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Bergen Ridge Homeowners Association, Inc. v. Township of North Bergen


December 17, 2007


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-4859-05.

Per curiam.


Argued November 15, 2007

Before Judges Parker, R. B. Coleman and Lyons.

Plaintiff Bergen Ridge Homeowners Association, Inc. (Bergen Ridge), a non-profit corporation, sued defendant Township of North Bergen (North Bergen) and defendant Riverview Development, LLC (Riverview) to set aside an unorthodox private sale of municipal property to Riverview. The trial judge, Hector R. Velazquez, determined that the municipality's sale of its undivided fifty-percent interest in a 5.5 acre tract held as a tenant-in-common with a private citizen was not in accordance with N.J.S.A. 40A:12-13(b)(5), but that Riverview relied upon North Bergen's determination that the sale was proper; that Riverview expended considerable funds in reliance thereon; that the sale was in good faith; that there was no evidence of fraud; that the sale price was supported by an appraisal; and that Bergen Ridge had not filed its suit for ten months following the adoption by North Bergen of an ordinance to authorize the sale. Accordingly, the trial court dismissed Bergen Ridge's complaint on the grounds of equitable estoppel. Because we agree with Judge Velazquez's thorough and well-reasoned oral decision, we affirm for substantially the reasons set forth in his opinion.

The pertinent facts are as follows. The property at issue is an undeveloped tract of land located in North Bergen, consisting of approximately 5.5 acres along the Hudson River. For more than thirty years, North Bergen owned an undivided fifty-percent interest in the property as a tenant-in-common with a private individual, Joseph Parisi (Parisi). All parties agree that a municipality holding an undivided fifty-percent interest as a tenant-in-common with a private citizen is unique, and not specifically addressed by any statute or case law. Prior efforts to develop the property had failed.

On May 28, 2004, Parisi contracted to sell his one-half interest in the property to A.K. Ventures, a predecessor of Riverview, for $2.5 million, contingent upon North Bergen agreeing to sell its one-half interest in the property to A.K. Ventures, as well. By agreement dated October 27, 2004, North Bergen agreed to sell its one-half interest in the property to A.K. Ventures for $2.5 million. The agreement of sale was subject to the passage of an appropriate ordinance authorizing the sale and the closing of the purchase of Parisi's other one-half interest. Although the current zoning ordinance permitted buildings with heights of up to 120 feet, the purchaser agreed in the agreement of sale, that the property would be restricted to an eighty-five foot height limitation. Before North Bergen executed the sale agreement, it obtained an appraisal which concluded that the $2.5 million sale price was a fair market price.

The ordinance authorizing the sale was finally adopted by North Bergen on November 10, 2004, and published on November 17, 2004. In May 2005, approximately five months after the end of the appeal period applicable to appeals from the ordinance, a closing occurred which vested Riverview with title to the entire parcel.

Following the closing, Riverview and North Bergen exchanged correspondence concerning an amendment to the agreement of sale to change the height restriction of eighty-five feet. North Bergen agreed to amend the agreement of sale to remove the height restriction in consideration: (1) of receiving an additional $1 million; (2) an acceleration of payments; (3) a recreational easement on the property; (4) a commitment from Riverview to enlarge the view corridors; and (5) a commitment from Riverview to provide additional parking spaces to be rented to North Bergen residents. On August 4, 2005, North Bergen approved an ordinance to authorize the amendment to the agreement. That amended ordinance was published on August 10, 2005.

Counsel for Bergen Ridge, a non-profit corporation comprised of thirty-four members who own two- and three-family homes across the street from the site, appeared at the August 4, 2005 meeting and spoke in opposition to the amended ordinance. On September 1, 2005, Bergen Ridge's counsel wrote a letter to Riverview advising it not to continue to expend more money on the project since Bergen Ridge intended to take action to set the sale aside.

On September 23, 2005, Bergen Ridge filed its first complaint in this matter. Its purpose in attempting to set aside the sale is to preserve its views of the Hudson and beyond. It filed an amended complaint on October 12, 2005, and a notice of lis pendens on December 9, 2005. It filed a second amended complaint on February 27, 2006. On May 30, 2006, the trial court granted defendant's motion to discharge plaintiff's notice of lis pendens. On July 21, 2006, the trial was held in this matter and the court placed its decision on the record on August 2, 2006. On September 5, 2006, the court entered an order dismissing plaintiff's complaint in lieu of prerogative writs, and on November 27, 2006, the court executed an order dismissing without prejudice defendant's slander of title claim and determining its order to be final in all respects. This appeal ensued.

On appeal, Bergen Ridge presents the following arguments for our consideration:



A. Judge Velazquez Correctly Determined That The Sale Of The Property Was Illegal.

B. Judge Velazquez Incorrectly Determined That The Summer Cottagers' Case Is Applicable To Preclude Vacation Of The Sale.

C. Judge Velazquez Improperly Relied Upon The Hearsay Certification Of Robert Cayre.

D. The Estoppel Doctrine Should Not Have Been Applied Against Plaintiff Because Defendant Riverview Did Not Rely Upon An Act Or Omission Of Plaintiff.









North Bergen cross-appeals, arguing that the trial court erred in ruling that North Bergen's sale of its one-half interest in the property to Riverview failed to comply with N.J.S.A. 40A:12-13(b)(5).

Turning first to Bergen Ridge's argument that the private sale was void because it was not in accordance with the statutory conditions found in N.J.S.A. 40A:12-13(b)(5), we note at the outset that the trial judge's analysis was correct in that the conditions in that statute which permit a private sale were not met. Under N.J.S.A. 40A:12-13(b)(5), a sale to the owner of real property contiguous to the real property being sold may appropriately be by private sale when authorized by resolution, provided certain conditions are met.

The first condition is that the sale be to the owner of real property contiguous to the real property being sold. We agree with the trial judge that the sale of an undivided half interest in the same piece of property to the owner of the other undivided half interest is not a sale of property in which one parcel is contiguous to the other. By definition, contiguous means "touching along all or most of one side; near, next, or adjacent." Webster's New World College Dictionary 315 (4th ed. 2001). This is the same parcel. Hence, the exception to public bidding was not met for that reason.

A second condition is that the property being sold must be less than the minimum size required for development under the municipal zoning ordinance. The subject property is not less than the minimum size required for development, because the property is 5.5 acres and the zoning requirement is 5 acres. While North Bergen would argue that the fifty-percent interest would result in the acreage being 2.75 acres, we note again that this is an undivided interest.

Third, the statute requires that if there is more than one owner with real property contiguous to the tract, those parties must be afforded the opportunity to bid. That did not occur in this case. In sum, we agree with the trial judge's analysis that the private sale of the property was not in accordance with or authorized by N.J.S.A. 40A:12-13(b)(5), the statute relied upon by North Bergen.

That being said, we, nevertheless, reject Bergen Ridge's assertion that the sale was void ab initio. We note that the holding in Summer Cottagers' Assn. of Cape May v. City of Cape May, 19 N.J. 493, 504-05 (1955), remains viable. Our Supreme Court made it clear that

[t]here is a distinction between an act utterly beyond the jurisdiction of a municipal corporation and the irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The former are ultra vires in the primary sense and void; the latter, ultra vires only in a secondary sense which does not preclude ratification or the application of the doctrine of estoppel in the interest of equity and essential justice. Id. at 504.

We recently relied upon that holding in Williams Scottsman v. Garfield Bd. of Educ., 379 N.J. Super. 51, 58-59 (App. Div. 2005), certif. denied, 186 N.J. 241 (2006).

As stated earlier, we agree with the trial court's analysis of the Summer Cottagers' case and its applicability to these facts. The trial court appropriately noted that North Bergen's sale of the property is within its statutory powers and that its actions in this case were ultra vires only in the secondary sense. The court noted that plaintiff is a private association and estoppel applies more broadly to it than to the municipality. The court recognized the unique status of the township's form of ownership of the property and that this made the property difficult to market. More importantly, the court concluded that there was no evidence of fraud or favoritism and that this sale was more beneficial to the township and its citizens than the continued ownership of an interest in land that remained undeveloped for the past thirty years.

We note the record also reflected that an appraisal was done and the monies received were consistent with the appraised value, which took into account the height limitation imposed by the zoning ordinance. Significantly, the trial court found that Bergen Ridge waited ten months after the passage of the initial ordinance to file its complaint to set aside the sale. Implicitly, the court's reasoning is that Riverview had expended significant funds for the acquisition of the property, as well as for pre-construction costs in reliance upon the absence of any complaint from any quarter in moving ahead. In addition, the court found that Riverview relied on the opinions of the municipal officials that the mode of sale was appropriate.

Weighing all these factors, the court appropriately concluded that the doctrine of equitable estoppel would bar the setting aside of this unorthodox sale of a unique interest. We agree with the trial court's reasoning. See Summer Cottagers', supra, 19 N.J. 493; Williams Scottsman, supra, 379 N.J. Super. 51.

Bergen Ridge argues that the court improperly relied on hearsay in coming to its findings. In particular, it objects to a certification from Robert Cayre regarding funds expended by Riverview. "Traditional rules of appellate review require substantial deference to a trial court's evidentiary rulings." State v. Morton, 155 N.J. 383, 453 (1998). See N.J.R.E. 611 (holding that a judge has discretion over mode of interrogating witnesses). As this issue involves the trial court's exercise of discretion, the appellate court will not interfere unless the trial judge has "pursue[d] a manifestly unjust course." Gillman v. Valley Mfg. Corp., 286 N.J. Super. 523, 528 (App. Div.), certif. denied., 144 N.J. 174 (1996). We find no merit in Bergen Ridge's argument because we find the trial court, in a reasonable exercise of its discretion, afforded counsel an opportunity to cross-examine a knowledgeable Riverview financial officer on the issue, which counsel declined.

With regard to Bergen Ridge's argument that equitable estoppel should not have been applied against it because Riverview did not rely upon any act or omission of Bergen Ridge, we find that argument to be without merit on two grounds. First of all, it is clear that the trial judge found that Riverview relied on Bergen Ridge's failure to take any action for almost ten months after the initial ordinance authorizing the sale and for four months after Riverview closed title. Second, in the Summer Cottagers' case, there was no reliance by the developer on the plaintiff non-profit neighborhood organization, and yet the Court utilized the equitable estoppel argument as a bar to setting aside the sale. Summer Cottagers', supra, 19 N.J. 493.

Bergen Ridge further claims that the failure to include the advertised height restrictions, that is, the eighty-five-foot height restriction from the initial sale agreement in the deed of sale rendered the sale a nullity. There is no authority for that claim. Moreover, the deed makes explicit reference to the ordinance pursuant to which North Bergen authorized the sale and that, of course, is public record which would bind the purchaser. In any event, the ordinance was subsequently amended to delete the restriction. See R. 2:11-3(e)(1)(E).

The municipality enacted that amendatory ordinance in accordance with municipal law to alter certain terms for substantial and valuable consideration -- $1 million, as well as certain other non-monetary benefits. The testimony indicates that the developer initially sought the eighty-five-foot height restriction to lessen his acquisition costs of related riparian rights. When he determined that the property would be better developed at the maximum height restriction for the zone, he sought and negotiated a change in the contract. There is no evidence of any bad faith or improper conduct between North Bergen and Riverview on this issue. Moreover, the amendment was done by ordinance which required public notice and advertising. That removal of the restriction results in the property being subject to the municipal zoning law height restriction and does not provide a special exception for this developer.

An amendment is not, in and of itself, contrary to public policy. Public bidding is not impaired when a municipality subsequently bargains for a needed change in a contract. Greenberg v. Fornicola, 37 N.J. 1, 10 (1962). "Even when public-bidding statutes apply, they do not foreclose changes 'when the public body in its own interest seeks an amendment to meet an unanticipated development in circumstances in which new bidding would be inappropriate or impracticable.'" Wasserman's, Inc. v. Twp. of Middletown, 137 N.J. 238, 246 (1994) (quoting Greenberg, supra, 37 N.J. at 10). In this situation, further public bidding would have been inappropriate and impracticable and, in the absence of any indication of fraud or detriment to the public, we find the trial court's decision to have been well supported.

Bergen Ridge also argues that the amended ordinance should be deemed void because the township violated the Open Public Meetings Act, N.J.S.A. 10:4-6 to -21. We find that argument without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Lastly, Bergen Ridge's argument that the trial court erred in dismissing the lis pendens is moot. Clearly, an issue is "moot" on appeal if "the decision sought in a matter, when rendered, can have no practical effect on the existing controversy." Greenfield v. N.J. Dept. of Corr., 382 N.J. Super. 254, 258 (App. Div. 2006). Given the court's ruling here, a discussion regarding the lis pendens can have no practical effect on this matter and we deem it moot.

Consequently, after thoroughly reviewing the record and the arguments of counsel, we are satisfied that Judge Hector Velazquez's well-reasoned, thorough, and detailed ruling was supported by sufficient credible evidence and the law. We, accordingly, affirm substantially for the reasons set forth in his oral decision.



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