STEVEN I. GROSS VS. KEVIN A. IANNUZZI (L-3360-14 AND L-6543-14, ATLANTIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0018-16T2
STEVEN I. GROSS and GENEVIEVE
GROSS,
Plaintiffs,
APPROVED FOR PUBLICATION
and
June 5, 2019
JERRY DIPIETRO, DAVID ARSHT, APPELLATE DIVISION
BEVERLY ARSHT, IRA SACHS,
ANDREA SACHS, ED MARINELLI,
TONI MARINELLI, MARIA A.
MARINELLI, JEFF STEINIG,
and NIKKI STEINIG,
Plaintiffs-Respondents,
v.
KEVIN A. IANNUZZI,
Defendant-Appellant,
and
CITY OF MARGATE,
Defendant-Respondent.
______________________________
BARRY ABRAHAM and ELLEN
ABRAHAM,
Plaintiffs,
v.
KEVIN A. IANNUZZI,
Defendant-Appellant,
and
CITY OF MARGATE, JAMES
GALANTINO, in his official capacity,
and ROGER RUBEN1, in his official
capacity,
Defendants-Respondents.
______________________________
Argued December 19, 2018 – Decided June 5, 2019
Before Judges Alvarez, Reisner and Mawla.
On appeal from Superior Court of New Jersey, Law
Division, Atlantic County, Docket Nos. L-3360-14
and L-6543-14.
Stephen J. Hankin argued the cause for appellant
(Hankin Sandman Palladino Weintrob & Bell,
attorneys; Stephen J. Hankin, of counsel and on the
briefs).
John S. Abbott argued the cause for respondents City
of Margate, James Galantino, and Roger Rubin.
Salvatore Perillo argued the cause for respondents
(Nehmad Perillo & Davis, attorneys; Salvatore Perillo,
of counsel and on the briefs).
1
This defendant's name was misspelled in the complaint. The correct spelling
is "Rubin."
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2
The opinion of the court was delivered by
REISNER, J.A.D.
Defendants Kevin Iannuzzi, the City of Margate (Margate), and two city
officials, James Galantino and Roger Rubin, appeal from a July 14, 2015 trial
court order and an August 16, 2016 order denying reconsideration. For the
reasons that follow, we affirm in part and reverse in part.
The trial court overturned Margate's approval of Iannuzzi's plan to
demolish his beachfront townhome, which was damaged by Superstorm Sandy,
and replace it with an elevated and enlarged free-standing residence. The
court also rejected Iannuzzi's alternate plan to rebuild and elevate the
townhome using its original footprint. In determining that Iannuzzi could not
build a free-standing house and that any replacement structure could not be
elevated, notwithstanding current flood-safety standards, the trial court relied
on a Declaration of Covenants and Restrictions (the Declaration) that took
effect in 1978 when the townhome development was built.
However, in August 2017, after the trial court decided the case, the
Legislature amended N.J.S.A. 58:16A-103 (the Act), concerning flood-safe
construction. The Act, originally adopted in 2013 in response to Sandy,
prohibits enforcement of development ordinances that would prevent certain
flood-safe construction, including the otherwise lawful raising of a Sandy-
damaged structure. The 2017 amendment added row houses or attached
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townhouses held in fee simple to the definition of "structure" and provided that
deed restrictions could not be enforced to prevent elevation of a Sandy-
damaged structure.2
Our review of the trial court's legal interpretations, including its
interpretation of contracts, is de novo. See Manalapan Realty, LP v.
Manalapan Twp. Comm., 140 N.J. 366, 378 (1995); Cooper River Plaza E.,
LLC v. Briad Grp., 359 N.J. Super. 518, 528 (App. Div. 2003). Applying that
standard of review, we affirm the trial court's order insofar as it precludes
Iannuzzi from razing the townhome and building a free-standing house on the
lot, instead of either repairing or rebuilding the townhome. We agree with the
trial court that, by its terms, the Declaration prevents Iannuzzi from building a
free-standing house without the approval of a majority of the other
homeowners in the townhome development. 3 The trial court also correctly
2
After this case was argued, we permitted the parties to submit supplemental
briefs addressing the 2017 amendment.
3
Plaintiffs argue that even if a majority of the owners approve defendant's
plan, the case should be remanded to Margate's currently-combined
Planning/Zoning Board. They contend that constructing a free-standing house
would be contrary to the terms of the land use approvals for the original
development. However, plaintiffs did not cross-appeal from the trial court's
August 16, 2016 order, which vacated an earlier order remanding the matter to
the Board to hear an administrative appeal from the issuance of a zoning
permit. Accordingly, that land use issue is not properly before us and we
decline to address it. Additionally, the issue is not ripe, because the Board
(continued)
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determined that the Declaration was not abandoned, did not lapse, and remains
in effect. On these issues, we affirm for the reasons cogently stated by the trial
court in its written opinions dated July 14, 2015, and August 16, 2016, and we
conclude that defendants' arguments do not merit further discussion. R. 2:11-
3(e)(1)(E). We reach a different conclusion with respect to the issue of
elevating the townhome.
Addressing a matter of first impression, we hold that N.J.S.A. 58:16A-
103, as amended, applies to Iannuzzi's individually-owned townhome and
permits him to elevate the structure as required by current flood-safety
standards, despite Declaration provisions that would otherwise preclude him
from doing so. As intended by the Legislature, the amended statute overrides
the Declaration and any local development regulations that might otherwise
prevent Iannuzzi from elevating the townhome. Hence, we reject plaintiffs'
argument that Iannuzzi must obtain dispensation from Margate's
Planning/Zoning Board because raising his townhome would be inconsistent
with the development's original site plan approvals. Likewise, Iannuzzi's
statutory right to elevate his townhome does not depend on whether the
(continued)
never ruled on the appeal, having decided to hold it in abeyance pending the
outcome of this litigation.
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townhome or the development as a whole suffered "substantial" damage within
the meaning of Margate's flood-safety ordinance.
We further reject plaintiffs' argument that, even if Iannuzzi is permitted
to raise the elevation of the townhome's first floor, he must maintain the
existing height of the roofline by reducing the living space within the
townhome. That cramped interpretation would defeat the legislative purpose
to encourage flood-safe construction. In the circumstances presented here,
Iannuzzi's right to protect his property from flood hazards outweighs his
neighbors' right to preserve their ocean views. 4 Accordingly, we reverse the
trial court order precluding Iannuzzi from elevating the townhome pursuant to
the standards set forth in N.J.S.A. 58:16A-103 as amended.
I
In light of the narrow issue presented, the record evidence can be
summarized as follows. In 1977, a developer obtained Planning Board
approval to construct what, at the time, was an unusual townhouse
development on the beachfront in Margate. The development consisted of one
row of ten attached two-story oceanfront townhomes, and a second row of ten
4
We do not address the issue – not presented here – whether Iannuzzi's
neighbors also have the right to raise the elevation of their townhomes for
flood safety, thereby incidentally regaining their water views. We note that in
the trial court, Margate's attorney argued that all of the unit owners were
legally entitled to elevate their units for flood safety and should do so.
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attached three-story townhomes located directly behind the first row. The
expressed purpose of this configuration was to give both rows of townhomes
an ocean view. The Planning Board particularly noted that feature in its
resolution approving the development.
Although the townhomes shared party walls that extended down into the
foundation, each was situated on its own subdivided lot, was owned in fee
simple, had its own separate roof and utilities, and was separately assessed and
insured (including flood insurance). There was no homeowners' association
and rooftop condensers were the sole common element.
On August 8, 1978, the developer executed and later recorded the
Declaration, which set forth certain requirements that were to "run with the
land and . . . be binding on all parties having or claiming any right, title or
interest in the described property or any part thereof." The Declaration
required homeowners to obtain approval of at least a majority of the property
owners in order to build additions to their units, and required additions to
conform "to the design of the development." The Declaration covenants were
to remain in force for twenty-five years (from July 1, 1978 to July 1, 2003),
with two additional twenty-five year renewal periods, "unless changed by a
vote of two-thirds of the property owners at the time of expiration." Thus, at
the time either of the first two twenty-five year periods expired, the owners
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could vote to change the terms of the Declaration. Otherwise, the covenants
would renew unchanged.
On October 29, 2012, Superstorm Sandy damaged all of the
development's beachfront units. Nine of the units were repaired in place,
although for reasons not evident on this record, they were not elevated to
prevent future flood damage. The tenth townhome, located on the southern
end of the row, was so badly damaged that Margate issued a notice of unsafe
structure declaring it uninhabitable. The unit's then-owner did not repair it.
Iannuzzi eventually bought the unit in its damaged condition, intending to
demolish it and replace it with a free-standing house. Iannuzzi obtained a
zoning permit for that construction from Margate's zoning officer. The local
construction code official wrote Iannuzzi a letter advising that the townhome
was substantially damaged by Sandy and any rebuilt structure would have to
be elevated to thirteen feet above flood level, requiring an increase in elevation
of slightly more than four feet.
Plaintiff Steven I. Gross filed an appeal with the Board challenging the
issuance of the zoning permit. Before the appeal was heard, two groups of
plaintiffs, one of which included Gross, filed lawsuits seeking to stop
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construction of the free-standing house. 5 Iannuzzi defended his right to build
the house. However, in the alternative, he asserted a right to rebuild the
original townhome in place and elevate it to meet flood safety standards.
Plaintiffs vigorously opposed both of Iannuzzi's proposed courses of action,
potentially leaving Iannuzzi with a wrecked oceanfront townhome which he
could not rebuild to current flood safety standards.
In a written opinion issued on July 14, 2015, the trial court rejected
Iannuzzi's claims that the Declaration had expired or was otherwise no longer
effective. The court held that either building a free-standing house or
elevating the townhome in place would constitute an "addition" under the
Declaration, and thus required approval of a majority of the unit owners. The
court also reasoned that the townhouse was not a separate "structure" within
the meaning of N.J.S.A. 58:16A-103, and hence that statute did not authorize
Iannuzzi to elevate the townhome. The trial court remanded to the Board
Gross's appeal from the zoning permit. On August 16, 2016, the trial court
denied Iannuzzi's motion for reconsideration, but vacated the portion of the
prior order remanding the matter to the Board.
As further discussed below, the Legislature then amended N.J.S.A.
58:16A-103. The amendments extended the definition of "structure" to
5
The trial court enjoined Iannuzzi's proposed construction and consolidated
the lawsuits.
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include townhomes and precluded the enforcement of deed restrictions that
would impede flood-safe construction.
II
Recognizing that safe construction in flood areas requires the elevation
of first floors, the Legislature enacted N.J.S.A. 58:16A-103 to spare owners
from having to obtain variances and other land use approvals in order to
elevate existing buildings, including Sandy-damaged structures, located in
flood-prone areas. As enacted in 2013, the statute provided that:
b. (1) Notwithstanding the provisions of any
other law to the contrary, except as otherwise
provided pursuant to paragraph (2) of this subsection,
a person shall be exempt from any development
regulation, including any requirement to apply for a
variance therefrom, that otherwise would be violated
as a result of raising an existing structure to a new and
appropriate elevation, or constructing a staircase or
other attendant structure necessitated by such raising,
provided, however, this exemption shall apply only to
the minimum extent or degree necessary to allow the
structure to meet the new and appropriate elevation
with adequate means of ingress and egress.
....
c. (1) Notwithstanding the provisions of any
other law to the contrary, except as otherwise
provided pursuant to paragraph (2) of this subsection,
a person shall be exempt from any development
regulation, including any requirement to apply for a
variance therefrom, that otherwise would be violated
as a result of using a new and appropriate elevation
when lawfully repairing or reconstructing a Sandy-
damaged structure, or constructing a staircase or other
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attendant structure necessitated by use of the new and
appropriate elevation, provided, however, this
exemption shall apply only to the minimum extent or
degree necessary to allow the Sandy-damaged
structure to meet the new and appropriate elevation
with adequate means of ingress and egress. . . .
[N.J.S.A. 58:16A-103(b)(1), (c)(1) (2013).]
Paragraph (b)(2) provides that the exemption does not apply "to a person
who has altered the original dimensions of a structure if, had the alteration not
been made, the structure could have been raised to meet the new and
appropriate elevation either without the exemption or with an exemption of
lesser degree than is needed with the alteration." N.J.S.A. 58:16A-103(b)(2).6
Paragraph (c)(2) contains a similar provision for repair or replacement plans.
N.J.S.A. 58:16A-103(c)(2). Under the 2013 statute, a "Sandy-damaged
structure" meant "any structure that existed on October 28, 2012 and was
damaged or destroyed by Hurricane Sandy," and "original dimensions" meant
"the exact vertical and horizontal dimensions of a structure as it existed on
October 28, 2012." N.J.S.A. 58:16A-103(a).
6
The "[n]ew and appropriate elevation" is "any elevation to which a structure
is raised, or is to be raised, that is equal to or higher than the applicable ne w
[Federal Emergency Management Agency (FEMA)] base flood elevation,
provided, however, in no case shall the new and appropriate elevation exceed
the highest applicable flood elevation standard." N.J.S.A. 58:16A-103(a). The
"[h]ighest applicable flood elevation standard" is defined by reference to flood
elevation standards adopted by FEMA, "plus an additional three feet," or the
applicable flood elevation standard required by the New Jersey Department of
Environmental Protection, "whichever is higher." Ibid.A-0018-16T2
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The legislative history clearly expressed the intent to allow flood-safe
construction, notwithstanding local zoning laws.
This bill, as amended by the committee, would
provide a person with a limited exemption from local
land use restrictions when raising an existing structure
to meet certain State or federal flood elevation
standards, if raising the structure would otherwise
result in a violation of the local land use restriction.
In particular, the exemption would allow a
person to raise the structure to the "highest applicable
flood elevation standard," which is defined in the bill
to be the higher of two standards: (1) the new Federal
Emergency Management Agency (FEMA) base flood
elevation plus two additional feet, or (2) any
applicable flood elevation standard required pursuant
to rules and regulations adopted by the Department of
Environmental Protection (DEP) pursuant to the
"Flood Hazard Area Control Act."
A "new FEMA base flood elevation" is defined
in the bill to mean any advisory base flood elevation
or effective base flood elevation proposed or adopted
after October 29, 2012, by the FEMA. A base flood
elevation, as calculated by FEMA, represents the
elevation of a flood with a one percent chance of
occurrence during any given year, commonly referred
to as a "100-year flood." A structure that is not
elevated to the applicable FEMA-issued base flood
elevation for its location is subject to a higher flood
insurance premium under the National Flood
Insurance Program.
For an existing structure, raising the structure to
meet one of these flood elevation standards may, in
certain cases, violate local land use restrictions, such
as a maximum height restriction or a setback
restriction. This bill would provide a partial
exemption from such local land use restrictions, so as
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to allow a property owner to raise an existing structure
to the highest applicable flood elevation standard
without violating local land use restrictions. The
exemption would apply only to the minimum extent or
degree necessary to meet the higher of the two
standards, as they apply to the location in question.
[Assembly Environment and Solid Waste Committee,
Statement to A. 3890 (May 13, 2013).]
Before its passage, the legislation was amended to broaden its scope to
include "development regulations" as opposed to the narrower term "local land
use regulations" and to make clear that it specifically applied to structures
damaged by Sandy.
These floor amendments would provide for the
exemption to apply to "development regulations," as
defined pursuant to section 4 of the "Municipal Land
Use Law," P.L.1975, c.291 (C.40:55D-4), rather than
to "local land use restrictions." The term
"development regulations" is more accurate for the
purposes of this bill. The amendments would also
provide that the exemption would apply not just when
raising existing structures, but also when using a
raised elevation in the repair or reconstruction of a
structure damaged by Hurricane Sandy. Moreover, the
amendments would clarify that the exemption would
apply not just to the raising of a structure, but also to
the construction of a staircase or other attendant
structure necessitated by such raising. In addition, the
amendments would clarify the scope and applicability
of the exemption by changing the definition of
"highest applicable flood elevation standard" and
"new FEMA base flood elevation," and by
establishing and defining the following new terms:
"existing structure," "new and appropriate elevation,"
"original dimensions," and "Sandy-damaged
structure." . . .
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[Statement to Assembly with Senate Floor
Amendments to A. 3890 (June 20, 2013).]
In August 2017, the Legislature amended the statute in two significant
respects. Under the 2017 amendments, the definition of "structure" was
expanded to include a row house or townhouse that, as in this case, is owned in
fee simple:
"Structure" means any dwelling or building; however,
in the case of attached townhouses or row houses for
which title to each townhouse or row house building,
including the roof and other structural elements, is
held in fee simple, "structure" means a single
townhouse or single row house. "Structure" shall not
include a unit which is part of a condominium as
defined in P.L.1969, c. 257 (C.46:8B-1 et seq.).
[N.J.S.A. 58:16A-103(a).]
The amendments also added a new section (d) addressing deed
restrictions:
d. Notwithstanding the provisions of any other law to
the contrary, any deed restriction or agreement, no
matter when entered into or made, that prohibits or has
the effect of prohibiting any otherwise lawful raising
or constructing of a structure to a new and appropriate
elevation is contrary to public policy and therefore
shall be unenforceable, except that all other covenants,
easements, and restrictions of a common interest
community shall remain in force, and costs associated
with the construction, repair, or other related
improvements to neighboring properties and common
elements shall be borne solely by the owner of the
structure which will be raised or constructed to a new
elevation.
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[N.J.S.A. 58:16A-103(d) (emphasis added).]
The amendments appear to be a response to the trial court's decision in
this case, and the legislative history leaves no room for doubt as to the
Legislature's continuing intent to sweep away obstructions to flood-safe
construction:
This bill would provide that any deed restriction
or agreement that prohibits or has the effect of
prohibiting any otherwise lawful raising or
constructing of a structure to meet certain flood
elevation standards is contrary to public policy and
therefore unenforceable. The bill would also clarify
how certain exemptions from development regulations
under existing law apply in the case of townhouses or
row houses for which title to each unit is held in fee
simple.
The provisions of the bill declaring . . . the
unenforceability of certain deed restrictions or
agreements would apply in the case of structures being
raised or constructed to a "new and appropriate
elevation," which is a defined term under existing law
and based on certain flood elevation standards set
forth in P.L.2013, c.107 (C.58:16A-103). The bill
also provides that the deed restrictions or agreements
covered by the bill would be unenforceable no matter
when entered into or made.
The bill defines the term "structure" to mean
any dwelling or building; however, in the case of
attached townhouses or row houses for which title to
each unit is held in fee simple, it would mean a single
townhouse or single row house. This definition would
be applicable to the provisions of the bill that render
certain deed restrictions or agreements unenforceable
under the circumstances discussed above. In addition,
the definition would clarify that certain existing
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exemptions from development regulations prescribed
in P.L.2013, c.107 (which apply when raising,
repairing, or reconstructing certain structures to meet
flood elevation standards) would be applicable in the
case of a single townhouse or single row house, even
when attached to or located within a complex, so long
as title to each unit is held in fee simple.
[Senate Environment and Energy Committee,
Statement to S. 2884 (January 30, 2017).]
Floor amendments, adopted prior to passage, added an exception
excluding units that are part of a condominium, a provision not applicable
here. The amendments also preserved "covenants, easements, and restrictions
of a common interest community" other than those that would block flood-
safety elevation. Statement to Senate with Assembly Floor Amendments to S.
2884 (May 22, 2017). The floor amendments protected neighbors by requiring
that "costs associated with the construction, repair, or other related
improvements to neighboring properties and common elements must be borne
by the owner of the structure which is being raised or constructed to a new
elevation." Ibid.In their supplemental brief, plaintiffs raise a series of arguments
attempting to distinguish the 2017 amendments. We find those contentions
entirely without merit. They warrant no discussion beyond the following brief
comments.
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Plaintiffs argue first that because the Iannuzzi unit includes a party wall,
and because all of the unit owners share the rooftop condensers, this unit
cannot be considered a qualifying independent structure owned in fee simple
under N.J.S.A. 58:16A-103. In support of this position, plaintiffs argue that in
a 2014 webinar, FEMA stated that for purposes of assessing whether a
structure has been substantially damaged, a row of townhomes with party walls
constitutes a single structure. In amending the Act, our Legislature has clearly
determined to use a different definition of "structure." Further, the Act does
not require a finding of "substantial" damage. Lastly, it is undisputed that
Iannuzzi's deed includes ownership of his unit's roof. Plaintiffs cite no
authority for their assertion that a shared rooftop air-conditioning condenser
defeats Iannuzzi's fee simple title to his townhome.
Plaintiffs next contend that, even if Iannuzzi's unit qualifies as a
"structure" for purposes of N.J.S.A. 58:16A-103, he should not be permitted to
raise it in violation of the Declaration, but instead should be required to give
up the living space on the unit's first floor in order to avoid raising the
roofline. We cannot agree.
In making their argument, plaintiffs ignore that the Declaration is no
longer relevant by virtue of N.J.S.A. 58:16A-103(d), which voids any "deed
restriction or agreement, . . . that prohibits or has the effect of prohibiting any
otherwise lawful raising or constructing of a structure to a new and appropriate
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elevation." Plaintiffs are correct that the exemption provided by N.J.S.A.
58:16A-103(c)(1) applies "only to the minimum extent or degree necessary to
allow the Sandy-damaged structure to meet the new and appropriate elevation
with adequate means of ingress and egress." But that does not mean Iannuzzi
must abandon the first floor of his unit in order to comply with this provision.
Under the statute, structures are to be raised in their "original
dimensions" to the "appropriate" elevation and no more. N.J.S.A. 58:16A-
103(a), (b)(2), (c)(2). Reading the statute as a whole, we conclude the
requirement that the exemption be as limited as possible must be read in pari
materia with the requirements that the original dimensions of the structure be
maintained and the elevation be no more than necessary. The clear import of
the language is that the owner can raise the entire structure several feet off the
ground, while maintaining the original dimensions of the structure – including
the original amount of living space. Nothing in the wording or history of the
statute remotely suggests that the Legislature intended to require owners of
two-story residences to abandon the first floors of their homes in order to
obtain a flood-protected structure.
Plaintiffs next argue that Iannuzzi must seek an amendment to the
original site plan for the townhouse development because a site plan does not
qualify as a "development regulation" from which Iannuzzi is exempt under
N.J.S.A. 58:16A-103. That argument is without merit.
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N.J.S.A. 58:16A-103(b)(1) provides, in pertinent part, that a person is
"exempt from any development regulation, including any requirement to apply
for a variance therefrom, that otherwise would be violated as a result of raising
an existing structure to a new and appropriate elevation." Under the Municipal
Land Use Law (MLUL), N.J.S.A. 40:55D-4, a "[d]evelopment regulation" is
defined as a "zoning ordinance, subdivision ordinance, site plan ordinance,
official map ordinance or other municipal regulation of the use and
development of land, or amendment thereto adopted and filed pursuant to [this
act]." A "[s]ite plan" is defined as a "development plan of one or more lots."
N.J.S.A. 40:55D-7. Because a development regulation includes a site plan
ordinance, without which there would be no site plans, the exemption
necessarily includes an amendment to a site plan. Holding otherwise would
defeat the Legislature's purpose to allow owners of Sandy-damaged structures
to comply with flood-safe construction measures, without the delays inherent
in variance applications and site plan approvals. To leave no doubt on the
subject, Iannuzzi does not have to obtain the Board's approval in order to
elevate his townhome in accordance with the Act.
Plaintiffs' remaining arguments, invoking "the defenses of equitable
estoppel and unclean hands," are without sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed in part, reversed in part.
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