In re Borough of Englewood Cliffs, Corp.

• Court: New Jersey Superior Court — Appellate Division
• Writing for the Court: GILSON, J.A.D.
• Citation: In re Borough of Englewood Cliffs, Corp., 473 N.J.Super. 189, 279 A.3d 463 (N.J. Super. App. Div. 2022)
• Docket Number: DOCKET NO. A-3119-20
• Decision Date: 15 July 2022
• Parties: In the MATTER OF the Application of the BOROUGH OF ENGLEWOOD CLIFFS, a municipal corporation of the State of New Jersey.

473 N.J.Super. 189

279 A.3d 463

In the MATTER OF the Application of the BOROUGH OF ENGLEWOOD CLIFFS, a municipal corporation of the State of New Jersey.

DOCKET NO. A-3119-20

Superior Court of New Jersey, Appellate Division.

Argued April 6, 2022

Decided July 15, 2022

Robert A. Magnanini, Berkeley Heights, argued the cause for appellant Borough of Englewood Cliffs (Stone & Magnanini LLP, attorneys; Robert A. Magnanini, on the briefs).

Thomas F. Carroll, III, Princeton, and Antimo A. Del Vecchio, Montvale, argued the cause for respondent 800 Sylvan Avenue, LLC (Hill Wallack LLP and Beattie Padovano, LLC, attorneys; Thomas F. Carroll, III, Antimo A. Del Vecchio, and Daniel L. Steinhagen, on the brief).

Joshua D. Bauers argued the cause for intervenor respondent Fair Share Housing Center (Joshua D. Bauers, of counsel and on the brief; Adam M. Gordon, on the brief).

Before Judges Gilson, Gooden Brown, and Gummer.

The opinion of the court was delivered by

GILSON, J.A.D.

Municipalities have constitutional obligations to provide for their fair share of the regional need for affordable housing. See In re Adoption of N.J.A.C. 5:96 & 5:97 (Mount Laurel IV ), 221 N.J. 1, 110 A.3d 31 (2015) ; the Fair Housing Act, N.J.S.A. 52:27D-301 to -329.4. After years of litigation and a trial, the trial court found that the Borough of Englewood Cliffs (the Borough) had failed to comply with its constitutional obligations and awarded a builder's remedy to allow affordable housing to be built in the Borough.

Thereafter, the Borough negotiated and entered into settlement agreements to allow affordable housing to be built. Those settlement agreements were submitted to the trial court and accepted after the court had conducted a fairness hearing. Following a change in the membership of the Borough's council, the Borough moved to vacate the settlement agreements, contending that two council members who had voted for the agreements had conflicts of interest. That argument was in direct contradiction to the position the Borough had taken before the trial court and in a related litigation where the Borough had argued that there were no conflicts of interest. Accordingly, the trial court rejected the Borough's argument for several reasons, including that the Borough was judicially estopped from claiming a conflict. The trial court, thereafter, entered a final judgment based on the settlement agreements.

The Borough now appeals from the order denying its motion to vacate the settlement agreements and the final judgment enforcing those agreements. We reject the Borough's arguments and affirm.

I.

In 2015, the Borough filed this action seeking a declaration that its affordable housing plan was constitutionally compliant (the DJ Action). The Borough also sought immunity from being sued by third parties to comply with its fair-housing obligations. The Fair Share Housing Center (Fair Share), a non-profit organization that advocates for affordable housing, and 800 Sylvan Avenue, LLC (Sylvan), the owner of property in the Borough, both intervened in the action. Thereafter, Sylvan and Fair Share spent several years trying to negotiate a settlement with the Borough.

On August 27, 2019, when no settlement had been reached, the trial court issued an order and opinion granting Sylvan's motion to terminate the Borough's immunity from builder's remedy lawsuits.¹ The court found that the Borough had acted in "bad faith" and had made a "concerted effort" to avoid compliance with its affordable housing obligations.

Thereafter, the trial judge, Christine A. Farrington, J.S.C., conducted a trial to determine whether the Borough's affordable-housing plan was constitutionally compliant. On January 17, 2020, at the conclusion of phase one of the trial, Judge Farrington issued an order and a thorough 129-page opinion finding that the Borough's affordable housing plan, which had been adopted in 2018, was constitutionally non-compliant. The judge directed the Borough to prepare a new compliance plan and revise its zoning ordinances within ninety days.

On February 12, 2020, at the conclusion of phase two of the trial, Judge Farrington issued an order and written opinion granting Sylvan site-specific relief in the form of a builder's remedy. The judge directed the Borough to rezone Sylvan's property to allow for the construction of 600 dwelling units, including 120 units of affordable housing.

The Borough refused to comply with the court's orders. It adopted a resolution declaring that it was "not willing to rezone the sites the Court has ordered it to rezone." The Borough also did not adopt a new affordable-housing compliance plan within the ninety days as directed by the trial court.

On April 17, 2020, Judge Farrington issued an order finding the Borough in contempt.

To compel compliance, the judge voided the Borough's zoning ordinances, stripped its planning board of the ability to review land-use applications, and appointed a special hearing officer to review development applications, including Sylvan's plan. The Borough twice sought leave to appeal, but we denied those motions.

The Borough then re-instituted settlement negotiations to try to resolve the litigation. On October 4, 2020, the Borough council met to consider approving two settlement agreements: one with Fair Share and one with Sylvan. During that meeting, Hemant Mehta, a Borough resident, objected to the settlement agreements and argued that council members Deborah Tsabari and Edward Aversa should not vote on the agreements because they had conflicts.

Several months before the October 2020 council meeting, Mehta had filed an action in lieu of a prerogative writ seeking, among other things, to restrain Tsabari and Aversa from voting on or participating in all matters related to the Sylvan property. Mehta asserted that Tsabari had a conflict because she owned property within 200 feet of the Sylvan site and Aversa had a conflict because his dental office was located within a proposed overlay zone. That prerogative writ action was heard by Judge Farrington, who was also presiding over the Borough's DJ Action.

In opposition to Mehta's position on a motion for reconsideration, the Borough filed papers contending that neither Aversa nor Tsabari had conflicts and that the council members’ interests were "common with the other members of the public" because the Borough covered a small geographic area and the location of affordable housing within the Borough would have the same effect on all Borough residents, including council members. The court in the Mehta action refused to enter restraints against the council members and ultimately dismissed Mehta's prerogative writ complaint with prejudice.

At the October 4, 2020 council meeting, the Borough attorneys pointed out that Mehta's contentions of conflicts of interest had previously been rejected by the court in his prerogative writ action. Thereafter, no council member recused himself or herself. Instead, the council voted to approve both settlement agreements.

The settlement agreement between the Borough and Sylvan provided that Sylvan would reduce the total number of housing units in its development plan, from 600 units with 120 units of affordable housing to 450 units with 90 affordable units. The agreement with Fair Share also provided for a reduction in the Borough's total realistic development potential. In the settlement agreement with Fair Share, the parties expressly acknowledged that they were settling the litigation "recognizing that the settlement of Mount Laurel litigation is favored because it ends delays and results more quickly in the construction of homes for lower-income households."

Both settlement agreements included enforcement and waiver provisions. In the Sylvan agreement's waiver provision, the parties "waiv[ed] all rights to challenge the validity or the ability to enforce" the settlement agreement. The parties also waived their right to challenge or appeal any order or decision in the DJ Action. The waiver provision in both settlement agreements also expressly acknowledged "that a change in political control of the Borough Council may occur, but such a change would not constitute a change in circumstances that would warrant a retraction of" the parties’ waiver of the right to appeal. The settlement agreement also provided that if a party sought relief related to the DJ Action, the non-breaching party could move to enforce the settlement agreement and the breaching party would be liable for "all legal fees" and "costs" incurred.

On October 8, 2020, after the settlement agreements were signed by the parties, the trial court entered a consent order scheduling a fairness and compliance hearing concerning the settlement agreements. No party challenged the validity of the council's adoption of the two settlement agreements on conflict-of-interest grounds within forty-five days of the council's October 4, 2020 vote.

On December 21, 2020, the trial court held a fairness and compliance hearing at which the Borough asked the court to approve the settlement agreements. Before that hearing, Mehta again objected to the approval of the settlement agreements, contending that council members had conflicts of interest. The Borough submitted opposition to Mehta's position and again took the position that there were no conflicts. In an extensive oral decision, issued on December 22, 2020, Judge Farrington found that the settlement agreements were fair and reasonable to lower-income households and entered a conditional judgment approving the settlement agreements.

As a result of elections conducted in November 2020, the makeup of the Borough's council changed effective January 2021. On April 16, 2021, the Borough filed an application seeking to invalidate the settlement agreements on the grounds that Tsabari and Aversa had disqualifying conflicts of interest that rendered the agreements void ab initio. Fair Share and Sylvan opposed that motion and filed motions to enforce...