Rezem Family Associates v. the Bor. of Millstone

• Decision Date: 15 April 2011
• Citation: 30 A.3d 1061,423 N.J.Super. 103
• Parties: REZEM FAMILY ASSOCIATES, LP, Plaintiff–Appellant/Cross–Respondent,v.The BOROUGH OF MILLSTONE, Ray Heck, in his official capacity, Borough of Millstone Council, William Poch, in his official capacity, Borough of Millstone Planning Board, Keith Dorschner, in his official capacity, Shirley M. Bishop, James DeMuro, in his official capacity, Defendants–Respondents/Cross–Appellants,andCarter Van Dyke, in his official and individual capacities, and Carter Van Dyke Associates, Defendants–Respondents.
• Court: New Jersey Superior Court

423 N.J.Super. 103

30 A.3d 1061

REZEM FAMILY ASSOCIATES, LP, Plaintiff–Appellant/Cross–Respondent,

v.The BOROUGH OF MILLSTONE, Ray Heck, in his official capacity, Borough of Millstone Council, William Poch, in his official capacity, Borough of Millstone Planning Board, Keith Dorschner, in his official capacity, Shirley M. Bishop, James DeMuro, in his official capacity, Defendants–Respondents/Cross–Appellants,andCarter Van Dyke, in his official and individual capacities, and Carter Van Dyke Associates, Defendants–Respondents.

Superior Court of New Jersey, Appellate Division.

Argued Dec. 1, 2010.Decided April 15, 2011.

Stuart J. Lieberman, Princeton, argued the cause for appellant/cross-respondent (Lieberman & Blecher, P.C., attorneys; Mr. Lieberman, of counsel and on the brief; Michael G. Sinkevich, Jr., on the brief).David R. Strickler argued the cause for respondents/cross-appellants Borough of Millstone, Ray Heck, Borough of Millstone Council, William Poch, Borough of Millstone Planning Board, Keith Dorschner, Shirley M. Bishop and James DeMuro (Norris McLaughlin & Marcus, attorneys; Stephen M. Offen, Bridgewater, of counsel; Mr. Strickler and Erin T. Welsh, on the brief).David Parker Weeks argued the cause for respondents Carter Van Dyke and Carter Van Dyke Associates (Ruprecht, Hart & Weeks, LLP, attorneys; Mr. Weeks, Millburn, of counsel and on the brief; Matthew E. Blackman, Hackensack, on the brief).Before Judges GILROY, ASHRAFI and NUGENT.

The opinion of the court was delivered by

ASHRAFI, J.A.D.

Plaintiff Rezem Family Associates, LP (Rezem or plaintiff) appeals from an order dismissing its civil rights complaint under Rule 4:6–2(e) for failure to state a claim upon which relief can be granted. Several defendants cross-appeal from denial of their application for attorney's fees as prevailing parties. We affirm.

The primary issue on appeal is whether a plaintiff must initially pursue administrative and judicial remedies, and obtain a final ruling on its land use claims, before it can pursue a cause of action for alleged violation of its substantive due process rights. We hold that a substantive due process claim in a land use dispute requires both governmental misconduct that “shocks the conscience” and exhaustion of remedies available under our land use law.

I.

Rezem is the former owner of sixty-seven acres of vacant land in Millstone, Somerset County. It filed a complaint in March 2009 alleging civil rights violations and other causes of action against the Borough of Millstone and several other defendants involved in land use planning and zoning decisions of the Borough.¹ The essential allegation of Rezem's complaint is that:

the Borough of Millstone and its various agents have violated specific civil rights of the Plaintiff by successfully attempting to prevent the Plaintiff from developing its property through a variety of false statements, fraudulent claims, and misstatements of fact .... in a concerted effort to keep Plaintiff's property as open space in order to satisfy the Defendants' desire to retain what they claim to be the “historic” nature of the property.The eight counts of plaintiff's complaint alleged: (count one) substantive due process violations under 42 U.S.C. § 1983; (count two) § 1983 conspiracy; (count three) temporary regulatory takings; (count four) substantive due process violations under the New Jersey Civil Rights Act, N.J.S.A. 10:6–1 and –2; (count five) negligence by the Van Dyke defendants; (count six) intentional tort by the Van Dyke defendants; (count seven) conspiracy; and (count eight) civil racketeering in violation of the New Jersey Civil Racketeer Influenced and Corrupt Organizations Act (NJRICO), N.J.S.A. 2C:41–1 to –6.

In June 2009, all defendants moved to dismiss the complaint under Rule 4:6–2(e) for failure to state a claim upon which relief can be granted. The municipal defendants also sought reimbursement of their attorney's fees and litigation expenses pursuant to 42 U.S.C. § 1988. Following oral argument, the trial court issued a letter opinion and an order dated December 7, 2009, granting defendants' motions to dismiss the complaint in its entirety and denying the municipal defendants' motion for attorney's fees and expenses.

Plaintiff and the municipal defendants filed notices of appeal. Plaintiff seeks reinstatement of six of the eight counts of its complaint.² The municipal defendants seek attorney's fees and expenses. Because Rezem's claims were dismissed under Rule 4:6–2(e), we will assume for purposes of the appeal that it can prove the facts alleged in its complaint. See Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 625–26, 660 A.2d 505 (1995).

Rezem states that its sixty-seven acre tract in Millstone had been owned by members of the Rezem family and related entities for eighty years. In 1997, Somerset County constructed the Amwell Road bypass and an adjoining roadway through the property, dividing it into three sections. In 1999, plaintiff approached Borough officials with proposals by two potential buyers, Exxon and Haynes Oil Company, for development of a new gas station at the bypass intersection. Borough planners informed Rezem and the potential developers that no development of any kind would be approved for the property until the Borough completed revision of its Master Plan.

In 2002, when the property was zoned as “light industrial,” the former Borough planner prepared a map showing a “planned village development” that included Rezem's land. The plan would have permitted construction of 250 single-family homes and condominiums on Rezem's land, as well as a commercial site and twenty-eight acres of open recreational space. The Planning Board refused to support a zoning change in accordance with the 2002 concept presented by its own planner.

In November 2002, a “builder's remedy” lawsuit was filed against the Borough under the Mt. Laurel³ doctrine alleging that the Borough failed to meet its State constitutional obligation to provide zoning for affordable housing. Rezem was joined as a party in the lawsuit, and the case was transferred to the State Council on Affordable Housing (COAH) for mediation. The Mt. Laurel litigation remained unresolved at the time Rezem filed its complaint in this litigation.

The Borough also filed an application before COAH for substantive certification of its Mt. Laurel plan. The plan included the Rezem property as a site where a substantial number of affordable housing units could be developed. According to Rezem's complaint, the Borough's COAH application contained “a variety of false statements and misstatements regarding [the subject] property.”

Plaintiff's complaint further alleges that from 2002 through 2004 Borough planners created five separate development plans for Rezem's property, but the municipal defendants refused to change the zoning to make any of the plans feasible.

In 2004, a sixth development plan, known as the 2004 Vision Plan, was prepared by defendant Carter Van Dyke, the new Borough planner. According to Rezem, this Vision Plan contained false statements and damaging claims regarding Rezem's property. For example, the Vision Plan included a map depicting the property as containing approximately fifty percent wetlands, when in fact less than five percent of the property is wetlands. Rezem appeared before the Planning Board and demanded a written retraction of the Van Dyke defendants' map, but the Planning Board took no action.

In addition, the Vision Plan included a map referred to as “Historical Resources” that depicted a Revolutionary War “hospital” and encampment sites as having been located on the Rezem property. Upon inquiry, Carter Van Dyke's assistant informed Rezem that this map was inaccurate. At a Planning Board meeting held shortly after the publication of the Vision Plan, Rezem “submitted and read a formal response ... that informed the Borough that these maps were in fact not true, and were a fictitious creation of the Borough Planner.” The municipal defendants failed to correct or retract the maps.

Similarly, at an August 2004 COAH meeting, defendant Carter Van Dyke stated that during the construction of the bypass roadway in 1997, historical artifacts were found on the Rezem property. Rezem contacted the Somerset County engineer in charge of the bypass construction, and that person denied any historical artifacts had been found.

In 2005, the Borough submitted another COAH application, which contained false statements about future sewer access for Rezem's property. Specifically, the COAH application stated the Borough and Hillsborough Township had entered into a joint agreement to update the Borough's sewer service area plan. Similar representations were also made in the Borough's 2007 COAH application. In fact, the Borough's attorney informed Rezem that Hillsborough was demanding a substantial hook-up fee and that any proposal for sewer service was not going forward. Moreover, the director of the municipal utility authority in Hillsborough stated to Rezem in late 2007 that he had not even discussed sewer plans with Millstone officials.

Throughout this time period, several developers entered into contingent contracts with Rezem to buy the property. All of these contracts were terminated because of the zoning obstacles imposed by defendants. In October 2000, Rezem received an offer of $450,000 for 2.5 acres of its land from Haynes Motor Fuels. Haynes later terminated the contract when it was unable to obtain amendment of a zoning ordinance to build a gas station.

In July 2002, a major residential developer, Toll Brothers, entered into a contract to purchase the entire property for $9,250,000. In September 2002, Toll Brothers made a formal presentation to the Planning Board for development of the property. However, “[a]s a result of the Planning Board meeting and based on statements from the Planning Board indicating that there was no way that...