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First Avenue Realty, LLC v. City of Asbury Park

United States District Court, Third Circuit

October 31, 2013

THE CITY OF ASBURY PARK, et al. Defendants.


JOEL A. PISANO, District Judge.

This action brought by plaintiff First Avenue Realty, LLC, ("Plaintiff") against the City of Asbury Park (the "City"), Asbury Partners LLC ("Partners") and istar Financial Inc. ("istar", collectively with the City and Partners, "Defendants") arises in connection with Plaintiff's desire to repair and/or renovate a multi-family apartment building located in the City's redevelopment zone. Presently before the Court are motions by Defendants to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and a motion by Plaintiff for leave to file a Second Amended Complaint. The Court decides the matter without oral argument pursuant to Local Civil Rule 78.1. For the reasons below, Defendants' motions to dismiss are granted, and Plaintiff's motion to amend is denied.


A. Procedural History

Plaintiff initiated this action in December 2009 and shortly thereafter filed its Amended Complaint. The Defendants responded at that time by moving to dismiss the Amended Complaint. D.I. 14 and 15. The parties then began working together in an attempt to reach an amicable resolution of the matter, and the Defendants' motions were denied without prejudice to being renewed if a settlement could not be reached. D.I. 20 and 21. In April 2011 the matter was stayed and administratively terminated while the parties continued to work to resolve the dispute. D.I. 28. Unfortunately, the parties' settlement efforts were not fruitful, and by letter dated December 3, 2012 Plaintiff advised the Court that it wished to reopen the case. D.I. 33. The Court lifted the stay and reopened the matter on January 4, 2013. D.I. 35. Several months later, the instant motions followed.

B. Facts Alleged[1]

Plaintiff is the owner of a multi-family apartment building located at 213-215 First Avenue in Asbury Park, New Jersey. This property is located within the City's Waterfront Redevelopment Zone, which is governed by the City's Waterfront Redevelopment Plan (the "Plan") adopted by the City's Ordinance No. 2607, as well as the Amended and Restated Redeveloper and Land Disposition Agreement dated October 28, 2002 between the City and Partners. According to the Redevelopment Plan, the property is located in the prime renewal area. Plaintiff's apartment building consists of 32 units, 19 of which were occupied at the time relevant to this matter.

In or about April 2008, Plaintiff applied for and received permits to do work on the building, including replacing plywood and sheetrock in bathrooms, replacing siding and windows, repairing a wall in the rear of the building, re-energizing the electrical service, installing a new water shutoff valve, and replacing/repairing the roof. On June 4, 2008, while repairs were underway, a tarp that was placed on the roof of Plaintiff's building blew off during a rainstorm, which resulted in significant flooding and damage to the building. The building was evacuated and the tenants were relocated.

On June 5, 2008, the City held a hearing to determine whether the building was still habitable, and the property was determined to be unfit for habitation. An order was issued prohibiting occupancy of the building until a new certificate of occupancy is obtained.

On or about August 4, 2008, a construction official from the City inspected Plaintiff's property and found that Plaintiff was performing renovations and repairs that went beyond the scope of the work authorized by the permits. A stop work order was issued, and Plaintiff was prohibited from performing any additional work beyond the roofing, plumbing and siding authorized by the previous permits. The order also required Plaintiff to submit detailed plans and specifications before continuing.

Plaintiff did not appeal the City's stop work order and instead sought to file the required plans and specifications, and also applied for a new zoning permit. The new application sought to undertake repairs and renovations necessary as a result of the storm damage to the building. The City denied the application on August 20, 2008. In denying the application, the City determined that the proposed work constituted "redevelopment" under the New Jersey Local Redevelopment Housing Act, N.J.S.A. 40A:12A-3, and therefore Plaintiff would be required to obtain "subsequent developer" status under the Plan.

The denial letter from the City advised Plaintiff of its right to file an appeal to the City's zoning board of adjustment. Plaintiff filed such an appeal, but later withdrew it. Subsequently, on October 6, 2008, Plaintiff initiated an action in the Superior Court of New Jersey captioned First Avenue Realty, LLC v. City of Asbury Park, et al., Docket No. MON-L-4635-08. Plaintiff, however, conceded that it failed to exhaust its administrative remedies, and on July 15, 2009, the parties entered into a consent order dismissing the complaint without prejudice.

Plaintiff then entered into negotiations with Partners to become a subsequent developer. The parties were unable to reach an agreement, and Plaintiff accuses Partners of failing to negotiate in good faith. Plaintiff alleges that in the absence of an agreement with Partners, its building remains damaged and uninhabitable.

The Amended Complaint contains nine counts. In the first count, Plaintiff alleges that it has no remedy to resolve the impasse with Partners and, consequently, its property was taken without just compensation in violation of the Fifth and Fourteenth Amendments. The second count alleges that the City has unconstitutionally denied Plaintiff any economically viable use of his property. In the third count, Plaintiff asserts that Defendants, in failing to reach an agreement permitting Plaintiff to be designated a subsequent developer, have unconstitutionally deprived Plaintiff of the fair rental value of its property. The fourth count alleges that the alleged taking of Plaintiff's property violates 42 U.S.C. § 1983 and § 1985. The fifth count alleges that Defendants' actions violated Plaintiff's right to equal protection under the Fourteenth Amendment. In the sixth count, Plaintiff alleges that it is a third party beneficiary to the Agreement between the City and Partners and that Partners has breached that agreement by failing to "act in good faith and to deal fairly" with Plaintiff. The seventh count alleges that defendants conspired to restrict the use of Plaintiff's property, thereby "violating the Fourteenth Amendment." In count eight, Plaintiff alleges that the "actions of the Defendants in providing an appearance that they would enter into subsequent developer's agreements constitutes a sham as well as a denial of Plaintiff's ...

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