AB MONMOUTH, L.L.C. v. TOWNSHIP OF WALL PLANNING BOARD

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

A-1629-15T3

AB MONMOUTH, L.L.C.,

Plaintiff-Respondent,

v.

TOWNSHIP OF WALL PLANNING BOARD,

Defendant-Appellant,

and

CLAIR W. FLINN, VALERIE K. FLINN,

ROBERT C. MCGIRR, R. REUEL STANLEY,

KEVIN SHULMAN, GINA SHULMAN,

JOSEPH BUCKELEW, JOHN R. O'BRIEN,

G. GERARD BARNETT, MARJORIE P. BARNETT,

JOHN MORRONGIELLO, SUSAN MORRONGIELLO,

ROSEMARIE LAROCA, JAMES DAY,

KATHLEEN DAY, JOSEPH C. ROSELLE,

ANITA ROSELLE, HENRY DABROWSKI,

IRENE W. DABROWSKI, ROBERT GROSSMAN,

GALE GROSSMAN, D. KASUN ASSOCIATES,

ROBERT A. SHEKITKA, EDA SHEKITKA,

JOHN CUTILLO, PRUDENCE M. CUTILLO,

CARMELO CONTRINO AND SUSAN CONTRINO,

Defendants/Intervenors-Appellants.

Argued May 31, 2016 Decided October 6, 2016

Before Judges Fasciale and Nugent.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1204-15.

John J. Jackson argued the cause for appellant (King, Kitrick, Jackson & McWeeney, attorneys; Mr. Jackson and Kimberly Bennett, on the brief).

Roger J. McLaughlin argued the cause for intervenors-appellants (McLaughlin, Stauffer & Shaklee, P.C., attorneys; Mr. McLaughlin, of counsel and on the briefs; Susan L. Solda De Simone, on the briefs).

Jack Plackter argued the cause for respondent (Fox Rothschild, L.L.P., attorneys; Mr. Plackter, of counsel and on the brief; Nathan Buchter, on the brief).

PER CURIAM

On leave granted in these consolidated actions, defendant Township of Wall Planning Board (the Board) in No. A-1099-15, and intervenors Clair W. Flinn, Valerie K. Flinn, Robert C. McGirr, R. Reuel Stanley, Kevin Shulman, Gina Shulman, Joseph Buckelew, John R. O'Brien, G. Gerard Barnett, Marjorie P. Barnett, John Morrongiello, Susan Morrongiello, Rosemarie Laroca, James Day, Kathleen Day, Joseph C. Roselle, Anita Roselle, Henry Dabrowski, Irene W. Dabrowski, Robert Grossman, Gale Grossman, D. Kasun Associates, Robert A. Shekitka, Eda Shekitka, John Cutillo, Prudence M. Cutillo, Carmelo Contrino, and Susan Contrino (the intervenors) in No. A-1629-15, appeal from an October 26, 2015 Law Division, Special Civil Part order remanding the matter to the Wall Township Planning Board for final site-plan approval of plaintiff AB Monmouth, LLC's (AB Monmouth) application to develop a 199-room extended stay hotel facility. For the reasons that follow, we reverse.

This action involves a proposed development on land that is a common element of The Monmouth Condominium in Wall Township. To provide a context for the issue on appeal, it is necessary to review the background of the condominium's development. The parties do not dispute the background facts.

On June 30, 2003, the Board approved the original developer's application to build "sixteen four story age restricted multi-family dwellings containing six condominium units in each dwelling" on a parcel of land consisting of approximately twenty-five acres (the Property). Each unit was to be approximately 4000 square feet in size. The proposed development also included two non-residential buildings, a clubhouse and a guardhouse.1 On October 26, 2005, the Condominium Master Deed was made, establishing the condominium form of ownership for the Property and naming the development "The Monmouth Condominium" (the Condominium). The Master Deed was recorded on December 1, 2005.

The Master Deed states "The Monmouth Condominium Association, Inc., . . . has been established as the condominium association to have the responsibility for the administration, operation and management of the Condominium, . . ." and provides that "all Owners of Units in the Condominium will automatically be Members of the Association, and subject to the Master Deed, the Certificate of Incorporation and By-Laws of the Association . . . ." The Master Deed expressly prohibits partitioning of the common elements

6.03 No Partition. Subject to the provisions of this Master Deed, the Certificate of Incorporation, the By-Laws and the New Jersey Condominium Act, the Common Elements shall remain undivided and no Unit Owner(s) shall bring any action for partition or division thereof. In addition, the undivided percentage interest in the Common Elements shall not be separated from the Unit to which it appertains and shall be deemed conveyed or encumbered with the Unit even if such interest is not expressly mentioned or described in the conveyance or other instrument.

The Master Deed also addresses in section 16.03 how the condominium form of ownership can be terminated

1603 Termination. Despite anything to the contrary herein, an amendment, deed of revocation or other document shall be effective to terminate the Condominium form of ownership upon the written approval of eighty (80%) percent in interest of all non Sponsor Unit Owners and the written approval of the Sponsor for so long as it holds one (1) Unit for sale in the ordinary course of business.

The original developer built forty-eight of the proposed ninety-six units, but was unable to build the other forty-eight units. In 2009, AB Monmouth, a subsidiary of Amboy Bank, acquired the Property from the original developer by accepting a deed in lieu of foreclosure.

On September 8, 2014, AB Monmouth filed a development application (the application) with the Board, seeking preliminary and final major site plan and conditional use approval to construct an extended-stay hotel facility, consisting of two buildings containing a total of 199 rooms (the hotel project). AB Monmouth proposed to build the hotel project on the part of the Property that remained vacant as the result of the original developer failing to complete the condominium development.2 When AB Monmouth filed its application with the Board, it had not received authority from the Association to make the application, had not attempted to partition the Condominium common elements, and had not attempted to terminate the condominium form of ownership of the Property.

The Township Planner initially determined AB Monmouth's application was incomplete because, among other things, it did not include "an ownership status certification by the applicant." AB Monmouth submitted additional information, and the Township Planner responded, in part: "[o]ne additional issue that must be clarified prior to a certification of completeness is the filing jurisdiction of the applicant. Please provide appropriate verification that AB Monmouth holds sole ownership of the subject property or Association minutes indicating that, by a majority vote, the Association consents to the application filing."

Following the exchange of additional correspondence, counsel for AB Monmouth wrote to the Board's solicitor and asserted AB Monmouth was a developer within the meaning of the Municipal Land Use Law (MLUL) (N.J.S.A. 40:55D-1 to -163), and therefore had standing to submit the application, because AB Monmouth had a proprietary interest in the land, owned a majority of the condominium units, and owned a majority of the interests in the common elements. Ten days later, the Township Planner certified the application as complete and scheduled a hearing before the Board.

Prior to the hearing date, the Township Planner informed AB Monmouth that as a result of the 2005 zoning amendments the Property had become a legal non-conforming use and its integration with another use required a use variance, which had to be heard by the zoning board. Additionally, the Township Planner said the application would require evidence of approval from non-sponsor condominium owners. The certificate of completion was revoked and the application deemed incomplete.

AB Monmouth's attorney responded in a strongly worded letter, asserting the revocation of the certificate of completion was invalid, and under the MLUL, the application would be deemed approved if not timely acted upon. The Board placed the application back on its meeting agenda. During the February 9, 2015 meeting, after an extended discussion, in a seven-to-one vote, the Board declined to hear the application for three reasons: it did not have jurisdiction to hear the application because the application required a use variance, which came under the jurisdiction of the zoning board; the administrative officer had directed the matter to the zoning board and an appeal from that decision had to be made to the zoning board; and, there was "a substantial question of whether the [a]pplicant has the ownership right to bring this application before the Board."

AB Monmouth filed an action in lieu of prerogative writs challenging the Board's decision on various grounds. After the unit owners who are parties to this appeal intervened, AB Monmouth filed a notice of motion for "Jurisdictional Determination Approval" seeking an order that its application "is by-right and that no variance is required from the Township of Wall Zoning Board with respect to the Application. In addition, the by-right Application is approved or, in the alternative, [the Board] has jurisdiction to and must decide, the site plan and conditional use Application." The Board and the intervenors opposed the motion, but the court granted it.

In an opinion delivered from the bench on October 26, 2015, the court concluded AB Monmouth had standing to make the development application to the Board. Equating the issue of standing with an interested party, the court stated that "[a]n interested party is defined as any person whose right to use, acquire, enjoy property is or may be affected, or whose interests may be violated, denied or infringed." Noting the issue of standing "is to be liberally approached and where the question of standing is at least debatable, the action will be permitted to proceed if resolution of the issues raised is in the public interest," the court concluded AB Monmouth had standing because it was a partial owner, having acquired this interest "via deed in lieu of Sheriff's [s]ale." The court further concluded "resolution of the issues presented is in the best interest of the public and all parties."

The court filed an order on the same day, remanding the matter "to the [Board] for final site-plan approval within [forty-five] days of the entry of this order." We granted the Board's and intervenors' motions for leave to file interlocutory appeals and consolidated the actions.

On appeal, the intervenors assert the motion judge "overlooked the fact that the portion of the property upon which [AB Monmouth] sought approval to construct an extended [-] stay hotel remains a part of the condominium property in which all unit owners hold an undivided interest." The intervenors argue that the part of the Property that is the subject of AB Monmouth's development application has never been removed or separated from the entire condominium project. According to the intervenors, without "written consent from 80% of the non-sponsor unit owners, which [AB Monmouth] does not have, [AB Monmouth] has no legal authority, ability or standing to seek approval to build an extended[-]stay hotel on the unbuilt section of the Condominium property." The intervenors also argue the MLUL should not be interpreted to provide AB Monmouth with standing that contravenes The Monmouth Condominium's Master Deed as well as the Condominium Act (N.J.S.A. 46:8B-1 to -38).

The Board joins the intervenors' arguments. The Board also argues that its rejection of AB Monmouth's application based on standing was an appropriate discretionary determination that should not have been reversed; the MLUL definition of "Developer" need not be construed to allow a tenant-in-common the right to apply for a development application without consent of the other co-tenant; and the trial court's order should be reversed in any event, because the court erroneously required the Board to approve AB Monmouth's application.

AB Monmouth argues its majority and financial interests in the Monmouth Condominium Property, as well as its legal title to the land that is the subject of its application, confers standing under the MLUL to file the application. The intervenors reply that the cases relied upon by AB Monmouth are distinguishable based on the facts of the pending action, and they reiterate the provisions of the Condominium Act cannot be overlooked when determining whether AB Monmouth is a "developer" within the meaning of the MLUL.

Our courts accord "wide latitude . . . to a municipal planning board in the exercise of its delegated discretion." Ten Stary Dom P'ship v. Mauro, 216 N.J. 16, 33 (2013). "A board's decisions are presumptively valid, and a court may not substitute its own judgment for that of the board unless there has been a clear abuse of discretion by the board." Ibid. A party challenging a planning board's action has the burden of demonstrating the board acted arbitrarily, capriciously, or unreasonably. Cell S. of N.J., Inc. v. Zoning Bd. of Adjustment of W. Windsor Twp., 172 N.J. 75, 81 (2002).

Nonetheless, "[w]e are ordinarily not bound by an agency's determination on a question of law." Advance at Branchburg II, L.L.C. v. Twp. of Branchburg Bd. of Adjustment, 433 N.J. Super. 247, 252 (App. Div. 2013) (citing In re Distrib. of Liquid Assets, 168 N.J. 1, 11 (2001)). Nor do we owe any deference to a Law Division judge's legal conclusions. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Here, the facts are undisputed. Accordingly, the question whether AB Monmouth had standing as a developer is a question of law.

"Standing" can mean different things in different contexts. For example, standing may refer to a plaintiff's ability to initiate and maintain an action before the court. Stubaus v. Whitman, 339 N.J. Super. 38, 47 (App. Div. 2001), certif. denied, 171 N.J. 442 (2002). In that context, if a plaintiff does not have sufficient legal standing, a court will not hear the matter. Ibid. "New Jersey courts generally have set a fairly low threshold for standing, and have afforded litigants the benefits of liberal interpretations of the standing requirements." Spinnaker Condo. Corp. v. Zoning Bd. of Sea Isle City, 357 N.J. Super. 105, 110-11 (App. Div.) (citing Triffin v. Somerset Valley Bank, 343 N.J. Super. 73, 81 (App. Div. 2001)), certif. denied, 176 N.J. 280 (2003).

Standing to bring a development application is not coextensive with standing to bring an action in court. The MLUL requires and the parties do not dispute that one must be a "developer" to bring a development application before a board. See, e.g., N.J.S.A. 40:55D-3 ("'Applicant' means a developer submitting an application for development"); N.J.S.A. 40:55D-46, "Procedure for preliminary site plan approval" ("requir[ing] that the developer submit to the administrative officer a site plan and such other information as is reasonably necessary to make an informed decision. . . ." (emphasis added)); N.J.S.A. 40:55D-48, "Procedure for preliminary major subdivision approval" ("An ordinance requiring subdivision approval by the planning board shall require that the developer submit to the administrative officer a plat and such other information as is reasonably necessary to make an informed decision. . . ." (emphasis added)).

The term "developer" is defined by N.J.S.A. 40:55D-4 to mean "the legal or beneficial owner or owners of a lot or of any land proposed to be included in a proposed development, including the holder of an option or contract to purchase, or other person having an enforceable proprietary interest in such land." We conclude AB Monmouth was not a developer.

AB Monmouth owns condominium units, developed and undeveloped. A condominium unit need not include improvements to land, and "may exist under the [Condominium] Act, even if it does not yet have an actual use. A unit is defined as part of property 'designed or intended for any type of independent use.'" High Point at Lakeview Condo. Ass'n v. Twp. of Lakewood, 442 N.J. Super. 123, 135 (App. Div. 2015) (quoting N.J.S.A. 46:8B-3(o)). "Each unit shall constitute a separate parcel of real property which may be dealt with by the owner thereof in the same manner as is otherwise permitted by law for any other parcel of real property." N.J.S.A. 46:8B-4.

In contrast, a unit owner is not the sole owner of the land on which a particular unit is constructed. Under the Condominium Act, "the land described in the master deed" is a "[c]ommon element." N.J.S.A. 46:8B-3. Each condominium unit is assigned an undivided interest in the common elements, and "[t]he common elements shall remain undivided and shall not be the object of an action for partition or division." N.J.S.A. 46:8B-6.

The right of any unit owner to use the common elements shall be a right in common with all other unit owners (except to the extent that the master deed provides for limited common elements) to use such common elements in accordance with the reasonable purposes for which they are intended without encroaching upon the lawful rights of the other unit owners. Ibid.

A unit owners' proportionate undivided interest in a condominium's common elements cannot be partitioned. Thus, in High Point, we concluded that a municipality's tax foreclosure judgment on undeveloped condominium units did not result in the municipality obtaining fee simple ownership of the undeveloped parcel of land. High Point, supra, 442 N.J. Super. at 137. Rather, the municipality obtained title "to the phantom units, which remain integrated with the entire tract as described in the master deed." Id. at 142.

From these principles, we conclude AB Monmouth is not a developer within the meaning of N.J.S.A. 40:55D-4, that is, "the legal or beneficial owner or owners of a lot or of any land proposed to be included in a proposed development, including the holder of an option or contract to purchase, or other person having an enforceable proprietary interest in such land." AB Monmouth is not "the legal or beneficial owner" of "a lot or any land" to be included in its proposed development. Rather, "the owners" of the land to be included in the proposed development are all of the condominium unit owners, each unit owner having an indivisible interest in all the common elements, which expressly include "the land described in the master deed." N.J.S.A. 46:8B-3(d)(i). The unit owners, not any individual unit owner or group of owners, would be the developers under N.J.S.A. 40:55D-4.

Nor is AB Monmouth the holder of an option or contract to purchase, or a person having an enforceable proprietary interest in the land proposed for development. Although it can construct the undeveloped units it owns, which "may be dealt with by the owner . . . in the same manner as is otherwise permitted by law for any other parcel of real property," N.J.S.A. 46:8B-4, a unit owner cannot sell, buy, mortgage, partition, subdivide, or sever land that constitutes a common element of a condominium. In short, a condominium owner has only those rights defined by the Condominium Act and the condominium documents, including the Master Deed. Here, filing a development application for a multi-unit hotel is authorized by neither the Condominium Act nor the condominium documents.

Our decision is consistent with policy considerations underlying both the Condominium Act and the MLUL: it maintains the integrity of the condominium form of ownership and protects all unit owners in a condominium; and it avoids having members of planning and zoning boards, who invest considerable time and effort in discharging their responsibilities, conduct lengthy hearings over many nights to evaluate a development project that cannot be developed due to the disapproval of the owners of the land to be developed.

For the foregoing reasons, we vacate the trial court's order.

Reversed.

1 The Board later granted the original developer's application for amended preliminary and final major site plan approval.

2 In 2003, when the original developer had received approval to develop the condominiums, the Property was located in an OP-10 zone, which permitted such developments as conditional uses. Wall Township amended its zoning ordinance in 2005. Among other things, the amendment eliminated age-restricted residential units as permitted conditional uses in the OP-10 zone and permitted hotels as conditional uses in the zone.