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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3497-15T2
MOHAMMED HOSSAIN,
Petitioner-Appellant,
v.
NEW JERSEY DEPARTMENT OF
COMMUNITY AFFAIRS, SANDY
RECOVERY DIVISION,
Respondent-Respondent.
_______________________________
NEW JERSEY DEPARTMENT OF
COMMUNITY AFFAIRS, SANDY
RECOVERY DIVISION,
Petitioner-Respondent,
v.
MOHAMMED HOSSAIN,
Respondent-Appellant.
_______________________________________
Submitted August 8, 2017 – Decided August 15, 2017
Before Judges Sabatino and O'Connor.
On appeal from the New Jersey Department of
Community Affairs, Sandy Recovery Division,
Docket Nos. RRE0022673 and RSP0022615.
Chad M. Sherwood, attorney for appellant.
Christopher S. Porrino, Attorney General,
attorney for respondent (Melissa Dutton
Schaffer, Assistant Attorney General, of
counsel; Valentina M. DiPippo, Deputy Attorney
general, on the brief).
PER CURIAM
This appeal arises from a March 14, 2016 consolidated final
agency decision of the Department of Community Affairs ("DCA") to
recoup previously-allocated grant funds from a residential
property owner and deny him access to additional funds from the
Sandy Recovery Division. In particular, we mainly consider whether
DCA, which adopted an initial decision of an Administrative Law
Judge ("the ALJ"), had a sufficient basis in the record to deny
the owner access to Superstorm Sandy relief funds because he failed
to meet the $8,000 threshold in storm-related damages needed to
qualify for the grants.
For the reasons that follow, we vacate DCA's decision and
remand for additional proceedings and factual findings. Among
other things, on remand DCA shall seek a FEMA inspection that was
not performed, and also shall calculate and take into account
permit fees and construction costs that, when added to appellant's
other expenses, potentially could lead to a repair estimate of
over $8,000.
2 A-3497-15T2
We derive the following background from the record.
Superstorm Sandy devastated large portions of coastal New Jersey
on October 29, 2012. Following the storm, the United States
Department of Housing and Urban Development allocated Community
Block Grant Disaster Recovery funds to aid in the relief effort
for property owners who sustained damage from the storm.
Allocations, Common Application, Waivers, and Alternative
Requirements for Grantees Receiving Community Development Block
Grant (CDBG) Disaster Recovery Funds in Response to Hurricane
Sandy, 78 Fed. Reg. 14329, 14335 (March 5, 2013). DCA administers
the program in New Jersey.
In administering the federal funding, DCA created the
Superstorm Sandy Housing Intake Program, which is divided into
several types of grants. In this appeal, appellant Mohammed
Hossain challenges denials of his claims under two Sandy-related
programs: the Homeowner Resettlement Program ("HRP"), and the
Renovation, Reconstruction, Elevation and Mitigation Program
("RREMP").
HRP offers grants for "any non-constructive purpose that
assists the homeowner to remain in the county in which they lived
at the time of the storm." Department of Community Affairs,
Disaster Recovery Division, Resettlement Program Policy: Version
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3 4 (July 29, 2013). To receive an HRP grant of up to $10,000,
an applicant must demonstrate he:
1. Resided in one of the nine distressed
counties;
2. Lived in the property as a primary
residence at the time of the storm;
3. Registered with FEMA by May 1, 2013; and
4. Sustained Sandy-related damages with a
fully verified loss ("FVL") of at least $8,000
or experienced one foot of water on the first
floor of the property.
[Id. at 5.]
Additionally, DCA administers aid through RREMP, which
assists impacted Sandy homeowners to "complete the necessary work
to make their homes livable and compliant with flood plain,
environmental, and other State and local requirements."
Department of Community Affairs, Sandy Recovery Division,
Reconstruction, Rehabilitation, Elevation and Mitigation (RREM)
Program: Policies and Procedures 16 (October 2014). The
qualifications for this program are nearly identical to HRP, with
the added requirement that a recipient have an adjusted household
gross annual income of less than $250,000. Id. at 18.
Appellant owned, and continues to own, a building at 3001
Fairmount Avenue in Atlantic City. The property consists of three
units: a first-floor commercial space used as a convenience store,
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a second-floor residence that appellant lives in with his wife and
children, and a third-floor apartment that he rents out.
DCA does not contest that appellant lived in the second-floor
residence during Sandy. DCA stipulated that appellant would meet
nearly all other qualifications of both grant programs, but
disputes that he sustained a FVL on the second floor of at least
the minimum eligibility threshold of $8,000.
Appellant applied to the DCA for both a HRP and RREM grant
through separate online applications in June 2013. He noted that
the property was damaged during Sandy, and he had registered with
FEMA.
On July 28, 2013, DCA issued appellant a $10,000 grant
agreement and promissory note for the 3001 Fairmount property
under the HRP grant. Under the terms of the grant, appellant
attested that he met the HRP requirements, and agreed to continue
to reside in the property for three years in order to be forgiven
the $10,000. The funds were accordingly disbursed to appellant.
After a delay of nearly two years not explained in the record,
DCA acted on appellant's RREM application. Laura Shea, an
assistant commissioner for DCA, issued appellant a denial letter
for this RREM application on April 27, 2015. Shea wrote that, in
reviewing his application, DCA determined he did not sustain the
$8,000 minimum amount of FVL.
5 A-3497-15T2
Additionally, Shea wrote appellant was not "legally
authorized to receive" the HRP grant money he had been given nearly
two years earlier, because he failed to meet the $8,000 threshold
for that grant, as well. Consequently, Shea demanded that
appellant reimburse DCA the $10,000 HRD grant if he had already
spent the disbursement.
Appellant challenged both the RREM denial and the HRP
reimbursement demand. He submitted numerous invoices and
construction quotes to the agency to demonstrate his eligibility.
DCA transmitted the case to the Office of Administrative Law, and
an ALJ conducted a hearing on December 10, 2015. A representative
appeared for DCA, and appellant was self-represented. No witnesses
other than appellant testified.
At the hearing, DCA argued that appellant had improperly
certified he had met the $8,000 threshold, and therefore the agency
could request a refund. In support of its position, DCA submitted
construction estimates that do reflect that more than $8,000 worth
of damages occurred at the property. However, the record is not
clear as to how much damage was associated with the residential
second floor – the only part of the property eligible for the
grants. Although appellant lives on the second floor, the
electrical panel for the entire property, for example, is on the
6 A-3497-15T2
first floor. These and other facts about the premises made a
floor-by-floor analysis of the costs challenging.
The property had two heating boilers that were replaced. The
costs of these boilers and what parts of each boiler serviced
which floor or floors were vital issues at the hearing.
Customarily, DCA relies on FEMA inspectors to determine the
FVL. However, in the present case FEMA mistakenly inspected a
different building appellant owned as a landlord, 44 South Trenton
Avenue, instead of his subject residence at 3001 Fairmount Avenue.
Because appellant failed to correct FEMA's error, as DCA argued
he was obligated to do, DCA never received a valid FVL estimate
from FEMA for 3001 Fairmount Avenue.
As the hearing transcript reflects, appellant testified that
a FEMA inspector mistakenly came to his Trenton Avenue property.
ALJ: Did you have a meeting with an inspector
and tell him you lived at Trenton Avenue?
APPELLANT: No. The inspector came and – he
came in Trenton Avenue. . . . He said ["]this
is your house?["] I said yes. So he did the
inspection and then . . . he left.
. . . .
ALJ: [W]hy did he come to Trenton Avenue and
not Fairmount Avenue?
APPELLANT: I don't – I don't know.
7 A-3497-15T2
Given the evidence that appellant has lived at his Fairmount
residence since 2005 and voted in that precinct, the ALJ noted
that it made him "uncomfortable" that a FEMA inspector would show
up instead at appellant's Trenton Avenue rental property.
Appellant testified that his children attended a school near the
Fairmount property. The ALJ commented that "it makes it hard for
me to be a fact-finder without having both sides of the story" and
that a representative from FEMA should have been at the hearing.
In explaining why DCA approved appellant's grant initially,
the agency's representative told the ALJ that the Trenton Avenue
property had sustained at least one foot of water, so the $8,000
threshold would not be applicable. Further, she remarked that
FEMA and applicants often made errors inspecting incorrect
properties if a property had a different mailing address from its
physical location. The ALJ also noted that the errors in this
matter may have been the result of a language barrier.
Lacking the typical FEMA estimate in this case, DCA conducted
its own damage assessment. DCA summarized the documents it
considered: a November 2012 insurance adjuster's report, which
singled-out no damages for the second floor but reflected a total
furnace bill at $4,917; a report from Bangla Trade, Inc. and the
City of Atlantic City from April 2013 certifying $44,164 worth of
damage, without specifying what part of the property was damaged;
8 A-3497-15T2
and a $3,050 chimney sweep and masonry invoice for the entire
Fairmount property. Additionally, appellant presented a quote for
$107,390.65 in repairs for the entire property by NK Construction,
which was conducted on October 5, 2015, several years after Sandy.
With respect specifically to the replacement of boilers, DCA
reviewed an installation estimate from a contractor, Broadley's
of Marmora, of $6,889 for a 175,000 BTU boiler "for home" on
November 10, 2012. This estimate noted that a "permit is extra"
and that appellant also "must have [a] chimney inspection." This
quote also estimated a 100,000 BTU unit for what is delineated as
"home-apartment" at a cost of $6,071, excluding permitting and
chimney inspection expenses. Additionally, Broadley's provided a
$7,843 estimate on January 28, 2013 for a 100,000 BTU unit boiler
"for apartment." Again, this quote did not include a chimney
inspection or permit expenses.
With respect to the residential boiler quote, the ALJ noted
at the hearing:
If this is true and this was paid, [appellant]
could probably get to the $8,000
threshold . . . with incidentals that . . .
are related to this, you know. . . . The permit
fee, if there's an inspection fee . . . .
Because it says [on the quote] "permit is
extra. Build at cost. Must . . . have
chimney inspected."
9 A-3497-15T2
Tellingly, the ALJ perceived a fundamental problem with DCA's
position:
[Appellant] has extensive damages. I mean,
he has at least $50,000 worth of damage [to
the total property], close to it. And, you
know, he's – he's a smidge below the $8,000,
if you look at just based upon heating.
. . . .
I'm not a contractor, you're not a contractor,
so . . . that's why we need that inspector to
go out there, to say how much is this, was it
attributable to -- or allocatable to
commercial, residential. And if he went to
the wrong address, maybe [appellant] is
entitled to have an inspector go back out
again.
At the close of the hearing, the ALJ directed DCA to request
more information from FEMA and to ascertain whether appellant was
entitled to an additional FEMA inspection at the Fairmount
property. The record is unclear if DCA carried out this request.
The ALJ also asked appellant to provide him with receipts of
what appellant paid for the repairs. Specifically, he asked
appellant to break out storm-related repairs isolated to the second
floor. The ALJ recognized that appellant was "very close on the
estimates, but [was] not close on the . . . bank or the adjuster's
calculations. Now, they may have lowballed it, they may have
depreciated it[.]"
10 A-3497-15T2
After the hearing, appellant presented to the ALJ an invoice
dated March 22, 2013 from Broadley's, which reflected that it
performed $13,285 worth of repairs to appellant's second-floor
heating and hot water units on March 18, 2013. The invoice listed
the installation of a 175,000 BTU boiler for the second floor. In
addition to the boiler installation, the invoice noted "additional
gas piping/water piping repairs." The invoice detailed $3,620 for
parts, and an installation price of $9,665.
After the record closed, the ALJ issued a seven-page initial
decision on January 28, 2016. The ALJ framed the core issue as
whether the boiler used for the second floor sustained $8,000 in
damages.
The ALJ first cited the adjuster's assessment for the entire
furnace repair of $4,917. He contrasted that estimate with the
$6,071 and $7,843 higher estimates appellant presented for the
second and third-floor boiler repairs total. Last, the ALJ
referenced the $13,285 invoice that appellant had submitted post-
hearing. The ALJ stated it was "unclear if this invoice is for
the second and third floor units or just petitioner's second floor
residential unit, because it is so much higher than all of the
previous estimates." He described the $4,917 and $7,843 quotes
as "making the $13,286 post-hearing paid invoice appear very high."
11 A-3497-15T2
Additionally, the ALJ again underscored that FEMA never
inspected the Fairmount property, remarking that the "tribunal
could have benefitted from the FEMA inspection." Even so, the ALJ
found it significant that an "independent adjuster" who is a "third
party outsider[] and [is] considered reliable" provided the $4,917
quote. Comparing that figure to the $6,071 to $7,843 estimates
presented by appellant pre-hearing, the ALJ concluded the
adjuster's figure was reasonable, and therefore appellant fell
below the $8,000 FVL threshold.
The DCA Commissioner adopted the ALJ's decision as final on
March 14, 2016. Now represented by counsel, appellant seeks to
overturn that determination.
Appellant contends that this court should rely on the proofs
to reach its own conclusions, which he argues demonstrate his
eligibility for either grant. Additionally, he argues that the
ALJ failed to consider chimney repair costs and the post-hearing
invoice, and instead relied on an estimate for a different boiler
unit to reach his conclusion. DCA counters that the ALJ relied
on credible proofs in the record, and did not reach his decision
arbitrarily or capriciously to deny appellant's grant eligibility.
We are cognizant that appellate courts generally must afford
agency determinations' deference for orders based on the credible
12 A-3497-15T2
evidence. Our role as an appellate court is restricted to four
inquiries:
(1) whether the agency's decision offends the
State or Federal Constitution; (2) whether the
agency's action violates express or implied
legislative policies; (3) whether the record
contains substantial evidence to support the
findings on which the agency based its action;
and (4) 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.
[George Harms Constr. Co. v. N.J. Tpk. Auth.,
137 N.J. 8, 27 (1994) (citations omitted).]
"An administrative agency's final quasi-judicial decision
will be sustained unless there is a clear showing that it is
arbitrary, capricious, or unreasonable, or that it lacks fair
support in the record." In re Herrmann, 192 N.J. 19, 27-28 (2007)
(citing Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963));
see also Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186
N.J. 5, 16 (2006). "The burden of demonstrating that the agency's
action was arbitrary, capricious or unreasonable rests upon the
[party] challenging the administrative action." In re Arenas, 385
N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219
(2006) (citing McGowan v. N.J. State Parole Bd., 347 N.J. Super.
544, 563 (App. Div. 2002); Barone v. Dep't of Human Servs., 210
N.J. Super. 276, 285 (App. Div. 1986), aff'd, 107 N.J. 355 (1987)).
13 A-3497-15T2
Despite that general policy of deference, we conclude that
the agency's decision in this particular case lacks adequate
support in the present record and, absent further development and
clarification of the record, is arbitrary and capricious.
Throughout the hearing and his written decision, the ALJ
voiced concerns with DCA's proofs. He never found appellant lacked
credibility, and noted that any problem with his application may
be attributed to "a language barrier." Further, DCA does not
challenge appellant's residency, but instead blames appellant for
FEMA's mistake in inspecting the wrong property. Indeed, the ALJ
wrote his preference would be for FEMA to inspect the property
itself to give a truly unbiased opinion, and he mused that, in
fairness to appellant's application, FEMA should do so.
Unfortunately, that did not occur.
The ALJ hypothesized during the hearing that the adjuster
might have "low-balled" appellant in its $4,917 estimate. However,
in his written decision, the ALJ placed substantial weight upon
the adjuster's figure in determining that the $13,000 estimate was
"very high." At the hearing's close, the ALJ orally noted that
permit costs and other fees could very well vault the $6,071 and
$7,843 estimates over the $8,000 threshold, but later declared in
his written decision that he could not accept the $13,285 actual
invoiced cost as valid.
14 A-3497-15T2
Having considered this rather convoluted record as a whole,
we are satisfied that the ALJ and the agency unreasonably concluded
that appellant's damages were definitely under $8,000. For
instance, taking the adjuster's furnace estimate of $4,917, and
adding the chimney estimate1 of $3,050, coupled with permitting
costs and the chimney inspection2, the $8,000 threshold is easily
cleared. The same can be said if the higher boiler estimates of
$6,071 or $7,843 were added to the chimney inspections and permit
costs.
The ALJ did not explain sufficiently why the $13,285 invoice
for repairs performed, which was generated before litigation, was
unacceptable. Even if it is deemed unacceptable, the ALJ did not
explain why permitting and chimney fees were not included in his
final calculations. As the ALJ himself noted, certain documents
in the record indicated appellant was "a smidge below" the $8,000
threshold. Hence, the permitting and chimney costs manifestly
could have placed him over the required amount.
1
Neither the ALJ opinion nor DCA's brief on appeal challenge the
chimney replacement estimate, nor do they factor that estimate
into their calculation. Ultimately, the chimney costs may not
factor into the second floor's FVL calculation in full or in part,
but they must be addressed on remand.
2
Similarly, the ALJ opinion and DCA brief neglect to factor in
these added costs the contractor spotlighted as figures not
included in the initial estimates.
15 A-3497-15T2
DCA cites this court's opinion In re Adoption of Amendments
to Northeast, Upper Raritan, Sussex County Water Quality
Management Plans, 435 N.J. Super. 571, 582 (App. Div. 2014) to
advocate deference to the administrative determinations. However,
there the Appellate Division affirmed an agency decision that
differed from an ALJ decision because the agency placed greater
emphasis on an expert's report than the ALJ, but that decision was
still based in the record. Id. at 585. Here, the ALJ did give
greater weight to the $4,917 adjuster's estimate over the $13,286
invoice, but we note he also neglected to analyze the impact of
the $3,500 chimney quote or the permitting and chimney inspection
costs.
Construction costs in actuality often exceed estimates, due
to a variety of reasons. Here, without making further inquiry
into the reasons behind the price disparity between the estimates
and the $13,280 invoiced sum, the ALJ improperly dismissed out of
hand the very evidence he requested appellant present him post-
hearing.
These facts of the case, coupled with the nearly two years
that transpired between DCA issuing appellant a grant and demanding
a refund, leads us to conclude that the agency's decision should
be reconsidered on remand.
16 A-3497-15T2
On remand, DCA must seek a FEMA inspection of appellant's
property. Additionally, the remand proceeding should allow
appellant to present clearer evidence about the actual
construction work done, and the fact-finder should make associated
credibility determinations on the record.
Vacated and remanded. We do not retain jurisdiction.
17 A-3497-15T2
MOHAMMED HOSSAIN VS. NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS(NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, SANDY RECOVERY DIVISION)
Combined Opinion