Jersey Central Power & Light Co. v. Kingsley Arms, Inc.

Citations: 271 N.J. Super. 68; 637 A.2d 1303; 1993 N.J. Super. LEXIS 916

Court: New Jersey Superior Court Appellate Division; August 31, 1993; New Jersey; State Appellate Court

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Defendant Asbury Park Housing Authority (APHA) objects to a levy on its bank accounts placed by plaintiff Kingsley Arms, Inc. (Kingsley), which is seeking to compel the turnover of the levied funds. Central to this dispute is the interpretation and constitutionality of N.J.S.A. 40A:12A-34, a statute that has not been previously addressed by the courts regarding its constitutionality or its application in similar situations. 

Kingsley owns the Kingsley Arms Apartments and has pursued damages due to APHA's chronic failure to pay rent, leading to judgments against APHA totaling $250,155.31, including two specific judgments from 1993. Kingsley secured a writ of execution to satisfy these judgments, which resulted in the Sheriff of Monmouth County levying on two of APHA’s bank accounts. APHA contends that N.J.S.A. 40A:12A-34 exempts its property from such execution, while Kingsley argues that the statute does not apply in this case, or alternatively, that if it does, it is unconstitutional.

The legislative history of the Local Redevelopment and Housing Law indicates that the statute was intended to consolidate and simplify existing laws governing redevelopment agencies and housing authorities, establishing a comprehensive framework for their operations.

Kingsley challenges the applicability of the statutory exemption under N.J.S.A. 40A:12A-34 concerning the Asbury Park Housing Authority (APHA) on several grounds:

1. **Definition of 'Housing Authority'**: Kingsley contends that APHA does not qualify as a 'housing authority' as defined in N.J.S.A. 40A:12A-3 because the City of Asbury Park did not officially reconstitute APHA following the statute's enactment. However, this interpretation prioritizes form over substance, as the statute does not mandate such reconstitution. The legislative intent was to simplify the governance of housing authorities, indicating that APHA can invoke the statute.

2. **Timing of the Levy**: N.J.S.A. 40A:12A-34, effective retroactively to January 18, 1992, governs levies on housing authority property. Kingsley argues that since the lease with APHA predates this statute, it should be allowed to levy on APHA’s bank accounts. Nevertheless, the court asserts that all relevant actions occurred after the statute's adoption, confirming that N.J.S.A. 40A:12A-34 governs the case, irrespective of the lease's earlier dates.

3. **Exemption of Rent Claims**: Kingsley argues that the Legislature could not have intended to exempt housing authorities from all claims, such as rent, under N.J.S.A. 40A:12A-34. By comparing it to N.J.S.A. 40A:12A-16a(2), which allows housing authorities to lease property, Kingsley suggests that landlords should still be able to enforce rent judgments. However, this interpretation conflicts with the statute's intent to protect housing authorities from execution on their properties.

Overall, Kingsley's arguments are systematically addressed, emphasizing the statute's intent and the inapplicability of his claims based on timing and interpretation of the law.

Kingsley’s argument relies on claiming ambiguity in the phrase "all property" found in N.J.S.A. 40A:12A-34. The court finds no ambiguity in the terms, affirming that "all property" clearly encompasses all assets of the APHA, including the disputed bank accounts. The court emphasizes that it is not its role to question the Legislature's reasoning or the statute's consequences, focusing instead on the statute's explicit language. The court concludes that "all property" means exactly that—any property subject to execution.

Moving to constitutional concerns, the court addresses the Takings Clause, noting that both the U.S. and New Jersey Constitutions prohibit taking private property for public use without just compensation. Traditionally, a "taking" requires physical appropriation, although New Jersey recognizes that noninvasive governmental actions may also lead to compensable takings in specific circumstances. The court cites precedents where governmental actions did not violate the Takings Clause and acknowledges that a compensable taking can occur when governmental actions significantly destroy beneficial use of property.

Kingsley contends that the statute must allow landlords to collect judgments against tenants who refuse to pay rent. However, the court highlights that APHA has not claimed it will not pay rent but will do so when financially able. Ultimately, the court concludes that exempting a redevelopment agency’s property from execution does not violate the Takings Clause, as alternative methods for enforcing judgments exist, allowing Kingsley to pursue other legal avenues for relief.

In Lyon v. City of Elizabeth, the Court of Errors and Appeals invalidated a levy against the City of Elizabeth's property, emphasizing that municipalities cannot be stripped of essential resources necessary for their operations without explicit legislative authority. The court highlighted that allowing a creditor to execute against such resources would undermine the local government's sovereignty. Similarly, the Atlantic City Housing Authority (APHA), which relies on federal funding from the Department of Housing and Urban Development (HUD) for its operations, would suffer operational disruptions if its bank accounts were executed upon by Kingsley. This concern echoed the rationale in Lyon and informed the New Jersey statute N.J.S.A. 40A:12A-34, which protects public entities' ability to function.

The court ruled that Kingsley cannot execute on APHA’s accounts, as the appropriate recourse for judgment collection lies in an action in lieu of prerogative writs, acknowledging that no unconstitutional taking occurs under this statute. Regarding the Contract Clause of the U.S. Constitution, which prohibits states from impairing contracts, the court noted that this clause is not absolute and must be balanced against the state's police power to protect citizens' interests. The court dismissed Kingsley’s claim that N.J.S.A. 40A:12A-34 violates the Contract Clause, noting that the clause’s significance has diminished and that APHA's funding issues do not substantially impair Kingsley’s contract rights, as Kingsley has alternatives for collecting judgments.

Kingsley’s claim for relief is barred by N.J.S.A. 40A:12A-34, which balances creditor rights with the State's police powers, asserting that this balance does not infringe upon the Contract Clause. The State's actions serve a compelling public purpose by ensuring safe and adequate housing for needy families. Kingsley’s attempts to execute against APHA could jeopardize this objective, hindering APHA’s ability to provide affordable housing. N.J.S.A. 40A:12A-34 modifies the collection procedure for Kingsley’s judgments without violating the Contract Clause.

Regarding the Due Process Clause, property rights, including final judgments, cannot be taken without due process. However, the abolition of one remedy does not equate to a denial of due process if an adequate alternative is provided. Kingsley’s right to enforce its judgments remains intact under N.J.S.A. 40A:12A-34, which only restricts the seizure of government property through execution. Alternative remedies, such as pursuing prerogative writs or waiting for HUD funds, are available to Kingsley, ensuring due process is upheld.

The court concludes that N.J.S.A. 40A:12A-34 does not violate the Takings, Contract, or Due Process Clauses. It assumes that the creation of APHA by the City of Asbury Park indicates an intention to ensure rent payment, rejecting any notion of unconstitutional property taking. The court agrees that a writ of mandamus could provide Kingsley with relief, maintaining that Kingsley has a remedy under these circumstances, thus affirming the statute's constitutionality. The court will now consider whether Kingsley can obtain relief through the current civil action or if a new action is necessary.

Kingsley has established a valid claim for a writ of mandamus requiring payment from APHA, as it has secured two uncontested summary judgments confirming its entitlement. APHA has not challenged Kingsley's right to payment but argues that the court should consider its budgetary constraints and the timing of payments from HUD, suggesting HUD might need to be joined as a party. However, these concerns do not affect the immediate decision on whether to issue the writ. Kingsley meets all necessary criteria for a writ of mandamus: it has a clear right to relief, APHA has a definite duty to act regarding Kingsley's claim for rent, and there is no adequate alternative remedy available due to N.J.S.A. 40A:12A-34. 

Furthermore, APHA contends that Kingsley must initiate a separate action under R. 4:69 before payment can be ordered. The court rejects this argument, emphasizing that the New Jersey Court Rules aim to promote efficient justice rather than create procedural hurdles. Requiring Kingsley to file a new action would be unnecessary and burdensome, as it has already demonstrated its right to relief. Thus, the court concludes that Kingsley does not need to start a new action to receive the relief it has proven it is entitled to and that the issues have been sufficiently addressed.

The court concludes that: (1) N.J.S.A 40A:12A-34 exempts APHA's bank accounts from execution; (2) this statute is constitutional under the Takings Clause, Contract Clause, and Substantive Due Process Clause; (3) Kingsley must seek satisfaction of its judgments against APHA through an action in lieu of prerogative writs rather than execution; (4) Kingsley has demonstrated all elements necessary for a writ of mandamus, allowing the court to issue an order for payment to Kingsley without requiring a separate action. Counsel for the plaintiff is instructed to submit an order within five days. The statute exempts property of redevelopment agencies from execution, although bondholders retain rights to enforce pledges or liens. The Attorney General will only intervene on appeal regarding the statute's constitutionality. The court notes that prior executions only barred levies on real property, and questions arise about Kingsley’s right to seek execution on interlocutory orders that are not final. The Sheriff levied amounts from APHA's bank accounts, but the court emphasizes that the 1992 amendment expanded the exemption to "all property." It acknowledges that contracts with public entities involve the understanding of sovereign powers, and although APHA agreed that the amounts were due, the court does not opine on the permissibility of execution if there is noncompliance with the writ.