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Feld v. City of Orange Township

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 19, 2010

JUDITH S. FELD, ROBERT M. FELD AND THE FOUR FELDS, INC., D/B/A L. EPSTEIN HARDWARE CO., PLAINTIFFS-APPELLANTS,
v.
THE CITY OF ORANGE TOWNSHIP, DEFENDANT-RESPONDENT, AND HASSAN ABDUL-RASHEED, INDIVIDUALLY AND IN HIS CAPACITY AS A CITY COUNCIL MEMBER, DWIGHT MITCHELL, IN HIS CAPACITY AS MUNICIPAL CLERK, HARVARD DEVELOPMENT URBAN RENEWAL ASSOCIATES, LLC, AS THE SUCCESSOR IN INTEREST TO HARVARD DEVELOPMENT ASSOCIATES, LLC, HOUSING AND NEIGHBORHOOD SERVICES, INC., NORTHERN HILLS REDEVELOPMENT, LLC, GOLD HAVEN PROPERTIES, INC., AND VILLITA ARTES, LLC, DEFENDANTS.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2401-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 2, 2010

Before Judges Wefing, Grall and Messano.

Plaintiffs Judith S. Feld, Robert M. Feld and the Four Felds, Inc., doing business as L. Epstein Hardware Co., appeal from an order dismissing their third-amended complaint in this action in lieu of prerogative writs. The complaint was dismissed, without prejudice, on motion filed by defendant City of Orange Township (City) and joined by defendants Housing and Neighborhood Services, Inc. (HANDS) and Harvard Development (Harvard)*fn1 (collectively the HANDS defendants). Although defendants moved to dismiss for failure to state a claim pursuant to Rule 4:6-2(e) and fees pursuant to Rule 4:6-4(b), the judge dismissed pursuant to Rule 4:6-4(b). He also awarded fees and costs in the amount of $1483.50 to the City's attorney and $1810.50 to the attorney for the HANDS defendants.

Because the judge did not issue an oral or written decision setting forth findings of fact and legal conclusions explaining why a sua sponte dismissal pursuant to Rule 4:6-4(b) was appropriate and because we cannot conclude that it was, we reverse with direction to vacate the order and continue the proceeding.*fn2 We reject the City's argument urging us to affirm on a different basis, which is that the complaint should have been dismissed pursuant to Rule 4:6-2 for violation of Rule 4:5-2. The HANDS defendants did not participate in this appeal. Plaintiffs filed their first complaint on March 17, 2008. This was defendants' third motion to dismiss.

In May 2008, the HANDS defendants filed a notice of motion to dismiss pursuant to Rules 4:6-2 and 4:6-4 and for fees and costs pursuant to Rule 4:6-4(b). In a supporting certification, counsel indicated that the HANDS defendants would also rely on Rules 4:5-8 and 1:4-1. On July 10, 2008, the judge found that plaintiffs' complaint: did not include numbered paragraphs and segregate claims founded upon separate transactions into separate counts to facilitate a clear presentation of the matter, as required by Rule 1:4-2; did not state the particulars of the wrongs supporting plaintiffs' claims of fraud and conspiracy as required by Rule 4:5-8; and was insufficient to permit the judge or defendants to discern the facts upon which plaintiffs were relying or the relief they sought. Accordingly, by order of July 15, 2008, the judge reserved decision on defendants' motion "until further application by [d]efendants" and granted plaintiffs leave to file an amended complaint by July 25, 2008.

Plaintiffs filed an amended complaint on July 23, 2008, which included twenty-six counts against the City, the HANDS defendants and individual defendants. Arguments on defendants' second motion to dismiss was heard on August 29, 2008. At that motion hearing, plaintiffs were represented by an attorney who agreed to reformulate the complaint to limit the action to counts one through nine - challenges to ordinances and resolutions issued by the City Council. Counts one through nine were identified as the only claims properly considered in a prerogative writ action and were dismissed without prejudice in order to give plaintiffs until September 18, 2008 to file another amended complaint. The remaining counts, ten through twenty-six, were dismissed without prejudice. In addition, the request for fees was denied without prejudice. The order memorializing those determinations was entered on September 16, 2008; it does not refer to the judge's dismissal of the request for fees and costs pursuant to Rule 4:6-4(b) without prejudice.

Plaintiffs filed a third-amended complaint dated September 16, 2008. It included eight counts challenging four ordinances issued by the City Council between February 19 and August 6, 2008. Plaintiffs, however, filed a notice withdrawing count five on October 13, 2008.

In the seven counts that remain, plaintiffs seek invalidation of the ordinances, equitable relief and, in some instances, referral to "the Attorney General and Local Finance Board for further investigation."

Ordinance No. 54-2007 is challenged in counts one through four. That ordinance authorizes the sale of property known as 540 Mitchell Street to Harvard, pursuant to N.J.S.A. 40A:12A-39, for $300,000 and "[s]uch other terms and conditions as may be established by Contract of Sale." It also requires the buyer to pay the taxes on the property and improvements and to submit a site plan application to the planning board. The ordinance identifies Harvard as the "designated redeveloper" of specified lots, including 540 Mitchell Street, which is within the Central Valley Redevelopment Area, and $300,000 as the appraised value of the property.

In count one, plaintiffs allege that Ordinance 54-2007 is void as "ultra vires, arbitrary, unreasonable, capricious, unconstitutional and [an] unlawful act." The focus of count one is that the ordinance was not adopted in conformity with the controlling statutes and exceeds the authority delegated to the City by the Legislature. The following claims can be gleaned. Harvard is a redeveloper not a redeveloping entity within the meaning of the "Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -49," and, for that reason, the private sale of property to this redeveloper is governed by N.J.S.A. 40A:12-13(c), which plaintiffs assert requires compliance with the "Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -49." They further assert that N.J.S.A. 40A:12A-8(g) permits conveyance of land without bidding under terms that are "reasonable." Plaintiffs assert that the City Council did not apply the correct legal standard and approved the sale without considering the reasonableness of the price and terms of the sale. They point to the fact that the property had an assessed value of $704,000, which was much higher than the appraised value at which the sale was approved. Finally, they assert that the ordinance misstated the appraised value, which was $330,000 not $300,000.

Count one includes other factual allegations that have no relevance to the adoption of Ordinance 54-2007, at least none that is apparent to us. To illustrate, we note assertions about: charges pending against the mayor; violations of the Open Public Meetings Act in connection with the election of an acting mayor; error in an ordinance adopted prior to Ordinance 54-2007 that was recognized and addressed in an ordinance issued after Ordinance 54-2007; and a challenge to the legality of an ordinance approving a contract for professional services unrelated to the sale of 540 Mitchell Street.

In count two, plaintiffs seek the same relief as in count one plus injunctive relief in the form of an order compelling the City to append "a written instrument to any and all future sale of real property ordinances." From the allegations stated in count two, one can readily glean that the claim is based upon alleged violations of designated statutes and sections of the City's administrative code allocating the functions of the legislative and executive branches of City government. The specific violation claimed is that the ordinance unlawfully delegates the Council's authority to approve contracts to the executive branch.

In count three, plaintiffs seek a declaration that the sale approved in Ordinance 54-2007 violates "the express clear terms of the [Harvard] Redevelopment Agreement" and an order compelling compliance. They allege that the Redevelopment Agreement requires submission of a dispute about the price of the property to binding arbitration and that a debate among the councilpersons about the reasonableness of the price required submission to arbitration. They further allege that, as property owners and taxpayers who are third-party beneficiaries of the redevelopment agreement, their reasonable expectations were frustrated by the City's failure to arbitrate the dispute between the councilpersons.

This count, like count one, also includes allegations that have no apparent relevance to the claim asserted. For example, there is an objection based upon delay by the redeveloper in changing its name and a suggestion that there were lots excluded from the redevelopment zone for improper reasons amounting to unreasonable governmental action.

In count four, plaintiffs seek a declaration that Ordinance 54-2007 was invalid because it was not passed by a super majority, and they request injunctive relief in the form of an order compelling the vote of a super majority on all future private sales of real property. In support of that claim, they assert the following: the local ordinance requires the vote of a super majority on matters relevant to the City's finances and budget; N.J.S.A. 40A:2-17b requires a super majority for passage of a bond ordinance; and N.J.S.A. 40A:2-27b(3) requires the same for a "private sale of bonds." Paragraphs 153 and 154, which are part of count four, state the legal reasoning upon which they rely: "The private sale of City owned real estate to a private redeveloper is an extraordinary course event, affecting and impacting the financial well being" of those who pay property taxes; "There is no rational reason to distinguish procedurally a private sale of real property to a redeveloper from a private sale of bonds to a State agency...."

As noted above, count five of the third-amended complaint was withdrawn.

In count six, plaintiffs challenge Ordinance No. 11-2008 as an "arbitrary, capricious, unreasonable, premature and ultra vires act." Through that ordinance the Council approved an application by "Harvard Development Urban Renewal Associates, LLC for the development of the Project" set forth in its application and, relying upon "N.J.S.A. 40A:20-1 et seq."; granted an "exemption from taxation on improvements" made through the Project for a period of twenty years; and authorized the mayor to execute a financial agreement in lieu of taxes substantially in the form set forth as an exhibit to the ordinance.

Plaintiffs' allegations in support of their challenge to Ordinance No. 11-2008 are that the financial agreement did not comply with N.J.S.A. 40A:20-8 and N.J.S.A. 40A:20-9. They contend that the financial agreement was deficient and arbitrary because it: contained material with typographical errors and inconsistencies; was issued before the developer held title; was issued on the same day that DEP imposed a moratorium on building in the City; lacked an "effective date deadline"; was issued on an application that did not meet the requirements of N.J.S.A. 40A:20-8; and is illusory.

Count six also contains assertions and allegations with no apparent relevance. There is, for example, a suggestion that the errors are a result of a rush to approve before the membership of the City Council changed.

Count seven, is a challenge to Ordinance No. 8-2008, which approves a $9,000,000 bond for improvements to the City's "Mountain Wells [and] the Chestnut Street Treatment Facility and High Pump Station." Plaintiffs contend that the existing infrastructure was inadequate to support further development. They seek to void the ordinance as an "unlawful, capricious, unreasonable and ultra vires act" and obtain an order compelling the City to take specified corrective actions. Among the allegations are claims that the ordinance was not passed by a two-thirds vote of the full membership, which plaintiffs assert is required by N.J.S.A. 40A:2-27b(3); was mischaracterized as debt to be sold at a public sale when a private sale was intended; was impermissibly amended by resolution; failed to identify expenses and items as required by N.J.S.A. 40A:2-20; pledged water revenues to fund the debt without complying with N.J.S.A. 40A:2-15; and ignored a distinction between obligations that are "self-liquidating" and those secured by "ad valorem taxes" on real property that they claim is pertinent for purposes of N.J.S.A. 40A:2-47a.

Count seven, like counts discussed above, includes allegations that have no apparent relevance. One example is a description of plaintiffs' efforts to obtain information about a matter reported in the newspaper and their dissatisfaction with the City's response; another is the generalized criticism of practices generally employed by the City that plaintiffs allege leads to less than full public disclosure.

In count eight, the final count, plaintiffs seek an order voiding Ordinance No. 9-2008, as an "arbitrary, capricious, unreasonable, ultra vires and unconstitutional act." That ordinance provides for a five-year tax abatement for improvements to specified structures in areas in need of rehabilitation, in need of redevelopment, or in the City's urban enterprise zone. Again, plaintiffs present claims that are based on their perception of deviations from governing statutes - specifically N.J.S.A. 40A:21-8; N.J.S.A. 40A:21-9; N.J.S.A. 40A:21-10. Similarly, there are allegations concerning events after the ordinance was adopted, which was on June 4, 2008. In contrast, there are pejorative characterizations of this tax abatement program as a "below the radar," "stealth subsidy program" that may or may not have relevance to plaintiffs' allegations about the unreasonableness and arbitrariness of the City Counsel's action in passing the measure.

In November 2008, the City moved to dismiss the complaint. The notice of motion stated that dismissal was sought for failure to state a claim upon which relief can be granted, R. 4:6-2(e), failure to plead with particularity, R. 4:5-8(a), and for fees and costs pursuant to Rule 4:6-4(b). At the motion hearing held on January 23, 2009, counsel for the HANDS defendants indicated that he had filed no opposition beyond a letter joining "in the City's position under the rules to dismiss the complaint." Thus, counsel did not renew the HANDS defendants' request for dismissal pursuant to Rule 4:6-4(b) raised on the prior motion.

At the time of the hearing on the motion, the trial judge stated: "I find the complaint does not afford the defendants a fair opportunity to apprise them of the allegations and/or causes of action and [that they] clearly would be prejudiced if they were forced to answer this complaint." He did not indicate that he had any intention of dismissing the complaint or striking portions thereof pursuant to Rule 4:6-4(b)(1)-(2). Following the hearing and without further explanation, however, the judge entered an order of dismissal pursuant to Rule 4:6-4(b)(1) and fees and costs. The order was entered on February 6, 2009.

Plaintiffs raise the following issues on appeal:

I. Rule 4:6-4(b)(1) Must Be Interpreted Restrictively So As Not To Chill Creative Advocacy or To Bar Access To the Courts.

Procedural Due Process Violated. Need For Plenary Evidentiary Hearing.

II. He Who Seeks Equity Must Do Equity.

III. The Trial Court Erroneously and Prematurely Limited The Felds' Ability to Rebut the Four Contested Ordinances' Presumption of Validity with Any Post Adoption Facts and Legislation.

The judge did not provide adequate notice of his intention to dismiss pursuant to Rule 4:6-4, which was not a basis for dismissal urged by defendants on this motion. Nor did the judge provide an adequate explanation for his decision to dismiss and award counsel fees and costs pursuant to Rule 4:6-4(b).

Rule 4:6-4(b) provides:

On the court's or a party's motion, the court may either (1) dismiss any pleading that is, overall, scandalous, impertinent, or, considering the nature of the cause of action, abusive of the court or another person; or (2) strike any such part of a pleading or any part thereof that is immaterial or redundant. The order of dismissal shall comply with R. 4:37-2(a) and may expressly require, as a condition of the refiling of a pleading asserting a claim or defense based on the same transaction, the payment by the pleading party of attorney's fees and costs incurred by the party who moved for dismissal.

The judge's findings simply do not address the considerations that warrant dismissal under Rule 4:6-4(b). To be deemed "scandalous" the allegations in a complaint must be prejudicial and irrelevant to the claim asserted. Calliari v. Sugar, 180 N.J. Super. 423, 430 (Ch. Div. 1980); DeGroot v. Muccio, 115 N.J. Super. 15, 19 (Law Div. 1971). Impertinent material "'consists of statements that do not pertain, and are not necessary, to the issues in question.' Superfluous historical allegations are a proper subject of a motion to strike." Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (construing Fed. R. Civ. Proc. 12(f)), rev'd on other grounds, 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed. 2d 455 (1994) (citations omitted).

Based upon our review of the complaint, it is apparent that it includes some impertinent and scandalous material. In our preceding discussion of each count of this complaint, we provided illustrations of material that has no apparent relevance to the claim asserted therein. Our discussion was not intended to be exhaustive.

Nonetheless, we cannot conclude that it was appropriate for the judge to enter a sua sponte dismissal on this ground without, at a minimum, giving prior notice during the argument on defendants' motion that would have permitted plaintiffs to respond. See Kohn's Bakery, Inc. v. Terracciano, 147 N.J. Super. 582, 585 (App. Div. 1977) (concluding that it was error to dismiss a complaint for violation of court order or rules without providing an adequate opportunity to be heard).

Nor can we agree that the entire complaint is either scandalous or impertinent. In our preceding discussion of the separate counts in this complaint, we detailed plaintiffs' specific challenges to the various ordinances that are based on specified deviations from statutes governing the City's actions and the subjects addressed. Without suggesting any view on whether those claims would survive an adequate motion for dismissal pursuant to Rule 4:6-2(e) supported by a brief demonstrating why plaintiffs could not prevail as a matter of law, it is clear to us that the entire complaint is not impertinent or scandalous.

We decline to speculate about whether the judge may have elected to dismiss the claim on the alternative ground provided in Rule 4:6-4(b) - that "considering the nature of the cause of action, [the complaint is] abusive of the court or another person." A judge has an obligation to explain the reasons for a determination so that this court may review it without speculating. R. 1:7-4(a); see Curtis v. Finneran, 83 N.J. 563, 569-70 (1980).

An explanation is especially important in a case such as this. The judge had options from which to select an appropriate remedy. Rule 4:6-4(b)(1)-(2) permits a judge to dismiss an offending complaint in its entirety or to strike portions that are immaterial or redundant. A judge's election between those remedial measures is a judicial determination that must be explained. R. 1:7-4(a).

From the perspective of a trial judge, there is a practical reason for providing the required statements of facts and reasons for an order dismissing pursuant to Rule 4:6-4(b) without prejudice. An order of dismissal on that ground that is issued without a decision identifying the problems is not likely to be productive. Repetition of the improprieties is the more likely outcome when the problems have not been identified. In contrast, if there is a clear articulation of what must be eliminated in order to proceed, then it is more likely that the next pleading will be one that has been pruned of extraneous materials that are obfuscating the issues and unfairly burdening the court and the party's adversary.

The trial judge also erred in fashioning the award of fees and costs. In addition to providing an inadequate explanation for the award, the sanction was not assessed in accordance with the Rule 4:6-4(b). An award of fees and costs authorized by Rule 4:6-4(b)(2) may be imposed only "as a condition of the refiling of a pleading asserting a claim or defense based on the same transaction." The fees and costs in this case were not awarded on that basis. Accordingly, they must be vacated.

The City urges us to affirm on a different ground. They contend that the complaint was properly dismissed pursuant to Rule 4:6-2 for violation of Rule 4:5-2. Rule 4:5-2 requires plaintiffs to "set[] forth a claim for relief... [that] contain[s] a statement of the facts on which the claim is based, showing that the pleader is entitled to relief, and a demand for judgment for the relief to which the pleader claims entitlement." Based on our summary of the seven counts remaining in this complaint set forth above, we reject this argument. While the City may not agree that the asserted violations and deviations from the statutes upon which plaintiffs rely are meritorious, there is no question that a cause of action is suggested by those facts. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988). Accordingly, we cannot affirm on the basis suggested by the City.*fn3

Plaintiffs should not understand this opinion as one approving of the manner in which their several complaints were prepared or as one suggesting that there is merit to the claims. If consideration was given to our pleading rules when these complaints were filed, it is not apparent in the resulting pleadings.

Plaintiffs' lack of attention to rules formulated to facilitate the expeditious and just resolution of claims, see R. 1:1-2, is also evident in the papers submitted on this appeal. Plaintiffs' brief does not conform with the relevant rule. We invite plaintiffs' attorney to compare the procedural history and statement of facts set forth in its brief for compliance with Rule 2:6-2(a)(3)-(5). Compliance with those provisions is more than a technicality designed to benefit the members of the appellate panel and the adversary. It facilitates a persuasive presentation of the facts pertinent to the issues.

The order under review is vacated, and the matter is remanded for further proceedings on defendants' motions to dismiss for failure to state a claim, which the trial judge did not address. The judge of course has discretion to establish a briefing schedule with direction for defendants to explain why they are entitled to a dismissal of the claims asserted in the various counts.

Reversed and remanded for further proceedings.


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