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LLC v. City of Sea Isle City

United States District Court, D. New Jersey, Camden Vicinage

March 27, 2018

8600 LANDIS, LLC, Plaintiff,
CITY OF SEA ISLE CITY, et al., Defendants.

          FOX ROTHSCHILD LLP By: Timothy J. Bloh, Esq. Christopher C. Fallon, III, Esq. Counsel for Plaintiff

          MADDEN & MADDEN, P.A. By: Patrick J. Madden, Esq., Counsel for Defendants City of Sea Isle City, Leonard Desiderio, George Savastano and Cornelius R. Byrne

          COOPER LEVENSON, P.A. By: Russell L. Lichtenstein, Esq. Counsel for Defendants Kix McNutley's and Sea Isle Inn.

          SWARTZ CAMPBELL LLC By: Joseph A. Venuti, Jr., Esq., Counsel for Defendant Paul J. Baldini, Esq.



         This suit arises out of proceedings before the City of Sea Isle City's Planning Board. Plaintiff 8600 Landis, LLC, asserts that Defendants, various City officials and two private businesses, improperly used the zoning approval and permit process to delay construction of Plaintiff's mixed use building.

         Before the Court are Defendants' Motions to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated herein, the Motion to Dismiss brought by Defendants Kix McNutley's and Sea Isle Inn (“the Restaurant Defendants”) will be granted in its entirety, and the Motions to Dismiss filed by the other Defendants will be granted in part and denied in part.

         I. FACTS

         As alleged by Plaintiff, in May, 2010, the Sea Isle City Planning Board granted “preliminary and final site plan approval and variance relief” to Plaintiff's predecessor-in-interest “to construct a three (3) story mixed use building containing 9, 669 square feet of interior and ‘outdoor' restaurant space on the first floor; and thirteen (13) four bedroom residential units on the second and third floors.” (Amend. Compl. ¶ 21) Defendant Planning Board Member Leonard Desiderio, who was also the Mayor of Sea Isle City during the relevant time period[1], “recused himself from Plaintiff's application and abstained from voting, presumably recognizing the conflict in that his businesses, [Defendant] Sea Isle Inn and [Defendant] Kix McNutley's, are competitors of Plaintiff.” (Id. ¶ 22)[2] “Despite his public recusal and abstention, ” Defendant Desiderio allegedly “stayed involved behind the scenes in undermining Plaintiff's project to favor [Desiderio's] own personal business interests.” (Id. ¶ 23)

         On December 15, 2014, the “Original Plans” for Plaintiff's mixed use building “w[ere] approved by the Planning Board Engineer.” (Amend. Compl. ¶ 28) Two days later, on December 17, 2014, Plaintiff submitted a “Revised Plan Set” which “reduced the number of bedrooms in the thirteen (13) residential units from 4 to 3 and changed the front façade entrance doors by bringing the doors to street level.” (Id. ¶ 31) Shortly thereafter, on December 30, 2014, the Planning Board “administratively approved” the Revised Plan and “fully executed, ” although apparently did not issue, “a permit set.” (Id. ¶ 33)

         Similarly, on April 1, 2015, the Planning Board “approved” a “Revised Fit-Out Plan” which was an “Accessibility Plan” apparently related to the restaurant portion of the project. (Amend. Compl. ¶¶ 35, 37, 38)

         Once all plans were approved, it appears the next step in the process was the issuance of construction permits. While the permits for the residential units were allegedly issued on April 8, 2015, “the necessary permits for the first floor restaurant space” were allegedly delayed by several months. (Amend. Compl. ¶ 40) Specifically, the Amended Complaint alleges that Defendant “Sea Isle Construction Official / Zoning Officer” Cornelius R. Byrne, “refused to issue” the restaurant permits (id.), and caused delays by allegedly raising “unnecessary” questions about “the intended use of the residential units, ” as well as “the administrative approvals already granted to Plaintiff.” (Id. ¶¶ 40-43) Plaintiff contends that these questions were “subterfuge” for the real reason for the delay: Defendant Desiderio and /or Defendant Savastano allegedly “order[ed]”, or “directed”, Defendant Byrne to delay and / or refuse to issue the permits. (Id. ¶¶ 40, 60, 61)

         On September 17, 2015, Defendant Sea Isle City Solicitor Defendant Paul J. Baldini, Esq.[3] wrote a four-page letter to Defendant Byrne which states in relevant part,

Dear Neil: . . . By way of e-mail dated August 19, 2015 you have requested a legal opinion to determine whether the project as being developed [by Plaintiff] meets the intent of the approvals the project received in May of 2010 and otherwise comports with Sea Isle City Ordinances.

         (Amend. Compl. Ex. O) After setting forth a legal analysis, the letter concludes that the project significantly deviates from the Planning Board approvals[4], and that such “changes . . . are not de minimus in nature and cannot be implemented without review by the full Planning Board after appropriate application to amend the approved site plan.” (Id.) Allegedly “as a result of” this letter, “[on] September 23, 2015 [Defendant] Byrne . . . issued . . . a Stop Work Order to Plaintiff” which caused further construction delay. (Amend. Compl. ¶ 45)

         On October 1, 2015, Plaintiff filed a complaint in New Jersey Superior Court against the City of Sea Isle City “challenging the City of Sea Isle Construction Official / Zoning Officer's issuance of a Stop Work Order and denial of building permits related to a commercial space owner by [Plaintiff].” (Amend. Compl. Ex. B)

         “Plaintiff's project was completed in late May 2016.” (Amend. Compl. ¶ 54)

         On August 2, 2016, the Superior Court held

that the Construction Official / Zoning Officer's revocation and denial of the permits . . . were arbitrary, capricious and unreasonable. The court holds that [Plaintiff] is entitled to any and all permits necessary to construct the Property consistent with the approvals granted under the Original Plan, Revised Plan, and Revised Fit-Out Plan.


         Plaintiff contends that the delays caused by the allegedly improper denial of permits and Stop Work Order caused Plaintiff to incur specific additional costs[5] and caused Plaintiff to “default” on its lease for the first floor restaurant space because Plaintiff could not deliver possession to the lessee by the date set in the lease.[6] (Amend. Compl. ¶ 48)

         Plaintiff further contends that Defendant Desiderio directed the delays because Plaintiff's business and Defendant Desiderio's businesses, Defendants Kix McNutley's and Sea Isle Inn, “are direct competitors in the restaurant and hospitality industry.” (Amend. Compl. ¶ 58)

         The Amended Complaint asserts the following claims against the Sea Isle City Defendants[7] only: Count 1-- violations of Plaintiff's substantive due process rights, equal protection rights, and “right to use and enjoy its property” (Amend. Compl. ¶ 83), under the New Jersey Constitution; Count 2 -- violation of Plaintiff's federal right to substantive due process pursuant to 42 U.S.C. § 1983; Count 3 -- violation of Plaintiff's federal right to equal protection pursuant to 42 U.S.C. § 1983; Count 4 --“civil conspiracy under 42 U.S.C. § 1983 and § 1985”; and Count 11 -- negligence. Against all Defendants the Amended Complaint asserts: Count 5 -- tortious interference with prospective economic advantage; Count 6 -- conspiracy; Count 7 -- violation of the New Jersey Antitrust Act, N.J.S.A. § 56:9-3; Count 8 --violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; Count 9 -- unfair competition; and Count 10 - “abuse of process.”


         To withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 663. “[A]n unadorned, the defendant-unlawfully-harmed me accusation” does not suffice to survive a motion to dismiss. Id. at 678. “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

         In reviewing a plaintiff's allegations, a district should conduct a three-part analysis:

First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Third, when there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.

Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (internal citations, quotations, and modifications omitted) (quoting Iqbal, 556 U.S. at 675, 679).

         Rule 12(b)(6) requires the district court to “accept as true all well-pled factual allegations as well as all reasonable inferences that can be drawn from them, and construe those allegations in the light most favorable to the plaintiff.” Bistrian, 696 F.3d at 358 n. 1. Only the allegations in the complaint and “matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case” are taken into consideration. Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 2 (3d Cir. 1994) (citing Chester Cty. Intermediate Unit. v. Pennsylvania Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990)). A court may also “consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

         III. ANALYSIS

         A. The Sea Isle Defendants' Motion to Dismiss [[8]]

         Substantive due process

         Defendants argue that the factual allegations of the Amended Complaint, even if taken as true, do not meet the “shocks the conscience” standard applied to substantive due process claims in the land use context. See Eichenlaub v. Twp. of Indiana, 385 F.3d 274, 285 (3d Cir. 2004) (“The District Court properly held . . . that whether a zoning official's actions or inactions violate due process is determined by utilizing a ‘shocks the conscience' test.”). Plaintiff asserts that the factual allegations are sufficient to plausibly support a conclusion that Defendant Desiderio engaged in self-dealing which, Plaintiff contends, does meet the shocks the conscience standard.

         Defendants correctly observe that the shocks the conscience “test is designed to avoid converting federal courts into super zoning tribunals. What ‘shocks the conscience' is only the most egregious official conduct.” Eichenlaub, 385 F.3d at 285 (internal citations and quotations omitted). Plaintiff, also relying on Eichenlaub, argues that the facts alleged support a plausible conclusion that Defendant Desiderio engaged in self-dealing, which Plaintiff contends, amounts to “gross misconduct” supporting its substantive due process claim. Id.

         The Court holds that the present factual allegations are insufficient to “‘nudge [the] claim[] across the line from conceivable to plausible.'” Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly). Plaintiff asks this Court to draw the inference that Defendant Desiderio engaged in self-dealing based on two sentences of the Amended Complaint:

22. During the May 10, 2010 hearing, Planning Board Member, Mayor Desiderio, recused himself from Plaintiff's application and abstained from voting, presumably recognizing the conflict in that his businesses, Sea Isle Inn and Kix McNutley's, are competitors of Plaintiff. (Exhibit D).
23. Despite his public recusal and abstention, Mayor Desiderio stayed involved behind the scenes in undermining Plaintiff's project to favor his own personal business interests.

(Amend. Compl. ¶ 22-23)

         The Court finds several deficiencies in these allegations. First, it is important to note that the allegations are based on Exhibit D to the Amended Complaint, the Memorializing Resolution of the Planning Board, which only states, “Board Member Mayor Desiderio recused himself from the Application and stepped down from the dais, ” and records that Desiderio “abstain[ed]” from voting on the application. (Amend Compl. Ex. D) Thus, the Amended Complaint pleads no facts suggesting why Defendant Desiderio recused and abstained from voting, and none are contained in the Memorializing Resolution. Plaintiff invites the Court to infer that the reason was Defendant Desiderio's interest in Kix McNutley's and Sea Isle Inn, but the allegations of the Amended Complaint itself demonstrate such an inference would be nothing more than speculation at this point: “Mayor Desiderio, recused himself from Plaintiff's application and abstained from voting, presumably recognizing the conflict . . . .” (Amend. Compl. ¶ 22; emphasis added)

         Second, the Amended Complaint fails to plead sufficient facts that would plausibly support a conclusion that Mayor Desiderio did, indeed, have a “conflict.” As discussed infra with respect to the antitrust claims, the Amended Complaint fails to plead facts suggesting that Plaintiff is a competitor of Kix McNutley's and Sea Isle Inn, or even more basically, how the Restaurant Defendants compare with Plaintiff.[9] Absent facts suggesting competition between the Restaurant Defendants and Plaintiff, the Court cannot plausibly conclude that Defendant Desiderio had a conflict, and absent a conflict, the Court cannot draw the conclusion that there was self-dealing.

         Third, exacerbating the uncertainty surrounding the factual allegations is the alleged fact, supported by the Memorializing Resolution, that Plaintiff was not the Applicant whose application Defendant Desiderio abstained from voting on.[10] This alleged fact only raises additional questions concerning both the reason for Defendant Desiderio's recusal and the existence of a conflict.

         Lastly, the allegation that Defendant Desiderio “stayed involved behind the scenes” (Amend. Compl. ¶ 23) is vague, and its significance, if any, in the substantive due process analysis is unclear. The Court cannot discern whether Plaintiff contends that there was anything improper or wrongful about “staying involved.” It does not necessarily follow that a Planning Board Member who recuses from a vote on an application must have no further “involvement” with an application once it has been approved, particularly in this case, where the Applicant and the ...

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