High Horizons Development Co. v. State, Dept. of Transp.

• Decision Date: 02 July 1990
• Citation: 120 N.J. 40,575 A.2d 1360
• Parties: HIGH HORIZONS DEVELOPMENT COMPANY, Respondent, v. STATE of New Jersey, DEPARTMENT OF TRANSPORTATION, Appellant.
• Court: New Jersey Supreme Court

Page 40

120 N.J. 40

575 A.2d 1360

HIGH HORIZONS DEVELOPMENT COMPANY, Respondent, v. STATE of New Jersey, DEPARTMENT OF TRANSPORTATION, Appellant.

Supreme Court of New Jersey.

Argued March 27, 1990.

Decided July 2, 1990.

Susan R. Roop, Deputy Atty. Gen., for appellant (Robert J. Del Tufo, Atty. Gen., atty., Michael R. Clancy, Asst. Atty. Gen., of counsel; Susan R. Roop and Jeffrey W. Gerber, Deputy Atty. Gen., on the brief).

John W. Wopat, III, for respondent (Falvo and Wopat, Oakhurst, attys.).

The opinion of the Court was delivered by

O'HERN, J.

The central issue in this appeal is a property owner's claim of right to a trial-type hearing on the property owner's application for a state-highway-access permit. Under prior law the Department of Transportation's (DOT's) enabling legislation, N.J.S.A. Title 27, spelled out no procedure for processing an access permit, and the regulations enacted under its authority gave but a sparse outline. N.J.A.C. 16:41-2. That regulation prescribes the form of application and the documentation to be submitted, depending on the nature of the application, i.e., is it a large project, small project, major highway, etc.? Neither statute nor regulation states that an applicant is entitled to a hearing, much less a trial-type hearing, on an application.

Absent such a provision in DOT's enabling act, High Horizons Development Company (High Horizons) claims entitlement to a trial-type hearing under the provisions of the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15, or other principles of administrative law.

The case arises from High Horizons' development of a condominium project abutting State Highway 36 in Long Branch, Monmouth County, New Jersey. The project consists of fifty-eight units and has frontage on another access street, Clifton Avenue, which leads to Route 36. Route 36, also called Ocean Boulevard, is a divided, four-lane highway that parallels the shore line in this coastal community.

High Horizons applied to DOT in April 1987 for access to Route 36 by way of a circular drive suited to delivery vehicles and other occasional traffic. It proposed principal access for residents' vehicles from Clifton Avenue, but wanted dual access in part to alleviate the traffic burden on the local street. A planned security gate activated by magnetic card would limit the Clifton Avenue entrance to residents. DOT denied the application in a June 19, 1987, letter, explaining:

The site for the proposed residential development is located several hundred feet north of Joline Avenue which is a signalized intersection with exclusive left turn lanes provided on Route 36. It is recommended that direct access to the site from Route 36 be denied due to the alternate access which is available on Clifton Avenue. This would allow all required traffic movements to be accomplished at the signalized intersection.

High Horizons appealed. In response to concerns of the applicant and local fire authorities about emergency access, in January 1988 DOT proposed limited access by means of a mountable curb. The property owner rejected that solution and renewed the appeal. After further review, including a February 26 hearing before the Region III Engineer, DOT maintained its denial of full access, offering the following reasons:

There is access to your site from Clifton Avenue. This should handle the traffic generated by your development.

Your traffic report indicates a minimal amount of traffic would have used the Ocean Boulevard access. This being the case, Clifton Avenue will be sufficient to handle the site traffic.

The additional access to Ocean Boulevard could adversely affect the existing traffic patterns on Ocean Boulevard.

Providing access to the project from Ocean Boulevard is unnecessary given the proximity of a regulated crossing at Joline Avenue.

High Horizons carried its appeal to the Acting Deputy State Highway Engineer, who presided at an informal hearing at DOT's Trenton Office on April 25, 1988. Although witnesses were not sworn, High Horizons presented testimony by one of its principals and by a traffic-safety consultant. Both emphasized the careful design for traffic management, which had local approval. DOT produced no testimony and did not cross-examine witnesses. The complex as planned also had a conditional CAFRA permit (Coastal Area Facility Review Act, N.J.S.A. 13:19-1 to -21). The applicant claimed that the CAFRA permit was premised on direct access to Route 36.

DOT issued its final decision on June 30, 1988. In denying the application, DOT explained that any need for emergency access from Route 36 would be met by the mountable curb, and that the Clifton Avenue access was, in its judgment, adequate for all other purposes. DOT disputed High Horizons' contention that its CAFRA permit required direct Route 36 access, and declined to base its decision on the need created only by applicant's plan, in the face of its own judgment that direct access "would negatively affect existing traffic patterns." High Horizons appealed to the Appellate Division.

When DOT filed its statement of items comprising the record, pursuant to Rule 2:5-4(b), High Horizons responded by moving before DOT, pursuant to Rule 2:5-5(a), to settle the record, asserting that six of the fifteen listed documents had never been furnished during the appeal process. DOT denied the motion, responding that the omitted documents contained no relevant, undisclosed information, and High Horizons did not move before the Appellate Division to review that denial. Among the documents not made available to the applicant were several internal memoranda and a copy of a letter from the Monmouth County Planning Board to the Division of Coastal Resources in the Department of Environmental Protection, recommending against direct Route 36 access for another condominium development. High Horizons' major concern was that although an internal memorandum referred to the Planning Board letter, High Horizons had had no opportunity to attempt rebuttal.

The Appellate Division agreed with the property owner that an evidentiary hearing was required, reasoning that entitlement to such a hearing turned on whether the application for an access permit was a "contested case" as defined by N.J.S.A. 52:14B-2(b). 231 N.J.Super. 399, 555 A.2d 740 (1989). Relying on Cunningham v. Department of Civil Service, 69 N.J. 13, 350 A.2d 58 (1975), the court found both prerequisites to an evidentiary hearing: (1) the presence of contested factual issues, and (2) dispute over particularized property rights. 231 N.J.Super. at 405-07, 555 A.2d 740. In addition, the court ruled that DOT had "violated the requirements of administrative due process by failing to disclose all of the documents upon which it relied." Id. at 407, 555 A.2d 740. The court reversed DOT's final decision and remanded for referral of the matter to the Office of Administrative Law (OAL) as a contested case. We granted certification. 117 N.J. 139, 564 A.2d 862 (1989).

Since the date of the agency's action, the Legislature has completely overhauled the procedure for handling highway-access permits. State Highway Access Management Act, L. 1989, c. 32 (Approved February 23, 1989). The new Act directs the agency to adopt implementing regulations. Those regulations were promulgated but have not yet been adopted. State Highway Access Management Code, 22 N.J.R. 1061 (1990) (proposed N.J.A.C. 16:47).

It would, of course, be premature and unwise to pass on the validity of the new administrative program in an unlitigated setting. Hence, the only remaining issue is whether in the circumstances of this case, not likely to reoccur, the Appellate Division was correct in requiring a trial-type hearing before an Administrative Law Judge (ALJ).

I

Few subjects have generated more inconclusive principles of law than attend the question of when a trial-type hearing is required as a condition of administrative action. See generally 2 K. Davis, Administrative Law Treatise § 10.1 (2d ed. 1979) (summarizing evolution of law of protected interests); Rabin, "Some Thoughts on the Relationship Between Fundamental Values and Procedural Safeguards in Constitutional Right to Hearing Cases," 16 San Diego L.Rev. 301 (1979) (discussing extent of safeguards needed to protect basic due-process values). Of course it would all be a lot simpler for everyone if plain legislative language were to resolve the problem, but the APA, which is the touchstone for decision in formulating fair administrative procedures, falls short of such clarity.

To place this issue in perspective, it is useful to recall the stages of growth of administrative law. See L. Jaffe, Judicial Control of Administrative Action 3-10 (1965). At first courts struggled with the contours of substantive policy-making that could be delegated to agencies. See Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570 (1935). Once courts recognized that the choice of policy was for the agency, the next distinctive trend in the development of administrative law was to require procedural fairness before an agency could act as a lawmaker by formulating interstitial mandates that affected public conduct or by adjudicating private rights. Hence, the 1946 enactment of the federal Administrative Procedure Act, 5 U.S.C. §§ 551 to 559. New Jersey enacted its APA in 1968. L. 1968, c. 410. A 1978 amendment directed that the OAL would provide impartial hearing examiners in "contested cases." L. 1978, c. 67 § 8 (codified at N.J.S.A. 52:14B-10(c)). The language of the New Jersey APA is similar to the federal Administrative Procedure Act and to the Uniform Law rendition adopted by many states.

Rather than itself specifying when a trial-type hearing is required, the APA piggybacks on other sources for the determination of this fundamental issue. Its thesis is that when an administrative hearing is required, that hearing shall be...