EDWARD NORIAN, et al. v. PLANNING BOARD BOROUGH OF ALPINE, BOROUGH OF ALPINE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3163-04T13163-04T1

EDWARD NORIAN, GEORGE

HARALABATOS and ALPINE THREE,

L.L.C., a New Jersey limited

liability company,

Plaintiffs-Respondents,

v.

PLANNING BOARD OF THE BOROUGH

OF ALPINE, BOROUGH OF ALPINE,

Defendants-Appellants,

and

BOROUGH OF CRESSKILL,

Defendant-Respondent.

________________________________________________________________

 

Submitted November 9, 2005 - Decided

Before Judges Coburn, Collester and Lisa.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-3971-03.

Sills Cummis Epstein & Gross, attorneys for appellants (Thomas Jay Hall, of counsel; Robert Kasuba, on the brief).

Archer & Greiner, attorneys for respondents (Lloyd H. Tubman, of counsel and on the brief).

PER CURIAM

The Borough of Alpine (Borough or Alpine) and the Alpine Planning Board (Planning Board or Board) appeal from an interlocutory order and the final judgment in this land use dispute that authorized plaintiffs to connect their proposed seven-unit townhouse development to an off-site sanitary sewer system. Alpine's wastewater disposal policy generally required the use of on-site systems, except for properties bordering neighboring communities, which were permitted to connect to the sewage disposal systems in those communities if they were willing to accept the effluent. Plaintiffs' property did not border a neighboring community.

The litigation arose in the context of the Board's denial of plaintiffs' application for preliminary site plan approval. Prior to submission of that application plaintiffs had brought a builder's remedy action against Alpine under the Mount Laurel doctrine. That action resulted in a settlement agreement between plaintiffs, Alpine and the Board, by which plaintiffs' property would be rezoned to permit the construction of seven residential units.

Judge Jonathan N. Harris entered the interlocutory order under review on September 29, 2003, declaring the Board's denial of the site plan application arbitrary, capricious and unreasonable because it rested on legally impermissible grounds. After further proceedings before the Board, Judge Harris conducted a bench trial and found that authorization for the off-site connection was an implied condition of the Mount Laurel settlement agreement. He entered final judgment to that effect on February 10, 2005.

From our independent review of the record before the Planning Board, we agree with the judge's determination regarding the September 29, 2003 order. From our review of the trial record, we are satisfied that the judge's finding of an implied condition in the settlement agreement is supported by the evidence. We therefore affirm both orders.

I

Plaintiffs purchased the property in 1986. They sought to develop it either as three two-family homes or three office buildings. Neither application was approved. On January 17, 1995, plaintiffs filed a builder's remedy action against Alpine. On May 24, 1996, the court declared Alpine's land use ordinances unconstitutional. On July 22, 1996, Alpine adopted its Fair Share Ordinance. A Special Master was appointed to assist the municipality and affected parties, including plaintiffs, in conforming Alpine's land use framework to the requirements of the Fair Housing Act. Negotiations included the concept of permitting plaintiffs to develop their property by constructing seven residential units.

Initially, all parties contemplated an on-site system to service the development. Accordingly, in September 1998, plaintiffs applied to the DEP for a "discharge into ground water" permit, which would allow installation of a septic system on the property. In February 1999, the DEP notified plaintiffs of several technical deficiencies in its application. Thus, all parties, including Alpine, were on notice at that time that plaintiffs were experiencing difficulty with obtaining DEP approval for an on-site system.

Nevertheless, an on-site system was still contemplated. On June 24, 1999, Alpine's attorney wrote to the Special Master proposing settlement of the Mount Laurel suit. He stated that the Borough was "agreeable to the development of seven market value units on the site with one $20,000 RCA [Regional Contribution Agreement] provided the same is constructed using an approved septic system . . . ." By letter of July 7, 1999, plaintiffs' counsel wrote to Alpine's counsel expressing agreement with the offer of settlement.

In August 1999, plaintiffs supplemented their DEP application, and in November 1999, DEP wrote to plaintiff stating that the application was "generally acceptable." However, this status changed dramatically on February 4, 2000, when the DEP wrote to plaintiffs and stated:

Please be advised that based upon further review and additional site inspections conducted on January 5, and January 7, 2000, the [Bureau of Nonpoint Pollution Control] has determined that the technical information found in the [New Jersey Pollutant Discharge Elimination System - Discharge to Ground water] permit application does not correspond to the conditions observed on-site. The initial site inspection conducted on August 5, 1999 was during drought conditions so the discrepancies were not apparent. On both days in January of 2000, [the property] was found to have an active spring on-site in addition to running water on both sides of the property (respect[ively] the eastern and western portions of the property) along with standing water throughout the site. Since the active spring was observed during the August 5, 1999 site visit that demonstrates that the . . . site is constantly under saturated conditions. On-site monitor wells indicated the water table to be between 2 to 5 inches below the soil surface. Terracotta piping was found at the lower southwest half of the property line and was actively channeling water into a roadside ditch away from [the property] to a nearby stream, which indicates continuous subsurface saturation.

The letter concluded by stating that the DEP "determined that this project, as proposed, is not approvable" and an on-site disposal permit "will not be issued for this facility as proposed."

Two weeks later, on February 18, 2000, Alpine's attorney submitted a draft settlement agreement to the Special Master, plaintiffs' attorney and the attorney for the Planning Board. The draft expressly contemplated that either an on-site or off-site system could be utilized. It contained this provision:

Upon receipt from the [DEP] of a wetlands delineation which will permit the construction of the project proposed to be constructed on the site and approval for either an on-site septic system issued by the [DEP] in accordance with the New Jersey Pollutant Discharge Elimination System - Discharge to Ground Water regulations and the Alpine Health Officer or the installation of an approved sanitary sewer system which will service the property, the Borough shall adopt a zoning ordinance . . . .

[Emphasis added.]

On March 27, 2000, plaintiffs' counsel wrote to Alpine's counsel, continuing the negotiations over the specific terms of the settlement agreement, complaining that the draft submitted "contains several material departures from our agreements and understandings." One provision objected to was that quoted above. Plaintiffs objected to the requirement that they obtain certain permits as a prerequisite to rezoning, contending that "the continued insistence that the cart come before the horse in the permitting process can only be viewed as an attempt to frustrate the ability of plaintiffs to ultimately enjoy the benefits of the settlement." Plaintiffs did not object to requiring DEP wetlands delineation approval as a precondition to rezoning. But they did object to sewage disposal approval as a condition to obtain the desired rezoning.

On May 24, 2000, the parties finalized their negotiations and a settlement agreement was signed by plaintiffs, Alpine and the Planning Board. In place of the language quoted above, the final form of agreement read:

Upon the Court's approval of this Settlement Agreement and upon receipt from the [DEP] of a wetlands interpretation which will permit the construction of the project proposed to be constructed on the site the Borough shall within sixty days thereafter adopt a zoning ordinance . . . .

Thus, the final form of settlement agreement was silent on the issue of sewage disposal. It contained no provision requiring an on-site system, nor did it prohibit connection to an off-site system. The settlement was approved, and the court entered an Order of Compliance and Judgment of Repose to resolve the Mount Laurel action. Alpine amended its zoning ordinance to rezone plaintiffs' property in accordance with the agreement.

Plaintiffs submitted their preliminary site plan application to the Board on April 11, 2002. The application conformed in all respects to the zoning requirements, containing no request for variances or design waivers. Plaintiffs had previously obtained the wetlands letter of interpretation from the DEP as required by the settlement agreement. The plan did not provide for on-site sewage disposal. Because the DEP had rejected such a system due to the unfavorable soil conditions and water table, plaintiffs revised their plans to provide for a 4,700 foot two-inch force main that would connect with the nearest available line in the Borough of Cresskill, which had agreed to the connection. The 4,700 foot line would be placed under public roads, and the design was such that other property owners along the route would not be able to connect to it. The homeowners' association would be responsible for its maintenance.

After multiple hearing dates over the ensuing months, the Board adopted a resolution on April 23, 2003, denying plaintiffs' application. The resolution "concluded that the project complied with the applicable zoning regulations but that the Property could not safely be developed as proposed due to naturally existing conditions." The Board cited the "high water table" which prevented "the use of conventional septic systems for the number of units proposed." The Board expressed its concerns that the proposed off-site system might not be approved by the Borough of Alpine, the Bergen County Planning Board, or the DEP.

II

Plaintiffs initiated this action, contending their application fully complied with all applicable ordinances and they were entitled to preliminary site plan approval. They contended the Board's denial improperly rested on the Board's speculation that plaintiffs might not be able to obtain from other entities other approvals needed for their development.

Relying primarily on W.L. Goodfellows & Co. of Turnersville, Inc. v. Washington Twp. Planning Bd., 345 N.J. Super. 109 (App. Div. 2001), Judge Harris concluded that any perceived difficulties in the ability of the applicants to obtain approvals should have resulted in a conditional approval rather than denial. He entered an order on September 29, 2003, declaring the Board's action arbitrary, capricious and unreasonable, directing approval of plaintiffs' preliminary site plan application, and remanding to the Board for imposition of any appropriate conditions. Alpine and the Planning Board appeal that order, contending the Board properly denied plaintiffs' application. We do not agree.

Discretionary decisions of local land use boards are presumptively valid. Harvard Enters., Inc. v. Bd. of Adjustment of Madison, 56 N.J. 362, 368 (1970). Courts may not substitute their judgment for that of the municipal body unless it is proven that the board's action was arbitrary, unreasonable or capricious. Ibid.; Kramer v. Bd. of Adjustment, 45 N.J. 268, 296-97 (1965). When a municipal planning board is called upon to review an application that does not request any variances or design waivers and the applicant meets the standards prescribed by local ordinances, the board lacks the authority to deny approval. PRB Enters., Inc. v. S. Brunswick Planning Bd., 105 N.J. 1, 7 (1987); Dunkin' Donuts of N.J., Inc. v. Twp. of N. Brunswick Planning Bd., 193 N.J. Super. 513, 515 (App. Div. 1984); Lionel's Appliance Ctr., Inc. v. Citta, 156 N.J. Super. 257, 268-69 (Law Div. 1978).

A court will grant deference to a planning board only if the ordinance confers discretion on the board. PRB Enters., supra, 105 N.J. at 7. When a board considers the validity of a site plan, its "authority . . . is limited to determining whether [the] plan conforms with the zoning ordinance and the applicable provisions of the site plan . . . ordinance." Sartoga v. Borough of W. Paterson, 346 N.J. Super. 569, 582 (App. Div.), certif. denied, 172 N.J. 357 (2002). The standards contained within the ordinance must be clear and express because "the absence of express standards may invite inconsistency, encourage controversy, and lead to arbitrary action by the planning authority." Pizzo Mantin Group v. Twp. of Randolph, 137 N.J. 216, 229 (1994). The local board "has no authority to deny site plan approval based on its view that a use permitted under the zoning ordinance . . . is inconsistent with principles of sound zoning." Sartoga, supra, 346 N.J. Super. at 582-83.

A reviewing court follows the same standards as the trial court, giving deference to the municipality's broad discretion and reversing only if the municipal action was arbitrary, capricious or unreasonable. Booth v. Bd. of Adjustment of Rockaway, 50 N.J. 302, 306 (1967); Kramer, supra, 45 N.J. at 296-97. We are satisfied from our independent review of the record that Judge Harris applied the correct legal standards and reached the correct result. Plaintiffs' site plan application conformed in all respects to the standards in Alpine's zoning ordinance and was entitled to approval. Shim v. Washington Twp. Planning Bd., 298 N.J. Super. 395, 411 (App. Div. 1997). Of course, the Board had the authority to impose appropriate conditions, including obtaining needed approvals, permits, and easements, but it had no authority to deny the site plan because those items were not obtained in advance. W.L. Goodfellows & Co., supra, 345 N.J. Super. at 116. We affirm the September 29, 2003 order substantially for the reasons stated by Judge Harris in his comprehensive oral decision of September 18, 2003.

III

After further proceedings, the Board adopted a resolution which, in compliance with the court order, granted preliminary site plan approval, and set forth numerous conditions to which the approval was subject.

The matter returned to the Law Division for further proceedings in which plaintiffs contested the legality and reasonableness of many of the conditions. Judge Harris eventually conducted a bench trial on January 24, 25 and 26, 2005. Shortly before the trial, on December 15, 2004, the Borough adopted a resolution expressing its adherence to the provisions of its Master Plan that prohibited connections to off-site sanitary sewer systems to all locations in the municipality, including plaintiffs', except those bordering adjacent municipalities. The resolution stated that the Borough's consent with respect to properties in the non-sewered areas, including plaintiffs' property, might be required for an amendment to the Bergen County Utilities Authority's Wastewater Management Plan, for the granting of easements through municipal properties, including municipal roads, and for any agreement with a neighboring municipality to allow connection. The resolution stated that "[t]he Mayor and Council will refuse to consent to any sanitary sewer system that is inconsistent with this resolution, including but not limited to those consents discussed above."

Plaintiffs contended that their right to utilize an off-site system derived from the Mount Laurel settlement agreement. Although the agreement was silent as to the method of sewage disposal, plaintiffs contended that, based upon the course of dealings between the parties leading up to the agreement and the totality of the circumstances, the agreement contained an implied condition that they would be allowed to connect to an off-site system. The Borough and Board took the contrary position. Resolution of this issue was at the heart of the dispute regarding preliminary site plan approval, and with the consent of all parties this issue was included within the scope of the trial.

Based upon the testimonial and documentary evidence received at trial, the judge noted that although the parties did not expressly agree upon the method of sewage disposal for plaintiffs' project, the off-site connection to Cresskill's system was fairly contemplated by the parties in the settlement agreement and was within their reasonable expectations at the time the settlement was entered into.

The judge based this determination on his findings relating to the course of dealings between the parties and the totality of the circumstances. The judge focused on five factors:

(1) On February 4, 2000, the DEP informed the parties that the proposed on-site system was not acceptable because of unfavorable soil conditions and a high water table. This was determined by the DEP from its own site inspections conducted after the preliminary exchange of correspondence between attorneys for Alpine and plaintiffs in June and July 1999 which contemplated an on-site system. Even prior to the February 4, 2000 letter from the DEP, there were other correspondences indicating the Borough's awareness of major problems with the proposed on-site solution. Indeed, a draft settlement agreement prepared by Alpine's attorney provided for either an on-site or off-site disposal system. Thus, the Borough and Board were well aware of the possible off-site option when they entered into the settlement agreement.

(2) Alpine and the Board were well aware of the technical feasibility of extending infrastructure to plaintiffs' site based upon an earlier report. Therefore, sewering plaintiffs' site by connection to the Cresskill system "was not a brand new issue. It wasn't a major surprise."

(3) At no time prior to the Planning Board hearings did Alpine ever expressly contend that an off-site sewer option for plaintiffs' development was precluded by the settlement agreement. Thus, the judge stated "that in the meeting of the minds it wasn't just as simple that it was [on-site] septic or nothing." The judge further noted that even before entry of the Judgment of Repose in the Mount Laurel action in December 2000, "Alpine was aware of the application for the revision or amendment to the Water Quality Management Plan." The Borough and the Board did not contend that the proposed revision or amendment was contrary to the settlement agreement or the Judgment of Repose.

(4) Another factor that put Alpine on notice of the potential for an off-site solution was found in the regulations of the Counsel On Affordable Housing (COAH). The judge stated:

Alpine knew or should have known that COAH regulations relating to lack of water or sewer could require municipal participation, cooperation and endorsement of infrastructure initiatives to facilitate otherwise suitable sites for low or moderate income housing.

And COAH's regulations, as we've learned and as we know from say the Supreme Court decision in the Bicounty case, COAH has always taken a more expansive view about what is a[n] inclusionary site or a Mt. Laurel II site and has included both contributory as well as actual inclusionary sites.

What I'm talking about here is, of course, what is now the discordancy between a contributory site and an inclusionary site, at least for purposes of forcing foreign municipalities, brother and sister municipalities, to accept or not to accept -- assuming they have capacity -- wastewater.

A facility that enjoys mere contributory status can't force a neighboring town to allow sewer tie-in. Again, assume -- even assuming capacity. An inclusionary development; that is, a site that actually has a substantial number of low or moderate income units, is capable of forcing.

And that principle doesn't apply necessarily to the home municipality. I'm only back referring to the COAH regulations that are very expansive. In other words, even a contributory site such as the Norian site under the COAH regulations would very well be entitled to some level of participation in infrastructure extensions.

I'm not here saying that the municipality could be compelled by those regulations to pay for them, but to suffer them, to endure them, even with the kinds of consequences, dire or not, that has been argued in this case, even though they may exist.

(5) Finally, Alpine received, without objection, multiple benefits from plaintiffs' performance at times when Alpine knew plaintiffs were pursuing the off-site sewer option. It accepted the $20,000 payment and the benefits of the Judgment of Repose.

Judge Harris issued a final judgment on February 10, 2005, ordering that plaintiffs' property may be developed with seven townhouses with an off-site sewer connection to the Borough of Cresskill, subject to all State regulations; declaring the Borough's December 15, 2004 resolution expressing its refusal to consent to such a connection not applicable to plaintiffs' development; prohibiting the Borough and Planning Board from actively opposing or withholding their consent to plaintiffs' applications to the DEP or the Bergen County Utilities Authority; and modifying or excising several of the conditions to the preliminary site plan approval imposed by the Planning Board.

The Borough and Planning Board appeal from the final judgment. They argue on appeal that (1) the trial court erred in its analysis of the Mount Laurel implications raised in this matter, and (2) the trial court erroneously determined that plaintiffs' property could be sewered under the settlement agreement. We reject these arguments.

We will not disturb the factual findings of a trial judge sitting without a jury if they are supported by adequate, substantial and credible evidence. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). We are satisfied that Judge Harris' finding, by a preponderance of the evidence, that the possibility of an off-site sewer solution was within the contemplation of the parties in entering into the settlement agreement and was not precluded by the agreement is well supported by the record evidence. We affirm the final judgment substantially for the reasons expressed by Judge Harris in his thorough and well-reasoned oral opinion of January 28, 2005. We add these brief comments.

Through a lengthy negotiation, it was agreed that plaintiffs would be permitted to develop their site with a seven-unit residential development. In exchange, the Borough would be found in compliance with its Mount Laurel obligations and would receive a Judgment of Repose, insulating it from future litigation regarding affordable housing for six years. Alpine would also receive the $20,000 payment from plaintiffs to be used in satisfying its Mount Laurel obligations. Throughout the negotiations, Alpine and its representatives were aware that due to unfavorable site conditions an on-site septic system was probably not feasible to accommodate the proposed seven-unit development. Indeed, before the agreement was finalized, the DEP rejected the on-site option. It was also known to the parties during the negotiations that an off-site option was being considered and steps were being taken towards that end.

We find unpersuasive the reliance by the Borough and the Board on the early exchange of correspondence in June and July 1999, in which the parties preliminarily agreed to an on-site system as a condition of settlement. That was a preliminary stage of the negotiations, and that status was superseded by later developments with the knowledge of parties on both sides. We also find unpersuasive the argument by the Borough and the Board that had they known plaintiffs would be given approval for an off-site sewer connection they would not have settled the Mount Laurel action and plaintiffs would not have been successful in pursuing their builder's remedy. We will not give credence to that speculation. The fact is they did settle, they received all of the benefits of the settlement agreement, and they are bound to comply with the agreement's provisions. For the reasons we have already stated, we are satisfied the agreement contained an implied authorization for connection to an off-site system.

Further, plaintiffs bargained for the right to construct seven market-rate townhouses. Alpine had a duty of good faith and fair dealing to perform its part of the agreement in accordance with the settlement. Wilson v. Amerada Hess Corp., 168 N.J. 236, 245 (2001). "To determine what is considered a good faith performance, the court must consider the expectations of the parties and the purposes for which the contract was made." Seidenberg v. Summit Bank, 348 N.J. Super. 243, 259 (App. Div. 2002). "[A] party to a contract may not unreasonably frustrate its purpose." Ibid. To allow Alpine to require an on-site disposal system would frustrate plaintiffs' ability to enjoy the benefit of their bargain, namely the construction of seven conforming townhouse units.

 
We also find unpersuasive the argument by the Borough and the Board that plaintiffs had a duty to scale down the size of the units or the number of units, in an effort to obtain DEP approval for an on-site system. Because the agreement, as construed by Judge Harris and affirmed by us, contemplated the possibility of an off-site solution, there was no obligation on plaintiffs' part to reduce the scope of their development if the seven-unit development, as designed, could be sewered through an off-site solution.

Affirmed.

The Borough and Board have made no arguments on appeal regarding the provisions in the final judgment modifying or excising conditions imposed by the Board.

(continued)

(continued)

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January 3, 2006