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Township of Hamilton v. Fieldstone Associates

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 24, 2008

TOWNSHIP OF HAMILTON, IN THE COUNTY OF MERCER, A MUNICIPAL CORPORATION IN THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
FIELDSTONE ASSOCIATES, L.L.P., DEFENDANT-RESPONDENT/CROSS-APPELLANT.
TOWNSHIP COUNCIL IN THE TOWNSHIP OF HAMILTON, INTERVENOR-APPELLANT/CROSS-RESPONDENT. SAVE HAMILTON OPEN SPACE, INTERVENOR-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, L-2622-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 10, 2008

Before Judges Parrillo, S.L. Reisner and Baxter.

These two appeals, which we have consolidated for purposes of this opinion, arise from an unsuccessful effort by the Hamilton Township Council (Council) to repudiate the settlement of a condemnation case, and an unsuccessful attempt by a citizen group, Save Hamilton Open Space (SHOS), to intervene in the trial court proceedings.*fn1 Finding no merit in either appeal, we affirm the trial court orders dated November 30, 2006, February 13, 2007, March 23, 2007, and April 3, 2007, substantially for the reasons stated in Judge Linda Feinberg's oral opinion placed on the record on November 30, 2006, and her written opinions dated February 1, 2007 and April 3, 2007.*fn2

I.

The procedural history and facts of this case are discussed in detail in Judge Feinberg's eighty-two page written opinion dated February 1, 2007, and her twenty-five page opinion issued April 3, 2007, and they need not be repeated here. We have summarized below the facts most pertinent to the issues on this appeal.

At the center of this dispute is a fifty-acre tract of land in Hamilton Township, known as Klockner's Woods. The property, which contains wetlands and woodlands, is in a residential zone, and its owner, Fieldstone Associates, Inc., was actively seeking to build a residential housing development on the land. In response to significant local opposition to the development, and in an effort to preserve open space, the Township Planning Board included the site in its Open Space and Recreation Plan, and the Township filed a condemnation action to acquire the property.

Fieldstone initially contested the condemnation, claiming that it was an illegal effort to prevent the land from being developed. At the court's urging, the parties entered into settlement negotiations, and eventually agreed on a price of $4.1 million for the land. Pursuant to an authorizing resolution of the Township Council, the Township attorney signed a consent order pursuant to which the Township would pay $4.1 million for the property.

At the time the Council authorized the settlement, the Township had several million dollars in funds previously appropriated, through Ordinance No. 20-020, for the purpose of acquiring property for open space preservation. However, the Township wanted to avoid spending all of that money on the property, by applying for Green Acres funding and other available State and county grants or loans. Therefore, the settlement provided that the Township could either pay the settlement amount within a short period of time, or could delay paying the $4.1 million for a period of one year while the Township explored funding options. In the latter case, the settlement committed the Township to pay Fieldstone monthly interest on the $4.1 million until the Township paid the principal amount.

After the court entered the consent order in June 2005, considerable public controversy developed in the Township over the amount of the settlement. The opposition was apparently founded on the belief that the property was either worthless swampland, or that, at a minimum, its capacity for development had been vastly overstated and its value artificially inflated. At the next election, the voters elected a majority of Council members who were opposed to the settlement. Also during this period, the Township experienced delay in its application to the Department of Environmental Protection (DEP) for funding for the acquisition. The delay was caused primarily by the DEP's concerns over the extent of wetlands on the property and the number of developable lots on the land, both of which factors would affect its value and hence the amount of grant or loan money the agency would extend for the purchase of the property.

As a result of the delay, on September 16, 2005, Fieldstone filed a motion to enforce the settlement. The Township attorney, acting at the direction of the Mayor who supported the settlement, filed a cross-motion asking the court to modify the settlement to eliminate the Township's obligation to pay interest pending its payment of the $4.1 million. The trial court delayed adjudicating both applications, pending expert studies to delineate the wetlands on the property and to determine the number of lots that could be developed. Additionally, the trial court permitted the Township Council, which had hired its own attorney, to intervene on the issue of funding for the settlement. The Council also moved to vacate the consent order, contending that the formerly-constituted Council's resolution authorizing the settlement was ultra vires.

Eventually, expert studies determined that the land could be developed despite the presence of wetlands, and that the number of developable lots was the same or nearly the same as the number of lots on which the Township contended the $4.1 million settlement price was based. The land was also appraised at a value of $3.7 million. All of this evidence undercut the objectors' contentions that the land was worthless swamp or capable of only very limited development. After receiving this documentation, the DEP issued a "letter of interpretation" (LOI) accepting the Township's expert report concerning the extent of wetlands on the property, and the Legislature appropriated $4.125 million to provide no-interest loan money to cover up to 75% of the Township's cost to acquire the property. See L. 2006, c. 68, par. 4b.

On October 16, 2006, after the DEP issued its LOI, SHOS filed a motion to intervene in the action, contending that it wished to present evidence that the property was not worth the $4.1 million purchase price. At the time SHOS filed its motion, it did not have such evidence to present to the court. Rather, SHOS sought time to obtain an expert report designed to rebut the LOI; its motion also anticipated a further request for a plenary hearing on the issue of environmental constraints on development of the property. In an oral opinion placed on the record on November 30, 2006, Judge Feinberg denied the application, concluding that it was untimely and would unduly delay and complicate the resolution of the case.

Following oral argument on the motions by Fieldstone, the Township, and the Council, Judge Feinberg issued a comprehensive written opinion on February 1, 2007. Judge Feinberg rejected the Council's contention that the settlement was ultra vires because the Township either had not appropriated funds to pay for the settlement before entering into the agreement, in violation of N.J.S.A. 40A:4-57, or because the Township had not complied with statutory bonding requirements. She also denied the Township's application to modify the agreement to eliminate the interest payments, and she enforced the settlement. However, as a matter of equity, the judge determined that if the Township promptly paid the $4.1 million, certain interest payments then due and owing would be forgiven.

On April 3, 2007, Judge Feinberg granted Fieldstone's motion in aid of litigant's rights, following the Township Council's continuing refusal to appropriate funds to pay the settlement. By order of May 31, 2007, this court stayed enforcement pending appeal.

II.

We begin by addressing the Township's appeal. As in the trial court, on this appeal the Township contends that the Council resolutions approving the settlement violated the Local Budget Law and the Local Bond Law. The Township therefore contends that the Council's resolution was "void ab initio" and the consent judgment should be vacated. Consistent with the Council's position in the trial court, the Township also urges "the restoration of this case to the trial calendar" so that the condemnation case can continue. At oral argument, counsel confirmed that the Township was not seeking to abandon the condemnation action, but was only seeking to have the settlement set aside.

Having reviewed the record, we conclude that the Township's appellate contentions are without sufficient merit to warrant discussion in a written opinion, Rule 2:11-3(e)(1)(E), and we affirm substantially for the reasons stated in Judge Feinberg's cogent and comprehensive eighty-two page opinion. We add the following comments.

The Township relies on N.J.S.A. 40A:4-57, which provides:

No officer, board, body or commission shall, during any fiscal year, expend any money (except to pay notes, bonds or interest thereon), incur any liability, or enter into any contract which by its terms involves the expenditure of money for any purpose for which no appropriation is provided, or in excess of the amount appropriated for such purpose.

However, the same section also provides exceptions for "[c]apital projects to be financed in whole or in part by the issuance of notes or bonds," N.J.S.A. 40A:4-57(a), and "[c]ontracts or leases the terms of which exceed the fiscal year in which such contracts are made." N.J.S.A. 40A:4-57(b).

As Judge Feinberg correctly concluded, N.J.S.A. 40A:4-57(b) applies here, because the settlement was to be paid over a period of time that extended beyond the fiscal year in which the settlement was finalized. Moreover, through an ordinance adopted in 2002, the Township had already authorized and issued $5 million in open space bonds, and had appropriated those funds to pay for open space acquisitions. See N.J.S.A. 40A:4-57(a). A large portion of that fund was available to pay the settlement, and the Township had applied for State Green Acres funds and other grants and loans to pay for the remainder of the obligation imposed by the settlement.

The Township's reliance on Midtown Properties, Inc. v. Madison Twp., 68 N.J. Super. 197 (Law Div. 1961), aff'd o.b., 78 N.J. Super. 471 (App. Div. 1963), is misplaced. That case involved a settlement of a developer's action in lieu of prerogative writs, by means of a consent order in which the Planning Board purported to approve a development plan without a statutorily-required board resolution or a public hearing, and the municipality and the Planning Board essentially agreed that the settlement would supersede the municipality's zoning power in a variety of clearly illegal ways. "The zoning power delegated by the Legislature to the township officials was prostituted for the special benefit of the plaintiff." Id. at 206. The case is in no way similar to the one before us.

Bew v. Ventnor City, 81 N.J.L. 207 (Sup. Ct. 1911), is likewise not on point, as it concerned a holding that where a project could only be funded with bond money, the bonds had to be sold, before the town could enter into a contract to be funded by the bond proceeds. Id. at 210-11. N.J.S.A. 40A:2-37, on which the Township relies, requires that the bonds be authorized, not necessarily sold, in advance of the contract. Moreover, in the case before us, $5 million in open space bonds had been authorized and sold before the Township adopted the ordinance authorizing the condemnation action to acquire Klockner's Woods for open space preservation.

The amount the Township had on hand was more than enough to cover the $1.2 million price the Township anticipated paying when it commenced the condemnation action. However, it was unable to obtain the property at that price, and later appraisals revealed that the property was worth at least $3.7 million. The Township reasonably limited its liability, and sought to preserve its open space funds, by settling with Fieldstone on terms that allowed the Township to pay only interest while it sought grants and other non-municipal funds to cover the $4.1 million settlement price.

Because the settlement only required the Township to pay interest during the first year of the settlement,*fn3 and because the Township had already bonded for and appropriated several million dollars for the general purpose of acquiring open space, there was more than enough money available to pay the Township's settlement obligation for the budget year in which the Township authorized the settlement. See 405 Monroe Co. v. City of Asbury Park, 40 N.J. 457, 472-74 (1963). Moreover, the Township had a reasonable expectation of obtaining, and did in fact obtain approval for, State grants and loans to cover its remaining obligation under the settlement. See City of Atlantic City v. Cynwyd Investments, 148 N.J. 55 (1997). Consequently, the Township lawfully created the obligation to fulfill the settlement.

We note one final practical observation. Once having filed a condemnation action, a municipality commits itself to paying the judgment that will eventually result after the condemnation trial. However, the amount of the judgment is necessarily unknown when the action is filed. It follows that the municipality may limit its potential liability by entering into a consent order stipulating to the value of the property, thus settling the case.*fn4 See N.J.S.A. 20:3-14 (authorizing a municipality to settle a condemnation case).

As Judge Feinberg correctly reasoned, a public entity cannot be permitted to settle a condemnation action as the Township did here and then unilaterally undermine the resulting consent judgment by refusing to appropriate funds to pay obligations due under the settlement in succeeding years. Having entered into a consent order providing for the taking of the property through condemnation and the payment of just compensation, the Township was constitutionally and statutorily obligated to pay for the land, and we find no error in the trial court's order enforcing the consent judgment. See N.J.S.A. 20:3-12(h); N.J.S.A. 20:3-44 (enforcement of condemnation judgments).

Accordingly, we affirm the trial court's orders enforcing the settlement, and we hereby vacate the stay entered by our order dated May 31, 2007.

III.

Next, we turn to the SHOS appeal. At oral argument, counsel for SHOS confirmed that the organization strongly supported, and continues to support, the condemnation of the property for open space purposes. Its purpose in seeking to intervene in the trial court was to be heard on the fair value of the property.

In that connection, SHOS avowed its intention to present to the trial court evidence (which it did not yet have in hand) concerning environmental constraints on the property and the way in which those constraints affected the property's value. In its motion brief, SHOS expressed concern that if the settlement price was unrealistically high, possible funding sources such as the DEP might not be willing to provide grants or loans to finance the purchase.*fn5

Responding to contentions that its motion was untimely, coming almost two years into the litigation and a year after entry of the June 2005 consent judgment, SHOS admitted in its reply motion brief that "its motion comes at what would normally be considered the tail end of the litigation. However, the conflict remains a live one that may well require evidentiary hearings and substantially more review before the case is finished." SHOS did not seek to be heard on the legal issues which were before the trial court and which are the subject of this appeal. In fact at oral argument of this appeal, counsel agreed that SHOS's intervention would only be relevant if we were to vacate the consent judgment and remand the matter for a continuation of the condemnation proceedings.

To be granted intervention as of right under Rule 4:33-1, the party seeking intervention must:

(1) claim "an interest relating to the property or transaction which is the subject of the action," (2) show he is "so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest," (3) demonstrate that the "applicant's interest" is not "adequately represented by existing parties," and (4) make a "timely" application to intervene. [Chesterbrooke Ltd. P'ship v. Planning Bd. of Twp. of Chester, 237 N.J. Super. 118, 124 (App. Div.), certif. denied, 118 N.J. 234 (1989) (citations omitted).]

If a party is not entitled to intervention as of right, the court may afford the party the right to permissive intervention under Rule 4:33-2. See Am. Civil Liberties Union of N.J., Inc. v. County of Hudson, 352 N.J. Super. 44, 70 (App. Div. 2002), certif. denied, 174 N.J. 190 (2002). Permissive intervention may be granted at the court's discretion, based on the following considerations: the promptness of the application, whether or not the granting thereof will result in further undue delay, whether or not the granting thereof will eliminate the probability of subsequent litigation, and the extent to which the grant thereof may further complicate litigation which is already complex. [Ibid.]

We agree with Judge Feinberg that the application was untimely. The consent order was entered in June 2005, at which point the $4.1 million price was publicly known, but SHOS did not seek to intervene until October 2006. SHOS's application would certainly have caused delay, and the trial judge was properly "concerned with the potential for undue delay or prejudice to the rights of the City and the condemnee if intervention were permitted." Asbury Park v. Asbury Park Towers, 388 N.J. Super. 1, 12 (App. Div. 2006).

Granting intervention also would not necessarily have furthered SHOS's expressed interest in ensuring the acquisition of the property. In fact, if SHOS had succeeded in muddying a valuation issue that had been clarified by DEP's letter of interpretation concerning the wetlands on the property, SHOS might have interfered with the Township's ability to obtain funding for the acquisition. To the extent that SHOS's expressed interest was in ensuring that the property would be acquired, the Township and Fieldstone adequately, and successfully, represented that interest. We find no abuse of discretion or other error in the trial court's decision denying the motion.

Finally, while we appreciate SHOS's concern for the policy issue it seeks to raise, its application is moot in light of our disposition of the legal issues in this appeal.*fn6 And, despite SHOS's expressed concern in the trial court that funds would not be available to complete the acquisition of the property, the Legislature has appropriated $4.125 million to fund the acquisition.

Accordingly, we affirm the November 30, 2006 trial court order denying SHOS's motion to intervene in the litigation.

Affirmed.


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