On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-6706- 97 and L-5687-00.
Before Judges King, Cuff and Wecker.
The opinion of the court was delivered by: Cuff, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This appeal involves an on-going dispute between the owner of a restaurant located in a residential neighborhood and owners of neighboring homes. Over the years, the scope of operations has expanded and intensified without benefit of any variances or site plan review. We review an order which equitably estops the Borough from issuing a cease and desist order to the restaurant, a nonconforming use in a residential zone, but which also imposes conditions on the restaurant's operation. With the exception of a modification of the conditions, we affirm.
The following facts were developed during eight days of testimony before the Planning Board.*fn2 Plaintiff Bonaventure International, Inc. (Bonaventure) is the owner of a 96-seat restaurant known as The Sandpiper Restaurant (The Sandpiper) located in Spring Lake, Monmouth County. The restaurant is open for breakfast, lunch and dinner and is also available for a variety of private functions, such as weddings, christenings and showers. The operators of the restaurant also provide off-premises catering.
The Sandpiper is located one-half block from the oceanfront in the midst of a residential neighborhood. Defendants Brennan, Kappy, Nazarian and Saboy reside next to, across the street from, or two houses away from the restaurant.*fn3
It is undisputed that the restaurant and the Atlantic Hotel in which it is located were conforming uses until 1975 when the area was rezoned to allow only residential uses. In fact, the homes occupied by defendants Kappy and Saboy were erected on the site of the former Monmouth Hotel. The record developed before the Planning Board reveals that in 1975, the owners of the Atlantic Hotel served meals to the occupants of the hotel, usually no more than ten. No meals were served to the public. Furthermore, from 1970 until 1978, the area in which the meals were served was leased to the operator of a nursery school in the off-season, September to May.
In 1982, the son of the owner of the hotel, opened the restaurant to the public. The mercantile license application filed in 1982 stated that the restaurant had 40 seats. The testimony before the Planning Board established that the owner/operator utilized only the eastern half of the ground floor for the restaurant. Defendant Saboy testified that when the restaurant initially opened to the public in 1982, he asked the zoning officer whether it was permitted to serve the public. He was informed that the hotel/restaurant was grandfathered.
Between 1982 and 1985, the restaurant gradually expanded from 40 to 60 seats. In December 1986, the hotel/restaurant was sold to KTI Realty, Inc. (KTI). Prior to acquiring the property, Brooke Tarabour, a KTI partner, met with Sylvester Carroll, the Zoning Officer. She was informed that the fire code would allow a 90-seat restaurant. Tarabour also met with the building inspector who, according to her, raised no zoning concerns. In June 1987, after renovating the kitchen, Tarabour filed an Application for a Retail Food Establishment License which stated that only dinner would be served in the 88-seat restaurant. In 1987, the restaurant occupied the east and west sides of the ground floor of the hotel.
In 1987, KTI also applied for a variance to expand the restaurant at the site. KTI sought to add a deck to the entrance and allow outdoor seating; it also sought to slightly expand the hotel accommodations. It did not seek leave to expand the indoor seating. Some of the defendants objected and the Board of Adjustment denied the application. The resolution adopted by the Board of Adjustment acknowledged that the use was nonconforming and that it contained a 96-seat restaurant.
In 1988, KTI filed another application for variances to make improvements to the site, including the installation of a swimming pool. Once again, defendants and others opposed the application and the Board of Adjustment denied relief. The resolution adopted by the Board of Adjustment referred to the use as nonconforming and recited that the restaurant contained 96 seats. KTI appealed the denial. The litigation was eventually settled; the resolution adopted by the Board of Adjustment memorializing the settlement referred to the restaurant as a nonconforming use with 96 seats.
Between 1989 and 1991, the property was sold and converted to a condominium. The hotel became one unit; the restaurant was a second unit. As part of the condominium conversion, the driveway and the limited off-street parking which served the site were designated a common element of the hotel. In 1991, Bonaventure acquired only the restaurant. The restaurant is barred by the condominium agreement from parking cars or receiving deliveries on- site. When Bonaventure commenced operation of the restaurant in 1992, it not only offered à la carte dining in the 96-seat restaurant but also began to accept bookings for events such as weddings, showers and christenings which occupied all or a substantial portion of the premises. It also started to offer off- premises catering.
In 1994, Bonaventure acquired a liquor license and sought to transfer the license to The Sandpiper. In the face of considerable opposition from neighbors, including defendants, the application was denied. The resolution denying the transfer acknowledged the nonconforming nature of the 96-seat restaurant.
Based on information developed during their opposition to the liquor license transfer application, defendants wrote to the Zoning Officer and requested the issuance of a cease and desist order until The Sandpiper obtained a use variance. In their January 24, 1997 letter, defendants related that the area in which The Sandpiper is located was a nursery school when the zoning ordinance was amended in 1975. The Borough Attorney responded on February 7, 1997, denying their request and citing the accessory use and entire controversy doctrines. Defendants renewed their request to the Mayor and Council in a letter dated May 22, 1997. On July 9, 1997, the Zoning Officer responded that the owners of the hotel and restaurant had never abandoned the restaurant operation because they operated a restaurant during each summer season. Therefore, he opined there was no need for the current owners of the restaurant to apply for a variance.
Defendants then filed an application with the Planning Board to appeal the decision of the Zoning Officer. They requested the Planning Board to compel the Zoning Officer to issue a cease and desist order. On December 19, 1997, Bonaventure filed a verified complaint and order to show cause in the Superior Court, Law Division. In its complaint, Bonaventure claimed that the proceeding before the Planning Board was barred due to defendants' lack of standing and lack of jurisdiction. Bonaventure also invoked various equitable doctrines, including entire controversy, equitable estoppel, and laches.
In a letter opinion dated January 13, 1998, Judge D'Amico denied without prejudice Bonaventure's application to proceed in a summary fashion to enjoin the individual defendants' appeal before the Planning Board. The parties and the court agreed that the matter would proceed before the Planning Board regarding the jurisdictional issues contained in the complaint. The court retained jurisdiction.
After hearing arguments from both parties, the Planning Board by resolution dated April 8, 1998, denied the jurisdictional challenges raised by plaintiff, and allowed the matter to proceed on the merits of the application. The matter returned to Judge D'Amico, who affirmed the Planning Board's April 8, 1998 rulings that defendants had standing to bring the appeal, the appeal was timely, and neither the entire controversy doctrine nor res judicata barred the application. The court retained jurisdiction of the issue of equitable estoppel and remanded for development of a factual record before the Planning Board.
The Planning Board held hearings on May 12, July 14, August 11, September 8, December 8, 1999, January 12, May 10, July 12, and October 11, 2000. During these hearings, defendants testified concerning not only the history of the Atlantic Hotel/The Sandpiper but also the impact on the neighborhood from the intensification of the use, particularly following 1991. They testified that there were few, if any, banquets at the restaurant during KTI's ownership and operation. Tarabour confirmed these observations. She testified that KTI operated The Sandpiper almost exclusively as an à la carte restaurant. She stated that ...