October 16, 2009
JOEL A. MOTT, III, PLAINTIFF-RESPONDENT,
ZONING BOARD OF ADJUSTMENT OF CITY OF OCEAN CITY, DEFENDANT, AND THE CITY OF OCEAN CITY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-418-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted August 12, 2009
Before Judges Rodríguez and LeWinn.
The City of Ocean City (Ocean City) appeals from the October 9, 2008 final judgment in favor of plaintiff Joel A. Mott, III. We affirm.
The issue presented is a legal issue. The facts have been stipulated by the parties as follows: Mott owns the Bourse Building, a three-story historic commercial building constructed in 1895. Mott also owns a parking lot in close proximity to the Bourse Building, located on Central Avenue.
In 1989, Mott, a practicing attorney, applied for site plan approval, including certain variances, in order to make improvements to the Bourse Building. The Zoning Board of Adjustment of the City of Ocean City (Board) approved an integrated site plan, which included improvements on both the Bourse Building and the Central Avenue property. At the time of the 1989 application, the commercial business (CB) zone, in which the Bourse Building is located, required parking. As part of the 1989 application, the Board granted a use variance to create eleven parking spaces on the Central Avenue property, which is located in the residential multi-family (RMF) zone.
In 1996, Section 25-205.1.13 of the Ocean City Zoning Ordinance was amended to eliminate the requirement that parking be provided for commercial uses in the CB zone. Nine years later, Mott decided to build a two-family home (duplex) on the Central Avenue parking lot site. This is a permitted use in the RMF zone. Mott applied for a zoning permit and paid an application fee of $50 to Ocean City. The City issued zoning permit No. 20050224.000 certifying that the Central Avenue site was approved for the duplex use. Mott also paid $500 to the Ocean City Department of Public Works to obtain a street opening permit for the duplex site and he applied for a construction permit. After Mott complied with additional requirements, the Ocean City Construction Code Office issued construction permit No. 20051588, permitting construction of the duplex, including permission to perform building, electrical, plumbing, and fire protection work on the premises. After receiving the building permit, Mott gave Dougherty & Johnson Builders a $50,000 deposit to do the construction work. Dougherty & Johnson Builders contracted with several sub-contractors, spending $28,944.16 of Mott's deposit.
After partial completion of the project, Ocean City Zoning Officer Ken Jones concluded that the zoning permit should not have been issued because the parking lot site was part of an integrated site plan approval with the Bourse Building. Jones rescinded the zoning permit for noncompliance with the zoning code. Patrick Newton, the construction official, rescinded the building permit for the same reason. A stop work notice was issued. Construction was halted.
Mott applied to the Board for an amendment to the 1989 site plan approval, seeking to remove the Central Avenue parking lot. The Board denied the application.*fn1
Mott filed an action in lieu of prerogative writs, challenging the denial of his application for site plan approval to remove the parking lot from the previous site plan for the Central Avenue property. Later, Mott filed an amended complaint asserting a claim of estoppel to prevent the Board from revoking previously issued building and zoning permits.
Judge Valerie H. Armstrong bifurcated the issues. She upheld the Board's April 19, 2006 decision to deny Mott's application for site plan approval. That decision is not on appeal. However, the judge held that equitable estoppel precluded the City from rescinding the building and zoning permits. The judge ordered the reinstatement of both permits and granted Mott permission to complete construction of the proposed duplex on the Central Avenue property.
In an oral opinion delivered on October 8, 2008, Judge Armstrong reasoned:
The City's asserted interest here is in maintaining eleven parking spaces for the [Bourse] building. By the same token, at the time [Mott] applied for and received the permits and commenced construction the City, for whatever reason, had previously eliminated commercial parking requirements for the CB district. It was not until several months after [Mott] applied to remove the parking lot from the site plan that the CB zone parking requirements were reinstated.
Further, [Mott's] duplex project would not significantly harm the City's zoning scheme because a proposed two-family home is a permitted use in the RMF zone where the property is located resulting in the elimination of a non-conforming use parking lot. Moreover, [Mott] did not rely solely on his misinterpretation of the 1996 amendment to the City's zoning ordinance in proceeding with his duplex project. He relied on the continual granting of permits by the City, permits that were issued and received in good faith and that gave [Mott] permission to do exactly what he did.
"There [should] be some point at which the owner of a property who acts in such circumstances becomes secure." [Jantausch v. Borough of Vernon, 41 N.J. Super. 89, 95 (Law Div. 1956)]. And in the instant action [Mott] reached that point.
In balancing the respective interests at stake here the forces on [Mott's] side are sufficiently countervailing to, "prevail over the normally paramount authority of the municipality to preserve the desirable characteristics of the community through zoning." [Tremarco Corp. v. Garzio, 32 N.J. 448, 456 (1960).] Like all other municipalities the City of Ocean City must be "reasonably amenable to 'fair standards of conduct in their transactions with outsiders.'" [Gruber v. Mayor and Comm. of Raritan, 39 N.J. 1, 15 (1962) (quoting Johnson v. Hosp. Serv. Plan, 25 N.J. 134, 144 (1957)).]
On appeal, Ocean City contends that the building permit was void ab initio and therefore estoppel cannot apply, and that Mott could not have reasonably relied on the Board's approval. We disagree.
We begin our analysis mindful of the traditional strictures on the application of the doctrine of equitable estoppel.
First, "the doctrine of equitable estoppel is applied 'only in very compelling circumstances'... 'where the interests of justice, morality and common fairness clearly dictate that course.'" Palatine I v. Planning Bd. of Montville, 133 N.J. 546, 560 (1993) (overruled in part on other grounds by D.L. Real Estate Holdings, L.L.C. v. Point Pleasant Beach Planning Bd., 176 N.J. 126 (2003)). (citations omitted). Second, "[e]quitable estoppel is 'rarely invoked against a governmental entity.'" Middletown Twp. Policemen's Benevolent Ass'n v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (quoting Wood v. Borough of Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)). However, estoppel is a remedy available against a governmental entity "where its misconduct or that of its officials acting strictly within the scope of unlawful authority threatens to work a serious injustice against a person who has reasonably relied upon such conduct to his detriment." Capano v. Borough of Stone Harbor, 530 F. Supp. 1254, 1267 (D.N.J. 1982); see also Gruber, supra, 39 N.J. at 14.
Generally, the doctrine of estoppel stands for the principle "that one may, by voluntary conduct, be precluded from taking a course of action that would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct." Middletown Twp. v. Policemen's Benevolent Ass'n, supra, 162 N.J. at 367 (quoting Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493, 503-04 (1955)). The burden is on the proponent of the doctrine. Palatine, supra, 133 N.J. at 562.
In land use cases, the application of estoppel requires a balancing between the interests of the party obtaining the permit and the municipality's right to act in a manner promoting the public welfare through proper planning and zoning ordinances. Gruber, supra, 39 N.J. at 15. Equitable estoppel is appropriately imposed against a municipality "where interests of justice, morality and common fairness clearly dictate that course." Palatine, supra, 133 N.J. at 560.
The scenario presented here was addressed by Professor Cox, who instructs that:
Where building permits have been issued and the permittee has commenced construction in accordance with the permit, but an attack is made upon the validity of the permit, the question may ultimately arise in litigation as to whether the municipality is estopped from revoking the permit as a result of the reliance placed thereon by the permittee to his detriment.... [I]t should be noted that where the building inspector and the applicant acted in good faith and the inspector's decision that the ordinance allowed issuance of a permit was reasonable and the permittee afterward relied on the permit in good faith, the permit may not thereafter be revoked since it would be inequitable to the property owner
The enforcing officer must bear in mind that if a permit is issued and the recipient commences construction or takes other action which is of a substantial nature in reliance on it, the municipality may be estopped from revoking the permit once the error is discovered. [William M. Cox, New Jersey Zoning and Land Use Administration, § 23-5 at 542, 544 (Gann 2008).]
Accord., Lehen v. Atlantic Highlands Zoning Bd. of Adj., 252 N.J. Super. 392 (App. Div. 1991) (applying the doctrine of equitable estoppel to prevent the municipality from preventing completion of work which was within the scope of a permit issued in error); Hill v. Bd. of Adj. of Eatontown, 122 N.J. Super. 156, 161-62 (App. Div. 1972) (holding that an act such as the issuance of a permit in error, which is voidable as an irregular exercise of a municipal power, "is a mistaken or irregular exercise of a ministerial function rather than an action which is utterly void," and is therefore subject to the imposition of an equitable estoppel).
Here, Mott argues that he reasonably relied, in good faith, upon the zoning permit and building permits issued by Ocean City and it was unjust and unfair for the City to revoke these permits after he expended substantial amounts of money. We agree and conclude that Mott's position is consistent with the authorities cited above. Therefore, we conclude that Judge Armstrong's analysis was correct in applying the doctrine of equitable estoppel.