Opinion
DOCKET NO. A-6129-10T4
01-31-2013
GINSBURG DEVELOPMENT COMPANIES, L.L.C., Plaintiff-Respondent/Cross-Appellant, and THE ESTATE OF EVELYN BANFF, Plaintiff/Intervenor, v. TOWNSHIP OF HARRISON, Defendant-Appellant/Cross-Respondent.
John A. Moustakas argued the cause for appellant/cross-respondent (Law Office of Brian J. Duffield, attorneys; Mr. Moustakas, on the brief). Richard S. Goldman argued the cause for respondent/cross-appellant (Drinker Biddle & Reath, attorneys; Mr. Goldman and Jason J. Bundick, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Grall and Hayden.
On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1249-08.
John A. Moustakas argued the cause for appellant/cross-respondent (Law Office of Brian J. Duffield, attorneys; Mr. Moustakas, on the brief).
Richard S. Goldman argued the cause for respondent/cross-appellant (Drinker Biddle & Reath, attorneys; Mr. Goldman and Jason J. Bundick, on the brief). PER CURIAM
This appeal is from a final judgment resolving a dispute between Ginsburg Development Companies, L.L.C. (Ginsburg) and the Township of Harrison (Township). The dispute concerns Ginsburg's obligation for the cost of a contract the Township awarded for off-site improvements made to the Township's sewer system and needed to satisfy a condition of final major subdivision approval granted to Ginsburg by the Planning Board of the Township of Harrison (Board) pursuant to the Municipal Land Use Law (MLUL), N.J.S.A. 40:55D-1 to -163. Ginsburg's percentage share of the cost is fixed in a developer's agreement executed by Ginsburg and the Township after the Board's grant of subdivision approval.
When the Township demanded payment of Ginsburg's share of the successful bidder's contract, Ginsburg objected to the $208,600 payment sought on the ground that the bid included the cost of work beyond the scope of the agreement. After an unsuccessful attempt to resolve that dispute, Ginsburg filed a complaint in the Law Division seeking a declaratory judgment interpreting the developer's agreement and declaring that Ginsburg owed $160,470. In addition, Ginsburg sought damages for the Township's alleged breaches of the agreement and of the duty of good and fair dealing. The Township answered and filed a counterclaim charging Ginsburg with breach of the agreement and seeking damages in the amount due under the agreement. Subsequently, the contract seller of the property, the Estate of Evelyn Banff, intervened and sought declaratory relief and reformation of the agreement.
The trial judge awarded the Township partial summary judgment in the amount $160,470. Following a trial on the additional amount in dispute, the judge awarded the Township an additional $18,047.18, bringing the total judgment to $178,517.18, about $30,000 less than the Township's initial demand. The judgment provides that payment by Ginsburg or its successor must be made "at the time construction begins on the land which is the subject of the [developer's agreement], and full payment shall be made prior to the issuance of the first building permit."
In delaying payment until such time as construction begins, the judge accepted Ginsburg's argument — that Toll Bros., Inc. v. Board of Chosen Freeholders, 194 N.J. 223 (2008) and River Vale Planning Board v. E & R Office Interiors, Inc., 241 N.J. Super. 391 (App. Div. 1990), "stand for the proposition that conditions of land use approvals are only enforceable when the developer actually proceeds with its project."
The Township appeals, objecting only to the provision of the judgment permitting Ginsburg to withhold payment until it is ready to build. Although Ginsburg cross-appeals, it urges us to affirm the judgment, contending, as it did in the trial court, that "the Township cannot require payment of the judgment amount unless and until the commencement of construction on the project." (Capitalization omitted). We conclude that the delay of payment in the circumstances of this case is unwarranted and vacate that provision of the judgment.
The Estate has not participated in this appeal; an order suppressing its brief was filed on July 6, 2012.
I
Before addressing the appeal, we dispose of a pending motion. A month after filing its brief on appeal, Ginsburg filed a motion to supplement the record. By order of March 15, 2012, the motion was referred for decision by the panel hearing the appeal.
Ginsburg, acknowledging that it held the status of contract purchaser of the subject property through the filing of the appeal and cross-appeal, moved to supplement the record with documents establishing its subsequent termination of the agreement of sale and abandonment of plans to develop the property. This information about post-judgment events is not material to the judgment, which provides that Ginsburg's payment is not due until it is ready to build. Even if we were to assume the information has some relevance to the amount of the judgment, it would be immaterial because neither party contends that the amount of the judgment should be different.
If the post-judgment events that are the subject of this motion to supplement the record have any relevance, it would be to relief that is available pursuant to Rule 4:50-1. But Ginsburg has not moved for a limited remand to permit the trial judge to consider a motion to vacate the judgment pursuant to Rule 4:50-1. See Hodgson v. Applegate, 31 N.J. 29, 42 (1959) (explaining that a motion for a limited remand is the proper procedure in a case where there are grounds for vacating a judgment and a pending appeal). Moreover, Ginsburg does not argue that we should exercise original jurisdiction to grant relief from the judgment and has not filed a change of circumstances application before the Board or moved for a limited remand to permit it do so. See Toll Bros., supra, 194 N.J. at 246-47.
For the foregoing reasons, we deny the motion to supplement.
II
The pertinent facts are not in dispute. Ginsburg contracted to purchase a property, consisting of approximately sixty acres of farmland, in October 2003. Ginsburg planned to subdivide the property and construct a residential development with seventy-seven single family homes on half-acre lots. The contract of sale was conditioned on Ginsburg's obtaining the necessary permits and approvals.
Ginsburg applied for and was granted final major subdivision approval. The Board adopted a resolution memorializing its approval and the conditions to which it is subject on September 15, 2005. Pertinent here, the approval was conditioned on Ginsburg's obtaining water treatment works approval from the New Jersey Department of Environmental Protection, a NJDEP-TWA permit. That permit required a certification from the Township indicating that its existing sanitary sewer collection system was adequate to handle the projected flow from the project.
Recognizing the inadequacy of the Township's system, Ginsburg and the Township negotiated an off-site sanitary sewer improvement agreement — a developer's agreement — that was executed in November 2005. The second, third, fourth and fifth "whereas" clauses establish the nexus between the agreement and the subdivision approval:
WHEREAS, the Developer intends to submit a Treatment Works Approval ("TWA") application to the New Jersey Department of Environmental Protection ("Department") for approval to construct the necessary on-site sanitary sewer mains and appurtenances required to extend sanitary sewer service to and within the Development; and
WHEREAS, the TWA application requires the Township to certify that there is adequate conveyance capacity in its existing sanitary sewer collection system for the projected flows from the Development; and
WHEREAS, the Township cannot provide such certification in that there is inadequate conveyance capacity in Pump Stations No. 1 and 2 and in the section of sanitary sewer main between MH 354 and 371, inclusive, as well as in MH 522, MH 523, MH 524 which will require certain improvements in order to convey the projected flows from the Development ("Off-Site Sanitary Sewer Improvements"); and
WHEREAS, the parties have agreed that the Township will endorse the TWA application and provide sanitary sewer service to the Development contingent upon the contribution by the Developer to the Off-Site Sanitary Sewer Improvements and the compliance with the terms and conditions of this Agreement and other lawful requirements of the Township.
Through this agreement, the Township promised to endorse and file the TWA application indicating that remedial steps were being taken to correct deficiencies. Ginsburg and the Township also acknowledged that the Township's pump stations one and two were inadequate to handle the projected flow from the project. They agreed that Ginsburg's pro-rata share was seven percent of the improvements to pump station one and seventeen percent of the improvements to pump station two, an amount they would determine by "applying the respective percentages to the final contract price awarded by the Township." According to Philip Evans, Ginsburg's executive vice-president responsible for land acquisition at the time of the negotiations, Ginsburg "came up with" the percentages based on the projected pro-rata share of "flows."
Ginsburg further agreed to make payment based on those shares "within thirty (30) days of receipt of written notice indicating the amount of the contract price for the improvements to" the pump stations. There is no dispute that the Township ultimately solicited bids for the project and awarded the contract to the lowest responsible bidder. After awarding the contract, the Township demanded payment in accordance with the terms of the agreement. Evans acknowledged that Ginsburg did not make the payment. He explained that Ginsburg withheld payment because it "didn't believe the numbers were correct."
There is no dispute that the Township, through its contractor, has made the improvements to pump stations one and two. Nor is there any dispute that, at the time of trial, Ginsburg had not abandoned its rights under the approval or modified its plans to proceed with the seventy-seven residential-unit development. Evans testified to those facts, and he acknowledged that Ginsburg intended the Township to rely on Ginsburg's promise to pay.
Evans did not believe that the Township relied on that promise to its detriment, however, because it was his understanding that the Township's sewers were inadequate to handle the volume of flow without regard to any additional development. He did not identify the basis of his understanding, however, and it was refuted by the superintendent of the Township's waste water treatment program, who explained that the Township had a self-imposed restriction on new development because its system had reached eighty percent of capacity.
In a separate paragraph of the developer's agreement, Ginsburg agreed to perform certain additional work at its own expense. The judgment does not address this obligation, and in its opening brief on this appeal the Township concedes that Ginsburg has no obligation to make those improvements unless and until it proceeds with the project. Accordingly, that obligation is not in issue.
III
Because there is no challenge to the amount of the judgment, the question is whether there was any justification for delaying Ginsburg's obligation to make payment until Ginsburg commenced work on the project. As noted earlier, the judge concluded that Toll Bros., Inc. v. Board of Chosen Freeholders, 194 N.J. 223 (2008) and River Vale Planning Board v. E & R Office Interiors, Inc., 241 N.J. Super. 391 (App. Div. 1990), "stand for the proposition that conditions of land use approvals are only enforceable when the developer actually proceeds with its project." In our view, the precedents were read too broadly.
River Vale involved a municipality's effort to enforce a provision of a developer's agreement and final site plan approval requiring the contract purchaser of the property to make on-site improvements related to its proposal to convert a building previously used by a fertilizer and garden supply firm into a multi-tenant occupancy. 241 N.J. Super. at 394-95. Subsequent to the approval and agreement, but prior to altering the site, the contract purchaser rented and then sold the property to a buyer who obtained a certificate of occupancy and used the structure on the property as a warehouse. Id. at 396-97.
The former and present owners moved for summary judgment both asserting that all rights and benefits afforded by the variance and site plan approval had been abandoned. Id. at 397-98. The judge granted the motion, reasoning that the obligation to install improvements was conditioned on the owners going ahead with the project. Id. at 398. This court agreed with that reasoning and affirmed. The panel held:
Once [the project] had been abandoned, there was no need for the developer to proceed [with the improvements] under the agreement and no burden placed on the municipality because of the increased facilities or higher density use. . . . Since the site plan is not going to proceed as proposed, the municipality may not enforce that agreement.The panel explained that there was "no prejudice to the municipality" because it had the option to "rescind the site plan approval and variance." Id. at 400-01.
[Id. at 400.]
This case is distinguishable on two grounds. First, at the time of trial Ginsburg had not abandoned the rights and benefits of its final major subdivision approval. Its executive vice-president for development testified that Ginsburg intended to proceed. Second, it is not at all clear that the Township would not be prejudiced if Ginsburg were permitted to delay payment of its pro-rata share of the cost for work the Township had completed through its contractor.
Like River Vale, Toll Brothers involved a material change in a developer's plan that was approved on the condition that the developer make specified roadway improvements required by the proposed project. 194 N.J. at 229-33, 255. At the County Planning Board's insistence, Toll Brothers, a subsequent purchaser, executed a developer's agreement addressing the roadway improvements. Id. at 233. Thereafter, Toll Brothers filed a declaratory action to invalidate that developer's agreement or, in the alternative, to obtain a determination that the conditions of the approval should be modified to reflect the significant change in circumstances resulting from its reduction in the scope of the project. Id. at 239.
The trial judge rejected Toll Brothers' request for leave to demonstrate a change in circumstances to the County Planning Board, concluding that a developer's agreement was different than "a condition of approval" stated in a planning board's resolution. Id. at 240. Upon review, however, the Supreme Court made clear that "a developer's agreement is not . . . an independent contractual source of obligation." Id. at 249. The Court defined a developer's agreement as "a contract between a developer and a public authority that details the manner in which the conditions of approval will be fulfilled." Id. at 248. It went on to explain that a developer's agreement "is an ancillary instrument, tethered to the conditions of approval, and exists solely as a tool for implementation of the resolution establishing the conditions." Id. at 249. The Court concluded that such an agreement "can be enforced" while the resolution is in effect, but it is nullified when the resolution is no longer valid. Ibid.
In this case, Ginsburg did not argue that the resolution was invalid. To the contrary, it indicated that it intended to proceed in accordance with its terms, apart from performing its obligation to pay for the improvements made by the municipality through its contractor. In this circumstance, we see nothing in Toll Brothers that suggests reformation of the obligation to make timely payment of its pro-rata share for work the municipality had done.
The "heart of the case" in Toll Brothers was the developer's claim that it was "entitled to appear before the County Planning Board to request a recalculation of its off-tract improvement obligations due to the substantial downsizing of its original design." Id. at 246. The right "to request a change in the condition of approval" is codified in N.J.S.A. 40:55D-12(a). Toll Bros., supra, 194 N.J. at 247. Recognition of the right for modification of condition in light of changed circumstances is related to N.J.S.A. 40:55D-42, which permits a governing body to require "a developer, as a condition for approval of a subdivision or site plan, to pay the pro-rata share of the cost" of improvements to "off-tract" facilities, such as sewerage facilities, only when "reasonable and necessary" and "necessitated or required by construction or improvements within [a] subdivision or development." Ibid. Essentially, when there have been changes in the scope of the developer's project that alter the extent of required off-site improvements, a hearing is necessary to re-align the conditions imposed in the original resolution approving the project with the actual burden imposed by the revised project. Toll Bros., supra, 194 N.J. at 247.
Ginsburg does not contend that the Township lacked an ordinance addressing pro rata share of a developer's contribution to off site improvements as required by N.J.S.A. 40:55D-42.
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On that reasoning, the Court concluded: "In denying Toll Brothers' motion to return to the Board, the trial judge was wide of the mark." Id. at 254. But that reasoning does not apply in this case because there was no request to seek modification from the Board, and the record provided on appeal includes nothing suggesting that Ginsburg made any allegation of a change in circumstances relevant to its obligation to pay its pro-rata shares of the improvements to pump stations one and two. Moreover, Ginsburg did not argue that the percentages set forth in the developer's agreement overstated its pro-rata share of the completed work. Thus, there was no question of fairness raised by Ginsburg's request to delay payment beyond the date fixed in the developer's agreement. The resolution to which the agreement was tethered was still in effect, and, at the time of trial, the developer continued to indicate its intention to proceed with its project as planned.
For all of the foregoing reasons, the provision of the final judgment delaying Ginsburg's obligation to pay is vacated, and the remainder of the final judgment is affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION