August 25, 2008
HILLSBOROUGH STORAGE, L.L.C., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
HILLSBOROUGH TOWNSHIP ZONING BOARD OF ADJUSTMENT AND RAIA SELF-STORAGE OF HILLSBOROUGH, L.L.C., DEFENDANTS-RESPONDENTS/CROSS-RESPONDENTS, AND SUBURBAN CORP. AND 713 COMPANY T/A WEST ESSEX INDUSTRIAL PARK, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1031-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 25, 2008
Before Judges A. A. Rodríguez and Collester.
Hillsborough Storage L.L.C. (Appellant), the owner and operator of multiple self-storage facilities, appeals from Judge Allison E. Accurso's decision upholding the finding by the Hillsborough Board of Adjustment (Board) that self-storage facilities are a permitted use in the I-1 Light Industrial Zone (I-1 Zone). Specifically, Appellant argues that our decision in DePetro v. Twp. of Wayne Planning Bd., 367 N.J. Super. 161 (App. Div.), certif. denied, 181 N.J. 544 (2004), changed the law and that the idea that self-storage facilities are warehouses is no longer a tenable argument. Appellant argues that, in light of the DePetro decision, self-storage facilities are not warehouses and cannot be deemed a permitted use in the I-1 Zone.
These are the operative facts. Suburban Corp. and 713 Company t/a West Essex Industrial Park (West Essex) owns 3.5 acres of property in Hillsborough's I-1 Zone. West Essex contracted to sell this property to Raia for the construction of a three-story self-storage facility.
West Essex and Raia applied to the Hillsborough Township Planning Board (Planning Board) for approval of a minor subdivision, site plan and rear yard variance for construction of the proposed self-storage facility. While the Planning Board's decision was pending, Appellant challenged whether self-storage facilities were a permitted use in the I-1 Zone by filing an application pursuant to N.J.S.A. 40:55D-70b for an interpretation of sections 188-97 and 188-106B(2) of the Hillsborough Township's Zoning Ordinance.
According to section 188-106A(1) of the Township's Ordinance, the purpose of the I-1 Zone is to "create zoning districts recognizing the existing pattern of small industrially oriented facilities, allowing remaining lots in the same areas to be developed with similar uses and providing areas for modest industrial operations." Pursuant to section 188-106B(2), one of the expressly permitted uses in the I-1 Zone is "[w]arehousing, shipping and receiving completely within an enclosed building." Although those uses are not specifically defined in the Zoning Ordinance, the general principle is that "[a]ll uses not expressly permitted are prohibited."
The Board held a public hearing. At the hearing, Appellant introduced the testimony of Peter Steck, a licensed and experienced planner who, in his professional opinion, stated that section 188-106B(2) lists warehouses as a permitted use in the I-1 zone and self-storage facilities are not warehouses. The Board also heard from Robert Ringelheim, the Township's planner, who opined that self-storage facilities had already been determined to be a permitted use in the I-1 and GI Zones as evidenced by the three self-storage facilities currently in operation. Ringelheim stated that the zoning ordinance as it pertains to the I-1 Zone "[had] not changed in form since 1993, before the first self-storage facility was erected." In addition, two members of the public appeared at the hearing to ask questions of the planners and to make comments on the application. West Essex did not attend or participate in this hearing.
The Board determined:
[There is] no significant difference between the two zones with respect to warehousing or self-storage uses.
The principle permitted uses in the I-1 and GI Zone Districts include warehousing without referring to either customer service uses or commercial storage warehouse uses. The proposed self-storage facility is a lower impact use than a commercial storage warehouse in terms of the traffic generation, truck traffic, noise and amount of deliveries.
The Board finds that the self-storage facility use is a much better planning fit in terms of the impact on surrounding uses than a commercial storage warehouse.
The Board finds that self-storage, as described in the application, is a permitted use in the I-1 Zone District.
Appellant filed an action in lieu of prerogative writs challenging the interpretation of the zoning ordinance by the Board. All three defendants filed timely answers and West Essex asserted several affirmative defenses and its own counterclaim.
After submitting its responsive pleading, West Essex sent a frivolous litigation letter to Appellant, seeking a voluntary dismissal of the action against it on the basis that Appellant failed to state a claim upon which relief could be granted. Appellant responded that West Essex was included as a defendant in the action "because their interests [would] be affected by the outcome of [the] litigation." However, Appellant offered to stipulate to the dismissal of the action against West Essex in exchange for West Essex agreeing to abstain from challenging any decision rendered in Appellant's favor.
After a one-day trial, Judge Accurso upheld the decision of the Board that self-storage facilities are a permitted use in the I-1 Zone. Thereafter, West Essex moved for fees and sanctions against Appellant pursuant to Rule 1:4-8 on the basis that it initiated frivolous litigation by naming it as a party without a sufficient legal basis to do so. The judge denied this motion.
The Appeal Appellant contends that the judge failed to evaluate the Board's determination concerning the permissibility of self-storage facilities in the I-1 Zone under the appropriate standard of review. Namely, Appellant argues that the trial court afforded too much deference to the Board rather than reviewing the record de novo. We disagree.
We note that factual findings made by a municipal body are entitled to substantial deference "if supported by sufficient credible evidence in the record." Urban v. Planning Bd., 238 N.J. Super. 105, 111 (App. Div. 1990), aff'd as modified, 124 N.J. 651 (1991) (citing Rowatti v. Gonchar, 101 N.J. 46, 51 (1985)). However, it is generally accepted that "interpretation of an ordinance is a purely legal matter as to which the administrative agency has no peculiar skill superior to the courts'." Jantausch v. Verona, 41 N.J. Super. 89, 96 (Law Div. 1956). Thus, a reviewing court is not obliged to show deference to a decision made by a municipality concerning a purely legal issue. Urban, supra, 238 N.J. Super. at 111-12; DePetro, supra, 367 N.J. Super. at 174. Therefore, a reviewing court analyzes decisions made by the municipality concerning the construction and interpretation of an ordinance de novo. Bubis v. Kassin, 184 N.J. 612, 627 (2005); United Prop. Owners Ass'n of Belmar v. Borough of Belmar, 343 N.J. Super. 1, 14 (App. Div.), certif. denied, 170 N.J. 390 (2001); Jantausch, supra, 41 N.J. Super. at 96. Nevertheless, a reviewing court must "give deference to a municipality's informal interpretation of its ordinances." Fallone Props., L.L.C. v. Bethlehem Twp. Planning Bd., 369 N.J. Super. 552, 561 (App. Div. 2004).
Here, the disputed issue centers around the interpretation of section 188-106B(2) of the Township's Ordinance. Accordingly, the trial court was required to review the Board's decision de novo as the issue presented concerned a legal question. Still, a court is cautioned against using the de novo standard to completely disregard a municipality's long-standing interpretation of its ordinance. As stated above, "although [a reviewing court must] construe the governing ordinance de novo, [the court must still] recognize the board's knowledge of local circumstances and accord deference to its interpretation." Fallone, supra, 369 N.J. Super. at 562 (citing Somers Assoc. v. Gloucester Twp., 241 N.J. Super. 323, 342-43 (App. Div.), certif. denied, 122 N.J. 355 (1990)).
Here, Judge Accurso reached her decision concerning the substantive issue after considering the testimony presented by the planners. We conclude that the judge properly applied the de novo standard of review, even though she took into consideration the Board's long-standing interpretation of the ordinance.
Next, Appellant argues that this court's opinion in DePetro expressly rejected the idea that self-storage and warehouses are similar facilities, and made a zoning distinction between the two. This argument, however, oversimplifies the holding reached by this court in DePetro and distorts the persuasiveness of the DePetro decision on the issue presented in this case.
According to section 188-97 of the Township's Ordinance, "all uses not expressly permitted are prohibited." Pursuant to section 188-106(B), there are eight "principal permitted uses" in the I-1 Zone. Of these eight, one permitted use is "[w]arehousing, shipping and receiving completely within an enclosed building." Hillsborough Zoning Ordinance section 188- 106(B)(2). According to section 188-106A(1), the general purpose of the I-1 Zone "is to create zoning districts recognizing the existing pattern of small industrially oriented facilities, allowing the remaining vacant lots in the same areas to be developed with similar uses and providing areas for modest industrial operations." Appellant contends that this list is presumably exhaustive concerning permitted uses and that self-storage facilities are simply not the equivalent of a warehouse. Conversely, West Essex and the Township of Hillsborough contend that the Board has consistently interpreted the term warehousing to be inclusive of self-storage facilities in the I-1 Zone as evidenced by the three existing self-storage facilities currently operating in the I-1 and GI Zones.
In general, "[a]s in the case of statutes, the purpose of construction of ordinances and municipal by-laws is the discovery and effectuation of the local legislative intent . . . ." Wright v. Vogt, 7 N.J. 1, 5 (1951). In doing so, the appellate court "give[s] deference to a municipality's informed interpretation of its ordinances, while nevertheless construing the ordinance de novo." Wyzykowski v. Rizas, 254 N.J. Super. 28, 38 (App. Div. 1992), aff'd in part, rev'd in part, 132 N.J. 509 (1993).
Here, Appellant relies heavily on this court's decision in DePetro to support its argument that self-storage facilities have been expressly determined not to be the equivalent of a warehouse facility. In DePetro, we considered whether a Wayne Township Ordinance precluded the construction of self-storage facilities based upon a controlling zoning ordinance that expressly prohibited operation of commercial storage warehouses. In analyzing this question, the DePetro court lengthily discussed the differences between commercial storage warehouses and self-storage facilities. Id. at 173. Ultimately, the DePetro court held that, although both facilities perform storage functions, there were distinct differences in the method of storage, purpose of storage, modes of delivery, and clientele regarding each type of facility. Id. at 174. The DePetro court, however, noted that despite obvious differences between self-storage and warehouse facilities, self-storage facilities are a subset of warehouses. Id. at 176.
In rendering its decision, the DePetro court looked to evidence that the Board had previously construed the ordinance as permitting self-storage facilities. Id. at 175. Indeed, the DePetro court stated that our Supreme Court has already observed that: "An agency's construction of a statute over a period of years without legislative interference will generally be granted great weight as evidence of its conformity with the legislative intent." DePetro, supra, 367 N.J. Super. at 175 (quoting Last Chance Dev. P'ship v. Kean, 119 N.J. 425, 434 (1990)).
In this case, the zoning ordinance has already been interpreted by the Board to include self-storage facilities in the I-1 Zone as a permitted use. Although Appellant can make a plausible argument that the DePetro decision impliedly supports its position that self-storage and warehouse facilities have distinct differences, this argument ultimately fails in light of the Board's prior determination that the construction of self-storage facilities is permitted. Unlike DePetro, where the township clearly attempted to prohibit large-scale warehousing in a particular business zone, the I-1 Zone generally permits warehousing and the construction of self-storage facilities. Furthermore, in accordance with the township planner's testimony, there is already three self-storage facilities currently in operation in Hillsborough. Additionally, any construction of the I-1 Zone "has not changed in form since 1993, before the first self-storage facility was erected." As such, the court simply cannot overturn the Board's interpretation in the face of its consistent historical application. Rather, the court is instructed to engage in a review of the zoning ordinance with an eye towards liberally construing any inconsistencies in favor of the municipality. Fallone, supra, 369 N.J. Super. at 561.
Hillsborough has also misplaced its reliance on the Self-Service Storage Facility Act (Act), N.J.S.A. 2A:44-187 to -192. Although the Act states that a "self-service storage facility" is not a warehouse, this is only true for purposes of chapter 7 of Title 12A of the New Jersey Statutes, i.e., the Uniform Commercial Code. N.J.S.A. 2A:44-188.
Lastly, Appellant contends that the Board's decision was arbitrary, capricious and unreasonable because: 1) it failed to fully explain the reasoning behind its decision; 2) it did not specifically address the DePetro decision; and 3) its reliance upon "planning fit" of the proposed self-storage facility was inappropriate.
First, the trial court already acknowledged that the Board made improper statements concerning its belief that self-storage facilities were a preferable planning fit in the I-1 Zone. Since this issue was not before the Board, it lied outside of their jurisdiction and the trial court correctly disregarded such statements as superfluous language.
With respect to Appellant's other two arguments, there is simply no merit to their charges that the Board failed to sufficiently articulate the rationale supporting its determination that self-storage facilities are permitted in the I-1 Zone. In its resolution, the Board engaged in an in-depth discussion of the relevant provision of the zoning ordinance, the township's prior application of the I-1 Zone resolution, and credited the testimony introduced by both planning experts. Ultimately, the Board concluded that there were no significant changes in the law requiring them to alter their historical application of the I-1 Zone as it relates to self-storage facilities. Moreover, Appellant's argument that the Board failed to consider the purported impact of the DePetro decision because it failed to identify the case by name in its decision is illogical. The more important issue is whether the decision reached by the Board was arbitrary and capricious. We conclude that it was not.
On cross-appeal, West Essex argues that the judge erred in denying its motion for fees and the imposition of sanctions against Appellant for violating R. 1:4-8, which prohibits the institution of "frivolous litigation." West Essex contends that its inclusion as a named party defendant in Appellant's complaint was frivolous because there was an insufficient legal basis to do so.
As stated by our Supreme Court:
R. 1:4-8 authorizes the court to impose sanctions, including attorney's fees, if a party's complaint: is filed in bad faith; is not warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; or contains factual allegations that do not have evidentiary support or, as to specifically identified allegations, [are neither] likely to have evidentiary support [nor] will be withdrawn or corrected if reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support. [Schettino v. Roizman Dev., 158 N.J. 476, 487-88 (1999) (internal quotations omitted).]
Initially, one must first evaluate whether the party seeking an award of attorney's fees and sanctions pursuant to R. 1:4-8 has satisfied the two-step procedural prerequisites laid out in the rule. More specifically, in order for a party to properly preserve a Rule 1:4-8 motion, a party is required to first make a separate motion with the court and then must give notice to their adversary of its right to withdraw the objectionable pleading within a twenty-eight-day period. Trocki Plastic Surgery Ctr. v. Bartkowski, 344 N.J. Super. 399, 406-07 (App. Div. 2001), certif. denied, 171 N.J. 338 (2002).
Here, West Essex satisfied both requirements by filing a separate motion with the court followed by sending a frivolous litigation letter to Appellant requesting a voluntary dismissal. Accordingly, whether West Essex is entitled to fees and sanctions is dependent upon the substantive merit of its argument.
As a rule, attorney's fees will not be awarded where a party has a "reasonable and good faith belief in the merit of [its] cause." First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007) (citing DeBrango v. Summit Bancorp., 328 N.J. Super. 219, 227 (App. Div. 2000); K.D. v. Bozarth, 313 N.J. Super. 561, 574-75 (App. Div.), certif. denied, 156 N.J. 425 (1998)). As such, "[t]he nature of conduct warranting sanction under Rule 1:4-8 has been strictly construed . . . ." Ibid. Indeed, the touchstone of the inquiry is based upon "objective reasonableness." Wyche v. Unsatisfied Claim & Judgment Fund of the State, 383 N.J. Super. 554, 560-61 (App. Div. 2006). Additionally, a successful claim brought under Rule 1:4-8 will only hold an attorney, and not their client, personally liable. In re Farnkopf, 363 N.J. Super. 382, 397 (App. Div. 2003).
Here, Appellant instituted this action for the sole purpose of subjecting the Board 's decision to de novo judicial review. Noticeably absent from the complaint was a claim directly asserted against West Essex. When answering Appellant's complaint, West Essex noted that Appellant failed to state a claim upon which relief can be granted, and that the action was frivolous, as applied to them, pursuant to Rule 1:4-8.
Appellant argues that West Essex, as the property owner, was rightfully included as a defendant because a property owner and contract purchaser whose contract is contingent upon resolution of land use matters concerning the property have consistently been named as parties to litigation involving the status of such property. As support, Appellant cites several Appellate Division cases where property owners were properly joined as parties in actions concerning zoning and planning board issues. All of these cases involve plaintiffs who lodged a challenge to either a zoning or planning board decision with specific implications on the existing property owner and contract purchaser to a single parcel of property. See Scardigil v. Borough of Haddonfield Zoning Bd. of Adjustment, 300 N.J. Super. 314 (App. Div. 1997) (appealing specific variances granted to a property owner); Perlmart of Lacey, Inc. v Lacey Twp. Planning Bd., 295 N.J. Super. 234 (App. Div. 1996) (addressing plaintiff's challenge to the grant of a conditional use permit to a property owner engaged in commercial activities); Galanter v. Planning Bd. of Howell, 211 N.J. Super. 218 (App. Div. 1986) (challenge to site plan approval by local planning board). As pointed out by West Essex, this case presents an entirely different factual scenario. Here, Appellant's suit consists of a more general challenge to the interpretation made by the Board concerning the status of the I-1 Zone and does not concern a land use determination directly affecting West's Essex's particular piece of property.
Nevertheless, Rule 1:4-8 requires that Appellant's actions rise to the level of malicious or harassing behavior before fees are awarded or sanctions imposed. Although, Appellant mistakenly included West Essex as a defendant because they believed its interests would otherwise be jeopardized, they did not engage in malicious or harassing conduct. Moreover, the standard allows a party's good faith to be taken into consideration. As evidenced by its response to the frivolous litigation letter, Appellant clearly believed that inclusion of West Essex as a defendant was required since their contract with Raia was presumably contingent upon its ability to guarantee that Raia would be able to construct a self-storage facility on the land. Furthermore, Judge Accurso noted that West Essex took proactive steps to assert its position in the litigation by filing a counterclaim against Appellant, "suggest[ing] an interest in the suit."
Finally, we reject Appellant's argument that the NoerrPennington doctrine grants to it immunity from any Rule 1:4-8 frivolous litigation claim by West Essex. The Noerr-Pennington doctrine affords homeowners immunity when petitioning the government for redress in the context of zoning applications that affect their property rights. Structure Bldg. Corp. v. Abella, 377 N.J. Super. 467, 472 (App. Div. 2005); Lobiondo v. Schwartz, 323 N.J. Super. 391 (App. Div. 1999). West Essex is not a governmental entity, rendering the doctrine inapplicable in this case.
We affirm on the appeal and cross-appeal.
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