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Timber Properties Inc. v. Township of Chester

Decided: March 2, 1984.


Skillman, J.s.c.


[205 NJSuper Page 275] This is a Mount Laurel case. See Southern Burlington Cty. N.A.A.C.P. v. Mount Laurel Tp., 92 N.J. 158 (1983)

(" Mount Laurel II "). It follows the usual pattern. The principal plaintiff is Timber Properties, Inc. (referred to hereafter as "Timber"), a builder which proposes to construct a development that will include some housing for low and moderate income persons. Defendants are the municipality in which the proposed development would be constructed, Chester Township, as well as its governing body, its planning board and the members of those municipal agencies. The complaint contends that the municipal zoning ordinance is unconstitutional because it fails to provide a realistic opportunity for the construction of low and moderate income housing.

In addition to the usual factual allegations on which Mount Laurel claims are based, the complaint alleges that Timber filed applications for conceptual review and for preliminary site plan approval with the Planning Board and that its plans complied with the existing zoning ordinance. The complaint further alleges that for nearly a year and a half the Planning Board as well as other municipal officials strongly encouraged the proposed development. However, the proposed project was aborted, shortly after the decision in Mount Laurel II, when the governing body adopted amendments to the Chester zoning ordinance which compelled the denial of Timber's site plan application. This amendment to the zoning ordinance and the circumstances of its adoption provide the basis for a variety of non-Mount Laurel claims, which are set forth in separate counts of the complaint. Plaintiffs contend that defendants' actions deprived Timber of "vested rights" in their proposed development, violated Timber's federal civil rights for which a claim lies under the Federal Civil Rights Act, 42 U.S.C. ยง 1983, interfered with contractual relationships for which a claim may be pursued under the New Jersey Tort Claims Act, N.J.S.A. 59:1-1 et seq., and violated the New Jersey Antitrust Act, N.J.S.A. 56:9-1 et seq.

Defendants filed a motion which sought in part dismissal and/or summary judgment on these non-Mount Laurel counts.*fn1 It is concluded for the reasons set forth in this opinion that these parts of the motion should be granted in their entirety.

I -- Vested Rights

A municipality possesses continuing authority to amend its zoning ordinance and ordinarily a zoning change applies to property for which there is a pending application for approval of a particular use. Donadio v. Cunningham, 58 N.J. 309, 322-323 (1971); Morris v. Postma, 41 N.J. 354, 362 (1964); Tremarco Corp. v. Garzio, 32 N.J. 448 (1960). The reason for this rule is that any zoning amendment presumably serves "to preserve the desirable characteristics of the community through zoning", Tremarco v. Garzio, supra at 456, and the exemption of a property owner from a zoning amendment simply because an application had been filed under a prior ordinance would undermine the objectives sought to be achieved by the new ordinance. Kruvant v. Cedar Grove, 82 N.J. 435 (1980); Donadio v. Cunningham, supra. As the court observed in Sautto v. Edenboro Apartments, Inc., 69 N.J. Super. 420 (App.Div.1961):

[A] property owner interested in a large construction project must ordinarily take his chances on numerous types of incidental preliminary expenses generally incurred even before a permit is issued. Clearly, as to these, the situation of the owner may be damnum absque injuria in relation to a bona fide subsequently adopted restrictive regulation. Any other rule would severely burden municipal authorities properly concerned with legitimate zoning protection for the public at large as against the operations of land developers who naturally may be more concerned with immediate profits than with the general public welfare subserved by salutary zoning. [ Id. at 434.]

However, there are circumstances under which a landowner may acquire "vested rights" under an existing zoning ordinance and hence be exempt from the effect of a zoning change. One source of "vested rights" is a section of the Municipal Land Use Law which provides that the general terms and conditions on

which a preliminary subdivision or site plan approval has been granted shall not be changed except by an ordinance addressed to public safety or health concerns. N.J.S.A. 40:55D-49(a); see Field v. Franklin Tp. 190 N.J. Super. 326 (App.Div.1983). A second source of "vested rights" is the judicially developed doctrine of equitable estoppel. See Virginia Construction Corp. v. Fairman, 39 N.J. 61, 70 (1962).

The branch of the "vested rights" doctrine which rests upon the Municipal Land Use Law is not relied upon by Timber since it did not acquire either subdivision or site plan approval. Rather, Timber must rely upon the judicially developed doctrine of equitable estoppel.

There are only two circumstances in which the courts of this State have concluded that a municipality may be barred under principles of equitable estoppel from applying an amended zoning ordinance to a landowner. One circumstance is where a building permit or similar municipal authorization has been issued and there has been substantial reliance upon that authorization. See, e.g., Gruber v. Raritan Tp., 39 N.J. 1 (1962); Tremarco Corp. v. Garzio, supra. The second is where a trial court has entered judgment ordering municipal approval for a particular land use and there are special equities which militate against application of a subsequently adopted ordinance to bar that use. See, e.g., Kruvant v. Cedar Grove, supra; Urban Farms, Inc. v. Franklin Lakes, 179 N.J. Super. 203, 217-223 (App.Div.1981), certif. den., 87 N.J. 428 (1981).

Even in these two categories of cases, the New Jersey courts have barred municipalities from invoking newly adopted zoning ordinances to prevent proposed uses of property only in very compelling circumstances. Thus, in Gruber v. Raritan Tp., supra, informal and formal approvals were obtained for a residential development, a performance bond was filed, model homes were constructed, and curbing, sidewalks utility poles, road grading and graveling were completed, before the municipality adopted a zoning ordinance which prohibited residences

in the zone where the developer's property was located. The court held that "on elemental considerations of justice" the developer should be permitted to complete at least part of its project. Id., 39 N.J. at 19. In Tremarco Corp. v. Garzio, supra, the building inspector issued a valid building permit for the construction of a public garage and gasoline filling station and in reliance on that permit plaintiff purchased the property in question, expended money for a survey and architectural work, entered into a contract to construct the facility and had gasoline storage tanks delivered to the premises for installation, before the zoning ordinance was amended. In these circumstances, the court concluded that "the equities strongly predominate in favor of plaintiff." Id., 32 N.J. at 458 In Kruvant v. Cedar Grove, supra, a developer twice successfully challenged the validity of zoning ordinances which prevented construction of a garden apartment complex on his property. When the municipality attempted a third rezoning of the developer's property during the pendency of litigation challenging the validity of the second rezoning and in violation of a court order establishing a deadline for any rezoning, the court concluded that "the equities warrant and judicial integrity justifies" ignoring the most recent zoning amendment in determining the propriety of the developer's project. Id., 82 N.J. at 445.

In cases where such extraordinary circumstances have not been demonstrated, the New Jersey courts have reaffirmed the continuing authority of a municipality to subject all property within its jurisdiction to a zoning amendment even though individual property owners may have incurred substantial expenses in reliance upon the prior zoning ordinance. Thus, in Donadio v. Cunningham, supra, Justice Hall observed:

The paramount public interest dictates that no equity should arise in an owner's favor and that he should have no right of reliance until the municipality has, by issuing a valid permit, officially approved the project at the first level of authority. [58 N.J. at 322.]

Consistent with this restrictive view of the "vested rights" doctrine, our courts have rejected claims to exemption from

later changes in zoning ordinances based upon a site plan approval. Hill Homeowners Ass'n v. Passaic, 156 N.J. Super. 505 (App.Div.1978); a use variance, Dimitrov v. Carlson, 138 N.J. Super. 52 (App.Div.1975), certif. den. 70 N.J. 275 (1976); and a final subdivision approval, Sandler v. Springfield Tp. Bd. of Adjustment, 113 N.J. Super. 333 (App.Div.1971). While these decisions seem to leave open the possibility that municipal action short of the issuance of a building permit could encourage reliance and confer vested rights, they indicate that such a finding could be made only in an exceptional situation. In any event, there is no decision which states that vested rights can be acquired without either official municipal action or the judgment of a court.

In arguing that the "vested rights" doctrine should be applied more broadly, Timber relies primarily upon the following dictum in Urban ...

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