P & H CLINTON PARTNERSHIP v. TOWNSHIP OF CLINTON, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2997-03T12997-03T1

P & H CLINTON PARTNERSHIP,

Plaintiff-Appellant/

Cross-Respondent,

v.

TOWNSHIP OF CLINTON, READINGTON-

LEBANON SEWERAGE AUTHORITY,

TOWNSHIP OF READINGTON, BOROUGH

OF LEBANON, LEBANON BOROUGH

SEWERAGE AUTHORITY, and the

NEW JERSEY DEPARTMENT OF ENVIRONMENTAL

PROTECTION,

Defendants-Respondents,

and

LARKEN ASSOCIATES, LLC,

Defendant/Intervenor-Respondent/

Cross-Appellant,

and

BELLEMEAD DEVELOPMENT CORP.,

MERCK & CO., INC., CLINTON

TOWNSHIP COMMUNITY COALITION,

PHYLLIS R. BLACK, SANDRA B. MAXWELL,

WILLIAM H. BLACK, CONSTRUCTION

SPECIALTIES, FALLONE PROPERTIES, LLC,

HUNTERDON PLAZA ASSOCIATES, LLC,

ANITA G. HOGAN, JANE FOLK WERNER,

MOIRA A. MURPHY, NEIL VAN CLEEF, A.T.A.

DEVELOPERS, INC., and KULLMAN INDUSTRIES,

Defendants/Intervenors-Respondents.

 

Argued December 8, 2005 - Decided May 25, 2006

Before Judges Stern, Parker and Lihotz.

On appeal from the Superior Court of New

Jersey, Law Division, Hunterdon County,

Docket No. L-375-03.

Stephen M. Eisdorfer argued the cause for

appellant/cross-respondent (Hill Wallack,

attorneys; Mr. Eisdorfer of counsel;

Henry T. Chou, on the brief).

DiFrancesco, Bateman, Coley, Yospin, Kunzman,

Davis and Lehrer, attorneys for respondent

Township of Clinton (Albert E. Cruz, on the

brief).

Edward J. Buzak argued the cause for respondent

Readington-Lebanon Sewerage Authority (Mr.

Buzak and Alyse C. Landano, on the brief).

Valerie Kimson Bollheimer argued the cause

for respondent Township of Readington (Purcell,

Ries, Shannon, Mulcahy & O'Neill, attorneys;

Ms. Bollheimer, on the brief).

Joseph S. Novak argued the cause for respondents

Borough of Lebanon and Lebanon Borough Sewerage

Authority (Novak and Novak, attorneys; Mr. Novak,

on the brief).

Lewin J. Weyl, Deputy Attorney General, argued

the cause for respondent New Jersey Department

of Environmental Protection (Peter C. Harvey,

Attorney General of New Jersey, attorney; Patrick

DeAlmeida, Assistant Attorney General, of counsel;

Mr. Weyl, on the brief).

Glenn S. Pantel argued the cause for intervenor-respondent Bellemead Development Corporation (Drinker,

Biddle & Reath, attorneys; Mr. Pantel, Christine

Cartwright Banker and Karen A. Denys, on the brief).

Peter J. Wolfson argued the cause for intervenor-

respondent Merck & Co., Inc. (Porzio, Bromberg

& Newman, attorneys; Mr. Wolfson and Kenneth R.

Meyer, of counsel; Mr. Wolfson, Mr. Meyer and

Brian P. Sharkey, on the brief).

Richard Webster argued the cause for intervenor-respondent Clinton Township Community Coalition (Rutgers Environmental Law Clinic, attorneys; Thomas A. Borden, of counsel and on the brief).

Dilts & Koester attorneys for intervenors-respondents

Sandra Maxwell, Phyllis Black and William Black (Anthony E. Koester of counsel and on the brief).

William R. Connelly attorney for intervenors-respondents Hunterdon Plaza Associates, LLC, and Fallone Properties, LLC.

Alan Bart Grant argued the cause for intervenor-respondent/cross-appellant Larken Associates, LLC, and

respondents Anita B. Hogan, Jane Folk Werner, Moira H. Murphy, Neil VanCleef and A.T.A. Developers, Inc. (Mauro, Savo, Camerino & Grant, attorneys; Mr. Grant and Edward Halpern, on the brief).

Deborah B. Rosenthal argued the cause for intervenors-

respondents Construction Specialties and Kullman Industries (Gebhardt & Kiefer, attorneys; Susan R. Rubright, on the briefs).

PER CURIAM

This appeal focuses on efforts to develop affordable housing in Clinton Township. Plaintiff P & H Clinton Partnership (P & H) appeals from an order entered on January 20, 2004 dismissing with prejudice its complaint, which sought (1) to compel the Readington-Lebanon Sewerage Authority (RLSA) to allow plaintiff to access its sewer system which runs adjacent to its property; and (2) to enjoin any additional connections to the RLSA sewer system. The demand for injunctive relief brought about the intervention of numerous property owners and developers in Lebanon and Reading Townships (referred to collectively as the intervenors), who claimed that depriving them of their allocated sewer capacity would cause extreme financial hardship.

Plaintiff is a developer seeking to build a 911-unit inclusionary development, known as Windy Acres, in Clinton Township (Clinton). Defendant RLSA is the agency established by Reading Township and Lebanon Borough to "construct and maintain a sewer treatment plant with monies garnered from capital contributions of both Lebanon and Readington." RLSA's trunk line runs adjacent to the Windy Acres property line. RLSA currently allocates 935,000 gallons of sewer treatment capacity per day (GPD) for Readington and 240,000 GPD for Lebanon with 25,000 GPD reserved for the Round Valley Recreation Park in Lebanon.

Efforts to build an inclusionary development on plaintiff's site date back twenty years. It was included in the fair share plan that Clinton submitted to the Council on Affordable Housing (COAH) in 1986, and was one of three inclusionary sites that the township designated to meet its first-cycle fair share of 233 units.

As of March 1992, when COAH prepared its first compliance report, the site consisted of 305 acres, of which 294 acres were developable. COAH calculated that the developable portion could yield 1,176 housing units, of which 182 would be affordable. The site could not be developed without a wastewater treatment plant, however, because there was no existing or projected capacity in Clinton to service the development. In February 1993, COAH granted the township's petition for first-round substantive certification conditioned on Clinton's cooperation in assisting the developers of all inclusionary sites in obtaining wastewater treatment capacity. COAH's resolution specifically directed Clinton to "reserve sufficient gallonage, on a priority basis, so as to fully provide for its fair share of 175 units, as set forth in the Clinton Township Housing Element and Fair Share Plan."

In October 1996, plaintiff's predecessor-in-title, B & H Associates, secured planning board approval for a general development plan which called for the construction of 1,140 dwelling units, 182 of which would be affordable. But, the planning board recognized that the proposed development could not be built until the Clinton East Sewage Treatment Plant was operational. The Clinton East plant would have a capacity of 550,000 GPD, of which 315,000 GPD would be allocated to Windy Acres. One of the conditions of approval was that no certificate of occupancy could be issued until the Clinton East plant was built, tested, approved and certified for operation by the New Jersey Department of Environmental Protection (DEP) and other appropriate agencies. The approval will terminate after twenty years, or ten years measured from the date that the project has access to sewage treatment service, whichever is sooner.

Plaintiff purchased the property in June 1998 and applied for revised general development plan approval. The approval was granted in June 1999. The planning board found that the revised plan for Windy Acres was an improvement because it slightly decreased density, yet maintained 182 affordable units. Again, approval was conditioned upon construction and approval of a new sewage treatment plant.

In September 1999, Clinton adopted an ordinance authorizing Applied Wastewater Management, Inc. to develop, own and maintain a wastewater collection, treatment and disposal system. In December 1999, Clinton contracted with Applied Wastewater and a related company, Applied Water Management, Inc. to undertake the design, construction, ownership and operation of the proposed sewage treatment plant. Under the agreement, at least 300,000 GPD would be allocated to Windy Acres and 75,000 GPD to each of two other proposed inclusionary development sites. In February 2000, plaintiff and Clinton entered into a developer's agreement, under which Clinton agreed to apply for a New Jersey Pollution Discharge Elimination System (NJPDES) permit for the proposed treatment plant and plaintiff agreed to pay its pro rata share of the cost of the plant.

With the sewer agreement in place, plaintiff applied to Clinton's planning board for approval of a 911-unit development on 292 acres. Plaintiff's proposal included a mixture of townhomes and single-family homes with 145 affordable units. Clinton's 1987-1999 second-cycle cumulative fair share of the regional affordable housing had by then increased to 392 affordable units. Clinton's housing element and fair share plan intended to address that need in part, through the 145 affordable units in the Windy Acres development.

Hearings before the planning board commenced on March 6, 2000 and continued at twenty-two meetings through June 4, 2001. On March 7, 2001, COAH granted Clinton's petition for second-round substantive certification. In June 2001, however, the planning board denied plaintiff's application for preliminary subdivision and site plan approval. In its resolution, the planning board gave numerous reasons for denying the application, including plaintiff's lack of approvals for the sewer plant. Plaintiff filed an action in lieu of prerogative writs in the Law Division to challenge the planning board's action. On February 5, 2004, the trial court affirmed the planning board's decision and plaintiff appealed. That matter is pending under docket number A-4179-03.

On November 18, 2002, while plaintiff's prerogative writs action was pending in the Law Division, the DEP proposed regulations redesignating the south branch of Rockaway Creek from a category two waterway to a category one waterway. 34 N.J.R. 3889(a) (November 18, 2001). The effect of the proposed reclassification would be to "prohibit discharges that would result in any measurable or calculable change to the existing water quality" in Rockaway Creek. On March 13, 2003, DEP notified plaintiff's counsel that it would take several months to complete the permit process and that plaintiff should be aware that DEP had proposed reclassifying the south branch of Rockaway Creek. On April 22, 2003, DEP adopted the new regulation reclassifying the waterway, effective May 19, 2003. 35 N.J.R. 2264(b) (May 19, 2003). On February 11, 2003, Clinton submitted an application to DEP for an NJPDES permit.

On July 14, 2003, DEP notified Clinton's mayor that the township's permit application was incomplete because of the redesignation of Rockaway Creek and Clinton was required to revise its application to show that the proposed Clinton East Sewage Treatment Plant would not produce any measurable changes to the water quality of Rockaway Creek.

On July 23, 2003, plaintiff filed the complaint and an application for an order to show cause in this action alleging that because the DEP had reclassified portions of the south branch of Rockaway Creek as a category one waterway, the only feasible way to construct the Windy Acres development was to provide sewer service through the system owned and operated by RLSA. In its order to show cause, plaintiff sought (1) a judgment declaring that defendants Clinton, DEP, RLSA and its constituent members, Reading Township, Borough of Lebanon, and Lebanon Borough Sewerage Authority owed a duty to plaintiff to facilitate the provision of sanitary sewer service to the Windy Acres development; (2) an order requiring defendants to formulate and implement a joint plan within ninety days to provide for the collection and treatment of sewage that would be generated by the Windy Acres development; (3) an order compelling DEP to review, on an expedited basis, any applications for amendment of wastewater management plans, the NJPDES permits, and other permits or approvals necessary to enable plaintiff to tie into the RLSA sewer system; (4) appointment of a special master to oversee the implementation of any necessary remedies and to make recommendations and reports to the court; and (5) an award of costs and counsel fees.

On October 1, 2003, the trial court entered the order to show cause, setting November 21, 2003 as the return date for a hearing. The order directed defendants to show cause why they should not be enjoined from permitting any additional user to connect to the sewer lines served by the RLSA treatment plant, irrespective of whether the user had previously received an allocation or permit. The order also preliminarily enjoined any additional allocation, permit or license to any user seeking to connect to the RLSA treatment plant. Defendants Lebanon Borough Sewerage Authority and Readington Township were ordered to provide notice of the proceeding to all individuals or entities who had previously received any allocation, license or permit to connect to the sewer system served by the Readington-Lebanon Sewage Treatment Plan and to any individual or entity that had received site plan or subdivision approval or had pending site plan or subdivision applications for developments that would tie into the system.

A number of permit holders or parties who had secured allocation for sewer service moved to intervene. The DEP, along with intervenors Clinton Township Community Coalition (CTCC) and Bellemead Development Corporation (Bellemead) moved to dismiss the complaint. Intervenor Larken Associates, LLC (Larken) moved to disqualify the Hill Wallack law firm from representing plaintiff, claiming a conflict of interest. Defendant Readington Township's cross-claim against Clinton alleged that all capacity in the RSLA system had been utilized or had been reserved under written agreements for property owners within Readington and Lebanon and that there was no excess capacity available.

Plaintiff argued that the reclassification of the south branch effectively prevented construction of any sewage treatment plant, since no plant had thus far been designed or constructed to meet the category one standard. Consequently, plaintiff maintains that by reclassifying the waterway the DEP effectively denied its application for a final NJPDES permit, which in turn meant that no affordable housing could be constructed on the Windy Acres site in the foreseeable future.

Plaintiff then began looking for alternative ways to provide sewer service for its development. The trunk line from Lebanon to the RLSA sewage treatment plant runs immediately adjacent to the Windy Acres site, and in this action, plaintiff focused its efforts on accessing the RLSA sewer system. Plaintiff alleged that, although RLSA had reported that all of its existing capacity had been allocated, many users who had been allocated capacity had not yet connected to the system and the current flow through the system was significantly less than its capacity. Plaintiff maintained that the unused capacity at RLSA was sufficient to service Windy Acres, but that "connections continue to be made to the plant and the corresponding flow increases leave a small window of opportunity" for plaintiff to secure adequate treatment capacity.

Engineers retained by Readington and Lebanon, however, disputed plaintiff's claim. In 2003, Thomas Zilinek, Readington's engineer, conducted a preliminary evaluation of unallocated capacity and indicated that all of the 935,000 GPD reserved to Readington had been contractually allocated to property owners in Readington who were either consuming their allocated capacity, partially consuming their capacity, or had contracted to reserve capacity for sites scheduled for development. Readington had reserved only 30,000 GPD to meet its own affordable housing obligations. An ordinance adopted by Readington in April 2003 allocated its remaining capacity to those projects which would enable Readington to meet its own affordable housing obligations and to provide sewer service to those properties in the sewer service area where the septic systems were failing.

Readington retained a second engineer, Peter F. Cerenzio, who explained that to allow plaintiff to access the RLSA system, Readington would have to amend its "section 208" and wastewater management plans, which describe the planning area's environmental features, existing sewer service and facilities and the existing state of wastewater treatment in those areas, ranging from conventional septic systems to regional treatment plants. Cerenzio opined that Clinton failed to explore other options for providing sewer service to the Windy Acres development.

Lebanon's engineer, James Hill, certified that "the Borough of Lebanon is currently utilizing or has already entered into binding allocation agreements for virtually all available capacity, except for 1,518 gallons (which is the amount necessary to serve five or six homes.)"

On November 21, 2003, the return date of plaintiff's order to show cause, the trial judge conducted a case management conference and heard arguments on applications to intervene. In an opinion dated December 5, 2003, the judge granted the right to intervene to anyone who had secured approvals, paid fees or expended resources in reliance on agreements to tie into the RLSA system. On December 19, 2003, the judge rendered an opinion and entered an order (1) dismissing DEP on the grounds that the Law Division lacked jurisdiction to hear an appeal from an agency action or inaction and finding that the matter belonged in the Appellate Division; and (2) denying Larkin's motion to disqualify Hill Wallack. In an order entered on January 20, 2004, the trial court granted defendants' and the intervenors' motions for summary judgment on the ground that the court had no authority to order RLSA to allow plaintiff to connect to its sewer system or to interfere with the rights of intervenors within the RLSA district to connect to that system.

It is from the January 20, 2004 order that plaintiff appeals and argues that the trial court erred (1) in dismissing the complaint "because the only matter before the trial court was P & H's application for a preliminary injunction and none of the parties or intervenors argued, nor did the court address the issue of whether RLSA or its constituent members were obligated under the Mt. Laurel doctrine to expand the sewer plant at the cost of P & H to accommodate an inclusionary development;" (2) in vacating plaintiff's order to show cause application for temporary restraints against dissipation of sewer capacity pending the outcome of litigation; and (3) in dismissing the DEP because it is a necessary party. In its cross-appeal, intervenor Larken contends that the trial court erred in denying its motion to disqualify Hill Wallack.

I

Plaintiff challenges the Law Division's dismissal of the complaint on two grounds. It first argues that the only issues properly before the trial court were whether plaintiff was entitled to a preliminary injunction prohibiting the further dissipation of RLSA's capacity and whether the intervenors were entitled to relief. Plaintiff contends that the motions to dismiss addressed only whether the court could divest intervenors of their contractual right to tie into the RLSA system. Plaintiff maintains that the court never adequately addressed the allegations that the RLSA system had excess capacity for plaintiff to access and that RLSA should be ordered to cooperate with plaintiff in expanding the sewer plant at plaintiff's expense. Plaintiff argues that the Mt. Laurel doctrine authorizes a court to order a sewerage authority which services other municipalities to cooperate with the developer of affordable housing and provide needed service.

In our view, the Law Division properly reached the merits. A court may order one municipality or regional sewerage authority to provide sewer access to an affordable housing development in another municipality based upon a showing of "compelling circumstances." Bi-County Dev. of Clinton, Inc. v. Borough of High Bridge, 174 N.J. 301, 328 (2002). Compelling circumstances could exist if COAH were to determine that Clinton could not meet its Mt. Laurel obligation without the Windy Acres development. Plaintiff's demand that RLSA cooperate with plaintiff in expanding the sewer plant, therefore, should have been dismissed without prejudice. Plaintiff should have the option to reinstate that portion of the complaint if and when COAH determines that Clinton's amended fair share plan does not create a realistic opportunity for meeting its fair share obligation without the Windy Acres site.

In plaintiff's second argument challenging dismissal of the complaint, it contends that defendants' and the intervenors' motions to dismiss "only argued that P & H was not entitled to preliminary restraints against new connections to the RLSA treatment plant because such relief would unduly interfere with the intervenors' pre-existing contractual rights to sewer capacity at the plant." The record indicates, however, that at the case management conference on November 21, 2003, counsel for Bellemead stated his intent to file a motion to dismiss the complaint with prejudice as to the defendants who intervened for the purpose of protecting their rights to connect to the RLSA system. Subsequently, Bellemead and Merck moved under R. 4:6-2(e) to dismiss for failure to state a claim.

Both motions were directed at plaintiff's demand to freeze sewer connections or divest the intervenors of their contractual rights. Merck argued that plaintiff had no right to utilize the RLSA system because the Supreme Court held that a municipality is under no obligation to provide utility service to non-residents. CTCC moved to dismiss the complaint in its entirety based upon lack of subject matter jurisdiction, the doctrine of primary jurisdiction, ripeness and failure to join an indispensable party (COAH). RLSA moved to dismiss the complaint on the ground that it had no duty to satisfy the utility needs of Clinton or its residents. Thus, the question of whether the entire complaint should be dismissed was squarely before the court on December 19, 2003, when it heard oral argument.

In a decision rendered on the record, the trial judge noted that New Jersey law allowed the relief sought by plaintiff only upon a showing of compelling circumstances, and found that plaintiff had not shown compelling circumstances in part because Clinton could satisfy its affordable housing obligation through development of another site. Giving plaintiff the benefit of all favorable facts and reasonable inferences, the judge concluded that plaintiff failed to state a claim upon which relief could be granted. Since the court considered matters outside the pleadings, it viewed the motion as one for summary judgment and dismissed the entire complaint.

We have carefully reviewed the record, and we are satisfied that it does not support plaintiff's argument that the motions to dismiss addressed only the merits of plaintiff's application for preliminary restraints. RLSA's letter brief noted that the complaint sought a declaratory judgment that defendants had an affirmative duty to "facilitate the provision of sanitary sewage service to the Windy Acres Development." RLSA argued that it had no legal duty "to satisfy the sewage needs for Clinton Township" and that any request to amend a wastewater management plant should be reviewed by DEP." We are satisfied that the trial court properly considered the merits of the motions to dismiss and converted them to summary judgment motions after considering matters outside the pleadings. R. 4:6-2(e). We are further satisfied that the merits have been fully briefed and are ripe for our review. We will, therefore, consider the substantive issues.

Municipalities generally have no duty to operate publicly owned utilities for the benefit of non-residents. Mongiello v. Borough of Hightstown, 17 N.J. 611, 615-16 (1955). "[I]f non-residents can incidentally be served as an accommodation and without endangering the local service [that is] all well and good; but such incidental service to non-residents may not fairly be converted into an obligation to render additional non-resident service tending to jeopardize the service within the municipality." Id. at 618

There is an exception to the general rule, however, where an inclusionary development in one municipality could not be built without access to the sewer system in another municipality which has excess capacity. Dynasty Bldg. Corp. v. Borough of Upper Saddle River, 267 N.J. Super. 611, 616 (App. Div. 1993), certif. denied, 135 N.J. 467 (1994). In Dynasty, we held that an order requiring one municipality "to make existing sewer capacity available to Mt. Laurel inclusionary development sites comports with the concept that municipal obligations to provide for low and moderate income housing are established on the basis of regional responsibility." Ibid. The matter was remanded for a determination of whether adequate sewer service and capacity existed to serve those inclusionary sites which required access. Id. at 617. The two municipalities involved were parties to an inter-municipal sewer service agreement and the order on appeal required only that the municipalities revise their agreement. Id. at 614.

Plaintiff relies on Samaritan Ctr., Inc. v. Borough of Englishtown, 294 N.J. Super. 437 (Law Div. 1996), in which a municipality was ordered to cooperate with an adjoining municipality in providing water and sewer service for an inclusionary development, notwithstanding the absence of an inter-municipal agreement. There, the court held that every municipality "has an obligation to facilitate, if not assist, the regional goal of providing realistic housing opportunities for low and moderate income people in a cost effective manner." Id. at 455. The municipality opposed mandatory cooperation and offered no proof that either it or its customers or residents would suffer any "detriment, disadvantage or burden." Ibid. The Law Division granted plaintiff's application for a preliminary injunction and ordered defendant to provide the requested water and sewer connections as long as defendant's system had the capacity and plaintiffs paid all connection and service fees. Id. at 460-62.

In Bi-County, the developer who sought to connect to the sewer system in an adjoining municipality was given the option of setting aside ten percent of the units for low and moderate income families or paying a fee into the municipality's affordable housing trust fund in lieu thereof. 174 N.J. at 308. The developer elected to construct market rate units and pay the fee. Id. at 309. We had held, at 341 N.J. Super. 229, 237 (App. Div. 2001), that one municipality's duty to "facilitate" the construction of affordable housing in another municipality applied only if affordable housing was going to be built on the site in question; payment of an in-lieu development fee under these circumstances would not suffice. 174 N.J. at 313-14. Before the Supreme Court, however, COAH argued that in-lieu fees were the functional equivalent of inclusionary development, and the Court held that payment of a development fee "does not have a sufficient nexus to the actual production of low income housing to justify infringing on another municipality's right to restrict access to its sewer system." Id. at 327. The Court stated:

Compelling circumstances should exist in order to justify, under Mount Laurel principles, disturbing the general rule that a municipality may exclude another municipality or its residents from using or connecting to its sewer system. We anticipate that general rule will be disturbed only in the case of developments that substantially and directly serve important regional and environmental interests. The Bi-County development is not in that category.

We imply no view on the soundness of the underlying legislative scheme that authorizes municipalities to finance and construct their own sewer systems for the exclusive use of property owners in the respective municipality. The question whether in special circumstances municipalities should be encouraged, or even required, to make available sewer capacity to property owners in adjacent communities, assuming adequate compensation is paid to the sewered municipality, is for the Legislature. We infer that on occasion such arrangements are negotiated voluntarily.

[Id. at 328.]

Here, the trial judge found that plaintiff's request was an "extreme solution" that would negatively impact numerous third parties by effectively divesting their contractual right to sewer service. The trial court found, moreover, that there was "absolutely no legal precedent for a court to seize sewerage capacity previously allocated to private parties in favor of a Mt. Laurel developer."

Plaintiff maintains that the trial court erred in dismissing the entire complaint without making findings of fact respecting defendants' duty to assist in providing sewer service for low and moderate income housing, arguing "that the Mt. Laurel doctrine required defendants to expand their sewer plant at plaintiff's cost, if such relief was necessary to provide the 145 units of low and moderate income housing in Clinton's COAH-approved housing element and fair share plan." While we do not disagree in principle with plaintiff's position, it is clearly conditioned on plaintiff demonstrating "compelling circumstances," Bi-County, supra, 174 N.J. at 328, and the trial judge found that plaintiff had not met that standard.

COAH has the primary responsibility for evaluating and enforcing municipal housing elements in fair share plans. Elon Assocs. v. Twp. of Howell, 370 N.J. Super. 475, 484 (App. Div.), certif. denied, 182 N.J. Super. 149 (2004); Sod Farm Assocs. v. Twp. of Springfield, 366 N.J. Super. 116, 129 (App. Div. 2004). At oral argument before us, counsel advised that on November 9, 2005, COAH had entered an order to show cause requiring Clinton to appear before COAH on December 14, 2005 to show cause why COAH should not revoke Clinton's substantive certification and dismiss its petition for amended certification. The order to show cause was based upon Clinton's rejection of plaintiff's settlement proposal to build half of the units originally proposed on the Windy Acres site and dedicate land to the township for construction of future affordable units.

If COAH concludes that there are other viable sites that would meet the township's fair share, then plaintiff will be unable to demonstrate compelling circumstances. The Mt. Laurel doctrine is intended to ensure that municipalities create a realistic opportunity for their fair share of the region's affordable housing. Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 541 (2002); Mt. Laurel II, supra, 92 N.J. at 208. The Court assumed that developers would take a major role in vindicating the doctrine, but its intended beneficiaries were the poor, not the developers. Ibid. See also Hills Dev. Co. v. Twp. of Bernards, 103 N.J. 1, 54 (1986).

In Hills, the Court recognized that some municipalities with inadequate sewer capacity might have to satisfy some of that capacity for developments that included affordable housing. The Court, therefore, empowered trial courts to impose conditions designed to conserve scarce resources. Id. at 62. But a scarce resource restraint should not be imposed for the benefit of a particular builder if there are other tracts available on which to build affordable housing. Id. at 62-63. COAH reserves the power to impose a scarce resource restraint upon a municipality within its jurisdiction. N.J.A.C. 5:91-10.1; See Tocco v. New Jersey Council on Affordable Hous., 242 N.J. Super. 218, 223-24 (App. Div.) (holding that COAH's imposition of a scarce resource restraint on a municipality within its jurisdiction did not constitute a taking), certif. denied, 122 N.J. 403 (1990), cert. den., 499 U.S. 937, 111 S. Ct. 1389, 113 L. Ed. 2d 446 (1991).

COAH has the primary responsibility to determine whether Clinton has a viable alternative plan if Windy Acres is not developed. Elon, supra, 370 N.J. Super. at 484. COAH is continuing its review of the plan, notwithstanding this appeal. See Order to Show Cause Why COAH Should Not Revoke Substantive Certification and Dismiss [Clinton's] Amendment to Substantive Certification (November 9, 2005); In re Application for Relief in Clinton Twp., COAH 05-1702/04-1630(c) (March 9, 2005); In re Motions to Revoke Clinton Twp.'s Second Round Certification, supra. If COAH determines that there are alternative sites that can meet the township's fair share, then plaintiff will have failed to demonstrate compelling circumstances and will have no right to connect to or force the expansion of RLSA's sewage system. If, on the other hand, COAH determines that there are no other viable sites and that Windy Acres is necessary to enable the township to meet its fair share, then plaintiff may be able to demonstrate compelling circumstances. In our view, therefore, the trial judge correctly dismissed the complaint against the defendants but should have done so without prejudice so that plaintiff may reinstate the complaint if COAH determines that Clinton cannot meet its fair share without Windy Acres.

We hold, therefore, that paragraph two of the January 20, 2004 order shall be modified to the extent that the dismissal of plaintiff's demand that RLSA and its constituent members cooperate with plaintiff in securing necessary DEP and other approvals that would allow RLSA to expand its sewer plant at plaintiff's expense to accommodate the Windy Acres development be dismissed without prejudice. Plaintiff may also reinstate its complaint against Clinton in the event COAH finds that Windy Acres is a necessary component of Clinton's Mt. Laurel obligation.

II

Plaintiff next argues that the trial court erred in denying its application for temporary restraints against dissipation of sewer capacity pending the outcome of this litigation. Plaintiff maintains that the court should have allowed it to conduct a survey "which would have accounted for the status of allocated but unutilized capacity at the RLSA treatment plant." While plaintiff concedes that all of the sewer capacity at the plant had been "technically allocated," it contends that a proper survey "could have well revealed that many of these parties intended to abandon their allocations or would have otherwise been amenable to selling their unutilized allocations" to plaintiff.

Plaintiff did not seek to have the trial court order a survey to determine whether capacity that was "technically allocated" was unutilized. Rather, plaintiff sought an order permanently enjoining RLSA and any user who would utilize less than 2,500 GPD from accessing sewer capacity, irrespective of their contractual rights to do so. The relief sought by plaintiff in the trial court was over-broad and could have substantially damaged parties who had purchased sewerage capacity and had relied on their allocations in developing or selling their properties. In short, plaintiff did not raise the survey in the trial court and we will not address it here. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

In our view, the trial judge properly denied plaintiff's application for injunctive relief against the intervenors. An interlocutory injunction is an extraordinary remedy that involves the most sensitive exercise of judicial discretion. Crowe v. De Gioia, 90 N.J. 126, 132-33 (1982). It is a remedy to prevent irreparable injury, and must be administered with sound discretion considering justice and equity. Coskey's Television & Radio Sales & Serv., Inc. v. Foti, 253 N.J. Super. 626, 639 (App. Div. 1992). Injunctive relief should issue only when the movant demonstrates that (1) relief is necessary to prevent irreparable harm; (2) the legal rights underlying plaintiff's claims are settled; (3) the material facts are uncontroverted; and (4) a relative hardship analysis favors the party requesting the relief. Crowe, supra, 90 N.J. at 132-34; Parks v. Commerce Bank, 377 N.J. Super. 378, 387 (App. Div. 2005).

Here, the trial judge found that plaintiff failed to demonstrate any likelihood of success and that the relief requested would impose substantial hardship on the intervenors. The judge reasoned that plaintiff had cited no authority for "wresting away scarce resources from third parties in favor of a Mt. Laurel developer." Both Dynasty and Samaritan suggest that a scarce resource restraint should not be applied to developers or landowners who had already been allocated sewer service, or who had obtained vested approvals. Cf. Dynasty, supra, 267 N.J. Super. at 615-17 (recognizing borough's entitlement to a fair opportunity to testify as to detrimental impact a Mt. Laurel development's sewerage needs would have on the community the sewer system was serving); Samaritan, supra, 294 N.J. Super. at 460 (noting that "the public health, safety and welfare is not served if the present sewer and water lines for which connections are desired are overburdened.")

The trial court correctly concluded that although

COAH has acted several times to impose scarce resource restraints, [it] has expressly stopped short of divesting innocent third parties of vested rights to such resources. The hesitancy on the part of a state agency that is charged with effectuating the policy goals of the Mt. Laurel decision is instructive in this court's determination of whether the proposed relief is appropriate within the meaning of COAH.

The relief sought by plaintiff would significantly impact planned developments within the RLSA service area and would impose a substantial hardship on the intervenors. Finally, plaintiff failed to show that the Windy Acres development is essential to Clinton's Mt. Laurel obligation. That issue is still before COAH.

III

Plaintiff next contends that the trial court erred in dismissing DEP because it was a necessary party, even though plaintiff has not alleged any substantive claims against it. Plaintiff maintains that the trial judge erroneously construed the complaint as a demand to set aside the DEP's reclassification of the south branch of Rockaway Creek. Plaintiff argues that it sought no affirmative relief against DEP and that it named DEP as a party only because the agency was "necessarily implicated" in the litigation. In his opinion, the trial judge held that the complaint against DEP should be dismissed for lack of subject matter jurisdiction under R. 4:6-2(a) because we have exclusive jurisdiction to review administrative decisions under R. 2:2-3(a)(2).

On its face, the complaint alleged that DEP's reclassification of the south branch made it unfeasible to build the Windy Acres development, and that DEP, as well as municipalities, regional sewage authorities and other state agencies had a constitutional duty under the Mt. Laurel doctrine to "facilitate the provision of low and moderate income housing so as to satisfy the unmet regional housing need." Plaintiff also alleged that DEP would have to issue various approvals and permits to enable plaintiff to tie into the RLSA system, and requested that the trial court order all defendants, including DEP, to formulate and implement a joint plan within ninety days to enable Windy Acres to tie into the RLSA system. The complaint also sought an order requiring DEP "to review on an expedited basis any applications for amendment of wastewater management plans, NJPDES permits, or other permits or approvals necessary to facilitate provision of sanitary sewage service to the Windy Acres development."

DEP maintains that the New Jersey Water Quality Planning Act, N.J.S.A. 58:11A-1 to -16, and regulations promulgated thereunder, require that all developments be consistent with existing water quality management plans. N.J.S.A. 58:11A-10; N.J.A.C. 7:15-3.1(a). A "wastewater management plan" is defined as "a written and graphic description of existing and future wastewater-related jurisdictions, wastewater service areas, and selected environmental features and treatment works." N.J.A.C. 7:15-1.5. The Water Quality Planning Act demands opportunities for meaningful public participation in the formulation of such plans, N.J.S.A. 58:11A-8, and DEP has adopted detailed procedures for amending water quality management plans, which include public notice and an opportunity to be heard. N.J.A.C. 7:15-3.4. Any interested person may initiate a petition to amend an existing water quality management plan. N.J.A.C. 7:15-3.4(g)(1). DEP acknowledges that plaintiff would qualify as an interested person.

Plaintiff provides no support for its demand that the Law Division or the DEP review applications for an amendment to any required plans or permits when no applications have been filed. Moreover, plaintiff has not challenged the DEP's reclassification of the south branch before the DEP and we will not review administrative actions unless administrative remedies have been exhausted. R. 2:2-3(a)(2).

Plaintiff maintains before us that it was "not challenging any action by NJDEP, nor was it seeking to compel NJDEP to take any action, because no relief had been granted by the trial court" and that it "simply anticipated that NJDEP might become a necessary party in the remedial phase of litigation in the event the trial court ordered RLSA to submit an application to NJDEP." Consequently, plaintiff maintains that DEP is a "necessary party" to this litigation.

A party is necessary to a litigation if a court cannot grant complete relief in its absence or if the party claims an interest in the subject matter and is so situated that a disposition of the case in its absence would impair the party's ability to protect its interest or create the risk of multiple claims or inconsistent obligations. R. 4:28-1(a). A party is not indispensable unless it "'has an interest inevitably involved in the subject matter before the court and a judgment cannot justly be made between the litigants without either adjudging or necessarily affecting the absentee's interest.'" Toll Bros., supra, 334 N.J. Super. at 90-91 (quoting Allan B. DuMont Labs, Inc. v. Marcalus Mfg. Co., 30 N.J. 290, 298 (1959)). We are satisfied that the complaint against the DEP was properly dismissed.

IV

Intervenor Larken cross-appeals from the trial court's denial of its motion to disqualify Hill Wallack from representing plaintiff because one of the firm's partners, Thomas Carroll, represented Larken for about six months in securing preliminary site plan approval for a project totally unrelated to the Windy Acres project. Larken argues that Hill Wallack's continued representation of plaintiff violates R.P.C. 1.9(a), which prohibits a lawyer from representing a client whose interests are adverse to those of his former client. Plaintiff denies any conflict of interest and argues that the motion was moot when made because plaintiff had offered to exempt Larken from any scarce resource order.

Although the trial judge decided the motion on its merits, we conclude that the issue is moot based upon our holding that plaintiff is not entitled to injunctive relief precluding Larken, or any other intervenor, from accessing the RLSA system. The cross-appeal is dismissed as moot. R. 2:8-2.

V

In summary, we affirm the dismissal of the complaint against the intervenors and the DEP with prejudice. We affirm the dismissal of the complaint against the remaining defendants, except we modify the judgment to dismiss the complaint without prejudice to allow plaintiff to reinstate its complaint in the event that COAH determines that Windy Acres is necessary for Clinton's certified affordable housing plan and plaintiff is unable to negotiate a resolution with Clinton and/or RLSA to provide sewer capacity for Windy Acres.

Affirmed as modified.

 

The south branch of Rockaway Creek was one of a number of waterways the DEP proposed to redesignate from category two to category one.

In addition to CTCC, Bellemead and Larken, the following parties intervened: Merck & Co., Inc.; Phyllis R. Black; Sandra B. Maxwell; William H. Black; Construction Specialties; Fallone Properties, LLC; Hunterdon Plaza Associates, LLC; Anita G. Hogan; Jane Folk Werner; Moira A. Murphy; Neil Van Cleef; A.T.A. Developers, Inc.; and Kullman Industries.

The Mt. Laurel doctrine is derived from S. Burlington County NAACP v. Twp. of Mt. Laurel (Mt. Laurel II), 92 N.J. 158 (1983); S. Burlington NAACP v. Twp. of Mt. Laurel (Mt. Laurel I), 67 N.J. 151, appeal dismissed and cert. denied, 423 U.S. 808, 96 S. Ct. 18, 46 L. Ed. 2d 28 (1975).

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A-2997-03T1

May 25, 2006