Square Brighton Corp., Inc. v. City of Atlantic City

• Decision Date: 22 February 1996
• Citation: 671 A.2d 203,287 N.J.Super. 450
• Parties: SQUARE BRIGHTON CORPORATION, INC., a New Jersey corporation, and Floyd James, a taxpayer of Atlantic City, Plaintiffs-Appellants, v. The CITY OF ATLANTIC CITY, a Municipal Corporation and Body Politic of the State of New Jersey, Greate Bay Hotel and Casino, Inc. t/a "Sands Hotel & Casino", a New Jersey Corporation, CYNWYD Investments, and Boardwalk Regency Corporation, a New Jersey Corporation, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 450

287 N.J.Super. 450

671 A.2d 203

SQUARE BRIGHTON CORPORATION, INC., a New Jersey corporation and Floyd James, a taxpayer of Atlantic City Plaintiffs-Appellants, v. The CITY OF ATLANTIC CITY, a Municipal Corporation and Body Politic of the State of New Jersey, Greate Bay Hotel and Casino, Inc. t/a "Sands Hotel & Casino", a New Jersey Corporation, CYNWYD Investments, and Boardwalk Regency Corporation, a New Jersey Corporation, Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Jan. 23, 1996.

Decided Feb. 22, 1996.

Edward N. FitzPatrick, Ramsey, for appellants Square Brighton Corporation, Inc. and Floyd James (DeCotiis, FitzPatrick & Gluck, Ramsey, and McGahn & Friss, attorneys, Longport; Mr. FitzPatrick and Patrick T. McGahn, Jr., of counsel; Mr. FitzPatrick, Mr. McGahn and Agnes I. Rymer, Ramsey, on the brief).

Daniel A. Corey, Voorhees, for respondent The City of Atlantic City (Mr. Corey, City Solicitor, attorney; Mr. Corey, of counsel; Mr. Corey and John M. Eccles, Jr., on the brief).

Stephen R. Nehmad, Atlantic City, for respondent Greate Bay Hotel and Casino, Inc., t/a "Sands Hotel & Casino" (Perskie & Nehmad, attorneys; Mr. Nehmad, of counsel; Mr. Nehmad and Richard F. DeLucry, on the brief).

No brief or appearance was filed on behalf of respondents CYNWYD Investments and Broadwalk Regency Corporation. Before Judges MICHELS, VILLANUEVA and KIMMELMAN.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Plaintiffs Square Brighton Corporation, Inc. (Square) and Floyd James (James) appeal from a summary judgment of the Law Division entered in favor of defendants The City of Atlantic City (Atlantic City), Greate Bay Hotel and Casino, Inc., t/a "Sands Hotel & Casino" (Sands), CYNWYD Investments (CYNWYD) and Boardwalk Regency Corporation (Boardwalk) that declared Atlantic City Ordinance No. 61 of 1994 valid and enforceable.

The facts giving rise to this appeal are not disputed. For approximately 10 years, until July 1992, Sands leased from Square a sixteen-foot strip of land (the strip), which was used as part of a public thoroughfare, commonly referred to as Pop Lloyd Boulevard running between Dr. Martin Luther King, Jr., Boulevard and Indiana Avenue in Atlantic City, New Jersey. CYNWYD owns the fee interest in the site upon which the strip is located. Boardwalk leased this site from CYNWYD for ninety-nine years and subleased the site to Square. Sands, which had exclusive possession and control of the strip pursuant to license agreements, used it as a bus lane, a bus depot and to access its loading dock.

Sometime in 1991, rather than renewing the lease with Square, Sands instituted suit against Atlantic City to compel it to acquire the strip. The suit was settled. Under the terms of the Stipulation of Settlement executed by Atlantic City and Sands, Atlantic City agreed to "promptly, without delay and as expeditiously as possible" acquire the strip. The Stipulation of Settlement provided that "Sands shall pay one-hundred percent of the fair market value 'compensation' (as defined by N.J.S.A. 20:3-2) plus all associated costs to be paid by the City to acquire the Street." Additionally, the Stipulation of Settlement provided that "Sands shall pay one-hundred percent of all sums, if any, regardless of how described, adjudicated by the court in this matter to be due to [Square] from the City for the use of the Street between August 1, 1992 and the time it is acquired by the City."

In August 1994, the Atlantic City Municipal Council adopted Ordinance No. 61, which was approved by the Mayor in September 1994. Ordinance No. 61, in pertinent part, reads:

SECTION 1. The City of Atlantic City (the "City") shall promptly, without delay and expeditiously take any and all actions necessary, appropriate and legally required to acquire, for public right-of-way purposes, the southerly 16-foot strip of what is now commonly referred to as Pop Lloyd Boulevard, running between Dr. Martin Luther King, Jr., Boulevard and Indiana Avenue (the "Street"), having dimensions of approximately 16 feet by 350.75 feet and shown as the diagonally-stripped area on Exhibit "B" to this Ordinance. The City shall comply with all applicable laws, including without limitation the provisions of N.J.S.A. 40A:12-1, et seq. (the Local Lands and Buildings Law) and N.J.S.A. 20:3-1, et seq. (the Eminent Domain Act). If the City is unable to acquire the Street by consent in an arm's length bona fide transaction, then it shall acquire the Street by eminent domain. Greate Bay Hotel and Casino Inc., t/a Sands Hotel & Casino ("Sands") is to pay one-hundred percent of the fair market value "compensation" and one-hundred percent of all sums, if any, regardless of how described, due to Square Brighton Corporation ("Square") from the City for the use of the Street between August 1, 1992, and the time it is acquired by the City, all as more particularly set forth in the Stipulation attached as Exhibit "A".

* * * * * *

SECTION 3. Pursuant to the terms of the Stipulation, all funds for the acquisition and all funds due Square from the City for use of the Street shall be provided by Sands and therefore no certification of funds is required.

In September 1994, Square and James, a taxpayer and an employee of Square, instituted this action by a Complaint in Lieu of Prerogative Writs against Atlantic City, Sands, CYNWYD and Boardwalk, seeking (1) a declaration that Ordinance No. 61 and the Stipulation of Settlement between Atlantic City and Sands were null and void; and (2) an injunction enjoining Atlantic City from taking any steps to implement Ordinance No. 61 or the Stipulation of Settlement. Plaintiffs also sought compensatory damages, interest, costs and counsel fees. Plaintiffs claimed that (1) Ordinance No. 61 violated N.J.S.A. 40A:4-57, a provision of the Local Budget Law, because the ordinance purported to incur public liability, and to enter into a contract which involved an expenditure of money, for which no appropriation had been made; and (2) the Stipulation of Settlement independently violated the Local Budget Law because it involved expenditures of money for which no appropriation had been made.

After issue was joined, the trial court on cross-motions for summary judgment, held that Ordinance No. 61 did not violate the Local Budget Law and was valid and enforceable. Judge Weinstein in the Law Division, in part, reasoned:

There are two reasons why I believe this statute has not been violated: Firstly, by its terms, realistic terms, and the direction of this Court in its ruling in the prior case that the acquisition was to take place by March of 1995 did not direct, did not require, did not anticipate payments by the City during fiscal 1994, and so, if it is necessary, the budgetary process is open for inclusion of any expenditure before an expenditure of funds in 1995 will take place. Moreover, the fact that the stipulation, the settlement agreement incorporated in the ordinance, imposed the responsibility on the part of the Sands to pay could have allowed the City in my opinion to avoid having to go through the process that [counsel] has indicated would be followed here by having the Sands pay directly to the owner of the parcel the amount of the condemnation award or the agreement, agreed price, if there is an agreement for acquisition, and to pay directly any other costs that may be incurred. The agreement and the ordinance does not require reimbursement by the Sands, it requires payment by the Sands of all attendant costs of acquiring the property.

Under those circumstances either or both of the reasons I have given, I am satisfied that in this limited context of the acquisition of this property as part of a settlement of a lawsuit, all costs of which [are] to be borne by a taxpayer individually and not the City or the public, is not violative of the ordinance--of the statute, and, therefore, I uphold the validity of this ordinance and grant summary judgment to the defendants.

On appeal, plaintiffs now seek a reversal of the summary judgment and the entry of judgment in their favor, contending that Atlantic City Ordinance No. 61 violates the Local Budget Law and that the open-ended exception created by the trial court is unauthorized by the Local Budget Law. We disagree and affirm.

We are satisfied from our review of the record and the arguments presented that the trial court properly concluded that Ordinance No. 61 did not violate the Local Budget Law. Moreover, we are convinced that summary judgment was properly granted in favor of defendants whether the matter is viewed traditionally under Judson v. Peoples Bank & Trust Co., 17 N.J. 67, 110 A.2d 24 (1954), or under the standard more recently announced in Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520, 666 A.2d 146 (1995), and that all issues of law raised are clearly without merit. R. 2:11-3(e)(1)(E). Accordingly, the summary judgment under review is affirmed substantially for the reasons expressed by Judge Weinstein in his thoughtful oral opinion of November 17, 1994.

We write further simply to emphasize that Ordinance No. 61 does not violate the Local Budget Law because Atlantic City was not obligated to expend any of its funds or incur any liability in connection with the acquisition of the strip. The Local Budget Law, which is codified at N.J.S.A. 40A:4-2 to -88, in pertinent part, provides:

No officer, board, body or commission shall, during any fiscal year, expend any money (except to pay notes, bonds or interest thereon), incur any liability, or enter into any contract which by its terms involves the expenditure of money for any purpose for which no appropriation is provided, or in excess of the amount appropriated for such purpose.

Any contract made in violation hereof shall be null and void, and no moneys shall be paid thereon. [ N.J.S.A. 40A:4-57.]

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