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DEG, LLC v. Township of Fairfield

A-4051-09T2 (N.J. Super. App. Div. 2011) (Unpublished)

ZONING — A settlement agreement to resolve a zoning dispute should be interpreted within the context of the dispute and not merely by its exact words.

Pursuant to a consent judgment, a municipality agreed to permit a sexually-oriented business to operate, but only subject to conditions set forth in the judgment. The business operated in the rear half of a 10,000 square foot building and was only permitted to display bathing suits and lingerie in its windows. No adult products, videos or DVD’s were to be visible from outside the store. In addition, the store’s interior was not to be visible from the windows, and window displays could not be located on the side of the building that fronted one specific road. The municipality issued a certificate of non-conformity for the store after adopting a zoning ordinance that authorized sexually-oriented businesses, but only as a conditional use in a different zoning district. That certificate described the location of the business as a 5,000 square foot rear location adjacent to the road with windows that could not be used for display purposes.

The business applied to relocate its business from the rear to the front of the building. Under this proposal, the store’s floor area would remain the same, but it would front on a state highway. The zoning officer denied this application, believing the use to be contrary to the consent judgment. It was his thinking that the settlement was intended to limit the exposure and visual impact of the adult use. In the appeal that followed, the lower court concluded that the denial violated the terms of the consent judgment, finding the judgment did not restrict adult uses to a particular section of the premises. It entered an order permitting the business to occupy the front portion of the premises.

Now, on appeal by the municipality, the Appellate Division reversed the lower court’s order, finding that the court had erred in construing the consent judgment to permit the business to move from the rear of the building to the front, where it would primarily face a state highway. According to the Court, the business had been operating for nearly six months prior to entering into the consent judgment, and it concluded that the consent judgment, when referring to the store, was referring to the store in that rear location. Further, the judgment restricted window displays facing a specific road. The Court thought this restriction would be meaningless if the premises could move to the front of the building because it would no longer exist adjacent to that road. Additionally, the consent judgment referred to limits on viewing the business’s products so as not to offend the sensibilities of the public, and the outward appearance of the business would be magnified if it were permitted to relocate facing the state highway. Finally, the Court cited the certificate of non-conformity which referenced the business as existing in the rear section of the building.

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