July 16, 2009
GF PRINCETON, LLC, PLAINTIFF-APPELLANT,
EWING TOWNSHIP PLANNING BOARD, HERRING LAND GROUP, LLC, AND AMERICAN PROPERTIES AT SCOTCH ROAD, LLC, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1244-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 9, 2008
Before Judges Skillman, Graves and Grall.
Defendant Herring Land Group, Inc. (Herring) owns a 45.7 acre tract of land located in Ewing Township.
On December 27, 1985, Herring's predecessor in title leased a 16.3 portion of this property to the predecessor in title of plaintiff GF Princeton, LLC (Princeton). (For ease of reference, Herring and its predecessor in title are referred to collectively as Herring and Princeton and its predecessor in title are referred to collectively as Princeton.) The lease was for a term of seventy-five years and will not expire until December 31, 2060.
On December 23, 1986, the lease was amended to include an "improvements deed," which granted Princeton an ownership interest in two office buildings together with parking and other improvements located within the leased area. These buildings are approximately 179,940 square feet in area. At the time of this transaction, the office buildings were the only structures on the property. A memorandum of the lease agreements and improvements deed was filed in the Office of the Mercer County Clerk.
Herring subsequently entered into a contract to sell a 4.8 acre portion of its property to defendant American Properties at Scotch Road, LLC (American Properties), contingent upon Herring obtaining subdivision approval for the tract and American Properties obtaining site plan approval for construction of a four-story extended-stay hotel with 127 rooms and 145 parking spaces.
On January 11, 2007, American Properties filed an application with the defendant Ewing Township Planning Board (Board) for subdivision and site plan approval, and on February 7, 2007, American Properties and Herring filed an amended joint application for those approvals. The application proposed to subdivide the tract into three lots: (1) lot 3.03, which is the 4.8-acre lot that Herring has contracted to sell to American Properties for its hotel development project; (2) lot 3.04, which is an 18.3-acre lot that includes the 16.3 acres leased to Princeton; and (3) lot 3.05, which is a 22.6-acre lot that is to remain vacant. The application sought numerous variances and waivers, including variances to permit the minimum lot width of proposed lot 3.04 on which Princeton's buildings are located to be 75 feet whereas 250 feet is required, a ground sign on lot 3.04 located less than the required 25 feet from the street right-of-way, and a waiver of the obligation to prepare a tree survey for lot 3.04.
The applicants did not give Princeton notice of the application for subdivision of the property it leases and on which its two office buildings and other improvements are located.
The Board conducted a one-day hearing on the application. The focus of the hearing was upon the site plan for the proposed hotel. There was no mention during the course of the hearing of Princeton's leasehold interest in most of the proposed lot 3.04 or its ownership of the two office buildings located on that lot. No one appeared at the hearing to cross-examine the applicants' experts or to speak in opposition to the application.
At the conclusion of the hearing, the Board approved the applications, and on April 5, 2007, it adopted a memorializing resolution, which subjected the approvals to numerous conditions, including a requirement that the applicants provide an easement for future access between proposed lots 3.04 and 3.05.
On May 21, 2007, Princeton filed an eight-count complaint in lieu of prerogative writs challenging the Board's grant of Herring's and American Properties' subdivision and site plan applications. The complaint alleged that the applications contemplated using a portion of the parking lot and access road on the leased property for the proposed hotel and that Herring and American Properties failed to obtain Princeton's consent for that use. It also alleged that the easement for future access between proposed lots 3.04 and 3.05 was located within the leased area. The complaint further alleged that Princeton had a "sufficient property interest" in the property for which Herring and American Properties sought subdivision and site plan approval to require notice of their application. In addition, the complaint alleged that the applicant's failure to disclose Princeton's interest in the property to the Board constituted a "material misrepresentation." The complaint further asserted that the grant of the applications was not supported by adequate findings of fact and conclusions of law or evidence in the record and was therefore arbitrary and capricious.
American Properties filed a motion to dismiss the complaint for failure to state a claim, in which the other defendants joined. On August 8, 2007, the trial court granted the motion as to the first six counts of Princeton's complaint, but denied the motion as to the seventh and eighth counts. The dismissed counts claimed that subdivision and site plan approvals were invalid because Herring and American Properties had failed to obtain Princeton's consent for the proposed development project or, alternatively, because the applicants failed to give Princeton notice of the application. In addition, the court dismissed the sixth count, which claimed that the applicants' failure to notify the Board of the lease and Princeton's ownership of the leased area improvements constituted a material misrepresentation that requires invalidation of approvals.
The trial court ruled upon the seventh and eights counts of Princeton's complaint by a brief oral opinion and an order entered on October 22, 2007, which affirmed the Board's grant of subdivision and site plan approval, but remanded to the Board for the taking of further testimony and findings of fact and conclusions of law relating to the applicants' requests for variances required for the construction of certain signs. The applicants subsequently withdrew their requests for those variances.
On appeal, Princeton argues that the subdivision and site plan approvals are invalid because the applicants failed to obtain their consent to apply for those approvals. In the alternative, Princeton argues that the approvals are invalid because the applicants failed to give it notice of the applications and as a result Princeton had no opportunity to appear at the hearing before the Board. In addition, Princeton argues that the Board's approval of the applications must be set aside because the applicants' failure to disclose to the Board Princeton's interest in proposed lot 3.04 constituted a material misrepresentation. Finally, Princeton argues that even if the subdivision and site approval are affirmed, the grant of the variances from the width requirement applicable to lot 3.04 and from the ordinance provisions relating to the pylon sign must be reversed because the record does not contain substantial credible evidence to support those variances.
We reject Princeton's argument that the applicants were required to obtain its consent to apply for the site plan and subdivision approvals. However, we conclude that the approvals are invalid because the applicants failed to give Princeton notice of the applications and as a result Princeton was deprived of the opportunity of being heard in opposition. Therefore, those approvals and the related variances and waivers must be vacated and the case remanded to the Board for a new hearing on notice to Princeton. This disposition makes it unnecessary to address Princeton's other arguments.
Princeton's arguments regarding the need for its consent to the applications for the subdivision and site plan approvals are presented under two subsections of its appellate brief. Under Point I(A), Princeton argues that the Board lacked jurisdiction to consider the applications because the applicants failed to submit evidence of Princeton's consent. Under Point I(C), Princeton argues that the Board's approvals of the applications were invalid because they were not conditioned upon the submission of Princeton's consent.*fn1 We perceive no material difference between these two arguments.
Princeton's argument that its consent was required for the subdivision and site plan applications is based on sections of the Ewing land development ordinance which require an applicant for such an approval to submit a "[c]ertification that the applicant is the owner of the land or his properly authorized agent, or that the owner has given his consent under an option agreement, . . ." and which defines "land owner" to "mean the legal or beneficial owner of land including . . . [any] person having an enforceable proprietary interest in such land," and "land" to include "improvements and fixtures such as, buildings, structures, . . . extending above or below the surface." Princeton argues that its seventy-five-year lease of a 16.3-acre portion of the subject property together with its ownership of the improvements located on this property give it the status of a "land owner" under these ordinance provisions.
This argument is clearly without merit and only warrants brief discussion. R. 2:11-3(e)(1)(E). Our Supreme Court has indicated that even ninety-nine-year leases are not considered equivalent to fee simple ownership for all purposes. See City of Atlantic City v. Cynwyd Investments, 148 N.J. 55, 72 (1997). Therefore, Princeton's seventy-five-year lease, which is not renewable, plainly does not make Princeton an "owner" of the property. Compare Ric-Cic Co. v. Bassinder, 252 N.J. Super. 334, 340-42 (App. Div. 1991) (holder of ninety-nine-year perpetually renewable lease may apply for land use approval); see also Iron Mountain Info. Mgmt. Inc. v. City of Newark, 405 N.J. Super. 599, 615 (App. Div.), certif. granted, ___ N.J. ___ (2009). Moreover, as the trial court held, "[a]lthough [Princeton] may have an ownership interest in the lease area improvements, there is no requirement under the MLUL that requires a lessee's consent in order for the landowner to file a development application on an adjoining property."
We turn next to the question whether Princeton was entitled to notice of the subdivision and site plan applications.
Notice of an application for a land use approval or other governmental permit may be required either by express statutory mandate or as a matter of administrative due process and basic fairness. See Twp. of Stafford v. Stafford Twp. Zoning Bd. of Adjustment, 154 N.J. 62, 70-73 (1998); Juzek v. Hackensack Water Co., 48 N.J. 302, 314-16 (1966); Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361, 402-08 (App. Div. 2008); Brower Dev. Corp. v. Planning Bd. of Twp. of Clinton, 255 N.J. Super. 262, 267-70 (App. Div. 1990). Considerations of administrative due process and basic fairness also may lead a court to imply a duty to give notice to interested parties despite the absence of an express statutory mandate. See Stafford, supra, 154 N.J. at 72-73.
Princeton acknowledges that the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -99, does not expressly require notice of a subdivision or site plan application to be given to a party with the kind of interest Princeton possesses as a result of its seventy-five-year lease of a substantial portion of the property and ownership of improvements on the property. Therefore, the question is whether it was entitled to such notice as a matter of administrative due process and basic fairness.
In determining whether a party is entitled to notice of a request for an administrative approval on this basis, one significant consideration is the substantiality of that party's interest in the action that approval would authorize. Stafford, supra, 154 N.J. at 72; Brower, supra, 255 N.J. Super. at 270. Herring's application to the Board sought the subdivision of the very property upon which Princeton's two office buildings and other ancillary improvements are located. Moreover, those improvements constituted the only existing development on the property. American Properties' application sought permission to construct a 127-room hotel within a short distance of those improvements. In addition, Princeton asserts that the easement for future access between proposed lots 3.04 and 3.05 upon which the Board conditioned the approvals will interfere with the use of the access easement that is part of its leasehold estate. It is not possible based on the record before us to determine the merits of these claims, but the close relationship between Princeton's property rights under its seventy-five-year lease and improvements deed and American Properties' interests under the contract of sale with Herring and the site plan approval underscores the substantiality of Princeton's interest in the applications for subdivision and site plan approval.
Another consideration in determining whether a party is entitled to notice of a request for an administrative approval as a matter of administrative due process and basic fairness is whether such notice is required to adequately protect that party's interests. See DeRose, supra, 398 N.J. Super. at 403-08. The hearing before the Board on the application for the subdivision and site plan approvals is the only opportunity a party such as Princeton is afforded under the MLUL to present opposition. Once those approvals were granted, American Properties was authorized to proceed with construction of its proposed hotel. The circumstances of this case are significantly different from those in Iron Mountain, in which the court held that a commercial tenant was not entitled to notice of a proposed blight designation of the leased property because its interests could be adequately protected by the opportunity it would be afforded in a condemnation action to challenge the municipality's right to acquire the property. See Iron Mountain Info. Mgmt. Inc., supra, 405 N.J. Super. at 615-18. Therefore, we conclude that Princeton was entitled to individual notice of the subdivision and site plan applications in order to protect its substantial interests in the proposed subdivision and development of another part of the property on which its office buildings are located.
We reject defendants' argument that N.J.S.A. 40:55D-12(b), which requires notice to owners of real property located within 200 feet in all directions of a property for which certain types of land approvals are sought, provides the sole basis for an obligation to give individual notice to an interested party of an application for a land use approval. The interest of owners of properties located within 200 feet of a property which is the subject of an application for a land use approval is less direct and substantial than the interest that Princeton has in the subject property as a result of its seventy-five-year lease and ownership of substantial improvements. Consequently, absent an express statutory mandate, such owners of adjoining property would not be entitled to individual notice of an application for a land use approval. However, Princeton's interest in the applications for the subdivision of the property on which its office buildings and ancillary improvements are located and site plan approval for a hotel that seems to contemplate some use of the leased property and associated easement is so direct and substantial that Princeton was entitled, as a matter of administrative due process and basic fairness, to individual notice of the application even in the absence of an express statutory requirement.
The applicants' failure to give such notice was compounded by their failure to disclose to the Board Princeton's substantial interests in the property. The applications to the Board did not include copies of either the seventy-five-year lease or the amendment to that lease. Moreover, the applicants' experts did not discuss Princeton's interests in the property and the two office buildings and other improvements in their testimony before the Board. Thus, the Board was not informed of the reciprocal access easements provided under the second and third decretal paragraphs of the second amendment to the lease. If the applicants had made full disclosure of the extent of Princeton's interests in the property, the Board may have required them to give notice to Princeton. Even if the Board did not require such notice, it may have conditioned the approval upon resolution of any possible questions concerning the applicants' proposed use of the leased property and easement areas in connection with American Properties' projected development.
Accordingly, we affirm the dismissal of count one and three of Princeton's complaint. We reverse the dismissal of count two and remand to the Board for reconsideration of the subdivision and site plan approvals based on the evidence to be presented at a new hearing in which Princeton is afforded the opportunity to participate. In view of this disposition, there is no need to consider the dismissal of counts six through eight of Princeton's complaint.