Opinion
DOCKET NO. A-5710-12T3
10-13-2016
STATE OF NEW JERSEY, STATE AGRICULTURE DEVELOPMENT COMMITTEE, COUNTY OF HUNTERDON and TOWNSHIP OF FRANKLIN, Plaintiffs-Respondents, v. QUAKER VALLEY FARMS, LLC and DAVID DEN HOLLANDER, Defendants-Appellants.
Robert P. Merenich argued the cause for appellants (Gemmel, Todd & Merenich, P.A., attorneys; Mr. Merenich, on the briefs). Jason Stypinski, Deputy Attorney General, argued the cause for respondent State of New Jersey, State Agriculture Development Committee (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Stypinski and John Doyle, Deputy Attorney General, on the brief). Office of Hunterdon County Counsel, attorneys for respondent County of Hunterdon, join in the brief of respondent State of New Jersey, State Agriculture Development Committee. Courter, Kobert & Cohen, P.C., attorneys for respondent Township of Franklin, join in the brief of respondent State of New Jersey, State Agriculture Development Committee.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is only binding on the parties in the case and its use in other cases is limited. R.1:36-3. Argued October 28, 2014 - Decided July 24, 2015
Motion for reconsideration granted.
Resubmitted September 15, 2016 - Decided October 13, 2016 Before Judges Ostrer and Sumners. On appeal from the Superior Court of New Jersey, Chancery Division, Hunterdon County, Docket No. C-14007-08. Robert P. Merenich argued the cause for appellants (Gemmel, Todd & Merenich, P.A., attorneys; Mr. Merenich, on the briefs). Jason Stypinski, Deputy Attorney General, argued the cause for respondent State of New Jersey, State Agriculture Development Committee (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Stypinski and John Doyle, Deputy Attorney General, on the brief). Office of Hunterdon County Counsel, attorneys for respondent County of Hunterdon, join in the brief of respondent State of New Jersey, State Agriculture Development Committee. Courter, Kobert & Cohen, P.C., attorneys for respondent Township of Franklin, join in the brief of respondent State of New Jersey, State Agriculture Development Committee. PER CURIAM
We grant the motion for reconsideration of defendants Quaker Valley Farms, L.L.C., and its owner and member, David den Hollander, withdraw our previous opinion in this matter, and substitute the following opinion.
The other member is Cindy den Hollander.
This case arises from defendants' earth-moving activity in late 2007 and early 2008 on roughly twenty acres of a 120 acre farm subject to a deed of easement (DOE) executed pursuant to the Agriculture Retention and Development Act (ARDA), N.J.S.A. 4:1C-11 to -31, -32 to -37. Defendants graded part of their rolling Hunterdon County farmland to achieve slopes of no more than one percent in order to accommodate the placement of hoophouses three-hundred feet in length.
A "hoophouse" is usually a temporary greenhouse structure, made of plastic sheeting, attached to hoop-like supports. See N.J.A.C. 5:23-3.2(d)(4).
Pursuant to its enforcement powers under N.J.S.A. 4:1C-33, the State Agriculture Development Committee (SADC) filed a verified complaint in the General Equity Part against defendants, seeking injunctive relief to stop their grading activities and to remediate the damage done to the soil. Defendants filed a counter-claim, alleging a violation of the New Jersey Civil Rights Act (NJCRA), N.J.S.A. 10:6-2, and other claims, arising out of the SADC's alleged interference with their use of the farmland.
Plaintiffs Hunterdon County and Franklin Township also filed complaints arising out of defendants' activities. They join in the SADC's brief.
The court enjoined completion of the earth-moving project. Issues of liability and remedy were bifurcated. The trial court granted the SADC's motion for summary judgment and denied defendants' cross-motion, finding that defendants violated the DOE's terms. The court subsequently denied a motion for reconsideration. After a four-day trial on remedy, the court entered a decision and order providing for the remediation of the displaced soil.
Defendants appeal from the court's orders. As pertains to the court's liability determination, defendants principally argue that the court misinterpreted the DOE, assigning insufficient weight to the right granted thereunder to erect agricultural structures and to engage in agricultural activities including greenhouse farming. Defendants also argue the SADC lacks clear, consistently applied standards governing the extent to which farmers subject to DOEs may disrupt soils of preserved farmland to erect otherwise permitted agricultural structures. Defendants contend as well that they undertook their earth-moving activities in compliance with their approved "C. 251 plan," pursuant to the Soil Erosion and Sediment Control Act, N.J.S.A. 4:24-39 to -55.
"C. 251" plan refers to the chapter number of the Soil Erosion and Sediment Control Act, L. 1975, c. 251.
The SADC asserts that defendants' earthmoving irremediably altered prime farmland. In doing so, SADC contends defendants violated the terms of the DOE.
Having reviewed defendants' arguments in light of the record and applicable principles of law, we are constrained to reverse the grant of summary judgment and remand. We conclude that the DOE permits grading activities for agricultural purposes such as greenhouse farming, provided that the landowner engages in soil conservation activities to the extent practicable. We discern genuine issues of fact regarding the scope of defendants' earthmoving and soil conservation activities and whether they undertook soil conservation measures to the extent practicable. Resolution of these factual issues are material to determining whether defendants violated the DOE.
I.
We discern the following facts from the summary judgment record, extending to defendants as non-movants "all reasonable and favorable inferences that the record can support." Thiedemann v. Mercedes-Benz U.S., L.L.C., 183 N.J. 234, 240 (2005) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995)). Although we also have before us the record of the four-day trial on remedy, we are confined to the summary judgment record in our review of the court's summary judgment order. See Ji v. Palmer, 333 N.J. Super. 451, 463-64 (App. Div. 2000).
We review first the terms of the DOE, and then the facts pertinent to defendants' earth-moving activities.
A.
The DOE restricts use of the property to "agricultural use and production," and requires compliance with the ARDA and SADC rules:
2. The premises shall be retained for agricultural use and production in compliance with N.J.S.A. 4:1C-11 et seq., P.L. 1983, c.32 [ARDA], and all other rules promulgated by [SADC]. Agricultural use shall mean the use of the Premises for common farmsite activities including, but not limited to: production, harvesting, storage, grading, packaging, processing and the wholesale and retail marketing of crops, plants, animals and other related commodities and the use and application of techniques and methods of soil preparation and managements, fertilization, weed, disease and pest control, disposal of farm waste, irrigations, drainage and waste management and grazing.
This definition of "agricultural use" tracks the one found in ARDA, N.J.S.A. 4:1C-13(b).
Pertinent to this case, the DOE both authorizes agricultural activities that disrupt the soil and requires soil conservation. The key provision upon which plaintiffs rely states:
7. No activity shall be permitted on the Premises which would be detrimental to drainage, flood control, water conservation, erosion control, or soil conservation, nor shall any other activity be permitted which would be detrimental to the continued agricultural use of the Premises.
But, the DOE also explicitly permits the removal of soil for the construction of roads, buildings, and other structures for agricultural purposes:
5. No sand, gravel, loam, rock, or other minerals shall be deposited on or removed
from the Premises excepting only those materials required for the agricultural purpose for which the land is being used.In addition, the DOE explicitly establishes a presumption in favor of the grantor's free use of the land except as explicitly limited by the DOE's terms.
. . . .
12. Nothing in this Deed of Easement shall be deemed to restrict the right of Grantor, to maintain all roads and trails existing upon the Premises as of the date of this Deed of Easement. Grantor shall be permitted to construct, improve or reconstruct any roadway necessary to service crops, bogs, agricultural buildings or reservoirs as may be necessary.
. . . .
14. Grantor may construct any new buildings for agricultural purposes.
11. Nothing shall impose upon the Grantor any duty to maintain the Premises in any particular state, or condition, except as provided for in this Deed of Easement.
. . . .
17. This Deed of Easement imposes no obligation or restriction on the Grantor's use of the Premises except as specifically set forth in this Deed of Easement.
The rules referenced in paragraph 2 state that the deed restrictions "shall be liberally construed to effectuate the purpose and intent of the Farmland Preservation Bond Act [(1981 Bond Act)], P.L. 1981, c.276, and the Agriculture Retention and Development Act, N.J.S.A. 4:1C-11 et seq., P.L. 1983, c.32." N.J.A.C. 2:76-6.15(c). However, neither the DOE nor the SADC rules set standards regarding the permissible amount of impervious cover and the methods and extent of permissible soil displacement. Instead, the statutory provisions similarly affirm the values of soil conservation and projects that promote agriculture.
The record includes a May 27, 2004 issue paper of the SADC recognizing that "[t]he SADC Deed of Easement pursuant to N.J.A.C. 2:76-6.15(a) does not limit the amount of impervious surface permitted on preserved farmland." The paper noted that some argue permanent greenhouse structures, equine arenas and various other large structures negatively affect the future productivity of the land, while others argue that impervious coverage limits "unduly restricts agricultural versatility." The paper noted that some landowners voluntarily agree to impervious coverage restrictions.
Notably, the DOE does not prescribe a mechanism for a landowner to obtain approval for construction of non-residential agricultural buildings that may incidentally disturb or degrade soil. Rather, prior approval only is required in cases of residential construction, and subdivision of the parcel.
As a result of limited funding from state and local sources, landowners compete for the sale of development easements to the SADC. The SADC has adopted criteria for the selection of properties for preservation. "Priority [is] given to soils which exhibit superior quality, require minimal maintenance and have a greater potential for long term viability for a variety of agricultural purposes." N.J.A.C. 2:76-6.16(c)(1). Another criterion is "tillable acres." N.J.A.C. 2:76-6.16(d). "Priority [is] given to the proportion of the land that is deemed tillable." N.J.A.C. 2:76-6.16(d)(1). "Tillable land" includes "cropland harvested," N.J.A.C. 2:76-6.16(d)(2), which in turn includes "land under structures utilized for agricultural or horticultural production." N.J.A.C. 2:76-16.6(d)(2)(i). In addition to these criteria concerning soil quality, the imminent threat of development, proximity to other farms, and current agricultural use also affect the selection process.
The DOE at issue here was executed in September 1993 by defendants' predecessors in title Harold and Rosalie Mathews as grantors, and the County of Hunterdon as grantee. The DOE also vested rights in the SADC. In consideration of the DOE, the Mathewses received over $402,000.
When the Mathewses applied to sell an easement, they reported that 111 of their acres were used as harvested cropland, of which 81.32 acres fell into soil class "A." However, most of the acres were involved in a government program and were not actually in production. The property included a large farm house, a 200-foot, two-story poultry house, a large barn, machinery garages, a 75 by 150-foot cinder block building, and a grain bin. In assessing the Mathewses' application to transfer their development rights, evaluators highly rated the quality of their soil.
B.
Defendants purchased the farm in 1997 for roughly $500,000. Before they did so, the Hunterdon County Agriculture Development Board (HCADB) approved a subdivision that would allow defendants to lease part of the property from the Mathewses. Many greenhouses and hoophouses were already located on the property, some with concrete or gravel floors. Den Hollander proposed to add more once the subdivision was authorized. In order to minimize soil erosion and sediment deposition that would result, the HCADB conditioned its approval of the subdivision on his acquisition of a C.251 plan from the Hunterdon County Soil Conservation District (HCSCD). The HCADB did so despite citizens' concerns about the amount of impervious coverage.
In the years after defendants acquired the Mathews farm, they used the land to grow flowers to sell to big box stores. A significant portion of their crop was chrysanthemums or mums. Although defendants utilized multiple greenhouses and hoophouses covering ten acres, they also grew mums uncovered in containers on woven plastic fabric on top of the soil on a twenty acre field on the property.
The balance of the farm included two acres of hoophouses near the homestead, and fifty-one acres that contained "the homestead, old chicken coops, other agricultural structures, woodland, wetlands, undisturbed farmland, and a recently constructed detention basin."
In September 2007, defendants suffered a million-dollar crop loss when a hail storm damaged the uncovered mums. Defendants decided to prevent such losses in the future by placing seventy-two additional hoophouses measuring thirty feet by three-hundred feet on the twenty acre field.
In order to construct the new hoophouses, defendants determined that the field, which according to den Hollander, had a slope of as much as eight percent, needed to be graded to a maximum slope of one percent. Den Hollander explained that the hoophouses needed to be level to assure uniform delivery of water, fertilizer, fungicide, exposure to sunlight, and equal distribution of heat. This uniformity was necessary to assure the equal maturation of the plants. Level hoophouses also reduce the burden on laborers, who transport the plants by hand-pushed carts. Although defendants did not intend to utilize the attributes of the soil, den Hollander contended that the field's open space, light, air and water were essential to his crop.
In order to level the field, defendants engaged in a cut-and-fill operation in which land upslope was cut, and downslope areas were raised. Defendants admitted they moved roughly 50,000 cubic yards of soil, cutting into existing contours of land by as much as twelve feet.
Once aware of defendants' activities, plaintiffs conducted site visits and commenced this action to halt defendants' efforts. The SADC alleged that the topsoil and subsoil from the upslope areas were removed, mixed together with rock fragments, and placed on the downslope areas. Although plaintiffs conceded a portion of the topsoil was stockpiled at two locations on the disturbed area, their experts opined that the stockpiles were too small to contain all of the topsoil that was disturbed. They concluded that the topsoil was mixed with subsoil during the grading process. Howard C. Smith, asserted that "little soil was separated by layer, except some topsoil, and instead the layers of soil appeared to have mixed together." Two other experts, Christopher C. Obropta and James R. Johnson opined, "It appears that soil horizons have been blended to create a composite fill that contains exposed bedrock." Smith asserted that where the cutting and grading occurred, "it is now impossible . . . to ever separate the component soil horizons, and rebuild them" into prime soil.
The soil on the site was identified as "Quakertown silt loam, 2 to 6 percent slopes" in the 1974 Hunterdon County Soil Survey. It was classified as "Prime" by the Natural Resources Conservation Services. According to the survey, a representative profile of the soil consists of surface and subsurface layers, which are a combined twelve inches thick; the subsoil that is twenty-four inches deep; and the substratum is about twenty inches thick, below which is sandstone bedrock. Formed over thousands of years, the soil is suitable for corn, small grain, hay and pasture.
The NRCS distinguishes between a "soil profile" and a "soil horizon," stating: "If you look in a soil pit or on a roadside cut, you will see various layers in the soil. These layers are called soil horizons. The arrangement of these horizons in a soil is known as a soil profile." See http://www.nrcs.usda.gov/wps/portal/nrcs/detail/soils/edu/?cid=nrcs142p2_054308 (last visited September 11, 2016).
Plaintiffs' expert William E. Palkovics divided the twenty-five acre area into three sections in his analysis. In area 1, consisting of 4.9 acres, he alleged topsoil was stripped, subsoil remained, but the soil's productivity was reduced by fifteen to twenty-five percent. In area 2, he asserted, the topsoil was stripped and replaced with a fill composed of mixed topsoil and subsoil, which was unsuitable for crops. In area 3, the soil was removed down to the bedrock. However, looking to a remedy, he said that "a new soil profile can be constructed to restore some of the agricultural productivity." That restoration project would cost over $3 million.
Den Hollander asserted that the top soil was not intermixed with the lower layers of soil, but was instead removed before the grading activities and then stockpiled. He stated this complied with the C.251 plan acquired from HCSCD.
Defendants' expert, Laurel Mueller, agreed with plaintiffs' expert that the "soil profiles on the graded portion of this project's landscape have been permanently altered." She also conceded that "soil characteristics have been drastically altered." She also agreed that, as it existed after grading, the land was not capable of supporting row crops.
However, in other significant respects, she differed with plaintiffs' experts. "Though the soil horizons are not in their original order or condition, the topsoil and subsoil have not been irreversibly damaged." She denied that the soil was "destroyed." She also disagreed that topsoil was indiscriminately intermixed with subsoil. She asserted that "most of what has been removed is safely stockpiled for future distribution." In test borings and trenches, she found evidence that the topsoil was scraped off before fill was placed in the downslope areas. She found no buried vegetation. However, in some places, the topsoil was incompletely removed. Topsoil layers as deep as five inches were found buried below fill.
She disputed the conclusion of plaintiffs' experts that topsoil must have been intermixed because the stockpiles were too small, based on their calculation of expected volume. She asserted, based on her field studies, that the topsoil depths on the farm prior to the earth-moving activity were actually closer to eight inches, rather than the twelve inches depicted in the 1974 soil survey upon which plaintiffs' experts relied. She also stated that the subsoil layer was also not as deep as depicted in the soil survey, and there were substantial "incursions" of lower quality soils. She noted that the soil survey was not based on actual field measurements.
She also disputed that soil was disturbed throughout the twenty-five acre field. She concluded that subsoil in area 1 was not touched at all. She based that conclusion on her discovery, on the surface, of remnants of the plastic sheeting used to raise container plants, and staples used to secure them. She also found that a significant amount of topsoil was also placed in berms. Thus, she found that only 3662 cubic yards of soil was "unaccounted for" which she said could be based on "method error, and partly by the thin buried topsoil horizons that were missed in stripping with flat blades on an undulating land surface."
She agreed that "a new soil profile could be constructed to restore some agricultural productivity." She found that eighty to ninety percent of the soil structure of the stockpiles was in "good condition;" would remain so indefinitely; and, with the establishment of deep rooted grasses and legumes, would actually improve over time until reapplied to the land if and when needed.
Mueller stated that agricultural productivity and production capacity were not lost as a result of the grading activity. To the contrary, she noted that "the dollar value of what could be produced" on the land was enhanced by the grading work.
C.
On the issue of whether defendants violated the terms of the DOE, the trial court granted the SADC's motion for summary judgment and denied defendants' cross-motion. The court concluded that the defendants' mass transformation of the soil provided sufficient grounds, in and of itself, to find that the project violated the DOE.
The court acknowledged that greenhouse construction was an authorized agricultural use, citing paragraph 14 of the DOE as well as N.J.S.A. 54:4-23.4, a provision of the Farmland Assessment Act of 1964. But the court also cited provisions of the Open Space Preservation Act of 1989 [OSPA], L. 1989, c. 183, and the Garden State Preservation Trust Act of 1999 [GSPTA], N.J.S.A. 13:8C-3, which define farmland as lands with valuable soils, and a provision of the GSPA which defines "farmland preservation" as the preservation of farmland to support agricultural or horticultural production as "the first priority use of that land." Based on these statutes, the court concluded that preserving the land's capacity to support agricultural production is a first priority of farmland preservation. Reviewing the purchase of the development easement in this case, the judge noted that "when considering the easement in conjunction with the ARDA and SADC Rules, there is no doubt the content of the soil to be protected played a critical factor in this land gaining preserved farmland status."
Turning to defendants' project, the court concluded, "from both an undisputed scientific standpoint and mere common knowledge, the earth moving project engaged by defendant[s] indisputably affected the very goals of soil conservation and protecting land for continued agricultural use as stated in the ARDA and further codified by the SADC." The court noted that "if the soils were as poor . . . as defendants now claim, the lot never would have gotten the . . . rating which facilitated the preservation."
Thus, even accepting Mueller's soil conservation estimates, the court found that those soils "deserve[d] protection under the easement, the ARDA, and the SADC Rules." The court found that "topsoil and subsoil were blended together," rocks were mixed with soil, and the soil went from prime rated to "udorthents," unsuitable for crop production. Referring to Mueller's reports, the court noted that "defendants' expert agreed the soil characteristics have been drastically altered at the site and are now not fit for usual agricultural production." The court quoted Mueller's statements that defendants "permanently altered" the "soil profiles" on the graded land. The court concluded that "defendants in fact destroyed the quality of the soil."
Although the court recognized that grading of the land "may be appropriate at times . . . for the construction of certain buildings," defendants were not permitted to so drastically change the soil in doing so:
But what is truly at issue is whether the construction of the greenhouses would allow defendant to change the composition of the soil so drastically. Here, the deed is clear in that no action can be taken which destroys the conservation of the extant soils, which was a key basis for the desirability of the land for purchase.
Because action taken by the defendant did damage to both soil conservation and future agricultural use, it violated the restrictions. The soil is not of the same quality it was when the County purchased the non-agricultural development rights, and requires . . . remediation.
The Court cannot accept defendants' contention that they may undertake such excavation on a farm purchased at a bargain price for $4,179/acre because its good soils resulted in preservation in order to carry on a use to which soil is irrelevant. Defendants should not expect the benefit of a deed restricted price without accepting the restriction. Once the soil was so detrimentally impacted, as both plaintiffs and defendants admit, defendants were in violation of the deed restriction.
[(Internal citations omitted).]
The court rejected defendants' argument that their C.251 plan permitted the earth-moving project. The court reasoned that the C.251 plan addressed prevention of soil erosion; by its own terms, the revision of defendants' C.251 plan covered issues of "soil erosion, sedimentation and related storm water management controls," and not the easement; it was issued pursuant to separate statutory authority; and the earth-moving project was not principally designed to prevent soil erosion.
The court also dismissed defendants' NJCRA counterclaim. Citing Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 366 (1996), the court found that no governmental body had acted in such an "egregious" manner as to "shock the conscience." The lack of SADC guidelines to describe permissible uses under the DOE did not meet this high standard.
The court thereafter denied defendants' motion for reconsideration.
After a four-day trial on remedy, the court issued an order and opinion requiring defendants to remediate the soil excavation project. The court was persuaded by Mueller's testimony that the topsoil in area 1 was eight inches before the earthmoving project and not the twelve asserted by Palkovics. Consequently, that area was not stripped, and needed no remediation. The court further found that eight to nine inches of top soil would "replicate the pre-disturbance condition . . . throughout the site." The court rejected Palkovics's proposal for reconstruction of soil to a depth of five feet, finding insufficient evidence that the soil uniformly existed at that depth pre-disturbance.
The court held that the remainder of the land must be "restored to the yield capacity of 70% prime-land capability class 2 in Quakertown (QukB) — and 30% soils of statewide importance category 3." The court allowed use of the topsoil in the existing stockpile. The court seemed to acknowledge that it was requiring remediation to a higher level than may have actually existed before the project, according to Mueller, but at a lesser level than was presumed to exist when the farm was selected for preservation. The court required twenty-four inches of subsoil in area 3, rejecting both Mueller's proposal that sixteen inches would be sufficient and Palkovics's proposal that depths of four feet were required. The court rejected defendants' proposals that the stockpiled soil be retained until an owner was prepared to use the farm for row crops.
The court held that the sloping nature of the farmland should be restored, without completely replicating what existed before. The court rejected the proposal that the top soil be replaced on terraces, which would permit placement of level hoophouses on top. The court held that would reward the wrongdoer; the terraces would be "utterly useless for farming"; and they would pose erosion hazards. The court left open the possibility that some areas could be maintained for hoophouses, consistent with the restoration of rolling slopes.
The court required defendants to farm the 4.9 acres in Area 1, to establish a productivity baseline for use in restoring the other acres. The court stated that it might take several years of farming to determine if the performance criteria have been met and required annual reporting regarding compliance with its decree. The court held that den Hollander was jointly and severally responsible for violating the easement. The court intended to appoint a master to oversee the remediation.
This appeal followed. We denied a stay of the court's judgment pending appeal.
II.
A.
We review de novo the trial court's grant of summary judgment. Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). Absent ambiguity that presents a question of fact, interpretation of a deed is a question of law for the court, which we likewise review de novo. See Hofer v. Carino, 4 N.J. 244, 250 (1950).
In interpreting the DOE, we consider several well-settled principles. We generally apply principles of contract interpretation to the task of interpreting the meaning of restrictions in a deed. See Cooper River Plaza East, L.L.C. v. Briad Group, 359 N.J. Super. 518, 527 (App. Div. 2003). The court's "prime consideration" in interpreting a deed "is the intention of the parties." Normanoch Ass'n v. Baldasanno, 40 N.J. 113, 125 (1963). See also Boss v. Rockland Elec. Co., 95 N.J. 33, 38 (1983) ("What the easement holder's rights are, vis-à-vis the landowner, depends first of all on the intent of the parties as expressed in the language of the grant.") (quoting Tide-Water Pipe Co. v. Blair Holding Co., 42 N.J. 51, 604 (1964)).
If "the intent of the parties is evident from an examination of the instrument, and the language is unambiguous, the terms of the instrument govern." Rosen v. Keeler, 411 N.J. Super. 439, 451 (App. Div. 2010) (internal quotation marks and citation omitted). When "language purportedly granting an easement is ambiguous or in dispute, 'the primary rule of construction is that the intent of the conveyor is . . . determined by the language of the conveyance read as an entirety and in the light of the surrounding circumstances.'" Poblette v. Towne of Historic Smithville Cmty. Ass'n, 355 N.J. Super. 55, 63 (App. Div. 2002) (quoting Hammett v. Rosensohn, 26 N.J. 415, 423 (1958)).
Additionally, as the Supreme Court has noted, "A contract should not be read to vest a party . . . with the power virtually to make his promise illusory." Russell v. Princeton Labs., 50 N.J. 30, 38 (1967). In interpreting a contract, a court must avoid interpreting one provision in isolation from others pertaining to the same subject. Newark Publishers Ass'n v. Newark Typographical Union, 22 N.J. 419, 425-26 (1956); see also Porreca v. City of Millville, 419 N.J. Super. 212, 233 (App. Div. 2011) ("A contract should not be interpreted to render one of its terms meaningless.") (internal quotation marks and citation omitted).
Unlike its interpretation of most other instruments, our Court has followed the principle that covenants that restrict the use of property must be "strictly construed," Berger v. State, 71 N.J. 206, 215 (1976), and ambiguities are resolved in favor of the landowner's unrestricted use. Freedman v. Sufrin, 44 3 N.J. Super. 128, 131 (App. Div. 2015); Cooper River Plaza East, supra, 359 N.J. Super. at 526. Noting the long-term impact of restrictions on the use of land, the Court has emphasized the need for clarity of expression. "It is not too much to insist that they be carefully drafted to state exactly what is intended -- no more and no less." Berger, supra, 71 N.J. at 215. The Restatement echoes this view:
We recognize that the Restatement has questioned the historical rule of strict construction. Restatement (Third) of Property: Servitudes § 4.1 comment a (2000). However, we are bound to follow our Court's precedent.
Because servitudes are interests in land, subject to the Statute of Frauds and the recording acts, heavy emphasis is placed on the written expressions of the parties' intent. The fact that servitudes are intended to bind successors to interests in the land, as well as the contracting parties, and are generally intended to last for an indefinite period of time, lends increased importance to the writing because it is often the primary source of
information available to a prospective purchaser of the land.
[Restatement (Third) of Property: Servitudes § 4.1 comment d (2000).]
The Restatement suggests that interpretation should be guided by the meaning that an ordinary purchaser would ascribe to servitude's terms, and not to the original parties' private understandings that are not preserved in the language. Ibid. "Searching for a particular meaning adopted by the creating parties is generally inappropriate because the creating parties intended to bind and benefit successors for whom the written record will provide the primary evidence of the servitude's meaning." Ibid.
Still, the court may resort to extrinsic evidence to inform the court's interpretation of the expressed intent. See Boylan v. Borough of Pt. Pleasant Beach, 410 N.J. Super. 564, 569 (App. Div. 2009); cf. Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953) (stating, in reference to interpreting a contract, "the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded"). The subsequent behavior of the parties may be relevant in ascertaining the parties' meaning, as it is in interpreting contracts. See Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958) (in interpreting lease, "Where ambiguity exists, the subsequent conduct of the parties in the performance of the agreement may serve to reveal their original understanding."); see Restatement (Second) of Contracts § 202 comment g (1981) ("The parties to an agreement know best what they meant, and their action under it is often the strongest evidence of their meaning."). See Restatement (Third) of Property: Servitudes, supra, § 4.1, comment d (noting that since "[e]xpressly created servitudes are typically the result of contractual transactions . . . the principles set forth in Chapter 9 of the Restatement Second of Contracts [which includes section 202] should be applied to determine the intent of the parties and the meaning of the terms expressed.").
Additional considerations guide our interpretative task because the easement arises from and incorporates statutes and regulations. First, the easement's terms are dictated by a specific regulation, N.J.A.C. 2:76-6.15, which establishes the standard form for such deed restrictions. This regulation was adopted and then periodically revised in formal rulemaking. See 16 N.J.R. 1639 (July 2, 1984) (proposed new rule on acquisition of development easements); 16 N.J.R. 2427 (Sept. 17, 1984) (adoption of new rule). Consequently, the regulatory history may illuminate the intended meaning of the form. Unlike a private negotiation that is not apparent to a subsequent purchaser, the regulatory history is a matter of public record.
Subsequent amendments to the regulation modified the terms of the development easements without resolving the interpretive issues before the court in this appeal. See 17 N.J.R. 65-66 (Jan. 7, 1985); 18 N.J.R. 1930 (Sept. 22, 1986); 22 N.J.R. 3362 (Nov. 5, 1990); 24 N.J.R. 2833-34 (Aug. 17, 1992); 25 N.J.R. 1868 (May 3, 1993); 26 N.J.R. 3160 (Aug. 1, 1994); 27 N.J.R. 4878 (Dec. 4, 1995).
Moreover, the regulation itself requires that "the deed restrictions . . . be liberally construed" to further the 1981 Bond Act and ARDA. N.J.A.C. 2:76-6.15(c). Such a rule of construction governs where the terms are unclear or ambiguous. N. Jersey Media Group v. Twp. of Lyndhurst, 441 N.J. Super. 70, 97 (App. Div.), appeal granted, 223 N.J. 553 (2015). This mandate of "liberal" construction favoring legislative policy, would apparently override a common law rule requiring "strict" construction mechanically favoring the grantor.
Last, the easement itself requires compliance with ARDA and SADC regulations. Specifically, it states that the "premises shall be retained for agricultural use and production in compliance with [ARDA] and all other rules promulgated by the [SADC]." DOE, Paragraph 2. Consequently, the statute and regulations infuse the DOE with meaning. See DOE, Paragraph 2.
Accordingly, the proper interpretation of the DOE requires the court to employ principles of statutory interpretation as well as contract interpretation.
B.
At issue in this case is the obvious and substantial tension between the provisions of the DOE that compel soil conservation, and those that permit a landowner to remove soil, alter the land, and construct agricultural buildings, if for agricultural purposes; and to engage in any use not specifically prohibited. On the one hand, a landowner may not engage in an activity "detrimental to . . . soil conservation . . . [or] continued agricultural use," see paragraph 7. On the other hand, the owner may erect agricultural structures, see paragraph 14; build ancillary roads, see paragraph 12; and remove soil if "required for the agricultural purpose" of the land, see paragraph 5. Furthermore, the DOE recognizes the owner may freely alter the premises, except as specifically proscribed by the DOE. See paragraphs 11 and 17.
We begin by observing that neither party clearly or persuasively reconciles the competing provisions of the DOE. SADC does not offer a clear rule of decision for reconciling the right to construct agricultural buildings, the right to remove soil for agricultural purposes, and the prohibition of activities detrimental to soil conservation. The SADC quotes with approval one of its experts, who stated that construction that involves "total dismantlement of the soil, such as building a manure lagoon or a new barn or grain storage area, are designed to support the land's operation as a farm, as opposed to being the farm operation itself."
The expert added that he was familiar with large-scale farmland and cut and fill grading activities. In those cases, "the soil was carefully removed in layers and then stockpiled to the side. Then the ground was reshaped to the desired contour and the soil layers were replaced by first layering the subsoil and then the topsoil to re-establish a soil." The expert contended that defendants instead mixed topsoil and subsoil together. The expert's comments would seem to support the opinion that, under the DOE, (1) complete destruction of soil is permitted only in service to use of the remaining soil; and (2) where cut and fill operations are conducted, the topsoil and subsoil should be removed and immediately reapplied to the graded land.
But it is unclear whether the SADC endorses this view. It concedes that the DOE allows construction of buildings for agricultural purposes, but the SADC argues that the DOE still "requires that soils be conserved and prohibits activity that would be detrimental to continued agricultural use." The SADC seems to adopt the position that defendant's earthmoving activities were simply too extensive without providing a clear guide for determining how much is too much: "Simply put, the destruction of a swathe of acreage of soil to the extent it was accomplished on Appellants' preserved farm is a markedly uncommon, if not unique activity, and such destruction violates the law and the Deed."
Defendants, on the other hand, urge us to strictly construe the DOE against the SADC. They contend that, to the extent the right to construct buildings and to remove soil conflicts with the prohibition of activities detrimental to soil conservation, the former overrides the latter so long as defendants comply with their C.251 plan.
C.
We conclude that a different result is compelled by application of the interpretive principles we have set forth above. We conclude that, under the DOE and the SADC regulations in effect, defendants were entitled to grade the farmland for the installation of hoophouses, provided they conserved the soil they removed in the grading operation to the extent practicable. We thus reject the trial court's ruling, which was based on an interpretation that focused too heavily on soil conservation. As demonstrated below, our interpretation navigates the dual aims that are established by the DOE's terms, by the applicable laws and regulations, and by the enforcement practice of the SADC.
This conclusion comports with the command in N.J.A.C. 2:76-6.15(c) that we liberally construe the DOE to further the purposes and intent of the 1981 Bond Act and the ARDA. That general directive does not clearly favor soil conservation or construction. Rather, the two statutes recognize the same dual, if sometimes competing goals, that are inherent in the DOE: soil conservation, and agricultural economic development, which may include expansion of greenhouse farming and other agricultural activities that do not rely on soil resources.
The Legislature's findings and declarations in the 1981 Bond Act reflect this duality, stating:
a. The development of agriculture and the retention of farmland are important to the present and future economy of the State and the welfare of the citizens of the State. The future of agriculture has been threatened by suburban development of the State's prime farmland. This process has resulted in significant direct loss of agricultural land, idled many intervening acres, led to conflicts between suburban and agricultural uses, jeopardized the farmers' right to farm, and frequently discouraged new agricultural investment.
b. The future of agriculture will be determined by economic factors such as the
capability to compete with all domestic and international productive areas. A primary factor in production efficiency for agriculture is long term planning in the management of soil and water resources and capital investments. This planning can only be accomplished where profitability and operating stability exist at motivating levels.Although protecting the productive soil resources is key, so is shielding the land from non-agricultural development, maintaining agriculture's economic role, and enabling New Jersey's agricultural sector to compete economically.
[1981 Bond Act, L. 1981, c. 276, § 2(a), (b) (emphasis added).]
"Farmland" is defined to mean both (1) "land identified as prime, unique or of Statewide importance according to criteria adopted by the New Jersey State Soil Conservation Committee, and land of local importance" and (2) "any other land on the farm which is necessary to accommodate farm practices as determined by the Department of Agriculture." 1981 Bond Act, L. 1981, c. 276, § 3(d).
We recognize that both the SADC and the trial court relied on the identical definition of "farmland" found in the OSPA, N.J.S.A. 13:8C-3. However, we do not find the OSPA illuminating. First, the DOE does not mention it. Second, while a deed restriction for properties in a limited-duration farmland preservation program shall be construed to further the intent of OSPA, as well as the 1981 Bond Act and ARDA, see N.J.A.C. 2:76-3.12(c) and -4.11(c), OSPA is not mentioned in connection with interpreting a deed of easement in the sale of development easements. See N.J.A.C. 2:76-6.15(c).
The Legislature declared the need to issue bonds to finance the purchase of easements in order both to retain "farmland," and to further its use in economically viable agricultural production:
c. Capital investment by the State through the issuance of bonds is necessary and desirable to acquire . . . development easements on farmland that the same may be retained in economically viable agricultural production and to assist . . . the long term development and management of farmland.
[Id. at § 2(c).]
The 1981 Bond Act required that a "farmland preservation program" "have as its principal purpose the long term preservation of significant masses of reasonably contiguous agricultural land and the maintenance and support of increased agricultural production as the first priority use of that land." Id. at § 3(e) (emphasis added). Notably, this section refers to the apparently broader category of "agricultural land" as opposed to "farmland" as defined. Arguably, defendants' increased production, through the use of hoophouses, on land contiguous to other farms, satisfies this purpose.
We do not find pertinent the dissimilar definition of "farmland preservation" found in the GSPTA, N.J.S.A. 13:8C-3, cited by the trial court. The GSPTA is not mentioned in the DOE, or the regulations dictating the terms of the DOE. See N.J.A.C. 2:76-6.15.
"Development easement" is defined to mean an interest in land constituting "the right to develop such lands for all nonagricultural purposes." Id. at § 3(c). Implicitly, what is left after the sale of a development easement is the right to develop such lands for any agricultural purposes.
The stated purpose and intent of ARDA also reflects the dual goals of preserving significant soils, and promoting the agricultural sector of the economy, which includes agricultural pursuits that do not depend on soil quality. ARDA's findings and declarations emphasize the economic viability of the agricultural industry:
a. The strengthening of the agricultural industry and the preservation of farmland are important to the present and future economy of the State and the welfare of the citizens of the State, and that the Legislature and the people have demonstrated recognition of this fact through their approval of the "Farmland Preservation Bond Act of 1981," P.L. 1981, c. 276;
b. All State departments and agencies thereof should encourage the maintenance of agricultural production and a positive agricultural business climate;
c. It is necessary to authorize the establishment of State and county organizations to coordinate the development of farmland preservation programs within identified areas where agriculture will be
presumed the first priority use of the land and where certain financial, administrative and regulatory benefits will be made available to those landowners who choose to participate, all as hereinafter provided.
[N.J.S.A. 4:1C-12 (emphasis added).]
Liberally construing the DOE to further the purpose and intent of the 1981 Bond Act and ARDA constrains us to place great weight on the goal of preserving "farmland" — which includes valuable soils. At the same time, it also compels us to recognize the goal of promoting a competitive, viable agricultural sector. The drafters of the two acts contemplated that preservation of farmland is essential to agricultural viability. However, it is not the only factor. Shielding "agricultural land" more broadly defined from encroaching non-agricultural development, are also ingredients to agriculture's economic future. The drafters contemplated that once the threat of non-agricultural development is removed, long term capital investments in agriculture would be more likely.
Thus, we conclude that the imperative to conserve soil in paragraph 2 must in all cases guide the exercise of the expressly granted authority in paragraph 5 to remove soil as "required for agricultural purposes," and the authority in paragraph 14 to erect agricultural structures. However, even applying a liberal construction, we do not conclude that the soil conservation obligation overrides the express authority to disrupt soil, which is explicit in paragraph 5, and is implicit in paragraph 14. To do otherwise would unduly limit, if not render illusory, the authority granted in paragraphs 5 and 14. See Russell, supra, 50 N.J. at 38.
SADC regulations, and the regulatory history of the DOE do not compel a different result. The regulations governing the acquisition of development easements recognize the goal of promoting the agricultural economy. "The principle purpose for acquisition of development easements is for the long term preservation of agricultural lands in order to maintain and enhance the agricultural industry in the State." N.J.A.C. 2:76-6.1. This general statement refers to "agricultural lands," as opposed to "farmland," and recognizes the goal of keeping our State's agricultural sector economically competitive.
The SADC regulations do not impose restrictions on construction, impervious cover, or methods of grading land. We note that in 2007, the SADC adopted "minimum eligibility criteria" for "lands from which a development easement is acquired." N.J.A.C. 2:76-6.20; see 39 N.J.R. 2483(a) (July 2, 2007). Two criteria, applied to lands over 10 acres, require that "[a]t least 50 percent of the land, or a minimum of 25 acres, whichever is less" must be "tillable" and "consist[] of soils that are capable of supporting agricultural or horticultural production." N.J.A.C. 2:76-6.20(a)(2)(i)-(ii). As under N.J.A.C. 2:76-6.16, "tillable" lands include those "under structures utilized for agricultural or horticultural production." N.J.A.C. 2:76-6.20(a)(2)(v)(1). The SADC has not chosen to impose such a requirement on grantors and successors governed by existing DOEs, notwithstanding that the DOE states that "[t]he Premises shall be retained for agricultural use and production in compliance with . . . all other rules promulgated by the [SADC]."
We are aware that after this dispute arose, the SADC approved a "General Guidance" document, "Interpreting the Provisions of the Deed of Easement," May 26, 2011. See STATE AGRIC. DEV. COMM., DEED OF EASEMENT SUBCOMM., INTERPRETING THE PROVISIONS OF THE DEED OF EASEMENT REPORT NO. 1: GEN. GUIDANCE (2016), www.nj.gov/agriculture/sadc/farmpreserve/postpres/interpretation.html (last visited Sept. 14, 2016). The SADC suggested amendments to N.J.A.C. 2:76-6.15 to interpret the requirement in paragraph 2 of the DOE that "[t]he premises shall be retained for agricultural use and production." Id. at 5. The suggested amendment would provide that "retained for agricultural use and production" means that the land may not be "dedicated" to non-agricultural use, where "'dedication' . . . means a use, activity or management of the land that restricts, interferes with or inhibits the potential to utilize the Premises for the primary purpose of agricultural or horticultural use and production at the present time or in the future." Id. at 7. However, no such amendment has been adopted. --------
In its initial proposal of the rule prescribing the terms of a DOE, the SADC proposed that grantors "comply with agricultural management practices," which were prescribed by the New Jersey Agricultural Experiment Stations (NJAES); represented the "best collective professional judgment and opinion" of NJAES faculty; or were approved by the State Soil Conservation Committee, "relat[ing] to soil and water conservation and management." Proposed N.J.A.C. 2:76-6.15, 16 N.J.R. 1641 (July 2, 1984).
That proposal and others prompted a comment that the DOE "should focus on restrictions prohibiting non-agricultural development and not dictating how the land should be farmed." 16 N.J.R. 2427 (Sept. 17, 1984). The SADC Committee accepted those concerns, deleted the proposed DOE provisions, stating, "The deed restrictions at N.J.A.C. 2:76-6.15 are not intended to mandate how the land must be farmed but to ensure that the land will be retained for agricultural use and production." Ibid. It is undisputed that greenhouse farming involves the agricultural use of the land.
The record also includes evidence that the SADC's action against defendants was without precedent. Defendants point to other farms, governed by DOEs, in which significant grading has occurred and impervious cover added. Plaintiffs respond that defendants' earth-moving project was itself unprecedented, and involved earth-moving on a larger scale than elsewhere. Plaintiffs also contend that the lack of enforcement against others does not bar the exercise of discretion to enforce rights against defendants.
We view the evidence of non-enforcement in a different light. It arguably reflects a subsequent interpretation of the DOE terms that would allow significant earth grading, and the construction of buildings, such as greenhouses or equine facilities, that result in impervious surfaces. See Michaels, supra, 26 N.J. at 388 (stating that "subsequent conduct of the parties" may illuminate the contracting parties' original understanding).
If some amount of such activity is permissible, then one must search for a limiting principle, that would fairly inform grantors or their successors of the extent to which they may disrupt the soil. "[I]n a variety of contexts," our Court has "insisted" that "[i]n dealing with the public, government must turn square corners." F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426 (1985) (internal quotation marks and citations omitted). In light of past non-enforcement, and the lack of detailed limitations on land grading activities, "turning square corners" in this case requires plaintiffs to provide adequate notice to defendants and others subject to DOEs as to what is proscribed and what is not. Defendants expended over $800,000 on the earth-moving project before it was halted; and plaintiffs seek remedies, in the form of a soil restoration project, that would impose costs multiples of that.
In light of the foregoing, we believe that the DOE should be interpreted to permit the construction of structures for agricultural purposes (including hoophouses) so long as the landowner conserves soil to the extent practicable in doing so. As the Supreme Court has noted, "practicable" means "reasonably capable of being accomplished; feasible in a particular situation." IE Test, L.L.C. v. Carroll, 226 N.J. 166, 182 (2016) (quoting Black's Law Dictionary 1361 (10th ed. 2014)). Accordingly, whether a particular soil conservation measure is practicable depends on a context specific, fact-sensitive inquiry. The court must determine whether a more protective measure would have been both economically and practically feasible for the farm in question. The court may look to generally accepted practices to assist its determination. But such practices shall not necessarily be dispositive as they may reflect practices that do not place as high a value on soil conservation as does the DOE. We adopt an objective test that does not depend on an analysis of the individual landowner's finances or personal aspirations.
The interpretation precludes extremes that might otherwise violate the DOE's terms. On the one hand, a farmer may not, in the process of building structures for agricultural purposes, disregard the project's effects on the soil. On the other hand, the duty to conserve soil must not be so great that it precludes a farmer's ability to engage in a permitted construction project, thereby unduly impinging upon his free use of the land for agricultural purposes. The farmer may not dump his soil, nor must he preserve every grain. An interpretation that results in either extreme would plainly violate the DOE. And, notably, the mere fact that the project will result in a "drastic" alteration of "soil composition" does not, in and of itself, place the project at either extreme.
We believe this limiting principle articulates the objectively discernable intention of the parties who crafted the DOE liberally construed to further the 1981 Bond Act and ARDA. But even if this were not so, we would be constrained to supply the limiting principle as a missing, essential term. See In re Estate of Miller, 90 N.J. 210, 219 (1982) (stating that if parties to a contract have not agreed to a term "essential to a determination of their rights and duties, a term that is reasonable in the circumstances is supplied by the court") (citing Restatement (Second) of Contracts, supra, § 204). Here, the limiting principle is essential to determine the parties' rights and duties, which otherwise remain unclear in light of inherent tension in the DOE, and the SADC's failure to utilize its authority to establish more detailed rules, as contemplated by paragraph 2 of the DOE. Furthermore, it is reasonable under the circumstances, as it furthers the soil conservation goal in paragraph 2, while preserving the rights in paragraphs 5 and 14.
D.
Based on the foregoing analysis, we are constrained to reverse the grant of summary judgment. The undisputed fact that defendants permanently altered the soil profiles, as Mueller conceded, does not appear to be sufficient to establish a violation of the DOE. After all, soil profiles are permanently altered anytime land is graded. Even if the topsoil and subsoil were carefully removed and stockpiled, and then reapplied to the land, the soil profile would differ. The same apparently is true of soil characteristics and soil horizons.
If defendants did engage in broad-scale indiscriminate mixing of topsoil and subsoil, then we have no doubt that defendants violated paragraph 7 given the agreement of experts that a significant removal of topsoil was feasible and consistent with soil conservation practice. However, whether such mixing occurred is genuinely disputed, as is the contention that the prime soils were irremediably "destroyed." Mueller contended that most of the topsoil was stripped and stockpiled. She challenged plaintiffs' calculations of topsoil depth and coverage, as well as the area of disturbance, leading her to conclude the topsoil preserved in stockpiles and berms represented all but roughly 3600 cubic yards of the topsoil that was originally in place and even that 3600 figure may have been an overestimate.
We note that defendants left as much as five inches of top soil, buried beneath fill. Additionally, it appears the subsoil horizons were not stockpiled in separate mounds and berms. Instead, it appears once the topsoil was removed, the various layers of subsoil were mixed together. The trial court must determine whether this was consistent with practicable soil conservation measures. We recognize that the C.251 plan addresses soil conservation. However, we agree with the trial court that the goals and purposes of the DOE are not necessarily congruent with those of the C.251 plan. Nonetheless, the methods required in the C.251 plan may be evidential of practicable soil conservation practices.
The issue on remand is whether defendants took the necessary steps, to the extent practicable, to conserve the soil disrupted by the land-grading activities. We presume the trial court will require expert testimony to establish those steps that a farmer, complying with such practices, would take in conjunction with a large-scale grading of land.
In view of our determination, we also reverse the court's order of judgment on remedy. The issue of remedy must await reconsideration of the issue of liability.
Lastly, although we reverse the grant of summary judgment in favor of plaintiffs, we discern no merit in defendants' claim under the NJCRA, and affirm the dismissal of that claim, for the reasons set forth by the trial court.
Reversed in part, affirmed in part, and remanded. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION