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NEW HORIZON INVESTMENT v. MAYOR AND MUN. COUNCIL OF BELLEVILLE

September 9, 2005.

NEW HORIZON INVESTMENT CORP. and AZAN INTERNATIONAL, INC., Plaintiffs,
v.
MAYOR AND MUNICIPAL COUNCIL OF BELLEVILLE, PLANNING BOARD OF THE TOWNSHIP OF BELLEVILLE, TOWNSHIP OF BELLEVILLE, and ESSEX COUNTY IMPROVEMENT AUTHORITY, Defendants.



The opinion of the court was delivered by: KATHARINE HAYDEN, District Judge

OPINION

Plaintiffs New Horizon Investment Corp. ("New Horizon") and Azan International, Inc. ("Azan") brought this civil rights action against the Mayor and Municipal Council of Belleville, the Planning Board of the Township of Belleville, the Township of Belleville, and the Essex County Improvement Authority (collectively "defendants") alleging that defendants perpetrated an unconstitutional taking of plaintiffs' real property. Before the Court is defendants' motion to dismiss or stay the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons that follow, defendants' motion is denied.

I. BACKGROUND All the facts are taken from the complaint and they will be deemed true for purposes of this Rule 12(b)(6) motion.

  New Horizon and Azan are New Jersey corporations. (Compl. ¶¶ 2-3.) The principals of both corporations are Lal and Kaiser Pathan, who are American citizens of Indian descent. (Compl. ¶ 4.) In 1999, New Horizon and Azan acquired two pieces of property from Essex County for investment purposes. (Compl. ¶ 33.) Specifically, New Horizon acquired 6.53 acres of land ("New Horizon property") and Azan acquired 1.38 acres of land ("Azan property"). (Compl. ¶¶ 2, 3.) These properties were formerly part of the Essex County Geriatrics Center site owned by Essex County. (Compl. ¶ 10.) Since plaintiffs acquired the properties they have been taxed as though the properties were residential. (Compl. ¶ 38.)

  Defendants Mayor and Municipal Council of the Township of Belleville (the "Town Council") are elected officials of the Township of Belleville ("Belleville"), a municipal corporation of the State of New Jersey, County of Essex. (Compl. ¶¶ 5, 7.) The Town Council enacts zoning ordinances for Belleville pursuant to New Jersey's Municipal Land Use Law of 1975 ("MLUL"). (Compl. ¶ 5.) Defendant Planning Board of the Township of Belleville (the "Planning Board") is a municipal agency as defined in the MLUL. (Compl. ¶ 6.) The Essex County Improvement Authority ("ECIA") is a governmental agency for the County of Essex. (Compl. ¶ 8.)

  Before they bought the properties, plaintiffs received a copy of the Belleville zoning map and ordinance book from Belleville officials. These documents indicated that the properties were part of the RA-2 zone permitting single-family residential use with up to eight units per acre. (Compl. ¶ 34.) Plaintiffs met with Belleville officials, including the acting township manager, the tax assessor and the secretary of planning and zoning boards, to discuss development of the properties. (Compl. ¶ 37.) Plaintiffs were encouraged to purchase the properties, were told that the Township would welcome development of the properties, and were assured that residential townhouses could be built on the properties rather. They were not advised about "open space" restrictions on the properties. (Compl. ¶ 37.)

  The zoning map and zoning ordinance book provided to plaintiffs prior to their purchase of the properties did not reference the existence of a Redevelopment Plan. (Compl. ¶ 35.) But according to the complaint, and unbeknownst to plaintiffs, in 1993 Belleville had classified a portion of the former Essex County Geriatrics Center site as an area in need of development ("Redevelopment Plan") pursuant to the New Jersey Redevelopment Law. (Compl. ¶ 13.) The Redevelopment Plan divided the redevelopment area into three parcels. (Compl. ¶ 15.) Parcel 3, which includes what is now the New Horizon and Azan properties, called for open space, passive recreation and playgrounds on the property. (Compl. ¶ 15.) The Redevelopment Plan stated that no property would be acquired by Belleville because Essex County owned the property and intended to sell parcel 1 and lease parcel 2 to the same redeveloper to be used and operated as a single development. (Compl. ¶ 16.)

  Plaintiffs point out that the Redevelopment Plan has never been implemented. (Compl. ¶ 19.) Plaintiffs maintain that Belleville has never properly amended its zoning ordinance establishing zone use classifications or bulk standards for a redevelopment zone. (Compl. ¶ 23.) And plaintiffs point out that the zoning map was not revised to depict any redevelopment zone until June 2001, eight years after the Redevelopment Plan was approved and after plaintiffs brought the properties. (Compl. ¶ 24.) The 2001 revisions to the zoning map indicated a redevelopment zone for the first time but the zoning ordinance still did not provide use classifications or bulk standards. (Compl. ¶ 24.) The amended zoning map also failed to identify any ordinances that authorized the amendment and the map failed to reflect any reference to parcel 1, 2 or 3 within the redevelopment zone. (Compl. ¶ 24.) Neither the 1993 Redevelopment Plan nor the municipal ordinance were ever filed with the Essex County Planning Board. (Compl. ¶ 25.)

  Plaintiffs maintain that starting in 1995, defendants acted in direct contravention of the 1993 Redevelopment Plan, acted as though there were no "open space" restrictions on plaintiffs' properties and recommended that the former Geriatric Center site be developed for various commercial uses. (Compl. ¶¶ 26-31.) Belleville recommended in 1995 and in 1998 that the area be used for significant future development, including an office research park. (Compl. ¶¶ 29-30.) Inconsistent with the Redevelopment Plan, in 1998, the former Geriatric Center site was subdivided into eight parcels in contemplation of the sale of the remaining seven parcels by Essex County. (Compl. ¶ 32.) Plaintiffs assert that Belleville's subdivision approval and sale without regard to the Redevelopment Plan is absolutely inconsistent with the "open space" restrictions that it now asserts.

  In 1998, plaintiffs were the successful bidders on the New Horizon and Azan properties and in 1999, they took title to the properties. Around this time, Essex County sold five other parcels of the former Geriatrics Center site to non-parties Kessler Development Corporation and Wellington Partners, L.L.C. and Rainmaker Capital, L.L.C ("Rainmaker Parties"), all of whom seek to develop these parcels. (Compl. ¶ 32.)

  Belleville has taxed the plaintiffs' properties as residential, with assessed values consistent with residential zoning and it has accepted tax payment based on the residential assessments. Plaintiffs assert this is inconsistent with properties having permitted uses limited to "open spaces". (Compl. ¶ 38.)

  On August 14, 2001, the Town Council adopted Ordinance No. 2906, amending the zoning ordinance and zoning map to create a commercial shopping center district (B-SC) consisting of portions of the former Geriatric Center site. (Compl. ¶ 42.) The new district did not include the New Horizon and Azan properties but included almost every other parcel of the former Geriatric Center site. (Compl. ¶ 42.) This new B-SC zone permitted large single-occupant retail establishments, shopping centers, malls and retail warehouse establishments, office buildings, research facilities and restaurants, and contemplated a gated community style development. (Compl. ¶ 43.)

  In response to the new zoning ordinance, a complaint in lieu of prerogative writs was filed in September 2001 by a group of Belleville citizens, captioned Citizens Organizations for Responsible Redevelopment, et al. v. Council of the Township of Belleville, et al., No. ESX-L-9243-01 (the "CORR action"). (Compl. ¶ 44.) The CORR action named as defendants the Mayor and Council, the Planning board and various parties with purported interest in the former Essex County property, including the Rainmaker Parties, New Horizon, Azan and Essex County. (Compl. ¶ 45.) The CORR action sought to invalidate the B-SC ordinance and compel Belleville to enforce the "open space" treatment contemplated by the 1993 Redevelopment Plan. (Compl. ¶ 46.)

  In 2003, plaintiffs learned that the CORR plaintiffs, the Rainmaker Parties and the Belleville defendants had been negotiating a settlement in which the Rainmaker Parties' property would be rezoned for high-density residential development, but plaintiffs' properties would be relegated to "open space." (Compl. ¶ 47.) Plaintiffs were excluded from the CORR ...


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