September 28, 2007; as amended October 5, 2007
ELIZABETH BOARD OF EDUCATION, PLAINTIFF-APPELLANT,
THE CITY OF ELIZABETH, J. CHRISTIAN BOLLWAGE, MAYOR, THE CITY COUNCIL OF ELIZABETH, TRUMBULL STREET BUSINESS CENTER, L.L.C., LUIS RODRIGUEZ, AND VIVIAN RODRIGUEZ, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Union County, UNN-L-0435-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 10, 2007
Before Judges Weissbard, S.L. Reisner and Gilroy.
Plaintiff Elizabeth Board of Education (the Board) appeals from a summary judgment dismissing its complaint in lieu of prerogative writs against defendants City of Elizabeth (the City), the City's Mayor, J. Christian Bollwage, the City Council (Council), Trumbull Street Business Center, L.L.C., (TSBC), Luis Rodriguez and Vivian Rodriguez (jointly Rodriguez). We affirm.
Elizabeth High School was constructed in 1977. In April 2006, the school's student enrollment was 5300, the highest of any high school in New Jersey, in a building designed to hold approximately 3000 students. In order to solve the congestion in the high school, the Board decided to build a separate vocational-technical school for the 900 students enrolled in those programs. By 1998, the Board was working to identify a suitable location for this new vocational-technical high school.
On July 28, 1998, the Council passed a resolution authorizing the City's Planning Board to investigate "if the area adjacent to the Kapkowski Road Redevelopment area is an area in need of redevelopment, and, if so, further authorize[d] the development of such a redevelopment plan." By the middle of 1999, the Board determined that this same property owned by New Jersey Transit (NJT), was an ideal location for the proposed new school. Accordingly, the Board sought to obtain the land pursuant to its power of condemnation, N.J.S.A. 18A:20-2. Following NJT's successful challenge to the condemnation attempt, the Board appealed.
On September 21, 2000, while the Board's appeal was pending, the City's Planning Board passed a resolution "designate[ing] . . . the Marine Waterfront - Trumbull Street Redevelopment Area . . . as a 'redevelopment area'" and recommended that the Council also designate the area as such. On December 7, 2000, the Council resolved to adopt the redevelopment plan recommended by the Planning Board.
Thereafter, the City published a Request for Proposals of the redevelopment of the area. These proposals were due to the City's Director of Neighborhood Services on February 5, 2001. On January 23, 2001, the Council passed Ordinance No. 3285, "An Ordinance To Approve And Adopt The Trumbull Street Redevelopment Plan Pursuant To The Planning Board Recommendation."
When the February 5, 2001 proposal due date arrived, only one proposal had been submitted. The lone proposal was submitted by VILU Construction, Inc. (VILU) of Elizabeth, the principals of which were defendants Luis and Vivian Rodriguez.
The proposal provided for the building of "a state-of-the-art, . . . light industrial business complex at 801-871 Livingston Street."
On May 25, 2001, we published our decision in the Board's condemnation suit, Elizabeth Board of Education v. New Jersey Transit Corp., 342 N.J. Super. 262 (App. Div. 2001). First, we quoted the New Jersey Public Transportation Act of 1979 in identifying NJT as "an instrumentality of the State exercising public and essential governmental functions." N.J.S.A. 27:25-4. We then ruled that despite the Board's desire to obtain the land for an educational purpose, "there is no express, or necessarily implied, statutory authority which permits a board of education to condemn land owned by the State." Id. at 264. As in the instant case, the Board argued there was a "'compelling' need" for its requested relief "in light of Abbott [V]"*fn1 Id. at 270.
We responded, however, that such an "argument must be directed to the Legislature, not to the courts." Ibid.
On September 25, 2001, the Council passed a resolution designating VILU "as the redeveloper for the Trumbull Street Redevelopment Project." On the same day, the Council passed Ordinance No. 3336, "An Ordinance To Authorize The Acquisition Of 801-871 Livingston Street, Elizabeth, New Jersey, Lot 1123, Block 8, From New Jersey Transit Corporation, At A Purchase Price Of $1,095,000.00, Less A Credit Of $575,000 For Environmental Cleanup, For A Net Amount Of $520,000." This area was "located within the Trumbull Street Redevelopment Area" that VILU was to redevelop. On September 27, 2001, Mayor Bollwage signed this ordinance.
On December 4, 2001, the City entered into a sale contract with NJT for the purchase of the property at 801-871 Livingston Street. This contract provided for the $575,000 credit for environmental cleanup, resulting in a sale price of $520,000.
Meanwhile, the Board began to search for alternate properties. In the summer of 2002, it investigated "the Johnson Machinery site" but abandoned its hopes for this location in March 2003 after due diligence revealed physical conditions rendering it unsuitable for use as a school.
In June 2003, the Board focused on "the ELG Metals site." Despite the Board's claims that it pursued this site "with the knowledge and approval of the City and Mayor Bollwage," the Board allegedly learned months later, after beginning due diligence, "that Mayor Bollwage had decided not to permit a school to be built there."
In August 2004, the Mayor allegedly "agreed to change the vocational high school site to 1000 Jefferson Avenue" and the Board "expended significant time and money to investigate whether this site would be appropriate." Less than a year later, by May 2005, the City notified the Board that only a pre-kindergarten through eighth grade school, and not a high school, could be built at that site.
After dismissing another site as unsafe because of "[t]he necessity for environmental remediation" there, the Board determined that only the NJT property it formerly sought, and an adjacent lot, known as "the Gunite site," would be suitable for the new high school.*fn2 Thus, in October 2005, the Board identified these two locations as its desired site for the vocational-technical high school and a new physical education complex.
The Board claims that "[a]t all times prior to the institution of this lawsuit the City has refused to entertain negotiations with the [Board] to sell the [NJT] site." Despite alleged statements by the Mayor that the City would identify appropriate locations for the new school, the Board claimed that as of its April 27, 2006, Statement of Material Facts, it had "not received any communications on this issue" nor had anyone at the State's Department of Education been contacted by a representative of the City.
On June 3, 2005, Pablo Muñoz, the Acting Superintendent of Schools sent a letter on behalf of the Board to John F. Spencer, Chief Executive Officer of the New Jersey Schools Construction Corporation (the SCC). This letter listed the Board's planned priorities, as developed by its School Properties Committee at a June 1, 2005, meeting. Listed as the eighth item among this list of fifteen was "New Vocational High School." Later in the letter, Muñoz reminded Spencer that "[a]s you are aware, the district needs all the facilities on the above list. We believe that restrictions on the number and types of projects -- or limiting construction and renovation to priority projects -- in the district is inconsistent with the Supreme Court's mandates . . . ."
The Board claims that Muñoz met with the Mayor on December 8, 2005. The Board asserts that at this meeting, Muñoz expressed the Board's willingness to build the school in an alternate location if the Mayor would "help to identify a suitable location" and that the Mayor agreed "to look for land and said that a particular parcel of land might soon be available." Four days later, on December 12, 2005, the Mayor allegedly called Muñoz and rescinded his offer to help find a new school location.
On December 13, 2005, the Council passed a resolution to amend its September 25, 2001, resolution and "change the name of the Redeveloper from Vilu [sic] Construction to Trumbull Street Business Center, LLC." Defendants Luis and Vivian Rodriguez were the principals of defendant TSBC, as well as VILU.
On December 27, 2005, the Council passed Ordinance No. 3774, "An Ordinance To Authorize The Sale Of City Owned Property Located At 801-871 Livingston Street, Tax Account No. 8-1123, To Trumbull Street Business Center, LLC. [sic], For Redevelopment At A Purchase Price Of $520,000." The ordinance was approved by the Mayor on December 28, 2005.
On January 11, 2006, ARD Appraisal Company completed an Appraisal Report of 801-871 Livingston Street for the Board. ARD appraised the market value of the property "as is" at $5,125,000, as of the date it was issued. ARD's valuation did not include any potential environmental clean-up costs, which could have substantially decreased the estimated market value and might delay the sale of the property.
On January 31, 2006, the Board filed an order to show cause and verified complaint in lieu of prerogative writs to contest Ordinance No. 3774. Before discussing the litigation in more detail, we pause to outline the subsequent history of the planned development of the disputed land.
On February 17, 2006, some two weeks after the Board filed its complaint, the attorney for TSBC and Rodriguez, wrote to the City's attorney, stating that though his "client has expended considerable sums of money and devoted substantial time and effort to achieve a redevelopment of the property with a use that would be highly beneficial to the citizens of Elizabeth," because of the Board's suit, TSBC would "not contest the determination of the City to rescind its designation as the Redeveloper of the entire site and the determination to rescind the authorization to sell the former New Jersey Transit property to it."
On February 28, 2006, the Council passed a resolution rescinding its resolutions of September 25, 2001, and December 13, 2005, designating VILU and TSBC as redevelopers for the disputed land. On March 14, 2006, the Council passed Ordinance No. 3801, "An Ordinance To Rescind Ordinance No. 3774 Of The City Of Elizabeth, Adopted December 27, 2005 . . . ." The ordinance rescinded the sale of the property to TSBC and its designation as redeveloper of the property. The Mayor approved this ordinance on March 15, 2006.
On April 6, 2006, Gerald T. Murphy, Chief Operating Officer of the School Construction Corporation (SCC), wrote to Rafael Fajardo, the Board's president. He stated that in July 2005 the SCC prioritized the projects it would complete with its remaining resources, and that the resulting "plan does not include the Vocational High School" requested by Elizabeth. He concluded that "since the SCC does not currently have the funding to build this school or acquire this land, we are not interested in acquiring any land for this project."
On May 23, 2006, the Council passed a resolution to implement "a Green Acres Grant for an Indoor/Outdoor Recreation Complex to be constructed" on the disputed land.
Having described the history of the property, we return to the history of the lawsuit. The Board's initial complaint contained ten counts. The first nine counts all sought injunctive relief "preliminarily and permanently restraining and enjoining any sale or purchase of the Subject Property . . . to [TSBC, the Rodriguezes] . . . and/or any entity owned/operated, or controlled by the Rodriguez defendants," as well as compensatory damages (including attorneys' fees) and "an Order compelling expedited discovery." The Board sought this relief because the City allegedly contracted to sell the property to the Mayor's political supporters for a reduced value, thus wasting municipal assets and damaging the Board through the wrongful actions of the governmental defendants (Count One). Additionally, the actions of the City, the Mayor and the Council would deprive the Board, the students, and the taxpayers of Elizabeth of a "suitable location" for a "much-needed school, together with a physical education complex," thus damaging the Board through the wrongful actions of Rodriguez (Count Two). The complaint further asserted that the sale agreement for the alleged reduced price was "an abuse of the governing body's discretionary authority, in that the actions presumably taken were in all regards arbitrary and capricious, unreasonable, and otherwise wrongful" (Count Three).
Counts Four and Eight sought the same relief on constitutional grounds, alleging a violation of Article VIII, section 4, paragraph 1 of the New Jersey Constitution. Count Four alleged that defendants interfered with the constitutional obligation of the State Legislature and Board to provide adequate facilities for public schools. Count Eight alleged that the City, the Mayor and the Council had exceeded the limits of their respective powers under the State Constitution.
Counts Five and Six also sought the same relief, based on alleged violations of the Local Lands and Building Law, N.J.S.A. 40A:12-1 to -38. The complaint alleged that the sale to TSBC violated N.J.S.A. 40A:12-13 et seq. because the land was "needed for public use," namely the new high school (Count Five) and violated N.J.S.A. 40A:12-21 because the land was "needed for county or municipal purposes" and because TSBC was not an entity authorized under the statute to pay only nominal consideration for the land (Count Six).
Count Seven sought the same relief, alleging that the governmental defendants' actions were fundamentally unfair and constituted "oppression, harassment and/or egregious deprivation." Count Nine sought this relief for alleged abuse of discretion and violation of public trust by the governmental defendants in "engaging in self-dealing, favoritism, or any conduct that is contrary to the best interests of the public." Finally, Count Ten sought an order for expedited discovery.
On February 1, 2006, Judge Barisonek held a hearing on the Board's order to show cause application. At the hearing, Judge Barisonek announced that he would "sign the Order to Show Cause and enter temporary restraints, which restraints were agreed to by the parties" in a pre-hearing conference in chambers. These restraints barred the City "from in any way, shape or form selling, transferring or conveying the subject property" before the order to show cause was to be heard on May 8, 2006. In addition, Judge Barisonek granted the Board "leave to file . . . an amended complaint . . . pursuant to the redevelopment statute under Title 40A" and could include "whatever amendment they deem appropriate to the pleadings." The judge specified that no interim discovery was permitted, because he saw no "need for discovery at this point." The judge continued, that "depending on where the case goes I'll decide that issue either on formal motion for discovery or on the return date of the Order to Show Cause." He ordered the attorney for the City and Council to provide the ordinances and public documents for the redevelopment plan to the attorney for the Board.
On March 3, 2006, the Board filed a first amended complaint. In Count Three, entitled "arbitrary and capricious action/injunctive relief," the Board emphasized that the actions of the Mayor and the Council "were arbitrary, capricious, unreasonable, and wrongful, regardless of whether or not they were undertaken in furtherance of a redevelopment plan under N.J.S.A. 40A:12A-1 et seq." Count Five was altered from alleging a "violation of local lands and building law" to seeking declaratory judgment under N.J.S.A. 2A:16-53 et seq. declaring that (i) Ordinance No. 3774 [authorizing sale of the land to TSBC] is null and void, (ii) the actions of the defendants were wrongful, arbitrary, and capricious and (iii) the City, [Mayor], and Council are estopped from seeking a price higher than $520,000, that which was offered to defendant [TSBC] in any negotiations for the sale of the property to the [Board].
This additional relief was also added to Counts Six, Seven, Eight and Ten of the amended complaint.
Count Six of the original complaint (alleging a violation of N.J.S.A. 40A:12-21) was deleted from the amended complaint, and was replaced by the original Count Seven (fundamentally unfair governmental action).*fn3 Accordingly, the original Counts Eight (violation of constitutional rights) and Nine (abuse of discretion/violation of public trust) became Counts Seven and Eight in the amended complaint. The new Count Seven was amended to explicitly state that the Board's "right to acquire, possess, and protect property under Article 1, paragraph 1" of the State Constitution had been violated by defendants' actions, while the new Count Eight was altered to specifically state the fiduciary relationship of the governmental defendants to their electorate.
Finally, two new claims were added in the amended complaint. The first (Count Nine) sought "an Order compelling the City to convey the Subject Property to the plaintiff for use as a new high school at a sale price not to exceed the proposed sale price to Defendant Trumbull," based on the assertion that "[a]ny determination by the municipal defendants to use the Subject Property for anything other than a new Vocational-Technical high school is arbitrary and capricious and should not be permitted." The second new claim (Count Ten) sought an order "compelling the City and Bollwage to negotiate in good faith with the plaintiff for the sale of the Subject Property" for the price offered to TSBC based on the fiduciary responsibilities of elected officials.
On March 22, 2006, the Mayor, joined by the City and Council, filed a motion to dismiss the Board's complaint, alleging a failure to state a cause of action under R. 4:6-2. Defendants also argued that any dispute regarding "the City's decision to designate Trumbull Street Business Center, LLC as the redeveloper of the property has been rendered moot." On March 29, 2006, TSBC and Rodriguez requested additional time to respond to the order to show cause. If this request was not granted, they would "join in and adopt arguments advanced by [the City's attorney.]"
On April 28, 2006, the Board filed its opposition to these motions as well as a Statement of Material Facts.*fn4 The Board's brief claimed that the constitutional issue of the importance of public education entitled it to "its day in court," that its public policy claims should not be dismissed, that allegations against Rodriguez were "well founded" and defendants had failed to meet the burden to justify summary judgment, and denied that voiding the sale of the property to TSBC rendered the case moot.
On May 2, 2006, the City and Council filed a reply brief, claiming that the case was moot, that consequently there was no public interest for the court to address, that there was no legal basis for the remaining claims in the first amended complaint and, as a result, discovery and a trial were not necessary. The SCC's April 6, 2006 letter to the Board was attached as an exhibit to demonstrate the SCC's lack of interest in acquiring the property.
On May 4, 2006, Judge Barisonek heard oral argument on the motions for dismissal. The judge indicated that "[a]nswering papers were submitted by the plaintiff indicating that this really needs to be considered as a summary judgment motion, not a motion under 4:6-2, because it's outside the four corners of the pleadings." None of the parties objected to the court's converting the dismissal motions to motions for summary judgment.
At the hearing the Board conceded that Counts One, Two and Three were now moot as a result of the Council ordinance rescinding the sale to TSBC. Nevertheless, the Board argued that the arbitrary and capricious actions of the governmental defendants in failing to engage in an arms-length transaction with Rodriguez led to the Board sustaining damages which it sought to remedy in the suit, and thus were not moot.
The Board insisted that the City, as a creature of the State, has a constitutional "obligation with respect to education." When the court questioned the Board's failure to "attack the designation of the [property for] redevelopment" the Board responded that the defendants had "unclean hands and induced the Board of Education to look at other pieces of property improperly." The Board further asserted that the "land should be transferred for purposes of satisfying the Constitutional [education] mandate, without the Board of Education, a public body having to pay what would otherwise be fair market value."
Finally, the Board reminded the court that "[t]he second cause of action that is embodied in all of the remaining counts, Judge, is the issue of damages." On that issue, the Board's argument was that the remaining counts do assert a cognizable cause of action that survived the reversal of the ordinance naming Mr. Rodriguez or his entity as a developer and reversing the sale; that those counts survive not only on the basis of Abbott but also on the basis of a damage claim that we were induced to not take action.
Specifically, the Board's attorney stated that for Counts Six (fundamentally unfair governmental action), Seven (violation of constitutional rights) and Eight*fn5 (abuse of discretion/violation of public trust), the Board relied on the tort of misrepresentation, resulting in "[t]he loss of the ability to obtain funding from the S.C.C., [and] the possibility we may have to acquire land at greater costs than what's being offered to people who have political and financial dealings with the Mayor."
Judge Barisonek questioned why the case was before him as a constitutional matter rather than as a condemnation case filed by the Board: "Why does it become a whole new area of law under an Abbott issue if it can simply be addressed through a condemnation action and a balancing of the uses?" He noted that "three separate areas of law" were being raised in the case: "eminent domain, redevelopment and the Abbott decisions." He characterized the Board's argument as requesting that he at least have a factual hearing as to why these rights of the Board of Education to acquire this particular piece of property is paramount to anything the City may want to do. They're still asking for restraints, not just against Rodriguez [sic], but selling it to anybody . . . . Abbott doesn't hold that. There's discussion about the plaintiff's rights under Abbott, whether it should be extended to give them relief that the plaintiff wants.
The Mayor's attorney responded by repeating the City's argument that the Board has "a vehicle to come to court . . . . That's condemnation" yet they had not chosen that route. Thus, he argued, it was inappropriate for the court to weigh competing public interests in this action in lieu of prerogative writs.
Judge Barisonek declined to issue a decision in the matter, but instead requested supplemental briefs from the Board and governmental defendants. These briefs were to address whether the Board was estopped from raising its constitutional claims and challenge to the City's public use of the property given its failure to challenge the redevelopment determination or file for condemnation. The underlying question was whether or not the plaintiff under any other theory has a right to attack that public use at this time. . . . That becomes significant in terms of if there is an estoppel as to whether or not summary judgment should be granted, because if they would be barred, the case is over, whether it be under the Abbott decision or under the redevelopment statute. So unless the City is willing to concede the issue [that the Board still has the right to come in on a public use issue], I want this briefed.
On June 9, 2006, the Board filed its supplemental brief. First, it argued that estoppel should not bar its claims because the defendants showed no reliance on any action or inaction by the Board. Second, the Board asserted that the forty-five day statute of limitations for actions in lieu of prerogative writs was not violated since its January 31, 2006 complaint challenged a December 27, 2005, ordinance, not the January 23, 2001, designation of the property as a redevelopment area, and was thus filed within the required time period. In the alternative, the Board argued that the forty-five day limit should be expanded because of the constitutional issues involved in its claims. Next, the Board argued that if any statute of limitations should run in this action, it should be N.J.S.A. 2A:14-1.2, the ten-year limitations applicable for actions brought by the State. Lastly, the Board insisted that issues of fact precluded the granting of summary judgment to defendants, and specifically focused on the abandonment of the redevelopment plan by the governmental defendants.
The City and the Council filed a joint supplemental brief again urging that the Board's suit be dismissed with prejudice because it was time-barred and lacked legal merit, and because the balancing of public uses sought by the Board was not at issue before the court. First, they argued that the case was ripe for summary judgment as no material facts were in dispute. Second, they argued that the Board's suit was a challenge to the City's January 23, 2001 redevelopment designation of the property, and thus was filed well beyond the forty-five day requirement of Rule 4:69-69(a) for actions in lieu of prerogative writs. Third, they argued for the first time that the Board had failed to satisfy the notice requirements of the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, in its claims against the governmental defendants. Fourth, they claimed that the Board's failure to challenge the property's redevelopment designation estopped this action in lieu of prerogative writs. Finally, they asserted for the first time that the Mayor lacked the statutory authority to sell or even offer to sell City-owned land, rebutting the Board's claims of reliance on misrepresentations by the Mayor.
On June 12, 2006, the Board's counsel sent a letter to Judge Barisonek, claiming that "[t]he City's [supplemental] brief improperly attempts to raise, for the first time, issues not raised in any of the defendants' motions to dismiss [and] . . . go beyond the issue Your Honor directed the parties to address in the supplemental brief." The Board objected to defendants' claims that the Board had failed to satisfy the notice requirement of the TCA, and that the Mayor lacked the statutory authority to sell or offer City-owned property. The Board thus requested that these issues and new exhibits be stricken from the City's submission, or alternately that the Board be allowed to respond to the new arguments.
On August 22, 2006, the final hearing on defendants' motions to dismiss was held before Judge Barisonek. The Board first clarified that the action "is not a challenge to the redevelopment plan, per se. . . . Our action at this time, pursuant to Abbott . . . is for transfer of the property. . . ." and sought a hearing in which the court would "balanc[e] . . . all the equities and public interests" for the property's use. In response, the court asked,
Where does Abbott say the court has to do a balancing between public uses as opposed to, as an example, . . . the Board instituting a condemnation action and . . . then get into the question as to where there is a paramount public use issue for the Board of Education as opposed to the area being in need of redevelopment?
The court did not dispute the Board's attorney's assertion that the Abbott decisions, specifically Abbott IV, supra, 149 N.J. 145, and Abbott V, supra, 153 N.J. 480, say "that constitutionally a student is entitled to go to a school in a physically adequate facility," but questioned whether such statements were mandates for the court to decide which public use was paramount. The Board responded that "the City of Elizabeth is [a] . . . subdivision of the State and that they have the same obligations . . . ." The Board argued that Abbott and the constitutional mandate regarding education should be read as requiring municipal action. Anticipating the City's response that the area had already been designated for redevelopment, the Board asserted that the court was required "to weigh the constitutional rights of the children of Elizabeth against whatever the redevelopment needs are that the City advances . . . ."
The Board's counsel also relied on case law explaining why the forty-five day time limit for actions in lieu of prerogative writs should not apply in this case because it involved a constitutional right. Greenway Dev. Co. Inc. v. Borough of Paramus, 163 N.J. 546, 558 (2000).
Finally, the Board argued that the notice provisions of the TCA should not bar its tort claims "because the Tort Claims Act doesn't apply to a damages claim asserted by a public agency." The Board cited Livingston Board of Education v. U.S. Gypsum Co., 249 N.J. Super. 498 (App. Div. 1991), in support of this claim, but the judge noted that this reliance was misplaced as it addressed a statute of limitations rather than a notice provision, like that in the TCA. The Mayor's attorney agreed with the court's explanation, adding that "[t]here is no statute cited by the plaintiffs in this case that exempts them from the [N.J.S.A.] 59:8 [notice] provision" of the TCA.
The attorney for the City and Council responded that "[t]here is simply no obligation for a municipality to transfer property to a Board of Education, and respectfully this court has no jurisdiction to do it." Rather he insisted that the Board's proper course to obtain the property was to "have condemned it and that's where you get the balancing of public uses and whether there is a prior public use or not, not in this alleged constitutional action."
Judge Barisonek delivered an oral opinion covering seventy-one pages of transcript. He began by outlining the history of the dispute over the property. He then held that
[s]ince the Rodriguezes have withdrawn from the project and city council has passed an ordinance which rescinded the designation of [TSBC] as redeveloper, the subject matter of that portion of the litigation is no longer in existence. On the basis of judicial economy and restraint, because there is no immediacy of the controversy, counts one to three should be dismissed as moot.
Judge Barisonek next turned to Counts Nine (compelling sale for a public purpose) and Ten (compelling good faith negotiations). He characterized the Board's argument in Count Nine as alleging "that the use of the property for the education of the children of Elizabeth is a paramount use of the property . . . [and] that any other use would be arbitrary and capricious and failure to convey the property to the [Board] represents a gross abuse of duty." He dismissed this count because the Board should have "take[n] affirmative action . . . with respect to the redevelopment statute and failed to do so. . . . Plaintiff failed to object to the declaration of blight under the redevelopment statute. And in fact they would be barred from doing that at this time." Judge Barisonek stated that in Count Ten, the Board requested the court compel the Mayor and Council to negotiate with the Board in good faith for the sale of the property, or alternately for the appointment of a trustee to moderate these negotiations. He also dismissed this count because there is no law that compels the City to sell the property or negotiate with the [Board]. The plaintiff . . . has failed to establish the necessity of a trustee . . . or for any type of special master as in the Abbott IV decision . . . . Since there is no case law that compels a sale to the [Board], there is no need for a trustee to negotiate any sale.
After reviewing the requirements of the Local Redevelopment and Housing Law (LRHL), N.J.S.A. 40A:12A-1 to -63, and stating that municipal actions under this law were presumed valid upon review, Judge Barisonek found that the trial "court does not have the authority to compel the City and City Council to convey the property to the [Board]."
Judge Barisonek then turned to Counts Four through Eight, alleging violations of constitutional rights (Four, Seven and Eight) and fundamentally unfair governmental action (Six), and seeking declaratory judgment (Five). In response to defendants' argument that absent a showing of a constitutional violation, the Board's suit was barred by the forty-five day filing requirement for an action in lieu of prerogative writs, R. 4:69-6(a), (c), the court stated that the Board "is not actually attacking, however, the [January 23, 2001] blight determination [as defendants claimed] but rather was attacking the [December 27, 2005] sale of the property to Rodriguez [sic] as being arbitrary and capricious." After considering that the Supreme Court has defined as qualifying for enlargement of the forty-five day period the "interest of justice" under Rule 4:69-6(c), the court ruled that "plaintiff satisfies the constitutional exception to relax the time period because it asserted the New Jersey Constitution and Abbott decisions mandate that the City sell or give the property to it."
The judge then addressed the Board's assertion "that Abbott gives [the trial court] the power to direct the municipality to provide lands for the construction of a needed school." He found no support for this claim in Abbott, adding "that there is nothing in that decision that says that the Board can force the City to sell or give it the subject property and I find there's nothing to show that Abbott should be expanded in this regard."
Judge Barisonek acknowledged language in Abbott IV, supra, stating "there can be no responsible dissent from the position that the Court has the constitutional obligation to do what it can to effectuate and vindicate the constitutional rights of the school children in the poverty-stricken urban districts" 149 N.J. at 202. Nevertheless, the judge refused to accept the Board's argument that the obligation of the court and the State extended to local municipalities because he saw no evidence that the Legislature had acted to impose a duty on municipalities "to reserve lands or work with the board to sell or transfer property for school facilities" even if the redevelopment plan had been abandoned, as the Board claimed. Similarly, the court could not compel good faith in negotiations because the Board failed to show that the "defendant even has to negotiate with the plaintiff in the first place." In so ruling, the judge stated that the Board "fails to acknowledge that there are certain lawful mechanisms [challenging the redevelopment designation, applying to the SCC for funding, and filing an action for condemnation] which it chose not to pursue to acquire the subject property that could have protected these same constitutional rights."
Because the Board failed to institute a condemnation action where the property's paramount public use could be determined, Judge Barisonek found that he did "not have to determine whether the redevelopment or school construction is a public use of a paramount nature." He continued that "plaintiff has not pointed to any express or implied Legislative act that gives the board the power to force a sale of the property owned by the City and already devoted to a public use," and noted that the SCC had informed the Board that it lacked funding to pursue the project and thus was not interested in acquiring the land. "Since the [SCC] on its own determined not to fund the vocational high school project, how could any alleged misrepresentations by the city's representatives have caused [the Board] to lose funding for the project? There never was going to be funds available to begin with."
While noting the Board's claim that the Mayor had engaged in a pattern of misdirecting the Board, the judge stated that the Board failed to recognize that "it has and had recommendations that did not involve the Mayor. As an example: Condemnation." "There is no way . . . that the board as a matter of law could show that it reasonably relied on misrepresentations by the mayor to its detriment when it had other means of securing property . . . ." Judge Barisonek found that the Board's claimed reliance on the Mayor's oral promises failed as a matter of law to meet the requirements for misrepresentation since "it is not the mayor who has authority to sell or transfer city owned property, nor is it the mayor who has authority under the redevelopment act but rather it is the city council." Thus, "any reliance on what the Mayor said . . . was misplaced since he does not have the authority to transfer or sell or offer to transfer or sell city owned property. That power . . . lies with the City Council" (citing N.J.S.A. 40:69A-40, codifying mayoral powers and N.J.S.A. 40A:12-13, codifying the procedure for the transfer of municipally-owned property and requiring the passage of a resolution or ordinance authorizing such a sale). No such resolution or ordinance authorizing sale of the property to the Board was ever passed by the Council.
The court declined to accept defendants' argument that the Board should be estopped from bringing the action because it had failed to challenge the blight determination and redevelopment designation for the property, reasoning that "there is no indication that the City relied in good faith upon the plaintiff's failure to challenge the blight determination and therefore that the City was led to change its position for the worse." Thus, he found that the City "did not rely in any good faith to its detriment on the board's failure to come forward and challenge any blight determination" and the application of the estoppel doctrine was not warranted.
Judge Barisonek then turned to the Board's requests that the governmental defendants be estopped from seeking a price greater than that offered to Rodriguez in its sale of the property to the Board. He rejected this argument for two reasons. First, he noted that that "the board has no authority to compel the City to convey the property" and even if such a conveyance could be required, "the plaintiff cites no case law preventing the City and the Mayor from seeking a price higher than" that offered to Rodriguez.
Finally, the judge turned to the tort claims and defendants' argument that these claims were barred by the Board's failure to comply with the notice provisions of the TCA. He declined to strike the defendants' argument as the Board requested, because he found the Board had raised the issue in its own supplemental brief by citing to Velez v. City of Jersey City, 180 N.J. 284 (2004). He then found that the plaintiff never filed notice of a claim within ninety days of "the dates of the alleged torts[:] June, 2003, May, 2004, August of 2004 and December of 2005 . . . nor did it move for late filing of notice pursuant to N.J.S.A. 59:8-9." While Judge Barisonek agreed with the Board that it "is a state entity as contemplated in [N.J.S.A.] 2A:14-1.2," providing for a ten-year statute of limitations, he did not agree that this statute should trump the notice provision of the TCA. He concluded that he could not "see how [the ten-year statute of limitations in N.J.S.A. 2A:14- 1.2] alleviates the necessity for filing [a] notice provision" as this resolution "would totally frustrate the Legislative purpose of the [TCA] notice provision of [N.J.S.A.] 59:8-8." Thus, he found that the Board was time-barred from filing its tort claims as a result of its failure to comply with the notice provision of N.J.S.A. 59:8-8.
The judge concluded that the Board's proper remedy was not the instant lawsuit, as "the Abbott decision should not be extended [and] there is no obligation upon the City to transfer [the property] to the Board under Abbott," but rather a challenge to "the blight determination and public purpose issue back in 2001, and/or institut[ion of] a condemnation action against the City to acquire the property to build a school." Judge Barisonek found that the Board's failure to pursue these remedies prevented it from seeking SCC funding as it "sat on its hands while it claimed that it relied to its detriment on comments allegedly made by the Mayor."
Judge Barisonek then addressed the Board's contention that Rodriguez "never had any intention to develop the piece of property . . . . And the only purpose they engaged in acting as . . . developers for the site . . . is because it was in furtherance of a scheme to keep it out of the hands of the Board of Ed."
In ruling on the liability of Rodriguez, Judge Barisonek began by stating that there was no question that the property was City-owned, had been designated for redevelopment, and was to have been sold to Rodriguez. He noted that "the only loss that the plaintiff can claim is a pecuniary loss that they suffered because of the scheme and what's alleged in terms of this pecuniary loss is the fact that they could not acquire the property and develop it as a school."
The judge noted the four elements of tortious interference:
(1) a protected interest; (2) malice, meaning intentional, unjustified interference; (3) a reasonable likelihood the interference caused the loss of the prospected interest; and (4) damages. DeMaria Construction, Inc. v. Interarch, 351 N.J. Super. 558, 567 (App. Div. 2001), aff'd, 172 N.J. 182 (2002). He then found that any preferential treatment received by the Rodriguezes as a result of their political connections "did not affect the plaintiff's right to acquire the property for a school . . . ." He found that the Board had failed to demonstrate a protected interest or damages from the City's proposed transfer to the Rodriguezes because there was no agreement between the City and the Board to convey the property and no way to compel the governmental defendants to make such a conveyance. Thus, "there is no way that [the Rodriguezes'] involvement whether it be with the Mayor or with the City interferes with any type of [contractual] arrangement or business arrangement." Because the Board failed to meet the four elements of tortious interference, specifically a showing of a protected interest and of damages, there was no fact issue to preclude an entry of summary judgment.
Notwithstanding, the Board's attorney argued that the Board had no notice that Rodriguez was moving to dismiss the suit on substantive grounds; rather, the Board only knew claims of scandalous language and mootness. The Board thus requested an opportunity to brief the substantive issue of tortious interference. Rodriguez's attorney responded that he had submitted a letter on March 29, 2006, in which he "adopted the arguments advanced" by the City's attorney in its motion for summary judgment.
In ruling on this issue, Judge Barisonek concluded that Rodriguez was not required to submit certifications in support of summary judgment as they were relying on those of their co-defendant, the City. He also reasoned that
I really don't believe on the basis of the law and under the redevelopment law as well as tortious interference there was a tort here committed by the Rodriguezes and that you sustained any damages as a result of their dealings with the Mayor and that there never was any contract or agreement for the sale of the property. That's the basis of the decision. So it is not a fact determination, it's a legal determination.
Thus, summary judgment was also entered in favor of Rodriguez. On September 1, 2006, the Board filed its Notice of Appeal.
On December 4, 2006, the Board filed a motion to supplement the record with the Second and Third Reports of the Interagency Working Group for School Construction, and the May 2, 2006 transcript of oral arguments before the Supreme Court in Abbott IX, 187 N.J. 191 (2006). We granted the Board's motion "as to the two working group reports" and denied the motion as to the transcript.
On appeal the Board presents the following arguments for our consideration, mirroring those advanced before the trial court:
POINT I: THE ORDER OF DISMISSAL BELOW SHOULD BE REVERSED, AND THE TRIAL COURT SHOULD BE ORDERED TO ALLOW DISCOVERY AND HOLD A HEARING TO DETERMINE WHETHER THE COURT SHOULD ORDER THE LAND IN QUESTION CONVEYED TO THE BOARD OF EDUCATION.
POINT II: THE TRIAL COURT ERRED IN DISMISSING THE MISREPRESENTATION AND TORT CLAIMS AGAINST THE GOVERNMENTAL DEFENDANTS FOR FAILURE TO COMPLY WITH THE NOTICE PROVISIONS UNDER THE TORT CLAIMS ACT.
POINT III: THE TRIAL COURT ERRED IN FINDING THAT THERE WAS NO REASONABLE RELIANCE BY THE BOARD OF EDUCATION ON THE ACTIONS AND STATEMENTS OF THE DEFENDANT MAYOR.
POINT IV: THE TRIAL COURT ERRED IN DISMISSING THE MISREPRESENTATION AND TORT CLAIMS AGAINST THE RODRIGUEZ DEFENDANTS.
POINT V: ABUNDANT ISSUES OF FACT PRECLUDED THE ENTRY OF SUMMARY JUDGMENT.
Except as discussed below, we conclude the Board's contentions are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We find ourselves in agreement with Judge Barisonek's thorough and perceptive analysis and affirm substantially for the reasons expressed in his oral decision of August 22, 2006. In particular, we conclude, as he did, that the Board failed to invoke the statutory condemnation remedy available to it, N.J.S.A. 18A:20-2, and may not short-circuit the condemnation process by filing this lawsuit.
We briefly address the argument that is at the heart of the Board's complaint. The Board's case is premised on what can only be described as a novel reading of the Abbott decisions. No one can dispute the paramount needs of our school children for a thorough and efficient education in facilities that are safe and adequate to the task. Land acquisition is, of course, the first step in the construction of new facilities required, as here, to accommodate severe overcrowding and its necessarily deleterious effect on education. In its third report of September 14, 2006, the Interagency Working Group for School Construction stated:
The importance of recognizing the role of the districts and providing for greater community participation is underscored in the area of land acquisition for school construction projects. Identifying and acquiring land for new school construction projects is one of the most challenging aspects of meeting the needs of students across the State. One key reform will be greater involvement of the districts and municipalities in the acquisition of land.
Issues related to site selection, incorporation of potential sites into a municipal Master Plan, local contributions to funding the cost of site acquisition, environmental remediation, use of condemnation, joint use agreements and other potential collaborations with developers are among the topics that must be considered.
In doing so, any proposal must address encouraging collaboration by school districts and municipalities in taking a leading role in the process of identifying and providing for the acquisition of land.
Most regrettably, cooperation between school boards and their municipalities is not always optimum. Without assigning fault, such an absence of cooperation seems to be the case here. Nevertheless, we cannot draw from the Abbott decisions a process that would allow a board of education to compel its municipality to convey land for school construction, outside the statutory condemnation process.