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Washington Commons, LLC v. City of Jersey City


January 22, 2009


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-894-07.

Per curiam.


Argued December 17, 2008

Before Judges Parrillo and Lihotz.

Plaintiff, Washington Commons, LLC, appeals from the June 14, 2007 order of the Law Division dismissing its action in lieu of prerogative writs against defendants City of Jersey City (City), Mayor Jerramiah Healy, City Council President Mariano Vega, the Jersey City Redevelopment Agency, the Jersey City Zoning Board of Adjustment (Board), and the Jersey City Department of Housing, Economic Development and Commerce, and from the court's further order of August 9, 2007 denying plaintiff's motion for reconsideration. For the following reasons, we affirm.

The facts and procedural history may be summarized as follows. In early 2004, plaintiff applied to the Board for major site plan approval and variances pursuant to N.J.S.A. 40:55D-70(c)(1), (c)(2) and (d) for the construction of an 11-story, 52-unit residential building at 311 Washington Street in Jersey City.*fn1 The Board approved the application conditioned on plaintiff building 68 units for residence instead of the 52 units originally proposed, and further, of those 16 additional units, seven were to be affordable artist live/work units. This condition was integral to the grant of the Section 70(d) variance because the Board considered the seven affordable units to be "an inherently beneficial use," which satisfies the positive criteria. The Board's resolution further provided that the seven units were to be conveyed to "the City or its designated agent, which at this time is the [Jersey City Redevelopment Corporation], for rental to low and/or moderate income certified artists in accordance with such terms and conditions as are negotiated by [plaintiff] and the City . . . ." (emphasis added).

Apropos to this latter point, prior to the Board's May 20, 2004 hearing on plaintiff's application, Claire Davis, the supervising planner for the City and secretary to the Board, prepared and submitted a Planning and Zoning Report (Report) to the Board on May 16 and 17, 2004, in which she stated that "the applicant proposes dedicating and conveying to the City seven (7) units . . . . The additional height and density proposed for this project provide the financial incentive to enable the developer to dedicate the 'affordable' units at no monetary cost to the City." Plaintiff was provided a copy of the Report, and did not challenge it. Moreover, at the hearing itself, which plaintiff attended, Kathryn Klanderman, speaking on behalf of Pro-Arts, a local arts organization, testified that, after reviewing the plaintiff's proposed plans, "[w]e are very pleased that the developers are offering seven well-designed affordable artists' live/work spaces; that they're giving them to the arts district, as they have no requirement to do so." Once again, plaintiff lodged no objection.

Nonetheless, after approvals were obtained, a dispute arose over the interpretation of the "negotiations" clause in the Board's resolution, with plaintiff insisting that "price per affordable housing unit" was included within its scope and that the price would be plaintiff's cost per unit ($463,235.29). By March 2005, plaintiff had already begun construction of the 14-story residential building and later that year, on June 21, 2005, had applied to the City for a twenty-year tax abatement pursuant to N.J.S.A. 40A:20-14(a). In fact, it was at a subsequent meeting concerning the tax abatement that City Council President Vega demanded of plaintiff that the seven units be donated to the City or its application would not be approved. Consequently, the tax abatement application was then tabled pending resolution of ongoing negotiations. However, by October 2006, negotiations ceased and no agreement had been reached.

In apparent response to a January 10, 2007 letter from the Mayor offering $200,000 for each of the seven units and further advising that plaintiff "would have been allowed to construct a maximum of 52 units in 11 stories," plaintiff filed an action in lieu of prerogative writs against the municipal defendants. Its complaint alleged, in four counts, that defendants: (1) acted arbitrarily and unreasonably in both failing to approve a twenty-year tax abatement and failing to approve payments for the seven affordable housing units at cost price to plaintiff; (2) interfered with plaintiff's prospective economic rights; (3) negotiated in bad faith; and (4) denied plaintiff due process. Thereafter, defendants moved to dismiss plaintiff's complaint and plaintiff cross-moved to strike from the Board's resolution any reference to building seven low income housing units and to compel the City to issue sixty-eight twenty-year tax abatements. Plaintiff also cross-moved to file a notice of late claim with regard to its tort claim, as it never filed a notice of claim.

Following argument, the court granted defendants' motion to dismiss, finding plaintiff's complaint was time-barred for two reasons: (1) the prerogative writs claim (count 1) was not filed within 45 days of accrual of the cause of action, Rule 4:69-6(a), which would have been either August 2005 when the City demanded the seven units be donated or at the latest October 2006 when negotiations terminated; and (2) no notice of the tort claim (count 2) was filed within 90 days, N.J.S.A. 59:8-8. As to the latter, the judge further declined to extend the time for filing because he found the Board's action neither arbitrary, capricious, nor unreasonable. As to the former, the judge held that plaintiff should first exhaust its administrative remedy before the Board. In denying plaintiff's later motion for reconsideration, the court added that the third count was repetitive of the first count, and was therefore dismissed for the very same reason, and that, as to the fourth count, there was no evidence of any due process violation, as plaintiff had been present at all Board hearings and actively participated in the process. Plaintiff then filed this present appeal, raising the following issues:



Plaintiff never returned to the Board as suggested by the Law Division judge. Instead, during the pendency of this appeal, at its regular meeting on November 8, 2007, the Board decided its May 20, 2004 resolution required plaintiff to donate the seven affordable housing units to the City and that price was never intended to be a term to be negotiated.*fn3 In response, on December 24, 2007, plaintiff filed a second complaint in lieu of prerogative writs (Washington Commons II) challenging the Board's November 8, 2007 "clarification." Defendants then filed a motion to dismiss, supported by the certification of Claire Davis and her Planning and Zoning Report. By order of April 11, 2008, the court dismissed this complaint on res judicata grounds, finding that because plaintiff did not exhaust its administrative remedies before the Board, and further that the Board's so-called "clarification" had actually been the Board's position all along, nothing had changed in the relationship between the parties since Washington Commons I.*fn4 In other words, the impasse in negotiations between the City and plaintiff existed prior to the Board's "clarification," and thus, plaintiff's claims remained time-barred because it should have filed a complaint in lieu of prerogative writs in August 2005, or at the latest, October 2006. Tellingly, the court added that upon reviewing the additional proofs adduced in Washington Commons II, there would be little doubt in my mind that the decision of the conveyance for a dollar a piece would in fact be my conclusion. The Planner's report which was the basis of the action of the Board of Adjustment was something they relied upon. It was something that was in my opinion and experience had to have been provided to Mr. Colling, to the architect, to the attorney.

And furthermore I'm satisfied from the additional transcript that I've now seen regarding the testimony of the person from the arts community that everyone that was there expected that the units were to be conveyed for a dollar.


As a threshold matter, we emphasize that no appeal has been filed from the Law Division's April 11, 2008 order dismissing plaintiff's Washington Commons II complaint. Subsumed within that order of dismissal is the Law Division's incidental finding that the Board's November 8, 2007 decision that price, having been fixed at $1.00, was not a negotiable term, was neither arbitrary, capricious nor unreasonable. Accordingly, there is no challenge to that collateral determination before us. Rather, the matter presented on this appeal concerns only the dismissal of plaintiff's original complaint essentially on grounds of being time-barred. While events subsequent to the filing of this appeal and made part of the appellate record may inform our determination of the instant issue, they do not form the basis for independent review and disposition.

That being said, we turn to the issue at hand. At the core of plaintiff's original action in lieu of prerogative writs, filed February 17, 2007, is a challenge to municipal action in failing to purchase the seven affordable housing units at plaintiff's cost ($463,235.29 each) -- as supposedly contemplated by the Board's May 20, 2004 resolution -- and in refusing to issue certificates of occupancy to allow the remaining units to be sold to the general public. Concerning the prerogative writs component of plaintiff's claim, the Law Division found it was time-barred as beyond the 45-day limitation of Rule 4:69-6(a) for actions in lieu of prerogative writs, having determined that the cause of action accrued at the latest in October 2006 when "price" negotiations broke down. As for the portion of the complaint seeking damages for interference with plaintiff's prospective economic rights, the court found the tort claim barred by plaintiff's failure to provide the requisite notice within 90 days pursuant to N.J.S.A. 59:8-8. And finally, regarding the count of the complaint alleging due process deprivation, the court found no support for the claim in either law or fact. We agree with these determinations.

Rule 4:69-6(a) provides that "[n]o action in lieu of prerogative writs shall be commenced later than 45 days after the accrual of the right to the review, hearing or relief claimed[.]" Paragraph (b) further provides that "[n]o action in lieu of prerogative writs shall be commenced . . . to review a determination of a planning board or board of adjustment, or a resolution by the governing body . . . of a municipality approving or disapproving a recommendation made by the planning board or board of adjustment, after 45 days from the publication of a notice . . . ." The rule does not by its terms define when rights "accrue" to trigger the 45-day period. That is determined according to substantive law. Harrison Redev. Agency v. DeRose, 398 N.J. Super. 361, 401 (App. Div. 2008). Thus, we have earlier determined that a developer's assignee's right to recover off-site improvements that had been paid under an ordinance that was later declared ultra vires did not accrue until the municipality failed to return the payments under the voided ordinance. Mill Race, Ltd. v. Mayor & Twp. Comm. of Bernards Twp., 230 N.J. Super. 160, 168 (App. Div.), certif. denied, 117 N.J. 154 (1989). And in Trenkamp v. Twp. of Burlington, 170 N.J. Super. 251 (Law Div. 1979), where the plaintiffs' prerogative writs cause of action concerning a building permit allegedly issued in violation of a zoning ordinance accrued on July 2, 1977, the date the permit was issued, the court nevertheless held that they had 45 days from August 17, 1977 when construction actually began and when plaintiffs had actual knowledge or reason to know of the permit's issuance. Id. at 266.

Of course, the 45-day limitation is further subject to enlargement under Rule 4:69-6(c) "where it is manifest that the interest of justice so requires." Although stated as a generalized standard, decisional exceptions, which have been engrafted upon the rule, include: (1) substantial and novel constitutional questions; (2) informal or ex parte determinations of legal questions by administrative officials; and (3) important public rather than private interests which require adjudication or clarification. Ocean County Bd. of Realtors v. Beachwood, 248 N.J. Super. 241, 247 (Law Div. 1991) (citing Brunetti v. Borough of New Milford, 68 N.J. 576, 586 (1975)).

Here, plaintiff does not argue that the court should have enlarged the 45-day period in the interest of justice. Instead, plaintiff exclusively contends that its cause of action did not accrue until receipt of the Mayor's letter on January 30, 2007, the significance of which is basically unexplained. We disagree with plaintiff's contention.

As noted, the challenged official action is the municipality's refusal to pay plaintiff its cost per affordable housing unit. Yet, plaintiff knew as far back as the original hearing on its site plan and variance application that the 2004 Planning Report relied upon by the Board expressly stated that the seven units were to be conveyed to the City at no cost, and testimony at the hearing corroborated this was the interested community's sentiment as well. Moreover, at meetings on plaintiff's tax abatement application in July and August 2005, the City's position that these units were to be "donated" was made abundantly clear. And if the councilman's "demand" cannot be said to constitute sufficient notice, then the termination of negotiations in October 2006 with no resolution of the issue should have left no doubt that the City would not accede to plaintiff's demand of cost per unit. In fact, plaintiff has never alleged that, during the course of negotiations, its demand was ever seriously entertained or considered even a remote possibility. Viewed in this context, the court reasonably found that the prerogative writs aspect of plaintiff's claim accrued, at the very latest, in October 2006 when the parties reached an irretrievable impasse. And plaintiff having offered no reason to enlarge the 45-day period, the court properly found the prerogative writs counts time-barred.

Plaintiff's complaint in this regard also fails for want of exhaustion of administrative remedies. It bears repeating that plaintiff proceeded in the Law Division on the basis of the City's position in negotiations without any determination by the Board as to whether that position was consistent with the Board's May 20, 2004 resolution. Since the true matter in controversy concerned the interpretation of the resolution's "negotiations clause," we believe it was incumbent upon plaintiff to first make timely and appropriate application to the Board for clarification.

Actions in lieu of prerogative writs are not maintainable where administrative remedies have not been exhausted. R. 4:69-5. Closely allied is the principle that a court may not entertain an action in lieu of prerogative writs until the municipal action is finalized. Harris v. Borough of Fair Haven, 317 N.J. Super. 226, 230 (Ch. Div. 1998). Exhaustion of administrative remedies serves three primary goals: (1) ensuring that claims will be heard by a body possessing expertise in the area; (2) allowing parties to create a factual record necessary for meaningful appellate review; and (3) obviating the need for resorting to the courts where an agency decision would resolve the matter. Atlantic City v. Laezza, 80 N.J. 255, 265 (1979).

Each of these goals would have been satisfied here by plaintiff's resort to the Board. That agency, after all, was in the best position to construe its own resolution and most familiar with the facts and rationale underlying its conditional approvals. Moreover, to the extent facts remained in dispute, a full record would have been developed before the Board enabling informed review. Indeed, the Board's decision may have obviated the need for unnecessary adjudication.

Not only did plaintiff fail to exhaust its administrative remedy before seeking judicial relief, it also refused to return to the Board upon the court's recommendation. This blatant bypassing of an obvious administrative remedy prevented any meaningful review of the critical matter at hand -- namely the construction of the Board's May 20, 2004 resolution -- and left plaintiff only the penultimate issue concerning the City's negotiating position, which the court properly found to be time-barred.


Plaintiff's tort claim of intentional interference with prospective economic rights was dismissed as time-barred for failing in the first instance to file a notice of claim with the affected public entities pursuant to the Tort Claims Act, N.J.S.A. 59:8-1 to -11, much less within the ninety days of the accrual of its claim as required by N.J.S.A. 59:8-8. Plaintiff argues that its tort claim is exempt from the Tort Claims Act's notice and time requirements because it was brought in lieu of prerogative writs, and alternatively, that plaintiff has nonetheless substantially complied with the Act by timely filing its complaint. We disagree.

The notice requirements of the Tort Claims Act are applicable to intentional torts, Velez v. City of Jersey City, 180 N.J. 284, 294 (2004), and make no distinction exempting such actions brought under the guise of in lieu of prerogative writs. See N.J.S.A. 59:8-3 and N.J.S.A. 59:8-8. Also, contrary to plaintiff's alternative argument, the timely filing of a complaint is not a substitute for the notice required by N.J.S.A. 59:8-8. Guzman v. City of Perth Amboy, 214 N.J. Super. 167, 172 (App. Div. 1986). Nor does it constitute substantial compliance therewith. In any event, as already noted, plaintiff's complaint in lieu of prerogative writs was not timely filed. And in this regard, although plaintiff ultimately moved to file a notice of late claim pursuant to N.J.S.A. 59:8-9, the trial court properly denied the request as beyond the one-year time limitation, N.J.S.A. 59:8-9, and in any event, it was unsupported by any showing of exceptional circumstances demonstrating why plaintiff could not have filed a notice of claim within the ninety-day period. Ibid.


We are also satisfied that the trial court properly dismissed the fourth count of plaintiff's complaint alleging deprivation of due process as substantively without merit. On this score, procedural due process requires at a minimum notice and an opportunity to be heard. Mettinger v. Globe Slicing Mach. Co., 153 N.J. 371, 389 (1998). Here, the trial court properly found that plaintiff attended both the variance and tax abatement hearings, was aware of the nature of the proceedings, was represented by counsel, and that records were made. There appears to be no real challenge to the court's findings in this regard. Accordingly, the dismissal of the fourth count alleging a constitutional violation was plainly correct and supported by the record.


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