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LLC v. Borough of Edgewater

United States District Court, D. New Jersey

April 30, 2019




         This matter comes before the Court on Defendant's Borough of Edgewater's motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). ECF No. 16. The Court reviewed the parties' submissions in support and in opposition, and considered the motion without oral argument pursuant to Fed.R.Civ.P. 78(b) and L. Civ. R. 78.1(b). For the reasons set forth below, the motion is DENIED.

         I. BACKGROUND

         Plaintiff 615 River Road Partners (“Plaintiff”) brings this action against the Borough of Edgewater (“Defendant” or “Edgewater”) and 100 fictitious individuals. See Compl., ECF No. 1. Plaintiff asserts that Defendant violated its Equal Protection (Count One), Substantive Due Process (Count Two), and First-Amendment (Count Three) rights by making it impossible for Plaintiff to develop a parcel of land it purchased before expropriating it.

         According to the Complaint, Plaintiff purchased a parcel of land located in Edgewater, New Jersey (the “Parcel”) in 2014. Id. ¶ 31. Though the Parcel was not zoned for residential use, Plaintiff planned to turn the Parcel into a large housing development, including five high-rise residential buildings (with 20% affordable-housing), public parks, and mass-transit improvements. Id. ¶ 11. To do so, the Parcel required extensive and expensive environmental remediation. Id. ¶¶ 11, 33. Defendant facilitated that remediation by issuing permits. Id. Plaintiff also met with Defendant to discuss its development plan before closing on the Parcel and repeatedly asked for feedback on its plans. Id. ¶ 32. Once remediation was complete, Plaintiff expected that obtaining zoning relief would be unproblematic, as “Edgewater has granted zoning relief in some form to every similarly situated waterfront parcel.” Id. ¶ 12.

         Contrary to Plaintiff's expectations, Plaintiff has not been able to obtain zoning relief. Plaintiff alleges that-due to Edgewater's government officials' inappropriate connection to a rival developer, Fred Daibes-Defendant has illegally obstructed Plaintiff's efforts by (1) refusing to meet with Plaintiff to discuss the development plan for three years; (2) imposing obstacles to Plaintiff's use-variance application, including requiring the application to be divided in two and delaying its review for contrived reasons; and (3) after Plaintiff lost a lawsuit for automatic approval of its zoning-relief application, voting to acquire the parcel by purchase or condemnation for pretextual reasons. Id. ¶¶ 1, 12, 44, 97, 107-08.

         Plaintiff alleges these actions departed significantly from Defendant's usual practice, in which zoning-relief applications are quickly processed and approved. Plaintiff accuses Defendant of engaging in the disparate treatment-culminating in pretextual condemnation-to benefit Daibes. Defendant's conduct is alleged to be part of a decades-long conspiracy involving Daibes, his various companies, and Edgewater municipal officials. Id. ¶ 4. According to Plaintiff:

Daibes and his Entities provide important Edgewater municipal officials and their families with, among other things, undisclosed cash payments . . ., employment at Daibes Entities and governmental agencies that are controlled by Daibes' political allies, below-market rental apartments in Daibes-owned buildings, loans and credit facilities from the Daibes-controlled Mariner's Bank, free use of a Daibes-owned restaurant, and the opportunity to purchase real property owned by Mariner's Bank for a fraction of the fair market value.

Id. ¶ 5. In exchange, Edgewater officials allegedly act in Daibes interest at the “expense of competing real-estate developers, low-income residents, and the public trust.” Id. ¶ 4.

         Consistent with the conspiracy, when Plaintiff purchased the Parcel, Daibes allegedly said, “[T]hey should have come to me in the beginning. I own and built this town. Now it will be condemned.” Id. ¶ 57. According to the Complaint, that is precisely what happened. “Edgewater's decision to condemn the property was made without public hearings, studies, findings of any kind, or support from [Edgewater's] own Master Plan.” Id. ¶ 13. The purported reason to condemn the property-to relocate Edgewater's small Public Works Department to the Parcel[1]-leaves it “as the only significant vacant parcel of waterfront property in the Borough that has not been permitted [for] residential use.” Id. Coincidentally, Daibes owns other waterfront parcels, that were re-zoned for residential use and on which he has built apartments like those planned by Plaintiff. See Id. ¶ 16.

         In response to Edgewater's actions, Plaintiff initiated this three-count lawsuit, alleging constitutional violations pursuant to 42 U.S.C. §§ 1983, 1988. In Count One, Plaintiff alleges that Defendant violated its right to Equal Protection by “intentionally treating Plaintiff differently from others similarly situated” with “no rational basis” while “acting under color of state law.” Id. ¶¶ 119-20. In Count Two, Plaintiff asserts Substantive Due Process violations because Defendant's actions, taken under color of law, “were . . . not rationally related to a legitimate state interest and/or were . . . motivated by bias, bad faith, and/or partisan political reasons or personal reasons unrelated to a proper governmental purpose, and shock the conscience.” Id. ¶¶ 125-26. Count Three alleges violations of Plaintiff's First Amendment rights because Defendant's actions were allegedly “based, in part, on [its] intent to retaliate against Plaintiff for” engaging in public-interest litigation (discussed below). Id. ¶¶ 131, 135.

         This matter is not the first litigation to result from the above-described (and related) conduct. In In re Borough of Edgewater, No. BER-L-6364-15 (“DJ Action”), Edgewater seeks a declaration that its affordable housing plan meets the requirements of New Jersey law. Compl. ¶ 100. The state court granted Plaintiff's motion to intervene “as a property owner in the Borough seeking to build affordable housing.” Id. In this matter, Plaintiff alleges it is being retaliated against for intervening in the DJ Action.

         Separately, Plaintiff filed 615 River Road Partners, LLC v. Edgewater Zoning Board of Adjustment and John Candelmo, No. BER-L-2020-16 (“Zoning Action”). Compl. ¶ 106. In that case, Plaintiff urged the court to deem Edgewater's zoning board's (“EZB's”) delayed review of its zoning-relief application violative of New Jersey law. Id. Plaintiff argued that because EZB took longer than the statutorily prescribed time to review its zoning-relief application, it should have automatically been deemed complete and approved. Id. ¶ 105. In June 2017, the court granted Edgewater summary judgment, and Plaintiff appealed. Id. ¶ 106.

         In December 2016, Plaintiff filed another state-court action, captioned 615 River Road Partners v. Borough of Edgewater, No. BER-L-0090-17 (“Overlay-Ordinance Action”). In the Overlay-Ordinance Action, Plaintiff challenges a November 2016 ordinance adopted by Edgewater that establishes an “overlay zone” to bookmark properties for affordable housing construction. Compl. ¶ 109. Plaintiff is challenging the ordinance as arbitrary, capricious, and unreasonable because it impermissibly treats similarly situated properties differently. Id. ¶ 110.

         In May 2017, Plaintiff filed yet another state action, captioned 615 River Road Partners, LLC v. Borough of Edgewater, et al., No. BER-L-003638-17 (“iPark Action, ” and together with the above, “State Actions”). Compl. ¶ 111. Plaintiff filed the iPark Action after Edgewater represented in the DJ Action that-due to the lack of completed affordable housing units-no further certificates of occupancy would be issued for the “iPark Project, ” a Daibes-involved development. Id. ¶ 89, 113. After Plaintiff filed an Open Public Records Act request, they learned an Edgewater official had issued two additional certificates. Id. ¶ 112. The court in the iPark Action determined that Edgewater violated state affordable-housing laws and required iPark to build seventy-five affordable-housing units. Id. ¶ 114.

         II. ...

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