionable and that Avalon failed to serve proper notice.

On January 25, 2012, the trial court remarked, "this doesn't appear to be a non-payment of rent case. This is really a [N.J.S.A.] 2A:18-61.1(i) case, a failure to agree to reasonable changes and terms and conditions." Accordingly, the court dismissed Avalon's complaint without prejudice and permitted it to proceed under the appropriate statute.

Sare filed a motion for sanctions against Avalon and its attorneys for filing frivolous litigation. The motion was summarily denied.

On February 14, 2012, Avalon issued another notice to quit and notice of lease changes. This notice indicated that Sare's present lease would terminate on either March 31 or April 1, 2012 and offered a twelve-month lease with a $1,020 monthly rent. The notice further provided that if Sare failed to respond, the previous month-to-month lease would automatically renew but with the increased rent of $1,020.

Sare again failed to respond, and on April 30, 2012, Avalon filed a complaint (Docket No. LT-4149-12) seeking a judgment of possession pursuant to N.J.S.A. 2A:18-61.1(i). On May 30, 2012, the court held a hearing and again dismissed Avalon's complaint without prejudice. Avalon's counsel noted that the April 30, 2012 complaint was "for cause," rather than for nonpayment, and that Sare had received another notice similar to the notices served before the prior complaints. The court considered the February 14, 2012 notice as the first notice and held that Avalon was required to produce a second notice. Relying on Lowenstein v. Murray, 229 N.J. Super. 616 (Law Div. 1988), and RWB Newton Assocs. v. Gunn, 224 N.J. Super. 704 (App. Div. 1988), the judge held that two notices were required, and because there was no separate notice to quit, the judge dismissed the complaint. The judge also held that the notice to quit that was appended to the complaint was still in effect and permitted Avalon to file a second notice to quit followed by a complaint if Sare did not vacate the premises.

On June 4, 2012, Sare again moved for sanctions against Avalon's attorneys for frivolous litigation. According to Sare's brief,2 the court heard oral argument on July 13, 2012 and denied the motion.

On June 6, 2012, Avalon provided Sare with a notice to quit and notice of rent increase. On August 13, 2012, Avalon sent Sare another notice to quit and notice of rent increase. A cover letter accompanying the notice indicated that the notice superseded the June 6, 2012 notice and requested that Sare "disregard the previous notice." The August 13, 2012 notice indicated that Sare's present lease would terminate on October 31, 2012 and offered a twelve-month lease commencing November 1, 2012, with a monthly rent of $1,100.

Sare failed to respond to the notice and sent a check for $943.95, the amount of his rent under the October 2008 lease. Avalon did not accept the check and notified Sare on November 19, 2012 that it was going to pursue legal action, because he did not remit the correct payment.

On December 3, 2012, Avalon filed a complaint for both judgment of possession and for nonpayment of rent (Docket No. LT-12022-12). The court conducted a hearing on January 2, 2013, and after hearing argument, adjourned the matter to permit Avalon to present documentation in support of the increase in rent.

On March 14, 2013, the court dismissed Avalon's complaint, finding that the August 13, 2012 notice superseded the June 8, 2012 notice

Since only one notice was served in this case, the complaint is dismissed. That means that there [are] two notices required and the notice sent on June 6, 2012 doesn't count because that . . . purported to terminate the lease as of June 1st, but the notice sent [on] August 13th terminates it as of October 31st.

They are inconsistent, only one of them can be valid. So I have to say, [Sare] has a point. Another notice had to be provided after the August 13th notice[.]

Avalon's counsel argued that the November 19, 2012 letter constituted the second notice, but the judge concluded that the letter was not a notice of termination. The judge acknowledged, however, "this may be the elevation of form [over substance]." The judge also found, without elaboration, that the proposed rent increase from $943.95 to $1,100 "goes beyond the envelope of what I think is appropriate and I do find it to be unconscionable." The judge seemed to acknowledge that eventually Avalon would follow the proper procedures and Sare would be required to sign a lease with an increase

There is something else going on here. I don't know what it is. I would hope that it would be resolved. I will say, Mr. Sare, at some point [Avalon is] going to get this right and you're going to have to sign a lease and you can't pay $943.95 into the [distant] future.

Sare filed another motion for sanctions against Avalon and its attorneys claiming Avalon's complaints were frivolous. On May 24, 2013, the court denied the motion. On September 18, 2013, Sare moved for reconsideration of the May 24, 2013 order and claimed that it did not contain reasons for denying his motion for sanctions. Over Avalon's objection, the court permitted Sare to convert the motion for reconsideration into a hearing on his underlying motion for sanctions. In denying Sare's motion, the court noted that Sare had successfully fended off Avalon's attempts to have him sign a new lease for "quite some time" but that Avalon's arguments were made in good faith

The only way the sanctions are imposed under the frivolous lawsuit . . . statute is if there was no way a good faith argument could be made, and the plaintiff and plaintiff's counsel knew or should have known that.

And in this case that manifestly was not the case . . . . I agreed with Mr. Sare's interpretation of the notice requirements. And the other basis upon which I ruled was that I determined that the 16 percent rent increase that was being sought was . . . unconscionable . . . .

[W]hen the plaintiff's . . . counsel . . . presented the case, she truly believed that every ["]I["] had been dotted and every ["]T["] had been crossed . . . . [S]he said well, there were three notices, the defendant got three notices. Now, based on the time that they came in, I determined only one could be counted as such. But just because [Avalon's counsel] misinterpreted [the two-notice requirement] doesn't mean . . . that the action was not brought in good faith. It means that she was wrong, it doesn't mean that she was frivolous.

On appeal, Sare raises twelve points for our consideration, although many are repetitious and overlapping, and in six of these points, he reargues at excessive length the merits of his position on the underlying matter where he prevailed. After a thorough review of the record, we conclude that the arguments presented in support of all of Sare's claims lack sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only these brief comments.

Rule 1:4-8 sanctions "are specifically designed to deter the filing or pursuit of frivolous litigation." LoBiondo v. Schwartz, 199 N.J. 62, 98 (2009). A second purpose of the rule is to compensate the opposing party in defending against frivolous litigation. Toll Bros., Inc. v. Twp. of W. Windsor, 190 N.J. 61, 71-72 (2007). The rule provides for imposition of sanctions where the attorney files a pleading or a motion with an "improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation," Rule 1:4-8(a)(1), or by asserting a claim or defense that lack the legal or evidential support required by Rule 1:4-8(a)(2), (3), and (4). State v. Franklin Sav. Account No. 2067, 389 N.J. Super. 272, 281 (App. Div. 2006).

To find a complaint frivolous, a judge must find that either the complaint was commenced in bad faith, or that the nonprevailing party knew, or should have known, that the complaint could not be supported by a good faith argument. N.J.S.A. 2A:15-59.1b. Courts have strictly construed Rule 1:4-8 in determining whether particular litigation conduct warranted sanctions. Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 1:4-8 (2015) (citing K.D. v. Bozarth, 313 N.J. Super. 561, 574-75 (App. Div.), certif. denied, 156 N.J. 425 (1998)). Accordingly, Rule 1:4-8 sanctions will not be imposed against an attorney who mistakenly files a claim in good faith. Horowitz v. Weishoff, 346 N.J. Super. 165, 166-67 (App. Div. 2001).

Sanctions are inappropriate if "there is an objectively reasonable belief in the merits of an argument . . . or where the plaintiff is engaged in a legitimate effort to extend the law on a previously undecided issue." J.O. v. Twp. of Bedminster, 433 N.J. Super. 199, 221-22 (App. Div. 2013) (holding that trial court did not abuse its discretion in declining sanctions where there were no published opinions interpreting the central statute at issue), certif. denied, 217 N.J. 295 (2014); see also First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 431-33 (App. Div. 2007) (holding that an objectively reasonable belief in the merits of a claim precludes an attorney fee award); Wyche v. Unsatisfied Claim & Judgment Fund, 383 N.J. Super. 554, 560-61 (App. Div. 2006) (holding that a legitimate effort to extend the law on a previously undecided issue precludes the award of sanctions); and K.D., supra, 313 N.J. Super. at 574-75 (declining to award counsel fees where there is no showing that the attorney acted in bad faith).

Although Sare asserts that Avalon's legal position was meritless, he does not proffer any evidence that Avalon acted in bad faith or otherwise filed the complaint for an "improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation." R. 1:4-8(a)(1). Sare relies on the fact that Avalon's complaint was dismissed and that the judge did not find Avalon's arguments persuasive. Sare's assertion that Avalon's legal position was indefensible in light of the established precedent does not render the complaint frivolous under Rule 1:4-8(a)(2), (3), or (4).

Furthermore, as the history of this matter demonstrates, "landlord-tenant law is often termed highly technical[,] requiring precise compliance with statutory requirements." Kuzuri Kijiji, Inc. v. Bryan, 371 N.J. Super. 263, 273 (App. Div. 2004). Although "[t]he precision required by the [Anti-Eviction Act, N.J.S.A. 2A:18-61.1 to -61.12] . . . has not been allowed to elevate form over substance," courts must strictly and precisely construe the notice requirements for terminating a tenancy. Ibid.

As Sare concedes, Avalon served a series of first notices, but failed to serve the required second notice before filing its complaints. Thus, Avalon failed to meet the strict requirements of the Anti-Eviction statute. However, Avalon's counsel believed that the multiple first notices were sufficient, and the trial judge admitted that his decision to dismiss Avalon's complaint may be elevating form over substance. The judge also acknowledged that there is virtually no doubt that Sare was, at the time of the complaint, on notice that Avalon wanted a new lease and believed Sare was in violation of his current lease. The unusual path of this litigation, and Avalon's failure to meet the stringent technicalities required by the statute, establish that Avalon and its counsel did not file the December 3, 2012 complaint in bad faith.

The court's conclusion that Avalon brought its claim in good faith, although it "misinterpreted" the two-notice requirement, is not a clear error of judgment. Accordingly, we conclude that the court did not abuse its discretion in denying Sare's motion for sanctions.

Affirmed.

1 Although defendant's notice of appeal does not reference the May 24, 2013 order, we view the two orders together as comprising the "judgment, decision, [or] action . . . appealed from[.]" See R. 2:5-1(f)(3)(A).

2 Sare failed to provide a copy of the order denying sanctions or the transcript of the hearing on his motion.