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South Brunswick Center, L.L.C. v. Township of South Brunswick


December 28, 2009


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-4435-06.

Per curiam.


Argued December 1, 2009

Before Judges Carchman and Lihotz.

This appeal requires us to explore the application of the broad principles enunciated in Toll Bros., Inc. v. Bd. of Chosen Freeholders of Burlington County, 194 N.J. 223 (2008), and whether a developer's agreement prevents a planning board and municipality from granting relief from the terms of such agreement.

Here, plaintiff, South Brunswick Center (SBC), appeals from an order of the Law Division dismissing its complaint in lieu of prerogative writs. The trial judge upheld defendants', South Brunswick Planning Board (the Board) and the Township of South Brunswick (the Township), denial of plaintiff's request for an extension of a construction deadline of a roadway and bridge as set forth in the developer's agreement. The construction of a roadway and bridge was a condition to the preliminary approval of plaintiff's development of a parcel of land, and the subject of the developer's agreement.

We reverse.

These are the facts adduced from the record. SBC is the successor developer of a 413 acre tract of land located on Route One in South Brunswick (the property). On June 15, 1994, the defendants Board and Township granted preliminary subdivision approval to develop the property with waivers and design exceptions to the predecessor developers, Jersey Center/Fidoreo, Inc. (Jersey Center). When developed, the property would incorporate 6.43 million square feet of commercial office space. The resolution, including conditions imposed on the preliminary approval, was subsequently memorialized in a May 2, 1995 developer's agreement.

In 1998, plaintiff acquired Jersey Center's interest in the property, including the prior waivers, design exceptions and conditions. Included conditions required SBC to construct a four-lane divided road referred to as Northumberland Way (the Road or Northumberland Way) and "all necessary improvements in connection therewith." During construction of the Road, these "necessary improvements" included a bridge, spanning wetlands, which would operate as a thoroughfare, connecting Major Road, a public roadway in South Brunswick, with Route 1.

The developer's agreement further contained language pertaining to the Township's obligation to "acquire land necessary for construction of Northumberland Way from the southerly boundary of the Property to Major Road (the 'Northumberland Extension')." However, the agreement also stated that construction of the Road would not be excused if the Township were not able to acquire such land. Instead, "Northumberland Way shall be constructed to the southerly boundary."

Critical to the 1994 approvals was the extension of the zoning vesting period to twenty years, with the new period to end on June 14, 2014. Generally, a preliminary subdivision approval is protected from zoning changes for three years, but because of the size, complexity and cost of this project, the Board exercised its statutory authority under N.J.S.A. 40:55D-49, and granted a zoning protection of twenty years. The Board found "that a longer period of protection is both appropriate and necessary for th[e] subdivision." However, the resolution stated that the grant of this extension was contingent upon completion of two lanes of the required road "and all necessary improvements in connection therewith" by June 14, 2004, and in the event that the road was not completed by then, the zoning protection would end on that date.

Development of the property commenced in September 2003. On April 28, 2004, plaintiff, anticipating it would be unable to complete the Road by June 14, requested a two year extension for the completion of the Road. Defendants conducted a hearing in June 2004, where plaintiff provided evidence and testimony proffering "reasons justifying the request for the extension." Defendants granted plaintiff's request and amended the developer's agreement to reflect this extension. This two-year extension was also granted to the Township to acquire the Northumberland Way extension on the southerly property boundary to the Road, an acquisition that was at the discretion of the Township.

The Road itself was completed before the June 14, 2006 deadline. However, the bridge which was required to connect the Road to Route 1, was not yet completed as several bridge components had not yet arrived. Paving and curbing of the bridge had yet to be completed, as were several other construction details, comprising an eight page punchlist.

On May 9, 2006, recognizing the delay, plaintiff forwarded correspondence to the Township requesting that defendants either acknowledge that plaintiff had fulfilled the conditions of "construct[ion] of at least two (2) lanes of [the Road]... and all necessary improvements in connection" with the Road or grant an extension until December 31, 2006 to permit completion of the bridge. Plaintiff requested a hearing to address these requests.

The Township responded on May 10, 2006, and declined to grant a second extension, stating that SBC "had more than enough time to fully satisfy its obligations" and "[i]t [was] unwilling to give [SBC] any more." The Township further stated that as there was no ambiguity in the developer's agreement and SBC had agreed to its specific provisions, "[i]t is the terms of the [developer's agreement] that govern, not whether [SBC] now feels that those terms are inequitable." Relying on its understanding of the law, the Township noted that it "[i]t is long established that [courts] will not write a new contract for parties or vary, enlarge, alter or distort its terms for the benefit of one to the detriment of the other." The Board likewise responded and denied plaintiff an opportunity to appear before the Board to present evidence either in support of an extension or that SBC had in fact fulfilled its contractual obligations under the developer's agreement. The Board stated that "[w]ithout an endorsement from the Council to... extend the time within which to complete [the Road] to December 31, 2006, there is no reason for the Planning Board to visit the issue at this time."

Even with the denial of an extension, plaintiff continued to complete the bridge. On February 16, 2007, the engineer certified that "the bridge work has been constructed and completed in a satisfactory manner and in substantial conformance with the [developer's agreement]." The County of Middlesex Department of Engineering signed off on the project, finding that it had "been completed in a satisfactory manner and [was] acceptable."

Plaintiff subsequently filed a complaint in lieu of prerogative writs with the Law Division, claiming, among other assertions, that "defendants' refusal to extend the date for completion of the Road, which action resulted in SBC losing protection from zoning changes that was to last until June 2014, was arbitrary, capricious and unreasonable, both under the requirements of the Municipal Land Use Law [N.J.S.A. 40:55D-1 to -163] and under the Agreement." By way of relief, plaintiff sought extension of the deadline for the completion of the bridge, which would result in zoning protection of the development through June 14, 2014.

During trial in the Law Division, plaintiff asserted that in determining whether to grant or deny its request for an extension, defendants should have considered several things, including that as of June 14, 2006, the bridge was either in place, or "in transit or in the process of being placed," as well as the absence of any detriment to the public interest in extending that date. Plaintiff also noted that the Road could not be used even if the bridge had been completed by the critical date as the Township had failed to acquire the property necessary to link with Major Road. In addition to an absence of harm, plaintiff urged that there would be significant public benefit from an extension of the zoning protection, stating that if it were to lose its zoning changes protection through June 2014, "there would be substantial impediments to obtaining buyers, tenants and financing for what were still undeveloped parcels, and without which it would be financially impractical for [plaintiff] to seek final approvals." Plaintiff also claimed that as defendants had indicated the Township had no intention of modifying the current zoning regulations, "there was no reasonable basis for the Board and the Township to deny" its request.

Defendants countered and urged the trial court to dismiss plaintiff's complaint, proffering that procedurally, plaintiff's complaint failed to state a harm for which there was relief, as it "would still have [its] subdivision approval" and "there is no contemplation in... the future of the zoning change ever being made." Defendants also claimed that plaintiff's rights were limited to those set forth in the developer's agreement, and as such, had no absolute right to an amendment as it had contractually agreed to have the Road and all necessary improvements completed by June 14, 2006.

At the hearing, the judge heard from one witness on behalf of plaintiff - Mr. William Iafe, an engineer employed by Atlantic Realty Development Company, who was "responsible on a day-to-day basis for the operational aspects of [plaintiff's] projects." Iafe described the planned purpose of the roadway to service plaintiff's development as well as serve as a connector between Route 1 and Major Road. Part of the plan was to minimize emergency response time and reduce travel delays. As part of the plan, the Township contemplated acquiring part of the roadway to implement the connector plan. The land was never acquired, but Iafe confirmed that the roadway within plaintiff's development is "100% done." In addition, at the time of the hearing in 2007, there was no development of the property, and it remained vacant land (with a completed roadway).

As developed at the hearing, the Road was designed in anticipation of serving as a connector. Absent that use, the road design would not have been as extensive.

Various delays were attributable to normal construction delays as well as delays generated by third-parties. One example cited was the delay of almost one-year in Public Service Gas and Electric Co. moving its power poles as part of a required realignment of the Road and an existing abutting street identified as Cornwall Road.

Ultimately, the Road was completed within the extension period, but the bridge remained unfinished. The bridge, which was a reinforced concrete structure spanning wetlands, required design approval from the county. Because of the nature of the spanned area, the bridge was curved and "super-elevated." According to Iafe, it was "complex structurally and concrete construction-wise" and was "tough to build." "There [was] nothing standard about it." Within three months after the deadline date, the bridge was "substantially completed," with approach slabs missing. The connection between the bridge and roadway was completed after commencement of the construction season in March 2007.

According to Iafe, absent the extension and the additional protection period, the Township can change the zoning, potential tenants or buyers of the property inhibiting from moving forward because of the uncertainties of design, financing and the other areas critical to development.

At the conclusion of the hearing, the trial judge denied that relief and dismissed the complaint, reasoning that defendants had an absolute contractual right to refuse to extend the deadline. This appeal followed.

The focal point of plaintiff's arguments on appeal is that Toll Bros. requires reversal of the trial court's decision. Plaintiff maintains that both defendants' and the judge's decisions were grounded on the presumption that a developer's agreement is a binding contract, a presumption that was vitiated in Toll Bros. And, because plaintiff's rights were not limited to those explicitly provided in the developer's agreement, plaintiff argues it was entitled to a hearing where it could present evidence and testimony supporting its position that an extension was both appropriate and beneficial.

While defendants concede that the Toll Bros. holds that a developer's agreement is not an independent right but sets forth rights and obligations that exist in the underlying resolution, they maintain that the case is distinguishable on its facts.

We first analyze Toll Bros. Toll Brothers acquired an interest in a parcel, for which the previous owner had received preliminary approval to construct a commercial, residential and retail development that would include a golf course. The local planning authorities had conditioned their approvals on the developers' willingness to make certain road improvements to address the increased traffic development would generate. Toll Bros., supra, 194 N.J. at 231. Toll Brothers executed a developer's agreement, whereby it adopted the approval conditions and agreed that it would "be responsible and solely liable to complete [road] improvements" related to the development. Id. at 234. Toll Brothers' receipt of subdivision approval was explicitly condition on it being "100% responsible" for the improvements.

For several reasons, irrelevant here, Toll Brothers was forced to abandoned construction plans for one portion of the parcel it had originally acquired, and it subsequently sought to renegotiate its obligations under the developer's agreement, seeking a recalculation of the costs it was required to assume, so it would "more adequately reflect its pro-rata share." Id. at 240. The County Planning Board refused to amend the developer's agreement, prompting Toll Brothers to seek reformation in court, asserting it should be permitted to move before the County to demonstrate that there was a change in circumstance that required reconsideration of the conditions set forth in the developer's agreement. Toll Brothers argued that if the developer's agreement was enforced as is, it would violate the off-tract contribution provision set forth in N.J.S.A. 40:55D-42 that prohibits the government from requiring off-tract improvements beyond a developer's pro-rata share.

The trial judge granted summary judgment to the defendants, finding "the terms of the developer's agreements 'clear and unambiguous,'[.]" Toll Bros., supra, 194 N.J. at 240. The judge rejected Toll Brothers' contention that it was entitled to a Board hearing because that argument "'confuse[d] a Developer's Agreement with an ordinary condition of approval' and would 'ignore[] basic principles of contract law that preclude[] such reconsideration.'" Ibid. Toll Brothers appealed, and we affirmed.

The Supreme Court rejected the County's argument that the developer's agreement was a binding contract and concluded that planning boards were required to exercise their delegated powers in "strict conformity with... the MLUL." Id. at 243. The Court concluded that the trial court erred in denying access to a hearing before the Board and held that a developer's agreement is not an independent obligation that frees the parties from the restraints in the MLUL.

A developer's agreement is a contract between the developer and the municipality that details the manner in which the conditions of approval will be fulfilled. It is ancillary to those conditions and is only enforceable to the extent that the conditions on which it is based are enforceable. Moreover, conditions of approval are not immutable; when the proportional effect of the public need generated by a project is materially changed by virtue of a significant reduction in the scope of the proposed development, the developer is entitled to an opportunity to demonstrate before the planning board that a recalculation of its contribution is warranted. The fact that the developer has entered into a developer's agreement is of no consequence to that entitlement. [Id. at 230.]

The Court concluded that Toll Brothers had a right to appear before the County to establish a sufficient change in conditions surrounding the property. The Court relied on N.J.S.A. 40:55D-12a, which codifies the right of a party to request a change in the conditions of approval, public notice and a hearing for modification of conditions reflected in a developer's agreement. Id at 254.

While defendant is correct that the facts are distinguishable, the broad principles enunciated in Toll Bros. apply here. The exclusive focus on the developer's agreement as a basis for denial is misplaced. A developer's agreement is not an independent source of rights either as to its substantive provisions or as a basis for denying an opportunity to be heard by the appropriate governmental agency to develop a factual basis for relief from its terms. A developer's agreement is an ancillary instrument, which "exists solely as a tool for the implementation of the resolution establishing the conditions." Toll Bros., supra, 194 N.J. at 249.

The trial judge premised his ruling, in good measure, on the absence of a provision in the developer's agreement which would allow for an extension of the deadline for the completion of the Road and bridge. "There is no provision in the developer's agreement entered into with the Township or the resolution adopted by the Board that would compel either the Township or the Board to extend the contract any further."

Toll Bros. compels a different result. Although decided after the Law Division order, under the time of decision rule, we apply the law in effect at the time of our decision rather than the law in effect when the issues were initially presented. Maragliano v. Land Use Bd. of Wantage, 403 N.J. Super. 80, 83 (App. Div. 2008) (citing Manalapan Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366, 378-79 (1995); Riggs v. Twp. of Long Beach, 101 N.J. 515, 521, 503 A.2d 284 (1986)), certif. denied, 197 N.J. 476 (2009).

Accordingly we reverse. The developer's agreement was not an impediment to an extension, and pursuant to plaintiff's properly submitted application, the Board was required to conduct a hearing. Plaintiff should have been afforded the opportunity to present evidence and testimony in support of its extension application. "[A] new application for... 'lifting conditions previously imposed,' [may be submitted] upon a showing that the continued enforcement of the restriction would frustrate an appropriate purpose. Changed circumstances or other good cause may warrant reconsideration by the local authorities." Allied Realty v. Upper Saddle River, 221 N.J. Super. 407, 414 (App. Div. 1987), certif. denied, 110 N.J. 304 (1988) (citations omitted).

Plaintiff urges that we exercise original jurisdiction and grant the requested relief. We have significant doubts that a denial of the requested relief can be justified in the face of completion of the Road and bridge. The reasons set forth in the Law Division and the lack of apparent public harm in granting an extension, that is almost de minimus, given the length of time that this massive project has been underway appear to support the extension. Nevertheless, we decline to exercise original jurisdiction.

We may exercise such original jurisdiction as is necessary to the complete determination of any matter on review. R. 2:10-5. See also N.J. Const., art. VI § V, par. 3, (permitting the exercise of original jurisdiction "as may be necessary to the complete determination of any cause on review."). However, "resort [to original jurisdiction] by the appellate court is ordinarily inappropriate where further fact-finding is necessary in order to resolve the matter." Pressler, Current N.J. Court Rules, comment on R. 2:10-5 (2009).

We do, however, recognize that the law has changed in the interim with the Court's decision in Toll Bros. prompting us to acknowledge that defendants should have the opportunity to address the issue initially with an understanding of the new parameters that govern. Accordingly, at this juncture, we reverse and remand to the defendant for appropriate consideration of plaintiff's request for relief.

Reversed and remanded. We do not retain jurisdiction.


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