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Deg, LLC v. Township of Fairfield and Zoning Officer

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 7, 2011

DEG, LLC, PLAINTIFF-RESPONDENT,
v.
TOWNSHIP OF FAIRFIELD AND ZONING OFFICER, GLENN PLUMSTEAD, IN HIS OFFICIAL CAPACITY, DEFENDANTS-APPELLANTS.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6984-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 8, 2011

Before Judges Yannotti, Espinosa and Skillman.

In July 2005, plaintiff DEG entered into a five-year lease of the rear half of a 10,000 square-foot building located on Route 46 East in Fairfield with the intention of operating a sexually-oriented business on the premises. The building and the property on which it is located are triangular, with Route 46 along one side, Horseneck Road along the second side, and an interior parking lot along the third side. The rear half of the building leased by DEG faces onto the parking lot, where both the entrance and a display window are located. The other side of the premises leased by DEG borders on Horseneck Road. There is no window or customer entrance on that side of the building. At the time DEG leased the rear half of the building, the front half, which faces primarily on Route 46, was leased by another commercial establishment, which sold dinette sets.

The sexually-oriented business that DEG proposed to operate on its premises was prohibited both by a Fairfield zoning ordinance, which prohibited sexually-oriented businesses anywhere in the municipality, and by N.J.S.A. 2C:34-7, which prohibits any person from operating a sexually-oriented business within 1,000 feet of any place of public worship, school, school bus stop, child care center, public playground, place of public recreation, hospital, or residential zone, unless such a business is expressly permitted by municipal ordinance.

To secure authorization for its proposed business operation, DEG filed this action claiming that the Fairfield zoning ordinance totally prohibiting all sexually-oriented businesses in the municipality violated its First Amendment free speech rights and that, as applied to its proposed business, N.J.S.A. 2C:34-7 also violated the First Amendment. Shortly after the filing of this action, the trial court issued a letter opinion which concluded that the zoning ordinance prohibiting sexually-oriented businesses anywhere in Fairfield was "unconstitutional on its face." The court also concluded, based on the limited record presented on the application for temporary restraints that "DEG has established that there are no locations in [Fairfield] or the surrounding municipalities where DEG can open its adult business without violating N.J.S.A. 2C:34-7," and therefore, DEG had "established a reasonable likelihood of proving that N.J.S.A. 2C:34-7, if applied to this location, would violate the First Amendment." Accordingly, the court entered an order mandating issuance of the permits required for DEG to commence operations. Under the authority of this order, DEG commenced operation of its sexually-oriented business, called the Essex Adult Emporium, on January 27, 2006.

The trial court also ordered a plenary hearing regarding the constitutionality of N.J.S.A. 2C:34-7 as applied to DEG's adult business. Before the court conducted that plenary hearing, the parties entered into settlement discussions, which culminated in entry of a consent judgment under which Fairfield agreed to permit DEG to continue operation of a sexually-oriented business on its premises, subject to the conditions set forth in the consent judgment. Those conditions placed restrictions on the manner of operation of DEG's business and its appearance to members of the public outside the store. Regarding the business's manner of operation, the consent judgment provided:

Customers shall not be permitted entry to the facilities except through the front door, of which there shall only be one.

DEG shall not permit customers to view the videos or DVDs in any booth or other enclosed area or on any device visible to customers in the Store. DEG shall not permit the appearance by "stars" or other well-known personalities in the sexually-oriented business trade at the Store for promotional purposes. DEG shall not sell any merchandise at the Store that is not described in this Consent Judgment. As frequently as necessary but at least daily, DEG shall police the exterior areas of the Store, its parking area, and the immediate environs to pick up any litter from customers, delivery people or the Store so that no videos or DVD wrappers or covers, or other packing or advertising material of an adult or sexually oriented nature is permitted to exist or accumulate on or near the premises of the Store.

Regarding the outward appearance of the store, which is the focus of this appeal, the consent judgment provided:

DEG shall operate the Store utilizing the name "Essex Adult Emporium" with signage for the Store being as depicted in Exhibits A1-A3 to the within Judgment.

Window displays shall not exhibit adult or sexually oriented products, but may display bathing suits and lingerie. DEG shall configure the Store and displays so that adult products, videos and DVDs are not visible from outside the Store. No products, videos or DVDs shall be displayed or offered for sale outside the Store. DEG shall block all visibility to the interior of the store so that the interior, except for the window display, is not visible from the outside. In addition, window displays shall not be located on the Horseneck Road side of the buildings.

After the parties entered into this consent judgment, the Fairfield governing body adopted a new zoning ordinance that authorized sexually-oriented businesses as a conditional use in a zoning district that did not encompass the location of DEG's premises. The adoption of this ordinance triggered the operation of a paragraph of the consent judgment which provided in pertinent part:

In the event that the Township adopts a future ordinance permitting the sale of adult-oriented products in a zone other than the zone within which DEG is permitted to operate the Store . . . the Township Zoning Official shall issue to DEG . . . a Certificate of Non-Conformity for the Store.

Despite this provision of the consent judgment, Fairfield refused to issue the certificate of nonconformity on the ground that DEG's conduct of its sexually-oriented business violates N.J.S.A. 2C:34-7, and therefore, the consent judgment was void. This refusal precipitated DEG's filing of a motion in aid of litigants' rights to enforce the consent judgment. Fairfield filed a cross-motion under Rule 4:50 for relief from the consent judgment.

These cross-motions precipitated lengthy post-judgment proceedings, which culminated in the Supreme Court's decision in DEG, LLC v. Township of Fairfield, 198 N.J. 242 (2009). It is unnecessary here to recount the history of those proceedings, because that history is not directly relevant to the issue presented by this appeal. Suffice it to say that the Court held that Fairfield was not entitled to relief from the consent judgment and that Fairfield was required to issue the "Certificate of Non-Conformity for the Store" required by the previously quoted paragraph of the consent judgment.

Following issuance of the Court's decision on March 25, 2009, Fairfield issued the required Certificate of Non-Conformity on June 25, 2009. This Certificate stated in pertinent part:

This is to certify that the above described premises together with any building thereon, are used or proposed to be used as or for a valid nonconforming use as described below . . . .

DESCRIPTION: 5,000 s.f. located in the rear unit adjacent to Horseneck for the retail sale of adult oriented videos, [DVDs], clothing, lingerie and accessories. Current Tenant - DEG, LLC dba/Essex [A]dult Emporium (operating as per Zoning Permit #05-2628 issued 11-18-2005). [Emphasis added.]

After receiving the Certificate, DEG did not question its conformity with the consent judgment.

Around the time of issuance of the Certificate of Non-Conformity, DEG applied to the Fairfield Zoning Officer to expand its sexually-oriented business operation to include the entire 10,000-square-foot building in which it is located. DEG represented that the additional 5,000 square feet of store space would be used for the sale of non-sexually-oriented clothing. The Zoning Officer denied this application.

DEG did not pursue this proposed expansion of its business any further. Instead, it submitted an application to the Zoning Officer for permission to relocate its sexually-oriented business from the rear to the front of the building in which it currently operates. Under this proposal, the total square footage used for the conduct of the business would remain the same, but it would front primarily on Route 46 rather than the parking lot. DEG asserted in this application that its business would continue to be conducted "consistent with" the consent judgment.

The Zoning Officer denied this application on various grounds, including that "[r]elocating the business to the front unit within the building would be contrary to the consent agreement which clearly intended to limit the exposure and visual impact of the adult use in the H-D zone." The Zoning Official stated that DEG could appeal his determination to the Board of Adjustment under N.J.S.A. 40:55D-70(a) or apply to the Board for a use variance under N.J.S.A. 40:55D-70(d).

DEG then filed an application to the trial court under Rule 1:10-3, providing for relief in aid of litigants' rights, in which DEG claimed that the Zoning Official's denial of its application for permission to relocate its sexually-oriented business from the rear to the front of the Route 46 building violated the consent judgment. The matter was brought before the trial court by an order to show cause.

In opposition to DEG's application for relief in aid of litigants' rights, Fairfield submitted a certification by Joseph Catenaro, who was the Business Administrator for Fairfield when the consent judgment was entered into, which stated in part:

The Township never agreed, and would never have agreed, to this business having access to this window display area along Route 46.

It is our concern that if DEG is permitted to bypass the development process, it will not only be able to occupy this space, but may make use of this display area, contrary to the Agreement of the parties, as embodied by the Consent Judgment.

The Township never contemplated, nor would it have agreed to, allowing DEG [to] make use of those display windows.

DEG's trade name as the Essex Adult Emporium is prominently displayed on the front of the building, so the only reason we can speculate, as to why DEG would want to move to the Route 46 side of the building, is to display its wares beyond the scope of the Agreement of the parties, as embodied by the Consent Judgment.

In my opinion, the placement of DEG's store in the rear of the subject building was highly significant. Quite frankly, had DEG proposed to occupy the front space, we would have sought limitations on the use of those windows.

After briefing and oral argument, the trial court issued a written opinion, dated March 25, 2010, which concluded that the Zoning Officer's denial of DEG's application to relocate its sexually-oriented business from the rear to the front of the Route 46 building violated the terms of the consent judgment. In reaching this conclusion, the court stated:

[The consent judgment] does not contain any specific restriction on plaintiff's use to a particular section of the premises located at 276 Route 46 East, Fairfield, NJ. . . . Relying on the language of [the consent judgment], it is clear that plaintiff's use was not limited in scope to the location it presently occupies. As a result, relocating the business to the front unit within the building would be consistent with the language and terms of the Order.

Based on this opinion, the court entered an order requiring Fairfield to "issue a Certificate of Re-Occupancy and/or Certificate of Prior Nonconforming Use . . . permitting [DEG] to occupy the front portion of Premises commonly known as 276 Route 46 East . . . ."

Fairfield filed a motion for reconsideration, which the trial court denied by an oral opinion. The court also denied Fairfield's motion for a stay pending appeal.

We conclude that the trial court erred in construing the consent judgment to permit DEG to relocate its sexually-oriented business from the rear of the premises, where it operated when Fairfield agreed to the judgment, to the front facing primarily on Route 46. Accordingly, we reverse the order authorizing that relocation.

A consent judgment reflects a settlement agreement between parties to litigation, see R. 4:42-1, and an agreement to settle a lawsuit is a "contract like any other contract." Peskin v. Peskin, 271 N.J. Super. 261, 275 (App. Div.), certif. denied, 137 N.J. 165 (1994). Thus, the determination whether the terms of a consent judgment have been honored should be analyzed in a manner similar to a claim of breach of contract.

Before considering the terms of the consent judgment, we note that neither party claims that there is any extrinsic evidence relevant to its interpretation, such as a preliminary draft or correspondence relating to its negotiation. Therefore, this appeal turns solely on the terms of the consent judgment considered in light of the circumstances surrounding its execution.

Before Fairfield entered into the consent judgment, the trial court had declared its zoning ordinance prohibiting the operation of any sexually-oriented business within the municipality to be in violation of the First Amendment and determined that there was a "reasonable likelihood" that N.J.S.A. 2C:34-7, under which DEG's proposed sexually-oriented business was also prohibited, would be found to violate the First Amendment as applied to the premises leased by DEG. See DEG, supra, 198 N.J. at 251-52. In addition, the court determined that "at this juncture, the public interest in the uninhibited exercise of free speech outweighs any interest the State or [Fairfield] may have in preventing DEG from opening its adult business." Id. at 252. Accordingly, on November 4, 2005, the trial court ordered Fairfield to issue the permits required for DEG to operate, and DEG opened its sexually-oriented business in the rear half of the premises on January 27, 2006. Ibid. Thus, when the parties entered into the consent judgment in July 2006, DEG had already been conducting its business in the rear half of the building for nearly six months. The front part of the building was occupied by another tenant, which sold dinette sets there until 2008 or 2009.

We turn now to the specific terms of the consent judgment. Paragraph two, upon which the trial court predicated the order granting DEG relief in aid of litigants' rights, states in pertinent part:

In the event that the Township adopts a future ordinance permitting the sale of adult-oriented products in a zone other than the zone within which DEG is permitted to operate the Store . . . the Township Zoning Official shall issue to DEG . . . a Certificate of Non-Conformity for the Store. [Emphasis added.]

Because DEG had been operating its business in the rear half of the building for six months when the consent judgment was entered into, there can be no doubt that "the Store" referred to in this paragraph was the sexually-oriented business being operated in that specific part of the premises.

This intent is confirmed by other provisions of the consent judgment that imposed limitations upon DEG's conduct of its sexually-oriented business, particularly the part of paragraph five which provides that "window displays shall not be located on the Horseneck Road side of the buildings." One side of the rear of the building where DEG was conducting its business when the consent judgment was entered into borders on Horseneck Road. However, no part of the front of the building borders on Horseneck Road. Instead, one side of the front of the building faces onto Route 46. Moreover, when the consent judgment was entered into (and now), that side of the building contained large windows in which displays of products and advertising could be placed. Consequently, if the parties had contemplated that the consent judgment would authorize DEG to conduct a sexually-oriented business not only in the rear of the building, where it was then being operated, but also in the front of the building facing primarily on Route 46, it seems likely Fairfield would have insisted upon the inclusion of a provision similar to the prohibition upon window displays on the side of the building facing Horseneck Road.

Although the other provisions of the consent judgment restricting the manner of operation of DEG's sexually-oriented business and its outward appearance to members of the public could apply to a business conducted at the front of the store, they underscore Fairfield's concerns about the operation of a sexually-oriented business in the municipality and its desire to minimize the perceived deleterious impacts of such a business, including the offensiveness of window displays and signs to persons walking or driving past the store. Thus, the consent judgment totally prohibits the exhibition in window displays of "adult or sexually-oriented products," but allows the display of "lingerie." It also requires DEG to "block all visibility to the store, so that the interior, except for the window display, is not visible from the outside" and to "police the exterior areas of the Store, its parking area, and the immediate environs to pick up any litter from customers, delivery people or the Store so that no videos or DVD wrappers or covers, or other packing or advertising material of an adult or sexually oriented nature is permitted to exist or accumulate on or near the premises of the Store."

It is evident from these provisions that Fairfield, in entering into the consent judgment, was concerned about the outward appearance of the Essex Adult Emporium to members of the public and the kind of litter that this type of business generates. It is also evident from the photographs attached to the Catenaro certification that the relocation of this business from the rear to the front of the building will aggravate these problems because the front of the store would face primarily on Route 46 and have more window space for displays of lingerie and other items that DEG does not consider to be "adult or sexually oriented products" than the store DEG was operating when Fairfield entered into the consent judgment. Indeed, DEG admitted that its motive in seeking to relocate from the rear to the front of the building was to gain enhanced exposure of its sexually-oriented business to the public. DEG's principal, George Kramer, submitted a certification to the trial court that candidly acknowledged that "DEG's desire is to relocate its business from the rear of the subject Premises to the front of the Premises in order to gain more exposure for the subject business." However, for the reasons previously set forth, we conclude that the consent judgment does not entitle DEG to obtain such enhanced exposure of the Essex Adult Emporium.

Finally, although not essential to our decision, we note that the Certificate of Nonconformity issued by the Zoning Official on June 25, 2009, described the premises on which DEG was entitled to continue the operation of its sexually-oriented business as "5,000 s.f. located in the rear unit adjacent to Horseneck for the retail sale of adult oriented videos, [DVDs], clothing, lingerie and accessories" (emphasis added), and that DEG did not file a motion challenging the conformity of this Certificate with the consent judgment.

Reversed.

20110407

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