OPINION

ROSEMARY GAMBARDELLA, Bankruptcy Judge.

The matter before the Court is to determine damages in the instant adversary proceeding. The following constitutes the Court's findings of fact and conclusions of law.

Facts

On November 12, 1993, the Court conducted a trial in the matter of Hilda De La Cruz et al. v. Edward S. Cohen, Adv. No. 91-2094.

On October 24, 1994, the Court issued a written opinion, 185 B.R. 171 (the "Opinion"), rendering the debt in question nondischargeable under § 523(a)(2)(A). As to damages, the Court noted that a hearing would be held to make the determination on the amount.

For purposes of the damages hearing, the following parts of the Opinion are pertinent:

(i) None of the Plaintiffs were born in the continental United States or spoke English as their native language or graduated college, see Opinion, at pp. 173-74;

(ii) The parties agreed that the written record of the Hoboken Rent Leveling Board represents the determination that the Board made with respect to the alleged rental overcharges, see id., at p. 175;

(iii) Section 523(a)(2)(A) requires proof of actual fraud, which meant that Plaintiffs had to establish by a preponderance of the evidence that: (1) Edward S. Cohen (the "Debtor") obtained money, property or services through a material misrepresentation; (2) the Debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the Debtor made the misrepresentation with intent to deceive; (4) the Plaintiffs reasonably relied on the representation; and (5) the Plaintiffs suffered loss, which was proximately caused by the Debtor's conduct; see id., at p. 177.

The Court ruled the debt in question nondischargeable under § 523(a)(2)(A) because the Court found, inter alia, that: (i) the Debtor made a misrepresentation regarding the amount of rent, see id., at p. 177; (ii) the Plaintiffs reasonably relied on the representation that the amount of rent they were asked to pay was within the bounds of the law, see id., at p. 177; and (iii) the Debtor's reckless disregard for the truth satisfied both the knowledge and intent to deceive elements of actual fraud, see id., at pp. 178-79.

On December 9, 1994, the Plaintiffs filed a brief with respect to damages ("Plaintiffs Brief"). Firstly, the Plaintiffs note that there is a dispute as to the total amount of rent the Plaintiffs paid, and thus, the total overpayment. See Plaintiff's Brief, at 1. The Plaintiffs, however, concede that the amount should be reduced and have attached a table setting forth the reduced calculations. See id., at 1-2 and Appendix A (damages table).

The Plaintiffs argue that the principle legal issue is the applicability of the New Jersey Consumer Fraud Act (the "Act"). The Act provides for imposition of treble damages for violations of the Act. The Plaintiffs contend that the Act is applicable to the instant case, and therefore, ask this Court to award them treble the amount of the overpayments.

On March 17, 1995, the Debtor submitted a brief with respect to damages ("Debtor's Damages Brief"). First, the Debtor argues that the overpayment calculation previously determined by the Hoboken Rent Leveling Board (the "Board") was in error. Next, the Debtor asserts that the "sole legal issue" before the Court is the applicability of the Act. Id. The Debtor argues that the Act is inapplicable for the following two reasons: (1) the Act has not been applied to landlord-tenant matters where the violation involves excessive rents charged in violation of a rent control ordinance; and (2) the Plaintiffs cannot establish the elements of fraud under the Act.

On March 27, 1995, a hearing was conducted on these issues. At the hearing, the parties submitted a Stipulation As To Rental Overpayments that was dated March 21, 1995. The Stipulation provided, in pertinent part, that:

. . . the determination of the Hoboken Rent Leveling Administrator shall be adjusted to reflect the following overpayments:

Corrected OverchargePlaintiff Determination Nelfo C. Jimenez $ 5,681.50 Elvia Siguenzia $ 3,319.00 Hilda De La Cruz $ 5,048.00 Maria Morales $ 5,310.00 Hector Santiago $ 5,975.00 Santia Santos $ 728.00 Gloria Sandoval $ 5,321.00 Enilda Tirado $ -0-

Total $31,382.50

See Stipulation dated March 21, 1995, filed March 27, 1995, at ¶ 6.

Due to the Stipulation, the only remaining issue before the Court was the applicability of the Act and the Court reserved decision on the matter.

Discussion

I. The Act Can Be Applied To the Rental Of Residential Apartments N.J.S.A. 56:8-2 reads in pertinent part:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived, or damaged thereby, is declared to be an unlawful practice; . . .

N.J.S.A. 56:8-2. The statutory language of N.J.S.A. 56:8-2 encompasses the landlord-tenant relationship. 49 Prospect St. Tenants Ass'n. v. Sheva Gardens, Inc., 227 N.J. Super. 449, 461-69, 547 A.2d 1134 (App.Div. 1988); see also, 316 49 St. Assoc. Ltd., Partnership v. Galvez, 269 N.J. Super. 481, 491-92, 635 A.2d 1013 (App.Div. 1994), cert. denied, 137 N.J. 164, 644 A.2d 612 (1994). Specifically, the Sheva court extended the definition of "sellers" and "consumers" to include landlords and tenants when the landlord is engaged in the "sale" or commercial enterprise of rental of real estate. Id. The Sheva court went on to explain that "[w]hile there may be some question as to the isolated rental of an apartment in a two-family house, such as the isolated sale of a single-family residence by its owners in DiBernardo v. Mosley, 206 N.J. Super. 371, 502 A.2d 1166 (App.Div. 1986), certif. denied, 103 N.J. 503, 511 A.2d 673 (1986), defendants in this case as landlord of a 55-unit, four-story apartment building, as well as several other apartment buildings, are obviously engaged in a commercial enterprise with the tenants as consumers." Id. at 465, 547 A.2d 1134.

As explained by the Sheva court, the Act originally provided that a "sale" included "any sale, offer for sale, or attempt to sell". Id. at 463, 547 A.2d 1134. In 1967, the term "sale" was amended to apply to "any sale, rental or distribution, offer for sale, rental or distribution or attempt directly or indirectly to sell, rent or distribute." Id. at 464, 547 A.2d 1134. Notably, the 1967 amendment also broadened the scope of the Act by inserting the language "or with the subsequent performance of such person as aforesaid." Id. Thus, as pertains to the rental of real estate, condemned practices relate not only to the initial sale or advertisement, but also to the landlord's subsequent performance. New Mea Const. Corp. v. Harper, 203 N.J. Super. 486, 501, 497 A.2d 534 (App.Div. 1985). The requisite standard mandates in part the maintenance of basic requirements of habitability. Sheva, 227 N.J.Super. at 468, 547 A.2d 1134.

Arguments asserting conflict between the Act and existing landlord-tenant statutes were considered inapt by the Sheva court. The Sheva court agreed that "there should not be duplicative recoveries for the same ascertainable loss, but conclude[d] that the existence of other statutory remedies for some of defendants' conduct does not bar applicability of the Consumer Fraud Act to this landlord-tenant relationship." Id. at 467, 547 A.2d 1134 (citations omitted). Moreover, the Sheva court distinguished cases wherein the treble damages were not imposed by citing the absence of both a singular administrative agency regulating landlord-tenant practices as well as a designated forum for relief. Id. at 468-69, 547 A.2d 1134. Lastly, in response to concern that its decision would invite abuse by tenants, the Sheva court emphasized that the Act would apply only in cases where the landlord's extreme conduct is deemed to satisfy the condemned commercial practices standard set forth in N.J.S.A. 56:8-2. Id. at 469, 547 A.2d 1134.

Therefore, under New Jersey case law, this Court finds, as argued by the Plaintiffs, that the Act can be applied to the type of landlord-tenant relationship present in the case at bar because Edward S. Cohen, the Debtor, was in the business of managing and operating real estate housing. See Opinion, at 172. The Debtor has argued that the Act is inapplicable to the type of landlord-tenant matter involved in the present case, namely, excessive rents charged in violation of a rent control statute. The Debtor contends that the Sheva ruling, which expressed that the Act was applicable to the landlord-tenant relationship, should be interpreted as limited to the circumstances of the Sheva case.

In Sheva, the court held that the Act applied where the conduct of the landlord, specifically the landlord's failure to comply with habitability standards, was sufficient to meet the condemned commercial practices set forth in N.J.S.A. 56:8-2. 227 N.J.Super. at 469, 547 A.2d 1134. The Debtor urges that Sheva should be interpreted as limiting the situations where the Act can be applied to landlords. However, the Sheva court does not indicate such a narrow application of the Act. The Sheva court states that the Act will apply to "extreme conduct of landlords sufficient to meet the condemned commercial practices set forth in N.J.S.A. 56:8-2." Id. Thus, the Sheva court did not limit the Act's landlord-tenant application to habitability violations but instead simply focused on the language of N.J.S.A. 56:8-2.

A recent decision by the Appellate Division, in 316 49 St. Assocs. Ltd. Partnership v. Galvez, 269 N.J. Super. 481, 635 A.2d 1013 (App.Div. 1994), confirms the conclusion that Sheva was not meant to be interpreted as limiting the Act's application in the landlord-tenant context. In Galvez, the Appellate Division reaffirmed application of the Act to landlord-tenant relationships by remanding to the trial court the question of whether a landlord violated the Act where a tenant alleged that an option to purchase, which mandated supplemental monthly payments in excess of the rent control ordinance, constituted a violation of the Act. 269 N.J.Super. at 491-92, 635 A.2d 1013. Therefore, the decision by the Appellate Division in Galvez evidences that the application of the Act is not limited to issues of habitability, and as a result, the Debtor's argument is rejected.

In sum, the Court is convinced that, based on New Jersey law, the Plaintiffs situation may properly fall within the scope of the Act.

II. Fraud Has Been Established Under the Act

The legislative intent behind the Act was to provide victimized consumers with a remedy in commercial transactions. Specifically, the Act aims "to prevent deception, fraud, or falsity, whether by acts of commission or omission in connection with sale and advertisement of merchandise and real estate." Fenwick v. Kay American Jeep, Inc., 72 N.J. 372, 376-377, 371 A.2d 13 (1977). In order to effectuate the protection of consumers, the Act is construed liberally. State v. Hudson Furniture Co., 165 N.J. Super. 516, 520, 398 A.2d 900 (App.Div. 1979). In concert with this legal interpretation, violation of the Act does not necessitate a showing of actual deceit or fraudulent act; any unconscionable commercial practice is prohibited. Skeer v. EMK Motors, Inc., 187 N.J. Super. 465, 470, 455 A.2d 508 (App.Div. 1982). While the Act does not define the term "unconscionable commercial practice," the New Jersey Supreme Court has opined that "the standard of conduct contemplated by the unconscionability clause is good faith, honesty in fact and observance of fair dealing." Kugler v. Romain, 58 N.J. 522, 544, 279 A.2d 640 (1971).

As originally adopted, the Act was limited to prosecution by the Attorney General. Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 472, 541 A.2d 1063 (1988). In order to maintain an action the Attorney General is required to show proof of violation; however, it is not necessary for the Attorney General to show that the victimized consumer had "in fact been misled, deceived or damaged thereby. . . ." Id. at 473, 541 A.2d 1063 (quoting N.J.S.A. 56:8-2). The 1971 amendment provided for a private right of action which enabled the successful plaintiff to recover, in addition to any other appropriate legal or equitable relief, treble damages, reasonable attorneys' fees, filing fees, and costs. Id. In contrast to actions instituted by the Attorney General, a private plaintiff must demonstrate an "ascertainable loss . . . as a result of" the unlawful conduct in order to prevail. Id.

Recently, the New Jersey Supreme Court explained:

To violate the Act, a person must commit "an unlawful practice" as defined in the legislation. Unlawful practices fall into three general categories: affirmative acts, knowing omissions, and regulation violations. The first two are found in the language of N.J.S.A. 56:8-2, and the third is based on regulations enacted under N.J.S.A. 56:8-4. A practice can be unlawful even if no person was in fact misled or deceived thereby. The capacity to mislead is the prime ingredient of all types of consumer fraud.

When the alleged consumer-fraud violation consists of an affirmative act, intent is not an essential element and the plaintiff need not prove that the defendant intended to commit an unlawful act. However, when the alleged consumer fraud consists of an omission, the plaintiff must show that the defendant acted with knowledge, and intent is an essential element of the fraud.

Cox v. Sears Roebuck Co., 138 N.J. 2, 17-18, 647 A.2d 454 (1994) (internal citations omitted).

Affirmative acts include unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation. N.J.S.A. 56:8-2. Concealment, suppression, or omission of any material fact constitute acts of omission. Id. As noted by the Cox court, the principle distinction between the affirmative act and knowing omission categories is that while intent is not a requirement for substantiating affirmative acts of consumer fraud, acts of omission are restricted to incidents where the defendant manifests knowledge and intent. 138 N.J. at 17-18, 647 A.2d 454; see also, Fenwick, 72 N.J. at 377-378, 371 A.2d 13 (same).

Therefore, as noted by the Plaintiffs, the following must be shown to establish an affirmative act or knowing omission violation: (i) an affirmative act constituting an unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation and ascertainable damages resulted; or (ii) a knowing omission of a material fact, with an intent that others rely on the deception and ascertainable damages resulted. See Plaintiff's Brief, at 5-6 (citing New Jersey Model Jury Charges, Civil § 4.23 (New Jersey Institute for Continuing Legal Education 1992)). Although Plaintiff does not articulate the burden of persuasion, the preponderance of the evidence is the standard for establishing a violation under the Act. Hyland v. Aquarian Age 2,000, Inc., 148 N.J. Super. 186, 191, 372 A.2d 370 (Ch.Div. 1977); see also, In re Fleet, 95 B.R. 319, 331 (E.D.Pa. 1989) (citing Hyland for rule that preponderance of evidence is standard under Act). In this Court's prior Opinion, it was explained that section 523(a)(2)(A) requires proof of actual fraud, which meant that Plaintiffs had to establish be a preponderance of the evidence that: (1) the Debtor obtained money, property or services through a material misrepresentation; (2) the Debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the Debtor made the misrepresentation with intent to deceive; and (4) the Plaintiffs reasonably relied on the representation; and (5) the Plaintiffs suffered loss, which was proximately caused by the Debtor's conduct. See Opinion, at p. 177 citing Trump Plaza Associates v. Poskanzer (In re Poskanzer), 143 B.R. 991, 999 (Bankr.D.N.J. 1992); Southeast Bank v. Hunter (In re Hunter), 83 B.R. 803, 804 (M.D.Fla. 1988); Comerica Bank-Detroit v. Nahas (In re Nahas), 92 B.R. 726, 729-30 (Bankr.E.D.Mich. 1988); see also Caspers v. Van Horne (Matter of Van Horne), 823 F.2d 1285, 1287 (8th Cir. 1987); Citibank South Dakota v. Dougherty (In re Dougherty), 84 B.R. 653, 656 (9th Cir. BAP 1988); Hong Kong Deposit and Guaranty Co. v. Shaheen (In re Shaheen), 111 B.R. 48, 51 (S.D.N.Y. 1990); Visotsky v. Woolley (In re Woolley), 145 B.R. 830, 833 (Bankr.E.D.Va. 1991); Citicorp Credit Services v. Hinman (In re Hinman), 120 B.R. 1018, 1021 (Bankr.D.N.D. 1990); Notre Dame Federal Credit Union (In re Tondreau), 117 B.R. 397, 400 (Bankr.N.D.Ind. 1989); Stamford Municipal Employees' Credit Union, Inc. v. Edwards (In re Edwards), 67 B.R. 1008, 1009-10 (Bankr.D.Conn. 1986); Chase Manhattan Bank v. Carpenter (In re Carpenter), 53 B.R. 724, 729 (Bankr.N.D.Ga. 1985). This Court ruled that the debt in question was nondischargeable under § 523(a)(2)(A) because the Court found, inter alia, that: (i) the Debtor made a misrepresentation regarding the legal amount of rent that could be charged for the subject apartments, see id., at p. 177; (ii) the Plaintiffs reasonably relied on the representation that the amount of rent they were asked to pay was within the bounds of the law, see id., at p. 177; and (iii) the Debtor's reckless disregard for the truth satisfied both the knowledge and intent to deceive elements of actual fraud, see id., at pp. 178-79.

Although it seems clear that there has been a violation of the Act based on the Court's earlier ruling, the Debtor has argued that the elements of fraud can not be established under the Act. The Debtor contends that the Court's ruling that the Debtor acted with "reckless disregard" of the truth does not establish that the Debtor's conduct classified as "knowing" which is a required element where the wrongful conduct constitutes an act of omission rather than an affirmative act.

The Debtor's argument is not persuasive because the Debtor's conduct need not be analyzed under omission standards. See Cox, 138 N.J. at 17-18, 647 A.2d 454; Fenwick, 72 N.J. at 377-378, 371 A.2d 13; Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 603, 581 A.2d 91 (App.Div. 1990), aff'd, 124 N.J. 520, 591 A.2d 943 (1991). As explained by the Cox court,

. . . the Act specifies the conduct that will amount to an unlawful practice in the disjunctive, as "any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact * * *." N.J.S.A. 56:8-2 (emphasis added). Proof of any one of those acts or omissions or a violation of a regulation will be sufficient to establish unlawful conduct under the Act.

138 N.J. at 19, 647 A.2d 454; see also, D'Ercole Sales Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 22, 501 A.2d 990 (App.Div. 198 5).

In defining the unconscionability clause, the New Jersey Supreme Court has stated:

The standard of conduct contemplated by the unconscionability clause is good faith, honesty in fact and observance of fair dealing. The need for application of the standard is most acute when the professional seller is seeking the trade of those most subject to exploitation — the uneducated, the inexperienced and the people of low incomes. In such a context, a material departure from the standard puts a badge of fraud on the transaction and here the concept of fraud and unconscionability are interchangeable.

Kugler v. Romain, 58 N.J. 522, 544, 279 A.2d 640 (1971); see also, Hundred East Credit Corp. v. Eric Schuster, 212 N.J. Super. 350, 355, 515 A.2d 246 (App.Div. 1986) (stating "the strongest case for relief [under the Act] is presented by `the poor, the naive and the uneducated.'") (quoting portions of Kugler) certif. denied, 107 N.J. 61, 526 A.2d 146 (1986).

Turning to the case at bar, based on the Court's earlier findings as to § 523(a)(2)(A), fraud has been established by a preponderance of the evidence. The Court notes that none of the Plaintiffs were born in the continental United States or spoke English as their native language or graduated college. See Opinion, at pp. 4-7. Thus, the instant case presents the type of situation which the New Jersey Supreme Court has expressed that "the concept of fraud and unconscionability are interchangeable." See Kugler, 58 N.J. at 544, 279 A.2d 640. As a result, pursuant to the language of N.J.S.A. 56:8-2, the Plaintiffs need not show that the Debtor's conduct was knowing to establish an "unlawful practice" under the Act since it is clear that an affirmative act violation has been shown, i.e., unconscionable commercial practice and/or fraud.

This ruling is consistent with the goal of the Act, which is to prevent sellers from engaging in deceptive sales and advertising practices in relation to the marketing of real estate and goods. See Meshinsky, 110 N.J. at 472, 541 A.2d 1063; Fenwick, 72 N.J. at 378, 371 A.2d 13. Moreover, the Act is remedial and must be "liberally construed in favor of protecting consumers." In re Fleet, 95 B.R. 319, 331 (E.D.Pa. 1989) (citing Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 494 A.2d 804 (1985)). These policy and equitable considerations further indicate that a finding of a violation of the Act is justified.

III. Plaintiffs Should Be Allowed To Benefit From the Act's Damage Provisions

Section 56:8-19 provides the remedy for a private party under the Act. The Court notes "that an award of treble damages and attorneys' fees is mandatory under N.J.S.A. if a consumer-fraud plaintiff proves both an unlawful practice under the Act and an ascertainable loss." Cox, 138 N.J. at 24, 647 A.2d 454. Section 56:8-19 states:

Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or practice declared as unlawful under this act or the act hereby amended and supplemented may bring an action or assert a counterclaim therefor in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section the court shall award reasonable attorneys' fees, filing fees and reasonable costs of suit.

N.J.S.A. 56:8-19 (emphasis added). Before calculating the Plaintiffs damages under this provision, this Court must address whether punitive damages for fraud, such as the Act's treble damages provision, can be excepted from discharge by section 523(a)(2)(A). The parties did not raise the question but upon this Court's independent research it was revealed that there is a difference of opinion among courts on this issue. Thus, this Court will discuss the issue briefly.

Based on this Court's research, neither the Third Circuit Court of Appeals, nor lower courts within the circuit, have taken a position on punitive damage awards under section 523(a)(2)(A). Two circuit courts that have considered the issue did not reach similar conclusions. In In re Levy, 951 F.2d 196, 198-99 (9th Cir. 1991), cert. denied, 504 U.S. 985, 112 S.Ct. 2965, 119 L.Ed.2d 586 (1992), the Ninth Circuit ruled that punitive damages were dischargeable where the grounds of dischargeability were based on findings of fraud under section 523(a)(2)(A). The basis for the Levy court's interpretation was that the exception to discharge under section 523(a)(2)(A) was available only "to the extent obtained by" fraud and not to debts imposed for purposes of punishment. Id. (citing § 523(a)(2)(A)). The Levy court stated that "the language of the statute suggests that the subsection limits nondischargeability to the amount of benefit to the debtor or loss to the creditor the act of fraud itself created." Id.

The Eleventh Circuit reached a different conclusion in St. Laurent v. Ambrose, 991 F.2d 672 (11th Cir. 1993). The St. Laurent court began its analysis by noting that most courts have found punitive damages dischargeable under § 523(a)(2)(A); however, other courts have disagreed and held that punitive damages for fraud are excepted from discharge by § 523(a)(2)(A). 991 F.2d at 677-78. In finding the § 523(a)(2)(A) exception to discharge equally appropriate to punitive damages, the St. Laurent court noted the absence of demonstrated intent by Congress to alter, by the 1984 amendment to § 523(a)(2)(A), the practice of excluding punitive debts from discharge where the compensatory damages resulting from the same conduct were nondischargeable. Id. at 679. Furthermore, the St. Laurent court focused on the "expansive definition of `debt'" and concluded that "the term `debt' encompasses an award for punitive damages arising from the same conduct as necessitated an award of compensatory damages. . . ." Id. at 680.

The Court agrees with the position espoused by the St. Laurent court. In keeping with the broad definition of "debt" under the Bankruptcy Code, all debts arising from the § 523(a)(2)(A) violation should be deemed nondischargeable. As a result, the "debt" that will be deemed nondischargeable under section 523(a)(2)(A) shall include the treble damages as specified by the Act.

In sum, the Plaintiffs have established a violation of the Act and are entitled to three times the amount of overpayment, along with reasonable attorneys fees and costs of suit. See Cox, 138 N.J. at 24, 647 A.2d 454.

Conclusion

The Court finds that a violation of the Consumer Fraud Act has been established. As a result, the Plaintiffs are entitled to a nondischargeable judgment equal to three times the stipulated amount of overpayment, along with reasonable attorneys fees and costs. The stipulated amount of the overcharges totaled $31,382.50. Accordingly, judgment shall enter reflecting treble damages in the total amount of $94,147.50, as apportioned to each plaintiff based on the stipulated amounts of rental overpayments, plus reasonable attorneys' fees and costs to be fixed by the Court. Counsel for the Plaintiffs shall submit a detailed affidavit of services rendered and costs incurred which shall be served on the attorney for the Debtor-Defendant.