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Signature Homes at Forest Lakes, L.L.C. v. New Jersey Pinelands Commission

A-4885-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

DEVELOPERS; PERMITS; PINELANDS COMMISSION—When examining a settlement agreement between a developer and a regional commission, such as the Pinelands Commission, a court must determine if the agreement contemplated any later discovered conditions and whether the agreement set a floor or a limit on the number of units the developer could build on its property.

A dispute arose over the development of a tract of land containing “unique ecological, economic, and cultural features,” and protected by the Pinelands Commission. The original construction proposal was to build four hundred single-family homes on more than one thousand acres within the protected area. After the municipality granted preliminary approval, the Pinelands Commission exercised its authority to review the project, leading to the developer to file suit. The litigation was settled, allowing construction of three hundred homes. The settlement required the developer to protect certain species of plants and animals.

After more than one hundred homes had been built, the developer applied to the municipal planning board for final approval to develop three remaining sections. Once again, the Pinelands Commission exercised its review authority, leading the developer to initiate another suit. A second settlement was reached, setting a reduced number of homes to be built. As agreed, the developer had to protect an additional, recently discovered species habitat.

After the developer received approval for its revised plans, a housing development association bought sixty residential lots and installed the necessary infrastructure. It got building permits for a group of homes, sold over half of them, and applied for more building permits. All of the permits were for houses that had already received development approval from the municipality. The Pinelands Commission, however, directed the municipality not to issue the new construction permits because yet another threatened species of animal had been discovered on the property.

The development association then sued to get the building permits. Its complaint was dismissed, and it appealed to the Appellate Division, contending that under the terms of the second settlement agreement it had a right to receive the construction permits and the lower court should have enforced that settlement. It also contended that the second settlement agreement considered not only the specific species discussed at that time, but all species that might be found on the site afterwards.

The Court pointed out that settlement agreements are contracts and a court is required to apply the same principles in interpreting them as it applies to any other contract. For contracts, the key is to discover the intention of the parties by examining the language used. Applying that principle, the Court held that the second settlement covered only the specific species discovered at that time and not potential future species. Furthermore, the agreement set only a ceiling on the maximum number of permits that could be issued for the tract of land. It did not create a floor. In short, the second agreement did not guaranty that the development association could get all of its building permits.

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