DARNICE GREEN VS. MORGAN PROPERTIESÂ (L-4158-10, CAMDEN COUNTY AND STATEWIDE)
A-1247-16T3
| N.J. Super. Ct. App. Div. | Sep 21, 2017Background
- Plaintiffs (Green, Permenters, Blumberg) are tenants (or former tenants) at two Morgan-managed NJ apartment complexes; their leases (2007–2010) included a $400 "attorney's fee" charged as "additional rent" for lease-enforcement/eviction matters.
- Plaintiffs were subject to multiple summary dispossess actions; Morgan charged the $400 fee on many occasions but sometimes credited or reduced it; Morgan operated an in‑house NJ legal department that handled evictions.
- Plaintiffs sued under the New Jersey Consumer Fraud Act (CFA), alleging the $400 lease term and its enforcement were unlawful/unconscionable and resulted in ascertainable loss; the Supreme Court previously held tenants may challenge the reasonableness of the lease fee and placed the burden on defendants to justify it (Green v. Morgan Props.).
- On class-certification motion plaintiffs proposed a statewide class of all tenants charged attorney fees by Morgan from 2007 to certification; defendants submitted evidence that in-house legal costs approximated fees collected, arguing the proposed class was overbroad and individual issues predominated.
- The trial court denied class certification, finding the proposed class included many members who suffered no ascertainable loss, that individual reasonableness inquiries predominated, counterclaims for unpaid rent would overwhelm the case, and named plaintiffs might not adequately defend class members against counterclaims.
- The Appellate Division vacated and remanded: it agreed the broad class was not maintainable but held a narrowed class excluding tenants who left owing more in unpaid rent than the legal fees charged (i.e., those vulnerable to defendant counterclaims) may be certified because common questions predominate and class treatment is superior.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper class definition (overbreadth) | Class of all tenants charged the fee should be certified; the fee is an illegal debt so all charged tenants are harmed | Class including tenants who were charged but did not pay (or left owing more than fees) is overbroad and contains many with no ascertainable loss | Broad class (all charged tenants) is not maintainable; a narrowed class excluding tenants who left owing more than their charged fees may be certified |
| Predominance of common issues | Common issue: whether the $400 lease charge is an unlawful/unconscionable practice under the CFA; common proof (leases, in‑house practice, experts) predominates | Reasonableness of fees must be evaluated eviction‑by‑eviction, producing individualized inquiries that defeat predominance | Common questions about the legality/reasonableness of the $400 lease term predominate; individual damages/ascertainable loss issues do not defeat certification and can follow common resolution |
| Superiority & counterclaims (management) | Class action is superior given small individual recoveries and systemic nature of the lease term; manageable if class narrowed to avoid counterclaim exposure | Defendants may assert counterclaims for unpaid rent against many class members, making class litigation unmanageable and unfair | Counterclaims risk defeats certification of the broader class, but do not preclude certification of a narrowed class that removes tenants vulnerable to counterclaims; class action remains superior for that narrower group |
| Allocation of burdens / proof of reasonableness | Plaintiffs emphasize defendants bear burden to demonstrate the fee's reasonableness (per the Supreme Court) | Defendants contend ascertainable loss and reasonableness must be shown tenant-by-tenant | Appellate panel notes Supreme Court placed burden on defendants to justify the fee; class adjudication on whether the $400 term is reasonable is appropriate, with individual loss addressed thereafter |
Key Cases Cited
- Green v. Morgan Props., 215 N.J. 431 (Sup. Ct. 2013) (tenants may challenge lease attorney‑fee clause; defendants bear burden to justify reasonableness)
- Iliadis v. Wal‑Mart Stores, Inc., 191 N.J. 88 (2007) (liberal construction of Rule 4:32‑1; predominance and commonality analysis)
- Carter‑Reed Co., LLC v. Glob. Payments, Inc., 203 N.J. 496 (2010) (standard of review and Rule 4:32‑1 factors for class certification)
- D'Agostino v. Maldonado, 216 N.J. 168 (2013) (ascertainable loss concept under the CFA and relation to damages)
- In re Cadillac V8‑6‑4 Class Action, 93 N.J. 412 (1983) (weighing common defect/class benefits against individual issues such as causation, reliance, damages)