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Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown

403 N.J. Super. 146, 958 A.2d 1 (App. Div. 2008);

ZONING; CONFLICTS OF INTEREST — A public official is disqualified from participating in proceedings where he or she has a conflicting interest that may interfere with the impartial performance of that official’s duties and the issue is not whether there is an actual conflict, but if there is a potential for conflict that would appear to taint the public official’s partiality.

A developer challenged municipal zoning ordinances on the basis that the mayor’s involvement in the process constituted a conflict of interest that should have disqualified her from participating. A principal of the developer and the mayor developed a business relationship over a period of time when they both served on a municipal committee. The mayor owned a title company and did title work for the principal, the principal’s wife, and later for the developer. After the developer filed a variance application with the municipality, the mayor did not disqualify herself from the proceedings. Instead, she elected to terminate her relationship with the developer and cease doing title work for it.

The lower court found that the conflict arising from the title work performed several years before the ordinances were adopted did not taint the mayor’s performance of her duties. The developer appealed and the Appellate Division reversed, noting that under common law, later codified in the Municipal Land Use Law (MLUL), a public official is disqualified from participating in proceedings in which he or she has a conflicting interest that may interfere with the impartial performance of that official’s duties. The issue is not whether there is an actual conflict but if there is a potential for conflict that would appear to taint the public official’s impartiality. The Court then noted that the question of whether the mayor’s involvement as a title officer required her disqualification was governed by the Local Government Ethics Law (Ethics Law). The Ethics Law applies a “financial or personal involvement” test to determine if a public official should be disqualified for a conflict of interest. The Court then considered whether the mayor or her title company’s financial involvement with the developer or its principals required her disqualification. The Court rejected the municipality’s argument that the major’s providing title work for the developer had to be contemporaneous with her participation in the zoning proceedings in order to disqualify her. The Court noted that the fundamental question was whether the title work had the capacity to impair the mayor’s objectivity and “tempt [her] to depart from [her] sworn public duty.” The Court found that a reasonably informed citizen, knowing of the significant involvement of the mayor in the proceedings and of the major’s issuing title insurance policies to the developer’s principals, might reasonably expect that the mayor’s objectivity or independent judgment would be tainted. The Court rejected the municipality’s argument that the conflict was limited to times contemporaneous to the time of the ordinances because limiting a disqualifying conflict of interest in that manner would erode the public’s confidence in the integrity of its elected officials and appointed representatives. The Court found that the public might reasonably perceive that the involvement of the mayor with the developer, with whom she had done business, would impair her objectivity. The Court noted that such suspicion is especially true when the ordinance under consideration is being hotly contested, as it was in this case. Therefore, the Court found that the ordinances were invalid due to the mayor’s failure to withdraw from participation when she had a conflict of interest.


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