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Susko v. Borough of Belmar

Superior Court of New Jersey, Appellate Division

April 22, 2019

JOHN E. SUSKO, FRANCINE M. DOLAN, KYLE BROWN, MICHAEL SEEBECK, PATRICIA COREA, NOREEN DEAN, JAMES BEAN, and JOY DESANCTIS,[1] Plaintiffs-Respondents,
v.
BOROUGH OF BELMAR and MAYOR AND COUNCIL OF THE BOROUGH OF BELMAR, Defendants-Appellants.

          Argued September 20, 2018

          On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1427-15.

          William W. Northgrave argued the cause for appellants (Mc Manimon, Scotland & Baumann, LLC, attorneys; William W. Northgrave and Thaddeus J. Del Guercio, III, on the briefs).

          Kenneth E. Pringle argued the cause for respondents (Pringle Quinn Anzano, PC attorneys; Kenneth E. Pringle, of counsel and on the brief; Denise M. O'Hara, on the brief).

          Before Judges Alvarez, Nugent and Reisner.

          REISNER, J.A.D.

         In response to the physical and economic devastation wrought by Superstorm Sandy, the Borough of Belmar took, or planned to take, a series of actions that were inconsistent with a thirty-year-old but still binding court decision in Slocum v. Borough of Belmar, 238 N.J.Super. 179 (Law Div. 1989). The trial court found that the Borough improperly used funds derived from beach fees (beach funds) to settle non-beach related litigation; improperly deposited into the Borough's general fund certain donations raised through a campaign to help rebuild the boardwalk (the buy-a-board donations); planned to improperly use the buy-a-board donations, and certain other funds restricted for beach use, to rebuild a boardwalk pavilion (the Taylor Pavilion) that was largely used for non-beach purposes; and doubled the fees for beach-front parking spaces in order to raise money for the general fund. The trial court found that defendants' actions or planned actions violated the Borough's obligations under the public trust doctrine and N.J.S.A. 40:61-22.20, which was enacted to implement the doctrine. The trial court also concluded that the Borough violated plaintiffs' substantive civil rights and awarded plaintiffs about $170, 000 in counsel fees and costs under the New Jersey Civil Rights Act (CRA), N.J.S.A. 10:6-2(f). [2]

         In challenging the resulting trial court orders, defendants - the Borough, and its Mayor and Council - contend that most of plaintiffs' issues were not ripe; the trial court's decision violated the separation of powers doctrine; the court erred in holding that the Borough must use the buy-a-board donations to rebuild the boardwalk; the court erred in finding that violations of the public trust doctrine were substantive rights for purposes of a counsel fee award under the CRA; the court erred in voiding the ordinance doubling the parking fees; paying litigation fees from the beach fund did not violate the public trust doctrine or the CRA; no counsel fee could be awarded because plaintiffs' attorney had no retainer agreement; the counsel fee award was excessive; and any fee award should be paid from the beach fund instead of the general fund.

         We conclude that the disputes in this case were ripe for adjudication. We affirm the orders on appeal, except that we modify the order awarding counsel fees under the CRA. We hold that when a municipality violates the beach fee statute, N.J.S.A. 40:61-22.20, by charging unreasonable beach fees, that violation constitutes the deprivation of a substantive civil right under the New Jersey Civil Rights Act, and a successful plaintiff is entitled to counsel fees. However, because the CRA requires the violation of an unambiguous, specific statutory or constitutional provision, most of the conduct plaintiffs proved in this case, while wrongful, did not establish CRA violations or entitle them to counsel fees.

         Under the limited circumstances of this case, we agree with the trial court that parking fees - charged only for beach-front parking and nowhere else in the Borough - constituted beach fees. The record supports the trial court's findings that doubling the parking fees in order to raise general revenues for the Borough imposed an unreasonable beach fee on users of the beach. Plaintiffs are entitled to counsel fees under the CRA for that violation of N.J.S.A. 40:61-22.20. Plaintiffs did not prove that the Borough's regular beach-badge fees were unreasonable, nor did they prove that they were physically excluded from any portion of the Borough's beach. Because CRA counsel fees are available for the violation of N.J.S.A. 40:61-22.20 that plaintiffs proved, we do not reach the separate issue of whether counsel fees are available under the CRA solely for a violation of the common-law public trust doctrine.

         I

         As background, it is helpful to briefly review the public trust doctrine and the Slocum decision.

         The public trust doctrine refers to the common-law principle that a state holds, "'in trust for the people, '" "'ownership, dominion and sovereignty' over tidally flowed lands" extending to the mean high water mark. City of Long Branch v. Liu, 203 N.J. 464, 474-76 (2010) (quoting Matthews v. Bay Head Improvement Ass'n, 95 N.J. 306, 316-17 (1984)). Accord Borough of Neptune City v. Borough of Avon-By-The-Sea, 61 N.J. 296, 303-04 (1972) (stating that "land covered by tidal waters belonged to the sovereign, but for the common use of all the people"). The public trust doctrine guarantees the public's right to reasonable access to the trust lands. Raleigh Ave. Beach Ass'n v. Atlantis Beach Club, Inc., 185 N.J. 40, 51-55 (2005). "[W]ithout access the doctrine has no meaning." Id. at 53 (citing Matthews, 95 N.J. at 323).

         Our courts have extended the uses covered by the public trust doctrine, beyond navigation, commerce, and fishing "to recreational uses, including bathing, swimming and other shore activities." Avon, 61 N.J. at 309. See Lusardi v. Curtis Point Prop. Owners Ass'n, 86 N.J. 217, 228 (1981) ("The public trust doctrine is premised on the common rights of all the State's citizens to use and enjoy the tidal land seaward of the mean high water mark."). To accommodate these uses, our courts consequently extended the public's right of accessibility beyond the foreshore to the beaches and the upper dry sand areas. Times of Trenton Publ'g Corp. v. Lafayette Yard Cmty. Dev. Corp., 183 N.J. 519, 532 (2005) (stating that "the doctrine has been applied in New Jersey to ensure access by the public to areas of the beach"). "Whether natural, or man-made, the beach is an adjunct to ocean swimming and bathing and is subject to the Public Trust Doctrine." Van Ness v. Borough of Deal, 78 N.J. 174, 180 (1978). See also Lusardi, 86 N.J. at 228 (stating that the scope of the doctrine was expanded to beaches "[b]ecause the use of dry sand beaches is practically inseparable from enjoyment of ocean swimming").

         Our courts have also emphasized the importance of equal access: "a modern court must take the view that the public trust doctrine dictates that the beach and the ocean waters must be open to all on equal terms and without preference and that any contrary state or municipal action is impermissible." Avon, 61 N.J. at 309. Over the years, our courts have enforced the public trust doctrine by overturning actions favoring residents over non-residents with regard to access to and fees for using beaches and related facilities. In Van Ness, 78 N.J. at 180, the Court held that a municipality could not set aside part of its public beach for use by residents only. In Matthews, 95 N.J. 330-32, the Court held that a beach owned and operated by a quasi-public association with close connections to the municipality could not exclude certain beach-goers from the dry upland portion of the beach. In Avon, 61 N.J. at 310, the Court overturned an ordinance that restricted the sale of seasonal beach badges to residents, which resulted in non-residents paying disproportionately higher fees for daily and monthly badges.

         In Slocum, the plaintiff filed a wide-ranging challenge to the Borough's beach fees and its alleged misuse of the fees for purposes unrelated to the beach. After a trial, a Law Division judge invalidated the Borough's beach fee schedule, finding that it discriminated against non-residents by doubling the fees on weekends as compared to weekdays, and by charging more for the cost per day of a weekend daily badge than the cost per day for a seasonal badge. Slocum, 238 N.J.Super. at 190. "The majority of weekend badge purchasers were nonresidents . . . [and b]y paying a vastly greater per day price for their badges, the daytrippers have been subsidizing season badge holders." Ibid.

         The judge also reasoned that, because the State holds certain lands in trust for the public, municipalities have a duty to take special care to account for all "beachfront related expenditures" and "beachfront related revenues." Id. at 183, 188. The judge determined that the Borough had "breached its duty of loyalty to the public" as trustee under the public trust doctrine by increasing "beach admission fees," rather than real estate taxes, in order to raise general revenues. Id. at 188. In fact, the judge found that the Borough had commingled its beach badge revenues with its general revenues, essentially "operat[ing] the beach area as though it were a commercial business enterprise for the sole benefit of its taxpayers." Ibid. He found: "This conduct resulted in surplus beach fee revenues being used to subsidize other municipal expenditures for the exclusive benefit of the residents of Belmar, rather than being set aside to meet future beach-related costs." Ibid. Thus, the judge held that the Borough had violated its "duty under the public trust doctrine" by "plac[ing] the interest of Belmar's residents before those of the beachgoers." Ibid.

         As a remedy for Belmar's past violations of the public trust doctrine, to prevent future violations, and to effectuate its obligation as a trustee of its beach-fee related funds, the judge ordered the Borough to keep clear financial accounts in the future:

Commencing with the 1990 summer season, Belmar shall maintain complete, accurate, and traceable records documenting the costs relating to its beachfront facilities. Belmar shall maintain a separate beach account in which all revenues collected by the borough, from beach admission fees and any other beach use fees, shall be deposited, and from which all expenditures for beach related costs will be paid.
[Id. at 208.]

         Based on extensive expert testimony, the judge also specifically delineated the allowable beach-related costs that could be included as components of the Borough's beach fees. Id. at 196-208.

         To comply with Slocum, the Borough created a beach utility fund (beach fund), which was separate from its municipal general fund. At the time the current litigation arose, the Borough was still required to comply with Slocum.

         II

         As a precursor to our legal analysis, we briefly summarize the evidence presented in the trial court. In 2012, Superstorm Sandy caused extensive damage along the Borough's beachfront. The storm virtually destroyed the boardwalk and several pavilions located along the boardwalk. Some of the pavilions had been built, or rebuilt after previous storms, using money raised from beach-badge fees, and they were used for beach-related purposes. But the Taylor Pavilion was not built with beach funds and had primarily been used for community functions unrelated to the beach. The Borough anticipated that it would receive insurance proceeds from policies covering the pavilions, as well as money from the Federal Emergency Management Agency (FEMA) to cover some reconstruction costs. In an effort to raise private funds toward the cost of rebuilding the boardwalk, the Borough also conducted a "buy-a- board" campaign, telling potential donors that their donations would allow them to pay for actual boards on the boardwalk.

         The Borough planned to use insurance proceeds and FEMA reimbursement money associated with beach-related pavilions to rebuild the Taylor Pavilion. The Borough also anticipated using the buy-a-board donations for that purpose. The Borough Council planned to issue bonds to fund the Taylor Pavilion construction, and it anticipated using the insurance, FEMA, and buy-a-board monies to repay the bonds. In addition, to avoid raising taxes on its residents, the Borough doubled the parking fees along the street adjacent to the beach, and paid certain non-beach-related litigation expenses using money from its beach fund instead of from its general fund. Plaintiffs filed a nine-count complaint challenging these actions as violating Slocum, violating the public trust doctrine, and violating the beach fee statute. After hearing motions and a two-day bench trial, the trial court decided the issues in plaintiffs' favor.

         III

         We will defer to a trial court's factual findings so long as they are supported by substantial credible evidence. Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 484 (1974). We owe particular deference to a trial court's evaluation of witness credibility. Cesare v. Cesare, 154 N.J. 394, 412 (1998). However, we engage in de novo review of a trial court's legal interpretations. Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

         We begin by addressing the issue of ripeness. In deciding whether an issue is ripe, the court should consider whether the issues are fit for judicial review and whether withholding judicial review would cause hardship to the parties. K. Hovnanian Cos. of N. Cent. Jersey, Inc. v. N.J. Dep't of Envtl. Prot., 379 N.J.Super. 1, 9 (App. Div. 2005). On this record, we affirm the trial judge's decision that the issues were ripe, substantially for the reasons stated in her thoughtful oral opinions of October 6, 2015, and October 23, 2015. We add these comments.

         As the trial court noted, the Borough had taken certain concrete steps toward misallocating some of the beach funds and violating requirements imposed by Slocum. Under the Slocum opinion - the validity of which defendants did not question in the trial court and do not question here - beach fund monies were to be treated as trust assets. Slocum, 238 N.J.Super. at 187-88. Slocum found that the Borough had routinely misused beach revenues, failed to properly account for beach fees, and "operated the beach area as though it were a commercial business enterprise for the sole benefit of its taxpayers." Id. at 188. Slocum imposed certain prophylactic remedies to preclude future misuse of beach funds and make it easier to determine whether future beach fees were reasonable. Those remedies included a requirement that the Borough place all beach funds in a dedicated account. Id. at 208.[3]There was evidence before the trial court that the Borough was violating the Slocum decision by placing $727, 000 in buy-a-board proceeds in a non-beach account. Further, due to the Borough's failure to use those proceeds to pay off a boardwalk construction bond, the beach fund was incurring about $36, 000 a year in interest costs on the bond.

         The trial court also determined that the parties needed a decision on the allowable use of FEMA reimbursement funds, insurance proceeds, and the buy-a-board funds, in time for an upcoming referendum on whether to issue about $4 million in bonds to pay for construction of the Taylor Pavilion. Underlying the referendum was a dispute over whether the FEMA, insurance, and buy-a-board monies could be used to repay the bonds. Through a petition drive, objectors to the rebuilding project had already forced the Borough to hold a referendum on the bond issue. The record here reflects that municipal government officials then embarked on a campaign of disinformation, designed to influence the outcome of the referendum.

         DeSanctis v. Borough of Belmar, 455 N.J.Super. 316 (App. Div. 2018), a separate lawsuit filed by some of the same plaintiffs who filed this case, supports the judge's decision that the dispute in this case was ripe. In DeSanctis, the municipal clerk drafted an interpretive statement for the same referendum involved in the present case. Id. at 322. We affirmed the trial judge's finding that, viewed in context, the interpretive statement was not an objective explanation of the referendum. Id. at 332-33, 335. Instead, it was biased and designed to "sell" the referendum to voters based on a representation that the Borough would use FEMA and other funds to repay the bonds without expense to the taxpayers.[4]Id. at 331-32. That was part of the same pattern of ...


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