Bd. of Adjustment of the Township of North Bergen v. B.A.P.S. Northeast, Inc.

• Decision Date: 27 February 2001
• Docket Number: No. 00-2135,00-2135
• Citation: 256 F.3d 107
• Parties: (3rd Cir. 2001) IN RE: FOUR THREE OH, INC., DEBTOR BOARD OF ADJUSTMENT OF THE TOWNSHIP OF NORTH BERGEN, THE, APPELLANT v. B.A.P.S. NORTHEAST, INC.; MICHAEL B. KAPLAN, CHAPTER 11 TRUSTEE; TOWNSHIP OF NORTH BERGEN, THE, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; FOUR THREE OH CORP. Submitted Under Third Circuit LAR 34.1(a)
• Court: U.S. Court of Appeals — Third Circuit

Page 107

256 F.3d 107 (3rd Cir. 2001)

IN RE: FOUR THREE OH, INC., DEBTOR

BOARD OF ADJUSTMENT OF THE TOWNSHIP OF NORTH BERGEN, THE, APPELLANT v. B.A.P.S. NORTHEAST, INC.; MICHAEL B. KAPLAN, CHAPTER 11 TRUSTEE; TOWNSHIP OF NORTH BERGEN, THE, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; FOUR THREE OH CORP.

No. 00-2135

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Submitted Under Third Circuit LAR 34.1(a) February 27, 2001

July 2, 2001

Appeal from the United States District Court For the District of New Jersey D.C. No.: 99-CV-06002 District Judge: Alfred M. Wolin

[Copyrighted Material Omitted]

Gerald J. Monahan, Esq., Union City, NJ, for Appellant

Robert L. Podvey, Esq. Podvey, Sachs, Meanor, Catenacci, Hildner & Cocoziello, Newark, NJ, for Appellees

Before: Nygaard, Alito, and Rosenn, Circuit Judges.

OPINION OF THE COURT

Rosenn, Circuit Judge

This appeal has its origin in BAPS's¹ application to the North Bergen Board of Adjustment ("BOA or "the Board") for a use variance which would permit BAPS to use the subject property as a temple for Hindu worship. BAPS had agreed to purchase the property from the trustee in bankruptcy for Four Three Oh, Inc. on the condition that it receive approval from the Township of North Bergen for its desired use. The application process dragged on for over two years, and finally culminated in the BOA's insistence that BAPS hire off-duty police officers to direct traffic and insure compliance with the occupancy limit for the temple set by the BOA. The Bankruptcy Court held that this condition was unreasonable and issued an injunction requiring the BOA to allow BAPS to use its own uniformed volunteers for traffic direction and occupancy limit compliance. The BOA appealed this order to the United States District Court for the District of New Jersey, which affirmed. The Board timely appealed to this Court. We also affirm.

I.

This controversy began in November of 1998, when the United States Bankruptcy Court approved the sale to BAPS of the subject property which previously had been owned by Four Three Oh, Inc., a debtor in Chapter 11 proceedings. The sale of the property, which had been used by the prior owner as a nightclub, was contingent upon BAPS obtaining permission from the BOA to use the land as a house of worship.

BAPS applied to the Township of North Bergen for a Certificate of Occupancy to permit the property to be used as a place of worship. Because the property is located in an industrial zone, the Township denied the application on the ground that a use variance was required under New Jersey law. BAPS then filed an application for the necessary use variance with the BOA, who scheduled the matter for a hearing in January, 1999.

Over the next several months, the BOA repeatedly postponed the hearing. As a result, the Chapter 11 trustee and BAPS jointly commenced an adversary proceeding in the Bankruptcy Court seeking an injunction requiring the BOA to grant BAPS's pending application for a variance. The Bankruptcy Court denied the injunction, but remanded the matter to the BOA for a hearing, ordering it to issue a final decision on the BAPS application by October 6, 1999.

The first remand hearing occurred on September 22, 1999. The BOA heard testimony from several experts, including Derrick McGrath, the BOA's engineer, who identified numerous problems with the site that BAPS needed to address. Most of these problems were later discussed by BAPS's engineer, Bhaskar Halari, who explained that BAPS could and would remedy them. One of the chief problems McGrath identified was the fear that the property had insufficient parking spaces to accommodate its anticipated use. In response to this concern, Kishor Joshi, BAPS's architect, testified that BAPS was willing to limit the temple's occupancy based on the number of available parking spaces.

The number of parking spaces that would be available for worshippers' use is a matter of dispute. Part of the land on which the former nightclub was situated is currently leased to a fast food restaurant (Taco Bell). Although Taco Bell's lease is silent on the issue of parking, Michael Kauker, the North Bergen town planner, had previously testified that, based on the number of seats in Taco Bell, the restaurant was entitled to exclusive use of 27 parking spaces. Joshi accepted this conclusion and calculated that the temple would be left with 165 spaces. He offered to limit the occupancy of the temple to 3.5 persons per parking space, or 578 persons.

The BOA then heard testimony from Michael Maris, BAPS's traffic expert. He testified that he had studied the traffic conditions on the avenue adjacent to the property and, using a "peak load factor" of .9, he calculated that the property would have a C Level of Service,² acceptable under Federal standards. Maris based this calculation on BAPS's agreement to limit itself to 165 parking spaces.

On September 28, 1999, the BOA heard testimony from its own traffic consultant, Hal Simoff. Using the same methodology as Maris, he concluded that the temple's driveways would operate unsafely, with a level of service rating of F. However, Simoff used a peak load factor of .7, which, on cross examination, he conceded was incorrect. He then agreed that a peak load factor of .82 would be more appropriate and would yield a D Level of Service, which Maris testified was still acceptable (under federal standards). Simoff later testified that, based on his reading of the metes and bounds description in the Taco Bell lease, Taco Bell was entitled to 65 parking spaces. Although it received notice of this litigation, Taco Bell never appeared or asserted any claim.

Between the second and final scheduled hearing dates, BAPS wrote a letter to the BOA offering to limit its occupancy to 505 persons, even though the number of available parking spaces would permit a building occupancy of 578 persons under the relevant North Bergen ordinance. Under the ordinance, a building with an occupancy limit of 505 required only 143 parking spaces.

The final hearing on the BAPS application took place on October 6, 1999. Simoff again testified at this hearing, but this time he limited his testimony to BAPS's existing facility in nearby Edison Township. Simoff claimed that BAPS had misrepresented its proposed use of that facility before the Edison land use board and that BAPS had made architectural changes to the Edison building without first obtaining the requisite municipal approval. However, Simoff once again retracted his testimony on cross-examination when confronted with approved site plans for the Edison facility. These plans proved that BAPS had, in fact, obtained the approval of the township before altering its building.

At the end of the final hearing, the BOA denied BAPS's application for a variance, citing occupancy, traffic, and parking problems. BAPS appealed this decision to the Bankruptcy Court, which reversed the denial, concluding that the Board had acted arbitrarily in refusing to consider reasonable restrictions that would alleviate problems with occupancy, parking, ingress and egress. The Court remanded the application back to the Board to consider such restrictions.

On remand, the BOA required, as a condition of granting the variance, that BAPS hire off-duty police officers to monitor traffic entering and exiting its parking lot. This condition was financially burdensome and, as it turned out, impossible to fulfill, because the chief of police later informed BAPS that off-duty officers were not available. The BOA refused BAPS's offer to have its own volunteers perform this function, and BAPS once again brought the matter to the attention of the Bankruptcy Court. This time, the Court held that this condition was arbitrary and unreasonable. It vacated the proposed condition and ordered BAPS's application for a variance approved, allowing BAPS volunteers to monitor the traffic flow in the temple parking lot. The BOA appealed this order to the District Court, which affirmed.

II.

The first question before us is whether the District Court applied the correct standard of review. The District Court reviewed the bankruptcy court's factual findings for clear error, while subjecting its legal conclusions to plenary review. Although this is the standard that normally applies to appeals from bankruptcy decisions, see In re Sharon Steel Corp., 871 F.2d 1217, 1223 (3d Cir. 1989), this case reached the District Court in an unusual procedural posture. The Bankruptcy Court had effectively reviewed the decision of the Board of Adjustment, an administrative body created under state law. Under similar circumstances, the Court of Appeals for the Eight Circuit explained the standard of review as follows:

[W]e are reviewing neither the legal rulings of the bankruptcy court nor its findings of fact. We are reviewing the judgment of a district court affirming a bankruptcy court decision giving effect to a decision of the [administrative agency]. In substance, we are reviewing the decision of an administrative agency.

Bankruptcy Estate of United Shipping v. General Mills, 34 F.3d 1383, 1390 (8th Cir.1994)(internal citations omitted).

When a federal court reviews a decision of a state agency, it must grant that agency's factual findings the same degree of deference to which they would be entitled if they were reviewed by a state court. See AT&T Wireless PCS v. Winston-Salem Zoning Board, 172 F .3d 307, 315 (4th Cir. 1999). If the BOA's decision had been reviewed in the state court system, the Law Division of the New Jersey Superior Court would have exercised a deferential standard of review. Its review would have been limited to determining whether the BOA's decision was supported by "substantial evidence" and whether it was "arbitrary, unreasonable or capricious." Pullen v. S. Plainfield Planning Bd., 291 N.J. Super 303, 311-12, 677 A.2d 278, 282 (Law Div. 1995)("Pullen I"). The Law Division would have...