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CORBALLY, in Their Individual and Official

Capacity as Members of the Governing Body,



April 28, 2015


Argued October 28, 2014 Decided

Before Judges Nugent, Accurso and Manahan.

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket

No. L-2057-12.

R.S. Gasiorowski argued the cause for appellant (Gasiorowski & Holobinko, attorneys; Mr. Gasiorowski, of counsel; Cathy S. Gasiorowski, on the briefs).

Sean D. Gertner argued the cause for respondents (Gertner Mandel & Peslak, L.L.C., attorneys; Mr. Gertner, of counsel and on the brief; Jena R. Silverman, on the brief).


Plaintiff Martell's Tiki Bar, Inc. appeals from a final order of summary judgment dismissing its complaint against defendants Borough of Point Pleasant Beach and members of its governing body seeking declaratory relief and alleging violations of the New Jersey Civil Rights Act, N.J.S.A. 10:6-2c, in regard to the Borough's "threat" to enact ordinances restricting Martell's hours of operation unless Martell's agreed to pay significant sums to the municipality. Because we agree with Judge Grasso that counts one through six of Martell's complaint were mooted when the Division of Alcoholic Beverage Control (ABC) stayed enactment of the ordinance and that Martell's failed to state a legally cognizable claim under the Civil Rights Act in count seven, we affirm.

Although the parties dispute the reasons for the ordinances at issue and the governing body's purpose in proposing them, the essential facts of the consideration of the ordinances and the timeline of events are undisputed. Martell's owns and operates a popular restaurant and bar on the Point Pleasant Beach boardwalk. It alleges that the Borough demanded money from it under threat of enacting Ordinance 2012-15, which, as originally conceived, would have required the bar to close at midnight unless it paid a fee, determined by its maximum occupancy, to allow it to continue to serve alcohol until 2:00 a.m.

The ostensible purpose of the ordinance was "to prevent further deterioration of public safety and quality of life" by curtailing the sale of alcohol after midnight while simultaneously allowing licensees "the ability to mitigate any perceived adverse effect" on their businesses by paying a fee which would allow the Borough to provide the "additional police, code enforcement and public works employees required to secure compliance with the provisions of the Alcoholic Beverage Control law and Borough Ordinances and to eliminate disturbing and disorderly conduct occasioned" by the sale of alcohol between midnight and 2:00 a.m. Martell's alleges that the Borough holds it "responsible for changing social mores . . . alleged to encourage the excessive use of alcohol and outrageous behavior" and that the structure of the ordinance evidenced the Borough's intention to single it out in "extract[ing] exorbitant fees that would be used to subsidize the Borough's budget rather than accomplish a legitimate purpose of zoning or exercise of police powers."

After initially introducing Ordinance 2012-15, the governing body determined to sever the portion allowing extended hours and incorporate it into its own ordinance. Thereafter, proposed Ordinance 2012-15 provided that "no alcoholic beverages shall be sold, served, delivered to, or consumed in any licensed premises between the hours of 12:00 a.m. and 6:00 a.m.," effectively compelling the Borough's bars to close at 12:00 a.m. rather than 2:00 a.m. Proposed Ordinance 2012-16 would have permitted licensees to continue to serve alcohol until 2:00 a.m. upon filing a petition requesting extended hours and paying a fee, based on maximum occupancy reduced by 200 and then multiplied by $60.00.1

At a public hearing on the proposed ordinances on May 15, 2012, the mayor acknowledged receipt of a letter from the Acting Commissioner of the Department of Community Affairs advising the Borough of the Department's view that proposed Ordinances 2012-15 and 2012-16, considered together, were unlawful and beyond the scope of the powers delegated to the municipality by the State. Specifically, the Commissioner wrote

Proposed ordinance 2015 . . . changes the closing time for establishments selling alcoholic beverages from 2:00 a.m. to 12:00 a.m. Ordinance 2012-16 . . . requires those retail consumption establishments wishing

to retain a 2:00 a.m. closing time to petition the governing body and pay an additional $60.00 per person of occupancy per year. . . . If approved by the governing body, the extended occupancy would run concurrent with the license term (July 1 through June 30).

Ordinance 2012-16 appears to increase the annual liquor license renewal fee in excess of the maximum fee permitted by N.J.S.A. 33:1-12. Although municipalities have the authority to set hours of operation pursuant to N.J.S.A. 33:1-40, renewal fees for retail consumption . . . are limited

by N.J.S.A. 33:1-12. The maximum license fee for retail consumption licenses is $2,500 . . . . N.J.S.A. 33:1-12. As to retail consumption licenses, "no ordinance shall be enacted which shall raise or lower the fee to be charged for this license by more than 20% from that charged in the preceding license year or $500, whichever is the lesser." [Ibid.]

The conjunctive nature of [Ordinances] 2012-15 and 2012-16 suggests that the Borough is looking to use its power to regulate closing times as a means to increase liquor license fees more than ten times what would be permitted by State statute.

As you know, municipalities are only permitted to exercise those powers expressly granted to them under law. However, the Borough appears to be undertaking an unlawful effort to institute a fee that it has no power to institute.

The governing body adopted Ordinance 2012-15 that evening with an effective date of July 1, but tabled Ordinance 2012-16.

On June 5, Martell's and Jenkinson's Pavilion, Inc. filed a petition of appeal and request for interim relief with ABC to contest the adoption and enforcement of Ordinance 2012-15. On June 29, the Director of ABC stayed the ordinance pending appeal. Although acknowledging the Borough's power to limit the hours of operation of licensed establishments under N.J.S.A. 33:1-40, the Director noted the same statute permits appeals of hours limitations to him, and that he was permitted to refuse to apply an ordinance upon determining it was adopted "in bad faith or for an illegitimate purpose," relying on Great Atl. and Pac. Tea Co. v. Mayor and Council of Pt. Pleasant Beach, 220 N.J. Super. 119 (App. Div. 1987). Determining "the substantial factual history" surrounding consideration of Ordinances 2012-15 and 2012-16 "raises at least the need for an inquiry into the allegations of bad faith or illegitimate purpose," the Director concluded a hearing before the Office of Administrative Law was required. He further determined to stay Ordinance 2012-15 because in the event the licensees were successful, "there is no method of redress for them to recoup the financial losses they would incur while the earlier closing time was in effect."

On the same day the Director entered the order staying the ordinance, Martell's and Jenkinson's filed a complaint in lieu of prerogative writs in Superior Court, seeking to invalidate it. The seven count complaint alleged (1) the Borough had induced Martell's and Jenkinson's to purchase and invest in their commercial properties and businesses; that they had done so in response to those inducements "with the representation and expectation of continued ability to operate their legal restaurant/tavern facilities during normal and reasonable operating hours as established by past practice over many years," and that adoption of Ordinance 2012-15 being "contrary to the inducements and practices over many years upon which the plaintiffs have relied and acted upon," was barred by equitable estoppel; (2) the ordinance was adopted in violation of the Local Government Ethics Law, N.J.S.A. 40A:9-22.1 et seq.;

(3) the ordinance had no rational or legitimate basis and was motivated by illegal and improper reasons; (4) the enactment of the ordinance violated the Public Trust Doctrine; (5) the ordinance was void for vagueness; (6) the ordinance was arbitrary, capricious and unreasonable; and (7) the ordinance violated plaintiff's rights under the New Jersey Civil Rights Act, thus entitling plaintiffs to attorney's fees, compensatory damages, and a civil penalty.

Defendants moved to dismiss the complaint in lieu of answer pursuant to R. 4:6-2. Judge Grasso denied the motion and temporarily stayed the matter pending resolution of the action before ABC, which he found had assumed primary jurisdiction over the controversy.

Following the devastation of super storm Sandy, the Borough on February 19, 2013 adopted Ordinance 2013-01, which rescinded Ordinance 2012-15 and restored the 2:00 a.m. closing time for all ABC licensed premises in the Borough. Following the rescission, all parties to the administrative appeal agreed it could be marked as settled and dismissed by ABC. Thereafter, Jenkinson's and defendants entered into a stipulation of dismissal, and the matter continued with Martell's as the sole plaintiff.

Defendants subsequently filed a motion for summary judgment to dismiss plaintiff's complaint, which the court granted on October 28, 2013. Judge Grasso found counts one through six of plaintiff's complaint were rendered moot when Ordinance 2012-15 was rescinded, a point Martell's conceded at oral argument on the motion.

With regard to count seven, plaintiff's claims under the New Jersey Civil Rights Act, Judge Grasso found "that the Borough's stated intention to enact Ordinance 2012-16 did not constitute a threat, intimidation, or coercion sufficient to warrant civil penalties" under the Act. The judge looked to Riggs v. Long Beach, 109 N.J. 601, 613 (1988), which commands a reviewing court presented with both valid and invalid purposes for a municipality's adoption of an ordinance to presume a valid purpose prevailed. Thus, accepting as true Martell's allegations that the Borough acted to extort significant sums from Martell's by threatening to restrict its hours of operation, the court found them insufficient as a matter of law to overcome the presumption created by the uncontroverted evidence of the Borough's valid purpose, namely "to stop the 'drunken raucous behavior' caused by bar patrons as described by residents during the public hearings."2

The judge further found imposing "civil penalties on a municipality for words spoken during its deliberations" would undesirably chill the legislative process. Finally, Judge Grasso noted that Martell's had failed to cite any case where "a court has awarded civil penalties against a municipality for passing an allegedly invalid ordinance, and then rescinding it before the law takes effect." The judge declined to do so here "because it would constitute a purely academic exercise."

The judge also rejected Martell's claim to attorney's fees under the Civil Rights Act. Accepting for purposes of the motion that its lawsuit caused the Borough to rescind the ordinance, the judge nevertheless rejected Martell's claim that it qualified for fees under a catalyst theory. See D. Russo, Inc. v. Union, 417 N.J. Super. 384, 391 (App. Div. 2010). Judge Grasso found Martell's could not prove it had a valid Civil Rights Act claim and thus that it would have prevailed had the Borough not rescinded its ordinance. Fundamentally, the judge concluded that New Jersey law does not generally treat a liquor license as property but rather as a temporary permit, which may not be revoked without due process. See Boss Co. v. Bd. of Comm'rs., 40 N.J. 379, 384 (1963); In re Schneider, 12 N.J. Super. 449, 456 (App. Div. 1951). Accordingly, he found "a liquor license affords its holder some procedural protections but it does not constitute a substantive right that would be protected by the Civil Rights Act."

The judge rejected Martell's alternate theory, that the Borough interfered with its right to do business, because no interference occurred as the ordinance never took effect. Finally, the judge noted that Martell's filed its Civil Rights Act claim in Superior Court only after enforcement of the ordinance was stayed by the ABC director, "[e]ssentially . . . piggyback[ing] this Civil Rights Act claim onto its ABC appeal." Reasoning that our law would not allow Martell's to recover its attorney's fees for that administrative appeal in this action, the judge rejected reliance on the ABC stay to prove Martell's Civil Rights Action claim had an adequate basis in law. Martell's appeals.

We review summary judgment using the same standard that governs the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). We accept defendant's version of plaintiffs conduct as true and give defendant the benefit of all reasonable inferences from the facts. Baliko v. Stecker, 275 N.J. Super. 182, 186 (App. Div. 1994). Our task here is thus to determine whether Judge Grasso was correct in finding the facts, viewed most favorably to Martell's, do not state a claim cognizable under the Civil Rights Act.

Martell's spends the bulk of its brief taking issue with Judge Grasso's finding that it "enjoys no protected property right to its liquor license." It argues that "[w]hether one calls it 'property' or a 'privilege,' [Martell's] interest in its liquor license is by no means meager, transitory, or uncertain. Pursuant to state and federal law, [Martell's] is entitled to due process prior to the revocation or nonrenewal of its license."

We agree, as did Judge Grasso. As the Supreme Court has recently explained, however, New Jersey's Civil Rights Act, unlike the analogous Federal Civil Rights Act, 42 U.S.C.A.

1983, does not apply to violations of procedural due process. Tumpson v. Farina, 218 N.J. 450, 477 (2014) ("Section 1983 provides remedies for the deprivation of both procedural and substantive rights while N.J.S.A. 10:6-2(c) provides remedies only for the violation of substantive rights."). Accordingly, Martell's claim that the threat or deprivation of its liquor license without due process is an interest cognizable under the Civil Rights Act is plainly without merit.3

We also reject Martell's contention that Ordinance 2012-15 would violate its substantive due process right to a liquor license. "Typically, a legislative act will withstand substantive due process challenge if the government 'identifies a legitimate state interest that the Legislature could rationally conclude was served by the statute.'" Nicholas v. Pa. State Univ., 227 F.3d 133, 139 (3d Cir. 2000). Only "legislative acts that burden certain 'fundamental' rights may be subject to stricter scrutiny." Ibid.

Here, because the Borough articulated what is clearly a "legitimate state interest" that is, "to prevent further deterioration of public safety and quality of life" by curtailing the sale of alcohol after midnight and because a liquor license can hardly be deemed a "fundamental" right, a substantive due process claim fails. See Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 366 (1996) ("In the light of the clearly evident trend of the Supreme Court to limit substantive due process rights under the Fourteenth Amendment, we believe that the denial of a property right in the context of municipal governance rarely will rise to the level of a substantive due process violation.").

Although Martell's argued in the trial court that it was entitled to attorney's fees under N.J.S.A. 10:6-2f, and preserved the claim in its notice of appeal, it has not briefed the issue. Accordingly, we deem it abandoned. 539 Absecon Blvd., L.L.C. v. Shan Enters. Ltd. P ship, 406 N.J. Super. 242, 272 n.10 (App. Div.), certif. denied, 199 N.J. 541 (2009); see also Pressler & Verniero, Current N.J. Court Rules, comment 4 on R. 2:6-2 (2015).

Because Martell's conceded that counts one through six of its complaint were mooted when the ABC director stayed enactment of Ordinance 2012-15, and we agree with Judge Grasso that its liquor license does not afford Martell's a substantive right subject to protection under the Civil Rights Act, we affirm the grant of summary judgment dismissing its complaint.


1 Martell's contends this formula, and a discount to holders of club licenses, effectively excludes virtually every other bar in the Borough, with the exception of its co-plaintiff Jenkinson's Pavilion, Inc., from the reach of proposed Ordinance 2012-16, reflecting the governing body's intent to single out the large boardwalk bars for unfair treatment.

2 Martell's acknowledges the evidence in the record of statistics from the Borough's police department indicating that over forty percent of all citations in the Borough are issued between the hours of midnight and 3:00 a.m. It contends, however, that there is no proof "that citations were issued to people who patronized Martell's or that [it] improperly or negligently served."

3 We further note that procedural due process is generally not implicated by legislative enactments because the legislative process itself provides all process due. See Kelly v. Hackensack Meadowlands Dev. Com., 172 N.J. Super. 223, 229 (App. Div.) ("[E]xercise of the legislative power need not be attended by the gamut of procedural due process safeguards which govern quasi-judicial proceedings."), certif. denied, 85 N.J. 104 (1980).

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