July 19, 2012
PAUL JOHNSTON, EDWARD JOHNSTON, AND SUSAN JOHNSTON, PLAINTIFFS-RESPONDENTS,
CITY OF CAPE MAY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-407-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: April 18, 2012
Before Judges Axelrad, Sapp-Peterson and Ostrer.
Defendant, the City of Cape May (the City), appeals from an April 6, 2011 order of the Law Division upholding a 1997 agreement between the City and plaintiff property owners removing a deed restriction prohibiting building on the lot and a 2009 Planning Board resolution granting site plan approval for improvements to the restaurant on the property. For the most part, the City challenges many of the municipal actions as ultra vires and either void ab initio or unenforceable. We affirm.
Plaintiffs Paul Johnston, Edward Johnston, and Susan Johnston own Block 1012, Lots 13 and l4 in Cape May, on which they operate the Cove Restaurant. The main building of the restaurant, which seats approximately forty people, is located on Lot 13, while a roofed and enclosed deck seating approximately fifty-six people is located on Lot 14. Lot l4 is a street bed on Third Avenue, vacated by a vacation ordinance, infra.
Plaintiffs sought to rebuild the enclosed deck, and on November 13, 2008, they received a construction permit from the City to "Repair/replace porch dining room floor." However, after work began, City Zoning Officer Mary L. Rothwell sent them a notice on January 16, 2009, advising that the zoning permit was denied, in part, for failing to comply with the conditions imposed by the Planning Board in l997, and requiring them to apply for site plan approval. Two weeks later, the City issued a Stop Construction Order.
Plaintiffs submitted a site plan application to the Planning Board and applied for a Coastal Area Facility Review Act (CAFRA) permit, N.J.S.A. 13:19-1 to -21, from the Department of Environmental Protection. They received CAFRA approval on February 6, 2009. The Planning Board granted site plan approval on April 14, 2009. Pending adoption of a Planning Board resolution, the construction official permitted plaintiffs to proceed with their deck reconstruction.
At a meeting of the City's governing body (Council) on May 5, 2009, it adopted Resolution No. 101-05-2009 following a closed session. Council took the position that plaintiffs did not have the legal authority to continue to maintain a building in the vacated street bed. In the resolution, Council opposed Planning Board approvals for the construction of any improvements in the vacated portion of Third Avenue, reconfirmed the City's easement rights and deed restrictions set forth in the vacation ordinance and deeds of conveyance, and prohibited the construction official from issuing any permits for construction of improvements in the vacated portion of Third Avenue.
Plaintiffs promptly filed a complaint in lieu of prerogative writs and order to show cause against the City,*fn1
seeking to restrain the City from obstructing the Planning Board from memorializing its site plan approval and to direct the issuance of a building permit. Among other issues, plaintiffs asserted that Council's closed session constituted a violation of the Open Public Meetings Act, N.J.S.A. 10:4-6 to -21.
On May 19, 2009, Council adopted a superseding Resolution No. 112-05-2009. The new resolution essentially repeated the prior determination, with the additional request that the Planning Board rehear plaintiffs' application for site plan approval.
Before an answer was filed, plaintiffs filed an amended complaint. The court transferred the matter from the Chancery Division to the Law Division. Following a hearing on the order to show cause, Judge Steven Perskie entered an order on June 26, 2009, requiring the City to promptly re-issue plaintiffs a permit to reconstruct the dining porch, at their own risk, in accordance with the Planning Board's April 2009 site plan approval. The court also ordered the Planning Board to rehear the application for site plan approval.
The City filed an answer and counterclaim seeking: (1) to enjoin or order the removal of construction of the proposed addition or any other permanent structure in the street bed other than the existing deck, and (2) to declare the City's 1997 resolution and agreement removing the deed restriction that prevented building on Lot l4 ultra vires and void as modifying the easement rights and restrictions contained in the vacation ordinance. Plaintiffs filed an answer to the counterclaim.
The Planning Board reheard plaintiffs' application in November 2009 and granted site plan approval. It adopted a memorializing resolution on December 9, 2009, Resolution No. 12-8-2009:1.
Following oral argument on cross-motions for summary judgment, Judge Perskie entered orders on January 28, 2010 denying both motions and granting the City leave to file an amended answer and counterclaim. The City filed an amended answer and counterclaim seeking orders: (1) declaring the City's l997 resolution ultra vires and void to the extent it modified the easement rights and restrictions contained in the vacation ordinance; (2) declaring the proposed addition in violation of the agreement approved by the resolution; (3) restraining the construction of the proposed addition; (4) compelling the removal of the addition or any other structure in the vacated street bed; and (5) declaring the City owns title to the property, ejecting plaintiffs, and awarding it immediate possession and damages.
The parties waived a plenary hearing and consented to resolution by briefs and oral argument, which was conducted by Judge Valerie Armstrong. On April 6, 2011, Judge Armstrong issued a lengthy written opinion and final judgment. The judge:
(1) found the 1997 agreement between the City and plaintiffs to be valid and enforceable and the 2009 Planning Board approval not to violate the 1997 agreement; (2) denied the City's request to eject plaintiffs from their property; (3) did not require plaintiffs to vacate or remove the dining porch improvements on Lot 14 and permitted them to complete the improvements in compliance with the 2009 site approval; and (4) required the City to execute the quitclaim deed required by the 1997 agreement, including an easement for the City to access Lot 14 to repair and maintain the stone jetty and for beach replenishment purposes. Judge Armstrong also dismissed with prejudice the City's answer and counterclaim and amended answer and counterclaim. This appeal ensued.
The City acquired Lot 13 and the appurtenant beach in 1951 for $25. On February 2, 1953, the City passed Resolution No. 24-2-53, which approved the public sale of Lot 13 for a minimum price of $50. The resolution stated that the land was "not needed for public use" and the property was "authorized and directed to be sold in the manner and subject to the terms and conditions prescribed herein." The resolution also contained as a "special term and condition" of the sale a "No building clause."
The City adopted Resolution No. 31-3-53 on March 3, 1953, authorizing the public sale of the property (Lot 13 but not the appurtenant beach) to the only bidders, Stanley and Margaret Schellenger, for $50. At that time, Stanley Schellenger was the City Clerk. The deed did not include a "no building clause."*fn2
The Schellengers sold the property by deed dated September 11, 1953 to Thomas and Louise Monte for $880. On July 6, 1964, the Montes conveyed the property to Martin and Marilyn Corbett, and the Corbetts subsequently conveyed the property to Chester and Catherine Jastremski on July 1, 1965.
Around the mid-1950s, a stone jetty was constructed on the unimproved portion of Third Avenue, adjacent to Lot 13, and still remains in place.
On August 4, 1965, the City adopted Ordinance No. 195 (vacation ordinance), which vacated a 25' x 140' portion of Third Avenue. Section I of the ordinance provided:
All that certain portion of Third Avenue situate[d] in the City of Cape May . . ., being more particularly described in Section II hereof, which lands are not needed for public use, is hereby vacated and abandoned as a public road, street, and avenue and the public right arising from the dedication thereof is hereby released, vacated and extinguished. [(Emphasis added).]
The ordinance also reserved an easement for the City:
There is hereby reserved from the aforesaid vacation of the above described lands an easement to the City so that the City from time to time will have adequate ingress and egress over the said lands for the purpose of maintaining, repairing, reconstructing or lengthening the said Third Avenue stone jetty.
In 1968, Ordinance No. 249 amended the vacation ordinance, reducing the vacated area from 25' to 24' in width.
On January 13, 1967, the City executed a deed, transferring its rights in the vacated street bed to Chester Jastremski for $1. The 1967 deed included the following condition:
The conveyance of the above described premises is conditioned on the fact that no building or structure be erected thereon or therein, except such construction by the City of Cape May, its successors or assigns, as may be necessary for the repair, maintenance and preservation of the stone jetty erected in said described premises.
Nothing herein contained shall be construed to prevent the placement by the abutting owner, his heirs and assigns, of personal property on the lands here in vacated provided however, same can be readily moved for the uses and purposes set forth herein. [(Emphasis added).]
Plaintiffs' parents purchased Lots 13 and 14 from the Jastremskis on December 29, 1967. The deed included a condition preventing construction on the vacated street bed. Specifically, the deed stated that the "portion of Third Avenue adjoining the above premises, vacated or to be vacated by the City," was subject to the condition that "no building or structure be erected thereon or therein except such construction by the City . . ., its Successors or Assigns, as may be necessary for the repair, maintenance and preservation of the stone jetty adjacent to said premises." The property ultimately passed to plaintiffs.
Mrs. Johnston (plaintiffs' mother) obtained a construction permit from the City and built the Cove Restaurant on Lot 13 in approximately 1970. In January 1971, a Certificate of Occupancy was issued for the restaurant. Notwithstanding the deed restriction, she obtained a permit in l976 to construct a 52' x 15' wooden deck to the side of the restaurant in the vacated street bed on Lot 14. In May l984, Mrs. Johnston obtained a permit to construct a roof over the existing deck. At some point the deck was enclosed with walls and removable windows, although there is no evidence in the record that a permit was issued for these improvements.
As noted by Judge Armstrong, the property's development history was well known to the City and Planning Board. The City Zoning Officer's knowledge of the Lot l4 deed condition and structure on the restricted lot was evident in her l993 review memo prepared in response to Mrs. Johnston's application for a site plan waiver regarding the paving of the parking area entrance on Lot 14. Zoning Officer Irma Canning concluded that in light of growing concerns and questions regarding increased seating, parking, "the structure now located on the restricted lot," and the number and size of signs that were installed, which all required site plan approval, the applicant was "required to submit a full site plan addressing these issues."
A 1994 memo from Canning to the City Manager and City Attorney also revealed that the City and Johnston family were involved in several land use disputes regarding Lots l3 and l4. The memo referenced mercantile licensing issues, violations regarding illegal signs on the property, and a summons issued by a city official for failure to obtain site plan approval, a paving permit, and other violations.
In l997, Mrs. Johnston applied to the Planning Board for approval for the existing conditions on the property and additional approvals on the site, which application was granted on July 2, 1997 in Resolution No. 6-4-97:1. The decision came after two meetings on March 5 and June 4, 1997, in which the Planning Board heard testimony on behalf of plaintiffs and reviewed letters, including Canning's 1994 memo outlining the land disputes. The reason for the adjournment was to allow Mrs. Johnston to finalize an agreement with the City and address certain matters that were pending in its municipal court. The Planning Board unanimously approved the resolution but conditioned it on plaintiffs' recording of a deed consolidating Lots 13 and 14.
Mrs. Johnston and plaintiffs executed the consolidation deed on September 19, 1997, and recorded the deed with the Cape May County Clerk on September 24, 1997. With respect to the vacated street bed, the deed included the condition "that no building or structures be erected thereon or therein, except such construction by the City of Cape May, its successors or assigns as may be necessary for the repair, maintenance and preservation of the stone jetty adjacent to said premises." The deed also reserved the City's easement to access the property in order to maintain and repair the jetty.
On June 17, 1997, Council adopted Resolution No. 137-6-97 (1997 resolution), which contained an agreement removing the deed restriction preventing building on Lot 14, by a unanimous vote at a regular meeting after the resolution was read aloud. The resolution, entitled "A Resolution Authorizing An Agreement With Cove Restaurant, 405 Beach Avenue, For The Issuance Of A Quitclaim Deed and Other Matters," provided:
WHEREAS, the City of Cape May and the Cove Restaurant wish to resolve all matters presently at issue between the parties, including ordinance violations, real property tax adjustments, easement restrictions, and mercantile license issues; and
WHEREAS, the parties have agreed to a settlement of all said issues;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Cape May, County of Cape May and State of New Jersey, that an Agreement be executed in the form attached, and the appropriate City Officials are hereby authorized and directed to sign same and all other documents necessary to complete its terms. [(Emphasis added).]
The agreement was attached to the resolution. Under the agreement, Mrs. Johnston and the Cove Restaurant were required to: (1) pay a $17,000 fine imposed by the municipal court and affirmed by the Law Division by June 20, 1997;*fn3 (2) reimburse the City $15,059.40 for a real property tax adjustment for Lots 13 and 14 for 1982 through 1997 by June 20, 1997; (3) promptly obtain a mercantile license for 1997-1998; and (4) reimburse the legal and engineering fees and costs incurred in the preparation of the agreement, the quitclaim deed, any resolutions and a property survey.
The City acknowledged that the Cove Restaurant obtained preliminary and final plan approval from the Planning Board for the property and restaurant operation as of June 4, 1997. The agreement also stated, "[a]ll terms of said approval are hereby incorporated by reference and made part hereof. All said terms shall be fully met by Cove." The agreement further required that the City execute a quitclaim deed to remove the deed restriction prohibiting construction on Lot 14, specifically stating:
City shall issue a Quitclaim Deed to Cove to remove the deed restriction originally imposed on the predecessor-in-title which prohibited construction on the premises formerly known as Block 10, Lot 1, now known as Block 1012, Lot 14, subject to the condition that the construction presently on said lot will in the future be removed, upon reasonable notice from the City, by Cove at Cove's expense in the event: the City, in the written opinion of the City's Engineer and the project engineer, if any, requires its removal for the repair and maintenance of the stone jetty adjacent to said premises, or for beach replenishment purposes. After said work is completed, the construction may be replaced at the expense of the property owner. In the event of the destruction of the construction because of fire, storm, or other cause, the construction may be rebuilt to its present configuration. In no event may the present construction be enlarged without the express written consent of the City. The construction may be repaired or improved by the Owner subject to compliance with all pertinent City or State regulations. [(Emphasis added).]
There is no evidence that a public hearing was conducted prior to the passage of the 1997 resolution containing the agreement, and there is no evidence that notice of the resolution was published before its adoption.
The Johnston family paid the fines and taxes; it is unknown whether they made the other payments. It appears, however, that the City never issued the quitclaim deed. The record does not include a fully executed copy of the l997 agreement and the record contains no indication that any official executed it on behalf of the City. Plaintiffs represented at oral argument before Judge Armstrong that they understood Mrs. Johnston to have executed the agreement. A letter dated March 11, 1997 from the City Attorney to Mrs. Johnston's attorney set forth the original terms of the agreement. Mrs. Johnston's signature is on that document, notarized on May 23, 1997. Moreover, a June 20, 1997 letter from the City Attorney to Mrs. Johnston stated he was enclosing the final draft of the agreement that "has now been thoroughly reviewed and all language requested to clarify the intent of the parties has been inserted." He requested that the document be signed, notarized and returned.
On December 23, 1997, the City Engineer notified the City's Construction/Zoning Office that the final inspection of the site improvements for Lots l3 and l4 revealed the improvements conformed to the approved plans submitted for the project.
Because of water issues and rotting of the wood deck, in November 2008, plaintiffs sought to rebuild the enclosed deck, including replacing the existing wooden deck in the vacated street bed with a concrete slab. When plaintiffs applied for the permit to replace the deck, they believed the 1997 agreement was in effect. As explained in Planning Board Resolution No. 12-8-2009:1, adopted December 9, 2009, plaintiffs sought to reconstruct the base of the enclosed deck with a concrete deck approximately four to eight inches above grade with pilings and piers in the existing footprint, and obtained a construction permit for the improvements. According to plaintiffs, the concrete would be close enough to the ground that construction vehicles would be able to access the jetty and beach in conjunction with repairs and maintenance to the jetty or beach replenishment.
As previously discussed, the City issued the Refusal of Zoning Permit and stop work notice; in April 2009, the Planning Board granted plaintiffs site plan approval; in May 2009, Council took action and this litigation commenced; and in December 2009, the Planning Board adopted its resolution following the rehearing of plaintiffs' site plan application, granting the application with the condition that no further additions or enlargements to the existing structure in the vacated street bed would be permitted. Among other items, Judge Armstrong upheld the 1997 agreement between the City and plaintiffs removing the deed restriction. This appeal ensued.
On appeal, the City argues:
THE RESOLUTION APPROVING THE 1997 AGREEMENT IS ULTRA VIRES IN THE PRIMARY SENSE; THUS THE 1997 AGREEMENT IS UNENFORCEABLE.
EVEN IF THE RESOLUTION APPROVING THE 1997 AGREEMENT IS ULTRA VIRES IN THE SECONDARY SENSE, THERE WAS NO DETRIMENTAL RELIANCE AND THUS ESTOPPEL DOES NOT APPLY.
THE COVE ADDITION IS NOT PERMITTED UNDER THE VACATION ORDINANCE.
THE 1953 CONVEYANCE IS ULTRA VIRES IN THE PRIMARY SENSE AND IS VOID AB INITIO.
"A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (l995). We do defer, however, to the factual findings of the trial judge that are supported by adequate, substantial and credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (l974). Based on our review of the record, oral argument, and analysis of the applicable law, we are not persuaded by any of the City's arguments. We affirm substantially for the reasons set forth in Judge Armstrong's comprehensive forty-page written opinion, which are amply supported by the record and applicable law.
Judge Armstrong rejected the City's ejectment and possession claims based on the argument that the l953 transfer of the property to former City Clerk Schellenger was ultra vires in the primary sense and void. The City relied primarily on N.J.S.A. 40:60-27, which limited municipalities from selling lands associated with streets and parks unless they gained other lands consisting of equal or greater value, and N.J.S.A. 40:184-27, which stated that, "no lands may be sold under the authority hereby conferred which . . . are located on the beach front of the Atlantic Ocean[,]" as interpreted by Skowysz v. City of Ventnor, 110 N.J. Super. 340, 348, 350 (Law Div. 1969), aff'd o.b., 56 N.J. 168 (1970).*fn4
Judge Armstrong found the Skowysz case, which relied on N.J.S.A. 40:184-27 and held the City of Ventnor could not sell a particular strip of Atlantic Ocean beach, was inapposite, noting that the property was a 125-foot strip of land between the bulkhead line and boardwalk characterized by the court as "beach or strand" whose "appearance and use is and always has been precisely the same as the rest of the beach area under and south of the boardwalk. At the present time the ocean comes up to and under the boardwalk, washing over this area at full tide." Id. at 343. As noted by Judge Armstrong, the court additionally described that beach front land as follows:
[It] is part of the general beach from the bulkhead to the ocean, no different in character, no different in composition and no different in its treatment by the municipality than any other part of the public beach contiguous to it. Persons using the strip of beach with which we are concerned have free access to and from the ocean without any obstacles except the supports or piling spaced at intervals to support the boardwalk. Therefore, physically as well as from the standpoint of accustomed use, the area in question is located on the beach front of the Atlantic Ocean. [Id. at 350-5l.]
In contrast, Judge Armstrong found that Lot l3 did not meet "the intent of 'beach front'" as contemplated by the statute or case law. She further noted as an important factor that "when the City conveyed Lot 13 to the Schellengers, it conveyed only the upland portion of the property, and not the appurtenant beach which had been part of the l951 conveyance from the Ackers to the City." The judge additionally found the record was devoid of any facts to support the City's argument that the property was a public park.
Judge Armstrong further rejected the City's argument that the 1953 conveyance was in direct violation of the statutes because it was tainted by "irregular and suspicious circumstances." The City noted the bid resolution contained a "no building clause" that purportedly was waived when it sold the property to the City Clerk, allegedly making the property more valuable and resulting in the City's sale of the property for $50 and Schellenger's resale for $880 six months later. The City argued, without historical or factual basis, that the term "no building clause" meant that no construction could take place on a property subject to that condition.
After analyzing numerous bid resolutions and deeds involving City property in the l950's and l960's provided by plaintiffs, Judge Armstrong found the "plain language" of the documents supported plaintiffs' position that the language "no building clause" meant there was no requirement for construction to commence and conclude within a defined period of time on land sold at public auction. The judge concluded there was "nothing to suggest that the procedure the City followed in selling and deeding the property to the Schellengers in 1953 was 'irregular and suspicious,' or illegal, such that [plaintiffs] must now be ejected from their property."
In Point IV, the City challenges Judge Armstrong's factual findings, arguing that Lot 13, as well as the vacated street bed, was part of the beach when it was conveyed in 1953, and that beach front land owned by a municipality is equivalent to a public park. The City also renews its argument of the "irregularity" in the l953 deed.
A municipality must act within the power delegated to it and cannot go beyond it. City of Jersey City v. Roosevelt Stadium Marina, 210 N.J. Super. 315, 329 (App. Div. 1986), certif. denied, 110 N.J. 152 (1988). When a municipality goes beyond its delegated powers, courts distinguish between actions that are "beyond the powers of the municipality, which are ultra vires in the primary sense and void, and those actions that represent an irregular exercise of powers granted by the legislature, which are only ultra vires in the secondary sense and subject to ratification by application of estoppel." Sellers v. Bd. of Trs. of the Police & Firemen's Ret. Sys., 399 N.J. Super. 51, 58 (App. Div. 2008) (citing Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 368 (2000)). See also Maltese v. Twp. of N. Brunswick, 353 N.J. Super. 226, 240-41 (App. Div. 2002).
The Supreme Court has set forth the distinction between acts that are ultra vires in the primary sense versus the secondary sense, which has been continuously applied by New Jersey courts:
There is a distinction between an act utterly beyond the jurisdiction of a municipal corporation and the irregular exercise of a basic power under the legislative grant in matters not in themselves jurisdictional. The former are ultra vires in the primary sense and void; the latter, ultra vires only in the secondary sense which does not preclude ratification or the application of the doctrine of estoppel in the interest of equity and essential justice. . . . But there cannot be such relaxation of the conditions laid down in the grant of the power as to defeat the public policy intended to be served. The question is essentially one of legislative intention. Are the conditions made prerequisite to the very existence of the power -- a limitation of the power itself? [Maltese, supra, 353 N.J. Super. at 240 (quoting Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493, 504-05 (1955)).]
We are satisfied the trial court's factual findings and ensuing legal conclusions that the l953 conveyance is not ultra vires in the primary sense and void are amply supported by competent evidence in the record and should not be second-guessed. See Rova Farms, 65 N.J. at 484. Contrary to the City's assertion, aerial photographs of the coastline from 1941 and 1944 do not clearly demonstrate that Lot 13 was beach front. It does not have the same appearance as beach front property. It is located next to the paved portion of Beach Avenue, which implies it was not used as beach front property. Nor is there any evidence demonstrating that when the City obtained Lot 13 in 1951 from the Ackers for $25, it was for the purpose of a public park. Specifically, there is no such qualifying language in the deed or any related document. Moreover, two years later, the City's resolution, which found Lot 13 was not needed for public use and authorized it to be sold, made no mention that the land had been held by the City for purposes as a public park.
Moreover, the City presented a bald allegation as to the meaning of the language "no building clause" in the l953 resolution in contrast with historical documentation presented by plaintiffs. Judge Armstrong extensively reviewed the credible "persuasive" evidence presented by plaintiffs and concluded that the City failed to demonstrate the "no building clause" created a restriction on building on the property. Accordingly, she properly rejected the City's allegation of improper or illegal conduct by the City that would render void its conveyance of the subject property over fifty years ago.
Judge Armstrong next found the 1997 agreement was properly approved by way of a resolution, and an ordinance was not required because, contrary to the City's assertion, the agreement did not modify the vacation ordinance. See Albigese v. City of Jersey City, 129 N.J. Super. 567, 569-70 (App. Div. 1974) (recognizing that an ordinance, representing an exercise of legislative power, may only be amended by an ordinance, not a resolution, which encompasses matters administrative or procedural in nature). As it was "clear" to Judge Armstrong "that a resolution was sufficient to modify the deed condition," the l997 agreement was not void ab initio as adopted ultra vires in the primary sense. We agree.
As the judge explained, the ordinance "vacated and abandoned a . . . portion of Third Avenue . . . as a public road thus extinguishing the public right arising from the dedication of the street" and created an easement for the City to have ingress and egress over the property for the purpose of "maintaining, repairing, reconstructing, or lengthening" the Third Avenue jetty. Although the judge recognized that the agreement did remove the l967 deed condition, which prohibited construction on Lot l4, and allowed the existing enclosed deck to remain on the land, she was satisfied it did not extinguish the City's easement rights to access Lot 14 to maintain the jetty. So are we. In fact, as noted by Judge Armstrong, the agreement expanded the easement to add access rights to the City for beach replenishment, if necessary, thus providing an additional benefit to the public. Moreover, the agreement provided that any construction on the property would be removed at plaintiffs' expense upon reasonable notice from the City, if repairs and maintenance to the jetty required it, or if access were needed for beach replenishment purposes.
Judge Armstrong alternatively found plaintiffs could arguably rely upon N.J.S.A. 40:60-51.2, which provides the statutory authority for a municipality to waive or modify by resolution a term or condition imposed in conveyances of lands "as to the erection, alteration or demolition of buildings" in certain circumstances. Recognizing that the City neither provided the requisite statutory notice nor full-blown public hearing before Council adopted the resolution approving the l997 agreement that removed the deed restriction, the judge found the agreement would be ultra vires in the secondary sense. She found "these procedural deficiencies do not render the removal of the deed condition void," explaining that the removal of the deed condition was "within the jurisdiction and power of the Council," which "appropriately adopted a Resolution approving the Agreement which, among other things, removed the deed condition."
Based on the totality of the record, Judge Armstrong concluded that equitable estoppel would apply. The essential principle of equitable estoppel is that "one may, by voluntary conduct, be precluded from taking a course of action that would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct." Summer Cottagers', supra, 19 N.J. at 503-04. The doctrine of equitable estoppel is applied "'only in very compelling circumstances.'" Twp. of Fairfield v. Likanchuk's, Inc., 274 N.J. Super. 320, 331 (App. Div. 1994) (quoting Palatine I v. Planning Bd. of Montville, 133 N.J. 546, 560 (1993)). Equitable estoppel is "hesitantly applied against public entities but it will be invoked against them where interests of justice, morality and common fairness dictate." Likanchuk's, supra, 274 N.J. Super. at 331 (internal quotation marks and citations omitted).
Analogizing to Summer Cottagers', supra, Judge Armstrong found that notwithstanding the failure to adhere to the procedural and statutory notice requirements, the City was estopped from rendering the 1997 agreement void more than a decade later. She held the failure to publish notice and hold a public hearing was "an apparent oversight and based on the unique facts of this matter appear to be a 'mere technicality.'"
In Summer Cottagers', supra, 19 N.J. at 497-507, a citizen group filed a lawsuit challenging the validity of the conveyance of public land from the City of Cape May's governing body for failure to comply with the statutory public advertisements of sale. The Court found "the statutory direction for notice was not fulfilled" and "the conditions of sale made null the statutory policy of open competition." Id. at 499. Nonetheless, the Court found the sale was not ultra vires in the primary sense because the municipality had the statutory power to sell the land. Because the plaintiffs failed to protest or take any action to vacate the sale until after construction of a motel at significant cost to the buyers despite knowledge of the project, they were estopped by the principles of "equity and elemental justice." Id. at 501-506.
Judge Armstrong explained in detail the basis for her finding of estoppel against the City under the "unique facts" of the matter, emphasizing that "[i]n response to the litigation filed by the Plaintiffs, the City, more than a decade after the City and the Plaintiffs arrived at the terms of the l997 Agreement, now attempts to assert that the modification of the deed condition was procedurally and thus fatally defective." She reiterated the history of the Johnston's ownership of the property, noting the construction of the deck and roof on Lot l4 dated back to l976 and l984, respectively, pursuant to permits from the City in both instances. Furthermore, "[t]he existing deck conditions were approved by the Planning Board in 1997 after the Council adopted the Resolution approving the Agreement which, among other things, removed the deed condition." The agreement was negotiated over an "extended period of time" by attorneys and City officials and the resolution was adopted at a regular meeting of the governing body. Another critical factor was that the removal of the deed condition was not harmful to the public as the easement remained. Accordingly, Judge Armstrong concluded that the City's failure to publish notice and hold a public hearing pursuant to N.J.S.A. 40:60-5l.2 was "an apparent oversight" and appeared to be a "mere technicality."
Judge Armstrong found plaintiffs relied on the terms of the 1997 agreement by paying the fine and real estate tax adjustments, executing and recording a deed of consolidation, and incurring the obligation of the City's legal expenses for preparation of the agreement, the property survey, and engineering fees. She also found plaintiffs made other improvements to replace the deteriorated wooden deck in reliance on the terms of the 1997 Planning Board approval.
We are satisfied the City acted within its powers in authorizing the l997 agreement by resolution rather than ordinance and discern no ultra vires conduct in the primary sense that would render the agreement void. To the extent that N.J.S.A. 40:60-51.2 is applicable, Judge Armstrong performed a sound analysis of the facts and law amply supporting her conclusion that the actions of the City were ultra vires in the secondary sense and the City is equitably estopped from now challenging the technical procedural deficiencies of the l997 resolution.
The City had the authority to enter into the agreement and remove the deed restriction and there was no public concern with removing it and allowing an enclosed deck adjacent to the restaurant, which had already been in place for years, with permits, to remain. The public interest was protected by the retention of the City's access easement to maintain and repair the jetty, which was expanded to include beach replenishment projects and the express requirement that plaintiffs remove the structure at their expense if it interfered with the City's access. Plaintiffs acted in good faith, obtaining building permits, executing the agreement with Council authorized by resolution and expending funds in furtherance of the agreement, obtaining site plan and other approvals from the Planning Board that permitted replacement of the wooden deck flooring with a concrete slab in the exiting footprint, and making improvements in reliance upon the approvals. The deck was in existence for more than three decades, with full knowledge of City employees, officials, and land use boards before Council adopted the resolution that precipitated this lawsuit.
There is no merit to the City's argument in Point III that the deck addition to the Cove Restaurant is contradictory to the vacation ordinance. R. 2:11-3(e)(1)(E). In Tide-Water Pipe Co. v. Blair Holding Co., 42 N.J. 591 (1964), relied on by the City, landowners sought to build over an easement held for the respondent's petroleum pipelines. Id. at 597. The respondent sought to enjoin the construction because of the potential need to repair the pipelines by digging straight down. Id. at 597-99. The trial judge concluded that the landowners did "not have an absolute right to erect a building over a pipeline easement, and that such erection of a building constitutes an invasion of the free right of access to the easement." Id. at 599. We affirmed, noting the "universally accepted principle of easement law that the landowner may not, without the consent of the easement holder, unreasonably interfere with the latter's rights or change the character of the easement so as to make the use thereof significantly more difficult or burdensome." Id. at 604.
In the present case, however, plaintiffs do not contend they have an absolute right to construct a building on top of the easement. Moreover, plaintiffs did not attempt to interfere with the City's easement without the City's consent and the City did not challenge the construction. To the contrary, plaintiffs applied for building permits in 1976 and 1984 to build the deck and construct a roof, and the City granted the permits without voicing any concern that the construction would impact its access to the jetty. Moreover, when Zoning Officer Canning's l993 review memo to the Planning Board expressly highlighted that the structure was located on a restricted lot, City professionals, officials, and land use board members were clearly sufficiently satisfied that the deck did not interfere with City access to the jetty that they removed the restriction and granted site plan approvals. In April 2009 the Planning Board was similarly satisfied when it granted plaintiffs site plan approval to replace the existing wooden deck in the vacated street bed with a concrete slab in the same footprint.
As Judge Armstrong noted, the City "overstates the intent of [the vacation ordinance]." The ordinance granted the City a limited easement through plaintiffs' property to repair and maintain the jetty, if necessary, and there was no evidence presented that the structure interfered with the City's access to the jetty. Planning Board Resolution No. 12-8-2009:1 clearly provided that no further additions or enlargements of the enclosed and roofed structure in the vacated portion of Third Avenue would be permitted.