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

NOT FOR PUBLICATION WITHOUT THE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 In a previous unpublished case, we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