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Borough of Seaside Park v. Sadej

A-6596-06T3 (N.J. Super. App. Div. 2009) (Unpublished)

ZONING; MALICIOUS USE OF PROCESS — A municipality, as a public corporation, cannot act with “malice” and since malice is an element of the malicious use of process tort, a municipality cannot be directly liable for that tort even when it is charged with using its zoning laws to wrongfully block development.

A husband and wife owned a single-family home. They filed building plans with the municipality. After most of the construction was completed, the municipality issued stop work orders, claiming that the work was out of compliance with the filed plans and that there were zoning violations. It turned out that the owners’ plans were different from those on file with the municipality. The owners claimed that the municipality’s plans were fraudulently altered once they were on file in order to support the municipality’s position that their construction activities constituted building code and zoning violations. To bolster that claim, the owners compared a copy of the plans they had (where each of the pages was initialed and dated by the zoning officer) with the municipality’s copy of the plans, where only the first page was initialed and the other pages were not initialed or dated. The pages that were not initialed were the ones that contained the discrepancies. The owners sent several letters to the municipality urging the municipality to reconsider its position. The municipality sued the owners, claiming the owners were violating the zoning code. It sought to prevent further construction and to require removal of the improvements already constructed. The owners counterclaimed, claiming estoppel and asserting fraudulent alterations by municipal officials and malicious prosecution by the municipality under the New Jersey Tort Claims Act (TCA). They also requested that they were entitled to counsel fees under the Frivolous Litigation Statute (FLS).

Over several years of litigation, various orders were entered dismissing the municipality’s claims of zoning violations and dismissing the owners’ tort claims brought under the TCA because they were time barred and the record was insufficient to allow those claims to survive summary judgment. Further, it found that the property improvements resulted in a building coverage zoning violation, but that the municipality was estopped from enforcing such violation. Finally, the lower court rejected the owners’ request for counsel fees, claiming that the municipality was immune from such an award. Both the municipality and the owners appealed.

The Appellate Division affirmed in part and reversed in part. First, as to the issue of whether the owners’ malicious use of process claims were time barred, the Court noted that one of the elements of a malicious use of process is that the action must be terminated in a plaintiff’s favor. Here, the time period only accrued when the lower court entered an order in favor of the owner several years after the municipality sued them. The owners were thus precluded from filing a malicious use of process claim until such time. Therefore, it determined that the owners actually had brought their suit within the statutory two-year time period provided by statute. It also noted that the municipality was currently contesting the dismissal of the zoning violations by the lower court judge, and, thus, at least until it disposed of the matter on appeal, the matter had not yet been finally determined in favor of the owners. As a consequence, the owners’ malicious use of process claims actually had been brought prematurely. It ultimately dismissed the malicious use of process claim, however. Rather than being time barred, it held that a municipality, as a public corporation, could not act with “malice.” Since malice is an element of the malicious use of process tort, it held that the municipality could not be directly liable for that tort.

The Court also disagreed with the lower court that there was no prima facie case of malicious prosecution. While the lower court believed that the record did not support the probable cause, malice, and favorable termination elements of the case of action, the Court held that all the elements were present to constitute a valid claim. It found that the evidence indicated that municipal officials realized that they had made a mistake in issuing the building permit and that the owners had alleged that municipality officials, to rectify that mistake, altered the plans to make it appear that the owners had failed to conform to plans. It also found that the municipality was aware of these allegations before it filed its complaint and could not provide an alternate explanation as to how the plans were altered. Therefore, the Court ruled it was error to grant summary judgment dismissing this claim against the various municipal officials in their individual capacity, and it remanded the matter to the lower court to allow these claims to proceed.

The Court affirmed the lower court’s ruling that the owners’ construction resulted in a building coverage violation. It concluded that the porch attached to the home should be included in the determination. Although the municipality did not assert such a violation in its pleadings, the lower court felt the need to interpret the ordinance according to its terms. It noted that this was a moot point, however, because it was later determined that the municipality was estopped from enforcing any building coverage violation.

Next, it remanded to the lower court for further proceedings the issue of whether the municipality was liable for counsel fees under the FLS. From the record before it, the Court noted that since it appeared that the owners never served the municipality with the “safe harbor” notice and demand, as required by the court rules, within twenty-eight days following service of the written demand, the failure to serve such notice and demand may prove fatal to the owners’ FLS claim. It stated that “reserving the right” to seek attorney’s fees, as the owners did in their pleadings, may not necessarily constitute compliance with the very specific requirements of the notice and demand provisions set forth in the Court Rules.

As to the immunity issue, it cited two Chancery Division cases that conflict with each other and, therefore, the Court would not resolve the dispute at this time. It deemed it more appropriate that other aspects of the FLS application be considered in the first instance by the lower court, including, but not limited to, whether the owners had complied with the safe harbor provision, the need for a practicality analysis, and whether the municipality’s conduct fell within the statutory definition of frivolous.

Finally, the Court affirmed the lower court’s finding that there were no setback or building height violations. As to the front and rear yard setback issues, the Court stated that there was no basis to review this determination because the structures were preexisting, non-conforming structures. With respect to the building height requirements in the municipality, the Court held that the municipality had misread its own ordinance. It found that there was an exception for “cupolas,” and that the house’s height with its attached cupolas was less than the maximum height allowed in the district. Thus, according to the Court, there was no violation.

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