IVAN KOSTESIC v. TOWN OF GUTTENBERG JOINT PLANNING AND ZONING BOARD et al.

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NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5936-04T15936-04T1

IVAN KOSTESIC,

Plaintiff-Appellant,

v.

TOWN OF GUTTENBERG JOINT PLANNING

AND ZONING BOARD and ECHEVARRIA

INDUSTRIES, INC.,

Defendant-Respondent.

_____________________________________

 

Submitted June 5, 2006 - Decided June 23, 2006

Before Judges Cuff, Lintner and Holston, Jr.

On appeal from the Superior Court of

New Jersey, Law Division, Hudson County,

L-4215-04.

Libero D. Marotta, attorney for appellant.

Maria Gesualdi, attorney for respondent Town of Guttenberg Joint Planning and Zoning Board.

Alonso & Navarrete, attorneys for respondent Echevarria Industries, Inc. (J. Alvaro Alonso, on the brief).

PER CURIAM

Plaintiff, Ivan Kostesic, appeals from a May 3, 2005, final order of the Law Division upholding the memorializing resolution (the resolution) of defendant Town of Guttenberg Joint Planning and Zoning Board (the Board) granting defendant Echevarria Industries, Inc.'s (Echevarria) application for bulk and use variances. Plaintiff also appeals from an earlier order entered on February 8, 2005, dismissing, with prejudice, the sixth count of his complaint alleging a conflict of interest on the part of certain members of the Board. We reverse both orders and remand for further proceedings.

The property in question is located in an R-1 low-density residential zone. The permitted uses in the R-1 zone include one-, two-, three-, and four-family residences and garden apartments. Echevarria sought to demolish the then-existing one- and two-story nonconforming commercial and residential buildings and construct a mid-rise four-story condominium complex containing twenty-one one-bedroom residential units. Echevarria sought use variances to (1) construct a non-conforming mid-rise apartment building; (2) increase the allowable density from six units per 7500 square feet under the zoning ordinance to twenty-one units per 7500 square feet; and (3) exceed the height of the building from three stories, or thirty-five feet, to four stories, or "shy of forty feet," a thirteen percent increase over that permitted. Echevarria also sought bulk variances to: (1) expand the maximum building coverage on the property from sixty to one hundred percent; (2) reduce the front yard from ten feet to zero; (3) reduce the side yard from two feet to zero; (4) reduce the rear yard from three feet to zero; (5) reduce the number of required parking spaces from thirty-eight to twenty-one; and (6) reduce the off-site loading requirement from one to zero. Plaintiff, the owner of residential property within 200 feet and located behind the proposed complex, appeared at the hearing and objected to the project.

The Board held a public hearing on Echevarria's application on May 17, 2004. Echevarria presented licensed architect and planner, Jose Carballo, whose firm had prepared the plans. Carballo testified to the plan specifications and the requested variances. He mentioned that the existing buildings on the site had front, side and rear yards of zero feet. Additionally, increasing the lot coverage to one hundred percent and reducing the yards to zero was needed to accommodate parking needs. The first floor would consist of one parking space for each residential unit located on the top three stories. Carballo testified that one parking space per unit would be sufficient because the property was within commuting distance to New York City and the units are one-bedroom condominiums. Above the first level, the building would be set back three feet on all sides, with the top floor being set back eighteen feet from the front. The first two residential floors have eight units, and the third floor has five units. There will also be one common space venting unit atop the roof of the building, which will be six feet high, because each condominium unit will have its own built-in condensers.

Carballo testified that he believes that the positive criteria outweighed the negative criteria and promotes the benefits of development and the neighborhood. He testified that, although the mid-rise complex remains a non-conforming use, it is closer to the permitted garden apartment usage than the mixed commercial-residential use that is currently on the site. He described other similar buildings in the neighborhood, and opined that, like a garden apartment, the proposed complex would further the intent of the Master Plan. He indicated that the complex would cater to a "professional user" working in New York City who would not use transportation "as we know it," thus allowing for one parking space per unit. Because the apartments are all one-bedroom units, Carballo also believed they would have little impact on the school system.

During the time reserved for the public's questioning of Carballo, plaintiff raised issues concerning construction of the building to the property line and its effect on plaintiff's garage, which is eighteen feet from the property line, parking on Jackson Street, sufficiency of parking when units are occupied by two people, the height of the building, noise generated by the unit on the roof, crowded schools, and sewerage. At one point during a colloquy with the Board Chairman, David Hepperle, plaintiff made a statement indicating his belief that certain people were friends with Mario Echevarria, a builder working in the town for fifteen years.

Thomas Rizzi, who lives at 6811 Adams Street, which is not within 200 feet of the property, also voiced his concerns, specifically relating to density, lot coverage, parking and garbage.

At the conclusion of the hearing, the Board approved the application by a 5-2 vote, with the following conditions: (1) the parking spots will be included in the deeds to the individual units; (2) the garage door must be as wide as possible, up to seventeen and a half feet, without hurting the integrity of the side walls; (3) fencing or parapets must be built to conceal the venting system unit atop the roof of the building; (4) parking space number 10 must be designated as handicap accessible; (5) landscaping will be shown on the final plans for signature; (6) the sidewalk will be made of concrete; (7) the curbs will be replaced; (8) the plans will reflect the correct lot numbers as lots 27 and 28; and (9) the building shall be fully sprinkled.

On June 21, 2004, the Board adopted its resolution, which set forth the requested variances, the date of the hearing, the witness presented as "Jose Carballo, licensed architect and licensed planner," that the Board considered the applicant's attorney's presentation and "gave due consideration to all individuals desiring to be heard," the conditions upon which approval was made, and the votes of each member. The resolution also stated, "WHEREAS, the premises in question is presently occupied by a mixed use, non-conforming structure consisting of a warehouse and a residential structure" and "[t]he proposed use would be for [a] midrise structure containing 21 residential one bedroom units . . . [t]he Board found it desirable to replace a presently existing non conforming structure with a residential structure."

Plaintiff filed his verified complaint in lieu of prerogative writs on August 9, 2004, challenging the Board's decision as arbitrary, capricious, and unreasonable. He also sought to have the Board's resolution declared null and void, charging, among other things, that Chairman Hepperle and Vice Chairman Brian Guaschino were seen "celebrating" the Board's approval with Echevarria, "creat[ing] an appearance of an impropriety and a conflict of interest . . . ." Echevarria and the Board filed motions to dismiss plaintiff's conflict of interest count. In response, plaintiff submitted an affidavit from Rizzi indicating that Vice Chairman Guaschino made the following statement to Rizzi:

I can't wait for [plaintiff's attorney] to depose me on this and ask me if I was at the dinner meeting with Dave at the steakhouse before the meeting held by the board on Mario's application, because I was not at that meeting. The only meeting I was at was when we went to Las Tapas after the meeting of the board to celebrate the approval of Mario's application. We were going to go to La Pasiva but it was closed so we went to Las Tapas where we put a few tables together had some [hors d'oeuvres] and drinks and we had a good time. I don't see anything wrong that Dave and I went out to celebrate with Mario. After all, Mario is a good friend.

The Board responded, filing an affidavit from Guaschino, who stated, "Mr. Rizzi is well known to the Planning Board and regularly appears voicing his opposition to applications." Guaschino added:

After every Planning Board Meeting, Dave Hepperle and I go out for dinner. . . . Because of my work schedule, I go straight to the Board meetings from work without stopping for dinner.

On the evening of this application, Dave Hepperle and I were going to go to La Pasiva which is two doors down . . . from Town Hall, but it was closed. So we decided to go to Las Tapas instead . . . .

Upon our arrival at Las Tapas, we went directly to the [b]ar. While at the bar, Mr. [Echevarria] who was already seated at a table with some individuals, invited us over for a drink.

I did not except Mr. [Echevarria] to be at Las Tapas, nor did I go there to spend any time with him.

I did say to Mr. Rizzi, "I don't see anything wrong that Dave and I had a drink with Mario.["] I never said to Tom Rizzi that we were at Las Tapas to celebrate or that Mario is a good friend. I would never characterize Mario [Echevarria] as a friend. He lives half a block away from me and we are neighbors. I still don't believe I did anything wrong by having a drink with Mr. [Echevarria].

I did say to Mr. Rizzi there are people who claim I went to dinner with [Echevarria] before the application and I want them to tell to my face that I was there and they saw me.

I never characterized my drink with [Echevarria] as a celebration. We just all simply happened to be at the same place at the same time by coincidence.

The judge ordered depositions of Rizzi, Joseph Barnert, who is a resident living within 200 feet of the site, Guaschino, and Hepperle. Hepperle testified that Echevarria is a neighbor and acquaintance of his and that after the meeting he and Guaschino went to Las Tapas restaurant where they saw Echevarria and joined him for wine and some hors d'oeuvres. He testified that he had two glasses of wine. He denied ever socializing or having dinner with Echevarria at any other time. Guaschino also confirmed that they had drinks and hors d'oeuvres with Echevarria at Las Tapas for approximately one hour and twenty minutes. He denied that he and Echevarria are friends, indicating that he first met Echevarria "in the neighborhood probably not long before his application came before us." Rizzi gave the following relevant testimony concerning the statement made to him by Guaschino:

[H]e said, well, the only place we went, we were at Las Tapas, that's true we were over there, and what's wrong with [Guaschino], I think, if I'm - - I don't want to misquote but I think [Guaschino's] philosophy is, you know, friends have a right to get together and celebrate and, you know, whatever they are, friends, and they got together and he went up to Las Tapas and they had some drinks together, hors d'oeuvres, so forth. That's your opinion, that's your feeling, you know.

Q. Okay. Did Mr. Guaschino use the word "friends"?

A. Yes. He also made a statement that if everyone were - - that are friends in this town, if - - we couldn't hear the case, we would be recusing ourselves for half the cases that come in front of the Planning Board, and I just, you know, listened to that, I don't think it was true, but I don't think we're friendly with everybody in town.

The judge dismissed the sixth count of plaintiff's complaint, finding that there was no evidence establishing that meetings took place prior to the May 17 application. The judge also found, "Rizzi did not provide any testimony of a celebratory nature between the applicant and the chairman and vice chairman while at Las Tapas," and concluded that plaintiff's verified complaint was not based upon personal knowledge as required by Rule 1:4-7. He added, "plaintiff has failed to provide any affidavits or sworn testimony to support the unsubstantiated and baseless allegations" respecting the conflict of interest count of his complaint.

On April 15, 2005, the judge placed his final decision on the record, upholding the Board's decision approving Echevarria's application. He repeated Carballo's testimony respecting the positive and negative criteria that must be examined under N.J.S.A. 40:55D-70d, and concluded that the Board did not act in an arbitrary, capricious, or unreasonable manner. On appeal, plaintiff basically asserts that (1) he presented sufficient proofs to warrant a plenary hearing on the alleged conflict of interest charge and (2) the Board's decision was arbitrary, capricious, and unreasonable.

On this factual record, we focus first on the order dismissing the count of plaintiff's complaint alleging conflict of interest. Initially, we note that the judge treated the motions to dismiss in part on plaintiff's failure to base his verified complaint on personal knowledge pursuant to Rule 1:4-7. Rule 1:4-7, however, provides that a verification may incorporate the allegations of the pleadings "by reference if made on personal knowledge . . . and the allegations are of facts admissible in evidence to which the affiant is competent to testify." See also Monmouth County Div. of Soc. Servs. v. P.A.Q., 317 N.J. Super. 187, 193 (App. Div. 1998), certif. denied, 160 N.J. 90 (1999). Guaschino's statement to Rizzi, which formed, in part, the basis for plaintiff's allegations, qualifies as personal knowledge because it is admissible under N.J.R.E. 803(b) as a statement of a member of the Board concerning a relationship he had with an applicant at the time an applicant appeared before the Board.

Although the judge relied in part on his conclusion that plaintiff's verified pleadings failed to sufficiently state facts based upon personal knowledge to trigger jurisdiction, he also essentially treated the motion to dismiss as one for summary judgment by expressly considering the matters outside the pleadings, specifically the deposition testimony of the various witnesses. R. 4:6-2. We, therefore, consider the judge's decision under the summary judgment standard requiring us to "view the facts that may be inferred from the pleadings and discovery in the light most favorable to plaintiff[]." Strawn v. Canuso, 140 N.J. 43, 48 (1995), superseded on other grounds by N.J.S.A. 46:3C-1 to -12.

At common law "[a] public official is disqualified from participating in judicial or quasi-judicial proceedings in which the official has a conflicting interest that may interfere with the impartial performance of his duties as a member of the public body." Scotch Plains-Fanwood Bd. of Educ. v. Syvertsen, 251 N.J. Super. 566, 568 (App. Div. 1991). The Municipal Land Use Law (MLUL) codified common law principles, stating, "[n]o member of the planning board shall be permitted to act on any matter in which he has, either directly or indirectly, any personal or financial interest." N.J.S.A. 40:55D-23b (emphasis added). Additionally, the Local Government Ethics Law, which applies to "[l]ocal government officers or employees under the jurisdiction of the Local Finance Board," N.J.S.A. 40A:9-22.5, similarly states:

No local government officer or employee shall act in his [or her] official capacity in any manner where he [or she], a member of his [or her] immediate family, or a business organization in which he [or she] has an interest, has a direct or indirect financial or personal involvement that might reasonably be expected to impair his [or

her] objectivity or independence of judgment[.]

[N.J.S.A. 40A:9-22.5d (emphasis added).]

The plaintiff need not show that an actual conflict of interest exists, but rather whether there is a potential for conflict. Griggs v. Borough of Princeton, 33 N.J. 207, 219 (1960) (citing Aldom v. Borough of Roseland, 42 N.J. Super. 495, 502 (App. Div. 1956)). The Supreme Court of New Jersey stated the following in Van Itallie v. Borough of Franklin Lakes, 28 N.J. 258, 269 (1958):

Local governments would be seriously handicapped if every possible interest, no matter how remote and speculative, would serve as a disqualification of an official. If this were so, it would discourage capable men and women from holding public office. Of course, courts should scrutinize the circumstances with great care and should condemn anything which indicates the likelihood of corruption or favoritism. But in doing so they must also be mindful that to abrogate a municipal action at the suggestion that some remote and nebulous interest is present, would be to unjustifiably deprive a municipality in many important instances of the services of its duly elected or appointed officials. The determinations of municipal officials should not be approached with a general feeling of suspicion, for as Justice Holmes has said, "Universal distrust creates universal incompetency." Graham v. United States, 231 U.S. 474, 480, 34 S. Ct. 148, 151, 58 L. Ed. 319, 324 (1913); see also Ward v. Scott (II), 16 N.J. 16 (1954). (emphasis added).

Whether a particular interest is sufficiently conflicting to disqualify a planning board member is factual and depends upon the circumstances of each case. Wyzykowski v. Rizas, 132 N.J. 509, 523 (1993). "'The question will always be whether the circumstances could reasonably be interpreted to show that they had the likely capacity to tempt the official to depart from his sworn public duty.'" Ibid. (quoting Van Itallie, supra, 28 N.J. at 268).

Specifically, there are

four types of situations that require disqualification: (1) "Direct pecuniary interests," when an official votes on a matter benefitting the official's own property or affording a direct financial gain; (2) "Indirect pecuniary interests," when an official votes on a matter that financially benefits one closely tied to the official, such as an employer, or family member; (3) "Direct personal interest," when an official votes on a matter that benefits a blood relative or close friend in a non-financial way, but a matter of great importance, as in the case of a councilman's mother being in the nursing home subject to the zoning issue; and (4) "Indirect Personal Interest," when an official votes on a matter in which an individual's judgment may be affected because of membership in some organization and a desire to help that organization further its policies.

[Wyzykowski, supra, 132 N.J. at 525 (emphasis added); see also Paruszewski v. Twp. of Elsinboro, 154 N.J. 45, 59 (1998); Haggerty v. Red Bank Borough Zoning Bd. of Adjustment, ___ N.J. Super. ___, ___ (App. Div. 2006) (slip op. at 19-20).]

Although personal friendship has never been deemed to be a disqualifying factor under the MLUL, the Ethics Law's use of the word "involvement" rather than "interest" suggests an expansion of "the areas of disqualification far beyond those encompassed by the provisions of the MLUL." Cox, N.J. Zoning and Land Use Administration, 3-1.2 at 49 (2006). Where an improper conflict of interest exists, the planning board's decision in its entirety is "void and must be set aside." See Haggerty, supra, slip op. at 27 (citing Aldom, supra, 42 N.J. Super. at 501).

As we have previously noted, in reaching his decision that plaintiff had not produced any evidence of potential conflict, the judge stated, "Rizzi did not provide any testimony of a celebratory nature between the applicant and the chairman and vice-chairman while at [Las Tapas]." Rizzi testified during depositions, however, that Guaschino used the words "friends" to describe both his and Hepperle's relationship with Echevarria and further implied that they, as "friends have a right to get together and celebrate" and "they got together and . . . went up to Las Tapas and they had some drinks together, hors d'oeuvres, so forth."

Guaschino and Hepperle related that they always go out after the planning board meetings and that the first restaurant they went to was closed, thus they decided to go to Las Tapas. Guaschino denied that they were celebrating at Las Tapas or that he and Echevarria were "friends," but instead only "acquaintances" and "neighbors."

Although the purported celebration with Echevarria may well have been a coincidental meeting and Guaschino's and Hepperle's acceptance of drinks and hors d'oeuvres for almost one and one-half hours innocent, there remains in our mind a sufficient question of fact to warrant a plenary hearing on the issue. A plenary hearing is necessary to scrutinize the circumstances by examining the credibility of Rizzi's version to determine whether there was a likelihood of favoritism. We leave it to the Law Division, on remand, to determine whether Rizzi's version of Guaschino's statement establishes that Guaschino and Hepperle were "celebrating" with a person they consider their friend or whether Hepperle's and Guaschino's decision to have drinks and hors d'oeuvres with Echevarria following the Board meeting, while inappropriate, was nevertheless innocent and not indicative of any predisposition in Echevarria's favor. If, on remand, it is determined that Guaschino's and Hepperle's votes were tainted by a conflict of interest, the trial court must set aside the Board's approval of Echevarria's application for variances and direct Echevarria to re-submit its application. See Haggerty, supra, slip op. at 28.

Because a preliminary plenary hearing on plaintiff's conflict of interest claim was necessary prior to deciding the merits of the Board's decision, we are constrained to reverse both the February 8, 2005, order dismissing the sixth count of plaintiff's complaint and the May 3, 2005, order upholding the Board's resolution.

Although we do not reach the merits of the Law Division's decision upholding the Board's decision, we are, nevertheless, constrained to make the following additional comments. Plaintiff raises, for the first time on this appeal, the lack of any factual findings in the Board's resolution. The requirement of a memorializing resolution is set forth in N.J.S.A. 40:55D-10g, which provides:

The municipal agency shall include findings of fact and conclusions based thereon in each decision on any application for development and shall reduce the decision to writing. The municipal agency shall provide the findings and conclusions through:

(1) A resolution adopted at a meeting held within the time period provided in the act for action by the municipal agency on the application for development; or

(2) A memorializing resolution adopted at a meeting held not later than 45 days after the date of the meeting at which the municipal agency voted to grant or deny approval. . . .

The statute requires a municipal agency to reduce each decision on any application to writing in the form of a resolution that includes findings of fact and conclusions of law. Here, the resolution is substantively deficient. The factual findings set forth in a resolution cannot consist of a mere recital of testimony or conclusory statements couched in statutory language. Harrington Glen, Inc. v. Mun. Bd. of Adjustment of Leonia, 52 N.J. 22, 28 (1968); Loscalzo v. Pini, 228 N.J. Super. 291, 305 (App. Div. 1988), certif. denied, 118 N.J. 216 (1989). Rather, the resolution must "contain sufficient findings, based on the proofs submitted, to satisfy a reviewing court that the board has analyzed the" applicant's variance request in accordance with the statute and in light of the municipality's master plan and zoning ordinances. Medici v. BPR Co., 107 N.J. 1, 23 (1987). Without such findings of fact and conclusions of law, the reviewing court has "no way of knowing the basis for the board's decision . . . ." Morris County Fair Hous. Council v. Boonton Twp., 228 N.J. Super. 635, 646 (Law Div. 1988).

The Board's resolution, which is devoid of factual findings, is the type of resolution that has repeatedly been recognized as deficient by the courts. Medici, supra, 107 N.J. at 23; Harrington Glen, supra, 52 N.J. at 28; Smith v. Fair Haven Zoning Bd. of Adjustment, 335 N.J. Super. 111, 123 (App. Div. 2000); Loscalzo, supra, 228 N.J. Super. at 305; Morris County Fair Hous. Council, supra, 228 N.J. Super. at 646. Indeed, the Board tacitly admits that its resolution is deficient, asserting instead, that plaintiff should not be permitted to raise the issue on appeal because it was not raised in the Law Division. We, however, anticipate plaintiff raising this same issue on remand in the event there is a determination favoring the Board on the conflict of interest issue. The legal insufficiency of the resolution in this case warrants a remand to the Board for reconsideration and specific factual findings. Smith, supra, 335 N.J. Super. at 123. Accordingly, if on remand it is determined that no conflict of interest existed, the matter should be remanded to the Board with directions to provide sufficient findings in its resolution to permit the Law Division to determine anew the basis for the board's decision. Because the Law Division judge upheld the Board's decision on the merits, a different judge should decide the issues on remand. R. 1:12-1(d). We do not retain jurisdiction.

Reversed and remanded for further proceedings consistent with this opinion.

 

The minimum lot area for two-family residential units in the R-1 zone is 2500 square feet.

Plaintiff also submitted an affidavit from Julia McGhee providing hearsay information later refuted by the purported declarant that, prior to the Board's hearing, Chairman Hepperle told the declarant that the application was going to be approved.

The Ethics Law defines "interest" as "the ownership or control of more than 10% of the profits, assets or stock of a business organization but shall not include the control of assets in a nonprofit entity or labor union[.]" N.J.S.A. 40A:9-22.3d. Additionally, "[l]ocal government officer" includes "any person whether compensated or not, whether part-time or full-time . . . (2) serving on a local government agency which has the authority to enact ordinances, approve development applications or grant zoning variances . . . ." N.J.S.A. 40A:9-22.3g

Although plaintiff pled the resolution lacked factual findings in the fifth count of his complaint, that issue was not argued in the Law Division.

(continued)

(continued)

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A-5936-04T1

June 23, 2006

 


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