MILLION BUCKS, INC. v. BOROUGH OF SEASIDE PARK ZONING BOARD OF ADJUSTMENT

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2002-08T32002-08T3

MILLION BUCKS, INC.,

d/b/a SAWMILL CAF ,

Plaintiff-Appellant,

v.

BOROUGH OF SEASIDE PARK

ZONING BOARD OF ADJUSTMENT,

Defendant-Respondent.

________________________________________________________________

 

Argued October 19, 2009 - Decided

Before Judges Lisa, Baxter and Alvarez.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1621-08.

Robert C. Shea argued the cause for appellant (R.C. Shea & Associates, attorneys; Mr. Shea, of counsel and on the brief; Matthew R. Sage, on the brief.

John P. Reilly argued the cause for respondent (Citta, Holzapfel & Zabarsky, P.C., attorneys; Mr. Reilly, on the brief).

PER CURIAM

Plaintiff, Million Bucks, Inc., doing business as Sawmill Caf (the Sawmill), was issued a cease and desist letter on February 7, 2007 by the Borough of Seaside Park Zoning/Code Enforcement Officer, Geoffrey N. Schwartz, who asserted that the Sawmill was operating a discoth que or nightclub on the second floor of the premises, in violation of the approvals granted by the Borough for a restaurant/tavern operation, and in violation of applicable Borough ordinances prohibiting nightclubs. The Sawmill appealed that determination to defendant, Borough of Seaside Park Zoning Board of Adjustment (Board). After ten public hearings on the Sawmill's appeal had been conducted, but before the Board rendered a final decision, the Sawmill filed a complaint in lieu of prerogative writs in the Law Division, alleging, among other things, that eight of the nine members of the Board should be disqualified because they were officers or members of the Taxpayers Association of Seaside Park (TASP), which for several years had been arguing that the Sawmill was being operated as a nightclub, rather than as a restaurant, which was the very issue before the Board.

The Law Division, in orders of November 5, 2008 and January 13, 2009, required the recusal of five of the Board's nine members on conflict of interest grounds, but declined to disqualify the other four. The judge also denied the Sawmill's request that the proceedings be voided and required to start anew, and rejected the Sawmill's motion for Schwartz's disqualification. We reject the judge's conclusion that mere membership in TASP was not sufficient, by itself, to require recusal of those members. We therefore reverse that portion of the judge's January 13, 2009 order. We also reverse the judge's order that the proceedings need not start anew. We do, however, affirm the judge's conclusion that Schwartz need not be disqualified. Last, in light of our determination that membership in TASP should have disqualified member Kenneth Deshay, we need not decide the alternate ground for his removal that the Sawmill argues. We thus affirm in part and reverse in part.

I.

Plaintiff Sawmill Caf , located on the Boardwalk in Seaside Park, is a restaurant that is also permitted to offer entertainment. Although the proceedings that are the subject of this appeal occurred in 2008, we pause to discuss two earlier proceedings that have a bearing on the Zoning Board hearings. In 2002, the owner of the Sawmill, Stephen D'Onofrio, filed an application with the Planning Board for approval of his plan to demolish the existing building and replace it with a structure that required variances for land coverage, lot depth and building height. During the February 26, 2002 hearing, Geoffrey N. Schwartz, the same person who later issued the cease and desist letter, participated in the Planning Board hearing in his capacity as a member of the Zoning Board. Significantly, during that hearing, D'Onofrio was asked by a member of the public whether he intended to offer any live entertainment on the second floor, to which D'Onofrio responded that although he did not presently intend to "hav[e] any type of entertainment up there," he did not want to exclude the possibility of such entertainment at some point in the future. After considerable discussion of that subject, Schwartz, along with the other members, voted in favor of granting all three variances.

The second proceeding to have a bearing on the Sawmill's appeal to the Zoning Board occurred on June 24, 2004, when the Mayor and Council conducted a hearing to consider the Sawmill's application to renew its Alcoholic Beverage Control retail consumption license. During the public portion of the meeting, the president of TASP, Tom Hourihan, addressed the Mayor and Council, explaining that at its June 18, 2004 meeting, TASP, which consisted of 650 dues-paying members, approved a plan to distribute fliers opposing the liquor license renewal. The membership also voted to retain an attorney to represent its interests. At the June 24, 2004 license renewal hearing, Hourihan argued that the Sawmill was adversely affecting the quality of life in Seaside Park:

The fliers were distributed, calling for everyone to have their voices heard, both pro and con, recognizing that the quality of life as far as our community and our taxpayers are concerned was being affected by the presence of the [Sawmill] or the people who are attending the [Sawmill] in this community.

We are also affected by the cost of providing police protection at the Sawmill . . . that lea[ve]s ninety percent of the entire community . . . unguarded and [un]protected when all of . . . the policemen are up there attending to incidents associated with the Sawmill.

We personally would like this to be a success . . . but we don't want to have it on the terms that exist today. We want it to be a successful operation without all of the hullabaloo associated with it and the diminishing of the quality of life for the residents . . . .

The attorney hired by TASP addressed the Mayor and Council, arguing that the Sawmill was being operated as a nightclub. The comments of TASP's attorney echoed a persistent theme in TASP's 2004 newsletter. Although the newsletters addressed matters that would typically be of concern to residents and taxpayers, such as taxes, the municipal budget, beach fees and the dissolution of the Central Regional School District, the most persistent topic, and the one that evoked the most passionate, and at times vitriolic, treatment, was the Sawmill and the license renewal proceedings pending before the Mayor and Council.

Specifically, the May 2004 newsletter, under a headline "Sawmill Saga Continues," noted that TASP was in the process of preparing a legal position on the matter and its "membership" was "very upset at both the manner [in which] this business is being run and the additional costs incurred in maintaining public safety for the premises." The September 2004 newsletter announced that "[t]he owners of the Sawmill suffered a few setbacks recently," noting that the certificate of occupancy had been rescinded for failure to meet building code requirements. The newsletter also expressed concern about the slow pace of the proceedings before the State Division of Alcoholic Beverage Control concerning the Sawmill's liquor license.

The June 24, 2004 liquor license renewal hearing was contentious, with eighteen members of the public addressing the Mayor and Council. Most expressed the view that the Sawmill was being operated not only as a restaurant, but also as a nightclub, in violation of Borough ordinances. The remarks by TASP member John Vanna typify the tone of the public comments:

MR. VANNA: This is my opinion. I believe it is important to recognize why we are really here tonight. It is not because a liquor license is up for renewal, that process with the Sawmill has been almost routine for years. The reason we are here tonight is because there's a credibility issue now . . . that threatens the strategic direction of this town.

. . . .

[The owner] did not become successful by being stupid. . . .

The true intention of the applicant has been and continues to be concealed from the governing body. [F]rom the out[set] the intention of the Sawmill owners was to create exactly what it has become, a large scale nightclub seeking to compete year-round with the clubs in Seaside Heights and consequently extend that atmosphere into Seaside Park. That's what it is and that was the intent.

The meeting of June 24, 2004 was adjourned, but at the next hearing, despite considerable opposition from TASP and the eighteen members of the public who addressed the Mayor and Council, the Sawmill's liquor license was renewed.

Despite the license renewal, complaints that the Sawmill was being operated as a nightclub apparently continued. Such complaints culminated in the issuance of the February 7, 2007 cease and desist letter issued by Schwartz. His letter notified the Sawmill that based upon his "site observations," he had concluded that "particularly on the second floor, activities which may be considered a disco, nightclub or concert hall have been taking place and are in violation of the approvals granted by the Borough of Seaside Park Planning Board for a restaurant/tavern operation." He also reminded D'Onofrio that "[n]ightclubs are not a permitted use within the Borough." The letter closed by warning that failure to comply immediately with the February 7, 2007 cease and desist order would subject D'Onofrio to fines, potential penalties and the possibility of injunctive relief.

The Sawmill appealed Schwartz's decision to defendant Seaside Park Board of Adjustment, seeking two determinations: 1) Schwartz's conclusion that the second floor was being operated as a nightclub was erroneous; and 2) the establishment was being operated lawfully and in accordance with the terms and conditions of all prior approvals. Testimony before the Board began on July 23, 2007, and continued on nine separate dates: August 20, September 10, September 17, October 15 and December 15, 2007, and February 4, March 15, April 7 and April 14, 2008. At the beginning of the July 23, 2007 hearing, the Zoning Board solicitor asked the members whether any of them "ha[d] any conflict," to which all members answered in the negative.

At that first meeting, the Sawmill requested an adjournment, asserting that it was not in a position to rebut the allegations Schwartz made in his February 7, 2007 letter because Schwartz had not provided it with "all papers constituting the record upon which the action appealed from was taken," as required by N.J.S.A. 40:55D-72. Board members Kenneth DeShay, Mike Tierney, Mike Giuliano and Chairman Andrew Sbordone commented that they saw no problem with proceeding in the absence of the required documentary record, noting that the Sawmill should have requested this information. On a motion introduced by Board member Adam Manzo, the Board voted six to one to proceed despite the objection raised by the Sawmill.

The only witness to testify at the first four hearings was Schwartz, who discussed the investigation he conducted before issuing his February 7, 2007 cease and desist letter. During the August 20, 2007 meeting, the Sawmill moved to disqualify Schwartz from serving as the Zoning Construction Code Officer, and to prevent him from participating any further in the hearings, because Schwartz had "prior knowledge of this application, [and] voted on this particular application at the February 26, 2002 Planning Board meeting." By a vote of eight to one, the Board voted to overrule the objection and permit Schwartz's participation to continue.

During the same time period that the Board was considering the Sawmill's appeal, specifically in September 2007, the Mayor and Council conducted the annual public hearing on the application to renew the Sawmill's liquor license. Schwartz, Police Chief Edward Dickson and Sergeant Bryan McKay testified. A videotape depicting the activities on the second floor of the Sawmill on July 13, 2007 was introduced. Interested members of the public Pat Degutis, John Tweed, Fritz McHugh and Terrence Farley testified that the Sawmill was being used as a nightclub. Thereafter, a resolution of the Borough of Seaside Park was adopted, memorializing the Borough's finding that the Sawmill Caf was improperly operating as a nightclub or "destination entertainment venue." The liquor license was, however, renewed.

In January 2008, the Zoning Board reorganized and its members consisted of Wilk, Manzo, Sbordone, Tierney, Deshay, Francis Losey, Michael Giuliano, Edward Gallagher and Raymond Sites. In April 2008, D'Onofrio learned that Board members Manzo and Wilks served as director and trustee, respectively, of TASP. On April 14, 2008, the Sawmill's attorney questioned the Board members about potential conflicts due to either TASP membership in 2004 or attendance at the September 2007 Mayor and Council meeting at which the governing body concluded that the Sawmill was operating as a nightclub. Manzo acknowledged being a trustee of TASP in 2003 and a director in 2005. Wilk conceded he had been a trustee of TASP since 2002 or 2003, and Sbordone stated he was a trustee at some point, for a short period of time. Deshay, Gallagher and Tierney acknowledged current membership in TASP, while Sites and Losey denied ever being members. Giuliano stated he doubted he had ever been a member of TASP, although he could not be sure. At the April 14, 2008 Board hearing, Manzo and Wilk disqualified themselves based on their association with TASP beginning in 2002.

At that same hearing, the Sawmill also questioned Board members about whether any of them had attended the September 19, and 26, 2007 meetings of the Mayor and Council, at which the Sawmill's license renewal application was considered, and during which the governing body concluded that the Sawmill was in violation of applicable Borough ordinances by operating the second floor as a nightclub. In response to that inquiry, Manzo, Wilk and Sbordone acknowledged they attended at least one meeting, while DeShay and Tierney denied attending any. The other four members stated they could not recall one way or the other.

On May 7, 2008, the Sawmill filed a complaint and order to show cause seeking to disqualify eight of the nine members of the Zoning Board. The complaint asserted that the eight had engaged in concealment of conflicts of interest that would undermine their objectivity and fairness in hearing the Sawmill's appeal. In particular, the Sawmill alleged that all eight were members of TASP at the time that it opposed the Sawmill's liquor license renewal. The complaint also alleged that three, Sbordone, Wilk and Manzo, were directors or trustees during that same period.

The complaint asserted that by virtue of their membership or the holding of elected or membership positions in TASP, the eight had "prejudged the subject matter of plaintiff's appeal and . . . taken an adversarial role against plaintiff's establishment." The complaint also alleged that TASP had "issued anti-Sawmill propaganda throughout the Borough," and hired attorneys "in a calculated effort" to prevent the Sawmill from renewing its liquor license at the hearing before the Mayor and Council on June 24, 2004, "premised upon their stated belief that [the Sawmill] was operating as a 'nightclub,' which is the ultimate and identical issue [that] plaintiff's 2008 appeal to the Board of Adjustment is premised upon."

Another count of the complaint alleged that Sbordone, Wilk and Manzo attended the Mayor and Council meetings on September 19, 2007, during which they heard the testimony of Schwartz and viewed his July 19, 2007 videotape that allegedly depicted the second floor being used as a nightclub. The complaint asserted that none of the three had disclosed their attendance at that meeting where the Mayor and Council adopted the resolution finding the Sawmill to be a "nightclub," and that they had participated in several Board meetings thereafter. Next, the complaint sought the disqualification of Board member Deshay based upon his "discourteous conduct" toward the Sawmill throughout the appeal, culminating in DeShay "physically throwing a pencil" at the Sawmill's attorney during one of the Board sessions.

The complaint also sought to disqualify Schwartz from presenting any further testimony or rendering any further opinions on the Sawmill's operation because he had served as a member of the Planning Board when the Sawmill's site plan application was approved on February 26, 2002; Gallagher, because he acknowledged that when he began sitting as a member of the Board in January 2008, he did not review any transcripts from the six earlier meetings; and Sites who acknowledged, when questioned by the Board solicitor, that he was unsure if he would be able to render an unbiased opinion on the Sawmill's appeal. Last, the complaint sought an order declaring that further consideration of the appeal by the present tainted Board would be in violation of the Municipal Land Use Law, and sought to declare all of the proceedings to date void with the appointment of a "reconstitute[d], new and unbiased Board for the purpose of deciding this appeal."

On November 5, 2008, after oral argument, the Law Division issued an order declaring Tierney, Sbordone, Wilk and Manzo had conflicts of interest that disqualified them from further participation because of their attendance at the September 19 or September 26, 2007 meetings of the Mayor and Council. The judge denied the motion to disqualify Board members who were directors, trustees or members of TASP, concluding that they would be able to impartially render an opinion on the Sawmill's appeal. The court declared Zoning/Code Enforcement Officer Schwartz and Board members DeShay, Losey and Giuliano not in conflict, and noted that Gallagher had already resigned his position on the Board and no determination need be made concerning his further participation. The Court declared Sites disqualified based on his admission that he was uncertain about his impartiality. The court ordered that the five disqualified members be replaced and that their replacements review the record before the matter continued before the Board.

On November 25, 2008, the Sawmill filed a reconsideration motion. After hearing oral argument, the judge issued an order on January 13, 2009, again denying the motion to void all of the hearings conducted to date and denying the Sawmill's motion to commence the appeal anew. The judge also declined to reconsider his earlier determination that mere membership in TASP was not a conflict of interest that should result in disqualification from hearing the Sawmill's appeal to the Zoning Board; however, the judge granted plaintiff's motion for reconsideration insofar as it sought to disqualify Sbordone, Wilk and Manzo, who had served as trustees or directors of TASP.

On appeal, the Sawmill argues that the Law Division erred by: 1) refusing to disqualify Schwartz based upon his 2002 participation in the Planning Board proceeding; 2) refusing to disqualify Deshay despite his intemperate and biased conduct; 3) permitting the proceedings to continue once the new members were appointed, so long as the five certified that they had read the entire record, and without requiring the proceedings to start anew; and 4) permitting those who had served as "mere[] members[]" of TASP to continue serving because they had no conflict of interest.

II.

We turn first to the Sawmill's claim that the judge erred by concluding that "mere membership" in TASP is not a conflict that should result in disqualification of Zoning Board members Deshay, Tierney and Giuliano. A considerable body of statutory and decisional law prohibits members of local boards, such as zoning boards of adjustment and planning boards, from participating in the determination of matters in which such members have a conflict of interest. Specifically, the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, specifies that "[n]o member of [the 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-69. Similarly, the Local Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.5, provides:

No local government officer or employee shall act in his official capacity in any matter where he, a member of his immediate family, or a business organization in which he has an interest, has a direct or indirect financial or personal involvement that might reasonably be expected to impair his objectivity or independence of judgment.

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

"'A conflict of interest arises when the public official has an interest not shared in common with the other members of the public.'" Haggerty v. Red Bank Borough Zoning Bd. of Adjustment, 385 N.J. Super. 501, 513 (App. Div. 2006) (quoting Wyzykowski v. Rizas, 132 N.J. 509, 524 (1993)). One of the situations identified by the Court as requiring disqualification of a public official is where there is an "'indirect personal interest,'" that is "'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.'" Ibid. (quoting Wyzykowski, supra, 132 N.J. at 525-26).

Whether a board member should be disqualified "depends upon the circumstances of the particular case." Van Itallie v. Borough of Franklin Lakes, 28 N.J. 258, 268 (1958). "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. Notably, "courts should scrutinize the circumstances with great care and should condemn anything which indicates the likelihood of corruption or favoritism." Id. at 269. On the other hand, "[l]ocal governments would be seriously handicapped if every possible interest, no matter how remote and speculative, would serve as a disqualification of an official." Ibid. Therefore, disqualification requires more than "some remote and nebulous interest." Ibid.

"'The question is whether there is a potential for conflict, not whether the public servant succumbs to the temptation or is even aware of it.'" Marlboro Manor, Inc. v. Bd. of Comm'rs of Montclair, 187 N.J. Super. 359, 363 (App. Div. 1982) (quoting Griggs v. Borough of Princeton, 33 N.J. 207, 219 (1960)). "A perceived conflict of interest is as harmful to the public's confidence in its representatives as the actual existence of such conflict." Barrett v. Union Twp. Comm., 230 N.J. Super. 195, 205 (App. Div. 1989).

Upon reconsideration of its original decision, the Law Division found Sbordone, Wilk and Manzo had impermissible conflicts as a result of being directors or trustees of TASP in 2004, but refused to disqualify those who were "mere members[]." On appeal, the issue is whether mere membership in TASP creates a disqualifying conflict, given that (1) in 2004, TASP actively opposed the renewal of defendant's liquor license by passing a resolution, by speaking in objection at a public hearing, by hiring an attorney to appear at the mayor and council special meeting, and by distributing fliers to residents urging them to oppose the license renewal at the June 24, 2004 hearing because the Sawmill was "ruining our Borough's quality of life"; and (2) in 2007, TASP continued to voice its opinion that defendant was operating as a nightclub. In its December 2007 newsletter, under a heading of "Sawmill Update," TASP wrote:

The county court proceedings regarding the Sawmill's use of the Green Room as a nightclub are on going with no ruling from [the] [j]udge . . . . The meetings with the Board of Adjustment to determine the use of the Green Room as a nightclub are also ongoing with no end in sight. The meeting with the Seaside Park Borough Council on the Liquor License scheduled for November 16th was postponed until an unknown date. Is there a pattern here? We hope the newly elected members of council will continue the commitment to oppose the operation of a nightclub in our community. Our residents have repeatedly stated a nightclub is not in keeping with the character of this community. (emphasis added).

In support of its claim that mere membership in TASP is an insufficient basis for disqualification, the Board argues, relying upon Van Itallie, supra, 28 N.J. at 269, that where the alleged conflict of interest is remote, nebulous or uncertain, disqualification is not required. We must therefore determine whether the potential for a conflict of interest, based on "mere membership" in TASP, is indeed uncertain or nebulous.

Like the facts before us now, in Zell v. Borough of Roseland, 42 N.J. Super. 75, 81 (App. Div. 1956), the defendants sought to distinguish the situation of a board member, who was a mere member of a church having an interest in the matter before the Board, "from that of a trustee or officer of the church." Id. at 81. We held that "such a distinction is not material," ibid., because "[a] trustee may have responsibility for management of the church's affairs, but he has no more 'interest' in the church, its affairs and well-being than any other member." Ibid.

We observed that the planning board member in question, a Mr. Diecks, who was also a member of a church that would benefit from the zoning change that had been approved by the Board, had an impermissible conflict of interest. Ibid. We reasoned that Diecks's "direct personal interest" in the church created a disqualifying "indirect personal interest in the matter of the proposed ordinance," because of the potential that Diecks's vote on the ordinance would be influenced by "what the church wanted." Ibid. In such circumstances, it mattered not that Diecks was only a member of the church and not a trustee. Ibid. The "totality of interest in a church obviously resides in its entire membership." Ibid. In addition, "[i]n determining whether a conflict exists, '[t]he potential for psychological influences cannot be ignored.'" Barrett, supra, 230 N.J. Super. at 201 (quoting Lafayette v. Bd. of Chosen Freeholders, 208 N.J. Super. 468, 473 (App. Div. 1986)). In situations of dual membership, a question necessarily arises as to "the prospect of divided loyalties between their personal interest and their obligation of official civic duty . . . ." Marlboro Manor, supra, 187 N.J. Super. at 363. Pressures of loyalty, "consciously or unconsciously[,] would have the natural tendency" to influence the official's vote. Aldom v. Borough of Roseland, 42 N.J. Super. 495, 507 (App. Div. 1956). "In such a situation the rule of law, based as it is on human experience, safeguards him and the public against the extraneous influence; it causes the 'cup' to pass from him; it disqualifies him from acting at all." Ibid.

Membership in TASP requires active steps: enrollment and the payment of a fee. As part of its self-reported mission, TASP states: "We also try to remain as close as possible to all Seaside Park matters by seeking Board and Trustee members which [sic] are active in town and are members of various committees and organizations." Here, the situation, where members of the Board are in a position to vote on an issue that has received so much sustained and concerted action by an organization of which they are members, should not have received the dismissive treatment the judge gave it. By the time the Zoning Board hearings began in 2007, TASP had already: taken a position that the Sawmill was "ruining our Borough's quality of life" and running a "'premier' nightclub" that was "not in keeping with the character of this community"; circulated fliers throughout the Borough urging residents to oppose the Sawmill's liquor license renewal because the Sawmill was operating a nightclub, which was the precise issue that was before the Board; and hired an attorney to press its case against the Sawmill.

As we held in Marlboro Manor, supra, when addressing a situation where two members of the Township's governing body voted against a liquor license transfer that their church pastor had opposed, "there can be no doubt that a question of the prospect of divided loyalties between their personal interest and their obligation of official civic duty existed." 187 N.J. Super. at 363. In those circumstances, "the public interest required disqualification." Ibid. We accordingly ordered their disqualification and vacated the order under review. Ibid.

Nothing in the record before us persuades us that Deshay or Giuliano should be treated any differently from the public officials in Zell or Marlboro Manor, who were held to have disqualifying divided loyalties by reason of the conflict between their official responsibilities and the positions advocated by the churches of which they were members. We did not require in Zell or in Marlboro Manor any showing of actual bias by the members in question. The "potential for a division of loyalties" was sufficient. Marlboro Manor, supra, 187 N.J. Super. at 362. Nor did we hold that "mere membership" was an insufficient basis for disqualification. In keeping with the principles articulated in Marlboro Manor, Zell, Barrett and Aldom, we reject the Law Division's conclusion that "mere membership" in TASP was an insufficient basis for disqualification. We thus reverse that portion of the January 13, 3009 order and remand for the entry of an order disqualifying the members in question.

III.

We turn next to the question of whether the proceedings must start anew once new members are appointed to replace those who have been disqualified, or whether, as the Law Division held, the proceedings can continue once the new members have read the record of the ten prior hearings. The Sawmill maintains that the comments and votes by the now-disqualified members have so infected the proceedings as to require that the proceedings start anew. The Board argues that the drastic remedy of starting the proceedings anew is not required.

The Sawmill relies on a number of decisions in which a Board's final decision was invalidated when, after the fact, it was determined that a member had a conflict. The Sawmill points to Haggerty, supra, 385 N.J. Super. at 517; Szoke v. Zoning Board of Adjustment of Monmouth Beach, 260 N.J. Super. 341, 345 (App. Div. 1992); Marlboro Manor, supra, 187 N.J. Super. at 363; and Friends Retirement Concepts v. Board of Education of Somerville, 356 N.J. Super. 203, 217 (Law Div. 2002).

None of the four involved a factual scenario like the one here, where no final vote had yet occurred, although Szoke presents an analogous situation. There, we held that even though the affected member, Edward Thayer, never voted on the ultimate issue, because he had recused himself apparently due to a conflict of interest, his participation in the proceedings created a taint that could not be eliminated merely because he ultimately chose not to vote. Szoke, supra, 260 N.J. Super. at 345. We observed that Thayer had "participated in the hearing in a significant manner on three occasions," in that (1) he gave background information of the zoning history, apparently based on personal knowledge; (2) he replied to a comment by the Chairperson that the Board recommend a change in zoning, stating that he "'strongly suggest[ed] that they do that'"; and (3) "in connection with a neighboring owner's concern about the manner in which utilities would be furnished to the proposed new residence," he interjected stating he "'was in charge of Distribution Engineering Department'" and then gave his opinion as to "what the electric company would do." Id. at 343-44. We held that Thayer's participation necessarily "poisoned the spirit of impartiality with which the Board's quasi-judicial proceedings must be governed." Id. at 345.

The Board attempts to distinguish Szoke by contending that the Sawmill alleges "no such statements, opinions or behavior likely to sway" the Board members who were not disqualified. We disagree. As the Sawmill asserts, the five disqualified Board members, Sbordone, Wilk, Manzo, Sites and Tierney, participated in eleven hearings and voted on issues raised by the Sawmill before the Board. Although their influence on the remaining Board members is unknown, a court "cannot speculate that the personal interests of [disqualified] members had no effect upon the votes of the others." Marlboro Manor, supra, 187 N.J. Super. at 363.

As we held in Marlboro Manor, "'[t]he infection of the concurrence of the interested person spreads, so that the action of the whole body is voidable.'" Ibid. (quoting Pyatt v. Dunellen, 9 N.J. 548, 557 (1952)). Moreover, "the mere existence of a conflict, and not its actual effect, requires the official action to be invalidated." Griggs v. Borough of Princeton, 33 N.J. 207, 220 (1960).

In light of Szoke, we are unwilling to conclude that merely disqualifying the members who had had such significant conflicts of interest should result in ignoring the taint that results from their prior participation. For that reason, we reverse the portion of the judge's order that would permit the proceedings to resume once the new members have read all of the existing record. The proceedings must start anew once replacement members are designated.

IV.

We turn next to the Sawmill's claim that the Law Division erred by refusing to disqualify Schwartz. We see nothing in Schwartz's participation in the 2002 Planning Board proceedings, in which Schwartz voted in favor of the Sawmill's request for variances, that requires his disqualification. The Sawmill's claim that Schwartz's presence in 2002 -- when D'Onofrio was questioned about his plans to bring entertainment acts to the Sawmill -- creates a disqualifying conflict of interest lacks sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E). We therefore affirm the portion of the order of November 5, 2008 that refused to disqualify him.

V.

In light of our conclusion that the judge erred when he refused to disqualify Deshay based on his membership in TASP, there is no need to address the alternate ground for his disqualification, namely his alleged impatience and alleged throwing of a pencil at the Sawmill's attorney.

VI.

We thus affirm the portion of the November 5, 2008 order that denied the Sawmill's motion to disqualify Schwartz. We reverse the portions of that order and of the January 13, 2009 order that denied the Sawmill's motion to disqualify Deshay and Giuliano based on their membership in TASP. We reverse the portion of the November 5, 2008 order that denied the motion to start the proceedings anew.

 
Affirmed in part, and reversed in part. We do not retain jurisdiction.

The fliers distributed by TASP read as follows:

CONTROL THE SAWMILL[;] STOP THEM FROM RUINING OUR BOROUGH'S QUALITY OF LIFE!!!!!!!!!!!! FAMILY RESTAURANT ----- YES[;] "PREMIER" NIGHTCLUB --- NO[;] OPERATING LICENSE RENEWAL HEARING THURSDAY--JUNE 24, 2004 at 7:30 PM[;] BOROUGH COUNCIL CHAMBERS[;] 6TH AND CENTRAL[;] BE THERE[;] HAVE YOUR VOICE HEARD[;] LET THEM KNOW THAT WE THE PEOPLE RUN OUR TOWN!

At the bottom of the flier was a section that gave members of TASP the opportunity to sign their name and address with the notation that although "unable to be present at this meeting, . . . the Taxpayers Association has my full support in this matter."

Hourihan referred to the Sawmill as the Green Room, which was another name for the restaurant.

The resolution that was adopted contained a finding that the Sawmill had "failed to comply with the existing conditions of the license by improperly operating a 'nightclub' or 'destination entertainment venue' and that the licensee ha[d] further failed to maintain the character of the premises as a restaurant." The renewal of the Sawmill's liquor license was made subject to several conditions, including an explicit prohibition on the premises being used as a nightclub or entertainment venue and a prohibition on removing the tables and seating from the second floor.

Francis Losey was the sole member that the Sawmill did not seek to disqualify.

In Zell, we analyzed N.J.S.A. 40:55-1.4, which has since been repealed, and replaced by N.J.S.A. 40:55D-69, the portion of the MLUL that we have already discussed. The operative language of the now-repealed statute is identical to the relevant portion of N.J.S.A. 40:55D-69, because both prohibit a member of a board from "act[ing] on any matter in which he has, either directly or indirectly, any personal or financial interest." Thus, although we relied in Zell on a statute that has since been repealed, such repealer is of no analytical significance here because the language of the repealed statute is identical to the current statute.

We recognize that our resolution of the issues presented, when combined with the Law Division's orders of November 5, 2008 and January 13, 2009, results in only one member of the Board remaining eligible to hear the Sawmill's appeal, Losey. The method for filling vacancies that result from such disqualification is set forth in N.J.S.A. 40:55D-69.1, which provides that "Class IV members of the planning board shall be called upon to serve, for that matter only, as temporary members of the board of adjustment." Such appointment shall be made "in order of seniority of continuous service to the planning board until there are the minimum number of members necessary to constitute a quorum to act upon the matter without any personal or financial interest therein, whether direct or indirect." Ibid. The parties have not addressed the "rule of necessity," see Griggs v. Borough of Princeton, 33 N.J. 207 (1960), in the event of difficulties that may ensue in reconstituting the Board. Because the parties have not addressed this issue, neither do we.

(continued)

(continued)

28

A-2002-08T3

November 10, 2009