Opinion
DOCKET NO. A-4020-13T3
03-31-2016
NEW YORK COMMUNITY BANK, Plaintiff, v. CITY OF ATLANTIC CITY, and METATLANTIC REALTY ASSOC., L.P., Defendants. METATLANTIC REALTY ASSOC., L.P., Plaintiff-Appellant, v. CITY OF ATLANTIC CITY, Defendant-Respondent.
Michael D. Sklar argued the cause for appellant (Levine, Staller, Sklar, Chan & Brown, P.A., attorneys; Mr. Sklar and Anthony Morgano, on the briefs). George N. Polis argued the cause for respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Leone and Whipple. On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2901-13. Michael D. Sklar argued the cause for appellant (Levine, Staller, Sklar, Chan & Brown, P.A., attorneys; Mr. Sklar and Anthony Morgano, on the briefs). George N. Polis argued the cause for respondent. PER CURIAM
Plaintiff Metatlantic Realty Associates, L.P. (Metatlantic) sought to prevent the demolition of certain buildings by defendant, the City of Atlantic City (the City). The Law Division denied the request. We affirm.
I.
Metatlantic is the owner and operator of the Lighthouse Plaza Apartments (Apartments) located in the City. The Apartments were built in 1984, and Metatlantic has owned and operated them since 2004. The Apartments consist of 315 residential apartment units, 267 of which are located in a nineteen-story high-rise building. The remaining forty-eight units are located in three two-story buildings (the Low-Rise Buildings). The Low-Rise Buildings are the subject of this appeal.
Plaintiff New York Community Bank (Community Bank) made a $12,640,000 loan to Metatlantic secured by a first-priority mortgage on the Apartments. Community Bank has not filed a brief on appeal.
On January 23, 2012, following an inspection, the City's Division of Construction issued to Metatlantic a "Notice of Violation and Order to Terminate." The notice stated that the Low-Rise Buildings were: (1) "not secured in accordance with section 104-4 of the City Code"; and (2) "unfit for human habitation [due] to its condition and is dangerous to the health and safety of the residents of the City in violation of Chapter 108 of the City Code." The notice advised Metatlantic that it had until February 13, 2012, to remedy these violations, and warned that failure to do so "shall result in the serving of notice that a hearing will be held before the public officer (or his designated agent) as outlined in Section 3 [of] Chapter 108 of the Atlantic City Code."
On March 20, 2012, the City's Department of Licensing and Inspections sent Metatlantic a "Notice to Repair, Occupy and/or Demolish" the Low-Rise Buildings. This notice advised Metatlantic that the department had determined that the Low-Rise Buildings were "unoccupied, unsafe, unsanitary or unfit for human habitation or use and pose[d] a danger to the health and safety of persons on or near the premises." The notice ordered that by the April 18, 2012 hearing, Metatlantic must:
1. (a) Repair all defects as noted upon the attached Property Inspection Report;
(b) Provide a report from a New Jersey licensed professional engineer or architect certifying the building is structurally safe and sound;
(c) Completely secure the building in accordance with Chapter 104 of the Atlantic City Code;
(d) Legally occupy the structure; or
2. Demolish the building.
Based on the evidence and testimony at the April 18, 2012 hearing, the Department of Licensing and Inspections issued an "Order to Repair, Occupy, Remove or Demolish." In this April 20, 2012 Order, the Low-Rise Buildings were declared abandoned, unoccupied, a nuisance, and unfit for human habitation, occupancy, or use based on the finding that the following eighteen conditions existed at the Low-Rise Buildings:
(1) Continual weather element intrusion;
(2) Rusted and corroded metal flashing;
(3) Open and/or broken windows and/or door;
(4) Trash and debris littered throughout;
(5) Exterior siding falling from structure;
(6) Interior intrusion by vermin;
(7) Exposed wood/metal work devoid of paint;
(8) Deteriorated porch and/or decks;
(9) Rotted and decayed vertical support columns;
(10) Penetrating holes through exterior walls;
(11) Corroded and decayed metal facades;
(12) Improperly secured;
(13) Accessible to vagrants and/or general public;
(14) Heavy black mold present in the building;
(15) Floors show signs of severe structural damage due to neglect;
(16) Deck railings are rotting and falling off structure;
(17) Large areas of missing siding and soffits; and
(18) Lacks habitual presence of human beings.
The April 20, 2012 Order noted that Metatlantic had until December 1, 2012, to secure, renovate, and obtain a certificate of occupancy for 60% of the Low-Rise Buildings. If Metatlantic failed to do so, they then had until December 24, 2012, to remove or demolish the buildings. If Metatlantic failed to remove or demolish the buildings, then the City would "immediately (as prescribed by law) proceed with demolition of same."
The April 20, 2012 Order also noted that Metatlantic had expressed the intent to repair the Low-Rise Buildings and had submitted a construction schedule. The construction schedule, approved by the City, required Metatlantic to obtain permits before June 1, 2012, to begin construction by June 2, 2012, and to obtain a certificate of occupancy for 60% of the Low-Rise Buildings by December 1, 2012. The construction schedule warned that the property had been ordered for demolition, that its dates were "critical" and "[f]ailure to comply with these dates" would result in the City pursuing removal or demolition of the Low-Rise Buildings.
Metatlantic commenced some renovations but stopped due to financial difficulties. The trial court later found that the "violations that were present during the April 2012 hearing were still present in February of 2013" and that "Metatlantic did not fully comply with the agreed upon renovation schedule."
On February 1, 2013, the Division of Code Enforcement issued a "Notice of Violation and Order to Abate" that found the Low-Rise Buildings to be in violation of "Chapter 207 of the City Code." This notice ordered Metatlantic to "board up and secure all exterior ingress." Metatlantic had until February 3, 2013, to comply with this Notice. On March 8, 2013, the Low-Rise Buildings were closed and the remaining tenants relocated by order of the City Fire Department due to "unsafe structural conditions, blocked fire escape doors, a lack of smoke detectors and the presence of toxic fumes." In an April 2, 2013 letter, the Department of Licensing and Inspections gave Metatlantic notice that the City intended "to proceed with the demolition of this property" after a "follow-up hearing scheduled" for April 12, 2013.
At the April 12, 2013 hearing, the City Inspector, Wallace Shields, testified that "some work has been done at the property"; however, it was performed "without getting the proper permits." Shields also stated that the Low-Rise Buildings were unoccupied, improperly secured, and that people had gained entrance by pulling off the boards covering entrances to the buildings. Metatlantic argued at the hearing that it could not financially afford renovations to the Low-Rise Buildings, that obtaining occupancy of the buildings was not feasible, and that there were ongoing negotiations with the Casino Reinvestment Development Authority to purchase the buildings; however, these negotiations would ultimately prove unsuccessful.
Due to Metatlantic's failure to comply with the construction schedule and the two orders to repair, occupy, remove, or demolish, the Department of Licensing and Inspections ordered Metatlantic to demolish the Low-Rise Buildings by May 10, 2013. If Metatlantic failed to comply, the City warned it would "proceed with steps to have [the] property demolished on Friday, May 17, 2013." Apparently, the City extended the deadlines for demolition by Metatlantic to June 10, 2013, and by the City to June 17, 2013.
On June 11, 2013, Metatlantic and Community Bank filed separate complaints in the Law Division. Metatlantic's complaint in lieu of prerogative writs sought an injunction and declaratory relief. On June 12, 2013, the trial court granted an order to show cause temporarily restraining the City from "[p]roceeding with any action associated with the removal and/or demolition of the Low-Rise Buildings." On July 9, 2013, the trial court consolidated the actions and temporarily restrained the City from demolishing the Low-Rise Buildings for thirty days. After hearing oral argument, the trial court issued a written opinion and order on April 24, 2014. Assignment Judge Julio Mendez denied Metatlantic's request for injunctive relief, finding the City's actions were "well within the statutory authority provided in N.J.S.A. 40:48-2.3 and that the City did not act arbitrarily and capriciously in ordering Plaintiffs to remove and/or demolish their property or face demolition by the City." The judge authorized the City to proceed with demolition. Metatlantic sought and the judge granted a stay of the demolition pending Metatlantic's appeal to this court.
II.
"'When reviewing the decision of a trial court that has reviewed municipal action, we are bound by the same standards as was the trial court.'" Price v. Strategic Capital Partners, LLC, 404 N.J. Super. 295, 301-02 (App. Div. 2008) (citations omitted). We must hew to those standards of review.
Parties may use an action in lieu of prerogative writs to "seek 'review, hearing and relief' in the Superior Court of all actions of municipal agencies." Rivkin v. Dover Twp. Rent Leveling Bd., 143 N.J. 352, 378 (quoting N.J. Const. art. VI, § 5, ¶4), cert. denied, 519 U.S. 911, 117 S. Ct. 275, 136 L. Ed. 2d 198 (1996); see R. 4:69. "A court may set aside a municipal board decision if it is shown to be arbitrary, capricious or unreasonable, not supported in the evidence, or otherwise contrary to law." Ibid.
The municipal entity's "decision is 'invested with a presumption of validity,'" 62-64 Main St., L.L.C. v. Mayor & Council of City of Hackensack, 221 N.J. 129, 157 (2015) (citation omitted), and "the burden of proof [is] placed on the plaintiff challenging the action," Grabowsky v. Twp. of Montclair, 221 N.J. 536, 551 (2015).
The primary question here is whether the City has the authority to demolish private property pursuant to L. 1942, c. 112, N.J.S.A. 40:48-2.3 to -2.12 (the Act), and the Atlantic City ordinance implementing it, Atlantic City, N.J., Code [hereinafter A.C. Code] ch. 108. That "is an issue of statutory construction; our review is therefore de novo." State v. Olivero, 221 N.J. 632, 638 (2015).
III.
A municipality such as the City "'is a political subdivision of the State, owing its existence and the extent of its authority to the will of the Legislature.'" Jones v. Buford, 71 N.J. 433, 437 (1976) (citation omitted). Municipalities derive their power from enabling legislation. Id. at 436. Here, the Act gives municipalities "broad powers to cause dilapidated or dangerous structures to be repaired, closed or demolished, and to take appropriate action upon a determination that a building is unfit for human habitation." Id. at 439.
In the Act, the Legislature delegated to municipalities the authority "to repair, close or demolish, or cause or require the repairing, closing or demolition" of
buildings which are unfit for human habitation or occupancy, or use, due to dilapidation, defects increasing the hazards of fire, accidents or other calamities, lack of ventilation, light or sanitation facilities, or due to other conditions rendering such building or buildings, or part thereof, unsafe or insanitary, or dangerous or detrimental to the health or safety or otherwise inimical to the welfare of the residents of said municipality[.]However, a municipality must "exercise that authority 'in the manner' provided in the statutes." Gamba v. Twp. of Brick, 395 N.J. Super. 143, 148 (App. Div. 2007) (quoting N.J.S.A. 40:48-2.3).
[N.J.S.A. 40:48-2.3.]
In N.J.S.A. 40:48-2.5, the Act "sets forth the procedures to be followed by a municipality in carrying out demolition proceedings." 21-23 Seidler Assocs., L.L.C. v. City of Jersey City, 391 N.J. Super. 201, 206 (App. Div. 2007). It authorizes municipalities to adopt ordinances permitting them to order property owners to repair, close, or demolish buildings that are "unfit for human habitation or occupancy or use." N.J.S.A. 40:48-2.5. The municipality may require
the repair, alteration or improvement of [such a] building to be made by the owner within a reasonable time, which time shall be set forth in the order or at the option of the owner to vacate or have the said building vacated and closed within the time set forth in the order.
[N.J.S.A. 40:48-2.5(c)(1).]
However, "if the building is in such a condition as to make it dangerous to the health and safety of persons on or near the premises, and the owner fails to repair, alter or improve the said building within the time specified in the order," the Act provides that "the owner shall be required to remove or demolish the said building[.]" N.J.S.A. 40:48-2.5(c)(2). "[I]f the owner fails to comply with an order to repair, alter or improve or, at the option of the owner, to vacate and close the building, the public officer may cause such building to be repaired, altered or improved, or to be vacated and closed[.]" N.J.S.A. 40:48-2.5(d). "[I]f the owner fails to comply with an order to remove or demolish the building, the public officer may cause such building to be removed or demolished[.]" N.J.S.A. 40:48-2.5(e). See Hepner v. Twp. Comm. of Lawrence, 115 N.J. Super. 155, 162 (App. Div.), certif. denied, 59 N.J. 270 (1971).
Under the authority granted to it under the Act, the City adopted A.C. Code ch. 108, which governs unfit buildings in the City. A.C. Code § 108-1(A) finds that "structures that are vacant for an extended period of time and in a state of disrepair or boarded" up, are "public nuisances" which attract vermin, vandals, vagrants, children, and crime. A.C. Code § 108-3(A) through (D) mirrors N.J.S.A. 40:48-2.5 (b) through (e).
The City also adopted A.C. Code § 108-4, which mirrors the standards contained in the Act at N.J.S.A. 40:48-2.6. N.J.S.A. 40:48-2.6 provides that
the public officer may determine that a building is unfit for human habitation or occupancy or use if he finds that conditions exist in such building which are dangerous or injurious to the health or safety of the occupants of such building, the occupants of neighboring buildings or other residents or such municipality; such conditions shall be deemed to include the following (without limiting the generality of the foregoing): defects therein increasing the hazards of fire, accident, or other calamities; lack of adequate ventilation, light, or sanitary facilities; dilapidation; disrepair, structural defects; uncleanliness; failure to comply with the requirements of the building code or the certificate of occupancy[.]
Here, it is undisputed that the Low-Rise Buildings were "unfit for human habitation or occupancy or use" at the time of the April 12, 2012 and April 20, 2013 orders, and at present. N.J.S.A. 40:48-2.6; A.C. Code § 108-4. It is further undisputed that at the time of those orders, the conditions in the Low-Rise Buildings included "defects therein increasing the hazards of fire, accident, or other calamities; lack of adequate ventilation . . . ; dilapidation; disrepair, structural defects; [or] uncleanliness." Ibid. Such conditions are deemed to be "dangerous or injurious to the health or safety of the occupants of such buildings, the occupants of neighboring buildings or other residents or such municipality." Ibid.
Further, a building which has "come into a state of disrepair through neglect, [or] lack of maintenance or use, . . . to the extent that the building is unfit for human habitation or occupancy or use, shall be deemed inimical to the welfare of the residents of the municipality wherein it is located." N.J.S.A. 40:48-2.5a. Accordingly, the City "may exercise [its] powers to repair, demolish, or cause the repairing or demolition of the building or buildings, or parts thereof, pursuant to the provisions of [N.J.S.A. 40:48-2.5(b)]." Ibid.; see also N.J.S.A. 40:48-2.3.
The City provided Metatlantic with the requisite notice and orders under N.J.S.A. 40:48-2.5 to either repair, alter, or improve the Low-Rise Buildings or face demolition. However, Metatlantic failed to repair the buildings by the December 1, 2012 deadline. Indeed, the trial court found that "[t]he violations that were present during the April 2012 hearing were still present in February of 2013." Because Metatlantic failed to "repair, alter or improve" the Low-Rise Buildings "within the time specified in the order," it was appropriate for Metatlantic to "be required to remove or demolish the said building[s]." N.J.S.A. 40:48-2.5(c)(2); A.C. Code § 108-3(B). When Metatlantic then "fail[ed] to comply with [the] order to remove or demolish" the Low-Rise Buildings by the December 28, 2012 date specified in the order of removal, the City was authorized to "cause such building to be removed or demolished." N.J.S.A. 40:48-2.5(e); A.C. Code § 108-3(D).
Because we find these provisions authorized the removal or demolition of the Low-Rise Buildings, we do not address the City's additional claim that demolition was also authorized under A.C. Code § 108-1 because the buildings were "vacant for an extended period of time and . . . boarded" up. Ibid. Nor do we address A.C. Ord. § 108-3.1, which gives the City authority to demolish vacant buildings deemed a public nuisance. --------
Rather than make the repairs required by the City, and render the Low-Rise Buildings habitable which Metatlantic conceded would cost over $500,000, Metatlantic chose instead to vacate and board up the buildings. Metatlantic argues that because it vacated and boarded up the Low-Rise Buildings, the City may not now seek demolition of the buildings.
Metatlantic ignores the language of N.J.S.A. 40:48-2.5, A.C. Code § 108-3(B), and the orders issued by the City. Under N.J.S.A. 40:48-2.5(c)(1) and A.C. Code § 108-3(B), if a building is simply found "unfit for human habitation or occupancy or use," an owner has discretion to vacate and close the building rather than repair, alter, or improve the building. However, if the building is "in such a condition as to make it dangerous to the health and safety of those on or near the premises, and the owner fails to repair, alter or improve the said building within the time specified in the order," then the City may order the owner to "remove or demolish" the building under N.J.S.A. 40:48-2.5(c)(2) and A.C. Code § 108-3(B). That is what occurred here.
In its April 20, 2012 order, the City declared the Low-Rise Buildings a public nuisance and found a list of eighteen serious conditions, many of which showed the buildings were "dangerous to the health and safety of persons on or near the premises." Ibid. The City found dangerous conditions on the outside of the buildings, such as exterior siding falling from the structures, corroded and decayed metal facades, deteriorated porch or decks, and deck railings rotting and falling off the structures. The City also found dangerous conditions inside the buildings, including fire hazards, vermin, heavy black mold, severe structural damage to the floors, and rotted and decayed vertical support columns. As the trial court found, the City properly concluded that these conditions posed an immediate danger to persons both on and near the premises.
Based upon these findings, the April 20, 2012 order did not merely require Metatlantic to "secure" the Low-Rise Buildings. It also ordered Metatlantic to repair and renovate the buildings and secure a certificate of occupancy, or else Metatlantic would have "to remove or demolish" the buildings. As the conditions were "dangerous to the health and safety of persons on or near the premises," such a demolition order was justified under N.J.S.A. 40:48-2.5(c)(2), (e); A.C. Code § 108-3(B), (D).
IV.
Metatlantic concedes that "it was undisputed that the Low-Rise Buildings presented a public safety concern in April of 2012 and into the first half of 2013." However, Metatlantic argues that because the Low-Rise Buildings were later boarded up, they no longer presented a danger to those on or near the premises. Metatlantic cites the Code Enforcement Official's April 2, 2013 addendum to the February 1, 2013 Notice of Violation that stated "most violations are abated," and his August 30, 2013 stamping of that notice as "ABATED."
However, the February 1, 2013 Notice of Violation cited Metatlantic only for failing to properly secure the Low-Rise Buildings by fixing and securing windows, doors and holes, as well as by removing trash and fixing balconies. It is clear that the Code Enforcement Official's addendum and subsequent stamping of this notice as "ABATED" only applied to the violations listed in the February 1, 2013 notice, and not all of the dangerous conditions listed in the April 20, 2012 order. Metatlantic failed to show that all of the dangerous conditions had been "abated." At the April 12, 2013 hearing, Inspector Shields noted only that "railing had been installed." At appellate oral argument, counsel for Metatlantic conceded that there was no other evidence that any of the required repairs had been completed or that Metatlantic had abated any other dangerous condition listed in the April 20, 2012 order. Thus, even if Metatlantic subsequently boarded up the buildings in compliance with A.C. Code chs. 104 and 207, the continued existence of dangerous conditions justified demolition under N.J.S.A. 40:48-2.5(c)(2), (e), and A.C. Code § 108-3(B), (D).
Moreover, the August 30, 2013 stamping of the February 1, 2013 notice as "ABATED" occurred after the April 12, 2013 demolition order, after the deadline and extended deadline to demolish the building, and after Metatlantic had commenced its action in the Law Division. A property owner is not entitled to ignore repair and demolition deadlines, or to invalidate the orders setting those deadlines by making repairs after the deadlines have passed.
Accordingly, the City did not act arbitrarily and capriciously by seeking demolition even though Metatlantic had boarded up the Low-Rise Buildings.
V.
Metatlantic argues on appeal that the City's order to demolish the Low-Rise Buildings constituted an unconstitutional taking of property, and the City must pay just compensation to Metatlantic under the Takings Clause of the United States and New Jersey Constitutions. U.S. Const. amend. V; N.J. Const. art. I, ¶20; see Klumpp v. Borough of Avalon, 202 N.J. 390, 405 (2010); see also Bernardsville Quarry v. Borough of Bernardsville, 129 N.J. 221, 236 (1992).
However, Metatlantic's constitutional claim is not properly before us. The trial court asked if Metatlantic was "raising the constitutionality of the ordinance at this point or [] of the statute that provided the City with the authority to enact ordinances to implement demolition of buildings?" Metatlantic replied, "No, Judge." The trial court confirmed that "there's no constitutional issue being raised," and did not rule on any constitutional issue.
It is well-settled "that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest." State v. Robinson, 200 N.J. 1, 20 (2009) (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)). Furthermore, Metatlantic "failed to give notice to the Attorney General, as required by Rule 2:5-1(h) if the constitutionality of a state 'enactment' is challenged." Feliciano v. Faldetta, 434 N.J. Super. 543, 547 (App. Div. 2014).
VI.
Accordingly, the trial court did not abuse its discretion by denying Metatlantic a declaratory judgment or an injunction. See In re Resolution of State Cmty. of Investigation, 108 N.J. 35, 46 (1987 ); Regalado v. Curling, 430 N.J. Super. 342, 345 (App. Div. 2013). Metatlantic's remaining arguments are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).
Affirmed. The trial court's stay is dissolved. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION