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Johnson v. Ocean City Planning Board


January 25, 2008


On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket Nos. L-705-06, L-708-06, L-709-06 and L-72-07.

Per curiam.


Submitted January 7, 2008

[Argued via Telephone Conference January 7, 2008]

Before Judges A. A. Rodríguez and C. S. Fisher.

In these appeals, which we have calendared back-to-back, the Ocean City Planning Board (Board) appeals from the May 30, 2007 Law Division orders granting default approvals for preliminary and final site plan pursuant to N.J.S.A. 40:55D-10.4 to Donald W. Johnson and Samuel Johnson, Jr. (the Johnsons) and O.C. Elite Homes (Homes). We reverse.

In A-5505-06T2, the Johnsons sought to construct three-story mixed-use buildings, with the ground floor being commercial and the second and third floors residential. On March 16, 2006, the Johnsons submitted an application to the Board for certain land use approvals. At the time of the application, the proposed development complied with all zoning ordinances, including those regulating parking. On May 1, 2006, these applications were deemed "complete" under the Municipal Land Use Law (MLUL).*fn1

Regarding A-5534-06T2, Homes sought to construct a three-story mixed-use building with up to four commercial units on the first floor and six residential apartments on the second and third floors. On March 13, 2006, Homes submitted an application to the Board for preliminary and final plan approval with bulk-variance requests and engineering waivers. At the time Homes submitted its application, it complied with all zoning ordinances, including those regulating parking. This application was subsequently deemed complete.

The Board scheduled hearings on the applications for July 12, 2006. However, on that date, the Board tabled the applications because of the impending passage of Ordinance No. 06-20, commonly referred to as the "ZLDO Amendment," which would amend Ocean City's Zoning and Land Development Ordinance with respect to parking requirements and necessarily impact the applications. The following day, the Ocean City Council (Council) passed the ZLDO Amendment, which was adopted on July 27, 2006, and became effective August 16, 2006. On August 15, 2006, the Board notified the Johnsons and Homes that the hearing on these applications would be held on September 6, 2006. On the scheduled date, the Board dismissed the applications with prejudice.

Subsequently, the Johnsons and Homes applied to the Board for a default approval. The Board refused to issue certificates of default approval. The Johnsons and Homes, thereafter, filed an action in lieu of prerogative writs. The judge heard these matters together with two others. The judge issued a written opinion in favor of the Johnsons and Homes, finding that based on the MLUL, the applications were complete on April 27 (Homes) and May 1 (Johnsons), citing to N.J.S.A. 40:55D-10.3. The judge concluded that the Board engaged in "intentional municipal inaction" and its delay was "deliberate."

Furthermore, the judge deemed the Board's decision to deny the Johnsons and Homes certificates arbitrary, capricious and unreasonable and ordered the Board to issue certificates of default approval pursuant to the ordinance in effect on the date the applications were deemed complete.

The Board filed this appeal, contending that the judge erred by holding that the Johnsons and Homes were entitled to certificates of default approval. We agree.

Pursuant to the MLUL, automatic approval occurs if after 120 days of an application becoming complete, the municipal body fails to act on it. N.J.S.A. 40:55D-61. An application is "complete" when so certified by the municipal agency or, if the agency fails to act, 45 days after the application is submitted. N.J.S.A. 40:55D-10.3. However, the MLUL's automatic-approval provisions must be applied with caution. Mere technical or inadvertent mistakes do not warrant default approval. See Eastampton Center, LLC v. Planning Bd. (ECLLC), 354 N.J. Super. 171, 193 (App. Div. 2002) ("Despite the seemingly mandatory language of [the statute], there is ample precedent for a court to deny automatic approval" when the "failure to act . . . is technical or inadvertent, and where there is no evidence of intentional delay or inattention to the application.").

A court should only impose the automatic approval remedy to address present and prevent future "bad faith, sharp practice, overreaching or dilatory conduct" by a municipal body, Allied Realty, Ltd. v. Borough of Upper Saddle River, 221 N.J. Super. 407, 419 (App. Div. 1987), certif. denied, 110 N.J. 304 (1988), not when the "inaction was 'technical or inadvertent, and where there is no evidence of intentional delay or inattention to the application.'" So. Plainfield Properties, L.P., 372 N.J. Super. 410, 417 (App. Div. 2004) (quoting ECLLC, supra, 354 N.J. Super. at 193). Examples of technical or inadvertent delays are misfiling of the application by a planning board employee, as in D'Anna v. Planning Bd., 256 N.J. Super. 78, 80 (App. Div.), certif. denied, 130 N.J. 18 (1992), or a municipal agency's acting on an understandable misconception of law, as in Manalapan Holding Co. v. Planning Bd., 92 N.J. 466, 480 (1983).

In So. Plainfield Properties, supra, a developer would not consent to a second adjournment after having previously consented to one previously. 372 N.J. Super. at 414. The Board passed a resolution, granting itself a six-month extension, postponing all action on the developer's application until beyond the deadline by which it had to act. Id. at 414-15. The Law Division granted summary judgment against the county planning board based on its failure to act within the statutory time frame, resulting in default approval. Id. at 411. On appeal, we affirmed, rejecting the board's argument that its resolution constituted a sufficient action under the statute, and observed:

We cannot countenance such an end-run around the statute. Statutory time limits for action on land use applications, with provisions for automatic approval in the event of governmental failure to act, were enacted by the Legislature to avoid precisely such governmental inaction. [Id. at 417.]

In ECLLC, supra, we found it erroneous to 1) deem an application complete where the board's professional engineer and planner declared otherwise and 2) order automatic approval because the board's decision came a mere three days late. 354 N.J. Super. at 191-92, 195. We found no bad faith on the part of the board, declaring:

Such a result is unreasonable, because it denies the Board the right in good faith to declare an application incomplete. An incomplete application is not entitled to any consideration on the merits. To sustain default approval of the application on the facts here is to say that a Board that errs in good faith, in determining that an application is incomplete, risks automatic approval of an arguably incomplete application. That was not the intention of the Legislature in enacting the default approval statutes.

The public interest here weighs far more heavily against automatic approval than does the Board's arguably late determination weigh in favor. [Id. at 195-96 (citation omitted).]

When considering the well-settled principle that a zoning board's decision is entitled to "substantial deference" from a reviewing court and must be reversed only when "arbitrary, unreasonable, or capricious[,]" New York SMSA, L.P. v. Bd. of Adjust., 370 N.J. Super. 319, 331 (App. Div. 2004), we conclude that the de minimis delays by the Board do not render the Board's decision arbitrary, capricious or unreasonable. Reviewing courts must "presume[] that the board has acted fairly, and a reviewing court may not substitute its judgment for that of the board." Fred McDowell, Inc. v. Bd. of Adjust., 334 N.J. Super. 201, 212 (App. Div. 2000) (citation omitted), certif. denied, 167 N.J. 88 (2001). The same deference is required from appellate courts. Charlie Brown of Chatham, Inc. v. Bd. of Adjust., 202 N.J. Super. 312, 321 (App. Div. 1985). See also Bressman v. Gash, 131 N.J. 517, 529 (1993) (appellate courts must "defer to the local land-use agency's broad discretion and . . . reverse only if we find its decision to be arbitrary, capricious, or unreasonable.").

The facts here are distinguishable from So. Plainfield Properties in that there, the planning board delayed for the vague reason that "traffic concerns . . . are under review."

So. Plainfield Properties, supra, 372 N.J. Super. at 415 n. 4. Here, the Board tabled the applications in order to wait and see the outcome of an amendment to its zoning ordinance, ZLDO, which, if passed, would have a great effect on the applications. Their reason was based on the very likely possibility that the applications would need to be amended. Because a municipal body is authorized to change its zoning ordinance, even if direct response to a valid application,*fn2 it was erroneous for the trial judge to conclude bad faith in these cases.

This case is more akin to ECLLC, as the decision by the Board (conceded to be proper in all respects except its timing) was only days late. In ECLLC the delay was three days. Here, the delay was eight business days for Homes' application and six for the Johnsons'. Such a de minimis delay "bespeaks inadvertence, ignorance or misunderstanding as to the operation and mechanics of the statute[,]" Manalapan Holding, supra, 92 N.J. at 481, and, in our view, does not warrant the drastic remedy of automatic approval.

The Board could have scheduled the new hearing for a week earlier than September 6, 2006. Therefore, its error in setting a date for the meeting (at which it was clear that all the applications would be rejected due to ZLDO) was a technical one, not worthy of the drastic remedy of default approval.

The trial judge also rejected the Board's argument that under the time-of-decision rule, the applications of the Johnsons and Homes were incomplete. The Board renews this argument before us on appeal. Essentially, it is the Board's position that the passing of ZLDO rendered the Johnsons' and Homes' applications incomplete, thereby preventing automatic approval under the statute. However, there is no case law for that proposition and in light of our disposition we need not address it here.

Accordingly, the automatic approval of the Johnsons' and Homes' applications are reversed. The Board was correct in dismissing the applications. However, the dismissal should have been without prejudice. We remand the applications back to the Board for reconsideration, in light of the ordinances in effect at the time of its decision.

Reversed and remanded to the Board. We do not retain jurisdiction.

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