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Riya Finnegan LLC v. Township Council of the Township of South Brunswick

December 22, 2008

RIYA FINNEGAN LLC, A NEW JERSEY LIMITED LIABILITY COMPANY, PLAINTIFF-APPELLANT,
v.
TOWNSHIP COUNCIL OF THE TOWNSHIP OF SOUTH BRUNSWICK, DEFENDANT-RESPONDENT, AND
THE SOUTH BRUNSWICK TOWNSHIP PLANNING BOARD, DEFENDANT.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 394 N.J. Super. 303 (2007).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

HOENS, J., writing for a majority of the Court.

In this appeal, the Court considers 1) the standards against which courts may test the sufficiency of the reasons given by a municipality for rezoning a parcel from a previously-designated zone that is consistent with the existing Master Plan to a zone that is not; and 2) whether, and under what circumstances, the decision of a municipality to rezone a single parcel in a manner inconsistent with the Master Plan constitutes impermissible inverse spot zoning.

Plaintiff Riya Finnegan LLC (Finnegan) owns a large parcel of undeveloped land in South Brunswick along Route 27. South Brunswick adopted its Master Plan in 2001. Under the Plan's Land Use Element, Finnegan's parcel and much of the other land along Route 27 was zoned C-1, Neighborhood Commercial. The Master Plan described this zone as being devoted to retail service businesses and professional offices. In 2003, Finnegan filed a site plan application to develop its parcel by constructing one professional and two retails buildings, including a drugstore. Neighboring residents objected, contending that pharmacies were not a permitted use. The Planning Board and the Zoning Board rejected that challenge. Next, the neighboring residents appeared before the Township Council and asked that Finnegan's parcel be rezoned to Office Professional (OP). They argued that the surrounding area was largely developed and if the parcel was developed as permitted by the C-1 Zone, there would be additional traffic, noise, odor, dust and pollution. The matter was referred to the Planning Board. After a public hearing, the Board recommended that the Township Council rezone Finnegan's parcel. In 2005, after hearing from the neighboring property owners and from Finnegan's representative, the Township Council adopted Ordinance 15-05, rezoning Finnegan's parcel to OP. The resolution that explained the Council's reasoning recognized that rezoning the parcel would not be consistent with the Master Plan, but stated that it would significantly protect the health, safety and welfare of the residents and motorists. The purposes expressed in the resolution were to "prevent an intensification of traffic congestion at the intersection" and to lessen the flow of vehicles through the nearby residential development and past a school and a park. Finally, the resolution explained that professional offices create minimal noise, lights, and odors, and generate fewer traffic problems.

Finnegan filed a complaint in lieu of prerogative writs, asserting that Ordinance 15-05 was inconsistent with the Master Plan, was arbitrary and capricious, and constituted impermissible inverse spot zoning. The Law Division agreed, declared the ordinance invalid, and remanded the matter to the planning board for consideration of Finnegan's site plan application. 386 N.J. Super. 255 (Law Div. 2006). The court reasoned that even though the Township had complied with the technical requirements of the Municipal Land Use Law (MLUL), its decision was arbitrary and capricious because it was based solely on the assertions of the neighboring property owners. In the alternative, the court concluded that because the Township had rezoned only Finnegan's parcel and there was no evidence in the record that the zoning change would further the comprehensive zoning plan in the Township, it constituted impermissible inverse spot zoning.

The Appellate Division reversed and reinstated Ordinance 15-05. 394 N.J. Super. 303 (App. Div. 2007). The appellate panel reasoned that because the Township Council was acting in a legislative rather than quasi-judicial capacity, its reliance on the objections of the neighboring residents alone was permitted. The panel also concluded that the ordinance adequately complied with the MLUL by setting forth the reasons for the governing body's decision to rezone the parcel in a manner that was inconsistent with the Master Plan. Finally, the panel rejected the trial court's conclusion that the ordinance constituted inverse spot zoning.

HELD: The ordinance that was adopted by the municipality's governing body, which rezoned the parcel of land at issue in this case, was arbitrary and capricious and constituted impermissible inverse spot zoning.

1. The MLUL grants municipal governing bodies the power to adopt or amend zoning ordinances, but the power cannot be wielded arbitrarily. Pursuant to the MLUL, a zoning ordinance must be adopted after the planning board has adopted a land use plan element and a housing plan element of a master plan and all provisions of the zoning ordinance or any amendment or revision must either be substantially consistent with the plan elements of the master plan or designed to effectuate them. The MLUL also permits the governing body to adopt a zoning ordinance that is inconsistent with the Master Plan, but only by affirmative vote of a majority of the governing body with the reasons set forth in a resolution and recorded in its minutes. Here, there is no doubt that the municipality complied with the technical requirements of the MLUL by referring the matter to the planning board for review and by including in the resolution that accompanied the ordinance the reasons behind the decision to rezone Finnegan's parcel. (Pp. 8-11)

2. The reasons expressed by the governing body for rezoning Finnegan's parcel fall short, however. In part, they fail to point to any support for the neighbor's concerns about traffic. If concerns expressed by neighboring residents about traffic congestion suffice to support a rezoning ordinance, it may become impossible for any undeveloped parcel to be utilized, thus fueling faster development as each property owner hurries to avoid being the owner of the last piece of undeveloped land. Furthermore, rezoning the property to the OP Zone would not necessarily resolve the residents' concerns because OP Zone includes banks, health clubs, fitness centers, dance studios, nursing homes, extended stay facilities, assisted living facilities, and research facilities. There is no evidence in the record that those uses would not also generate the traffic congestion that concerned the neighboring residents. (Pp. 11-12)

3. The resolution also does not explain why Finnegan's parcel, which was zoned C-1 and was located along a corridor dotted with areas zoned C-1, became appropriate for OP zoning. The OP Zone was designed for an entirely different part of the municipality and, prior to this decision, existed only there. The failure of the municipality to explain why or how it became appropriate to apply to Finnegan's land a zone that by definition applies to a part of the town with unique planning characteristics suggests that the choice was arbitrary. The fundamental question in all zoning cases is whether the requirements of the ordinance are reasonable under the circumstances. The Court concludes that the decision to rezone Finnegan's property was arbitrary, capricious and unreasonable. (P. 13)

4. The Court also finds that the decision to rezone Finnegan's parcel was arbitrary and capricious because it constituted inverse spot zoning. In spot zoning, the owner of a parcel seeks to reap the benefit of a zoning decision, by special ordinance or by variance, which treats his or her property more favorably than the comprehensive plan would allow to the detriment of the larger community or the immediate neighbors. In inverse spot zoning, it is the neighboring community that seeks to reap a benefit by imposing its particular view, contrary to the previously generated comprehensive plan, upon the specific parcel, to the detriment of the rights of that parcel's owner. Here, the rezoning constituted inverse spot zoning because it will now be more difficult for Finnegan to develop it when its proposed site plan was completely in accord with the previously-designated zone, the new zone was originally designed for an entirely different part of the town and for different planning purposes, the new zone does not further a comprehensive plan, the neighboring property owners were the impetus for the change, and the governing body and planning board acted without hearing from expert planners or consultants. (Pp. 14-20)

The judgment of the Appellate Division is REVERSED and the judgment of the Law Division is REINSTATED.

JUSTICE ALBIN filed a separate, DISSENTING opinion, in which JUSTICE LONG joins, and disagrees that the democratic exercise of the Township's will through the legislative process, as provided under the MLUL, was arbitrary and capricious, or that the ordinance can be nullified on the basis of the equitable doctrine of inverse spot zoning, and would affirm the judgment of the Appellate Division.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, WALLACE, and RIVERA-SOTO join in JUSTICE HOENS's opinion. JUSTICE ALBIN filed a separate, dissenting opinion, in which JUSTICE LONG joins.

The opinion of the court was delivered by: Justice Hoens

Argued September 22, 2008

This appeal involves two inter-related zoning questions. First, we consider the standards against which courts may test the sufficiency of the reasons given by a municipality for rezoning a parcel from a previously-designated zone that is consistent with the existing Master Plan to a zone that is not. Second, we consider whether, and under what circumstances, the decision of a municipality to rezone a single parcel in a manner inconsistent with the Master Plan constitutes impermissible inverse spot zoning.

Because we conclude that the ordinance adopted by the municipality's governing body, as explained in its supporting resolution setting forth that body's reasons for changing the zoning applicable to this particular piece of land, was arbitrary and capricious, and because under the circumstances, the rezoning of this specific parcel constituted inverse spot zoning, we reverse the judgment of the Appellate Division and reinstate the judgment of the Law Division.

I.

Plaintiff Riya Finnegan LLC owns a sizeable parcel of undeveloped land in South Brunswick, where Route 27 borders both Franklin Township and North Brunswick. In 2001, following a two-year period during which South Brunswick studied land uses and traffic, the municipality adopted its Master Plan. In accordance with the Land Use Element of that Master Plan, plaintiff's parcel, and much of the other land along Route 27, was included in the C-1, or Neighborhood Commercial, Zone. At the time, most of the parcels included in the C-1 Zone were already developed, and the Master Plan described this zone as being devoted to retail service businesses and professional offices, including multi-story mixed-use development. In accordance with the Municipal Land Use Ordinance, "[t]he intent of the C-1 neighborhood commercial/professional office/local services district is to permit the delivery of low-traffic-generating retail and professional services which directly benefit the residents of the surrounding neighborhood." South Brunswick Township Code § 62-1146.

In 2003, plaintiff filed a site plan application, seeking to develop its parcel by constructing one professional and two retail buildings, one of which was to be a drugstore. The application fully complied with the requirements of the C-1 Zone, but neighboring residents objected, contending that retail pharmacies were not a permitted use. After a preliminary consideration, both the Planning Board and the Zoning Board rejected that challenge and concluded that a drugstore was a permitted use in the C-1 Zone.

In a continued effort to stop plaintiff from proceeding, the neighboring residents appeared before the Township Council and asked that plaintiff's parcel be rezoned. They pointed out that the surrounding area along Route 27 that was included in the C-1 Zone was already largely developed. They argued that if plaintiff were also permitted to develop its land as allowed by the C-1 Zone, there would be additional traffic, noise, odor, dust, and pollution. Instead of permitting plaintiff to do so, they wanted its land to be rezoned to Office Professional (OP).

The OP Zone, like the C-1 Zone, was a previously-existing zone, included in the 2001 Master Plan. According to the Municipal Land Use Ordinance, "[t]he intent of the OP office park district is to permit planned office zoning for portions of the U.S. Route 1 corridor and to define new design standards for buffers, building orientation, and solid waste/recycling containers in all office and commercial zones." Id. § 62-1266. The matter was referred to the Planning Board for its input and, following a public hearing during which representatives of the neighboring property owners spoke in support of the measure, that body recommended that the Township Council rezone plaintiff's property.

On March 8, 2005, after hearing from the neighboring property owners and from plaintiff's representative, the Township Council adopted Ordinance 15-05, through which it rezoned plaintiff's parcel from the C-1 Zone to the OP Zone. The accompanying resolution explaining its reasons recognized that the decision to rezone this parcel "would be inconsistent with the Master Plan," but stated that "it will significantly protect the health, safety and welfare of the residents and motorists in the area." More particularly, the governing body explained that it decided to rezone this property to "prevent an intensification of traffic congestion at the intersection," and that "increased traffic from the site if it is developed as a commercial facility that is permitted by the C-1 zone will significantly impact the flow of cars and trucks through the Brunswick Acres residential development and past the Brunswick Acres elementary school and park." In addition, the Council pointed to existing parcels in the area that had already been developed in accordance with uses permitted in the C-1 Zone, resulting in a large number of retail and similar commercial establishments.

Finally, the resolution reasoned that rezoning this property to the OP Zone would be appropriate because: there is a minimal amount of nuisance from professional offices such as noise, lights and odors; offices are typically not open on weekends, when families in residential areas tend to use and enjoy their yards; offices often serve as a transition use between commercial and residential because of its intermediate intensity between a more intense use (in this case Route 27) and a less intense use (in this case Brunswick Acres residential neighborhood); office use ...


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