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PC Air Rights, LLC v. Mayor and Council of the City of Hackensack

April 9, 2008


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5350-05.

Per curiam.


Argued October 17, 2007

Before Judges Payne, Sapp-Peterson and Messano.

Plaintiff PC Air Rights, LLC, is the contract purchaser of development rights, including air rights, located in and over certain property owned by the New York, Susquehanna and Western Railway Corporation (the Railroad) in Hackensack. Plaintiff's complaint in lieu of prerogative writs that named the mayor and council of Hackensack, the city of Hackensack (collectively, the City), and the city's Board of Adjustment (the Board) as defendants was tried without a jury over three days in July 2006. Plaintiff now appeals from portions of the trial judge's order of final judgment entered on August 6, 2006. We have considered the arguments plaintiff has raised in light of the record and applicable legal standards. We affirm in part the order under review, reverse in part, and remand for further proceedings consistent with this opinion.


The contract between plaintiff and the Railroad intended to convey development and air rights, together with easements in and over property designated on the City's tax map as Lots 9 and 10 in Block 627 (the property). The property is divided into three tracts, each described in the agreement as the "fee of air space over the [Railroad's] right of way" between Summit and Prospect Avenues (Tract A), between Prospect Avenue and Overlook Terrace (Tract B), and between Overlook Terrace and Second Street (Tract C). Prospect Avenue, a dedicated public street, intersects the property, separating Lot 10 (ostensibly Tract A) from Lot 9 (the other two tracts). The contract also included some land at grade level along American Legion Drive, a road that is, in part, adjacent to the right of way.

Under the City's zoning ordinance as it existed prior to June 2005, plaintiff's proposed development site spanned four zoning districts. Lot 10 was split between an R-1 zone (permitting one-family dwellings), and an R-3 zone (permitting R-1 uses, as well as high-density multi-family uses). Lot 9 was split between three zoning districts, with its major portion being in the same R-3 zone as Lot 10, and with two smaller portions, one being in an R-2A zone (permitting one and two-family dwellings and garden apartments), and one being in an R-3B zone (permitting R-2A uses and professional office buildings).

On December 15, 2003, plaintiff filed a site plan application with the Board seeking to construct a twenty-three-story residential apartment complex on the property, partially at grade level and partially astride and atop the Railroad's right of way. We need not go into great detail regarding what occurred after the initial application was submitted, but it shall suffice to say that plaintiff initiated litigation by way of a complaint in lieu of prerogative writs challenging the alleged denial of its development proposal.*fn1 While that suit was pending, on September 27, 2004, plaintiff filed a new site plan application that now sought approval of a mixed-use building consisting of office space and residential apartments, as well as an accompanying parking structure. On October 6, 2004, the City's code enforcement official, Joseph Mellone, again determined the revised application was incomplete citing nine "deficien[cies]."*fn2

We quote Mellone's letter at length because it provides the basis for much of what followed. First, Mellone concluded that a "[s]ub-division was required," and noted that plaintiff's plan failed to include a metes and bounds description and square footage of the property "located in each zoning district that is being used as a basis of the application." Second, Mellone noted that the proposed use, "[m]ultifamily [h]igh [r]ise," was not permitted in an R-1 zone. He also noted that "[t]he calculations for density included property located in a[n] R-1/R-2 District as well as the . . . right of way." Third, he claimed the proposed driveway aisle width was insufficient. Fourth, Mellone believed the proposed number of on-site parking spaces was insufficient and otherwise not fully detailed. Fifth, Mellone concluded the primary entrance to the project was on American Legion Drive, thus making this side the "front" of the project and requiring re-calculation of all setbacks. Sixth, he noted the floor plan for the parking garage was incomplete. Seventh, since the proposed balconies exceeded permitted sizes, Mellone advised that they needed to be included in all calculations regarding permitted setbacks. Eighth, Mellone observed that two rooms on the plan were not labeled. And lastly, Mellone noted that the "[u]se of a separate lot separated by a public street cannot be used as a basis of an application."

In a letter dated December 3, 2004, plaintiff responded with certain revisions and the report of its consulting engineers intending to address Mellone's letter. While these responses apparently resolved some of the disputed issues, on December 27, 2004, Mellone again wrote that the development application was still incomplete because plaintiff had not yet submitted "variance applications." On January 12, 2005, plaintiff appealed this determination to the Board pursuant to N.J.S.A. 40:55D-70(a) and (b).*fn3 On April 7, 2005, plaintiff submitted an amended notice of appeal, along with an amended site plan application.

The Board conducted hearings on plaintiff's appeal on May 18 and June 29, 2005, and voted at the second meeting to sustain Mellone's interpretation of the requirements of the zoning ordinance, thus, denying plaintiff's appeal. A memorializing resolution dated August 17, 2005 was adopted.*fn4

Other events were occurring in the interim that would impact plaintiff's development proposal. Pursuant to a recommendation of its planning board, on June 28, 2005 the City adopted an amendment to its zoning ordinance and district map (the 2005 ordinance). The new map now brought a large portion of the property, previously zoned R-3, into the R-2 zone that permitted only one and two-family homes. By extending the lines for the R-2 zone to include an area of the property along the Prospect Avenue corridor that otherwise remained bound on both sides by continued R-3 designations, the effect of the new designation was to necessitate a use variance for the development proposal because it no longer conformed with the new zone plan.

On July 28, 2005, plaintiff filed this complaint in the Law Division, alleging that: 1) the 2005 ordinance constituted "improper 'reverse spot zoning'"; 2) the City failed to comply with the notice requirements and procedures of the Municipal Land Use Law (the MLUL), N.J.S.A. 40:55D-1 to -129, when it enacted the 2005 ordinance; 3) the 2005 ordinance violated plaintiff's substantive due process rights; 4) the 2005 ordinance resulted in an "inverse condemnation" of plaintiff's property rights; and 5) the City's actions violated the New Jersey Civil Rights Act, N.J.S.A. 10:6-1 to -2 (the CRA). Accordingly, plaintiff sought a declaration that the 2005 ordinance was invalid, as well as compensation for the alleged taking of its property, injunctive relief, and monetary damages.*fn5

After the Board approved its memorializing resolution, plaintiff amended its complaint to add a seventh count alleging that the Board's denial of its appeal was arbitrary, capricious, and unreasonable. The matter proceeded to trial before the Law Division judge sitting without a jury.


Following trial, the judge issued a thoughtful and comprehensive written decision. He first found that the amended zoning ordinance constituted impermissible reverse spot-zoning, and concluded that "plaintiff [was] entitled to a judgment in its favor invalidating the designation of [the property] as R-2, and restoring the previous R-3 zone boundaries to where they existed before June 28, 2005." However, the judge also determined that those "portions of [the property] that [were] more remote from the Prospect Avenue corridor and that were previously zoned R-3B and R-2A shall continue to be designated as R-2 pursuant to the" 2005 ordinance. Based upon his ruling, the judge declined to decide plaintiff's substantive due process claim, finding it "not necessary."

The judge also denied plaintiff's claim that the entire 2005 ordinance should be set aside because it was inconsistent with the City's master plan. He recognized that the City "succeeded mightily, if somewhat imperfectly," in "creat[ing] consistency" between the master plan and the 2005 ordinance. He viewed the spot zoning of plaintiff's property to be "an isolated error of judgment that ought not have the global consequences urged by plaintiff." He did find, however, that the notice provisions of the MLUL, specifically N.J.S.A. 40:49-2.1, were not met, and so concluded the enactment of the 2005 ordinance was void. The judge stayed his ruling in this respect for sixty days to permit the City to "re-enact a procedurally-compliant comprehensive zoning ordinance if it wishes."*fn6

The judge denied plaintiff's request for relief under the CRA. He found that although defendants had erred by deciding to re-zone major portions of the property, their actions were neither egregious nor conscience-shocking, and could rather be described as "the tedious imperfections of local legislatures that are routinely corrected through conventional actions in lieu of prerogative writs." He added, "[w]hile deserving of reversal, they are not necessarily deserving of an award of damages." He dismissed plaintiff's claims under the CRA with prejudice.

The court also dismissed with prejudice plaintiff's "inverse condemnation claim" finding that even under the 2005 ordinance, plaintiff acknowledged that the property still possessed economically beneficial uses. Furthermore, since plaintiff was not the actual owner of the property, it could not claim any temporary taking of its property rights.

The judge then turned to plaintiff's challenge to the Board's denial of its appeal from Mellone's rulings. Specifically, plaintiff contended that three of Mellone's nine points remained in dispute as a result of the Board's determination. Citing plaintiff's trial brief, the judge enumerated these as 1) "whether the [] proposed development created a subdivision; 2) whether the front of the proposed building was on Prospect Avenue; and 3) whether the site could not include Lots 9 and 10, which are separated by a public street."

Addressing the subdivision issue, the judge noted Mellone had not adequately explained why he believed one was needed, and that the Board "finessed" the issue by determining the subdivision was not necessary because Lot 10 could not be combined with Lot 9 for purposes of any application. However, the judge ruminated on whether a subdivision was required for "the conveyance of air space rights." Since neither ...

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