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Paramus v. Shamrock Creek

March 4, 2009

BOROUGH OF PARAMUS, A CORPORATE BODY POLITIC OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT, AND PLANNING BOARD OF THE BOROUGH OF PARAMUS, PLAINTIFF/INTERVENOR,
v.
SHAMROCK CREEK, L.L.C., A LIMITED LIABILITY COMPANY OF THE STATE OF NEW JERSEY, AND JDME ACQUISITIONS, T/A ENCHANTMENT AT PARAMUS, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS.



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

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

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.

I.

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 ...


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