March 30, 2010
BOROUGH OF PARAMUS, PLAINTIFF-APPELLANT, AND PLANNING BOARD OF THE BOROUGH OF PARAMUS, PLAINTIFF-INTERVENOR/ CROSS-APPELLANT,
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/CROSS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7387-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 1, 2010
Before Judges Rodríguez and Reisner.
Plaintiff Borough of Paramus*fn1 appeals from a July 29, 2009 declaratory judgment in favor of defendants Shamrock Creek, L.L.C. and JDME Acquisitions, entered by the Law Division on remand from our decision in Borough of Paramus v. Shamrock Creek, L.L.C., No. A-4508-07 (App. Div. March 4, 2009). We affirm.
The facts of this case are set forth in detail in our 2009 opinion and need not be repeated in their entirety. The case is a dispute between defendants Shamrock Creek and JDME, the seller and prospective developer, respectively, of a thirty-five acre parcel of land known as Lot 1, Block 7706, and the Borough, which seeks to enforce an agreement restricting development of the parcel. Specifically, the appeal concerns whether defendants are bound by a provision in a February 11, 1988 agreement barring residential development on the parcel.
The agreement, which settled Mount Laurel*fn2 litigation between the Borough and a prior owner of the property, was not recorded. Defendants contended that they were innocent purchasers who had no notice of the restriction and should not be bound by it. After a plenary trial, the Law Division judge agreed with them, holding that the unrecorded restriction was not enforceable against these defendants. Without reaching the merits of the trial court's decision, we reversed and remanded because the court erroneously precluded one of the Borough's witnesses from testifying at the trial.
In an oral opinion of July 29, 2009, issued after the remand hearing, the trial judge once again concluded that "the need for the integrity of the recording system trumps the ad hoc covenant proposed . . . by the plaintiff." He determined that after conducting a proper due diligence, defendants bought the property without knowing about the restrictions. He found that even the Borough's additional witness, an expert planner, only discovered the restriction by searching a website that defendants could not have been expected to find in conducting due diligence.*fn3 The judge also concluded that the Borough had not presented any evidence to support a conclusion that the public interest required enforcement of the unrecorded agreement.
The judge further reasoned that the Borough had an effective alternative to protect its asserted interest in restricting development on the parcel. Instead of recording the restriction, the Borough had passed a zoning ordinance limiting the total number of housing units that could be built in a "Mount Laurel" zone that included the parcel. Therefore, in order to develop the land, defendant developer would have to apply for a "d" variance from that ordinance. Additionally, the developer would need to obtain approvals from the Department of Environmental Protection concerning any environmental issues the parcel presented. The judge concluded that these factors provided sufficient protection for the Borough's interest without the need to enforce the unrecorded 1988 agreement.
Having reviewed the record, we find no merit in the Borough's contentions that the trial court "erred in refusing to enforce restrictions precluding the development of the property and improperly applied applicable case law." The Borough presented virtually no evidence to support enforcement of the restriction. We affirm for the reasons stated in the trial judge's well-reasoned opinion of July 29, 2009. We add the following comment.
We agree with the trial judge that the integrity of the recording system is a paramount interest to be protected here. See Island Venture Assocs. v. N.J. Dep't of Envtl.Prot., 179 N.J. 485, 492-93 (2004). We also perceive an additional public interest at issue. Although the trial judge found that the Borough's designation of the property as developable in its 2005 fair share plan was a mistake, the fact that it was included at all illustrates the mischief that may stem from such an unrecorded restriction on development. Enforcing such unrecorded settlements could allow a municipality to play fast and loose with the COAH process by not recording a development restriction, representing the land as developable for affordable housing in its COAH application, and then seeking to enforce the restriction when a developer attempts to build housing on the land. In summary, the trial judge correctly concluded that the Borough cannot enforce the unrecorded agreement against an innocent third-party purchaser.