K-LAND CORP. v. TOWNSHIP OF MARLBORO, et al.



NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2247-06T12247-06T1

K-LAND CORP., a New Jersey

Corporation,

Plaintiff-Appellant,

v.

TOWNSHIP OF MARLBORO and

TOWNSHIP OF MARLBORO PLANNING

BOARD,

Defendants-Respondents.

_____________________________________________________________


Argued December 12, 2007 - Decided

Before Judges Sapp-Peterson and Messano.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-573-06.

Carl S. Bisgaier argued the cause for appellant (Flaster Greenberg, P.C., attorneys; Mr. Bisgaier, Richard J. Hoff and Matthew T. Stanger, on the brief).

Andrew Bayer argued the cause for respondent Township of Marlboro (GluckWalrath, LLP, attorneys; Mr. Bayer and Cindy M. Perr, on the brief).

Collins, Vella & Casello, attorneys for respondent Township of Marlboro Planning Board joins in the brief of respondent Township of Marlboro.

PER CURIAM

Plaintiff K-Land Corp. appeals from the motion judge's dismissal of its complaint against defendants Township of Marlboro and the Township of Marlboro Planning Board (collectively, Marlboro), and his transfer of the litigation to the Council on Affordable Housing (COAH). We have considered the arguments raised in light of the motion record and applicable legal standards. We reverse.

We recite the facts as alleged in the complaint. Plaintiff is the owner of 18.03 acres of property identified on Marlboro's tax map as Block 132, Lot 18 (the Property) that it acquired in March of 2002. Following its purchase, plaintiff proposed to Marlboro that the Property be developed as age-restricted housing with a substantial percentage of units set-aside for low and moderate income households.

On November 7, 2002, plaintiff commenced Mount Laurel litigation alleging Marlboro had failed to engage in good faith negotiations for the development of the Property. The lawsuit claimed that the Property was suitable for inclusionary development and sought a builder's remedy for a proposed residential development with a maximum density of twelve units per acre and a set-aside of twenty percent affordable units. After filing the litigation, plaintiff elected not to prosecute the lawsuit because preliminary negotiations with Marlboro appeared fruitful.

On or about July 6, 2004, plaintiff and Marlboro reached an agreement for the development of the Property to include 365 residential units, thirty-three percent of which would be set aside as affordable units. Marlboro included the Property and the development plan as part of its second round compliance plan submitted to COAH in July 2004. The Property's inclusion in the compliance plan reflected Marlboro's commitment to amend the existing zoning plan to allow for development of the project.

On July 27, 2004, Marlboro petitioned COAH for substantive certification of its proposed plan. However, because numerous individuals and groups filed objections with COAH, the mediation and review period mandated by the Fair Housing Act, N.J.S.A. 52:27D-301 through -329, was triggered. During this process, plaintiff and Marlboro attempted to address the objectors' concerns regarding the density of the proposed development by agreeing to amend the initial agreement and reduce the total units to be constructed.

On August 11, 2005, Marlboro adopted Resolution #2005-319 that endorsed the revised agreement. In addition, the resolution "authorized" Marlboro's attorney to

enter into a [s]ettlement [a]greement between [Marlboro] and [plaintiff] to reflect the following terms and conditions: (1) [Marlboro] will amend its Affordable Housing Plan to include [plaintiff's] property developed with 245 market rate units, 49 affordable age-restricted units and the funding of 71 [regional contribution agreements] at an amount to be determined and approved by COAH; (2) [Marlboro] will agree to introduce zoning ordinances to allow those uses and bulk and density requirements necessary to implement the aforementioned development of the Property; (3) and any other necessary terms and conditions to implement the settlement as approved by [Marlboro's] Attorney and/or required by COAH.

Subsequently, on October 21, 2005, COAH issued a mediation report that discussed plaintiff's original development plan, objections that had been made, and the revised plan. The report concluded, "Should Marlboro include [the Property] in its petition for the third round, Marlboro must demonstrate that the site meets the suitability criteria set forth in N.J.A.C. 5:94-4.5."

Plaintiff contends that Marlboro agreed to include the Property and the revised development proposal in its comprehensive third round submission for substantive certification. However, on December 15, 2005, Marlboro's Township Council approved Resolution #2005-482 that rescinded Resolution #2005-319. This second resolution included another property, the Stattel Farm Project, in Marlboro's housing plan and deleted plaintiff's property from the plan. The resolution explained the change was required by a number of factors including: COAH's requirement that the Stattel Farm Project be included in the plan; the proximity between plaintiff's property, the Stattel Farm Project and other approved developments; the "high density proposed" for plaintiff's property; and the inclusion of the Stattel Farm Project with the other developments would "satisfy[] [Marlboro's] cumulative Second and Third Round affordable housing obligation." On December 20, 2005, Marlboro submitted its modified fair housing plan, excluding plaintiff's property, to COAH.

On January 31, 2006, plaintiff filed this complaint in lieu of prerogative writs alleging Marlboro's adoption of the rescinding resolution was "arbitrary, capricious, unreasonable, unlawful, illegal, unconstitutional and without legal effect." The complaint asked the court to 1) set aside resolution #2005-482; 2) "[d]eclare the [m]ediation [a]greement enforceable; 3) order Marlboro to include plaintiff's original or revised development plan in its fair housing plan submission to COAH, and to take all necessary steps to assure its construction; 4) appoint a master to oversee implementation of the remedies; and 5) other relief including damages, attorneys' fees and costs. On February 15, 2006, plaintiff also filed an objection to Marlboro's submission with COAH in which it cited the same historical events and legal objections. Plaintiff urged COAH to deny Marlboro's petition for substantive certification of the housing plan.

In lieu of an answer, on March 28, 2006, Marlboro moved to dismiss plaintiff's complaint pursuant to Rule 4:6-2(a) and (e). After several adjournments, and prior to oral argument, the parties agreed to stay this litigation pending the COAH mediation process and circulated a consent order to that effect. Nevertheless, on September 22, 2006, the motion judge ruled on Marlboro's motion and entered an order dismissing the complaint with prejudice. Neither the attorneys for plaintiff nor Marlboro were present because they believed the litigation had been stayed.

Characterizing the arguments of the parties, the judge noted that Marlboro argued the complaint should be dismissed because the matter was before COAH and under the agency's exclusive jurisdiction and plaintiff had "fail[ed] to exhaust administrative remedies." Plaintiff countered by arguing that the matter was essentially a contract action in which it sought to enforce its settlement agreement with Marlboro. Plaintiff argued its lawsuit was outside COAH's jurisdiction.

The judge concluded that the "settlement" as alleged by plaintiff "was never fully enacted." He noted, "More than a meeting of the minds of public officials is required for a contract to become binding as to a public entity." Because plaintiff's complaint "merely stated bald legal conclusions," the judge dismissed it without ever addressing the exhaustion argument actually raised by Marlboro.

Plaintiff moved to vacate the order of dismissal and to reinstate the complaint and on October 20, 2006, the motion judge considered oral argument. Plaintiff argued that Marlboro's motion sought dismissal because the matter was before COAH and the agency had exclusive jurisdiction. Plaintiff correctly noted that "the viability of [its] contract claims" was not at issue and the matter had not been briefed by either side. Alternatively, plaintiff argued that if the judge was convinced that COAH had exclusive jurisdiction, dismissal of the complaint should have been without prejudice.

The judge denied plaintiff's motion for the same reasons he had originally granted Marlboro's motion to dismiss. However, he clarified that the complaint was dismissed without prejudice. On December 19, 2006, the judge entered an order dismissing plaintiff's complaint without prejudice and transferring the matter to COAH. This appeal ensued.

Plaintiff argues that the motion judge improperly considered the merits of its contractual claim rather than applying the standard required when adjudicating a motion brought under Rule 4:6-2(e). Secondly, plaintiff contends that the Law Division has exclusive jurisdiction over its alleged contractual claims, and, thus, it was not required to exhaust its administrative remedies before COAH prior to filing the action. Since we agree with both these contentions, reversal is required.

In our review of the grant of a motion to dismiss, we apply the same standard as the trial court. Sickles v. Cabot Corp., 379 N.J. Super. 100, 106 (App. Div.), certif. denied, 185 N.J. 297 (2005). A motion to dismiss under Rule 4:6-2(e) should be "approach[ed] with great caution" and should only be granted in "the rarest of instances." Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 771-72 (1989). We must view the allegations in the complaint with liberality and without concern for the plaintiff's ability to prove the facts alleged in the complaint. Id. at 746. "A motion to dismiss a complaint . . . for failure to state a claim upon which relief can be granted must be evaluated in light of the legal sufficiency of the facts alleged in the complaint." Donato v. Moldow, 374 N.J. Super. 475, 482 (App. Div. 2005). The plaintiff's obligation is "not to prove the case but only to make allegations, which, if proven, would constitute a valid cause of action." Leon v. Rite Aid Corp., 340 N.J. Super. 462, 472 (App. Div. 2001). Thus, considering and accepting as true the facts alleged in the complaint, we determine whether they set forth a claim upon which relief can be granted. Donato, supra, 374 N.J. Super. at 483.

Whenever a motion to dismiss brought under subsection (e) presents "matters outside the pleading," Rule 4:6-2 requires that the motion be "treated as one for summary judgment." We need not digress and consider whether the motion judge applied the appropriate summary judgment standards, however, because it is clear from the record that he did not view the documents submitted by Marlboro, perhaps with the exception of the two resolutions, as particularly relevant to the inquiry. Rather, he determined that plaintiff's complaint contained only a bald assertion of a legally enforceable contract between it and Marlboro and was insufficient.

We think it is clear that plaintiff's complaint did not fail to set forth a claim, and therefore should not have been dismissed pursuant to Rule 4:6-2(e). Plaintiff alleged that it had an enforceable agreement by way of its settlement with Marlboro that was effectuated during COAH mediation. It further alleged that Marlboro approved the settlement by the passage of resolution #2005-319, and authorized its attorney to perform the "ministerial" duty of drafting the settlement agreement. Plaintiff alleged that Marlboro breached the agreement by submitting its third round fair housing petition and excluding plaintiff's land in favor of other developers. Plaintiff was not required to prove the sufficiency of its case at this stage, and it was error to dismiss its complaint for failure to state a claim.

We must also consider whether the actual grounds argued by Marlboro, that the court lacked subject matter jurisdiction pursuant to Rule 4:6-2(a), merited the dismissal of plaintiff's complaint. In this regard, Marlboro contends that plaintiff had lodged its objections with COAH and that the agency was vested with the exclusive jurisdiction to resolve the dispute. Thus, the motion judge properly dismissed the complaint and transferred the matter to COAH. R. 1:13-4.

Plaintiff contends that its complaint seeks to enforce a contract it negotiated with Marlboro, and that defendants breached that agreement by rescinding and voiding Resolution #2005-319, thus, excluding its property from the third round submission. Plaintiff argues, therefore, that the complaint in lieu of prerogative writs was entirely proper since it challenged municipal action, and jurisdiction rested with the Law Division. Alexander's v. Borough of Paramus, 125 N.J. 100, 107 (1991) (citing Hills Dev. Company v. Township of Bernards, 103 N.J. 1, 45 (1986)).

While COAH does have jurisdiction over the implementation of the Fair Housing Act and the development of affordable housing policy, Hills, supra, 103 N.J. at 22-24, this administrative power does not impinge upon the judiciary's exclusive powers to review a municipality's actions or ordinances. N.J.S.A. 52:27D-309; Hills, supra, 103 N.J. at 45. Instead, the Court has explicitly rejected the argument that COAH's jurisdictional authority extends to challenges over a municipality's acts, such as the passing of an ordinance. Alexander's, supra, 125 N.J. at 112-14. "Neither the plain language of its authorization . . . nor the purpose of the statutory grant . . . indicates a legislative intent that COAH oversee those claims that involve issues of municipal administration." Id. at 112.

COAH has exclusive primary jurisdiction over Mount Laurel compliance issues. Sod Farm Assocs. v. Twp. of Springfield, 366 N.J. Super. 116, 129 (App. Div. 2004). However, Marlboro's reliance on Sod Farm Assocs. to extend COAH's exclusive jurisdiction to the issues presented by plaintiff's complaint is misplaced.

In that case, "[t]he Law Division asserted jurisdiction to determine whether [a municipality] had satisfied its Mt. Laurel obligations by its affordable housing compliance plan, which was pending before COAH under the Fair Housing Act . . . and whether a builder's remedy should be given." Id. at 118 (footnotes omitted). Plaintiff alleged that COAH's failure to mediate the dispute in a timely fashion relieved it of any obligation to exhaust administrative remedies. Id. at 122-23. In reversing the trial judge, we concluded that "[a]ssumption by the courts of the agency's functions fosters the potential for mischief and the prospect of conflicting and contradictory results in the court system and in the administrative proceedings." Id. at 130.

Plaintiff's complaint seeks to enforce the settlement it allegedly reached with Marlboro as reflected in resolution #2005-319. Such a cause of action is routinely within the jurisdiction of the Law Division. Whether plaintiff prevails or not, Marlboro is free to continue to pursue the approval of the fair housing plan it submitted to COAH that excluded plaintiff's property. If plaintiff prevails, COAH need not modify its consideration of Marlboro's submission. In short, the remedy plaintiff seeks is something that may occur through COAH's mediation efforts; but, since COAH left the decision of whether or not to include the Property in Marlboro's fair housing plan to the township in the first instance, it would appear the agency is neither inclined nor empowered to enforce the alleged settlement.

In short, under the facts presented, plaintiff need not have exhausted its administrative remedies before COAH before bringing this lawsuit and the Law Division did not lack subject matter jurisdiction over the complaint.

Reversed.

The record is ambiguous as to whether plaintiff and the Township entered into negotiations for the Property's development or whether plaintiff had submitted proposals or applications for its development.

S. Burlington County N.A.A.C.P. v. Twp. of Mt. Laurel, 67 N.J. 151 (1975).

The 2002 complaint is not part of the record. Since plaintiff's complaint was dismissed on defendants' motion, we accept for purposes of this decision plaintiff's characterization of its motivation for voluntarily dismissing the complaint.

Marlboro's second round submission had not received substantive certification; thus, pursuant to N.J.A.C. 5:95-15.1(b), it was required to submit a third round filing or petition by December 20, 2005. N.J.A.C. 5:94-4.5 sets forth criteria for determining site suitability.

A series of orders in which the parties and the judge apparently attempted to agree on the appropriate language were entered between the date of oral argument and this final order.

(continued)

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A-2247-06T1

February 19, 2008