Oxford House Inc v. Township of North Bergen

Court of Appeals for the Third Circuit·Decided October 24, 2025·No. 24-2135·Published

Opinion

PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 24-2135

OXFORD HOUSE, INC.,

a Delaware not for profit corporation, Appellant

v.

TOWNSHIP OF NORTH BERGEN, a New Jersey municipal corporation

On Appeal from the United States District Court for the District of New Jersey (D.C. No. 2:21-cv-19260)

District Judge: Hon. Esther Salas

Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

April 28, 2025

Before: KRAUSE, BIBAS, and MONTGOMERY-REEVES, Circuit Judges

(Filed: October 24, 2025)

Stephanie E. Farrell Nehmad Davis & Goldstein 4030 Ocean Heights Avenue Egg Harbor Township, NJ 08234

Steven G. Polin 3034 Tennyson Street NW Washington, DC 20015 Counsel for Appellant

Drew D. Krause Cheyne R. Scott Chasan Lamparello Mallon & Cappuzzo 300 Lighting Way Suite 200 Secaucus, NJ 07094 Counsel for Appellee

OPINION OF THE COURT

KRAUSE, Circuit Judge.

Drafting a complaint can be a challenging enterprise.

Plaintiffs often believe that they have set out sufficient factual allegations to state a claim and commence their lawsuit, only for a court to tell them otherwise. For this reason, courts that dismiss a complaint typically set out their reasons for doing so and then grant leave for a plaintiff to amend and correct their missteps. Here, the First Amended Complaint filed by Oxford House failed to state a claim for discrimination, so the District

Court properly dismissed it. But it did so with prejudice, reasoning that its earlier denial of Oxford House’s motion for a preliminary injunction and our own opinion affirming that order had previously provided Oxford House with notice of the deficiencies in its complaint, and—as Oxford House had not corrected those deficiencies in its First Amended Complaint— amendment would be futile. Seeing it differently, we will vacate and remand.

I. Factual and Procedural Background1

Appellant Oxford House, Inc. is a Delaware not-forprofit corporation that helps individuals recovering from alcoholism and/or substance abuse to find affordable and supportive living arrangements. As part of this work, Oxford House arranges leases of single-family homes on behalf of groups of individuals in recovery so that they may live together and support one another. Once Oxford House secures the lease, the new residents take full responsibility for their living situation, including paying rent and utilities, maintaining the home, and communicating with their landlord.

In February 2021, Oxford House signed a lease in North Bergen, New Jersey (the Property). Before the new residents could move in, however, a Township ordinance required that

1 The following facts are taken from the First Amended Complaint and are accepted as true for purposes of deciding an appeal from an order granting a motion to dismiss. See Bah v. United States, 91 F.4th 116, 119 (3d Cir. 2024).

they first obtain a Certificate of Continuing Occupancy (CCO) from the Township’s construction official. See North Bergen, N.J., Ordinance 460-92 § 3 (Oct. 15, 1992). Issuance of a CCO is a ministerial act; once an application is submitted and the fee paid, the construction official “shall issue” a CCO unless the property is not up to code or its intended use is prohibited by the Township’s zoning ordinance. Id. § 6.

Oxford House’s realtor submitted an application for a CCO and sent an email to the Township’s zoning officer with a document explaining the Oxford House model. But the zoning officer denied the application, explaining by phone and email that Oxford House’s intended use of the Property violated North Bergen’s zoning ordinances. When Oxford House asked the Township’s attorney what specific zoning provision was violated, she asserted that the Oxford House model constituted a “Community Residence” under New Jersey’s Municipal Land Use Law, N.J. Stat. Ann. § 40:55D- 66.1 (West 2017), and so could only operate in a single-family dwelling, whereas the Property was a two-family dwelling. Oxford House emailed back to contest the Township’s categorization of Oxford Houses as “Community Residences,” but the Township did not respond.

In October 2021, Oxford House filed this action, alleging that the Township intentionally misinterpreted the Municipal Land Use Law as a pretext and that it denied the CCO application because of the Oxford House residents’ status as recovering alcoholics and substance abusers. It brought claims under the New Jersey Law Against Discrimination

(NJLAD), the Americans with Disabilities Act (ADA), and the Fair Housing Act, as amended by the Fair Housing Amendments (FHA), and it sought a preliminary injunction. The Township filed an Answer to the complaint, raising several affirmative defenses, and it opposed the requested preliminary injunction.

The District Court’s first order of business was to resolve the preliminary injunction motion. After ordering limited discovery for purposes of that motion, the District Court denied preliminary injunctive relief in June 2022, finding that Oxford House failed to establish a likelihood of success on the merits. Oxford House appealed that order, and in July 2023 we affirmed for essentially the same reasons. See Oxford House, Inc. v. Twp. of N. Bergen, 2023 WL 4837835, at *5-6 (3d Cir. July 28, 2023).

In most cases, the next step after the denial of a motion for a preliminary injunction would have been for the parties to proceed with discovery on the path to summary judgment or trial. Here, however, Oxford House decided on its own initiative to add a small number of new factual allegations and to remove the NJLAD claim, so in September 2023 it filed an amended complaint. Although the First Amended Complaint did not otherwise make substantive changes to the content of Oxford House’s asserted claims, the Township, which had filed an Answer to Oxford House’s original complaint, responded to the Amended Complaint by filing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).

The District Court then granted that motion, holding that the First Amended Complaint failed to state a claim. It also denied Oxford House’s request for leave to file a second amended complaint, explaining that Oxford House had “already amended its complaint once, after both this Court and the Third Circuit found that its original [c]omplaint . . . was insufficient to demonstrate a likelihood of success on the merits of Plaintiff’s claims” and that “[i]n so ruling, both this Court and the Third Circuit provided guidance as to what would be necessary for Plaintiff to sufficiently state a claim.” J.A. 21-22. Because the First Amended Complaint was largely unchanged from its original complaint, the District Court reasoned that any future amendment would be futile. Oxford House now appeals.

II. Jurisdiction and Standard of Review

The District Court had jurisdiction under 28 U.S.C.

§ 1331, and we have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court’s decision to dismiss for failure to state a claim de novo, see Doe v. Univ. of the Scis., 961 F.3d 203, 208 (3d Cir. 2020), and its decision denying leave to amend a complaint for abuse of discretion, see United States ex rel. Ascolese v. Shoemaker Constr. Co., 55 F.4th 188, 193 (3d Cir. 2022).

III. Discussion

A. The Township’s Post-Answer Motion to Dismiss

Before addressing the merits, we first pause to clarify a point of confusion regarding the filing of a post-answer motion to dismiss, like the Township’s here. Some district courts around the country have declined to consider such motions on the ground that the filing of an answer categorically precludes a defendant from later challenging the sufficiency of a complaint. See Power Probe Grp., Inc. v. Innova Elecs. Corp., 670 F. Supp. 3d 1143, 1146-47 (D. Nev. 2023) (collecting cases). We disagree.

True, motions raising certain defenses under Rule 12(b)

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