Green v. Morgan Properties, 215 N.J. 431

Background

Plaintiffs (tenants) were subject to eviction actions for nonpayment of rent and paid attorneys’ fees required by lease clauses ($400 if court appearance; $200 if resolved pre-appearance; 2010 form fixed $400 for any attorney service).
Corporate defendants are large apartment owners/managers; individual defendant is in‑house counsel who handled eviction matters for the corporations.
Plaintiffs sued in Superior Court asserting (1) unlawful eviction under the Anti‑Eviction Act, (2) Consumer Fraud Act (CFA) claims alleging unconscionable misrepresentation/ascertainable loss, and (3) negligent misrepresentation/malpractice. Complaint sought class relief.
Trial court granted defendants’ R.4:6‑2(e) motion and dismissed all counts with prejudice; Appellate Division reversed in part, reinstating CFA and negligence claims against corporate defendants and converting Count One dismissal to without prejudice, but reinstated claims against the individual lawyer as well.
Supreme Court granted certification to decide (a) whether fixed attorneys’ fee provisions in residential leases are treated as presumptively reasonable liquidated‑damages clauses or as additional rent subject to judicial scrutiny of reasonableness, and (b) whether the pleadings state CFA and tort claims against corporate and individual defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are fixed attorneys’ fee lease provisions presumptively valid liquidated‑damages clauses or subject to judicial reasonableness review when used in residential eviction contexts?	Lease fee is not a true liquidated‑damages clause; tenants (as adhesion contracting parties) can challenge reasonableness and the landlord bears burden to prove reasonableness.	The clause is a pre‑negotiated, enforceable liquidated sum (additional rent); thus presumptively reasonable and plaintiff must show unreasonableness.	Not liquidated damages in this context; treated as additional rent and subject to reasonableness review with burden on landlord to justify fees.
Does the complaint plausibly state a CFA claim against the corporate landlords for imposing excessive attorneys’ fees?	Yes — fees exceed actual costs (in‑house counsel) and are unconscionable, causing ascertainable loss.	No — fees are reasonable and contractual; no unlawful act.	CFA claim against corporate defendants survives Rule 4:6‑2(e); plaintiffs pleaded sufficient facts to proceed.
Can the individual in‑house attorney be held personally liable under the CFA based on the lease fee provision or fee‑sharing theory?	Individual can be liable because tenants relied on her role; fee‑sharing with employer is improper.	No — ethical rules do not create CFA liability; attorney did not draft leases or engage in acts falling within CFA.	CFA claim against the individual defendant is NOT sufficiently pleaded; reinstatement against her was error.
Do plaintiffs state a viable negligent misrepresentation / malpractice claim against corporate defendants and the individual attorney?	Plaintiffs allege misrepresentations about actual legal costs and reliance by paying fees to avoid eviction; filed affidavit of merit.	Defendants argue no misrepresentation to support negligence and attorneys generally not liable to non‑clients absent narrow circumstances.	Negligent‑misrepresentation claim against corporate defendants may proceed; claim against individual attorney for malpractice/negligent misrepresentation is not plausibly pleaded (no narrow third‑party duty alleged).

Key Cases Cited

Printing Mart–Morristown v. Sharp Elecs. Corp., 116 N.J. 739 (discusses liberal Rule 4:6‑2(e) dismissal standard)
Bosland v. Warnock Dodge, Inc., 197 N.J. 543 (defines three elements of a prima facie CFA claim)
Walker v. Giuffre, 209 N.J. 124 (attorneys’ fees governed by reasonableness principles)
MetLife Capital Fin. Corp. v. Washington Ave. Assocs., 159 N.J. 484 (definition and considerations for liquidated damages)
Wasserman’s Inc. v. Twp. of Middletown, 137 N.J. 238 (liquidated damages presumptively reasonable; burden on challenger)
Harris v. Community Realty Mgmt., Inc., 155 N.J. 212 (treats many residential leases as contracts of adhesion; protections in eviction process)
Taylor v. Housing Auth. & Urban Redev. Agency, 171 N.J. 580 (parties may treat attorneys’ fees as additional rent in certain contexts)
Petrillo v. Bachenberg, 139 N.J. 472 (circumstances where attorney owes duty to non‑clients are narrowly circumscribed)
Banco Popular N. Am. v. Gandi, 184 N.J. 161 (limits on attorney liability to third parties; duty arises where attorney knows third party will rely)
LoBiondo v. Schwartz, 199 N.J. 62 (courts reluctant to permit non‑clients to sue opposing counsel to avoid chilling advocacy)