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Lackland and Lackland v. Readington Township

A-2190-05T1 (N.J. Super. App. Div. 2008) (Unpublished)

ZONING; CONFLICTS OF INTEREST — Where a member of a regulatory body sits on a land use board and that member is actively opposed to the regulatory body’s granting of approvals to an applicant before that land use board, the involved member should not participate in deciding whether the applicant should receive approvals or variances from that land use board that are conditioned on receipt of approvals from the regulatory body.

A contractor entered into two contracts, each for the purchase of a lot that was to be developed for residential use. The contractor was unable to obtain approval for a residential subdivision before the contracts expired. One of the provisions on a checklist issued by the municipal planning board was that applicants were required to obtain approval from the municipal health board for the location of all planned septic tanks. The planning board denied approval for the septic tanks at the two lots, as well as at a number of additional lots that the contractor sought to develop. The health department raised concerns over whether soil tests showed that the septic systems would work during a wet season due to drought conditions in preceding months. During another attempt to gain septic tank approval before the health board, experts for the health board raised concerns about an artesian condition at at least one lot. The health board again denied approval for the septic systems and required additional wet season testing.

The municipality then adopted an ordinance that increased the required amount of open space for land that was not yet approved for development. Subsequent ordinances were passed. They set stricter requirements for underground water and septic tanks, but allowed prior tests of septic tanks to be grandfathered for one year after which the newer requirements were to apply. A master plan adopted by the planning board before the purchase contract expired called for the rezoning of a large area of land, including the contracted-for property. The rezoning was from a rural residential zone to an agricultural residential zone. This would cut the allowable population density in half and preserve additional open space for agricultural use.

The contractor and the property owner brought two federal court actions against the municipality, the planning board, the health board, a health board member who sat on the planning board, and additional municipal personnel. Each lawsuit alleged that the applicants’ state and federal constitutional rights were violated. The federal claims were dismissed, with prejudice, as time-barred. The contractor and the property owner also challenged the rezoning attempt by the board in state court. Numerous experts testified on behalf of the parties as to the suitability of the property for septic tanks and whether additional testing was required. The lower court found that the health board member on the planning board improperly influenced the health board to thwart attempts by the contractor to obtain approval for soil suitability. As a result, the lower court barred her from participating in any decisions involving the property in question. The lower court also enjoined the health board from applying septic tank regulations differently to the contractor than were applied to other applicants, and ordered it to apply the earlier regulations regarding septic suitability for a two-year period as opposed to the one year grandfathering in the more recently adopted regulations. The lower court dismissed all of the claims that challenged the rezoning of the property to an agricultural residential zone. It also dismissed the contractor’s claim that the health board wrongfully required that the contractor prove that an artesian condition did not exist on the property and dismissed its due process claims.

On appeal, the Appellate Division agreed with the lower court’s finding that the municipality did not include the property in the rezoning plan for the purpose of depressing its value so that it could acquire it for itself or for any other improper purpose. The Court dismissed the contractor’s and property owner’s claims that the rezoning ordinance was vague, that it improperly deferred to the municipal planning board, or that it was arbitrary or capricious as applied to the property. It affirmed the lower court’s finding that the purpose of the rezoning ordinance served the legitimate government objectives of promoting residential development and was compatible with farmland preservation and environmental protection. The property owner’s argument that the rezoning ordinance was invalid in its application to the property was rejected. The Court affirmed the lower court’s conclusion that the ordinance was valid, given the presumption of validity afforded to ordinances. It found that the contractor and the property owner failed to prove that the rezoning ordinance was arbitrary, capricious or unreasonable as it was applied to the property.

The Court rejected the property owner’s argument that the municipal health board’s decision to require more extensive testing was improper. It upheld the health board’s decision based on the evidence on the record and also because it was within the health board’s authority to do so as long as its decision was applied uniformly to all applicants. The Court, however, found that the lower court properly concluded that the health board member was an opponent of the contractor’s development plans and did not act objectively in her capacity as a board member. It also found that she was properly barred from participating in the municipality’s final decision on the property. The Court agreed with the property owner’s argument that she still had influence over the board’s position on the development plans. So, it modified the lower court’s order and transferred the responsibility for determining the suitability of the property for septic systems to the county board of health.

The Court rejected the property owner’s argument that its federal claims were improperly dismissed, and pointed out that because the property owner had not presented its claims in the lower court, it could not later assert that the claims were not a part of its state action. The Court rejected the municipality’s argument that approval by the health board for septic systems was an appropriate precondition to completion of a subdivision application as part of a planning board’s checklist, and agreed with the lower court’s holding that preliminary approval from a planning board should not rely on approval from outside agencies which are obtainable according to different schedules and deadlines. The Court believed that, if allowed to do so, boards could include anything they wanted in a checklist for the purpose of inhibiting applicants from gaining municipal approval.

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