THE FOUR FELDS, INC. VS. CITY OF ORANGE TOWNSHIP (L-7982-13, ESSEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: August 2, 2018
• Docket: A-0093-14T3
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0093-14T3

THE FOUR FELDS, INC., d/b/a L. EPSTEIN HARDWARE CO., and REASONABLE LOCK & SAFE CO. INC.,

Plaintiffs-Appellants,

v.

CITY OF ORANGE TOWNSHIP and OAKWOOD TOWERS,

Defendants-Respondents. ____________________________________

Argued February 7, 2018 – Decided August 2, 2018

Before Judges Fuentes, Koblitz, and Suter.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-7982- 13.

Jeffrey S. Feld argued the cause for appellants.

Robert D. Kretzer argued the cause for respondent The City of Orange Township (Lamb Kretzer, LLC, attorneys; Robert D. Kretzer, on the brief).

Robert Beckelman argued the cause for respondent Oakwood Towers (Greenbaum, Rowe, Smith & David, LLP, attorneys; Robert Beckelman, on the brief).

PER CURIAM

Plaintiffs, the Four Felds, Inc., d/b/a L. Epstein Hardware

Co. and Reasonable Lock & Safe Co. Inc., appeal the August 22,

2014 order that granted summary judgment to defendant Oakwood

Towers, dismissing plaintiffs' complaint against it, and a

companion order that dismissed the complaint against defendant

City of Orange Township (City). Plaintiffs' complaint challenged

City Ordinance 39-2013, approved on September 17, 2013, that

authorized the City to execute a financial agreement with Oakwood

Towers for a tax exemption. Plaintiffs alleged that the City's

action was arbitrary, capricious and unreasonable, that it

exceeded the City's delegated authority, and that City officials

violated their fiduciary duties. Plaintiffs also appeal the April

16, 2014 case management order that denied their request for

depositions and stated that the answer to the complaint filed by

the City "shall not be an avenue for plaintiff[s] to assert

frivolous litigation." We affirm the challenged orders.

Jeffrey S. Feld, Esq., on behalf of himself and his parents'

businesses, has been in litigation with the City and various

redevelopers for years. In a previous unpublished case, we

commented on his mode of litigation, which applies equally here.

2 A-0093-14T3 Feld v. City of Orange Twp. (Feld VI and VIII), Nos. A-3911-12 and

A-4880-12 (App. Div. Mar. 26, 2015) (slip op. at 3-4).

Plaintiffs own and operate industrial hardware and locksmith

businesses in the City. The companies and the property where they

are located are owned by Robert and Judith Feld as individuals.

On October 10, 2013, plaintiffs filed a 196-paragraph one-

count complaint in lieu of prerogative writs against defendants,

seeking to void Ordinance Number 39-2013, "An Ordinance of the

City of Orange Township Authorizing the Execution of a Financial

Agreement with Oakland Towers Granting a Tax Exemption" (the

Ordinance). The complaint also asked for a declaratory judgment

under the Long Term Tax Exemption Law (LTTEL), N.J.S.A. 40A:20-1

to -22,1 citing specifically N.J.S.A. 40A:20-12, and for restraints

enjoining the Ordinance. Defendants filed answers to the

complaint.

On June 27, 2014, Oakwood Towers filed a motion for summary

judgment. The City filed a motion to dismiss the complaint on the

same day. Plaintiffs opposed both motions. The trial court

granted the motions on August 22, 2014, following oral argument,

and dismissed plaintiffs' complaint. The court placed limited

findings and conclusions on the record.

1 Enacted by L. 1991, c. 431.

3 A-0093-14T3 Oakwood Towers is a limited-dividend housing association

formed in August 1979, pursuant to the Limited-Dividend Non-Profit

Housing Corporation or Association Law (LDL), N.J.S.A. 55:16-1 to

-22, repealed by L. 1991, c. 431, § 20 (effective Apr. 1992).

Since 1983, it has owned a 236-unit rental apartment complex in

the City, the units of which were designated as low and very-low

income-restricted affordable housing available exclusively for

elderly and disabled residents. In 1977, the property was granted

a tax abatement by resolution of the City, which specified that a

housing project would be constructed, maintained and operated

under the provisions of the LDL and the rules and regulations of

the New Jersey Housing Finance Agency (NJHFA). Oakwood Towers

would pay an annual charge for municipal services, in lieu of

taxes, at an amount "not exceeding the tax on the property on

which the development is located for the year in which a mortgage

on the development is executed in favor of the N.J.H.F.A., or, an

amount not exceeding [6.28%] of the annual gross revenues of the

development."

On June 2, 1980, the City and Oakwood Towers executed a Tax

Abatement Agreement (1980 Tax Abatement Agreement), providing that

it "shall be effective on the date [Oakwood Towers] executes a

first mortgage upon the development in favor of the NJHFA and

4 A-0093-14T3 shall continue for a period of not more than fifty (50) years

therefrom nor less than the term of the NJHFA mortgage." This tax

exemption "appl[ied] only so long as [Oakwood Towers] or its

successors and assigns and the development remain[ed] subject to

the provisions of the . . . [LDL], the supervision of [the Public

Housing and Development Authority (PHDA) of the Department of

Community Affairs (DCA)] and subject to the NJHFA mortgage," but

in any event, no longer than fifty years from the effective date

of the exemption. If the tax exemption was terminated, the

property "shall be taxed as omitted property in accordance with

the law." The 1980 Tax Abatement Agreement recited that it was

made "pursuant to the authority contained in Section 18 of the

[LDL] (N.J.S.A. 55:16-18), Section 30 of the [Housing Finance

Agency Law] (N.J.S.A. 55:14J-30),"2 and the December 6, 1977

Resolution, and with the approval of the NJHFA.

On March 16, 1983, Oakwood Towers and NJHFA entered into a

"Housing Assistance Payments Contract" (HAP contract), approved

by the United States Department of Housing and Urban Development

(HUD), to provide Section 8 "housing assistance payments on behalf

of [e]ligible [f]amilies" who leased units in the property. The

2 Repealed by L. 1983, c. 530, § 48 (effective Jan. 1984).

5 A-0093-14T3 1983 HAP contract was in effect for twenty years but could be

renewed for two five-year terms, or until March 2013.

Relevant here, on August 19, 2005, Oakwood Towers refinanced

the mortgage for $11,500,000 through a Fannie Mae Multi-Family

Mortgage. The New Jersey Housing and Mortgage Finance Agency

(NJHMFA)3 and DCA approved the prepayment of the original loan.

Oakwood Towers, NJHMFA, the PHDA and DCA also signed a "Deed

Restriction and Regulatory Agreement" (2005 Deed Restriction) on

the same date. Under the 2005 Deed Restriction, Oakwood Towers

agreed to continue to be subject to NJHMFA policies and regulations

regarding income, rents, tenant selection standards, income

certification, the fair housing market and transfer of ownership

until March 15, 2013. These "covenants, reservations and

restrictions" were to run with the land. The mortgage instrument

expressly referred to the 2005 "Deed Restriction and Regulatory

Agreement." The HAP Contract was collaterally assigned to the

lender and Fannie Mae under an assignment.

Prior to the refinancing, an assistant City attorney reviewed

the earlier tax abatement, stating in a letter to Oakwood Towers'

3 In 1983, the New Jersey Housing Finance Agency and the New Jersey Mortgage Finance Agency were combined into a single agency, the New Jersey Housing and Mortgage Finance Agency. L. 1983, c. 530, § 4.

6 A-0093-14T3 attorney on July 22, 2004, that the tax abatement would remain "in

full force and effect after the refinancing." The letter noted

that no resolution would be necessary because "the limited-

dividend general partnership [Oakwood Towers] will not be changing

and the transaction will be a 'simple refinancing of the

property.'" Also, Oakwood Towers "will not be assigning the tax

abatement to another entity."

In 2013, prior to the end of its HAP contract, Oakwood Towers

asked the City to extend its tax abatement for another ten years,

until 2023, to correspond with its requested extension of the HAP

contract. The City approved Ordinance 39-2013 on September 17,

2013. It allowed the City to provide a tax exemption to Oakwood

Towers by authorizing the City to execute a financial agreement

with Oakwood Towers for a long-term tax exemption under LTTEL "to

provide a tax exemption for the provision of housing . . . by an

urban renewal entity."

The Ordinance recited that Oakwood Towers agreed with the

NJHMFA and the DCA that, "notwithstanding the satisfaction of the

First Mortgage Loan, it continued [under the 2005 Deed Restriction]

to be subject to applicable NJHMFA regulations for housing

projects." The tax abatement was "critical" to Oakwood Towers'

ability to maintain the project as low and very low-income housing

7 A-0093-14T3 for the elderly and disabled. Because the HAP contract was

extended to March 2023, the Ordinance authorized the City's mayor

to execute the financial agreement that would provide a ten-year

tax exemption. That financial agreement would allow Oakwood Towers

to continue to operate the project for the low and very-low income

elderly and disabled. These commitments "would not be feasible"

without the assistance of the tax abatement. The Ordinance also

allowed for an increase in the annual service charge, which was

"in the best interest of the City." The tax abatement was a

"significant inducement" for Oakwood Towers to commit to the HAP

program and operate as housing for low and very low income,

disabled and elderly residents. According to the minutes, Jeffrey

Feld was present at the September 17, 2013 meeting when the

Ordinance was adopted, but he did not comment on the Ordinance.

On January 6, 2014, the City and Oakwood Towers signed a

Financial Agreement for Long Term Tax Exemption (2014 Tax

Exemption) where, under LTTEL, the City provided Oakwood Towers a

ten-year tax exemption and Oakwood Towers was required to pay an

annual service charge. The City found that the 2014 Tax Exemption

would "benefit the City and the community" because it would

"assur[e] the continued provision of safe, sanitary and quality

low and very-low income affordable housing for elderly and disabled

citizens." It found that the benefits of the exemption outweighed

8 A-0093-14T3 the costs and that the exemption was "important" to the City to

provide affordable housing because the exemption would "offset the

costs of maintaining" the housing which otherwise would be "an

impediment" to its continuation.

In its June 2014 motion to dismiss, the City argued the tax

exemption under the 1980 Tax Abatement Agreement was still in

effect when the Ordinance was approved. Oakwood Towers contended

in its summary judgment motion that the 2014 Tax Exemption was

authorized under either LDL or LTTEL. It argued that it relied

on the City attorney's 2004 letter and on the NJHMFA's approval

of the 2005 refinancing agreement. Oakwood Towers asserted it

could not maintain the project without the tax exemption.

Plaintiffs opposed the motions, contending that the tax

exemption ended either in 2005, when the property was refinanced,

or 2011, when the NJHMFA's mortgage was set to mature. They

contended that the City was entitled to take $6 million in

"residual receipts" that had been placed in escrow.

Following oral argument on August 22, 2014, the trial court

granted both motions and dismissed plaintiffs' complaint, noting

that "the people" could rely on what a town official said. The

court also said that it ruled previously "that city council members

have no duty to answer questions." A citizen's sole remedy for a

9 A-0093-14T3 council's refusal to answer questions was "to vote differently at

the next election."

On appeal, plaintiffs argue that the court's orders are

subject to de novo review; too much deference was accorded by the

court to City Council; elected officials and attorneys were subject

to a higher fiduciary standard of care; the court erred by excusing

elected officials from answering questions about the tax

exemption; the court abused its discretion in granting immunity

to the City and its special counsel; and the court denied

plaintiffs a level playing field. We affirm the challenged orders

because there is no merit to plaintiffs' arguments.

We review a court's grant of summary judgment de novo,

applying the same standard as the trial court. Conley v. Guerrero,

228 N.J. 339, 346 (2017). Summary judgment must be granted if

"the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact challenged

and that the moving party is entitled to a judgment or order as a

matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire

Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016) (quoting R. 4:46-

2(c)).

When a motion to dismiss a complaint under Rule 4:6-2(e)

includes matters outside the pleadings that are not excluded by

10 A-0093-14T3 the court, "the motion shall be treated as one for summary judgment

and disposed of as provided by [Rule] 4:46." The language of Rule

4:6-2 "expressly provides that if any material outside the

pleadings is relied on [for] a 4:6-2(e) motion, it is automatically

converted into a summary judgment motion." Pressler & Verniero,

Current N.J. Court Rules, cmt. 4.1.2 on R. 4:6-2 (2018). The

submission of certifications serves to convert a Rule 4:6-2(e)

dismissal motion into a motion for summary judgment. Nobrega v.

Edison Glen Assocs., 167 N.J. 520, 526 (2001). Thus, we review

the City's motion to dismiss as a summary judgment motion and use

the same de novo standard for both motions.

There was nothing arbitrary, capricious or unreasonable about

the City's adoption of Ordinance 39-2013. Actions of a municipal

body are presumed valid and will not be disturbed without

sufficient proof that the conduct was arbitrary, capricious or

unreasonable. Witt v. Gloucester County Bd. of Chosen Freeholders,

94 N.J. 422, 430 (1983). An ordinance will not be overturned by

a reviewing court unless the objector challenging the ordinance

can prove that the governing body's action was arbitrary,

capricious or unreasonable. Grabowsky v. Twp. of Montclair, 221

N.J. 536, 551 (2015). The burden of proof rests with the

plaintiffs who challenge the municipal action. Price v. Himeji,

LLC, 214 N.J. 263, 284 (2013). Here, there were no genuine issues

11 A-0093-14T3 of material fact that precluded the entry of summary judgment

orders dismissing this litigation.

Plaintiffs argue that Oakwood Towers' tax abatement

"terminate[d]" when the original NJHFA mortgage was extinguished,

contending that "the trial court ignored clear and unambiguous

statutory language." It is not clear what statutory language

plaintiffs reference. Neither the LDL or the LTTEL required the

expiration of this tax exemption. Under the LDL, the tax exemption

could extend fifty years. It provided:

Any exemption from taxation made pursuant to the provisions of this section shall not extend for a period of more than [fifty] years and shall only be effective during the period of usefulness of the project as determined by the authority and shall continue in force only while the project is owned by a housing corporation or housing association formed under this act and regulated by the authority or owned or operated by the authority.

[N.J.S.A. 55:16-18 (repealed 1984).]

Tax exemptions under the LTTEL may not be granted for more

than "[thirty-five] years from the date of the execution of the

financial agreement." N.J.S.A. 40A:20-13. LTTEL did not affect

the tax exemption that Oakwood Towers was granted in 1980.

An urban renewal entity organized and operating under a law repealed by this act shall not be affected by that repeal. Any financial agreement entered into and any tax exemption granted or extended shall remain binding upon the urban renewal entity and the

12 A-0093-14T3 municipality, subject to modification by mutual written consent, as if the law under which it was entered into, or granted or extended, had not been repealed by this act.

[L. 1991, c. 431, § 20(b).4]

It was not arbitrary, capricious or unreasonable for the City

to extend the tax exemption by the properly adopted Ordinance.

Plaintiffs do not challenge that LDL allowed for a fifty-year tax

abatement. Under LTTEL, a "qualified subsidized housing project"

can be exempted from taxation "for such period of time as the

federal agency subsidizing the project may require as a condition

of the subsidy" and the exemption can be extended "to secure a

continuation of federal subsidies after the expiration of the

initial subsidy period." N.J.S.A. 40A:20-13.1. The ten-year tax

exemption granted by Ordinance 39-2013 stated that it was pursuant

to authority set forth in LTTEL.

Plaintiffs argue that the 1980 tax exemption expired when the

mortgage was refinanced, citing to one portion of the 1980 Tax

Abatement Agreement that used the phrase "subject to the NJHFA

mortgage" to support their argument. Plaintiffs give no reason

why the tax exemption should have expired due to refinancing.

4 This provision has been amended twice. See L. 1992, c. 79, § 56, and then by L. 2009, c. 180, § 1(b). The amendments are not relevant for this case.

13 A-0093-14T3 Nothing about the project had changed. Oakwood Towers continued

to function as affordable housing for low and very low-income

seniors subject to regulation by NJHMFA and needed the exemption

to continue to function in that capacity. Those facts were not

disputed by plaintiffs. The 2005 Deed Restriction simply continued

the same type of regulatory requirements that NJHFA had included

in its 1981 mortgage with Oakwood Towers. The Fannie Mae Mortgage

referenced the 2005 Deed Restriction with NJHMFA where Oakwood

Towers continued to be bound by NJHMFA regulations and the HAP

contract. Therefore, plaintiffs do not show why the source of the

loan would affect the tax abatement when the conditions imposed

by NJHMFA as part of the loan continued to apply to Oakwood Towers.

Plaintiffs, thus, have not met their burden to overcome the

presumed validity of the Ordinance.

The City did not exceed its delegated authority by approving

the Ordinance that allowed the City to contract with Oakwood Towers

and provide a tax exemption. Plaintiffs contend "the local

governing body failed to create a legislative record sufficient

to support their legislative/discretionary action." However, not

only was there statutory authority to grant a tax exemption, but

the Ordinance and subsequent 2014 Tax Exemption stated the reasons

for approval and included findings by the City in support of the

14 A-0093-14T3 agreement. This was consistent with the requirements of LTTEL.

See N.J.S.A. 40A:20-11.

Plaintiffs contend that defendants violated their fiduciary

duties by "conceal[ing] material information and documentation

from stakeholders." See Driscoll v. Burlington-Bristol Bridge

Co., 8 N.J. 433, 474 (1952) (stating on the facts of that case

that public officers "stand in a fiduciary relationship to the

people whom they have been elected or appointed to serve").

Plaintiffs allege defendants used public monies to "defend a

negligence action against certain City elected officials, city

employees and retained professionals"; however, defendants

provided no factual basis at all for these claims.

Plaintiffs claim that they were "denied reasonable notice and

an opportunity to be heard" and that the Ordinance should be

declared void under the Open Public Meetings Act (OPMA), N.J.S.A.

10:4-15. They do not state which provisions of the OPMA were

violated. "[P]ublic bodies are given discretion in how to conduct

their meetings." Kean Fed'n of Teachers v. Morell, __ N.J. __,

__ (2018) (slip op. at 5) (citing N.J.S.A. 10:4-12(a)). "Nothing

in this act shall be construed to limit the discretion of a public

body to permit, prohibit, or regulate the active participation of

the public at any meeting, except that "municipal governing bodies

and local boards of education are required to set aside time for

15 A-0093-14T3 public comment." N.J.S.A. 10:4-12(a). Plaintiffs had notice of

the meeting and an opportunity to comment. According to the

minutes, Feld was present at the meeting when the Ordinance was

adopted. He did not express comments about this Ordinance. On

this record, plaintiffs have not alleged any facts that would

support an OPMA claim.

Plaintiffs contend the City granted immunity to itself and

outside counsel against frivolous and vexatious litigation. This

argument lacks any support. The April 16, 2014 case management

order simply stated that the City's answer "shall not be an avenue

for plaintiff to assert frivolous litigation." Plaintiffs cited

no evidence to suggest this provided immunity.

Plaintiffs contend they were denied a "level playing" field.

Although it is not clear what legal claims plaintiffs are

asserting, plaintiffs were not entitled to trial-like opening and

closing statements, as they allege; they did not establish how

depositions of the mayor or other elected officials were relevant

to the Ordinance; and there were no genuine issues of material

fact that would have required a plenary hearing or precluded the

orders granting summary judgment.

We agree that the trial court did not satisfy Rule 1:7-4

because it said little about its findings or conclusions. In

addition, there was no authority for the court to call upon members

16 A-0093-14T3 of the audience during the motion for their opinions. However,

because our review is de novo, there is no need for a remand.5

After carefully reviewing the record and the applicable legal

principles, we conclude that plaintiffs' further arguments are

without sufficient merit to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E).

Affirmed.

5 Plaintiffs raised an issue about an error involving "net profit"/surplus monies. The record is inadequate for us to address this issue.

17 A-0093-14T3