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Asbury Shores, Inc. v. City of Asbury Park

November 10, 2009


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4417-02.

Per curiam.


Argued: October 21, 2009

Before Judges Axelrad, Fisher and Sapp-Peterson.

Intervenor Somerset Development, LLC, the proposed assignee of the redevelopment contract between the City of Asbury Park (City) and Asbury Shores, Inc., appeals from summary judgment dismissal of its claim challenging the City's refusal to consent to the assignment. We reverse and remand.

The issue before the trial court pertained to an interpretation of two contractual documents between the City and Asbury Shores, the redeveloper of the City's urban renewal area. Both the 1990 agreement and the 1998 Contract Rider stated that the City's consent to an assignment of interests and rights under the redevelopment agreement was required, but only the earlier of the documents expressly provided that the City's consent was not to be unreasonably withheld.

By December 2001, Asbury Shores was looking to end its involvement with the project and informed the City it wanted to assign its redevelopment rights to Waterfront Conservation Commission, Inc. Asbury Shores entered into a conditional sales agreement with Waterfront; however, the City did not consent to the assignment. In September 2002, Asbury Shores filed a complaint in lieu of prerogative writs alleging the City's refusal to consent to the transfer violated its redevelopment agreement. The City filed an answer and counterclaim seeking to terminate the redevelopment agreement and return the property to the City. During the pendency of the litigation, Waterfront conditionally assigned the contract to Somerset and Somerset pursued discussions with the City. A redevelopment agreement between the City and Somerset was drafted in January 2005, but was never signed by the parties.

On April 14, 2006, Somerset's motion to intervene in the subject litigation was granted. Thereafter, Somerset filed an answer, counterclaims and cross-claims seeking judgment against the City, Asbury Shores, and Intervenor Waterfront to specifically perform under the agreements. Somerset alleged the City did not have discretion to refuse the proposed assignment and therefore acted arbitrarily and capriciously.

On March 2, 2007, Somerset filed a notice of motion for partial summary judgment seeking an order requiring the City to consent in writing to the sale of the redevelopment property to Somerset. The City contemporaneously filed a notice of motion for summary judgment seeking dismissal of Somerset's claims. Asbury Shores moved for summary judgment against the City for breach of contract and sought transfer of the redevelopment rights to Somerset.

In support of its motion, the City submitted a February 9, 2005 letter sent by Somerset's attorney to the Mayor and Council. The letter provided a history of the discussions with the City regarding the Springwood Avenue Redevelopment Plan and Somerset's understanding that it could move forward with market rate housing on the property it was purchasing from Asbury Shores and the City would negotiate with another developer to construct affordable rental housing on City-owned property within the site. Somerset noted that it was "shocked and surprised" when the redevelopment plan was introduced with an inclusionary affordable housing component for its parcel, in addition to the payment of an affordable housing fee. The letter concluded:

Based on this, Somerset Development is not prepared to proceed with the redevelopment of the Springwood Avenue Area based upon the Redevelopment Plan that is proposed for adoption at Thursday night's meeting. Therefore, we respectfully request that the Mayor and Council table this Ordinance so that the parties can meet to negotiate a mutually acceptable plan.

We . . . feel confident that we can resolve our issues if the Ordinance is tabled. We have worked long and hard on this Redevelopment project and have gone out of our way to attempt to accommodate the City's needs and desires. Given this fact, we feel it is only appropriate that before the City rushes to adopt an Ordinance that is contrary to the prior Agreements made between the City and Somerset, it take time to at least meet with Somerset to make a good faith effort to attempt to resolve any remaining issues.

At argument on the motion, the City's attorney referenced this letter as the explanation as to why it had terminated negotiations with Somerset. The City argued that "by 2005, clearly, there was no deal that could be made, because Somerset did not want to build what the [C]ity is looking at building." The City's attorney elaborated:

Somerset asked us not to act on [our plan] and that, candidly, was the triggering event from the [C]ity to have basically gone in a separate direction, in terms of . . . how to actually proceed with the . . . redevelopment. It ...

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