Court Opinion

ID: 4178965
Source: CourtListenerOpinion
Date Created: 2017-06-20 14:12:33.090017+00
Date Added: 2024-06-11T14:38:45.204045
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
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      Although it is posted on the internet, this opinion is binding only on the
         parties in the case and its use in other cases is limited. R.1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-0528-15T3

SQUIRETOWN PROPERTIES, LLC,

        Plaintiff-Respondent,

v.

TOWNSHIP OF LIVINGSTON and
LIVINGSTSON TOWNSHIP COUNCIL,

     Defendants-Appellants.
______________________________

              Argued April 26, 2017 – Decided June 16, 2017

              Before Judges Alvarez, Accurso and Manahan.

              On appeal from Superior Court of New Jersey,
              Law Division, Essex County, Docket Nos. L-
              9785-07 and L-326-15.

              Gary T. Hall argued the cause for appellants
              (McCarter & English, LLP, attorneys; Mr.
              Hall, of counsel and on the brief).

              Craig M. Gianetti argued the cause for
              respondent (Day Pitney, LLP, attorneys; Mr.
              Gianetti, of counsel and on the brief; Sarah
              Sakson Langstedt, on the brief).

PER CURIAM

        Defendants Township of Livingston and Livingston Township

Council appeal from an order in aid of litigant's rights in
favor of plaintiff Squiretown Properties, LLC, declaring

Livingston Ordinances 18-2014 and 19-2014 "invalid as applied to

[Squiretown's] project, which is the subject of a builder's

remedy award . . . for being an unnecessary cost-generative

feature."   Because the trial court failed to accord the

ordinances the presumption of validity to which they are

entitled and made factual findings on the basis of conflicting

certifications, we vacate the order and remand for discovery and

an evidentiary hearing.

     We summarize only so much of the long procedural history of

this matter as necessary to provide context for our decision.

In 2010, following a finding the Township was not in compliance

with its Third Round Mount Laurel1 obligations, the court awarded

plaintiff a builder's remedy directing the re-zoning of its

property to permit the construction of an inclusionary

residential development consisting of 220 apartments with a

twenty percent set-aside for low and moderate income households,

forty-four units.   See Joseph Kushner Hebrew Acad., Inc., v.

Twp. of Livingston, No. A-5797-10 (App. Div. Aug. 30, 2013)

(affirming the trial court's order).

1
  S. Burlington Cnty. N.A.A.C.P. v. Twp. of Mt. Laurel,
92 N.J. 158, 201 (1983) (Mount Laurel II).

                                2                          A-0528-15T3
    In 2011, Squiretown sought scarce resource restraints,

leading eventually to a memorandum of understanding, executed in

January 2014 and approved by the court, providing that the

Township would undertake steps to increase its water capacity

and commission a study of its sewer system.   The MOU noted a

proposed agreement between the New Jersey Department of

Environmental Protection and the Township to address

Livingston's water capacity deficit, which would permit the DEP

to process water supply connections for Squiretown's project.

The MOU noted Livingston's agreement with the DEP required the

Township to upgrade certain wells and complete others, requiring

capital expenditures, and permitted the DEP to require

Livingston to purchase additional water under short-term

contracts in order to address its existing water deficit.     In

order to ensure a water supply connection to its project,

Squiretown agreed to pay the cost of any such short-term

contract to the extent required for capacity needed for its

project.

    The study of the sewer system was designed to identify

inflow and infiltration problems believed to have contributed to

average flows exceeding eighty percent of the permitted flow

capacity of the Township treatment works in spring of 2011

following heavy rains.   Pursuant to the MOU, Squiretown agreed

                                3                          A-0528-15T3
to perform, at its own cost, a video inspection of the sanitary

sewer lines downstream of its property to identify any

improvements necessary to accommodate the anticipated wastewater

flows from its development and to assume responsibility for its

pro rata share of such improvements in accordance with the

Municipal Land Use Law.   Squiretown also agreed to pay its share

of the estimated costs of the sewer system study, slightly over

$100,000.   Squiretown's agreement to fund the study was

"premised upon the actual sewer connection fees for the

affordable units . . . being paid out of Livingston's Affordable

Housing Trust Fund."2

     On August 6, 2014, sixteen months after receipt of site

plan approval, Squiretown submitted its application for water

and sewer permits to the Township.3   Twelve days later, the

2
  In the re-zoning process to implement its builder's remedy,
Squiretown sought zoning ordinance exemptions from any
development fees for its affordable units, including water and
sewer connection fees. The special master, however, endorsed
Livingston's proposal to exempt the affordable units from
development application and escrow fees, but not from water and
sewer connection fees. The court-approved ordinance re-zoning
Squiretown's property thus provides a twenty percent reduction
in development application and escrow fees but does not exempt
any of the units from water and sewer connection fees.
3
  Although difficult to tell from the record, it does not appear
as if Squiretown tendered its payment for the permits when it
submitted its application.

                                4                          A-0528-15T3
Township Council introduced Ordinances 18-2014 and 19-2014,

raising sewer and water connection fees.

    Ordinance 18-2014 increased the fee for a sewer connection

permit to $3821 from $2500 and implemented an inspection fee of

$87 per unit.   Ordinance 19-2014 implemented a new water

connection fee of $942 per unit and increased the inspection fee

from $75 to $83 per unit.    Both ordinances reflected that the

increases in the permit fees had been recommended by a certified

public accounting firm retained by the Township, which had

"performed a study of the capital costs and interest on debt

service together with the number of equivalent users as of

December 31, 2013," and was authorized by N.J.S.A. 40A:26A-11 as

to the sewer connection fee and N.J.S.A. 40A:31-11 as to the

water connection fee.   The ordinances also provided that the

fees would be recalculated at the end of each budget year

pursuant to those statutes and could be reset by ordinance after

public hearing on a yearly basis.    The parties agree that,

notwithstanding the statutory requirement that the fees be

recomputed annually, Livingston had not recalculated its sewer

connection fee since 2001.   The last time it recalculated its

water fee was 1979.

    Squiretown appeared at the public hearing on the

ordinances, objecting to the new fees and requesting that its

                                 5                          A-0528-15T3
development be exempted from the increases.   The ordinances were

adopted by a unanimous vote of the Council at its meeting on

December 1, 2014.

    In January 2015, Squiretown filed a complaint in lieu of

prerogative writs challenging the ordinances.   Squiretown

alleged the public notice was defective; that the ordinances

were "arbitrary, capricious and/or unreasonable in light of the

substantial and burdensome increases" in the connection fees and

"because the increases . . . were not predicated on the

Township's costs in operating the systems"; that the increases

do "not comply with the statutory criteria set forth in the

Municipal Sewerage and Water Supply Acts"; that the increases

"constitute an unnecessary cost-generating feature in violation

of the Mount Laurel doctrine and [Fair Housing Act and]

"unfairly target[s]" Squiretown's project "right when

[Squiretown] is near the finish line of having all necessary

development approvals"; that the Township's failure to disclose

its anticipated increase in the connection fees during the

negotiations over the MOU, and when Squiretown agreed to

contribute to the sewer study and expend its own funds to

complete a video inspection of the downstream sewer lines,

"constitutes a breach of its implied duty of good-faith and fair

dealing" and "represent[s] continuous bad-faith conduct to

                               6                           A-0528-15T3
increase costs for this Project in hopes of its failure"; and

finally that the Township's transfer of "surplus funds of

$850,000 in 2011 and/or 2012 . . . from the sewer and water

utility funds to the general fund for tax appeals" violated the

New Jersey Local Budget Law.   The complaint demanded judgment

"reversing the passage of the Ordinances that amended the sewer

and water connection fee provisions of the Township Code, or in

the alternative, grandfathering [Squiretown's] Project from the

Ordinances so as to not be subject to the increased connection

fees."

    Before Livingston filed its answer in the ordinance

challenge, Squiretown filed a motion in aid of litigant's rights

in the Mount Laurel litigation, alleging the ordinances as

applied to its project violated the court's 2010 builder's

remedy order and the 2014 order approving the MOU.   Squiretown

asked the court to void the ordinances or exempt it from having

to pay the increased permit fees.   Squiretown also sought to

consolidate the Mount Laurel case with its recently filed

ordinance challenge.   After hearing argument on the return date,

the court consolidated the two cases and granted Squiretown's

motion in aid of litigant's rights.

    In a decision read into the record, the judge rejected the

Township's argument that it was entitled to discovery and a

                                7                         A-0528-15T3
plenary hearing on the validity of the ordinances.       Instead, he

found the case "certainly ripe for the entry of an order in aid

of litigant's rights."   Noting that "[t]he builder's remedy

order required the Township to remove any unnecessary cost

generative features," the judge found "nothing punitive about

Squiretown seeking the benefit of its bargain and to have the

ordinances for the sewer and water connections at the price that

they reasonably bargained for."       The judge further found that

"there is a strong argument that the sudden and coincidental

increase is an unnecessary cost generative feature in

contravention of the mantra of the affordable housing laws."

    Accepting Squiretown's arguments that: 1) its project was

court ordered to address the Township's unmet affordable housing

obligations; 2) "Squiretown had to have spent hundreds of

thousands of dollars to prosecute the affordable housing

litigation"; 3) site plan approval was granted in April 2013,

nearly twenty months prior to the increase in connection fees;

4) Squiretown entered into an MOU with the Township "following

mediation directly related to water and sewer" and approved by

the court; and 5) Squiretown "has been delayed in obtaining the

only outstanding permits, water and sewer, due to the Township's

failure to properly maintain its systems," the judge found "more

                                  8                          A-0528-15T3
than enough justification to have grandfathered Squiretown from

the dramatic increase in connection fees."

    The judge found that "for Squiretown's fair payment toward

Livingston's existing water and sewer system to go from $456,000

to $913,000 in one day strikes this court, not only as unfair,

but the timing would lead this court to believe that this was

targeted to deter Squiretown in their pursuit of their builder's

remedy under the fair housing laws."   He added that Livingston's

failure to advise either Squiretown or the special master during

the negotiations over the MOU that the Township intended to

increase the connection fees, "despite the fact that they

already had knowledge that they intended to do so" and refused

to mediate the increases, "is a strong argument that the

Township acted in bad faith and in contravention of the MOU

order."   The judge concluded upon review of "the totality of the

circumstances" that it "agree[d] with the arguments set forth by

Squiretown" and thus declared the ordinances increasing the

water and sewer connection fees "invalid as applied to

Squiretown."

    On Squiretown's application, the court subsequently

dismissed its ordinance challenge without prejudice, as the

order granting the motion in aid of litigant's right rendered

the relief sought in that action moot.   This appeal followed.

                                9                          A-0528-15T3
    Livingston argues that: the matter should be remanded "for

appropriate proceedings to develop a meaningful factual record

prior to any judicial determinations as to the validity of the

ordinances"; "the trial court incorrectly determined that the

updated utility service connection fees represented

impermissible cost-generative features as applied to development

providing affordable housing"; and the court erred in exempting

Squiretown from the effect of the ordinances.    Squiretown

counters that "[t]he trial court did not abuse its discretion in

deciding the motion in aid of litigant's rights on the record

before it."

    It is axiomatic that a municipal ordinance adopted pursuant

to authority delegated by statute bears a presumption of

validity.     Dial, Inc. v. City of Passaic, 443 N.J. Super. 492,

502-03 (App. Div. 2016).    Although "[t]he presumption is not an

irrebutable one, . . . it places a heavy burden on the party

seeking to overturn the ordinance."    N.J. Shore Builders Ass'n

v. Twp. of Jackson, 199 N.J. 38, 55 (2009) (internal quotation

omitted).     The ordinances at issue here were adopted pursuant to

N.J.S.A. 40A:26A-11 and N.J.S.A. 40A:31-11, which expressly

permit a municipality to impose a connection or tapping fee on

the owner or occupant of property for connecting the property to

a sewerage or water supply system and require those fees be

                                 10                        A-0528-15T3
completed at the end of each budget year.      Accordingly, there

can be no doubt that both ordinances are entitled to a

presumption of validity, having been adopted pursuant to

specific authority delegated by the Legislature.     See Dial,

supra, 443 N.J. Super. at 502-03; cf. Meglino v. Twp. Comm. of

Eagleswood, 103 N.J. 144, 152 (1986) (noting the limited role

courts have in reviewing municipal rates for utility services).

    It is also well established that "an otherwise valid fee

imposed for the issuance of a license or permit constitutes an

invalid tax if its primary purpose is to raise revenue."        N.J.

Shore Builders Ass'n, supra, 199 N.J. at 60.     In its ordinance

challenge, Squiretown alleged the ordinances were arbitrary,

capricious and unreasonable because the increases were not

predicated on the costs of operating the sewerage and water

supply systems and    did "not comply with the statutory criteria

set forth in the Municipal Sewerage and Water Supply Acts."

    If in fact the ordinances do not comply with the statutory

criteria, the proofs should not be difficult as both statutes

set forth a precise formula under which the fees are to be

calculated to ensure they do not exceed the actual cost of the

physical connection plus an amount representing "a fair payment"

towards the cost of the system.      See N.J.S.A. 40A:26A-11;

N.J.S.A. 40A:31-11.   Squiretown was not, however, ever put to

                                11                          A-0528-15T3
the task of proving its allegations that the connection fees

were improperly computed and excessive before the trial court

ruled the ordinances invalid as applied to its project.

    Although an "as applied" challenge to the ordinances is

certainly possible, Squiretown was not put to those proofs

either.   The Court has held that an ordinance that operates

reasonably in some circumstances but unreasonably in others is

not void, but enforceable "except where in the particular

circumstances its operation would be unreasonable and

oppressive."   Harvard Enters., Inc. v. Bd. of Adjustment, 56

N.J. 362, 368 (1970).   "The determination of such an issue

depends upon an evaluation of the proven facts within the

context of applicable legal principles.    The total factual

setting must be evaluated in each case, and if the issue be in

doubt, the ordinance must be upheld."     Id. at 369.

    We perceive that an "as applied" challenge could be

difficult here because the connection fee statutes at issue

require that the charges "shall be uniform within each class of

users" and are designed to recover the capital costs of building

the systems spread fairly across all users hooking into them.

See N.J.S.A. 40A:26A-11; N.J.S.A. 40A:31-11; cf. 612 Assocs.,

L.L.C. v. N. Bergen Mun. Utils. Auth., 215 N.J. 3, 21 (2013)

(discussing the legislative intent underlying the imposition of

                               12                         A-0528-15T3
connection fees under the nearly identical provisions of the

Sewerage Authorities Law, N.J.S.A. 40:14A-8(b), and the

Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-

22).

       Because "connection fees must be calculated to effect a

fair and reasonable contribution toward the costs of the system

by all users," 612 Assocs., L.L.C., supra, 215 N.J. at 21,

exempting some users would not further the legislative intent in

establishing the connection fees.4   If, however, Squiretown were

able to prove that the increases unduly increased the cost of

development so as to affect its ability to profitably market the

units, see Toll Bros., Inc. v. Twp. of W. Windsor, 303 N.J.

Super. 518, 541-42 (Law Div. 1996), aff'd o.b., 334 N.J. Super.

109 (App. Div. 2000), aff'd, 173 N.J. 502 (2002), we assume,

without deciding, that it might be able to assert a viable "as

applied" challenge to the ordinances in the context of its

inclusionary development project.

       In any event, it is clear that an "as applied" challenge

would require a detailed factual analysis of all the

circumstances underlying the enactment of the ordinances and

4
  We surmise such considerations may have entered into the
special master's opinion as to the reasonableness of charging
water and sewer connection fees for all units, including the low
and moderate income units.

                                13                        A-0528-15T3
their application to Squiretown's inclusionary project.    As

there was no attempt by Squiretown to create the necessary

evidentiary record, it is not possible to assess whether

Squiretown could have succeeded on its ordinance claims, which

the court determined were made moot by its ruling on

Squiretown's motion in aid of litigant's rights, as affording

the developer the same relief.

       Accordingly, we turn to consider Livingston's claim that

the trial court permitted Squiretown to circumvent the

requirements of an "as applied" challenge to the ordinances by

granting it relief under Rule 1:10-3 in the Mount Laurel suit.

       Public entities, like other parties, are not free to ignore

or violate court orders.    In re N.J.A.C. 5:96 & 5:97, 221 N.J.

1, 19 (2015).    Although a party seeking to compel compliance

with a court order need not prove its adversary was willful or

contumacious, ibid., the law is clear that the scope of relief

"is limited to remediation of the violation of a court order,"

Abbott v. Burke, 206 N.J. 332, 371 (2011) (Abbott XXI).

       The trial court rested its order exempting Squiretown from

the ordinances increasing fees for all new connections to the

sewerage and water supply systems on Livingston's violation of

the 2010 builder's remedy order and the 2014 order approving the

MOU.   Turning first to the more recent order, Squiretown nowhere

                                 14                        A-0528-15T3
identifies any specific provision of that order it claims the

Township has violated.5   Instead, it claims more generally that

the Township's failure to disclose its plan to increase the

connection fees during the negotiation of that order constituted

bad faith.

     Assuming that fact to be true for purposes of argument,6

Squiretown cites no authority that would permit a court to grant

relief in aid of litigant's rights in such circumstances, and

our research has not revealed any.7   Although there may be other

5
  Before the trial court, Squiretown argued the Township violated
the provision of the MOU which states "that upon meeting certain
conditions contained [in the NJDEP Water Agreement], Livingston
will be permitted to consent to, and NJDEP will process, water
supply connection applications for Plaintiff's projects."
Although Livingston argued its execution of Squiretown's
application would be contrary to the Water Agreement and DEP
regulations, the court did not undertake any inquiry into the
validity of that claim. See State Dep't of Envtl. Prot. v.
Mazza & Sons, Inc., 406 N.J. Super. 13, 29 (App. Div. 2009)
(noting that if there is a contested issue regarding the
defendant's ability to comply with an order, "the trial court
must conduct an evidentiary hearing to resolve the factual
dispute"). The court's order to the Township to endorse the
application is not before us.
6
  The only support for that allegation in the record is a
statement by an "unidentified speaker" in an excerpt of an
uncertified transcript of the public hearing on the ordinance.
7
  Indeed, the claim made to the trial court, that Squiretown
agreed to contribute $100,000 to the cost of the sewer study "in
part, because the Township agreed to pay" the roughly equivalent
sum by assuming the $2500 connection fee for each of the forty-
four affordable units from its Affordable Housing Trust Fund,
                                                      (continued)

                               15                         A-0528-15T3
avenues to address such wrongdoing, Squiretown, for example,

alleged in its ordinance challenge that the conduct breached the

Township's implied obligation of good faith and fair dealing,

see Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr.

Assocs., 182 N.J. 210, 224 (2005), its failure to identify a

specific provision of the MOU order the Township violated is

fatal to its claim for relief under Rule 1:10-3, see Abbott v.

Burke, 170 N.J. 537, 564-65 (2002) (Abbott VIII) (LaVecchia, J.,

concurring in part and dissenting in part) (noting a litigant

must show there is a "specific and unequivocal" order in place

to support relief under Rule 1:10-3).

    Accordingly, we turn to consider whether the trial court's

order could be upheld on its alternate ground, that is,

violation of the provision of the builder's remedy order

relating to "unnecessary cost-generative features."    Paragraph

eight of the interlocutory order of October 2010, granting

Squiretown a builder's remedy provides:

              Squiretown shall prepare and submit to
         the Special Master and counsel for
         [Livingston] a draft zoning ordinance with

(continued)
does not appear to support its argument. If anything, the
increased connection fee would appear to result in the Township,
not Squiretown, having received less than equivalent value in
that exchange.

                              16                           A-0528-15T3
         provisions intended to allow the development
         of the Squiretown Property in a manner that
         is consistent with this Order, the report of
         the Special Master as modified by her
         testimony at trial and the concept plan as
         revised pursuant to the procedures in
         Paragraph 6 of this Order. The zoning
         ordinance shall include provisions for
         removing unnecessary cost generative
         features in connection with development of
         the Squiretown Property. Squiretown and
         [Livingston], with the assistance of the
         Special Master as needed, shall endeavor in
         good faith to reach agreement on the
         provisions of the zoning ordinance; provided
         however, that [Livingston's] obligation to
         adopt such an ordinance is not conditioned
         on the parties reaching such an agreement.

    The parties do not dispute that Squiretown sought zoning

ordinance provisions exempting the affordable units from any

development-related fees, including fees for sewer and water

connections.   Livingston apparently opposed that request and

countered with a proposal to discount Squiretown's application

and review fees by twenty percent, thus, in effect, exempting

the affordable units from such fees.   The Township, however,

opposed any exemption for water and sewer connection fees.

    The special master agreed with Livingston, opining that "it

is appropriate to eliminate development application and review

(escrow) fees for the low and moderate income units, but it is

not unreasonable to require that all units be charged for sewer

and water connection fees."   Livingston subsequently adopted

                               17                        A-0528-15T3
ordinances re-zoning Squiretown's property and providing for

revised development regulations and fees, which ordinances were

approved by the court in the final judgment of compliance and

repose entered in June 2011 and affirmed by this court.8

     Accordingly, assuming that the builder's remedy order,

which is specific to "the zoning ordinance," encompasses

Ordinances 18-2014 and 19-2014, it is not self-evident as to how

water and sewer connection fees that were not considered

unnecessary cost-generative features in the judgment of repose

became so when the fees were increased, allegedly in accordance

with a legislatively mandated formula.   It is clear to us that a

finding in this regard was not possible on this record and would

not be possible without an evidentiary hearing in which the

ordinances are accorded the presumption of validity as required

by established law.   See Dial, supra, 443 N.J. Super. at 503;

see also Meglino, supra, 103 N.J. at 152.

     Accordingly, we vacate the order in aid of litigant's

rights and remand the matter for discovery and an evidentiary

hearing.   In doing so, we express no opinion on the outcome in

8
  The Township's agreement to pay the sewer connection fees for
the affordable units out of its Affordable Housing Trust Fund,
in exchange for Squiretown's contribution to the sewer study,
was made two-and-a-half years later as part of the MOU.

                               18                          A-0528-15T3
this case.     Squiretown maintains that the increase in the

connection and inspection fees for water and sewer service will

drive its costs for those items from $456,500 to $913,808,

essentially doubling them.    The amount and timing of those

increases could support Squiretown's argument that the charges

were an unnecessary cost-generative feature implemented by the

Township in bad faith to deter it from pursuing its builder's

remedy.9   The trial court, however, was not free to adopt

Squiretown's arguments in the absence of any proof of its

allegations.

     We expressly reject Squiretown's argument that whether "the

increased [connection] fees impaired the viability of the

development project," whether they were "comparable to [those

in] other jurisdictions in the surrounding area," or whether

they were calculated in accord with statutory requirements, is

"irrelevant to whether the Township's conduct violated the

Builder's Remedy Order and the MOU Order" and that it "did not

need to address any of those issues."    Those issues are highly

relevant and precisely the ones Squiretown must address on

remand to establish any entitlement to relief.

9
  We do not, however, understand the trial court's finding that
Squiretown "bargained for" the prices of connection fees the
Legislature requires be adjusted each budget year in accordance
with the statutory formula.

                                 19                          A-0528-15T3
     In our view, unless Squiretown can prove the increased fees

contained in Ordinances 18-2014 and 19-2014 were not calculated

in accordance with statute, this is an "as applied" challenge to

enforcement of those ordinances, in which Squiretown can assert

that the increases are an unnecessary cost-generative feature.

See Urban League v. Mahwah, 207 N.J. Super. 169, 232 (Law Div.

1984).   Resolution of Squiretown's claims will require a

detailed factual analysis of all the circumstances underlying

the enactment of the ordinances and their application to

Squiretown's inclusionary project.

     We vacate the order in aid of litigant's rights and remand

for discovery and an evidentiary hearing.10   We do not retain

jurisdiction.

     Vacated and remanded.

10
  On remand, Squiretown is, of course, free to move to reinstate
the claims dismissed without prejudice in its ordinance
challenge.

                               20                           A-0528-15T3