Mfrs. & Traders Tr. Co. v. Marina Bay Towers Urban Renewal II, LP, DOCKET NO. A-5879-17T2
| Decision Date | 22 October 2019 |
| Docket Number | DOCKET NO. A-5879-17T2 |
| Parties | MANUFACTURERS AND TRADERS TRUST COMPANY, as Indenture Trustee, Plaintiff-Respondent, v. MARINA BAY TOWERS URBAN RENEWAL II, LP, MARINA BAY TOWERS URBAN RENEWAL, LP, BEACH CREEK MARINA, INC., ESSEX COUNTY IMPROVEMENT AUTHORITY, CITY OF NORTH WILDWOOD, CONSULT URBAN RENEWAL DEVELOPMENT CORPORATION, BARBARA WATERMAN, ALICE WALSH, FRANCES DAVIS, LOUISE JARAMILLO, CAROLYN NARCISO, JEAN HOPPER, JOSEPH MORELLO, EDWARD & RAMONA HELLER, DOROTHY J. KIRWIN, PAUL & JOAN NEWELL, BONNIE MCNAMARA, and PHYLLIS HANAHAN, Defendants-Respondents, and STATE OF NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, NEW JERSEY HOUSING AND MORTGAGE FINANCE AGENCY, and STATE OF NEW JERSEY, Defendants-Appellants, and MARINA BAY TOWERS CONDOMINIUM ASSOCIATION, INC., US BANK - CUST PRO CAPITAL I, LLC, US BANK CUST FOR TOWER DBW, QUALITY ROOFING SUPPLY CO. INC., THYSSENKRUPP ELEVATOR AMERICAS, MULTI ROOF MAINTENANCE LLC, ALEXANDER DANNIBALE, MARGARET KERNS, MARGARET PASSIO, JOSEPH MARLEY, MARY C. TIETZ, JAMES LAWLESS, JAMES GET SINGER, ALICE LONG, ANTOINETTE NUGENT, JOAN M. SHEFSKI, MARY E. SMITH, LOUIS WOJTIW, JOAN CHESAITIS, ANTHONY BOYLE, MALCOLM FERENTZ, JAMES & LINDA MCGRATH, JACQUELINE HUGES, SANDRA WHITENER, NADALINE PEACOCK, LILLIAN CAPONE, MARGARET MULDREW, ELIZABETH JOVOVICH, JAMES HUNDZYNSKI, MARIANNE BATCHELOR, BERNITA HOLT, JOSEPH F. RADOSLOVICH, MARIE T. BRADY, CLARA MORRIS, DOLORES MCCOACH, LINDA ANSELL, FRANCIS MCCLAIN, HELEN ANDREWS, MICHAEL NORESKI, SYLVIA ARMSTRONG, PATRICIA DEVINE, EILEEN O'DONNELL, JOSEPH PERKIS, MADELINE A. HOGAN, RONALD KURTZ, GERALDINE PAXTON, RICHARD & IRENE MCALLISTER, MICHELLE COYLE, PATRICIA M. ALLEN, DOMINIC RAFFAELE, JOSEPH MADDEN, JAMES HERON, PATRICIA TRIMBLE, SARA A. KANE, HELEN UHLEIN, JOAN STAUB, WILLIAM H. SMITH, ELSIE SMITH, VIRGINIA GIVIN, ELAINE COHEN, ALICIA & GUY STEVENS, HELEN & FREDERICK BEAVER, RICHARD SINCLAIR, BARBARA SMITH, ANN HARRIS, IRENE D. STARAHS, BARBARA MARTINELLI, GERTRUDE SNYDER, SALLY T. SMITH, MARIE GRAY, and WALTER CRAWFORD, Defendants. BONNIE MCNAMARA, ALICE WALSH, BARBARA WATERMAN, CAROL NARCISO, FRANCES DAVIS, PHYLLIS HANAHAN, EDWARD HELLER, JEAN HOPPER, DOROTHY KIRWIN, and JOAN NEWELL, Plaintiffs-Respondents, and EILEEN O'DONNELL, NAD ALINE PEACOCK, JOAN SHEFSKI, ALICE LONG, BARBARA SMITH, PATRICIA TRIMBLE, and SANDRA WHITENER, Plaintiffs, v. MARINA BAY TOWERS URBAN RENEWAL II, LP, BEACH CREEK MARINA, INC., RUBICON DEVELOPMENT, LLC, RUBICON PROPERTIES, LLC, CONSULT URBAN RENEWAL DEVELOPMENT CORPORATION, PAC CAPITAL, LLC, PAUL COCOZIELLO, and ESSEX COUNTY IMPROVEMENT AUTHORITY, Defendants-Respondents, and NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, Defendant-Appellant, and MARINA BAY TOWERS CONDOMINIUM ASSOCIATION, INC., JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, M & T BANK, T.D. BANK, N.A., US BANK-CUST PRO CAPITAL I, LLC, and US BANK-CUST FOR TOWER DBW, Defendants. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Before Judges Sabatino, Sumners and Natali.
On appeal from an interlocutory order of the Superior Court of New Jersey, Chancery Division, Cape May County, Docket Nos. F-049229-14 and L-0365-14.
Susan Marie Scott, Deputy Attorney General, argued the cause for appellants (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Susan Marie Scott, on the brief).
James N. Lawlor argued the cause for respondent Manufacturers and Traders Trust Company (Wollmuth Maher & Deutsch LLP, attorneys; James N. Lawlor and Olivia J. Italiano, on the brief).
Salvatore Perillo argued the cause for respondent PAC Capital, LLC, (Nehmad Perillo Davis & Goldstein, PC, attorneys, join in the brief of respondent Manufacturers and Traders Trust Company).
Keith A. Bonchi argued the cause for respondents Marina Bay Towers Urban Renewal II, LP and MarinaBay Towers, LP (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill and Thomas George Aljian, attorneys; Keith A. Bonchi, of counsel and on the brief; Elliott J. Almanza, on the brief).
Robert A. Fagella argued the cause for respondent Beach Creek Marina, Inc. (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, attorneys; Flavio L. Komuves, on the brief).
Michael D. Mezzacca argued the cause for respondents Consult Urban Renewal Development Corporation, Paul Cocoziello, Rubicon Development, LLC, and Rubicon Properties, LLC (Bourne, Noll & Kenyon, PC, attorneys; Michael D. Mezzacca, on the brief).
Robert Beckelman argued the cause for respondent City of North Wildwood (Wilentz Goldman & Spitzer, PA, attorneys; Robert Beckelman, on the brief).
Olga D. Pomar argued the cause for respondents Jean Hopper, Phyllis Hanahan, Joan Newell, Edward Heller, Louise Jaramillo, Bonnie McNamara, Joseph Morello, Alice M. Walsh, Dorothy Kirwin, Carol Narciso, Barbara Waterman and Frances Davis (South Jersey Legal Services, Inc., attorneys; Olga D. Pomar, on the brief).
This appeal by the State of New Jersey and two of its agencies involves an income-restricted senior citizen housing project, Marina Bay Towers, that was built in the City of North Wildwood with the assistance of several sources of governmental funding. The project was conceived by developer PaulCocoziello, who owns several of the entities involved in the project. Those entities include the owner and lessor of the land where the project was built, Beach Creek Marina, Inc. ("Beach Creek"); the construction manager, Consult Urban Renewal Development Corporation ("CURDC"); and Rubicon Development, LLC, and Rubicon Properties, LLC, companies involved in developing and managing the property. Cocoziello is also the president, executive officer and managing member of PAC Capital, LLC ("PAC Capital"), the company that purchased $7.4 million in bonds issued by the Essex County Improvement authority ("ECIA") to help finance the project. In addition, he is the authorized agent and representative of plaintiff Marina Bay Towers Urban Renewal II, LP ("MBT II"), the limited partnership that currently owns the building.
Specifically, this appeal is from an interlocutory order of the Chancery Division approving a plan to restructure and rehabilitate Marina Bay Towers (the "Restructuring Plan" or "Plan") pursuant to foreclosure litigation, and denying the appointment of a receiver. The foreclosure and receivership actions were not consolidated but were heard together in the Chancery Division.
As we will discuss more extensively in Part I of this opinion, plaintiff Manufacturers and Traders Trust Company ("MTTC"), acting as trustee for PACCapital, filed the foreclosure action in connection with $7.4 million in bonds that had been issued in 2005 by the ECIA, to refinance the Marina Bay Towers project. The bonds were all purchased by PAC Capital. The foreclosure action was filed in November 2014, approximately three months after certain tenants (the "Litigating Tenants") filed the receivership petition.
The housing project has required significant repairs due, in large part, to extensive damage sustained during Hurricane Floyd and, thereafter, Superstorm Sandy.
Construction of Marina Bay Towers was initially financed through an allocation of federal Low Income Housing Tax Credits ("LIHTCs"), awarded in 1997 by the New Jersey Housing and Mortgage Finance Agency ("HMFA"). The project was also financed by a loan from the New Jersey Department of Community Affairs ("DCA"), also awarded in 1997, through its Neighborhood Preservation Balanced Housing Program (the "Balanced Housing Program"). In connection with the financing provided by the HMFA and the DCA, the State imposed certain occupancy and rent restrictions, also referred to in this opinion as "affordability controls," on the property.
The trial court conditionally approved the proposed Restructuring Plan, subject to oversight by a Special Master. As contemplated by the Plan, the courtextinguished the HMFA and DCA rent and occupancy restrictions. The court based its decision on a federal statute, 26 U.S.C. § 42(h)(6)(E)(i)(I), as well as its equitable powers under N.J.S.A. 40:37A-116, a provision affecting foreclosure actions set forth in the County Improvement Authorities Law, N.J.S.A. 40:37A-44 to -135 ("CIAL").
On appeal, the HMFA and the DCA (collectively, "the State") principally argue that the trial court erred by extinguishing the rent and occupancy restrictions and refusing to appoint a receiver. The participating respondents, the City of North Wildwood and the Litigating Tenants, largely support the State's arguments, although they have not filed cross appeals.
For the reasons that follow, we conclude the trial court correctly determined that, under 26 U.S.C. § 42(h)(6)(E)(i)(I), the rent and occupancy restrictions imposed by the HMFA in connection with the award of LIHTCs are extinguished upon a final judgment of foreclosure. However, the trial court incorrectly ruled that the DCA rent and occupancy restrictions are automatically terminated by foreclosure under the federal statute and by the rules governing the Balanced Housing Program. Despite that particular error, the trial court nonetheless properly exercised its equitable powers and discretion under the CIAL, N.J.S.A. 40:37A-116, to nullify the DCA provisions containing theaffordable housing restrictions and replace them with revised restrictions for low-income and moderate-income residents that are set forth in the Restructuring Plan. The trial court reasonably found that the revised restrictions were justified to save the economic viability of the project.
We further hold the trial court reasonably exercised its discretion in denying the receivership application, given, among other things, the condition of the building, the fact that more...
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