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Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown

September 10, 2008

MOUNTAIN HILL, L.L.C., PLAINTIFF-APPELLANT,
v.
TOWNSHIP COMMITTEE OF THE TOWNSHIP OF MIDDLETOWN AND THE PLANNING BOARD OF THE TOWNSHIP OF MIDDLETOWN, DEFENDANTS-RESPONDENTS, AND MOUNTAIN HILL, L.L.C., PLAINTIFF-APPELLANT,
v.
PLANNING BOARD OF THE TOWNSHIP OF MIDDLETOWN, DEFENDANT-RESPONDENT, AND MOUNTAIN HILL, L.L.C., PLAINTIFF-APPELLANT,
v.
TOWNSHIP COMMITTEE OF THE TOWNSHIP OF MIDDLETOWN, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Monmouth County, Docket Nos. L-2378-04, L-5591-04 and L-0296-05.

The opinion of the court was delivered by: C.L. Miniman, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued: January 22, 2008

Before Judges Stern, Collester and C.L. Miniman.

Plaintiff Mountain Hill, L.L.C. (Mountain Hill), appeals from an order of partial judgment entered on April 22, 2005, in the consolidated actions of Middletown Township Planning Board v. Mountain Hill, L.L.C., Docket No. L-5008-03,*fn1 and Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown and the Planning Board of the Township of Middletown, Docket No. L-2378-04. The April 22, 2005, order declared that defendant Planning Board of the Township of Middletown (Planning Board) and defendant Township Committee of the Township of Middletown (Township Committee) complied with the statutorily required notice and procedure for approval and adoption of Adult Active Community (AAC) Ordinance No. 2004-2760 on April 7, 2004, and AAC Ordinance No. 2004-2798 on December 6, 2004. The order also determined that Middletown Township Mayor Joan Smith was not precluded from voting on either ordinance by virtue of an alleged conflict of interest.

Mountain Hill also appeals from an order of partial judgment entered on August 2, 2005, in the same two consolidated actions vacating the December 18, 2003, injunction against further applications by Mountain Hill to the Planning Board and determining that Mountain Hill's third Application for Development Permit filed on October 16, 2003, was subject to the "time-of-decision rule" and was, thus, governed by the December 6, 2004, AAC ordinance.

Last, Mountain Hill appeals from a November 17, 2006, final judgment dismissing all three complaints in Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown and the Planning Board of the Township of Middletown, Docket No. L-2378-04, which challenged the April 7, 2004, AAC ordinance; Mountain Hill, L.L.C. v. Planning Board of the Township of Middletown, Docket No. L-5591-04, which challenged the 2004 Master Plan; and Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown, Docket No. L-0296-05, which challenged the December 6, 2004, AAC ordinance; and declaring that the AAC ordinances were valid and not arbitrary, capricious or unreasonable.

I.

The history of Mountain Hill's efforts, spanning almost a decade at the municipal and trial court levels, to create a planned development on property fronting on Route 35 in Middletown called the "Town Center" ended with the November 17, 2006, final judgment dismissing all three actions pending against defendants. That history has been riddled with municipal conflicts of interest that were ignored at the municipal level. This project first came to our attention in 2002 when we affirmed a judgment invalidating Ordinance 2001-2632, which was applicable to Mountain Hill's property, on the ground that it was not adopted by a vote of two-thirds of all members of the governing body. Mountain Hill, L.L.C. v. Middletown Twp., 353 N.J. Super. 57, 62 (App. Div.), certif. denied, 175 N.J. 78 (2002) (Mountain Hill I). In 2003 we affirmed a judgment invalidating Ordinance 2001-2617 applicable to Mountain Hill's property on the ground that a member of the governing body had a disqualifying conflict of interest that rendered the ordinance invalid. Mountain Hill, L.L.C. v. Middletown Twp., Nos. A-1968-01, A-2556-01 (App. Div. Apr. 16, 2003) (Mountain Hill II).

Earlier this year we decided that the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21, was not violated by discussions of the political ramifications of developing the subject property which occurred at Republican caucuses attended by members of the governing body and others. See Mountain Hill, L.L.C. v. Twp. of Middletown, 399 N.J. Super. 486, 506-07 (App. Div. 2008) (Mountain Hill III). Mountain Hill III was the first of four appeals argued before us on January 22, 2008. Id. at 488. We have decided the second and third appeals concerning errors by the Zoning Board in a joint opinion filed today. Mountain Hill, L.L.C. v. Zoning Bd. of Adjustment of the Twp. of Middletown, ___ N.J. Super. ___ (App. Div. 2008) (Mountain Hill IV). This opinion resolves the issues presented in the fourth appeal and primarily concerns the events occurring after the denial of Mountain Hill's first and amended second as-of-right Applications for Development Permit filed between January 3, 2003, and August 27, 2003,*fn2 which we resolve today in Mountain Hill IV. Id. at 19-20.

To understand the context in which the present dispute arose, we briefly review some of the history of Mountain Hill's effort to develop its property and Middletown's effort to avoid that development. On June 12, 1992, the New Jersey State Planning Commission prepared the New Jersey State Development and Redevelopment Plan, "Communities of Place." That plan stressed smart growth throughout the state and designated the land along Route 35 and Kings Highway East in Middletown as a future regional center for dense, mixed-use development.

At that time, Joseph J. Azzolina, Sr., and his family owned approximately eighty-five acres of property on Route 35 North and Kings Highway East in Middletown known as Lots 53-57, 59-68 and 69.01 in Block 825 on the Middletown Township Tax Map. The Azzolina family acquired this property over a period of many years between 1954 and 1993 in order to build a shopping center. Initially, the property was located in the M-1 (light industry) and B-2 (business) zones.

Joseph J. Azzolina, Sr., learned that the Planning Board was revising the Township's Master Plan and asked that all of his property be included in one business zone rather than two. This request triggered several meetings with municipal officials who communicated an interest in creating a planned development (PD) zone for a town center. The municipal officials wanted to apply the PD zone to about 200 acres and wanted only one developer for the entire zone. They advised Joseph J. Azzolina, Sr., that they would rezone his property as the PD zone and, if he acquired additional contiguous property up to 200 acres, they would include the additional property in the PD zone as well.

The following year the Planning Board amended Middletown's Master Plan and embraced the town-center concept advocated by the State. It designated "one of the last and largest areas of contiguous developable land in the Township" along Route 35 as the PD zone, including the property owned by the Azzolina family. The Master Plan recommended that the Township Committee "consider the positive aspects that a Town Center could bring to the community." In 1994 the Township Committee adopted a zoning ordinance that followed the recommendations contained in the 1993 Master Plan, including a PD zone applicable to Azzolina's eighty-five acres along Route 35.

The Azzolina family, in accordance with the encouragement of the municipal officials, began to acquire additional property for a Town Center, relying on the municipality's representation that the additional property would be included in the PD zone. Between 1993 and 1999, they acquired another fifty to fifty-two contiguous acres. All of this property was transferred to Mountain Hill, which was initially owned by Joseph J. Azzolina, Jr., and his cousin Phil Scadutto, Mountain Hill II, supra, slip op. at 3.*fn3 However, by December 12, 2003, other Azzolina and Scadutto family members acquired an interest in Mountain Hill.*fn4

However, "[t]he balance of the tract, 50 acres, remained in the M-1 . . . zone. No amendments to the PD zone were enacted by the Township Committee from 1994 through 2000." Mountain Hill I, supra, 353 N.J. Super. at 60.

In early 2000, Mountain Hill unveiled a concept plan for the Town Center to be located on all 137 acres and met with a number of Middletown officials, including the Chairperson of the Planning Board, to ascertain whether the property zoned M-1 would be rezoned PD as first indicated in 1993. Most of the officials reacted positively, although the Planning Board Chairperson at that time expressed that the project was too big About the time that Mountain Hill's concept plan was presented, Middletown commissioned T&M Associates to perform a traffic study of Route 35 and on May 3, 2000, T&M released its final "Route 35 Corridor Study." T&M analyzed the impact of Middletown's zone plan on traffic generation along Route 35 from the Holmdel border to Red Bank. It found the traffic conditions at the time of the study to be "generally acceptable although some approaches at a few intersections experience[d] lengthy delays." Because 300 acres along Route 35 "could be developed further for uses that would impact the peak traffic hours" and full development would "greatly exceed[] current roadway capacity," T&M recommended that "the permitted intensity of development" be substantially reduced while "maintaining the existing land use plan." Alternatively, T&M recommended "changing the land use plan at key areas." Whichever alternative Middletown selected, T&M recommended that it calculate the future number of trips that would take place if all the envisioned development occurred and, if necessary, further revise the land use plan to arrive at uses that were consistent with the current highway capacity.*fn5

After T&M issued its report, Mountain Hill sought a development permit, submitting plans to Anthony P. Mercantante, Township Planning Director. Because Mountain Hill's additional property had not been rezoned by the Township Committee, Mercantante found that use variances were required to expand the PD zone into the M-1 zone and to build residential dwellings in the M-1 zone. As a result, "[i]n September 2000, Mountain Hill filed an application with the Middletown Township Zoning Board seeking a use variance for the 50 acres still zoned industrial to allow Mountain Hill to develop a commercial/residential project on its entire 135 acre tract." Mountain Hill I, supra, 353 N.J. Super. at 60.

The application sought three minor use variances in the M-1 zone on a bifurcated application, but the application was not complete until January of 2002, primarily because Mayor Rosemary Peters asked Joseph J. Azzolina, Jr., "to do a road show [and] have town meetings to . . . explain what a Town Center was to the community." He spent all of 2001 educating the public on the Town Center concept, which proposed to "construct a mixed-use development that would include 1,700,000 square feet of retail and office space and over 400 residential units, including twenty-five affordable housing units." Mountain Hill II, supra, slip op. at 3-4. "The proposed development generated substantial interest among Middletown's officials and members of the public, many of whom opposed the proposal." Id. at 4. Indeed, there were proponents of, and opponents to, the development--the single most important political issue in Middletown--including citizen-action and special-interest groups, and each had a substantial body of support.

Meanwhile, the Township Committee began to revise Middletown's Development Regulations. First, the Township Committee adopted Ordinance 2001-2617 by unanimous vote on February 20, 2001. Id. at 4-5. The ordinance added the following proviso to the definition of "open space" (the open-space ordinance):

Where open space is a requirement of a zone and is created as a result of a site plan, subdivision, conditional use or variance application, not more than 50% of the area set aside shall consist of wetlands, open bodies of water or water courses, sloped areas of 25% or greater, detention or retention basins, swales and other drainage structures. [Id. at 5.]

This amendment affected about seventy percent of the land in Middletown, including the property owned by Mountain Hill.

One committeeperson who voted on the open-space ordinance, Rick Brodsky, Esq., "was a partner in the law firm of Ansell, Zaro, Grimm and Aaron, which had represented [Mountain Hill], [Mountain Hill's] principals, and persons related to [Mountain Hill's] principals, for over thirty years." Id. at 5-6. Mountain Hill made no objection to Brodsky's presence that day because he had assured "Azzolina that he would not participate in any matters regarding the PD Zone, and the governing body had instructed Brodsky not to participate in any issues regarding the PD Zone." Id. at 6. Shortly after the adoption of this ordinance, the State reissued its development plan on March 1, 2001, and continued to advocate town center developments as a solution to suburban sprawl. That same day Mercantante submitted proposed modifications to the PD zone to the Planning Board for its consideration.*fn6

"In March 2001, the Township Committee introduced Ordinance 2001-2632 which sought to amend and 'down-zone' the existing PD zone, substantially reducing what Mountain Hill could build on its property. Mountain Hill filed a valid protest under N.J.S.A. 40:55D-63 objecting to the proposed zoning ordinance." Mountain Hill I, supra, 353 N.J. Super. at 60. Mercantante then submitted a revised PD-zone ordinance on March 21, 2001, to the Township Committee and on May 2, 2001, the Planning Board recommended changes to this ordinance. Mercantante communicated those changes to the Township Committee on May 7, 2001, and advised that the Planning Board found the proposed ordinance consistent with the Master Plan.

Public hearing on the ordinance was scheduled for May 21, 2001. The week before the hearing, Mountain Hill's attorney, Gary E. Fox, telephoned Middletown's attorney, Bernard Reilly, to formally object to the down-zone ordinance and to the involvement of Smith in the introduction of that ordinance and any further proceedings therein. In a confirmatory letter faxed on May 21, 2001, Fox advised that Smith's company, Attorneys Title Company, had done title work for a number of years for Mountain Hill, Azzolina Land Corp., and Joseph J. Azzolina, Jr. He informed Reilly that her company had been billed and paid for those services. He asserted that Smith should have been disqualified from the introduction of the ordinance and should be disqualified from participating in the May 21, 2001, proceeding and any further proceedings.

On May 24, 2001, Reilly issued an opinion letter to Smith that there was no basis for disqualification for an interest that was remote, minor, attenuated or nebulous. He recited his understanding that the title work for Joseph J. Azzolina, Jr., was completed in 1998, that the work for Mountain Hill and Azzolina Land Corp. began in early 2000 and that Smith referred this work to another title company in early October 2000. Thus, he opined that any conflict was minor and remote and did not create a disqualifying conflict. As a result of this opinion, Smith continued her participation in the adoption of the down-zone ordinance, including the June 4, 2001, meeting.

At the June 4, 2001 Township meeting, the proposed ordinance was discussed. One of the members recused himself because of a conflict of interest. During the meeting, one of the four remaining members stated that "[f]or anything to pass here, it's going to require all four of us. All right. Just understand that. Anyone of us can block this whole ordinance." The Township's attorney did not comment on this statement. The ordinance was ultimately rejected by the Township Committee.

On June 18, 2001, the Township Committee proposed Ordinance 2001-2644, which also sought to "down-zone" the PD zone. Mountain Hill again filed a valid protest under N.J.S.A. 40:55D-63 objecting to the proposed ordinance. At the public hearing on July 2, 2001, the Township's attorney announced that one of the five committee members present, Mr. Brodsky, had "recused himself with regard to this matter, as he has in the past . . . ." He then advised the Township Committee that "if a member has recused themselves, they are, in essence, resigned from the Committee for purposes of this application which means that effectively there are four, all the members of [the] governing body are four." Accordingly, he concluded that three affirmative votes [were] needed to carry the ordinance under N.J.S.A. 40:55D-63. Following that discussion the vote was taken, with three votes in the affirmative and one vote in the negative, and the ordinance declared adopted.

[Id. at 60-61.]

As with the open-space ordinance, Mountain Hill challenged the adoption of Ordinance 2001-2644 "down zoning" the PD zone (the down-zone ordinance). On December 11, 2001, Judge Florence R. Peskoe struck down this ordinance on the ground that four favorable votes were required in the face of a protest, not three. Mountain Hill I, supra, 353 N.J. Super. at 61. Middletown appealed and we held that N.J.S.A. 40:55D-63 requires that whenever there is a duly filed notice of protest, an ordinance must be passed by two-thirds of all of the members of a municipal body, even though one or more do not vote on a particular municipal ordinance. Id. at 65. Because the Township Committee is comprised of five members, we held that the protested down-zone ordinance could only be adopted by four affirmative votes, not three as Reilly advised, and affirmed the order vacating the July 2, 2001, ordinance. Id. at 66. Thus, by the end of 2001 the legal impediments to Mountain Hill's Town Center development had all been removed by the Law Division.

On March 11, 2002, Mercantante advised the Zoning Board that he had received an application from Mountain Hill for a use variance for about forty-two acres on each side of Kanes Lane in the M-1 zone adjoining the PD zone. He explained that this property was within the planned development boundary of the Master Plan. However, he observed that the Development Regulations did not follow the Master Plan boundary. He then pointed out some additional information the Zoning Board might wish to request.

Mountain Hill secured a traffic impact analysis and otherwise completed its application to the Zoning Board in July 2002. By that time, Mountain Hill sought to develop Lots 53-57, 59-73, and 75-81 in Block 825 and Lot 7.01 in Block 871 on the tax map of Middletown, totaling 137 acres. Mountain Hill IV, supra, slip op. at 4.

The project had some proposed nonconforming uses in fifty-six acres of Mountain Hill's property located in the M-1 . . . zone, which does not permit residential uses, supermarkets or department stores. The balance of its property, eighty-five acres, is located in the PD . . . zone, which permits town centers and mixed uses.

Mountain Hill sought a bifurcated use variance to permit construction of four single-family homes and four apartments in the M-1 zone as part of the overall development project. Mountain Hill also sought a bifurcated use variance to permit a portion of a department store in the PD zone to extend into the M-1 zone. Public hearings on Mountain Hill's application were held on sixteen occasions from March 21, 2002, to May 22, 2003. In addition to other witnesses, Mountain Hill presented the testimony and report of Henry J. Ney regarding the traffic impact of the proposed application, which he compared with the traffic impact of a purported as-of-right plan . . . . Ney concluded that the proposed plan would have less impact than the as-of-right plan.

At a hearing on October 15, 2002, the Zoning Board addressed an issue that arose at earlier hearings respecting the as-of-right plan on which Ney relied. The Zoning Board previously determined that the reliability of Ney's opinion respecting the traffic impact of the proposed development depended on the accuracy of his assumption that the purported as-of-right plan conformed to the Development Regulations.

There were two areas of concern addressed at the October 15, 2002, meeting: the accuracy of Mountain Hill's calculation of the floor-area ratios for each zone, which excluded a multi-story garage from gross floor area, and the inclusion of four storm-water retention basins in the calculation of the open-space ratios. The retention basins would be graded out of the existing property with a clay layer installed to assist in preserving the wet nature of the basins.

The basins would be filled with natural surface-water runoff and would be covered with topsoil and grass before being filled with water. If the runoff was insufficient to keep the basins filled, the water level would be maintained through supplemental piping. The design of the basins would be graduated with a ledge for safety purposes.

Each basin would have a fountain to discourage algae growth. From the surface of the land, a person would only see water, grass and the fountain and could not see any of the pipes or other drainage structures. [Id. at 5-7.]

The Zoning Board voted on the interpretations to be given to these definitions on October 15, 2002. Id. at 12-13. It concluded that garages must be included in gross floor area and that retention basins could not be included in open space, ibid., despite the December 11, 2001, invalidation of the open-space ordinance, which expressly exclude retention basins from open space. Mountain Hill II, supra, slip op. at 2. Ultimately, the Zoning Board on June 23, 2003, adopted a resolution denying Mountain Hill's 2000 application because it essentially sought rezoning and variances were required for gross floor area and open space.

Mountain Hill once again turned to the Law Division for relief in a prerogative-writ action filed on June 27, 2003. Mountain Hill, L.L.C. v. Middletown Twp. Zoning Bd. of Adjustment, Docket No. L-2811-03. Two years later the judge reversed the interpretation of open space on May 23, 2005, Mountain Hill IV, supra, slip op. at 23-25. We ultimately affirmed the judge's open-space decision, id. at 42-43, but we also reversed the Zoning Board's interpretation of gross floor area, which had been affirmed by the judge. Id. at 35-39. We concluded that commercial vertical parking garages should be excluded from gross floor area when calculating the floor-area ratio for Mountain Hill's property in the PD and M-1 zones and concluded that retention basins should be included in open space. Id. at 38, 42-43. Thus, no such use variances were required for the 2000 application, contrary to the Zoning Board's June 23, 2003, resolution. Id. at 43.

Sometime after the Zoning Board voted at the October 15, 2002, hearing, Mountain Hill concluded that the Zoning Board would not grant any variance to it and Mountain Hill decided to develop an as-of-right plan to submit to the Planning Board. Fully engineered, as-of-right plan drawings dated December 23, 2002,*fn7 were submitted to Mercantante with an Application for Development Permit on January 3, 2003, which also sought a consolidation subdivision into one lot. The transmittal letter asked Mercantante to deny the development permit and promptly refer it to the Planning Board.*fn8 By letter of January 16, 2003, Marianne Hanko, the Township Zoning Officer, denied the application on the ground that a variance pursuant to N.J.S.A. 40:55D-70(d) was required because inclusion of the vertical parking garage in gross floor area caused the plan to exceed the maximum floor-area ratio permitted in the PD and M-1 zones. Hanko also observed that the inclusion of retention basins in the percentage calculation of open space had already been determined by the Zoning Board. This denial was supported by an opinion letter from the Township Attorney, opining in part that a consolidation subdivision into one split-zoned lot was not permitted in order to avoid the zone setbacks. [Id. at 17-18.]

Once again, Mountain Hill turned to the Law Division and filed a prerogative-writ action against Hanko contesting her January 16, 2003, determination.*fn9

While Mountain Hill was vigorously pursuing a development permit, the Planning Board, at the request of Mayor Rosemarie Peters, prepared a Draft Master Plan in January 2003. Smith was not a member of the Board in 2003. This Draft Master Plan rejected the State's concept of town centers to avoid suburban sprawl and instead suggested that "[t]he character of Middletown should be preserved by reinforcing the character of the Township Villages." The Draft Master Plan proposed to rezone the PD zone and a portion of the adjoining M-1 zone for development of active adult housing for persons over the age of fifty-five with some included commercial space.

No doubt this plan fueled Mountain Hill's zeal to push its development plan through in some way. Mountain Hill once again filed a prerogative-writ complaint in February of 2003. Mountain Hill, L.L.C., v. Middletown Twp. Planning Bd., Docket No. L-1293-03. The complaint alleged that four members of the Planning Board had conflicts of interest that should have precluded their participation in drafting the January 2003 Master Plan. That action was resolved on July 14, 2004, when the judge vacated the 2003 Master Plan based on the proven conflicts of interest by four Planning Board members other than Smith, who was not on the Planning Board in 2003.

With the action against Hanko dismissed at the pleading stage, and not wanting to "return to the Zoning Board on the same issues it had already considered with respect to the September 19, 2000, application," Mountain Hill IV, supra, slip op. at 18, Mountain Hill obtained a "second as-of-right plan to conform to the Zoning Board's erroneous interpretations of 'gross floor area' and 'open space.'" Ibid.

The revised, fully engineered drawings dated July 2, 2003, included parking garages in gross floor area, excluded retention basins from open space and eliminated the proposed theatre and hockey rink. Mountain Hill submitted the second as-of-right plan*fn10 and an Application for a Development Permit to Mercantante on July 29, 2003. Mountain Hill again requested that Mercantante deny the application and promptly submit it to the Planning Board, expressing concern that some of the parking spaces might require a design waiver and noting that this was Mountain Hill's third application and not an amendment of any prior application.

Rather than submit [it] to the Planning Board, on August 12, 2003, Hanko again denied the development permit asserting that a (d) variance was required for the driveways providing access between the PD and M-1 zones, a (c) variance was required for buildings not sufficiently set back from the zone line boundary of the PD and M-1 zones and a possible (c) or (d) variance might be required with respect to the reconfigured open space in each zone. This denial was again supported by an opinion letter from the Township Attorney. [Id. at 18-20.]*fn11

On August 15, 2003, Mountain Hill wrote to Hanko and requested a meeting to clarify the issues raised by Hanko and Reilly and to alert them that Mountain Hill was in the process of eliminating the residential uses in the cross-zone building. Id. at 20. In accordance with that letter, on August 27, 2003, Mountain Hill filed an amended application for development permit and an amended second as-of-right plan, seeking a consolidation subdivision and eliminating the second and third residential levels in the cross-zone buildings.*fn12 Ibid.

On September 11, 2003, Joseph Kachinsky for Hanko advised Mountain Hill, based on a opinion letter from Reilly, that the August 27, 2003, amended second as-of-right application required a (d) variance for driveways, parking and accessory facilities in the M-1 zone servicing or accessory to the PD zone; a (c) variance for structures not having the required setback from the M-1 property/boundary line; and such other variances as would be determined by a completeness review. That letter was accompanied by a September 11, 2003, letter from Reilly, who cited certain case law as requiring setbacks or buffers along the zone line. He also relied on Section 16-9.23 of the Development Regulations as requiring setbacks in the M-1 zone because there was a "serious issue" about whether the lot lines could or would be eliminated. Accordingly, he opined that the amended second as-of-right plan required Mountain Hill to apply for (c) and (d) variances. On September 12, 2003, Hanko issued an amended denial of the August 27, 2003, application based on driveways, parking facilities and building structures.

As a result of this denial, on September 17, 2003, Mountain Hill filed an appeal with the Zoning Board on October 10, 2003, and sought an interpretation of certain issues. In all, Mountain Hill presented five questions, three for interpretation and two on appeal. Id. at 21-22. However, Mountain Hill began to prepare a third as-of-right plan to remediate the grounds for denial in order to get before the Planning Board. Id. at 21.

On October 16, 2003, Mountain Hill again wrote to Mercantante and applied for another development permit and requested transmittal to the Planning Board for site plan approval. He noted "[t]his is the fourth separate and distinct Application" that "Mountain Hill has made to develop this property." The third as-of-right plan submitted with the fourth application had no cross-zone buildings and no cross-zone driveways and proposed construction of only 1,188,408 square feet of space, which was seventy-six percent of the original proposal. Mountain Hill claims that it is totally conforming to all development regulations as interpreted by the Zoning Board and Mercantante.

With the third as-of-right application soon to be referred to the Planning Board for site-plan approval, it instituted an action by verified complaint in lieu of prerogative writ on October 31, 2003, under Docket No. L-5008-03 against Mountain Hill and secured an order to show cause returnable on November 18, 2003. The Planning Board alleged that Mountain Hill had three applications pending at the municipal level, one of which was before the Zoning Board. The Planning Board also alleged that Mountain Hill had two pending prerogative-writ actions, one challenging the Zoning Board's denial of the use variances sought in September of 2000 under Docket No. L-2811-03 (Mountain Hill IV) and another seeking a default approval for the failure to act on one application under Docket No. L-4131-03. Also pending was the action seeking invalidation of the 2003 Master Plan based on a conflict of interest among members of the Planning Board, under Docket No. L-1293-03, and the OPMA action in the Chancery Division under Docket No. C-316-03 (Mountain Hill III). In addition, the verified complaint alleged the pendency of the Mount Laurel litigation against Middletown and the Planning Board under Docket No. L-2810-03 and another suit filed by forty individuals in the Chancery Division, including two principals of Mountain Hill.

The verified complaint alleged violations of Rule 4:5-1(b)(2) and sought compliance with that rule, sanctions for violations of it, and an order "barring hearing of any pending applications before the [Zoning Board] and/or the [Planning Board]" and "restraining [Mountain Hill] from instituting any further Civil Actions without prior approval of this Court."

While the hearing on the Planning Board's Order to Show Cause was pending, Reilly on November 3, 2003, advised Hanko about the Planning Board's lawsuit and stated: "Pending . . . the outcome of that proceeding, it would appear to be improvident to proceed formally with this more recent [October 16, 2003] submission pending the Court's ruling on the pending Order to Show Cause." Reilly enclosed a draft letter for Hanko to issue by November 5, 2003, and recommended attaching his letter to it.

On November 5, 2003, Lawrence A. Carton, the attorney for the Planning Board, served the Verified Complaint and Order to Show Cause in Docket No. L-5008-03 by hand on Fox. Fox immediately wrote to the judge raising a number of procedural issues and presenting some scheduling concerns, as well as alerting the judge to Mountain Hill's efforts to file a totally conforming as-of-right plan.

Also on November 5, 2003, Hanko checked off "DEVELOPMENT PERMIT APPROVED" on the fourth Application for Development Permit respecting the third as-of-right plans. That approval was conditioned on an attached letter dated November 5, 2003, from Hanko. Although the letter has "DENIAL OF DEVELOPMENT PERMIT" above the date, that designation is inconsistent with the body of the letter. Hanko advised Fox as follows:

With the assistance of the Township Attorney and the Township Planner's office, please be advised of the following:

1. The issue in the previous submissions as to the merger of the PD and M1 zoned areas appears to have been addressed by the separation or division of the development with no cross connections. The detail as to the physical construction of that separation or division is not clear. However, assuming that it is confirmed that the PD and M1 zoned areas are adequately and properly divided and separated, a "d" variance would not be required. The manner and detail of the division and separation, and its compliance with zoning requirements will be reviewed further during completeness review.

2. Certain of the parking areas and/or drive/accessways may require design waivers and/or "c" variances. The exact determination of the design waivers or "c" variances required will be further reviewed in the completeness review.

3. As noted in earlier review letters, preliminary and final site plan approval is required.

4. Further variances may be determined as necessary upon further review during completeness determination or by the Board during the hearing process on the application.

Enclosed is a copy of a letter from Township Attorney . . . regarding legal issues relevant to this application. As noted therein, he advises there is a pending lawsuit and issue as to whether jurisdiction for this submission/application can proceed given the multi-submissions and various lawsuits regarding the property now pending. That determination will be made by the Court in due course. If you have any further questions in that area, please direct them to [him].

These two letters were apparently received by Fox on November 5, 2003, because he responded to Reilly that day, construing his November 3, 2003, letter and Hanko's November 5, 2003, letter as a denial of the application with a referral to the Planning Board for a forty-five-day completeness review. Fox also ...


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