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Greenway Development Co., Inc. v. Borough of Paramus

May 15, 2000

GREENWAY DEVELOPMENT CO., INC. AND GREENWAY CORPORATION INC., INCORRECTLY IMPLEADED AS GREENWAY CORPORATION CO., INC., PLAINTIFFS-RESPONDENTS,
v.
BOROUGH OF PARAMUS, MAYOR CLIFFORD GENNARELLI, INDIVIDUALLY AND AS MAYOR AND PETER WELLS, ZONING OFFICIAL, DEFENDANTS-APPELLANTS, AND WARREN LANE ASSOCIATES, A NEW JERSEY PARTNERSHIP, ROBERT C. SUMNER, STEPHEN B. PALMER, STANLEY BEKRITSKY AND DOUGLAS HAYNES, CO-TRUSTEES OF THE EDITH MARION SUMMER TRUST AGREEMENT NO. 2, ARTHUR B. FOWLER, ARTHUR B. FOWLER, II, AND JOHN FOWLER, ALL AS SUCCESSOR VENTURE AGENTS OF PARAMUS INVESTMENT VENTURE, A JOINT VENTURE, SCHILP & CO., L.L.C., ALEXANDER SUMMER, L.L.C. AND BOROUGH OF PARAMUS PLANNING BOARD, DEFENDANTS.



The opinion of the court was delivered by: Coleman, J.

Argued February 14, 2000

On appeal from the Superior Court, Law Division, Bergen County.

The opinion of the Court was delivered by

The issue raised in this appeal is whether the notice of claim provision in the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, applies to an action for inverse condemnation. The Law Division found that compliance with the TCA was not a prerequisite to pursuing inverse condemnation claims. We agree and affirm.

I.

The relevant facts are undisputed. In March 1997, plaintiffs Greenway Development Co., Inc. and Greenway Corporation (collectively Greenway) contracted with Paramus Investment Venture to purchase approximately 2.2 acres of land located in a residential two-family zone. Consistent with the zoning plan, Greenway intended to construct six two-family homes. Prior to closing title, Greenway searched the public records and found a subdivision map, filed May 3, 1984, showing six two-family lots, and a site plan approved by the Planning Board and Borough Engineer on April 19, 1981 with revisions of March 6, 1984, showing subdivided lots for the construction of a two-family house on each lot. The tax assessor confirmed that the lots were listed separately, that a two-family home was to be developed on each lot, and that the Planning Board had approved a resolution providing for drainage based on that approved use of the property.

The property to be conveyed under the Greenway contract previously had been part of a larger parcel, known as the Atrium Property, that was located partially within a business zone and partially within a residential two-family zone. The Paramus Planning Board passed a resolution on January 29, 1982, granting a zoning variance to permit construction of a four-story office building on that portion of the land located in the business zone. Under the same resolution, the portion of the land that was located in the residential zone, including that which Greenway contracted to purchase, was to be used only as a buffer area. For reasons not revealed in the appellate record, that resolution was not made part of the subdivision approval file. Thus, after Greenway made a diligent search of the property, closed the title to the property and sought construction permits to erect two-family homes on the site, its applications were denied by the Borough of Paramus (Paramus).

Greenway instituted the present litigation in the Law Division by filing a Verified Complaint in Lieu of Prerogative Writs pursuant to Rule 4:69. An Order to Show Cause was issued on December 16, 1997. The complaint contained three counts. Count One sought to compel Paramus to issue building permits for two-family homes on the property. Count Two asserted inverse condemnation, and Count Three alleged interference with prospective economic advantage by Paramus and various municipal officials. On December 22, 1997, the trial court denied plaintiffs' request to immediately direct the issuance of the permits, and instead remanded the matter to the Paramus Planning Board for clarification of the condition in the 1982 variance resolution requiring that the "[residential] zone be used as a buffer only." On remand, the Planning Board determined, by resolution dated April 9, 1998, that it was intended that the residential portion remain undeveloped as a buffer between the office building and the surrounding residential area. Thereafter, Greenway filed an amended complaint adding the Planning Board as a defendant.

On May 5, 1998, Greenway filed a motion for summary judgment to compel Paramus to issue the requested building permits. The trial court found that prior to 1982 it was the Planning Board's intention to permit the property to be developed with two-family residential dwellings. The court explained that if Paramus and the Planning Board did not intend the site to be developed as described in the approved and filed plans, the information contained in the public record should have been corrected prior to Greenway's reliance on the public files. Accordingly, Paramus was directed to issue the requested building permits.

On November 4, 1998, Paramus and the Planning Board moved for summary judgment to dismiss the remaining two counts, which alleged inverse condemnation and interference with prospective economic advantage. Defendants argued that the order directing issuance of building permits rendered the claim for inverse condemnation moot, and the TCA's immunity for administrative actions precluded liability for interference with prospective economic advantage. Alternatively, defendants argued that Greenway had failed to establish the requisite elements of a claim for interference with prospective economic advantage. Greenway cross-moved for summary judgment.

The trial court dismissed the interference with prospective economic advantage count, finding that defendants were entitled to immunity under the TCA because of Greenway's failure to file a notice of claim, but granted Greenway's cross-motion for liability under the inverse condemnation claim because Paramus prevented Greenway from developing the property. The issues regarding the nature and extent of damages were reserved for a trial. The court found defendants had "denied plaintiffs economically viable use of their land, and interfered with [their] reasonable investment-backed expectations in that use, resulting in a regulatory taking." The court held that Greenway was therefore entitled to fair compensation for the temporary taking that occurred between the initial denial of the permits until the court order compelling their issuance. The court found defendants caused delays that were beyond "normal" and "incidental," and thus, when defendants decided not to issue the building permits despite their previous actions regarding the property, they acted at their own peril. The court held that neither defendants' subsequent actions nor the 1982 resolution could override the Planning Board's original approval of the two-family home subdivision.

In denying defendants' motion for reconsideration of whether the TCA barred the inverse condemnation claim, the trial court considered itself bound by the holding in Russo Farms, Inc. v. Vineland Bd. Of Educ., 280 N.J. Super. 320, 325 (App. Div. 1995), aff'd in part, rev'd in part, 144 N.J. 84 (1996), which held that compliance with the TCA's procedural notice requirements is not a prerequisite to pursuing inverse condemnation claims. The trial court noted that on review of Russo Farms, this Court declined to resolve the issue of whether the TCA applies to inverse condemnation actions but included a discussion of the approaches taken in other jurisdictions. Russo Farms, supra, 144 N.J. at 111-13. The trial court found persuasive "those [out-of-state] cases cited by the Court [in Russo Farms] holding that tort claims rules do not apply to inverse condemnation claims."

Defendants' motion for leave to appeal to the Appellate Division the issue of whether the TCA applies to inverse condemnation claims was denied. We granted defendants' motion for leave to appeal, 162 N.J. 658 ...


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