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Elon Associates, L.L.C. v. Borough of Englishtown

February 15, 2008

ELON ASSOCIATES, L.L.C., PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
BOROUGH OF ENGLISHTOWN, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
ELON ASSOCIATES, L.L.C., PLAINTIFF-APPELLANT,
v.
BOROUGH OF ENGLISHTOWN, DEFENDANT-RESPONDENT.
TRADITIONAL DEVELOPERS, L.L.C., A LIMITED LIABILITY CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF NEW JERSEY; JOHN F. PLOSKONKA, AND G & F ASSOCIATES, A PARTNERSHIP ORGANIZED UNDER THE LAWS OF THE STATE OF NEW JERSEY, PLAINTIFFS,
v.
THE BOROUGH OF ENGLISHTOWN AND THE PLANNING BOARD OF THE BOROUGH OF ENGLISHTOWN, DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-3127-99 and L-3015-01.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 15, 2008

Before Judges Skillman, Winkelstein and Yannotti.

This is an appeal from a post-judgment order in a Mount Laurel action which requires the defendant municipality to enter into a contract with a water company to purchase 100,000 gallons of water per day so it can provide the water service required by plaintiff's proposed housing development.

The Mount Laurel action was settled by an agreement between the plaintiff-developer, Elon Associates, and the defendant-municipality, Englishtown, and its planning board, which was executed in November 2002. The settlement agreement obligated Englishtown to "take all steps necessary to make public water and sanitary sewer service available to [Elon's] property." The agreement also contained detailed provisions concerning the manner in which Englishtown could discharge this obligation. It required Englishtown to "execute an agreement with the Gordon's Corner Water Company to purchase water in an amount sufficient to ensure the provision of adequate water supply to service the entirety of the inclusionary developments approved in the Judgment of Compliance in the most economically feasible manner[.]"

The agreement also authorized Englishtown to seek "additional diversion rights to Farrington Aquifer[.]" The municipality was given eighteen months after entry of a judgment of compliance to explore this alternative source of additional water supply. To enable Englishtown to pursue this alternative, the agreement required Elon to seek in good faith "within three months of the entry of the Judgment of Repose . . . to join the State of New Jersey in the Litigation to require it to allocate additional water to [Englishtown] in an amount sufficient to service the entirety of the inclusionary developments approved in the Judgment of Compliance." The settlement agreement further provided that "[u]ntil such time as the agreement with Gordon's Corner Water Company . . . has been executed[,] [Elon] shall have first priority to any available water resources existing in the Borough system over all other properties[.]"

Around the same time Englishtown settled the Mount Laurel action brought by Elon, it also settled a Mount Laurel action brought by another developer, Traditional Developer. Englishtown and the two developers jointly applied to the court for approval of the settlements. After a hearing, the trial court found that the settlements were fair and reasonable to low and moderate income persons and entered a judgment of compliance on January 27, 2003, which provided Englishtown with "repose from further exclusionary zoning litigation for a period of six years[.]" The judgment of compliance also provided for continuation of the appointment of a professional planner, Elizabeth McKenzie, as special master.

At some point, Traditional received authorization to commence construction of its development using Englishtown's existing water supply. The water required to service Traditional's development exhausted most of the available water supply in the Englishtown system.

Although the Englishtown Planning Board granted Elon preliminary and final major site plan approval for its proposed development, Elon did not undertake to join the Department of Environmental Protection (DEP) in the litigation to obtain the additional allocation of water that Englishtown would require for Elon's proposed development. However, Englishtown and Elon had informal communications with the DEP regarding the diversion of additional water to the Englishtown water system.

These communications were unproductive. The DEP indicated that in order for Englishtown to secure an additional allocation of ground water, it would have to obtain a "major modification" of its existing permit. The DEP also indicated that the Old Bridge and Farrington aquifers from which Englishtown obtains its water are "Critical Water Shortage 1 areas" and therefore excess water capacity must be purchased elsewhere. However, Elon's efforts to obtain a transfer of water diversion rights from a municipality or water utility that had excess capacity were unsuccessful.

Englishtown subsequently applied to the DEP for authorization for a water main extension to serve Elon's proposed development. The DEP denied the application on the ground that Englishtown's existing water capacity was insufficient to provide service to the development. In response, Englishtown claimed that it had an existing contract with Gordon's Corner Water Company (Gordon's Corner) that would enable it to provide the additional water required for Elon's development. The DEP rejected Englishtown's claim on the ground that its contract with Gordon's Corner only provided for an emergency interconnection and that for such a contract to be considered a reliable source of water, it must be a minimum ten-year contract.

In the spring of 2006, Elon's counsel requested the court to schedule a conference regarding the outstanding issues relating to the supply of water to its proposed development. Two such conferences were conducted, the first on April 11, 2006, and the second on May 12, 2006. A representative of the DEP appeared at the second conference. However, neither conference resulted in a resolution of the issues relating to the supply of water for Elon's proposed development.

On July 9, 2006, Elon filed a motion for enforcement of its settlement agreement with Englishtown. This motion sought an order compelling Englishtown to enter into a service agreement with Gordon's Corner for a term acceptable to the DEP which would provide the water ...


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