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Bruce Paparone, Inc. v. State

April 26, 2007

BRUCE PAPARONE, INC., EDWARD J. STURGIS AND SUSAN J. STURGIS, HUSBAND AND WIFE, PLAINTIFFS-RESPONDENTS,
v.
THE STATE OF NEW JERSEY, AGRICULTURE DEVELOPMENT COMMITTEE, DEFENDANT-APPELLANT, AND THE GLOUCESTER COUNTY AGRICULTURE DEVELOPMENT BOARD, DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Gloucester County, No. L-1661-05.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued February 28, 2007

Before Judges Wefing, Parker and Yannotti.

The State of New Jersey, through the State Agriculture Development Committee ("SADC" or "the Committee"), appeals from orders entered by the trial court granting plaintiffs' motion for summary judgment and denying its motion. Having reviewed the record in light of the contentions advanced on appeal, we reverse the grant of summary judgment to plaintiffs and remand the matter for further proceedings.

Plaintiffs Edward Sturgis and his wife Susan ("Sturgis") own a parcel of land approximately one hundred forty-one acres in size in South Harrison Township in Gloucester County which was used for agricultural purposes. In December 1997, pursuant to the Agriculture Retention and Development Act, N.J.S.A. 4:1C-11 to -48, Sturgis signed a Farmland Preservation Agreement with the Gloucester County Agriculture Development Board under which he agreed to retain that land in agricultural production for eight years.

The Agreement Sturgis signed was a standard one, prepared by the SADC to conform with the statutory requirements. Thus, it contained a provision that if Sturgis wished to sell the land during the eight-year period the preservation agreement was in effect, he would provide written notice to the Committee that he had executed a contract of sale and provide the Committee with a description of the contract's terms and conditions and a copy of the contract of sale. Upon such notification, the Committee would have the "first right and option to purchase the land upon substantially similar terms and conditions." N.J.S.A. 4:1C-39(a). The Agreement also provided that in the event Sturgis intended to subdivide the land, he would advise the Committee "prior to initiating such action." N.J.A.C. 2:76-3.12.

The Agreement was filed with the municipal tax assessor and recorded with the county clerk and constituted a restrictive covenant. N.J.S.A. 4:1C-24(a)(3). The Agreement was recorded with the Gloucester County Clerk on December 5, 1997, and would, by its terms, expire on December 5, 2005, unless extended by the parties. As a result of the execution of this Agreement, the Sturgis property was improved through the installation of an irrigation system paid for by a soil and water conservation grant of $25,114.46.

On November 25, 2003, approximately two years before the Farmland Preservation Agreement expired, Sturgis signed a contract to sell approximately one hundred twenty acres of the land to plaintiff Bruce Paparone, Inc. Paparone intended to remove the property from agricultural use and develop the property by constructing seventy-two single-family homes. The contract between Sturgis and Paparone provided that if Paparone obtained approval for seventy-two building lots, the purchase price would be $2,880,000, but the price would be adjusted upwards or downwards at the rate of $40,000 per approved building lot to reflect the actual number of lots for which approvals were eventually obtained. The contract further provided that in the event less than forty-nine building lots were approved, either party could cancel the contract; Paparone, however, had the right to waive this condition and complete the transaction even if less than forty-nine building lots were ultimately approved.

Sturgis did not immediately notify the Committee of his contract with Paparone, who proceeded with the task of seeking the various land use approvals that were required for such a large development. Indeed Sturgis did not do so until March 1, 2005, when Edward Sturgis, in response to an inquiry from the Committee, provided it with a copy of the contract he and his wife had signed some two years earlier. Further, despite the contractual obligation contained within the Farmland Preservation Agreement to notify the Committee before proceeding with a subdivision application, the March 1, 2005, letter did not advise SADC that the matter was then pending before the South Harrison Township Planning/Zoning Board. In fact, the matter was heard by the Board in April and May 2005, and in July 2005 the Board passed a resolution granting preliminary major subdivision approval for seventy-two building lots.

By letter dated April 6, 2005, before completion of the hearings before the Board, the Committee notified Sturgis that it intended to exercise its first right and option to purchase the property. Its letter noted that under N.J.S.A. 4:1C-39, it had until June 5, 2005, to submit an offer.

By letter dated June 2, 2005, the SADC conveyed its offer. Its letter stated in pertinent part:

The SADC is prepared to make you an offer of $19,000 per acre for the fee simple acquisition of the above property. If the certified fee simple fair market value is greater than $19,000 an acre, the SADC will pay the certified fair market value. If the certified value is less than ...


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