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DKM Residential Properties Corp. v. Township of Montgomery

January 24, 2005

DKM RESIDENTIAL PROPERTIES CORP., PLAINTIFF,
v.
THE TOWNSHIP OF MONTGOMERY AND THE CONSTRUCTION BOARD OF APPEALS OF THE TOWNSHIP OF MONTGOMERY, DEFENDANTS-APPELLANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 363 N.J. Super. 80 (2003)

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The issue in this appeal is whether the Uniform Construction Code Act, N.J.S.A. 52:27D-119 to -141 (UCC or Act), permits a municipal construction official to cite a developer for a construction code violation in respect of property that has been conveyed and for which a certificate of occupancy has issued.

DKM Residential Properties Corporation (DKM) developed and constructed the Cherry Valley Country Club (Cherry Valley) residential development in the Township of Montgomery (Township). As certificates of occupancy were obtained from the Township between 1995 and 1998, DKM sold the homes in the development and retained a possessory interest only in a few of the non-residential structures. In May 2000, the Township's construction department began receiving letters from Cherry Valley homeowners about improper installation of the stucco-like exterior finish that was applied to their homes. The homeowners maintained that the installation was not in accordance with the manufacturer's specifications and that as a result, moisture had penetrated the homes, causing decay, rotting, and mold accumulation.

On investigation, the Township's construction official determined that the installation had not complied with the manufacturer's specifications and was in violation of the New Jersey UCC. The Township official consulted a representative of the Department of Community Affairs (DCA) and was advised that the Township had the authority to bring an enforcement action against DKM. Thereafter, the Township's construction official prepared five notices of violation (NOVs) identifying sixty-two individual instances of violation, all but one of them pertaining to the residences. The NOVs set forth a timeframe for correction of the alleged defect and further contained a specific provision for the imposition of fines for the failure to make the corrections within the specified timeframe.

DKM appealed to the Township's Construction Board of Appeals (Board), challenging the NOV on several grounds, including a challenge to the Township's jurisdiction based on the fact that DKM no longer owned the properties. DKM also filed a complaint in lieu of prerogative writ 2001 against the Township and the Board, seeking to have the NOVs vacated and the Board enjoined from proceeding with a hearing. DKM moved for summary judgment, and the Board moved to dismiss the complaint for failure to exhaust administrative remedies. The Board and the Township later moved for summary judgment.

While the motions for summary judgment were pending, the Board conducted three days of hearings in the various NOVs then pending and rendered decisions concluding, among other things, that the Township had authority to issue NOVs and that the faulty installation constituted code violations. The Board ordered DKM to submit a remediation plan, subject to the consent of the involved homeowners.

Thereafter, the Law Division stayed all aspects of the Board's decision, with the exception of the requirement that DKM submit a remediation plan. In respect of the complaint, the Law Division granted summary judgment to the Township and the Board and dismissed DKM's complaint. In so doing, the court rejected DKM's argument that the Township lacked the authority under the UCC to issue an NOV to a builder once a certificate of occupancy had issued. The stay granted to DKM was vacated.

On appeal, the Appellate Division reversed the judgment below and remanded for entry of an order vacating the summary judgment entered in favor of the Township and the Board, reinstating the amended complaint, and granting summary judgment to DKM. The panel held that neither the UCC nor its regulations authorized the Township to bring an enforcement proceeding against DKM concerning property that DKM no longer owned. Rather, the court determined that the municipal enforcing agency was authorized to bring an enforcement proceeding against a builder/owner/developer only during the construction process. Among other concerns, the panel expressed concern about homeowners using the Code's regulatory enforcement process to pursue private claims, thereby unfairly shifting the cost of such actions to unaffected taxpayers.

The Supreme Court granted the Township's and the Board's petition for certification.

HELD: A municipal construction official has the authority under the Uniform Construction Code Act to cite a developer for a construction code violation in respect of property that has been conveyed and for which a certificate of occupancy has issued.

1. The UCC Act is remedial in nature, and designed to address directly matters affecting health, safety, and welfare. By its own terms, its provisions must receive liberal construction to advance its purposes. The UCC Act charges the DCA Commissioner with all powers to effectuate its purposes, including the power to enforce the UCC and related subcodes. He is assisted in that responsibility by locally appointed and State-certified municipal construction officials and subcode officials (municipal enforcing agency). (pp. 8-12)

2. Because the penalties under the UCC accomplish goals other than merely to secure immediate compliance with the Act by exerting a continuing and increasing penalty for an unabated condition, the penalty section does not evince a legislative intent to restrict penalty enforcement to actions only against the landowner in possession, and not against a violating developer who had been issued a certificate of occupancy on the property. (pp. 12-14)

3. The UCC Act and its regulations reasonably permit the issuance of an NOV and the imposition of a penalty against a developer after a certificate of occupancy has issued. (p. 14)

4. Absent any express or clearly implied limitation on the municipal enforcing agency's authority, there is no general lack of power on the part of the municipal enforcing agency to issue an NOV with an appropriate penalty to a developer notwithstanding that a certificate of occupancy may have issued. (pp. 16-17)

Judgment of the Appellate Division is REVERSED.

JUSTICES LONG, ZAZZALI, WALLACE, and RIVERA-SOTO join in JUSTICE LaVECCHIA's opinion. CHIEF JUSTICE PORITZ and ...


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