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Herm Realty Group, LLC v. Land Use Board of the Borough of Beach Haven and the Borough of Beach Haven

August 9, 2012

HERM REALTY GROUP, LLC, PLAINTIFF,
v.
LAND USE BOARD OF THE BOROUGH OF BEACH HAVEN AND THE BOROUGH OF BEACH HAVEN, DEFENDANTS.
HERM REALTY GROUP, LLC, PLAINTIFF-RESPONDENT,
v.
MARGUERITE E. ROYER, FRANCESCO RACANELLI, AND RRR ASSOCIATES, LLC, DEFENDANTS/THIRD-PARTY PLAINTIFFS/ INTERVENORS-APPELLANTS,
v.
REGINALD J. RABAN, ESQ., SUNSET HARBOR REALTY, A NEW JERSEY CORPORATION, RAYMOND GARBOWSKI, ELLEN GARBOWSKI, AND LANDAMERICA N.J. TITLE INSURANCE COMPANY,*FN1 THIRD-PARTY DEFENDANTS/ INTERVENORS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-2636-05, and Chancery Division, Ocean County, Docket No. C-201-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 26, 2011

Before Judges Axelrad and Sapp-Peterson.

Intervenors-appellants, Marguerite E. Royer, Francesco Racanelli, and RRR Associates, LLC (RRR) (hereafter collectively referred to as appellants), appeal from the August 25, 2010 order denying their motion for reconsideration of the court's June 18, 2010 order amending the September 29, 2006 Final Judgment by Consent (FJC) previously entered between plaintiff, Herm Realty Group, LLC (Herm), and defendants, the Land Use Board of the Borough of Beach Haven (Board) and the Borough of Beach Haven (Borough). We affirm.

By way of background, Herm, at one point, owned two oceanfront properties, designated as Lots 7, 8, 9, and 10 on the Borough's tax map. The properties were conveyed to Herm by two deeds, one for Lots 7 and 8, and one for Lots 9 and 10. The lots are located at 200 and 202 Stratford Avenue, and each property contains a two-family duplex. In 2005, Herm applied for building permits to construct a single-family home on Lots 7 and 8 and a second single-family home on Lots 9 and 10. The Borough zoning officer determined that the lots had merged and therefore did not issue the requested building permits. Herm appealed to the Board the zoning officer's determination that the lots had merged, and also filed an application for minor subdivision approval to convert the two duplexes into two single-family homes. The Board never addressed the zoning officer's determination and denied Herm's application for minor subdivision approval.

Herm filed a complaint in lieu of prerogative writs, seeking reversal of the Board's decision (Herm I) denying minor subdivision approval, as well as the Board's failure to address the zoning officer's determination. An amended complaint added the Borough as a defendant. The parties reached a settlement in September 2006, resulting in entry of the FJC. The FJC required the Borough to issue zoning permits for each property for the purpose of constructing single-family homes. The construction of the two homes was conditioned upon compliance with all zoning requirements. In exchange for the issuance of the zoning permits, Herm was required to execute and enter into an easement with the Borough.

On May 31, 2007, Herm sold 200 Stratford Avenue, Lots 7 and 8, to appellants, but Herm then filed a corrective deed transferring title to Royer, who in turn transferred the property to the limited liability company, appellant RRR. Subsequent to the sale, a dispute arose between Herm and appellants over the existence of an easement which traversed Lots 7 and 8. When this matter could not be resolved amicably, Herm instituted an action against appellants in 2009 to restore the easement (Herm II).

Appellants, as part of their answer to the complaint, filed December 22, 2009, asserted a counterclaim against Herm, seeking, among other relief: (1) a declaration that the conveyance of Lots 7 and 8 to them was void ab initio because the effect of the 2006 settlement was to grant subdivision approval, which could only be granted by the Board at an open public meeting, followed by resolution; (2) a determination that assuming the FJC granted subdivision approval, that approval expired because neither a subdivision map nor deed had been timely filed within 190 days and, therefore, the subdivision expired by operation of law, placing Lots 7, 8, 9, and 10 in their pre-settlement status as merged; and (3) rescission of the sale of Lots 7 and 8 on the ground of mutual mistake, specifically that the inclusion of the fifteen-foot easement in the contract of sale was unintended.

Appellants' answer also included a cross-claim asserted by RRR seeking a declaration that its purchase of Lots 7 and 8 from Royer was void because she did not have the legal authority to convey the property. Finally, appellants filed a third-party complaint, which they subsequently amended, naming as defendants their real estate attorney, real estate agent, and title company.

In April 2010, with notice to all parties involved in both Herm I and Herm II, Herm filed a motion seeking "an Order clarifying, to the extent necessary, the [FJC] entered in this matter." Appellants opposed the motion, advancing several points.

First, appellants stated the pending complaint before the court sought two forms of relief: a determination that 200 and 202 Stratford Avenue had not merged, and an order reversing the Board's denial of Herm's minor subdivision application and granting minor subdivision approval. Next, appellants argued Herm's counsel drafted the FJC, and had the settlement that was reached included the parties' acknowledgment the properties had not merged, that fact would have been made clear in the FJC. Additionally, appellants argued Herm's counsel failed to attach any documentation in the form of correspondence, resolutions, or other documentation, expressing what the settlement meant. Further, appellants maintained that under N.J.S.A. 40:55D-47(d), "a minor subdivision expires within 190 days from municipal approval." Additionally, they urged since it was undisputed Herm never filed a plat or a deed and the 190-day period had elapsed, subdivision expired and the property reverted to its merged status. Finally, appellants urged that the FJC, at best, reversed the denial of the minor subdivision and granted Herm the right to build a single-family home on each of the lots, subject to compliance with other zoning laws.

On May 14, Judge Vincent J. Grasso rendered an oral decision, in which he first determined that he would treat the motion as an application under Rule 4:50-1(f), which rule the judge noted speaks to the need to achieve equity and justice. He found "[t]he equities of the matter are served by clarifying and settling the title claim against the property owners without prejudice to Royer's and Racanelli's underlying and remaining claim of easement dispute." The judge memorialized his ruling in an order dated June 1. The order, in pertinent part, stated:

2. . . . The court finds that said [FJC] was silent on the issue of the merger of the subject properties known as 200 and 202 Stratford Avenue, Beach Haven, in the event said property was not developed with single-family dwellings.

3. The court has considered the submissions to the court and is satisfied and finds that the [FJC] dated September 29, 2006 can be amended and supplemented to provide that subdivision is not required by the Borough of Beach Haven for the separate conveyance of 200 and 202 Stratford Avenue, Beach Haven, because the properties have not merged and remain as two separate lots.

Thereafter, appellants' attorney wrote to the court expressing concern that the court's order could be interpreted as the court having made a ruling, as a matter of law, that the properties had not merged. Noting that no testimony had been taken and "no briefs were submitted to argue that point," counsel requested a clarification of the court's order to reflect that the court's amendment to the FJC was "only meant to say that [the court has] found that as part of the settlement[,] the parties agreed that the properties had not merged[.]"

Herm's counsel responded to this correspondence by advising the court that he believed appellants' counsel's concern was "misplaced" but ultimately agreed Herm would not take the position that the court made a determination, as a matter of law, that the properties had not merged.

On June 18, Judge Grasso entered a second amendment to the FJC, editing the language of paragraph three as follows: "3. The court has considered the submission to the court and is satisfied and finds that the [FJC] dated September 29, 2006 is amended and supplemented to provide that the ...


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