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Harmon v. Borough of Belmar

United States District Court, D. New Jersey

November 20, 2018

TIMOTHY HARMON, et al., Plaintiffs,
BOROUGH OF BELMAR, et al., Defendants.


          PETER G. SHERIDAN, U.S.D.J.

         This matter comes before the Court on a motion by Defendants to dismiss Plaintiffs' Third Amended Complaint for failure to state a claim upon which relief can be granted. The nine-count complaint alleges: (1) due process violations under the Fourteenth Amendment, pursuant to 42 U.S.C. § 1983; (2) violations of the equal protection clause of the Fourteenth Amendment, pursuant to 42 U.S.C. § 1983; (3) violations of the Racketeer Influenced Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq.; (4) violations of the New Jersey counterpart of RICO, N.J.S.A. 2C:41-1 to -6.2; (5) intentional interference with a contractual relationship; (6) intentional interference with prospective economic advantage; (7) intentional infliction of emotional distress; (8) violation of the New Jersey Civil Rights Act; and (9) retaliation for exercise of First Amendment rights.

         In addition to damages, Plaintiffs seek injunctive relief, directing the Borough to approve their transfer application and to permit them to operate their leased restaurant facility for a three-year period. Defendants seek dismissal of Plaintiffs' Complaint in its entirety.

         Factual Background

         Plaintiffs Timothy and Matthew Harmon (Harmon Plaintiffs) maintain restaurants and bars in the Borough of Belmar, New Jersey, including the Boathouse Bar and Grill (Boathouse). (Third Amended Complaint (TAC), ¶ 2-3). Plaintiff 1309 Main Street Associates (1309 Main) is an entity owned by the Harmon Plaintiffs, which, in turn, owns the property on which the Boathouse is located. (Id. at ¶ 3). In January 2014, the Borough entered into a redevelopment agreement with real estate developer, Loko, LLC. (Id. at ¶ 8). The plan included the construction and operation of an outdoor cafe and bar, located at the northern boundary of the Borough by the Shark River Inlet (Loko property). (Id. at ¶ 10, 13). Thereafter, Plaintiffs entered into an agreement with Loko to construct the outdoor cafe and bar, and to operate the facility for a three-year period. (Id. at ¶ 13). As part of the agreement, Plaintiffs were to transfer the alcoholic beverage license from another restaurant that they controlled, 507 Main, to the Loko property, which would operate a facility to be known as Salt. (Id. at ¶ 15).

         Plaintiffs ceased operation of 507 Main and, on April 24, 2015, applied to the Borough for the transfer of the alcoholic beverage license at 507 Main to the Loko property. (Id. at ¶ 16). To secure the transfer, Plaintiffs submitted a "Retail Liquor License Application." (Id. at ¶ 17; Declaration of April Claudio, ECF No. 56-2, Ex. H, Liquor License Application). During this same period, Loko demolished the existing structure on its property, in preparation for the construction of the Salt facility and other improvements. (TAC at ¶ 14). Thereafter, Plaintiffs claim to have "engaged contractors, expended substantial funds, obtained construction and other permits from the Borough and began the process of constructing the Salt facility." (Id.).

         According to Complaint, Plaintiffs expected their application would be handled by the Belmar Police Department, which would have a detective investigate the application and prepare a report for the Mayor and Borough Council within sixty days. (Id. at ¶ 19). Plaintiffs allege that the Belmar Police Department handled similar liquor license applications for other local restaurants, Chefs International, Inc., and 1 Oth Avenue Burrito Company, which were both outdoor bars and dining areas with live music, and were near residential structures, including a senior citizens' apartment building. (Id. at ¶ 20-21). However, the Complaint alleges that, contrary to the "policies and procedures" of the Belmar Police Department, Palmisano, as former Chief of Police, assigned Plaintiffs' application to Huisman, then a Captain of the Police Department who did not ordinarily investigate alcoholic beverage licenses. (Id. at ¶ 22).

         At an April 2015 meeting, Mayor Doherty allegedly made the following statements: (1) "The Borough will approve D'Jais or Ollie Klein[1] at that location, but not the Harmon brothers"; (2) "The Harmons' application is going to get lost at police headquarters and it's going to take forever to come to the Council"; (3) "When the Harmons' application comes before the Council, we will deny the liquor license and force them to go to the ABC"; and, (4) "We know people there (at the ABC) and if by chance they approve the transfer, we will appeal. They will never open." (Id. at ¶ 48). Nevertheless, on June 8, 2016, over one year after Plaintiffs filed their liquor license application, it was heard before Councilmen Brennan and Magovern, and Councilwomen Keown-Blackburn and Nicolay (hereinafter, "Council Defendants"). (Id. ¶ 62, 65, 66, 6870, 72). Prior to the hearing, Mayor Doherty and Connolly allegedly urged Belmar residents and business owners to appear at the meeting and oppose Plaintiffs' license transfer, (Id. at ¶ 63), and instructed Nicolay, Keown-Blackburn, and Magovern to vote "no," (Id. at ¶ 70). At the hearing, Councilman Brennan recused himself from deliberations, due to a potential conflict of interest, since his band plays at many local establishments. (Id. at ¶ 67). During the public deliberation, Councilwoman Keown-Blackburn stated that she did not believe the license transfer was in the best interests of the Borough and voted against it. (Id. at ¶ 68; Claudio Decl., ECF No. 56-2, Ex. I Council Meeting Minutes, at 2). Similarly, Councilwoman Nicolay expressed concern about the potential "security, parking, and noise" issues, and voted against the transfer as well. (TAC, at ¶ 68; Council Meeting Minutes, at 3). Councilman Magovern disagreed, noting that the impact of the transfer would be no different than similar establishments; he also acknowledged that he knew the Harmons and "fe[lt] they would do a good job." (Council Meeting Minutes, at 3). He voted in support of the application; however, since there was only one vote in favor, it did not pass. (Id.).

         Plaintiffs Dockside Dining and DCJ Belmar, interests controlled by the Harmon Brothers, appealed the denial a week later to the Division of Alcoholic Beverage Control (ABC), within the Department of Law and Public Safety. (Cladio Decl., ECF No. 56-2, Ex. J, Appeal). On November 3, 2017, Plaintiffs withdrew the appeal, since their lease of the property had expired, and a new Redevelopment Agreement had been entered between the Borough and Loko, LLC. (Claudio Decl., ECF No. 56-2, Ex. L, Withdrawal Letter). Before withdrawing their appeal, Plaintiffs Dockside Dining and the Harmon Brothers had filed a Tort Claim Form against the Borough on August 17, 2015. (Claudio Decl., ECF No. 56-2, Ex. AA, Tort Claim Form I). Named defendants included Doherty, Connolly, Huisman, and Palmisano. (Id.) The claim alleged, "[t]he Borough and its police department have negligently or intentionally failed to investigate and otherwise process Claimants' application for alcoholic beverage license transfer." (Id.) The notice form was amended two more times, first to add Nicolay, Brennan, Connolly, and Keown-Blackburn as defendants, (Claudio Decl., ECF No. 56-2, Ex. BB "Tort Claim Form II"). In describing the "wrongful acts" the amended claim added, "Maliciously, intentionally or in a grossly negligent manner denied the aforesaid application without legal or factual basis." (Id.). The Second Amended Tort Claim Form made no changes to the parties involved or the description of the cause of action. (Claudio, Decl., ECF No. 56-2, Ex. CC "Tort Claim Form III").

         In April 2015, while Plaintiffs' liquor license application remained pending, Mayor Doherty and Borough Administrator Connolly allegedly engaged in a "concerted effort to prevent the Plaintiffs from constructing and opening the Salt facility." (TAC at ¶ 29). Mayor Doherty allegedly told individuals "that the Plaintiffs 'would never open a business' in that location.'" (Id.). Doherty and Connolly allegedly directed Bianchi, as Borough Construction Officer, "to delay, deny and/or refuse to issue permits" for Plaintiffs' construction, despite already having received approval from the Borough Planning Board, to which Bianchi complied. (Id. at ¶ 34). On another occasion, Connolly directed Huisman and Palmisano to send police officers to the Salt property. (Id. at ¶ 38). The officers threatened to arrest the workers if they did not stop work. (Id.).

         During that summer, Plaintiffs claim that Connolly and Huisman filed a false Coastal Area Facility Review Act (CAFRA) claim with the New Jersey Department of Environmental Protection, "in an effort to stop the project." (Id. at ¶ 44). Neither Connolly nor Huisman were able to produce a copy of any violation and Kapalko later verified that no violation existed. (Id.). That fall, Huisman appeared before the Belmar Planning Board, to object to the site plan for the Salt facility. (Id. at ¶ 28). Huisman claimed that the facility's lighting was inadequate, which purportedly contradicted a report prepared by the Board's licensed engineer. (Id.). At some point thereafter, Plaintiff claims that Doherty and Connolly also directed a Stop Work Order on the Salt project, which was later issued by Bianchi. (Id. at ¶ 37).

         Plaintiffs also assert claims relating to the Boathouse, another restaurant they own in Belmar. At its core, those allegations relate to Huisman's alleged attempt to prevent the Boathouse from obtaining a permit to expand its premises during the February 2016 St. Patrick's Day parade. (Id. at ¶ 59). According to the Complaint, Huisman also advised he would be "standing outside the Boathouse on the day of the St. Patrick's Day Parade" and would "immediately shut down the Boathouse" if he found any violations. (Id. at ¶ 59). Plaintiffs do not allege that the permit was in fact denied or that Huisman took any action to shut down the restaurant during the parade.

         In addition, Plaintiffs allege Doherty had a personal desire to stop their project, claiming that he received assistance from officers of Chef s International to obtain a fifth mortgage on his house. They also allege that Doherty indirectly received political contributions from D'Jais, and that he was present at the grand opening of Anchor Tavern and stated that he had "a lot invested in this place." (TAC, at ¶¶ 80-91).

         Legal Analysis

         On a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the Court is required to accept as true all allegations in the Complaint and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). "To survive a motion to dismiss, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While a court will accept well-pleaded allegations as true for the purposes of the motion, it will not accept bald assertions, unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. Iqbal, 556 U.S. at 678-79; see also Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997). A complaint should be dismissed only if the well-pleaded alleged facts, taken as true, fail to state a claim. See In re Warfarin Sodium, 214 F.3d 395, 397-98 (3d Cir. 2000).

         1309 Main's Standing

         Defendants first contend that "the TAC does not allege that 1309 suffered any harm as a result of Defendants' alleged actions" and therefore lacks standing. (Defendants' Brief, ECF 56-1, at 20). According to the TAC, 1309 Main is "an entity owned by Plaintiffs Timothy and Matthew Harmon," which owns the real estate where the Boathouse is located.

         To have standing, a "plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016). As owner of the property on which the Boathouse sits, 1309 Main has standing to assert claims relating to that property, but only to the extent that the allegations affect development of the property or otherwise diminished the its value. Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131, 141 (3d Cir. 2009); Taliaferro v. Darby Twp. Zoning Bd, 458 F.3d 181, 190 (3d Cir. 2006). As Plaintiffs' Boathouse allegations set forth no such claims, 1309 Main lacks standing to bring those claims and similarly lacks standing to bring any claims relating to the Salt facility.

         Substantive Due Process

         "Section 1983 imposes civil liability upon any person who, acting under the color of state law, deprives another individual of any rights, privileges, or immunities secured by the Constitution or laws of the United States." Shuman v. Penn Manor Sch. Dist.,433 F.3d 141, 146 (3d Cir. 2005). "As a general matter, [courts have] always been reluctant to expand the concept of substantive due process because guideposts for responsible decisionmaking in this uncharted area are scarce and open-ended." Collins v. Harker Heights,503 U.S. 115, 125 (1992). "The history of substantive due process 'counsels caution and restraint.'" Nicholas v. Pa. State. Univ.,227 F.3d 133, 140 (3d Cir. 2000) (quoting Regents of Univ. of Mich. V. Ewing,474 U.S. 214, 229 (1985) (Powell, J., concurring)). It is "a doctrine ...

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