CJS INVESTMENTS, INC v. THE MAYOR AND COUNCIL OF THE TOWNSHIP OF ROBBINSVILLE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5368-10T2

CJS INVESTMENTS, INC.,

Plaintiff-Respondent,

v.

THE MAYOR AND COUNCIL OF THE

TOWNSHIP OF ROBBINSVILLE, and

THE TOWNSHIP OF ROBBINSVILLE,

Defendants,

and

THE WASHINGTON ESTATES HOMEOWNERS

ASSOCIATION, INC.,

Defendant/Intervenor-

Appellant.

_______________________________________

February 19, 2013

Argued March 20, 2012 - Decided

Before Judges Simonelli and Hayden.

On appeal from the Superior Court of New

Jersey, Law Division, Mercer County, Docket No. L-0123-11.

Alexis L. Gasiorowski argued the cause for appellant (Gasiorowski& Holobinko, attorneys; R.S. Gasiorowski, of counsel; Ms. Gasiorowski, on the brief).

Peter H. Klouser argued the cause for respondent (Heilbrunn Pape, L.L.C., attorneys; Mr. Klouser, of counsel; Jeffrey Zajac, on the brief).

PER CURIAM

Defendant/intervenor, Washington Estates Homeowners Association, Inc. (Association), appeals from the May 25, 2011 Law Division order, which released plaintiff CJS Investments, Inc. (CJS) from its performance guarantees. For the reasons that follow, we affirm.

On March 15, 2006, the Planning Board of defendant Township of Robbinsville1(the Township) granted CJS approval to develop a subdivision, known as Washington Estates, which included twenty-five residential lots and four open space conservation lots, in the Township's rural residential zone. The approval was based on the settlement of a lawsuit CJS filed after the Township denied approval of its original development plans. The June 22, 2005 settlement agreement provided for a reduction in the width of the subdivision's internal road, called Olivia Drive, from twenty-eight feet to twenty feet with a five-foot stabilized shoulder on each side "consistent with the design standards set forth in [the township ordinance] for rural residential development." That ordinance did not define the term "stabilized shoulder."

In the June 23, 2006 developer's agreement, CJS agreed to post a performance guarantee bond and cash guarantee (the performance guarantees). The performance guarantee made CJS "solely responsible for general, overall, routine and periodic maintenance of the Project and all roadways thereon until such time as all performance guarantees are released and maintenance guarantees are posted." CJS posted the requisite bond and cash guarantee.

On September 9, 2010, advised the Township that all bonded improvements were completed, and requested that the Township inspect and approve the completion and conduct a hearing for the release of the performance guarantees. On October 19, 2010, the engineering firm, Remington, Vernick & Arango Engineers, Inc. (Remington), retained by the Township to oversee the development, issued a report stating that it had inspected the project and recommended the release of the performance guarantees and activation of the maintenance bond (the Remington Report).

At the Township Council meeting on November 10, 2010, the Council discussed the Remington Report's recommendation and CJS's request. Members of the Association attended the meeting to oppose CJS's request, contending that CJS had not properly constructed the required five-foot stabilized shoulder along each side of the internal roadway. Two members of the Association gave statements concerning the poor drainage conditions in the road and in their yards.

The Association's attorney presented pictures depicting a slope from the road catching storm water runoff. Charles Rush, a professional engineer, advised the Council that he had recently inspected the property at the Association's request. In his opinion, the road was not lined on each side with the required stabilized shoulder, but with a sloped swale of grass. Rush opined that, while there was no generally accepted engineering definition for a stabilized shoulder, it should never be made of grass or be steeply sloped.

Township engineer, Timothy McGough, countered that the stabilized shoulder had been built according to the approved development plans and the town ordinance did not define a stabilized shoulder. According to the development plan, the stabilized shoulder was sloped and was partially a swale. In addition to being approved by the Planning Board, this design was also approved by the Department of Environmental Protection for storm water management purposes. McGough explained that the Township was aware of the homeowners' complaints and had worked diligently to get the shoulder as stable as possible. The Township conducted independent tests using a dump truck to determine if the shoulder could hold heavy equipment. He concluded that in most areas it supported the heavy load but some shoulder areas needed gravel reinforcement, which was then completed. Remington had been out to the site many times to ensure stabilization of the shoulder as well as to monitor asphalt repairs and installation of the top course.

The Council did not vote to approve or reject CJS's request on November 10, 2010. At the next Council meeting on December 9, 2010, the Association's attorney provided photos of standing water, described the instability of the swale, and pointed out the safety hazards of water collecting on the sides of the road. The Association's attorney also noted that there was no report supporting the recommendation to release the performance guarantees; there was only a one-page letter from Remington recommending the release of the performance guarantees, several reports from the Township engineer, and a few letters from CJS.

Council member Rich Levesque stated he had informally viewed the shoulder, saw standing water in the swale even though it had not rained for two weeks, and would vote to reject CJS's request. The Township attorney again noted that the swales were part of the shoulder in the approved developer plans and were part of the drainage system approved by DEP. He observed that no one claimed that the developer had not performed the work according to the specifications in the approved development plans, or that the Township had not verified the completion of the work.

The Township attorney had prepared a resolution regarding CJS's request. At the December 9 meeting he informed the Council that under the Municipal Land Use Law2(MLUL) they had to vote on CJS's request within forty-five days of receiving the Remington report. He warned them that, if they failed to vote, CJS could seek the court's intervention and, if successful, the Township would have to pay its attorney's fees. Council President Sheree McGowan called for someone on the Council to move the resolution but no one responded. The Council never voted to approve or reject CJS's request.

On January 14, 2011, CJS filed a complaint in lieu of prerogative writs seeking an order compelling the Township to grant its request to release the performance guarantees and awarding counsel fees. On April 29, 2011, the trial judge entered an order permitting the Association to intervene as a defendant. On May 10, 2011, the Association filed a motion to amend its answer to assert a counterclaim and a third-party complaint alleging breach of contract, breach of implied covenant of good faith and breach of covenant of quiet enjoyment.

On May 13, 2011, the parties appeared before Judge Linda R. Feinberg for oral argument. CJS contended that since the Council had failed to approve or reject CJS's request within forty-five days of the Remington Report, the performance guarantees must be released. CJS argued that, because the Council had failed to act, the law required the judge to compel the release of the performance guarantees on the items approved by the Remington Report. CJS also argued that the Remington Report did not detail all the satisfactory improvements because there had been interim engineering reports as improvements were approved and, as was the common practice with performance guarantees releases, the final engineering report merely provided that the performance guarantees should be released as all improvements were satisfactory. CJS also contended that the homeowners' complaints were about faulty design, not improper construction. The developer maintained that while the homeowners had complaints, there was no evidence showing that the complaints were related to a bonded improvement not completed according to plan specifications.

At the oral argument, the Township agreed with many of CJS's statements: that the Council failed to act on CJS's request within the statutorily mandated forty-five days after receipt of the Remington Report; that the Township continuously inspected the site from the start of construction, including the shoulder; that the construction was done according to the development plan approved by the Planning Board; that according to the local ordinance the shoulder could be stabilized with grass; and that the Council failed to vote CJS's request after the Township attorney advised that it was required by law to do so. However, since the Township would become responsible to correct the issues of pooling water in the swales once the roadway was dedicated to the Township, the Township requested a remand for a vote on CJS's request.

The Association's attorney reiterated the homeowners' statements at the Council meetings against the release of the Performance Guarantees, particularly those concerning the unstable shoulder and the poor drainage in the development. The Association argued that the Council had not acted arbitrarily when it rejected CJS's request by the silence of the Council members and their refusal to vote. The Association also raised constitutional and public policy arguments concerning the homeowners' rights to use and enjoy their property.

In response to the judge's inquiry about the completeness of the Remington Report, the Township attorney explained that the form of the report was customary. When an engineer would make a final report on a performance guarantee and recommended releasing the entire amount, according to the attorney, the engineer would provide a the summary re commendation of the kind contained in the Remington Report. On the other hand, when improvements were found deficient or not in compliance with the approved plan, the engineer would provide a detailed explanation of what was completed and what was not.

At the conclusion of argument, Judge Feinberg observed that the Council did not reject the Remington Report as incomplete or direct Remington to prepare an itemized list. She concluded that because both parties to the performance guarantees acknowledged that the Remington Report was in its customary form, the requirement in N.J.S.A.40:55D-53e(1) that the Township act within forty-five days of receipt of the report had been triggered. The judge further reasoned that the statutory language was clear that if the governing body did not act on the engineer's report within forty-five days, then the court must order the Council to release the performance guarantees. N.J.S.A.40:55D-53e(2). Accordingly, she granted CJS's request for relief.

The May 25, 2011 final order directed the release of the performance guarantees and the activation of the maintenance bond pursuant to N.J.S.A.40:55D-53. The order also required the Township to pay CJS's counsel fees. Lastly, the order provided that the Association could pursue its claims against CJS for breach of contract, breach of implied covenant of good faith and breach of covenant of quiet enjoyment in a separate action.

The Association filed this appeal,3raising the following contentions:

POINT ONE - THE COUNCIL'S [UNANIMOUS] REFUSAL TO GRANT PLAINTIFF'S REQUEST TO RELEASE ITS PERFORMANCE BOND CONSTITUTES AN AFFIRMATIVE ACT AND IS AMPLY SUPPORTED BY CREDIBLE TESTIMONY AND EVIDENCE IN THE RECORD BELOW AND WAS NOT ARBITRARY, UNREASONABLE OR CAPRICIOUS.

POINT TWO - THE TOWNSHIP PROPERLY ACTED IN DENYING PLAINTIFF'S APPLICATION FOR THE RELEASE OF ITS PERFORMANCE BOND BECAUSE THERE WAS SUFFICIENT EVIDENCE AND TESTIMONY ADDUCED AT THE HEARINGS TO SUGGEST THAT THERE WOULD NOT BE ENOUGH MONEY [AVAILABLE] FOR COMPLETION OF ALL NECESSARY IMPROVEMENTS TO THE SUBJECT PROPERTY IF THE MONIES WERE RELEASED.

Under N.J.S.A.40:55D-53, approval of a subdivision plat, a final site plan or a zoning permit may be conditioned on the developer posting a performance guarantee in favor of the municipality to assure installation and maintenance of on-tract improvements, including streets, grading, pavement, gutters, curbs, and sidewalks. N.J.S.A.40:55D-53a(1). The town engineer must prepare itemized cost estimates which must be attached to each posted performance guarantee. Ibid. Failure to complete the improvements can result in the obligor and surety being liable to the municipality for the cost of the uncompleted improvements. N.J.S.A.40:55D-53c. "The purpose of a performance guarantee is to ensure that there are sufficient funds to complete all the necessary improvements." R.J.P. Builders, Inc. v. Twp. of Woolwich, 361 N.J. Super. 207, 210 (App. Div.), certif. denied, 178 N.J.31 (2003).

When the improvements are substantially completed, the developer may request the governing body to inspect and approve the completion and to provide a detailed report within forty-five days. N.J.S.A.40:55D-53d(1). The engineer's list must detail the specifics of each improvement deemed incomplete or unsatisfactory and the proposed remedy. N.J.S.A.40:55D-53d(2). The list also must include "each improvement determined to be complete and satisfactory together with a recommendation as to the amount of reduction to be made in the performance guarantee . . . ." Ibid. Within forty-five days of receipt of the engineer's report, "[t]he governing body, by resolution, shall either approve the improvements determined to be complete and satisfactory by the municipal engineer, or reject any or all of these improvements upon the establishment in the resolution of cause for rejection . . . ." N.J.S.A.40:55D-53e(1).

Moreover, the statute prescribes very specific time limits within which the municipality must act on a bond release request. If the municipal engineer does not provide the completed report within forty-five days of the request, the developer can apply to the court in a summary manner for an order compelling the engineer to inspect and report on the improvements. N.J.S.A.40:55D-53e(2). Attorney's fees and costs may be awarded to the prevailing party. Ibid. Additionally, the governing body must act promptly once it receives the engineer's report.

If the governing body fails to approve or reject the improvements determined by the municipal engineer to be complete and satisfactory or reduce the performance guarantee for the complete and satisfactory improvements within 45 days from the receipt of the municipal engineer's list and report, the obligor may apply to the court in a summary manner for an order compelling, within a stated time, approval of the complete and satisfactory improvements and approval of a reduction in the performance guarantee for the approvable complete and satisfactory improvements in accordance with the itemized cost estimate prepared by the municipal engineer and appended to the performance guarantee . . . .

[Ibid.]

The Association argues that the Council complied with N.J.S.A.40:55D-53e because, by failing to vote on CJS's request, the Council voted to reject it. We disagree.

When required by the MLUL, a memorializing resolution "is the wellhead for the judiciary's consideration of the validity of municipal action." CBS Outdoor, Inc., v. Borough of Lebanon Planning Bd., 414 N.J. Super.563, 580 (App. Div. 2010) (citation omitted). The resolution is the official act of the governing body. Grasso v. Borough of Spring Lake Heights, 375 N.J. Super.41, 46 (App. Div. 2004). Discussion of a municipal body is not a substitute for a resolution of that body. Seeibid.("[I]t is the resolution that controls, not the observations of individual board members."). We reject as without merit the Association's argument that the Council's failure to vote on CJS's request constituted a rejection, especially where the statute mandated that a rejection may only occur "upon the establishment in the resolution of cause for rejection . . . ." N.J.S.A.40:55D-53e(1).

We note that once the Council received the Remington Report, it had forty-five days to pass a resolution approving or rejecting CJS's request, not just to have a discussion. The Council's failure to either approve or reject the Remington Report triggered CJS's right to an order compelling the approval of the improvements deemed satisfactory by the engineer and the release of the performance guarantees. N.J.S.A.40:55D-53e(2). See alsoTwp. of Barnegat v. DCA of N.J., Inc., 181 N.J. Super. 394, 402 (App. Div. 1981) ("[T]he municipality's failure to act has the significant consequence of constituting an approval of the improvements and of releasing the obligor and surety . . . .").

The facts here differ from the facts of DCA, where the municipality failed to inspect the improvements until after expiration of the time period but the subsequent engineer's report showed that the improvements were far from substantially complete. Id.at 398. There we found that the threshold determination was whether the improvements had in fact been completed. Here, both Remington and the municipal engineer reported to the Council that all the improvements had been completed and the performance guarantees should be released. Once this occurred, the Council did not have to accept the engineers' recommendations but did have to pass a resolution either approving or rejecting them. SeeN.J.S.A.40:55D-53e(1).

We reject the Association's argument that the failure of the Remington Report to itemize every improvement deemed completed prevented the report from triggering the forty-five day period for the Township to pass a resolution approving or rejecting the report. Both parties to the performance guarantees agreed that the Remington Report was sufficient, that the Council never asked Remington to provide a more detailed list, and that no one questioned the scope of Remington's recommendation to release the performance guarantees. As we read N.J.S.A.40:55D-53d(2), the focus is on providing the developer and the governing body with notice of what was complete and what was deemed incomplete so that the guarantee amount being withheld could be adjusted. Where as here, the engineer approved all the improvements and recommended release of the performance guarantees in their entirety, we are satisfied that the notice necessary to trigger the resolution of the governing body required by N.J.S.A.40:55D-53e(1) had occurred.

Affirmed.

1 Until 2008, Robbinsville Township was called Washington Township.

2 N.J.S.A. 40:55D-1 to -136.

3 The Township has not appealed the final order.