TRICARE TREATMENT SERVICES L.L.C. v. CHATHAM BOROUGH PLANNING BOARD

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-05371-12T1

A-0864-13T1

TRICARE TREATMENT SERVICES,

L.L.C.,

Plaintiff-Appellant,

v.

CHATHAM BOROUGH PLANNING BOARD,

CHATHAM BOROUGH BOARD OF ADJUSTMENT,

THE MAYOR AND COUNCIL OF THE BOROUGH

OF CHATHAM,

Defendants-Respondents.

________________________________________________________________

November 25, 2014

Argued October 21, 2014 Decided

Before Judges Reisner, Koblitz and Higbee.

On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1577-10 and L-1697-13.

Lawrence B. Litwin argued the cause for appellant.

Denis F. Driscoll argued the cause for respondents Chatham Borough Planning Board, Chatham Borough Board of Adjustment, and the Mayor and Council of the Borough of Chatham (Inglesino, Wyciskala & Taylor, L.L.C., and Horan & Aronowitz, L.L.P., attorneys; Mr. Driscoll and John E. Horan, of counsel and on the briefs).

James K. Pryor argued the cause for respondents Joseph J. Bell and The Bell Law Group n/k/a Bell, Shivas & Fasolo, P.C. in A-05371-12 (Bell, Shivas & Fasolo, P.C., attorneys; Mr. Pryor, of counsel and on the brief).

Ted Del Guercio, III, argued the cause for respondent Anne Marie Rizzuto in A-05371-12 (McManimon, Scotland & Baumann, L.L.C., attorneys; William W. Northgrave, of counsel and on the brief).

PER CURIAM

This is a consolidated appeal of two separate lawsuits filed by plaintiff Tricare Treatment Services, Inc. (Tricare) against defendants: the borough of Chatham, its Planning Board, Board of Adjustment (Zoning Board), Mayor, and Council. In January 2010 Tricare sought to convert leased property,1 the Parrott Mill Inn, a bed and breakfast in Chatham, to a residential rehabilitation center for compulsive gamblers.
Tricare maintained that the conversion merely continued a nonconforming use of the property. When the Zoning Board did not agree, Tricare filed a complaint in lieu of prerogative writs on May 13, 2010.

After a finding that Tricare's treatment center was not a continuing nonconforming use, considerable motion practice, and the filing of many amended complaints, this action was ultimately dismissed without prejudice for failure to exhaust administrative remedies on February 8, 2013, and Tricare was given ninety days to seek a variance. Because Tricare no longer had a legal interest in the property, its request for a variance was deemed incomplete. On June 24, 2013, Tricare filed another complaint and this second action was dismissed on September 27, 2013, pursuant to Rule 4:6-2(e), for failure to state a claim upon which relief can be granted.

Tricare appeals both of these dismissals, arguing that because the proposed use of the property as a residential treatment center was improperly denied, Tricare should be able to move forward on its claims for damages against the municipal defendants and add lawyers as defendants, Anne Marie Rizzuto, Joseph J. Bell and his firm.2 After reviewing the record in light of the many contentions advanced by Tricare on appeal, we affirm in all respects.

By way of additional background, the local zoning officer granted initial approval to Tricare on the basis that Tricare would continue the non-conforming use of the Inn. The zoning officer told Tricare to petition the planning board for a waiver of a site plan review. That waiver was subsequently granted by the planning board by voice vote on February 3, 2010. Chatham residents appealed the decision of the zoning officer and the Zoning Board reversed in a resolution passed in April 2010. When reversing the zoning officer, the Zoning Board determined that Tricare's proposed use of the Inn was not a continuing nonconforming use and thus required a variance.

Instead of seeking a variance, Tricare filed a complaint in lieu of prerogative writs on May 13. A week later the planning board adopted a "Resolution Reversing Approval of Waiver of Site Plan Due to Lack of Jurisdiction" indicating it had mistakenly exercised jurisdiction over the matter without notice to the public and unaware that the proposed use was not a continuation of the prior nonconforming use. In this resolution the planning board deemed its prior voice vote approval to therefore be "void ab initio[.]" During the litigation, defendants' counsel hired a private investigator, an action which Tricare objected to strenuously, but which was approved as appropriate by the motion judge. Tricare amended its complaint six times and engaged in three years of motion practice before finally filing for a variance in 2013. By that time Tricare had abandoned the lease agreement, the owner of the Inn objected to the variance, and the Zoning Board denied the application because Tricare could not perfect the application without an interest in the property.

During the litigation, the motion judge3 determined after a de novo review of the record that the Zoning Board correctly decided that the proposed use of the Inn as a gambling rehabilitation center was not a continuation of a pre-existing, non-conforming use. This determination lies at the heart of the viability of Tricare's suit for damages. Tricare concedes, as it must, that it no longer has an interest in the use of the property, thus its appeal of the denial of that use is moot4 except insofar as Tricare may have suffered damages from an improper denial of its proposed use. If the use was properly denied, then Tricare has no valid claim for damages against any defendant. We therefore begin with a discussion about whether Tricare's proposed use was properly deemed to require a variance.

I

The courts defer to decisions involving variances. A trial court may not disturb a municipal zoning board's decision granting a hardship variance unless such action was arbitrary, unreasonable, or capricious. Jock v. Zoning Bd. of Adjustment, 184 N.J. 562, 597 (2005); Columbro v. Lebanon Twp. Zoning Bd. of Adjustment, 424 N.J. Super. 501, 508-09 (App. Div. 2012). "Courts give greater deference to variance denials than to grants of variances, since variances tend to impair sound zoning." Med. Ctr. at Princeton v. Twp. of Princeton Zoning Bd. of Adjustment, 343 N.J. Super. 177, 199 (App. Div. 2001). We employ the same standard of review as the trial court. Wilson v. Brick Twp. Zoning Bd. of Adjustment, 405 N.J. Super. 189, 197 (App. Div. 2009). Where, as occurred here, a zoning board has interpreted an ordinance, however, no deference is owed and our review is performed de novo. Osaria v. W.N.Y. Rent Control Bd., 410 N.J. Super. 437, 443 (App. Div. 2009).

The Parrott Mill Inn is a colonial-era home converted to a bed and breakfast, a pre-existing nonconforming use located in Chatham's B-3 Zone,5 which does not allow overnight lodging. N.J.S.A. 55D-68 provides that "[a]ny nonconforming use or structure existing at the time of the passage of an ordinance may be continued upon the lot or in the structure so occupied[.]" It is well-settled that the spirit of zoning laws seeks to restrict rather than increase nonconforming uses. Town of Belleville v. Parrillo's, Inc., 83 N.J. 309, 318 (1980). A nonconforming use will be allowed to continue only if the continuance is of substantially the same kind of use as that to which the premises were devoted at the time of passage of the zoning ordinance. Avalon Home & Land Owners Ass'n v. Borough of Avalon, 111 N.J. 205, 210 (1988) (citation omitted). Nonconforming "uses may be continued as of right, but may not be enlarged as of right[.]" Reich v. Borough of Fort Lee Zoning Bd. of Adjustment, 414 N.J. Super. 483, 503 (App. Div. 2010) (citation omitted); see also Grundlehner v. Dangler, 29 N.J.256, 263 (1959) (holding that nonconforming uses may not be enlarged as of right "except where the enlargement is so negligible or insubstantial that it does not fairly warrant judicial or administrative notice or interference") (citation omitted).

The issue of whether a use constitutes an expansion of a prior nonconforming use is a mixed question of law and fact. Bonaventure Int'l, Inc. v. Borough of Spring Lake, 350 N.J. Super. 420, 438 (App. Div. 2002); seeBelleville, supra, 83 N.J.at 317. The determination of whether an activity is within the scope of the existing nonconforming use requires an examination of "the particular facts of the case, the terms of the particular ordinance, and the effect which the increased use will have on other property." Hantman v. Twp. of Randolph, 58 N.J. Super.127, 137 (App. Div. 1959), certif. denied, 31 N.J. 550 (1960); accordBelleville, supra, 83 N.J. at 317-18 (adopting the court's reasoning in Hantmanas "the proper analysis for examining changes in nonconforming uses").

The facts were concededly not in dispute. When granting summary judgment to defendants, the motion judge determined that Tricare's proposed use of the Parrott Mill Inn "as a treatment facility for compulsive gamblers did not constitute a proper extension of the pre-existing, non-conforming use of the [property] as a bed and breakfast . . . ." This determination is based on both the controlling law and the evidence.

In an analogous situation, our Supreme Court determined that a restaurant's conversion into a nightclub was not a continuation of a non-conforming use. Belleville, supra, 83 N.J. at 312-15. The Court repeated the trial judge's comment that "'a 'disco' is a place wherein you dance and a restaurant a place wherein you eat.'" Id. at 314. The conversion of the property from a restaurant to a nightclub constituted a "substantial change" in its use. The Court opined that the fundamental inquiry is "an appraisal of the basic character of the use, before and after the change." Id. at 316 (citation omitted). The Court noted that the "entire character of the business" was changed in that: "What was once a restaurant is now a dancehall." Id. at 318.

Tricare argues that its proposed use of the Inn was simply a continuation at a "less intense" level of that building's preexisting nonconforming use, because fewer patients would reside in the treatment center than the number of guests who stayed for the night in the Inn. The fundamental character of the Parrott Mill Inn would be altered, however, by its use as an in-patient gambling addiction treatment center rather than an inn providing bed and breakfast to Chatham visitors seeking a charming, historic spot to relax. Under Tricare's proposed use the public would be excluded from the facility as it would only be open to paying patients. Further, the new treatment center would serve patients three meals a day instead of just breakfast. Patients would not be permitted to leave the facility and would receive intensive counseling for their compulsive gambling addiction at the site. Simply put, what was once a bed and breakfast would become an addiction rehabilitation center, a fundamental and substantial change of the nature and character of the business.

This type of modification of the fundamental character of the property is precisely the type determined to be an impermissible change of a non-conforming use. Belleville, supra, 83 N.J. at 312-15; see also Conselice v. Borough of Seaside Park,358 N.J. Super.327, 335-37 (App. Div. 2003) (stating that expansion of the residential portion of a mixed-use property where mixed use was prohibited required a use variance); Hantman, supra, 58 N.J. Super. at 135-38 (stating that a change from a summer bungalow to a year-round occupancy required a variance).

Nonconforming uses may lawfully be enlarged by resorting to the variance procedure. Grundlehner, supra, 29 N.J. at 269. Plaintiffs failed to seek a variance for enlargement of the use of the Parrott Mill Inn to allow use as an addiction center for compulsive gamblers, as directed by the Zoning Board in 2010. Rather than seek a variance, Tricare opted instead to file a complaint in lieu of prerogative writs. Tricare did not file an application for a variance until 2013, three years after its interest in the property ended, rendering the variance application deficient on its face. The Zoning Board never decided whether to grant a use variance, because by the time Tricare filed for a variance it had abandoned plans to utilize the Inn and opened its facility elsewhere.

II

Tricare argues that the Zoning Board "proceeding violated the one stop shopping principle" of the zoning laws because it has no statutory authority, pursuant to N.J.S.A. 40:55D-70, to reverse the planning board. However, the Zoning Board in its resolution clearly stated that "the decision of the [z]oning [o]fficer in this matter was in error and should be reversed." Thus the Zoning Board reversed the zoning officer, not the planning board. The zoning officer's decision had resulted in the waiver of a site plan review by the planning board's February 3, 2010 voice-vote. The planning board rescinded its voice-vote waiver, determining that it had lacked jurisdiction.

N.J.S.A. 40:55D-70 enumerates the statutory powers given to a municipal zoning board of adjustment. Subsection (a) states that the zoning board shall have the power to "[h]ear and decide appeals where it is alleged by the appellant that there is error in any order, requirement, decision or refusal made by an administrative officer based on or made in the enforcement of the zoning ordinance[.]" N.J.S.A. 40:55D-70(a). Thus, Tricare's claim that the Zoning Board was without jurisdiction is without merit.

III

Plaintiff argues that the motion judge improperly dismissed its complaint for damages because defendants engaged in invidious discrimination against Tricare by denying its proposed use. For a civil rights claim in a land use context to succeed, a plaintiff must show evidence of governmental conduct "'that shocks the conscience[.]'" Rezem Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103, 115 (App. Div.) (citing Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 366, cert. denied, 519 U.S. 911, 117 S. Ct. 275, 136 L. Ed. 2d 198 (1996)), certif. denied and appeal dismissed, 208 N.J.366 (2011). "The reason for this high standard of proof is to prevent zoning appeals from being converted into civil rights claims." Ibid.

In Rezem, we dismissed the complaint because the plaintiff failed to exhaust available judicial and administrative remedies. In that case, as here, the plaintiff did not seek "a final decision on any application for a zoning change or development in the land, before [the] plaintiff filed [the] civil law suit." Id.at 116. Citing to 41 Maple Associates v. Common Counsel of Summit, 276 N.J. Super. 613, 619-20 (App. Div. 1994), we explained that a plaintiff may not pursue inverse condemnation claims and federal civil rights claims without first exhausting administrative remedies. SeeR. 4:69-5 (imposing a duty of exhaustion of administrative remedies in prerogative writs actions).

Tricare acknowledges that it did not seek a use variance in 2010, electing instead to file a complaint in lieu of prerogative writs. It argues that it would have been "futile" to seek a variance because of the town's discriminatory attitude toward compulsive gamblers. Futility, however, is defined only as a situation where no administrative remedies exist and the issues to be resolved are only legal issues. Brunetti v. Borough of New Milford, 68 N.J.576, 589 (1975); Warrenville Plaza, Inc. v. Warren Twp. Sewerage Auth., 230 N.J. Super. 461, 465 (App. Div. 1989). Tricare had an administrative remedy in 2010 but opted to wait until 2013 when it no longer had grounds to seek a variance.

Tricare's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). Thus dismissal of both actions was appropriate.

Affirmed.

1 The three-year lease agreement stated that the lease would commence March 1, 2010 "subject to the receipt of a non-appealable use approval from the Borough of Chatham and an unconditional and final certificate of occupancy . . . allowing Tenant's Permitted Use [as a treatment facility.]"

2 Tricare alleges that these attorneys wrongfully hired a private investigator and took other improper actions during the litigation.

3 Three judges were involved with this litigation at various times in its history. For the purposes of this opinion we need not distinguish among them.

4 "An issue is moot when the decision sought in a matter, when rendered, can have no practical effect on the existing controversy." Greenfield v. N.J. Dep't of Corr., 382 N.J. Super. 254, 257-58 (App. Div. 2006) (citation and internal quotation marks omitted)).

5 Chatham's ordinance 165-18, describing uses allowed in the B-3 Zone, provides in pertinent part

B. Permitted uses.

(1) Professional offices;

(2) Offices;

(3) Restaurants;

(4) Business services, retail trade and/or retail services, provided that the aggregate total of such uses shall not exceed 2,500 square feet on a tax lot of less than 1.5 acres, and such uses shall only be located on the ground floor;

(5) Child-care centers as provide for in N.J.S.A. 30:5B-1 et seq. and N.J.S.A. 40:55D-66.6

C. Conditional uses.

(1) Apartment units in accordance with N.J.S.A. 40:55D-67 and 165-148.

(2) Public utility in accordance with N.J.S.A. 40:55D-67 and 165-143.

(3) Banks in accordance with 165-144.

(4) Service stations in accordance with 165-146.