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Yard Sale Treasures, L.L.C. v. Township of Berkeley

August 13, 2007


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-2112-06.

Per curiam.


Submitted August 7, 2007

Before Judges S.L. Reisner and Lyons.

Plaintiffs, Yard Sale Treasures, L.L.C. and Diane Pardun, appeal from an order dated October 26, 2006, dismissing their complaint in lieu of prerogative writs against defendant Berkeley Township. We affirm substantially for the reasons stated in a written opinion issued by Judge Oles on October 13, 2006.


The facts and procedural history are set forth in detail in Judge Oles' opinion and need not be repeated here. In brief, Pardun and her partner Michael Novembre wished to open a restaurant and bar in Berkeley Township. Toward that end, they spent $385,000 to buy a pocket liquor license and commenced a search for an appropriate location. During the search, Novembre repeatedly consulted with the township zoning officer, Susan Steinhauser, to be sure that any property he was considering was in an area zoned for restaurants and bars. According to Novembre, he also had an attorney advising him on the project. Novembre finally located an existing restaurant which he and Pardun wished to buy. Steinhauser assured him that a restaurant and bar would be a permitted use in that location. On the strength of her assurances, and the subsequent issuance of a zoning permit, plaintiffs bought the business and spent $75,000 renovating it.

However, shortly before the restaurant and bar was to open, the Township attorney sent them a letter advising that the premises were in the Neighborhood Business Zone, where restaurants or bars were not permitted and, while there was a question whether the restaurant might be a grandfathered non-conforming use, the bar clearly was not; hence the Township would not issue a certificate of occupancy. Perhaps because of the urgent need to open the business, plaintiffs filed suit against the Township rather than applying to the local zoning board for a declaration as to whether the proposed use was permitted in the zone or grandfathered as a prior non-conforming use. After suit was filed, the Township conceded that the restaurant was a prior non-conforming use and allowed plaintiffs to open the restaurant without the bar.

At a hearing before Judge Oles, Steinhauser testified that she gave Novembre her opinion without looking at the zoning map, based on her assumption that because there were several other restaurant/bars in the area and because the existing premises itself was a restaurant, the zoning permitted such uses. She did not contend that her interpretation of the zoning ordinance was debatable but rather admitted that she was in error and that the zoning permit should not have been issued. Judge Oles held that the zoning ordinance did not permit restaurants or bars in the Neighborhood Business Zone and that, because the zoning permit had been issued in clear violation of the zoning ordinance, the Township was not equitably estopped from revoking it.


On this appeal, plaintiffs once again contend that the Township is equitably estopped from revoking the zoning permit. The parties do not disagree on the applicable legal principles concerning equitable estoppel. Both sides agree that under certain circumstances, a municipality may be estopped from revoking a zoning permit, where the owner has applied for the permit in good faith and has acted in reliance upon its issuance. See Bonaventure Int'l, Inc. v. Borough of Spring Lake, 350 N.J. Super. 420, 435-36 (App. Div. 2002). The parties, however, disagree on the application of the final prerequisite for application of estoppel in cases where a permit has been issued in error:

There is a carefully prescribed dichotomy between instances where equitable estoppel may and may not be applied against a municipality. The dichotomy is between an act which is utterly beyond the jurisdiction of the municipality and an act which involves an irregular exercise of a basic power possessed by the municipality. The former is ultra vires in the primary sense and void, but the latter is ultra vires only in a secondary sense, which would not preclude application of the doctrine of estoppel in the interest of equity and essential justice. [Bridge v. Neptune Twp. Zoning Bd. of Adjustment, 233 N.J. Super. 587, 597 (App. Div. 1989).]

This factor has been described as requiring consideration of whether the issuance was in clear violation of the zoning ordinance or whether it was based on a colorable, even if mistaken, construction of the ordinance:

The requirement we would add . . . is the necessity for the appearance of an issue of construction of the zoning ordinance or statute, which, although ultimately not too debatable, yet was, when the permit was issued, sufficiently substantial to render doubtful a charge that the administrative official acted without any reasonable basis or that the owner proceeded without good faith. [Jesse A. Howland & Sons, Inc. v. Borough of Freehold, 143 N.J. Super. 484, 489 (App. Div.), certif. denied, 72 N.J. 466 (1976).] Plaintiffs contend that the zoning ordinance is at least ambiguous as to whether restaurants and bars are permitted in the Neighborhood Business Zone and therefore the zoning officer's initial view that they were permitted was at least debatable. See ibid. The Township contends that Section 35-3 of the Berkeley Township Land Development Ordinances provides that those uses not specifically permitted in a zone are prohibited, and that the Neighborhood Business Zone section of the ordinance, Section 35-106.1, does not list restaurants or bars as permitted uses. On the other hand, the section does specifically permit the sale ...

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