Toll Bros., Inc. v. Township of Readington

• Decision Date: 04 February 2009
• Docket Number: No. 06-1053.,06-1053.
• Citation: 555 F.3d 131
• Parties: TOLL BROS., INC., Appellant v. TOWNSHIP OF READINGTON; Mayor and Committee for the Township of Readington, individually and in their official capacities; Township of Readington Planning Board; Members of the Township of Readington Planning Board, individually and in their official capacities; Julia C. Allen, individually and in her official capacity; Ronald P. Monaco, individually and in his official capacity; Beatrice Muir, individually and in her official capacity; Gerard J. Shamey, individually and in his official capacity; Frank L. Gatti, individually and in his official capacity; John and Jane Does 1-20; ABC Municipal Agencies 1-10, fictitious agencies.
• Court: U.S. Court of Appeals — Third Circuit

555 F.3d 131

TOLL BROS., INC., Appellant v. TOWNSHIP OF READINGTON; Mayor and Committee for the Township of Readington, individually and in their official capacities; Township of Readington Planning Board; Members of the Township of Readington Planning

Board, individually and in their official capacities; Julia C. Allen, individually and in her official capacity; Ronald P. Monaco, individually and in his official capacity; Beatrice Muir, individually and in her official capacity; Gerard J. Shamey, individually and in his official capacity; Frank L. Gatti, individually and in his official capacity; John and Jane Does 1-20; ABC Municipal Agencies 1-10, fictitious agencies.

No. 06-1053.

United States Court of Appeals, Third Circuit.

Argued: January 23, 2007.

Filed: February 4, 2009.

Darren H. Goldstein, [Argued], James A. Kozachek, Albert M. Belmont, III, Carl S. Bisgaier, Flaster Greenberg, P.C., Cherry Hill, NJ, for Appellant.

Valerie J. Kimson, [Argued], Susan A. Lawless, Purcell, Ries, Shannon, Mulcahy & O'Neill, Bedminster, NJ, John M. Bowens, Esq., Schenck, Price, Smith & Smith, Morristown, NJ, for Appellees.

Before SCIRICA, Chief Judge, FUENTES and CHAGARES, Circuit Judges.

OPINION OF THE COURT

CHAGARES, Circuit Judge.

We consider whether a real estate developer with an option to buy a parcel of land has standing to challenge zoning restrictions that prevent its planned development from going forward. We hold that it does.

I.

Appellant Toll Brothers, Inc. describes itself as "the nation's leading builder of luxury homes...." See Toll Brothers, http://www.tollbrothers.com (last visited January 15, 2009).¹ Toll Brothers prides itself on developing communities in prime locations; it carefully chooses "the most scenic areas that offer a blend of rural charm and suburban convenience." Id. In early 2001, Toll Brothers found just such a setting on a 160-acre tract of land in the Township of Readington, New Jersey ("the Township"). Toll Brothers entered into an option contract with the tract's owner, Readington Properties, LLC.

Pursuant to the contract, Readington Properties granted Toll Brothers an exclusive option to buy the tract at a fixed price. In exchange, Toll Brothers promised to make periodic payments to Readington Properties. The original contract stated a five-year option with an expiration date of January 2006. Subsequent amendments have extended the option period, and Toll Brothers' exclusive option remains in force. During the life of the option, Readington Properties cannot "enter into any lease, agreement of sale," or any other agreement affecting the property. Appendix ("App.") 203. In addition, Toll Brothers has the right to come onto the property "to perform engineering, environmental and such other feasibility studies" as it deems necessary. App. 200.

At the time of the contract's formation, the Township's zoning laws classified part of the tract as "research-office," and part as "rural-residential." The rural-residential classification allowed for "development of detached single-family dwelling units, farm and agricultural uses, and open space and parks." App. 45. Residential development in this zone could not exceed one unit per three acres. In the research-office zone, "general office development" was permitted. Id.

Toll Brothers quickly began to formulate plans for both the rural-residential and research-office portions of the property. For the rural-residential zone, the company "engaged in preliminary planning" to develop housing "for families with children." App. 46, 49. As to the research-office zone, Toll Brothers drafted plans for an office park. For whatever reason, the office plans advanced more rapidly than the residential plans. In May 2002, Toll Brothers submitted a formal application to the Township Planning Board requesting approval for construction of an office development. Toll Brothers claims that this proposal was consistent with the Township's zoning ordinance "and with the general character" of the area. App. 46.

The Township did not approve Toll Brothers' application. Instead, it passed an ordinance rezoning the entire tract "agricultural-residential." The agricultural-residential zone allowed for just three uses by right: "(1) farms; (2) open space and parks; and (3) residential uses at one residential dwelling per six acres." App. 47. As a result, office parks were prohibited. The requirement of six acres per dwelling, according to Toll Brothers, made any residential development economically unfeasible. Toll Brothers' development plans thus have been thwarted.

Toll Brothers contends that this change in law was no ordinary zoning decision. It was instead part of a nefarious plot hatched by Township officials to "reduce the fair market value of properties held by disfavored landowners." App. 33. By frustrating the lawful plans of Toll Brothers and other developers, Township officials sought to "drive down the value of the [targeted] propert[ies] and acquire [them] cheaply at ... price[s] below their fair market values." App. 36. They also "intended to discriminate against families with children ... in an effort to reduce [their] residential opportunities" within the Township. App. 41-42.

Toll Brothers claims the Township's actions have caused it considerable injury. The company is in the real estate development business, but the Township has prevented all profitable development of the Readington Properties parcel. Toll Brothers is maintaining its option by rendering periodic payments to Readington Properties. If and when the Township approves Toll Brothers' plans, the company still intends to exercise its option. In the meantime, Toll Brothers has spent considerable amounts of money on planning, including fees for "architects and other professionals." App. 291. In addition to these "sunk costs," Toll Brothers has also lost out on the potential profits.

In August 2002, Toll Brothers filed a lawsuit against the Township in New Jersey Superior Court. The complaint alleged violations of the New Jersey Municipal Land Use Law, N.J. Stat. Ann. §§ 40:55D-1 to -163; the Equal Protection Clause; the Due Process Clause; the Takings Clause; equivalent provisions of the New Jersey Constitution; and the public policy and law of New Jersey as expressed in the state Supreme Court's Mount Laurel decisions.² That action remains pending.

In December 2004, Toll Brothers brought this suit against the Township, the Township Committee, the Township Planning Board, and various Township officials (collectively, "defendants"). The allegations in this case are quite similar to the claims pending in state court, but they do not overlap completely. In this case, Toll Brothers brings claims under the Equal Protection Clause; the Due Process Clause; the Takings Clause; The Fair Housing Act of 1968, as amended, 42 U.S.C. §§ 3601-31; the New Jersey Law Against Discrimination, N.J. Stat. Ann. §§ 10:5-1 to -49; the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. §§ 1961-66; and New Jersey's RICO Act, N.J. Stat. Ann. §§ 2C:41-1 to -6.2. Toll Brothers seeks an order "[i]nvalidating and setting aside" the Township's zoning ordinance, an order "enjoining Defendants ... from enforcing" the ordinance, and money "damages sustained as a result of Defendants' illegal actions." App. 67.

The defendants moved to dismiss Toll Brothers' complaint for, inter alia, lack of standing.³ Toll Brothers opposed the motion and, in the alternative, sought leave to file an amended complaint. In an unreported decision, the District Court granted the motion to dismiss. See Toll Bros. v. Twp. of Readington, No. 04-6043, 2005 U.S. Dist. LEXIS 25793 (D.N.J. Oct. 31, 2005). The court found it significant that Toll Brothers was "the owner of an unexercised option." Id. at * 14. It noted that a favorable decision would still leave Toll Brothers "free to elect not to exercise the option." Id. Thus, the court concluded, Toll Brothers' claimed injury was "not concrete and particularized, nor [was] it likely to be redressed by a favorable decision." Id. at * 14-* 15 (quotation marks omitted). Independent of that analysis, the court also pointed out that Toll Brothers' complaint alleged discrimination against families with children. These families, however, were not parties. Id. at * 12. As a result, the court concluded that Toll Brothers lacked third-party standing to assert the families' rights. Id. The court did not specifically consider Toll Brothers' request for leave to amend the complaint in its decision, but the court squarely rejected the request in its opinion denying Toll Brothers' motion for reconsideration. This appeal followed.

II.

Toll Brothers alleged that the District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1332 and supplemental jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367. This Court has jurisdiction pursuant to 28 U.S.C. § 1291.

We exercise plenary review over the District Court's dismissal of the complaint for lack of standing. See Goode v. City of Philadelphia, 539 F.3d 311, 316 (3d Cir.2008); ACLU-NJ v. Twp. of Wall, 246 F.3d 258, 261 (3d Cir.2001). We review the District Court's denial of Toll Brothers' request for leave to file an amended complaint for abuse of discretion. Winer Family Trust v. Queen, 503 F.3d 319, 325 (3d Cir.2007).

III.

Article III of the Constitution limits federal "judicial Power" to the adjudication of "Cases" or "Controversies." U.S. Const. art. III, § 2. This limitation is essential to our system of separated powers. See Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 473-74, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982); see also Hein v. Freedom From Religion Found., Inc., 551 U.S. ___, 127 S.Ct. 2553, 2570, 168 L.Ed.2d 424 (2007) (plurality opinion). In cases involving state or local government, "it also serves to protect and preserve the principle of dual...