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Square Brighton Corp., Inc. v. City of Atlantic City

February 22, 1996

SQUARE BRIGHTON CORPORATION, INC., A NEW JERSEY CORPORATION, AND FLOYD JAMES, A TAXPAYER OF ATLANTIC CITY, PLAINTIFFS-APPELLANTS,
v.
THE CITY OF ATLANTIC CITY, A MUNICIPAL CORPORATION AND BODY POLITIC OF THE STATE OF NEW JERSEY, GREATE BAY HOTEL AND CASINO, INC. T/A "SANDS HOTEL & CASINO", A NEW JERSEY CORPORATION, CYNWYD INVESTMENTS, AND BOARDWALK REGENCY CORPORATION, A NEW JERSEY CORPORATION, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Atlantic County.

Approved for Publication February 22, 1996. As Corrected April 2, 1996.

Before Judges Michels, Villanueva and Kimmelman. The opinion of the court was delivered by Michels, A.j.a.d.

The opinion of the court was delivered by: Michels

The opinion of the court was delivered by MICHELS, P.J.A.D.

Plaintiffs Square Brighton Corporation, Inc. (Square) and Floyd James (James) appeal from a summary judgment of the Law Division entered in favor of defendants The City of Atlantic City (Atlantic City), Greate Bay Hotel and Casino, Inc., t/a "Sands Hotel & Casino" (Sands), CYNWYD Investments (CYNWYD) and Boardwalk Regency Corporation (Boardwalk) that declared Atlantic City Ordinance No. 61 of 1994 valid and enforceable.

The facts giving rise to this appeal are not disputed. For approximately 10 years, until July 1992, Sands leased from Square a sixteen-foot strip of land (the strip), which was used as part of a public thoroughfare, commonly referred to as Pop Lloyd Boulevard running between Dr. Martin Luther King, Jr., Boulevard and Indiana Avenue in Atlantic City, New Jersey. CYNWYD owns the fee interest in the site upon which the strip is located. Boardwalk leased this site from CYNWYD for ninety-nine years and subleased the site to Square. Sands, which had exclusive possession and control of the strip pursuant to license agreements, used it as a bus lane, a bus depot and to access its loading dock.

Sometime in 1991, rather than renewing the lease with Square, Sands instituted suit against Atlantic City to compel it to acquire the strip. The suit was settled. Under the terms of the Stipulation of Settlement executed by Atlantic City and Sands, Atlantic City agreed to "promptly, without delay and as expeditiously as possible" acquire the strip. The Stipulation of Settlement provided that "Sands shall pay one-hundred percent of the fair market value 'compensation' (as defined by N.J.S.A. 20:3-2) plus all associated costs to be paid by the City to acquire the Street." Additionally, the Stipulation of Settlement provided that "Sands shall pay one-hundred percent of all sums, if any, regardless of how described, adjudicated by the court in this matter to be due to [Square] from the City for the use of the Street between August 1, 1992 and the time it is acquired by the City."

In August 1994, the Atlantic City Municipal Council adopted Ordinance No. 61, which was approved by the Mayor in September 1994. Ordinance No. 61, in pertinent part, reads:

SECTION 1. The City of Atlantic City (the "City") shall promptly, without delay and expeditiously take any and all actions necessary, appropriate and legally required to acquire, for public right-of-way purposes, the southerly 16-foot strip of what is now commonly referred to as Pop Lloyd Boulevard, running between Dr. Martin Luther King, Jr., Boulevard and Indiana Avenue (the "Street"), having dimensions of approximately 16 feet by 350.75 feet and shown as the diagonally stripped area on Exhibit "B" to this Ordinance. The City shall comply with all applicable laws, including without limitation the provisions of N.J.S.A. 40A:12-1, et seq. (the Local Lands and Buildings Law) and N.J.S.A. 20:3-1, et seq. (the Eminent Domain Act). If the City is unable to acquire the Street by consent in an arm's length bona fide transaction, then it shall acquire the Street by eminent domain. Greate Bay Hotel and Casino Inc., t/a Sands Hotel & Casino ("Sands") is to pay one-hundred percent of the fair market value "compensation" and one hundred percent of all sums, if any, regardless of how described, due to Square Brighton Corporation ("Square") from the City for the use of the Street between August 1, 1992, and the time it is acquired by the City, all as more particularly set forth in the Stipulation attached as Exhibit "A".

SECTION 3. Pursuant to the terms of the Stipulation, all funds for the acquisition and all funds due Square from the City for use of the Street shall be provided by Sands and therefore no certification of funds is required.

In September 1994, Square and James, a taxpayer and an employee of Square, instituted this action by a Complaint in Lieu of Prerogative Writs against Atlantic City, Sands, CYNWYD and Boardwalk, seeking (1) a declaration that Ordinance No. 61 and the Stipulation of Settlement between Atlantic City and Sands were null and void; and (2) an injunction enjoining Atlantic City from taking any steps to implement Ordinance No. 61 or the Stipulation of Settlement. Plaintiffs also sought compensatory damages, interest, costs and counsel fees. Plaintiffs claimed that (1) Ordinance No. 61 violated N.J.S.A. 40A:4-57, a provision of the Local Budget Law, because the ordinance purported to incur public liability, and to enter into a contract which involved an expenditure of money, for which no appropriation had been made; and (2) the Stipulation of Settlement independently violated the Local Budget Law because it involved expenditures of money for which no appropriation had been made.

After issue was joined, the trial court on cross-motions for summary judgment, held that Ordinance No. 61 did not violate the Local Budget Law and was valid and enforceable. Judge Weinstein in the Law Division, in part, reasoned:

There are two reasons why I believe this statute has not been violated: Firstly, by its terms, realistic terms, and the direction of this Court in its ruling in the prior case that the acquisition was to take place by March of 1995 did not direct, did not require, did not anticipate payments by the City during fiscal 1994, and so, if it is necessary, the budgetary process is open for inclusion of any expenditure before an expenditure of funds in 1995 will take place. Moreover, the fact that the stipulation, the settlement agreement incorporated in the ordinance, imposed the responsibility on the part of the Sands to pay could have allowed the City in my opinion to avoid having to go through the process that [counsel] has indicated would be followed here by having the Sands pay directly to the owner of the parcel the amount of the condemnation award or the agreement, agreed price, if there is an agreement for acquisition, and to pay directly any other costs that may be incurred. The agreement and the ordinance does not require reimbursement by the Sands, it requires payment by the Sands of all attendant costs of acquiring the property.

Under those circumstances either or both of the reasons I have given, I am satisfied that in this limited context of the acquisition of this property as part of a settlement of a lawsuit, all costs of which [are] to be borne by a taxpayer individually and not the City or the public, is not violative of the ordinance -- of the statute, and, ...


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