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Paramus v. Shamrock Creek


March 4, 2009


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7387-06.

Per curiam.


Submitted February 3, 2009

Before Judges Wefing, Yannotti and LeWinn.

Plaintiff Borough of Paramus (Borough) appeals from a judgment entered by the Law Division on May 14, 2008, which provides in part that defendants Shamrock Creek, LLC (Shamrock) and JDME Acquisitions, LLC t/a Enchantment at Paramus (JDME), are not bound by a provision of an agreement between the Borough and certain successors in interest to Cedar Park Realty Co. (Cedar Park), dated February 11, 1988. The agreement allegedly bars residential development on property that JDME has contracted to purchase from Shamrock. For the reasons that follow, we reverse.


Cedar Park Realty Co. was the owner of some ninety-two acres of land in the Borough. In 1975, Cedar Park Realty Co. filed a Mount Laurel*fn1 lawsuit challenging the constitutionality of the Borough's zoning ordinance. In June 1977, Cedar Park Realty Co. transferred title to the property to Richard S. Schlein (Schlein) and Stanley Goodman (Goodman).

In 1985, after the enactment of the Fair Housing Act (FHA), N.J.S.A. 52:27D-301 to -329, the action was transferred to the Council on Affordable Housing (COAH). The Borough filed an affordable housing plan with COAH and sought substantive certification pursuant to N.J.S.A. 52:27D-313 to -314. The parties engaged in mediation and reached an agreement which resolved their dispute. Cedar Park and the Borough executed a written agreement dated February 11, 1988, which memorialized their understanding.

Section 3 of the agreement states that Cedar Park would be permitted to construct 140 free-market residential units on its property. Sections 3(a), (b) and (c) identify the areas of the property where the residential units would be constructed. In addition, section 3(d) of the agreement provides that:

[t]hose portions of the [t]ract not used for residential units shall be limited to open space, agricultural, and/or horticultural uses; in addition, Cedar Park shall be permitted to construct a new cemetery garage and caretaker's residence to replace the buildings presently used for those purposes, provided that the new buildings are no larger than the present buildings, and further provided that Cedar Park obtains all necessary governmental approvals for such construction.

The agreement additionally states that, "to facilitate a sale," the "developable portions" of the property may be subdivided from the remainder of the tract, "provided that both of the subdivided parcels remain subject to the terms of this [a]greement."

The agreement further provides that, in consideration for the rezoning of the properties and in lieu of the construction of low and moderate income housing on the site, Cedar Park would pay six per cent of the sales price for each unit into the Borough's affordable housing fund. The agreement also provides that it "shall be binding upon and inure to the benefit" of Cedar Park's successors in interest, "including but not limited to contract purchasers."

At its meeting of February 9, 1988, the Borough's Council adopted Resolution No. 88-2-101 approving the agreement. At a meeting held on February 11, 1988, the Borough's Planning Board (Board) approved the agreement by adopting Resolution PB-88-05. The agreement was not recorded pursuant to New Jersey's recording statutes, N.J.S.A. 46:15-1 to 46:26-1 (collectively, the Recording Act).

In October 1988, the Borough enacted amendments to the Borough's zoning ordinance implementing certain provisions of the agreement. The amendments were codified in the Borough's Code. The amendments created the RML Mount Laurel Residential Zone (RML Zone).

Section 429-192 of the Code states that the RML zone was created to provide "development bonuses" as a result of the settlement of Mount Laurel litigation as well as in consideration for the developer's agreement to make monetary contributions for the production of lower-income housing required to satisfy the Borough's Mount Laurel obligation. Section 429-193 provides that "the maximum number of dwelling units in [the] zone shall be 140."

In 1989, Cedar Park filed an application with the Board for preliminary subdivision of a portion of the property. On June 29, 1989, the Board conducted a public hearing on the application. At the hearing, Herbert A. Vogel (Vogel), Cedar Park's attorney, stated that the application was the "culmination" of twelve-years of litigation concerning the development of the property.

Vogel asserted that Cedar Park was seeking authorization to construct 129 single-family homes on the subdivided lots, not the 140 units that had previously been agreed upon by Cedar Park and the Borough. Vogel also said that sixty to seventy acres of Cedar Park's property were environmentally sensitive areas that would remain as open space for only agricultural or horticultural use and "cannot be used for anything else."

The Board granted the application and memorialized its action in Resolution PB-89-49, dated June 30, 1989. Among other things, the resolution states that the proposed subdivision plat was in accordance with the amendments to the zoning ordinance that were enacted in connection with the Borough's housing plan and the February 11, 1988 agreement between the Borough and Cedar Park, which was incorporated by reference in the resolution.

In August 1991, Richard S. Schlein and Ruth Goodman, Executrix, transferred title to the property to the Richard Goodman and Richard Schlein Partnership (G&S). At some time thereafter, S.G., LLC (S.G.) succeeded to G&S's interest in the property. Block 7706, Lot 1 was created as a result of a further subdivision of the Cedar Park property that was approved in 1997. The lot is approximately thirty-five acres. In November 2002, S.G. transferred title to Block 7706, Lot 1 to Shamrock for $90,000.

In July 2004, Shamrock entered into a contract for the sale of the lot to JDME at a minimum price of $13,200,000. Among other things, the agreement provides that the purchase price shall be increased by $90,000 per every residential unit approved for the site beyond 118 units. The agreement additionally provides that JDME could terminate the agreement if it receives approvals for less than 118 units. In June 2006, JDME filed an application with the Board seeking authorization to construct an age-restricted townhouse and garden home complex which includes 144 residential units.


On October 4, 2006, the Borough filed a complaint in the Law Division against Shamrock and JDME seeking a declaration that the 1988 agreement between Cedar Park and the Borough prohibits the development of any portion of Block 7706, Lot 1. Defendants filed an answer in which they denied the Borough's allegations. Defendants also filed a counterclaim seeking a declaration that they were not bound by the 1988 agreement because it was never recorded. They also sought damages for the alleged unconstitutional taking of their property and unlawful interference with their contractual and business relations.

In March 2007, the Board filed a motion to intervene as a plaintiff. The court granted the motion by order dated May 11, 2007. In January 2008, defendants filed a motion for summary judgment. The court denied the motion for reasons stated on the record on March 3, 2008, and entered an order on that date memorializing its decision.

The matter was tried by the court, sitting without a jury, on April 7 and April 8, 2008. Before the trial began, the court granted defendants' motion in limine to bar the Borough from presenting testimony by Brigette Bogart (Bogart), the Borough's planner; and Garry Pucci (Pucci), the Board's chairman.

At the trial, the Borough presented testimony by Peter Caminiti, who was the Board's Chairman in 1988 when it approved the Borough's agreement with Cedar Park resolving the Mount Laurel litigation. The Borough also presented testimony by Mark Ellenbogen, a member of JDME, and James Anzevino, the Borough's tax assessor. Defendants did not call any witnesses.

The court placed its decision on the record on April 28, 2008. The court weighed the evidence under the analytical framework spelled out in Island Venture Assocs. v. N.J. Dept. of Envt'l Prot., 179 N.J. 485 (2004), which applies when a court determines whether to enforce a condition or restriction affecting an interest in real property that has not been recorded pursuant to the Recording Act. Id. at 495.

Island Venture requires the court to undertake a "fact-sensitive analysis" and consider all relevant facts, including "the circumstances surrounding the failure to record the condition or restriction, the consequences of that failure to the subsequent purchaser, and the particular public interest implicated by the dispute." Ibid.

The trial court determined that defendants were not bound by the 1988 agreement between Cedar Park and the Borough. The court found that defendants were innocent purchasers who had undertaken a title search that did not reveal the 1988 agreement. The court also found that defendants did not have constructive knowledge of the 1988 agreement between Cedar Park and the Borough or the restrictions on development of the Cedar Park property set forth therein. The court stated that, because the 1988 agreement had not been recorded, "[i]t is unreasonable to expect defendants to be aware of the restriction [upon development] when the Planning Board and its staff planners were unaware of the restriction[.]"

The court additionally found that, rather than recording the 1988 agreement, the Borough had employed "a very potent protective device" by adopting an ordinance restricting development of properties in the RML zone. The court observed that a deed restriction "might handcuff the municipality to a point that it would be [contrary] to the public interest." The court further observed that "[i]t appears in this case the governing body opted for more flexibility and more discretion by not [employing a] deed restriction[.]"

In addition, the court stated that, "for whatever reason," the Borough expected to enforce its contractual rights by ordinance only. This is not farfetched or irrational, far from it. Frankly, this is a reasonably pragmatic approach that seems to fairly balance all interests, that is, it allows legislative changes to be made for changed circumstances or other publicly driven reasons while at the same time . . . barring development beyond 140 dwelling units.

On the other side of the coin, it allows the developer, as well, to seek individualized relief under the standards of the Municipal Land [U]se [L]aw[, N.J.S.A. 40:55D-1 to -163] by application to the Board of Adjustment or otherwise.

Since the public will b[e] adequately and fairly protected by this . . . mechanism, that is, the development application mechanism, the 1988 agreement's lack of enforcement does little violence to the public interest.

The court entered a judgment on May 14, 2008, which declares that defendants are not bound by paragraph 3 of the 1988 agreement. The judgment further provides that it does not affect the Borough's zoning ordinance or any prior land use approvals granted by the Board. Thereafter, the Borough filed its notice of appeal from the May 14, 2008 judgment.*fn2


We turn to the Borough's contention that the trial court erred by barring Bogart and Pucci from testifying at trial.

Here, defendants sought to bar Bogart's and Pucci's testimony pursuant to Rule 4:17-7, which provides in pertinent part that if a party who has furnished answers to interrogatories thereafter obtains information that renders such answers incomplete or inaccurate, amended answers shall be served not later than [twenty] days prior to the end of the discovery period, as fixed by the track assignment or subsequent order. Amendments may be allowed thereafter only if the party seeking to amend certifies therein that the information requiring the amendment was not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date.

In the absence of said certification, the late amendment shall be disregarded by the court and adverse parties.

It is undisputed that, in its answers to defendants' interrogatories dated July 9, 2007, the Borough did not identify Bogart or Pucci as persons having knowledge relevant to the case. It is also undisputed that the Borough failed to amend its answers to interrogatories to name these individuals as persons with relevant knowledge prior to the October 19, 2007 discovery end date.

We note, however, that in response to defendants' motion for summary judgment, which was filed in January 2008, the Borough submitted certifications by Bogart and Pucci. The certifications indicated that both Bogart and Pucci were persons who had knowledge of facts relevant to this matter. The certifications also detailed the basis of their knowledge.

In her certification, Bogart stated that in 2005 her firm, Burgis Associates, Inc. (Burgis), acted as the Board's planning consultant and prepared the Borough's housing plan for submission to COAH. The housing plan was approved by the Board and the Mayor and Council. Bogart asserted that, when she prepared the plan, she was incorrectly informed that Block 7706, Lot 1 "had the potential to be developed with 140 dwelling units[.]"

Bogart stated that, based on this information, she included the property in the housing plan "for purposes of determining the Borough's growth share projections." Bogart said that, after her office received JDME's development application in 2006, facts were uncovered that were unknown to us when we included the site in the [h]ousing [p]lan's growth share analysis. These facts related to restrictions on the site's development potential which precluded its development and consequently would have precluded us from including it in the [h]ousing [p]lan's growth share formulation had we known about it.

Bogart additionally stated that she advised the Board that the housing plan should be amended by removing Block 7706, Lot 1 from the growth share analysis. The Board approved the revised housing plan at its February 1, 2007 meeting.

In his certification, Pucci stated that, at its February 1, 2007 meeting, the Board voted to amend the Borough's master plan to include the amended housing plan. Appended to his certification was a transcript of the Board's meeting of February 1, 2007. The transcript indicates that Bogart advised the Board concerning amendments to the housing plan. One of the amendments involved the removal of a lot that had been included in the section of the plan dealing with "anticipated residential development."

On April 7, 2008, when defendants' motion in limine was argued in the trial court, counsel for the Borough explained that Bogart's testimony was necessary to explain the amendment to the housing plan adopted in 2007. Counsel noted that the minutes of the February 1, 2007 meeting and the Board's resolution did not specifically identify the property that was the subject of one of the amendments to the housing plan.

Counsel said that Bogart would explain the basis of the change and also submit a letter dated January 17, 2007, that she had written to the Board setting forth the reasons for the change. Counsel for the Board also addressed the court. He stated that he intended to call Pucci to authenticate the minutes of the Board's February 1, 2007 meeting.

Defendants' attorneys agreed to stipulate that the Borough's housing plan was changed in 2007 and Block 7706, Lot 1 was deleted from the plan. Defendants' attorneys also agreed to the admission into evidence of the Board's resolution approving that change and the transcript of the Board's February 1, 2007 meeting; however, defendants' attorneys would not agree to the admission of Bogart's certification. Defendants' attorneys also objected to the admission of Bogart's letter of January 17, 2007, because that document had never been produced in discovery.

The trial court granted defendants' motion. The court found that the Borough failed to identify Bogart and Pucci in its answers to interrogatories and did not amend its answers within the time prescribed by Rule 4:17-7. The court determined that the rule barred the Borough from presenting testimony from Bogart and Pucci.

The court further determined that, to the extent the Borough intended to offer the testimony of these witnesses in order to explain the change in the housing plan, the testimony was not admissible. The court said that if the Board wanted to explain its action, it should have put its explanation in its resolution.

The Borough first argues that the trial court erred by barring Pucci's testimony. We are convinced that this issue is moot. As we stated previously, the Board's attorney informed the court that he intended to present Pucci as a witness solely to authenticate the Board's resolution and the transcript of the February 1, 2007 meeting. When defendants' attorneys stipulated to the admission of those documents, the issue of whether Pucci should be permitted to testify became moot.

The Borough also argues that the trial court erred by barring Bogart from testifying at trial. We agree. In its answers to interrogatories, the Borough did not identify Bogart as a person having knowledge relevant to this case. Furthermore, the Borough never amended its answers to name Bogart as a person with such knowledge. Nevertheless, the record indicates that defendants knew Bogart was a person with knowledge relevant to this dispute. Moreover, defendants knew or should have known of the basis of her knowledge.

The record shows that, in their answers to the Borough's interrogatories, defendants named the members of Burgis, the Borough's planners, as persons with knowledge of facts relevant to this dispute. Defendants noted that in 2006 members of Burgis had written certain letters in response to JDME's development application. It is undisputed that Bogart was a member of Burgis. It is also undisputed that Bogart was the individual at Burgis who handled planning matters for the Borough.

In addition, as Bogart indicated in her certification, she had appeared before the Board at its February 1, 2007 public meeting and discussed the proposed changes to the Borough's housing plan. Therefore, Bogart's involvement with the 2005 housing plan and the 2007 amendments to that plan were matters of public record. Defendants do not assert that they were unaware of the February 1, 2007 meeting or what transpired at that meeting. Furthermore, the meeting took place well before the October 19, 2007 discovery end date.

As noted, the Borough submitted Bogart's certification to the court in opposition to defendants' summary judgment motion. This document was provided after the discovery end date; however, defendants did not request an opportunity to depose Bogart.

We recognize that, because the time for discovery had expired, defendants did not have a right to compel Bogart's deposition. Even so, nothing in the discovery rules precludes the parties from engaging in discovery after the discovery end date. We note that, when defendants' motion in limine was argued on April 7, 2008, the Borough's counsel stated that he had no objection if defendants wanted to depose Bogart, even during the trial.

We conclude that, under these circumstances, the trial court erred by relying upon Rule 4:17-7 as a basis to bar Bogart's testimony. The time constraints under Rule 4:17-7 may be relaxed upon a showing of exceptional circumstances. Brun v. Cardoso, 390 N.J. Super. 409, 419 (App. Div. 2006) (citing Pressler, Current N.J. Court Rules, comment 1.1 on R. 4:17-7 (2009)). The requirements of the rule also may be relaxed to ensure fundamental fairness in the litigation process. Ibid.

Relaxation of the time constraints in Rule 4:17-7 was warranted here because the Borough's failure to name Bogart in its answers to interrogatories did not substantially prejudice defendants. As we have pointed out, defendants knew or should have known that Bogart had relevant knowledge of this dispute prior to the discovery end date. Moreover, the Borough's technical failure to comply with the requirements of Rule 4:17-7 did not adversely affect defendants' ability to defend the claims asserted against them.

In addition to relying upon Rule 4:17-7 as a basis for precluding Bogart's testimony, the trial court stated that Bogart should not be permitted to testify because she was only going to provide "spin" for the 2007 change in the Borough's housing plan. The court observed that the Board acts through its votes and any explanation for its action should be set forth in a resolution. The court stated that if the Board "wanted to give meaning to why it was doing what it did[,] it should have done so and it could have done so."

We agree that the Board could have done a better job of explaining the amendment to the housing plan. We are convinced, however, that the Board's failure to do so was not a valid basis for precluding Bogart from testifying about her own involvement with the 2005 housing plan and the 2007 amendments. Bogart surely can testify that she prepared the 2005 housing plan based on her erroneous understanding that the subject property could be developed with 140 residential units. She can further testify that she prepared the change to the housing plan in order to correct that mistake. She also can testify that she advised the Board accordingly. Based on this testimony, the court could reasonably infer that Bogart's advice was the basis upon which the Board acted when it approved the amendment to the plan.

We are further convinced that the trial court's decision to preclude Bogart's testimony was not harmless error. The inclusion of defendants' property in the 2005 housing plan had a bearing upon the trial court's finding that defendants were innocent purchasers who did not have actual or constructive knowledge of the 1988 agreement. In its decision, the court stated:

[d]efendants engaged [in] title searches, conducted due diligence and spent thousands of dollars pursuing a potentially profitable use of the land. It is unreasonable to expect defendants to be aware of the restriction when the Planning Board and its staff planners were unaware of the restriction, as evidenced by the inclusion of the instant property in what became a hastily revoked housing element and master plan document.

The court went on to say that, "[t]he idea that defendant's representative on a trip to Borough Hall should have been more alert, aware and intelligent than [a] member of the municipal family is asking too much." The court added:

Now, of course, with 20/20 hindsight, [it is] arguably easy to see how an afterthought analysis, say a Sherlock Holmes like . . . investigation would uncover the links to the 1988 agreement through the planning resolutions all the way back to this obscure document from 1988. Even the stray reference in the zoning ordinance, Section 429-192 to "a settlement" of Mount Laurel action is not enough for even the most acute and inquisitive mind to have been put upon a duty of further investigation.

The inclusion of the subject property in the Borough's 2005 housing plan also had a bearing on the court's findings regarding the public's interest in having the restrictions on development in the 1988 agreement enforced despite the Borough's failure to record that document. In its decision, the court stated that:

[u]nfortunately, those in charge of the public stewardship at that time did not take them as seriously as today. That doesn't mean somebody did something wrongful, it's just a difference in emphasis, a difference in approach. It may very well be that through the passage of time sensitivity to environmental issues has changed. I think it certainly has, but no effort, except by ordinance, was taken to publicly record the restriction.

Over time, the memory of that contract faded, even in town hall, to the extent that, as I've already pointed out, the Borough itself proposed using this land for affordable housing purposes. Of course, it's retreated from that point but, as I mentioned before, the defendants can hardly be criticized for not learning of these restrictions when the Borough itself had forgotten it.

Thus, Bogart's testimony addressed matters that were significant to the "fact-sensitive" analysis required by Island Venture and undertaken here by the trial court. We cannot discount the possibility that the court may have been led to make different findings on facts critical to its analysis if Bogart had been permitted to testify.

Accordingly, we reverse the judgment entered for defendants on May 14, 2008, and remand the matter to the trial court to allow Bogart to testify as to the facts stated in her certification. Defendants also should be permitted to present witnesses and evidence to respond to Bogart's testimony. The parties should be afforded an opportunity to depose these witnesses before the resumption of the trial. After hearing the additional testimony, the trial court should reconsider its decision in light of the new evidence and make appropriate findings of fact and conclusions of law. R. 1:7-4(a).

In view of our decision to remand the matter to the trial court for further proceedings, we need not consider the Borough's contention that the court erred by finding that defendants were not bound by the 1988 agreement.

Reversed and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.

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