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United Savings Bank v. State

June 04, 2003

UNITED SAVINGS BANK, PLAINTIFF-APPELLANT,
v.
STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-3293-01.

Before Justice Wallace, Jr.,*fn1 (temporarily assigned) and Judges Ciancia and Axelrad.

The opinion of the court was delivered by: Ciancia, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 6, 2003

Plaintiff United Savings Bank (USB) appeals a summary judgment dismissing its inverse condemnation complaint against defendant, Department of Environmental Protection (DEP). The ruling was based upon a finding that USB had failed to exhaust its administrative remedies. In denying USB's subsequent motion for reconsideration the trial court also added that plaintiff's claim did not ripen because USB did not own the property when the action was brought.

On appeal, USB argues that summary judgment was inappropriate because discovery had not yet been undertaken and the"doctrine of futility" relieved USB of the need for further administrative proceedings. In regard to the latter, USB also argues that DEP failed to pass regulations thereby preventing any possible administrative amelioration in favor of USB. We find no merit in these contentions.

The present dispute goes back a number of years and centers on efforts to develop 6l.4 acres of land in Gibbsboro Township, known as the Tanglewood subdivision. From 1987 through 1991 USB loaned money to an entity named Terra-Tech Development Corp. so that the unimproved land could be developed by the construction of residential dwellings. The property, in part, consisted of wetlands that initially were under the jurisdiction of the Army Corps of Engineers (Corps). Terra-Tech had received all necessary preliminary municipal permits for the planned development prior to passage of the Freshwater Wetlands Protection Act (FWPA), N.J.S.A. 13:9B-1 to -30, effective July 1, 1988.

In 1991 Terra-Tech defaulted on its mortgage obligations and USB foreclosed. Title to the property passed to USB in 1995, the delay being caused by Terra-Tech's intervening bankruptcy proceedings. By that time Terra-Tech had received final municipal subdivision approval for a portion of the property designated as Section 1 and consisting of seventeen residential lots plus two open space lots. Indeed, homes had been built and sold.

USB sought an extension from the Corps for the prior approvals granted to Terra-Tech but was informed that as of March 1994 jurisdiction over the regulation of the property had passed to the State. See 33 U.S.C. § 1344(g); N.J.S.A. 13:9B-27. USB contacted the DEP and in an October 20, 1995 letter inquired what relief might be available now that DEP had assumed the regulatory functions. The DEP informed USB that it was no longer exempt from the FWPA and further development of the tract would require permits. See generally MCG Assocs. v. DEP, 278 N.J. Super. 108, 111-118 (App. Div. 1994). An exception to the state permit requirements existed for upland buffer areas adjoining wetlands, i.e., transition areas, because Terra-Tech had received federal exemptions prior to the passage of the FWPA. Ibid.

At some point, helonias bullatta, or"swamp pink," had been discovered on the property. This vegetation is listed on both federal and state endangered species lists. A 1986 review of the property by the Corps had failed to disclose the presence of swamp pink.

In 1996 Richard Kropp, Director of the Land Use Regulation Program within the DEP, wrote a letter to the Director of the Nature Conservancy regarding the Conservancy's"possible interest" in the Tanglewood property because it contained a significant population of swamp pink. In part, Kropp said that"[t]he project cannot proceed due to the extent of disturbance a housing project would have on the wetlands, which cover the majority of the site." A copy of the letter went to a vice-president at USB. The record reflects no response to that letter or any follow-up by DEP.

Later in 1996, USB filed an Individual Permit Application (IPA) seeking to build on four lots in Section 1. In a three page letter DEP requested additional information, including a better description of activities proposed, practicable alternatives, efforts made to minimize the impact on wetlands, and any information demonstrating extraordinary hardship if the permit were to be denied. USB provided some, but not all, of the requested information. In November 1996 USB sought to expand its IPA to include twelve acres from Section 2. The DEP responded that such an amendment required notification to certain individuals and a permit fee of $11,400"or we will not be able to process this request." The penultimate sentence in DEP's letter to USB was"[t]he Department will not review the request for amendment until these items are submitted but will issue a decision on the original application within the timeframes set forth by the Rules." USB did not pay the additional fees and the amendment was not considered.

In February 1997 the IPA for Section 1 was denied for lack of adequate documentation showing that the proposed project minimized impacts on wetlands. Under separate cover, however, Kropp wrote to USB suggesting that it seek two general permits for an upland portion of the Section 1 area under discussion. USB did so, and permits were granted for development of two houses on the Section 1 land and allowing"disturbance" of 7,300 square feet of wetlands.

In April 1997 USB sought a declaratory ruling from DEP"that there is no set of circumstances upon which the department would issue an individual wetland permit for the filling of 12 acres of wetlands and the construction of 35 homes in Section Two." DEP apparently did not respond. We note that pursuant to ...


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