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Rice v. Borough of Avalon


August 6, 2008


On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket Nos. L-625-06 and L-704-06.

Per curiam.


Argued April 23, 2008

Before Judge Cuff, Lihotz and Simonelli.

These actions were consolidated by the trial court.*fn1

In the first matter, plaintiffs Michael and Jane Rice (the Rices) filed a complaint in lieu of prerogative writs against the Borough of Avalon (Avalon) seeking a permit to construct a swimming pool. The trial court granted summary judgment to the Rices. No appeal has been taken from that order.

The second captioned case is the matter under review. Plaintiffs Save Avalon's Dunes, L.L.C. and Elaine Scattergood (collectively SAD) seek (1) to invalidate a 2001 Stipulation of Settlement (Settlement) between the Department of Environmental Protection (DEP) and the Rices that included a Coastal Area Facilities Review Act (CAFRA), N.J.S.A. 13:19-1 to -21, permit, and (2) to enjoin construction of the Rices's proposed five-story, forty-room residence and swimming pool in a dune area. SAD pursues its position on behalf of the citizens of Avalon pursuant to N.J.S.A. 2A:15-18.*fn2 Although injunctive relief was denied, the Law Division reserved the power to order any construction removed.

On January 29, 2007, Judge Perskie, "decline[d] to exercise whatever jurisdiction [the court] may have[,] in favor of plenary exercise of jurisdiction by the Appellate Division," and entered an order transferring the matter to this court pursuant to Rules 1:13-4 and 2:2-3(a)(2). Additionally, he ordered that the issuance of the permit to construct the swimming pool was predicated on the validity of the CAFRA permit, "so in the event of a later determination of invalidity, the [Rices] are proceeding at their own peril."

Respondents argue the appeal is untimely. SAD disagrees for several reasons. First, SAD maintains the Settlement was an informal agency action and not a final agency action subject to appeal. Second, the CAFRA permit must be invalidated because DEP made no findings of fact to support its issuance. Third, the DEP action violated a pre-existing agreement with Avalon, which prohibited construction of swimming pools in the dune area. Finally, the DEP has not complied with its procedures and failed to provide notice of its action to interested parties, as required by N.J.A.C. 7:6-5.4; absent notice, the time to appeal has not expired. We are not persuaded by SAD's arguments and dismiss the appeal.

The Rices purchased realty located as 5299 Dune Drive, Avalon, designated as Block 52.03, Lots 1, 3, 5, 7, 9, 11 and 13 and Block 52.05 Lots 1 to 5 (the property). The property is 44,100 square feet. The Rices sought to remove the existing dwelling and proposed construction of a single-family home, pool, accessory buildings, brick driveway and terrace.

In February 1999, the Rices filed an application for a CAFRA permit with the DEP. Notice of the filing was given to Avalon, the Avalon Zoning/Planning Board (Board), the Borough of Avalon Environmental Commission (Commission), the Cape May County Planning Board, the Borough of Avalon Construction Official, and homeowners located within 200 feet of the property.

Only the Commission responded. After the Commission held a public hearing, it submitted its concerns to the DEP, which included the need for run-off holding areas, modification of the driveway design, more limited removal of vegetation, reduction of the overall size of the structure, addressing the construction's impact on wildlife habitats, and mitigation of tree damage due to the use of heavy equipment. Also, the Commission highlighted that the Rices's plan to construct a swimming pool violated Section 1(b) of a 1994 State Aid Agreement (Agreement) between the DEP and Avalon. Although swimming pools are a permitted accessory use in the R-1AA zone, pursuant to § 27-6.2(A)(3)(c) of the Avalon Zoning Ordinance, the Agreement focused on maintaining public access to the waterfront, the preservation of beaches and dunes, and limiting erosion in hazard areas. The Agreement provided Avalon would receive state funding for beach restoration if it abided by the guidelines that prohibited construction of swimming pools in the high dunes area.

The DEP denied the Rices's CAFRA permit request on June 10, 1999, stating "[t]he proposed development will cause disturbance of the dune." See N.J.A.C. 7:7E-3.16. An aggrieved party may request a hearing before the DEP Commissioner within ten days of publication of the final decision denying a CAFRA permit.

N.J.S.A. 13:19-13 and N.J.S.A. 13:19-13.1. The Rices submitted a request for review, and the matter was certified as a contested case to be heard by the Office of Administrative Law (OAL).*fn3

Prior to any action taken by the OAL, the DEP and the Rices commenced settlement negotiations. The DEP conducted an on-site inspection of the property. The Rices agreed to modify the design and size of the proposed house, driveway, and ancillary structures to fit within a smaller footprint, and consented to protect the remaining open space in perpetuity by filing a conservation easement permanently restricting the development of the area. The DEP advised the OAL that a hearing was unnecessary based upon the proposed settlement, stating: "Considering the above developments, it is clear that the applicant's original application has been voluntarily withdrawn in favor of pursuing the settlement and the Department's denial letter has been made moot by its willingness to allow development within the construction footprint as outlined above."

The Rices submitted a revised site plan for the construction, N.J.A.C. 7:7-5.4(a), which reduced the size of the house, pool, and other structures confined to forty-seven percent of the property. They further agreed the remaining fifty-three percent of the property would remain protected open space and additional vegetation would be planted to stabilize the protected dune area. Continued negotiations between the DEP and the Rices resulted in a refined site plan, which they each accepted.

The DEP published a notice of intent to settle the litigation in the DEP Bulletin. Direct notice was not given to Avalon or the Commission. The Settlement was executed on April 26, 2001. The Settlement, "serv[ing] in lieu of a CAFRA permit," allowed the Rices to construct a modified version of the initially proposed residence and swimming pool on the property. The Settlement included a statement that "Notice of this settlement shall be provided by DEP in accordance with N.J.A.C. 7:7-5.4(c) and (d). This Stipulation of Settlement shall be deemed the final decision pursuant to N.J.A.C. 1:1-19.1(d) once the conditions of N.J.A.C. 7:7-5.4 have been satisfied." It is undisputed that the DEP failed to fulfill these notice provisions.

On November 19, 2001, the Rices advised the Board they reached a Settlement with the DEP. On January 16, 2002, the Rices re-filed an application for the Board's approval of the proposed construction, under the Avalon Beach Protection Ordinance, and notified all appropriate parties. The Commission responded to the Rices's submission, and again, it presented the concerns previously submitted to the DEP.

The Board determined the proposed construction met all bulk zoning requirements and was well within the lot coverage limitations. On June 11, 2002, the Board adopted a resolution that granted conditional approval of the proposed construction. Notice of the grant of conditional approval was published. Final approval was granted on January 6, 2004, when the Rices met all conditions previously imposed. On February 18, 2004, the Board published notice of final approval of the development. Construction commenced in March 2006.

In its appeal, SAD, as an interested taxpayer on behalf of Avalon, challenges the actions or omissions of the DEP. SAD asks this court to invoke original jurisdiction and vacate the Settlement. The DEP and the Rices assert the appeal is untimely. SAD disputes the validity of that position reasoning the "Stipulation of Settlement cannot be considered [a] final agency action."

The starting point of our analysis of whether SAD's appeal is timely is the Rules of Court. Rule 2:2-3(a)(2) governs direct appeals from administrative actions. The rule states: "Except as otherwise provided . . . appeals may be taken to the Appellate Division as of right . . . to review final decisions or actions of any state administrative agency . . . ." Ibid. The timing of the appeal is set forth in Rule 2:4-1(b): "Appeals from final decisions or actions of state administrative agencies . . . shall be taken within 45 days from the date of service of the decision or notice of the action taken."

SAD first argues the Settlement was only an informal agency action, not a quasi-judicial agency action, which would be final and appealable within forty-five days. See Northwest Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 134-35 (2001) (An agency may act formally "through adjudication, which is quasi-judicial" and the forty-five day rule to seek appellate review applies to "an agency's quasi-judicial decisions that adjudicate the rights of a particular individual."). See also Pressler, Current N.J. Court Rules, comment 2 on R. 2:4-1 (2008). SAD suggests the Settlement was made "without a trial-type hearing," making it informal. Fishman, supra, 167 N.J. at 137. On the other hand, respondents assert the issuance of a CAFRA permit to allow the Rices's construction was a final agency action.

CAFRA regulates residential, commercial or industrial development in the environmentally sensitive coastal lands of the state. "No person shall construct or cause to be constructed any facility in the coastal area until a permit is issued by the [C]omissioner of the DEP." N.J.S.A. 13:19-5; Crema v. New Jersey Dept. of Envtl. Prot., 94 N.J. 286, 295 (1983). The DEP applies the New Jersey Coastal Permit Rules, N.J.A.C. 7:7-1 to -10, and the Coastal Zone Management Rules, N.J.A.C. 7:7E-1 to -8, to designate appropriate construction in the area. Once a CAFRA permit application is submitted, accompanied by an environmental impact statement, the DEP must hold a hearing for interested parties to comment on the application. N.J.S.A. 13:19-9.

The DEP adhered to this procedure in this matter. Following its initial assessment, the DEP denied the Rices's permit request. The Rices then sought review before the OAL, which created a contested action, N.J.S.A. 52:14B-2(b), to be adjudicated through a hearing before an Administrative Law Judge.

Faced with the experts' opinions, which concluded the proposed development would cause limited environmental impact, the DEP properly exercised its authority and commenced additional discussions with the Rices. When enforcing CAFRA, the DEP must seek to balance the importance of "protecting environmental concerns while encouraging compatible economic growth." Crema, supra, 94 N.J. at 304. Settlement negotiations toward that end were a logical extension of the DEP's authority and the generally accepted policy to encourage good-faith resolution of claims.

The additional negotiations spanned eighteen months. The DEP presumably considered the concerns voiced by the Commission when requesting the Rices modify the proposed development. The Rices demonstrated the dwelling would be located almost 1,000 feet landward of the shoreline and beyond the crest of the fourth dune system. Also, the Rices submitted revised development plans. They agreed to reduce the size of each part of the total development, consented to provide perpetual protection via an easement that prevents future development of fifty-three percent of the property, and assented to expand the planting of natural vegetation, such as dune grasses, to increase dune stabilization in the undeveloped dune area.

Agencies are accorded "wide latitude in improvising appropriate procedures to effectuate their regulatory jurisdiction." Metromedia, Inc. v. Dir., Div. of Tax'n, 97 N.J. 313, 333 (1984). An administrative agency may "select those procedures most appropriate to enable the agency to implement legislative policy." In re Pub. Serv. Elec. & Gas Co. Rate Unbundling, 167 N.J. 377, 385, cert. denied, 534 U.S. 813, 122 S.Ct. 37, 151 L.Ed. 2d 11 (2001). In this context, settlements are favorably accepted. "They conserve judicial time but, more importantly, represent a rational resolution of a problem by the parties most closely involved and affected." Whispering Woods at Bamm Hollow, Inc. v. Twp. of Middletown Planning Bd., 220 N.J. Super. 161, 172 (Law Div. 1987).

Although the DEP did not conduct a trial-type hearing in considering the Rices's amended permit application, it reviewed extensive documentation submitted by the Rices and the Commission. We can assume the DEP reviewed the facts and exercised its discretion in applying the law to those facts in order to reach the terms of settlement. Thus, we determine the Settlement qualified as an "administrative adjudication," defined by the Administrative Procedures Act (APA), N.J.S.A. 52:14B-1 to -15, as "any and every final determination, decision or order made or rendered in any contested case." N.J.S.A. 52:14B-2(c); In re Freshwater Wetlands Gen. Permits, 372 N.J. Super. 578, 594 (App. Div. 2004).

Accordingly, we conclude the Settlement was a quasi-judicial determination, which adjudicated the rights of the Rices to construct the proposed development on their property and was not an informal agency action. In re Issuance of Permit by Dep't of Envtl. Prot., 120 N.J. 164, 171-72 (1990); see also Cunningham v. Dep't of Civil Serv., 69 N.J. 13, 22 (1975) (the crucial question to determine whether agency action is quasi-judicial is if the determination involves a certain person whose rights will be directly affected).

SAD also seeks to invalidate the Settlement because it did not include specific factfinding. More specifically, SAD urges the DEP failed to make findings that the approved construction complied with N.J.A.C. 7:7E-3.16 (construction on dunes); N.J.A.C. 7:7E-3.1 (construction in DEP designated "Special Areas"); N.J.A.C. 7:7E-3.38 (protection of endangered or threatened wildlife or plant species habitats); or N.J.A.C. 7:7E-3.39 (protection of critical wildlife habitats); and the approval of construction of a pool, which violates the Agreement.

Agencies engaged in quasi-judicial decision-making must "consider evidence and apply the law to facts as found, thereby exercising a discretion or judgment judicial in nature on evidentiary facts . . . ." Handlon v. Town of Belleville, 4 N.J. 99, 105 (1950). The Supreme Court has instructed that to acquire the requisite finality for triggering the forty-five day period prescribed by Rule 2:4-1(b), the "agency decision should contain adequate factual and legal conclusions. The decision also should give unmistakable notice of its finality. In re CAFRA Permit No. 87-0959-5, 152 N.J. 287, 299 (1997). A determination by an agency that does not contain proper factual findings and legal conclusions is not a final decision for appeal purposes under Rule 2:4-1(b)." Ibid.

SAD does not present evidence that the Rices's proposed development in fact violated the cited regulations, rather that the DEP omitted factual determinations on these issues. Thus, the infirmity in the DEP's action does not involve the absence of statutory authority, but rather presents a procedural irregularity. In other words, SAD's concern is not that the DEP's action in consenting to the Settlement was illegal, or even unfounded, but that interested parties were denied the rationale employed by the agency to grant the permit.

The need for the DEP's factfinding in granting or denying CAFRA permits is unmistakable. N.J.S.A. 13:19-10. "[B]ased on this long history of precedent and the plain language of the statute, we conclude that [the] DEP must make findings under the standards in N.J.S.A. 13:19-10, even if the DEP finds that a CAFRA permit application complies with specific regulations." In re Protest Coastal Program Rules, 354 N.J. Super. 293, 332 (App. Div. 2002).

The Settlement under review contained only the terms of agreement and otherwise omitted the DEP's rationale for permitting the development. "[O]ur courts ordinarily recognize that an agency's specialized expertise renders it particularly well-equipped to understand the issues and enact the appropriate [action] pertaining to the technical matters within its area." Id. at 330. This is because the agency has the "staff, resources and expertise to understand and solve those specialized problems." Bergen Pines County Hosp. v. N.J. Dep't of Human Servs., 96 N.J. 456, 474 (1984); Schwerman Trucking Co. v. Dep't of Envtl. Prot., 125 N.J. Super. 14, 18-19 (App. Div. 1973). However, the record must contain substantial evidence to support the findings supporting agency action. George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994). "An agency must engage in fact-finding to the extent required by statute or regulation, and provide notice of those facts to all interested parties." In re Freshwater Wetlands Gen. Permits, supra, 372 N.J. Super. at 594.

We agree the DEP failed to engage in the necessary factfinding when issuing the Rices's CAFRA permit. Had the DEP's handling of this longstanding matter not been so negligent, resolution could have been achieved long ago. Nevertheless, in this third-party challenge to the agency's action, we cannot accept SAD's broad assertion that the decision was not final and the Settlement must be set aside because the absence of factfinding thwarted public input.

We emphasize there is no evidence that the DEP's conclusion that the application qualified for a CAFRA permit was unwarranted. The Settlement was made known to the public, first, by the published notice of intent to settle; and second, when the Rices provided it along with their re-filed application to the Board. Also, the Board was sufficiently informed to "insure an intelligently advised vote." Arlington Assoc. v. Twp. Council Parsippany Troy Hills, 118 N.J. Super. 418, 421 (App. Div. 1972). So too, public hearings before the Board, over a two-year period, provided a venue for public challenge. However, none materialized.

In this instance, we cannot conclude the public voice was silenced. Our conclusion rests on the failure of the public to take available timely action. The DEP's inadequate findings of facts "should not permit objectors an indefinite period of time to seek a review, hearing and relief. In justice and reason there must be a limit to litigation and to the time when a party, having failed to pursue his remedy, may avail himself of it." Boulevard Improvement Co. v. Academy Assocs., 3 N.J. Super. 506, 515 (Law Div. 1949) (citations omitted).

Related to the lack of factfinding is SAD's contention that the Settlement, without explanation, violated the State Aid Agreement. Presumably, the challenge is that Avalon may lose beach restoration funds if it issues a permit to construct a pool. This argument is without merit. The Deputy Attorney General appearing on behalf of the DEP emphatically dispelled this contention when she stated:

[I]f they will approve the swimming pool, we recognize that it is going to be inconsistent with the State Aid Agreement, but in light of the circumstances of the long history of this matter, [the] DEP is not going to come back and say Avalon you have violated the agreement, now you owe us the money. And we'll try now to work to try to fix this in the future.

The remaining issue for our consideration is when SAD's action matured. SAD argues the failure of the DEP to comply with the notice requirements of the APA, as specified in the Settlement, tolls the forty-five day period to file its challenge. SAD asserts it neither knew of nor was subject to constructive notice of the issuance of the CAFRA permit until it obtained a copy of the Settlement on August 25, 2006, thus, its suit was timely filed. We cannot accept this proposition.

Following a denial of a permit request, N.J.A.C. 7:7-5.4 delineates the notice requirements when a subsequent settlement is reached between the DEP and an applicant appealing the initial decision. The regulation requires the DEP to publish notice of a proposed settlement in the DEP Bulletin and to provide notice "to the clerk of the municipality in which the proposed development is located and to any interested third party who commented on the project in writing or at the public hearing" to allow "any interested person . . . 10 days from the date of publication in the DEP Bulletin to comment on a proposed settlement." N.J.A.C. 7:7-5.4(c) and (d). The publication of the settlement triggers the appeal rights of any affected party. N.J.A.C. 7:7-5.4(e).

On January 10, 2001, the DEP published its proposed settlement in the DEP Bulletin as required by N.J.A.C. 7:7-5.4(c). The DEP conceded it took no further action, but relies on Riedel v. Sheeran, 73 N.J. Super. 105 (Law Div. 1962), arguing that "in the absence of proper notice, the forty-five day period to challenge [the agency] action will begin running from the date of the plaintiff's actual knowledge of the action taken." Id. at 118-19.

In Riedel, a property owner, proximate to the applicant's premises, objected to a permit request to operate a gas station at the site. Id. at 106. The plaintiff received notice of and attended a hearing before the Board of Adjustment to voice her objections. Id. at 108. The Board granted the permit but did not publish its final action. Id. at 109. The plaintiff filed a complaint in lieu of prerogative writs six months after the Board's decision. Ibid. The defendant challenged the complaint as untimely arguing that although constructive notice could not be shown, the plaintiff had received actual notice of the Board's decision and more than forty-five days had elapsed, barring suit. Ibid. Reasoning that a plaintiff may file a prerogative writs action upon actual notice of the act contested, see Donovan v. City of New Brunswick, 50 N.J. Super. 102, 106 (Law Div. 1958) (plaintiff's suit brought after expiration of limitations periods allowed as no notice was given and the complaint was timely after notice was received), the Law Division concluded that the right of review accrued on the date plaintiff received actual notice of the Board's decision. Ibid.

Our subsequent decisions have distinguished the conclusion in Riedel. See Stokes v. Twp. of Lawrence, 111 N.J. Super. 134, 139 (App. Div. 1970) (objector with actual notice was justified in reasonably delaying the filing of action until publication and filing action within forty-five days of publication); Toutphoeus v. Joy, 81 N.J. Super. 526, 532 (App. Div. 1963) (same); Marini v. Borough of Wanaque, 37 N.J. Super. 32, 38 (App. Div. 1955) (plaintiff's prerogative writs action dismissed as untimely when plaintiff who had actual notice of construction waited and filed a challenge to issuance of certificate of occupancy). However, we have not had an occasion to rule on circumstances where an agency fails to publish its final action and an interested party with actual notice of the agency action files a legal challenge well beyond the forty-five day limitations period.

"[G]enerally[,] a cause of action is deemed to accrue when facts exist[,] which authorize one party to maintain an action against another." Marini, supra, 37 N.J. Super. at 38. SAD's suit focuses on the lack of constructive notice of the DEP's grant of the CAFRA permit. Its standing is on behalf of Avalon and the Commission. However, the record reflects Avalon received actual notice of the Settlement on November 19, 2001, and the Commission received the Rices's updated application that included the Settlement prior to January 18, 2002, when it commented on the modified development application. A public hearing was held in June 2002, and notice of the conditional approval of the construction was published on July 10, 2002. Final approval was issued in January 2004, and was published on February 18, 2004. At no time during this twenty-seven month period was a taxpayer challenge lodged. Construction commenced in March 2006.

We conclude that the DEP's lapse in providing constructive notice to interested parties was cured by the Rices's provision of actual notice. Noting that Avalon and the Commission are the real parties in interest, SAD must accept that Avalon and the Commission were provided with the terms of settlement in 2001 and 2002, respectively. At that point, the finality of the DEP's decision was unmistakable. In re CAFRA Permit No. 87-0959-5, supra, 152 N.J. at 299. Then, for almost two additional years, public hearings aired the details of the construction, which triggered no taxpayer action. Even when the construction commenced, with the demolition of the prior structure and placement of footings for the new dwelling, SAD delayed its legal challenge for another six months.

We cannot ignore the Rices's good faith compliance with the CAFRA and municipal processes. Nothing is alleged suggesting untoward conduct to achieve permission to commence construction. The expiration of the forty-five day period for filing a challenge gave the Rices a vested right to be free from interference. "If public need exists for pressing prerogative writ litigation to prompt conclusion after it is instituted, an even greater need for prompt and timely institution thereof must co-exist." Theresa Grotta Home for Convalescents v. Bd. of Adjustment of N. Caldwell, 19 N.J. Super. 331, 336 (App. Div. 1952).

SAD and its taxpayer members had ample opportunity to file an action long before it chose to do so. The suggestion that SAD lacked notice until Avalon responded to its information request is unsupportable. We conclude that the appeal was not perfected within the period provided by Rule 2:4-1(b). "Where the appeal is untimely, the Appellate Division has no jurisdiction to decide the merits of the appeal." In re Hill, 241 N.J. Super. 367, 372 (App. Div. 1990) (citing Alberti v. Civil Serv. Comm'n, 41 N.J. 147, 154 (1963)). The appeal is, therefore, dismissed as untimely.

Appeal is dismissed.

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