LARS STERNAS VS. DMH2, LLC (L-7289-15, ESSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-2051-16T4
LARS STERNAS,
Plaintiff-Appellant,
v.
DMH2, LLC, a New Jersey
Limited Liability Company, and
PLANNING BOARD OF THE
TOWNSHIP OF VERONA,
Defendants-Respondents.
_______________________________
Argued April 30, 2018 - Decided February 4, 2019
Before Judges Accurso and O'Connor.
On appeal from Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-7289-15.
Angelo Cifelli, Jr. argued the cause for appellant
(Piro, Zinna, Cifelli, Paris & Genitempo, LLC,
attorneys; Angelo Cifelli, Jr., of counsel; Kathryn
Kyle Forman, on the briefs).
John P. Inglesino argued the cause for respondent
DMH2, LLC (Inglesino, Webster, Wyciskala &
Taylor, LLC, attorneys; John P. Inglesino, of counsel;
Derek W. Orth, on the brief).
Mark J. Semeraro argued the cause for respondent
Planning Board of the Township of Verona (Kaufman,
Semeraro & Leibman, LLP, attorneys; Mark J.
Semeraro, of counsel; Bryan P. Regan, on the brief).
The opinion of the court was delivered by
O'CONNOR, J.A.D.
In this prerogative writs action, defendant DMH2, LLC (DMH2)
submitted an application to defendant Verona Township Planning Board
(Board), seeking site plan approval to construct a building that would include
both retail and residential uses. During the hearings before the Board, an issue
arose as to whether DMH2's application required variance relief from certain
provisions of the Township's ordinances pertaining to setback and buffer
requirements. The Board ultimately determined such variance relief was not
required and granted DMH2 site plan approval.
In addition, during one of the hearings, plaintiff Lars Sternas, an
objector, challenged whether one Board member, who was also the municipal
engineer (the engineer), had a conflict of interest because he had ex parte
communications with DMH2. The engineer did not deny having such contacts
with DMH2 but refused to recuse himself and ultimately voted to approve the
site plan application; the vote on the application was five to four.
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Plaintiff filed a complaint in lieu of prerogative writs challenging the
decision that DMH2's application did not require variance relief and
contending the engineer had a conflict of interest that warranted the resolution
vacated. The trial court rejected plaintiff's arguments and upheld the
resolution, entering a judgment on December 8, 2016. Plaintiff appeals from
that judgment. For the reasons that follow, we vacate the judgment and
remand to the trial court for further proceedings.
I
The engineer was appointed to the Planning Board by the mayor
pursuant to N.J.S.A. 40:55D-23(a), which requires a mayor to appoint one
township official to a municipality's planning board. Ibid. A township official
who sits on a planning board is referred to as a "Class II" member. A
municipal engineer is a township official.
It is unclear from the record how or at what point in the proceedings
before the Board that plaintiff discovered the alleged conflict, but in response
to plaintiff's inquiries at one of the hearings, the engineer, who was not placed
under oath, stated he met with DMH2 and its engineer jointly "several times."
The engineer also stated he may have had email communications with DMH2's
engineer, but was not sure.
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During a subsequent hearing, the engineer commented, again without
having been sworn, that he has always engaged in conversations with
applicants, "giving directions as to what forms have to be filled out, and what
mapping has to be presented for either the Board of Adjustment or the
Planning Board, [in] my capacity as municipal engineer." He stated that, in
this matter, he provided such direction to DMH2, "just giving [it] directions
from the standpoint of what forms and what mapping was necessary to be
submitted to this Board." As stated, the engineer declined to recuse himself
and voted to approve the site plan application.
On the conflict issue, the trial court found the engineer did not own
property within 200 feet of the property that DMH2 sought to develop, was not
related to any person associated with DMH2, and did not stand to gain
financially by approving the site plan application. The court further found
there was "nothing unusual" about the engineer's ex parte communications
with DMH2. For reasons unnecessary to recite, the court also agreed with the
Board that DMH2's application did not require variance relief.
On appeal, plaintiff contends the trial court's findings on both issues
were flawed, necessitating reversal. On the conflict issue, plaintiff makes
clear he is not "attributing any improper motive" to the engineer. However,
plaintiff maintains that, in its meetings with DMH2 representatives, DMH2
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had the opportunity to and could have influenced the engineer to favor its
position, a factor plaintiff contends the trial court overlooked.
For the reasons set forth below, a remand is necessary to determine
whether the engineer had a conflict of interest when he heard and voted upon
DMH2’s application. In light of this disposition, it is premature to address the
merits of plaintiff's argument that DMH2 needed variance relief. The reason is
that, even if DMH2 does not require variance relief, the resolution approving
the application cannot be salvaged if the engineer had a conflict of interest.
The resolution shall have to be voided and set aside, and a new hearing on the
application conducted. See Randolph v. City of Brigantine Planning Bd., 405
N.J. Super. 215, 234 (App. Div. 2009)(holding the proceedings of a planning
board were void in their entirety because a member of the board who
participated in such proceedings had a conflict of interest); see also Haggerty
v. Red Bank Borough Zoning Bd. of Adj., 385 N.J. Super. 501, 516-17 (App.
Div. 2006) (setting aside decision of board of adjustment because of a board
member’s conflict of interest).
II
"The need for unquestionable integrity, objectivity and impartiality is
just as great for quasi-judicial personnel as for judges." Randolph v. City of
Brigantine Planning Bd., 405 N.J. Super. 215, 226 (App. Div. 2009) (quoting
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Kremer v. City of Plainfield, 101 N.J. Super. 346, 352-53 (Law Div. 1968)).
Under our common law, "[a] public official is disqualified from participating
in judicial or quasi-judicial proceedings in which the official has a conflicting
interest that may interfere with the impartial performance of his duties as a
member of the public body." Wyzykowski v. Rizas, 132 N.J. 509, 523 (1993)
(alteration in original) (quoting Scotch Plains-Fanwood Bd. of Educ. v.
Syvertsen, 251 N.J. Super. 566, 568 (App. Div. 1991)).
"[W]hether a particular interest is sufficient to disqualify is necessarily a
factual one and depends upon the circumstances of the particular case." Van
Itallie v. Borough of Franklin Lakes, 28 N.J. 258, 268 (1958) (citing Aldom v.
Borough of Roseland, 42 N.J. Super. 495, 503 (App. Div. 1956)). "If there is
[a disqualifying] 'interest,' there is disqualification automatically, entirely
without regard to actual motive, as the purpose of the rule is prophylactic . . .
." McNamara v. Borough of Saddle River, 64 N.J. Super. 426, 429 (App. Div.
1960). Therefore, actual proof of dishonesty need not be shown. Aldom, 42
N.J. Super. at 503. An actual conflict of interest is not the decisive factor; the
issue is whether there is a potential for conflict. Griggs v. Borough of
Princeton, 33 N.J. 207, 219 (1960) (citing Aldom, 42 N.J. Super. at 502). "[I]t
is the mere existence of the interest, not its actual effect, which requires the
official action to be invalidated." Twp. of Lafayette v. Bd. of Chosen
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Freeholders of the County of Sussex, 208 N.J. Super. 468, 473 (App. Div.
1986) (citing Griggs 33 N.J. at 220).
In determining whether a conflict exists, "[t]he potential for
psychological influences cannot be ignored." Barrett v. Union Twp. Comm.,
230 N.J. Super. 195, 201 (App. Div. 1989) (alteration in original) (quoting
Twp. of Lafayette, 208 N.J. Super. at 473.). "Officials must be free of even
the potential for entangling interests that will erode public trust in government
actions." Thompson v. City of Atlantic City, 190 N.J. 359, 374 (2007). As
one leading commentator on the topic of conflicts of interest put it, "Would an
impartial and concerned citizen, intelligent and apprised of all the facts in the
situation, feel that there was the potential for non-objectivity on the part of the
officeholder making a decision? If the answer is affirmative the appearance of
conflict exists." 34 N.J. Practice Series, Local Government Law § 9.4, at 412-
413 (Michael A. Pane, Jr.) (2007) (citations omitted).
In Smith v. Fair Haven Zoning Bd. of Adjustment, 335 N.J. Super. 111,
114 (App. Div. 2000), the plaintiffs appealed from a judgment affirming the
Fair Haven Zoning Board of Adjustment's resolution granting dimensional
variances to the defendant homeowners. Among other things, the plaintiffs
contended members of the Zoning Board engaged in impermissible ex parte
communications with the homeowners during site visits. Ibid.7
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In response to the plaintiffs' contention, the Law Division judge
remanded the matter to the Zoning Board for a hearing to supplement the
record. Id. at 116. During that hearing, the members of the Zoning Board
testified about the conversations they had with the homeowners and others
present during the site visits. Id. at 118-19. Based upon the supplemented
record, the Law Division judge determined none of the communications among
the members, the homeowners, and plaintiff was prejudicial to any party and
that no further judicial intervention was necessary. Id. at 116, 118-19. We
agreed with that assessment, although we added the following cautionary
comments. Id. at 120.
Specifically, we noted there should not be ex parte conversations
between board members and interested parties pertaining to the merits or lack
of merit of an application. Ibid. Although we couched our comments in the
context of communications during site visits, see ibid., this principle applies
whether a communication occurs during a site visit or in any other context or
setting. We repeated the established principle that interested parties must
voice their comments and arguments at hearings conducted by the board, not
ex parte. Ibid. Further, to ensure due process, a board's decisions must be
made on the basis of the evidence presented at its hearings. Ibid.8
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Defendants assert Neu v. Planning Bd. of Tp. of Union, 352 N.J. Super.
544 (App. Div. 2002) supports their argument that the ex parte
communications between the engineer and DMH2 were acceptable, but Neu is
readily distinguishable. In that matter, the plaintiffs were homeowners who
challenged defendant Union Township's Planning Board's final approval of a
major subdivision and site plan. Id. at 547.
During the hearings before the Planning Board, evidence emerged that
the developer contemplated building an elevated water storage tank. Id. at
548. The Planning Board commissioned an independent engineering firm to
examine alternative water systems, which subsequently issued a report
proposing ground-level water storage alternatives. Ibid.
While the matter was still pending before the Planning Board, the mayor,
representatives of the developer, and two Planning Board members met to
discuss the report. Id. at 549. The public was not notified of the meeting in
advance and the meeting was not recorded. Ibid.
The plaintiffs appealed from the resolution granting final approval,
seeking to have it declared null and void. Id. at 550. One of the plaintiffs'
arguments was the two Planning Board members' ex parte communications
with the developer warranted nullification of the approval. Ibid. The trial
court rejected the plaintiffs' argument and we affirmed. Id. at 550-51.
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When the Neu matter was before the trial court, those who had been in
attendance at the ex parte meeting submitted a certified statement to the court,
representing the discussions at the meeting were confined to the report
commissioned by the Board, the developer's ability to use a ground-level water
storage tank, and the transfer of certain water supply rights. Id. at 549. The
trial court determined the matters discussed during the ex parte meeting were
fully disclosed and reviewed during ten subsequent public hearings. Id. at 554.
Under these particular circumstances, we agreed with the trial court that there
was no basis to nullify the final approval because of the ex parte meeting. Id.
at 554-55.
Here, the engineer is claiming the discussions between him and DMH2’s
representative or its engineer were limited to advising what forms needed to be
filled out and what maps had to be presented for either the Board of
Adjustment or the Planning Board. We also understand plaintiff is not
alleging the engineer purposely engaged in any untoward conduct.
Notwithstanding, the engineer admits there were several conversations
with DMH2 or its representative. Dispensing more than merely ministerial
information may have occurred if there were several contacts. Moreover, any
ex parte contact the engineer had with the applicant is not insulated from
disclosure and must be examined. In our view, further fact-finding about what
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was discussed between the engineer and DMH2 or its representative during
those several conversations is in order.
We recognize there must be a Class II member on the planning board,
see N.J.S.A. 40:55D-23(a), and a Class II member is an official of the
municipality. In executing his or her duties, such official may beco me
involved in the processing of certain applications that may be heard by the
Board. Nonetheless, ex parte conversations between a Class II member and an
applicant or its representative must be avoided. Recusal of a Class II member
is required if there is evidence such member and an applicant discussed the
merits of a particular application ex parte. See Smith 335 N.J. Super. at 120.
Ex parte communications touching on the merits of the application risk the
Class II member forming an impression of the merits before witnesses have
testified and before any objector or member of the public has placed any
objection on the record. See Nanavati v. Burdette Tomlim Mem'l Hosp., 107
N.J. 240, 246-67 (1987) ("Suffice it to state that hearing cannot be fair if the
hearing body prejudges the matter before the hearing begins.").
Accordingly, we remand this matter to the trial court so it may schedule
a plenary hearing to adjudicate plaintiff’s claim the engineer was precluded
from hearing DMH2’s application because of a conflict of interest. A fully
developed record where, as in Smith and Neu, key witnesses testify is vital so
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that the trial court can adequately assess the merits of plaintiff's claim. We
cannot overstate how essential it is to the integrity of local governments that
public officials who serve on municipal boards abstain from ex parte
communications pertaining to matters before them and insulate themselves
from any outside influences.
Finally, we note if a Class II member has a conflict of interest, the tasks
the Board must perform will not be interrupted to any significant degree.
N.J.S.A. 40:55D-23.2 provides that if in a particular matter a planning board
lacks a quorum because a member has a conflict of interest, a member of the
municipality's board of adjustment shall take the disqualifying member's place
on the planning board to hear such matter. Therefore, if a Class II member
sitting on either board is concerned there may be a disqualifying conflict in a
matter appearing on a board's agenda, he or she can notify the chairperson of
the board so a temporary member may be substituted.
To the extent we have not addressed any argument DMH2 or the Board
has advanced on issue of the conflict, it is because the argument was without
sufficient merit to warrant discussion in a written opinion. See R. 2:11-
3(e)(1)(E).
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The December 8, 2016 judgment is vacated and the matter remanded for
further proceedings consistent with this opinion. We do not retain jurisdiction.
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