River Vale Planning Bd. v. E & R Office Interiors, Inc.

• Decision Date: 11 June 1990
• Citation: 575 A.2d 55,241 N.J.Super. 391
• Parties: RIVER VALE PLANNING BOARD and Mayor and Council of the Township of River Vale, Plaintiffs-Appellants, v. E & R OFFICE INTERIORS, INC.; Modern Office Equipment Co.; Eugene Tietjen, and Herman Steenstra, River Vale Construction Official, Defendants-Respondents and Jon Jerman Holding Co., Inc. and Jon Jerman, Individually, Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 391

241 N.J.Super. 391

575 A.2d 55

RIVER VALE PLANNING BOARD and Mayor and Council of the Township of River Vale, Plaintiffs-Appellants, v. E & R OFFICE INTERIORS, INC.; Modern Office Equipment Co. Eugene Tietjen, and Herman Steenstra, River Vale Construction Official, Defendants-Respondents and Jon Jerman Holding Co., Inc. and Jon Jerman, Individually, Defendants.

Superior Court of New Jersey Appellate Division.

Argued May 7, 1990.

Decided June 11, 1990.

Frederick L. Bernstein, Hackensack, for plaintiffs-appellants.

Roger W. Breslin, Jr. for defendants-respondents E & R Office Interiors, Inc., Modern Office Equipment Co., and Eugene Tietjen (Beattie Padovano, attorney, Roger W. Breslin, Jr., Montvale, on the brief).

No one appeared or submitted a brief on behalf of any other defendant-respondent.

Before Judges PETRELLA, O'BRIEN and HAVEY.

The opinion of the court was delivered by

PETRELLA, P.J.A.D.

The River Vale Planning Board and the Mayor and Council of the Township of River Vale (collectively referred to as River Vale) appeal from a judgment of the Law Division which dismissed that portion of their complaint which had sought enforcement of a variance, site plan conditions and a developer's agreement. The judgment also dismissed cross-claims among the various defendants. Defendant Jon Jerman Holding Company, Inc. (Jerman) ¹ was the original applicant for preliminary and final site plan approval and ancillary variances for a nonconforming property located on 3.41 acres of land on Rivervale Road in River Vale.

In the November 1988 judgment which dismissed the first and third counts of the complaint River Vale was ordered to refund a cash performance bond of $10,208 to Jerman which it had deposited with the Township. The judgment also recited that Jerman waived any claim it may have had against the Township of River Vale or its planning board for the return of an $8,575 deposit paid as reimbursement of expenses to River Vale. The allegations in other counts of the complaint were dismissed without prejudice by an agreement between the parties which was included in a "Stipulation of Settlement and Order of Dismissal" entered on November 16, 1988.

On this appeal River Vale argues that it is entitled to enforcement of the terms and conditions of a February 4, 1985 preliminaryS and final site plan approval under N.J.S.A. 40:55D-18, notwithstanding that Jerman and the subsequent purchaser of the property from Jerman, E & R Office Interiors, Inc. (E & R) asserted abandonment of the benefits of the application. River Vale argues that the site plan requirements "run with the land" and bind subsequent transferees as a matter of law. It asserts that E & R had actual notice of the Developer's Agreement and waived any objection to the performance of the site plan conditions and thus became bound to perform as a matter of contract. It also argues that principles of res judicata should bind the developer and his successor in title where the attempted withdrawal is after site plan approval, after execution of the Developer's Agreement and after the posting of a cash performance bond.

Jerman applied as a contract purchaser to the River Vale Planning Board on October 24, 1984 for preliminary and final site plan approval and for certain variances with respect to a 43,200 square foot building on 3.41 acres of land at 634 Rivervale Road and located in a light industrial "D" zone. The building, which covered 29% of the land, had previously been used by a fertilizer and garden supply firm. The applicable ordinance only permitted lot coverage of 25%. Jerman sought to use the property for multi-tenant occupancy and sought a variance to permit 64 parking spaces instead of the required 108 spaces. ²

Hearings were held before the planning board which ultimately granted preliminary and final site plan approval on February 4, 1985, together with an ancillary variance which approved 64 parking spaces. The site plan approval was conditioned on execution of a Developer's Agreement containing a detailed schedule of site improvements, along with performance guarantees. The agreement included posting a performance bond to insure installation of public improvements within two years at a cost of $102,088, and the posting of a cash performance bond of $10,208 with the township. Jerman entered into the agreement on March 28, 1985.

The Developer's Agreement provided in part:

WHEREAS, application for site plan approval and for a variance to allow 64 parking spaces (in lieu of the 108 required by the River Vale Zoning Ordinance) has been made by the developer for use of the premises ... for the tenants mentioned in a resolution of approval adopted by the Planning Board on February 4, 1985; and

WHEREAS, the premises are located ... in an industrial district, which developer proposes to convert from a single-use occupancy to multiple-use occupancy; and

* * * * * *

WHEREAS, the BOARD on February 4, 1985, granted approval of the application subject to conditions, including conditions relating to the making of certain public and on-site improvements and the providing of performance guarantees therefore; and

WHEREAS, the DEVELOPER wishes to express by this agreement its acceptance of the conditions determined by the Board and its undertaking to make and perform the public and on-site improvements required; subject to inspection by the Township and to the terms and provisions of this agreement;

NOW, THEREFORE, IT IS AGREED:

1. The DEVELOPER shall, ... make and install all of the improvements (a) shown on the schedule made a part hereof, hereinafter called the "Site Improvement Schedule;" (b) shown on the site plan hereinabove mentioned; ...

2. All of the improvements referred to in paragraph 1 hereof shall be completed within two (2) years from the date of this agreement.

* * * * * *

19. It is agreed that any assignment hereof or sale of the premises in whole or in part, shall not operate to relieve the developer from the obligations hereunder, without the express written consent of the Planning Board and Township Council of the Township of River Vale.

The performance guarantee for the improvements was never posted and none of the improvements were ever installed.

In the first half of 1985 E & R apparently entered into the lease with Jerman for 3,065 square feet of unheated warehouse space to store office furniture. A copy of the first page of the lease in the appendix is undated, but indicates that the lease is for two years, commencing February 1, 1985. On February 8, 1985 E & R obtained a Certificate of Continued Occupancy (C.O.) for the 3,065 square feet of space it leased from Jerman. The C.O. was issued by defendant Herman Steenstra, the River Vale Construction Official. Jerman purchased the property on February 21, 1985 for $860,000.

On December 13, 1985 E & R contracted with Jerman to purchase the property in question for $1,500,000. The parties dispute whether E & R was aware of the site plan approval process while it was taking place in February 1985. In any event, the closing on the sale of the property to E & R took place on May 6, 1986. The day after E & R purchased the property, River Vale recorded the Developer's Agreement between Jerman and the township with the Bergen County Clerk in Deed Book 7007, at Page 970.

On May 20, 1986 Jerman requested return of its cash bond in the amount of $10,208. River Vale did not return the bond, and on March 12, 1987 declared Jerman in default of the Developer's Agreement. On June 11, 1987 Steenstra, River Vale's Construction Official, informed the planning board that E & R had applied for a Certificate of Continued Occupancy for the premises and that he was prepared to issue same. River Vale then instituted suit against E & R, Jerman, and its principals, as well as its own construction official.

Jerman, the prior owner, and E & R, the present owner of the property, asserted that they abandoned any rights which they may have derived as a result of the grant of the variance and the site plan approval, albeit without River Vale's written consent. They therefore moved for summary judgment. River Vale cross-moved to bifurcate the trial on the issues of liability and damages, to strike E & R's demand for a jury as to certain issues, and for certain other relief. On January 4, 1988 these motions were denied, except that the complaint was dismissed as to Jon Jerman individually. The pretrial order was amended to provide that the trial would proceed in stages, with the first stage dealing only with the enforceability of the February 4, 1985 site plan resolution and related Developer's Agreement.

When the case came on for trial on the first stage issues, E & R and Jerman renewed their applications for summary judgment. The trial judge found that the operative facts were not in dispute, and granted their motions. The judge observed that River Vale was essentially seeking to enforce and obtain specific performance of the Developer's Agreement. He distinguished North Plainfield v. Perone, 54 N.J.Super. 1, 148 A.2d 50 (App.Div.1959), certif. den. 29 N.J. 507, 150 A.2d 292 (1959), since that case involved whether an intervening use consistent with existing zoning design interrupts the chain of circumstances so as to defeat the right to resume the use originally sanctioned by an exception. The judge concluded that a constructive condition to the agreement existed so that the developers' duty to install the improvements was conditioned on his going ahead with the project itself. Since the project was abandoned, the time for going ahead had run out, and the condition had not been met, the judge considered the approval no longer in effect. The judge construed the agreement against its drafters, relying on Terminal Constr. Corp. v. Bergen Cty., 18 N.J. 294, 301, 113 A.2d 787 (1955); Fletcher v. Interstate Chemical Co., 94 N.J.L. 332, 110 A. 709 (S.Ct.1920), aff'd o.b. 95 N.J.L. 543, ...