Alexander's Dept. Stores of New Jersey, Inc. v. Borough of Paramus

• Decision Date: 08 August 1990
• Citation: 243 N.J.Super. 157,578 A.2d 1241
• Parties: ALEXANDER'S DEPARTMENT STORES OF NEW JERSEY, INC., et al., Plaintiffs-Respondents, v. BOROUGH OF PARAMUS, New Jersey, the New Jersey Council on Affordable Housing, et al., Defendants-Appellants. WESTLAND GARDEN STATE PLAZA L.P. and Westland Properties, Inc., Third-Party Plaintiffs, v. Donald TRUMP, Trump Organization, Trump Organization/Alexander's and John Does 1-10, Third-Party Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 157

243 N.J.Super. 157

578 A.2d 1241

ALEXANDER'S DEPARTMENT STORES OF NEW JERSEY, INC., et al., Plaintiffs-Respondents, v. BOROUGH OF PARAMUS, New Jersey, the New Jersey Council on

Affordable Housing, et al., Defendants-Appellants.

WESTLAND GARDEN STATE PLAZA L.P. and Westland Properties, Inc., Third-Party Plaintiffs, v. Donald TRUMP, Trump Organization, Trump

Organization/Alexander's and John Does 1-10,

Third-Party Defendants.

Superior Court of New Jersey Appellate Division.

Argued April 3, 1990.

Decided Aug. 8, 1990.

Gary T. Hall, for defendants-appellants Borough of Paramus, Mayor and Borough Council of Paramus (McCarter &amp English, attorneys, Alfred L. Ferguson of counsel, Gary T. Hall, Brenda C. Liss and Lisa S. Bonsall, Newark, on the brief).

Robert S. Raymar for plaintiffs-respondents Alexander's (Hellring Lindeman Goldstein Siegal Stern & Greenberg, attorneys, Robert S. Raymar, Jonathan L. Goldstein and Heidi H. Hellring, Newark, of counsel).

Theodore L. Abeles for third-party plaintiffs Westland (Sills Cummis Zuckerman Radin Tischman Epstein & Gross, Atlantic City, attorneys, Theodore L. Abeles, Roseland, of counsel and on the brief).

Joseph L. Yannotti, Deputy Atty. Gen., for defendant-appellant New Jersey Council on Affordable Housing (Robert J. Del Tufo, Atty. Gen., attorney, Mary C. Jacobson, Deputy Atty. Gen., of counsel, Joseph L. Yannotti and Donald M. Palombi, Deputy Atty. Gen., on the brief).

Before Judges MICHELS, R.S. COHEN and BROCHIN.

The opinion of the court was delivered by

COHEN, R.S., J.A.D.

Plaintiffs are the owners of commercial land in Paramus. The "Westland" defendants own commercial and residential land in Paramus which lies generally across the highway from plaintiffs'. In 1985, Paramus was a defendant in an exclusionary zoning suit brought by a developer seeking to build low income housing. The Law Division ordered Paramus to rezone to meet its obligation to afford a realistic opportunity for affordable housing. The Fair Housing Act was thereafter enacted, and Paramus sought substantive certification of a proposed housing element and fair share plan from the Council on Affordable Housing. Westland was an objector because the plan located a number of housing units on Westland property.

Westland's objections were resolved in 1987. Paramus made an agreement with Westland to amend its zoning ordinance to allow commercial development more intensive than would otherwise have been permitted in return for the transfer of some $2.5 million and certain acreage from Westland to Paramus. The money and land were to be used for the purpose of helping to satisfy Paramus's Mt. Laurel obligation to provide low and moderate income housing. The agreement was conditioned on substantive certification and enactment by Paramus of zoning ordinance amendments. Paramus submitted the agreement and proposed zoning amendments to the Council on Affordable Housing ("COAH"). After a period of study in which plaintiffs could have participated but did not, COAH granted substantive certification to Paramus's housing element and fair share plan. Paramus then adopted the proposed ordinance changes, and plaintiffs filed their complaint in lieu of prerogative writs. They named Westland, Paramus, its Mayor and COAH as defendants.

Defendants moved to dismiss the complaint on various theories. Some of plaintiffs' claims were dismissed, and plaintiffs have not sought to appeal those rulings. Most of the complaint survived defendants' motions, however, and it is the rulings denying dismissal that are before us. Paramus and COAH separately sought and were granted leave to appeal. We consolidate the appeals for the purpose of decision.

Plaintiffs' complaint is in ten counts and includes a number of attacks: In Count I, it charges that the Paramus-Westland agreement and the zoning amendments are ultra vires and invalid because they are the products of the unlawful sale of commercial zoning to Westland. The second count charges that the agreement and zoning amendments are unlawful because they improperly shift to commercial developers the burden to fund Paramus's Mt. Laurel obligations, and to finance improper offsite improvements. The third count alleges that the agreement and amendments were invalidated by the participation of the Mayor, and his conflict of interest arising out of his brother-in-law's sometime legal representation of Westland and his wife's employment by the brother-in-law. The fourth count attacks the agreement and amendments on the ground that the governing body improperly contractually bound itself in futuro not to alter an agreed zoning scheme. The fifth count charged violations of the Open Meetings Act. It was dismissed by the Law Division, and is not before us. The sixth count charged that the amendments constituted invalid spot zoning by creating a uniquely favorable commercial zone limited to the Westland properties. The seventh count contends that the agreement and ordinance are invalid because they do not, contrary to COAH's substantive certification, provide a realistic opportunity for the construction of affordable housing. The eighth count charged unfair competition and restraint of trade. It was dismissed by the Law Division, and is not before us. The ninth count charged two procedural irregularities. The first was the failure of COAH to refer the proceeding before it, in which plaintiffs did not appear, to the Office of Administrative Law for an evidentiary hearing. This contention was dismissed by the Law Division. The second irregularity was Paramus's failure to present the proposed amendments to the planning board for its review. That contention survived. The tenth and final count charged that the ordinance was invalid because it was vague, inconsistent and ambiguous.

Defendants' motions to dismiss the complaint were argued on various grounds. The gist of their positions before us, however, can be simply stated. They argue that plaintiffs have no standing to maintain this litigation, that they failed to exhaust obligatory administrative remedies, that their claims were addressed to the wrong court, were too late, and were barred by special Mt. Laurel principles of repose. We affirm in part and reverse in part.

Every municipality in New Jersey has the constitutional duty to provide "a realistic opportunity for the construction of its fair share of low and moderate income housing." So. Burlington Cty. N.A.A.C.P. v. Mt. Laurel Tp., 92 N.J. 158, 221, 456 A.2d 390 (1983) ("Mt. Laurel II"). The Supreme Court recognizes lower income persons, public interest organizations representing the interests of lower income persons, and developers offering to build lower income housing as proper plaintiffs in suits charging municipalities with failure to satisfy their constitutional housing responsibilities. Mt. Laurel II, 92 N.J. at 218, 279-281, 337, 456 A.2d 390. Developers were expected to pursue a "builder's remedy," which would permit them to profit from constructing lower income housing while performing the public service of enforcing compliance with municipal Mt. Laurel obligations. Hills Dev. Co. v. Bernards Tp. in Somerset Cty., 103 N.J. 1, 54-55, 510 A.2d 621 (1986) ("Mt. Laurel III").

In response to the Mt. Laurel decisions and the Court's invitation to a legislative initiative, Mt. Laurel II, 92 N.J. at 212-213, 456 A.2d 390, the Fair Housing Act was adopted. L.1985, c. 222; N.J.S.A. 52:27D-301 et seq. It provides a statutory means to enable each municipality to determine and provide for its fair share of its region's need for low and moderate income housing. It creates COAH and gives it the responsibility of dividing the State into housing regions, ascertaining the housing needs, and developing guidelines for the municipalities to determine their fair share. N.J.S.A. 52:27D-305, 307. It authorizes COAH to determine, if asked, whether a municipality's proposed means of satisfying its Mt. Laurel obligations will in fact do so. N.J.S.A. 52:27D-313, 315; Mt. Laurel III, 103 N.J. at 35-36, 510 A.2d 621. If a municipality elects to notify COAH of its intent to submit its fair share plan and housing element ¹ and does submit them before the institution of any "exclusionary zoning litigation," it can gain valuable protection from exclusionary zoning litigation. If a municipality does not take advantage of the mechanisms created by the statute, it foregoes that protection.

If a municipality petitions COAH for substantive certification, N.J.S.A. 52:27D-313, COAH issues a grant if no objection is timely filed, and if the municipality's submittal is consistent with COAH's criteria and makes "the achievement of the municipality' fair share of low and moderate income housing realistically possible." N.J.S.A. 52:27D-314. Timely objection to the municipality's petition for substantive certification triggers the review and mediation process, which will hopefully resolve the objection. ² If it becomes a contested case, the matter is referred to the Office of Administrative Law for an evidentiary hearing. N.J.S.A. 52:27D-315; 52:14B-1 et seq. See Hills Development v. Bernards Tp., 229 N.J.Super. 318, 336 et seq., 551 A.2d 547 (App.Div.1988). COAH's decision is made after the Office of Administrative Law issues its initial decision. If COAH grants substantive certification, the municipality has 45 days in which to adopt the approved fair share housing ordinance. N.J.S.A. 52:27D-314.

A plaintiff who files an "exclusionary zoning case" against a municipality which has obtained substantive certification must join COAH as a party, and must face a presumption of validity of the housing element and the ordinance implementing it. The presumption may be overcome only by clear and convincing evidence that the housing element and ordinance do not provide a realistic opportunity for the provision of the municipality's fair share of low and moderate income housing. N.J.S.A. 52:27D-317. In...