BOROUGH OF AVALON VS. THE MARINA AT AVALON ANCHORAGE, Â LLC(C-8-16, CAPE MAY COUNTY AND STATEWIDE)

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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4817-15T2
BOROUGH OF AVALON,
Plaintiff-Appellant,
v.
THE MARINA AT AVALON ANCHORAGE, LLC,
Defendant-Respondent,
and
SUNRISE MARINA, INC. and AVALON
ANCHORAGE MARINA, LLC,
Defendants.
____________________________________
Argued April 26, 2017 – Decided June 5, 2017
Before Judges Accurso and Manahan.
On appeal from Superior Court of New Jersey,
Chancery Division, Cape May County, Docket
No. C-8-16.
Daniel A. Greenhouse argued the cause for
appellant (Cullen and Dykman, LLP,
attorneys; Neil Yoskin and Mr. Greenhouse,
on the brief).
Richard M. Hluchan argued the cause for
respondent (Hyland Levin, LLP, attorneys;
Mr. Hluchan, on the brief).
PER CURIAM
Plaintiff Borough of Avalon appeals from a June 20, 2016
final judgment granting defendant The Marina at Avalon
Anchorage, LLC's (Anchorage) motion to dismiss the Borough's
declaratory judgment complaint to invalidate the vacation of a
portion of 20th Street, which the Borough did in 2010 at the
behest of Anchorage's predecessor in title or, in the
alternative, to compel Anchorage to construct the "public
benefit improvements" its predecessor agreed to build in return
for the vacation. Because none of the recorded documents in
Anchorage's chain of title put it on notice that the street
vacation was contingent on the construction of those
improvements, we affirm.
We summarize the essential facts from the view most
favorable to the Borough. In 2005, Anchorage's predecessor,
Avalon Anchorage Marina, LLC (Marina), approached the Borough
about rezoning the property to permit residential development
and vacating the contiguous portion of 20th Street to assist in
its plans to redevelop the marina. Although amenable to the
idea of redevelopment, the Borough wanted Marina to maintain a
fuel dock and a restaurant on the property, to create more boat
slips, perhaps reinstate boat rentals, and limit residential
units to one particular section of the property.
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In 2007, Marina presented a site plan to the Borough's
combined Planning and Zoning Board of Adjustment and formally
requested the Borough to vacate a portion of 20th Street.
Marina's lawyer submitted a certification in this action,
averring that his client, Anchorage's predecessor, "proposed
retention of a fuel dock, a public boat ramp and a public access
area in consideration for the rezoning and the vacation of a
portion of 20th Street." The Borough Council determined that
vacating a portion of 20th Street would serve the public
interest because of the public benefits included in Marina's
plan, and agreed to do so in exchange for Marina's promise to
construct those improvements. The lawyer certified that "[t]o
the best of [his] knowledge," his client "fully intended to
construct those improvements when it developed the [p]roperty."
Marina, however, did not develop the property. Instead,
"[f]or reasons unrelated to the approval obtained from the
Avalon Planning/Zoning Board and the [Department of
Environmental Protection], as well as the street vacation
approved by the Borough, [Marina] decided to sell the [p]roperty
prior to commencing construction." And nothing in either the
ordinance vacating the portion of 20th Street or the site plan
approval expressly conditioned the street vacation on the
construction of those public benefits.
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The only condition contained in the Ordinance vacating the
street was that Marina obtain, within two years1, all approvals
from the DEP and the Planning/Zoning Board necessary to permit
construction. Specifically, the ordinance provides:
SECTION 3: CONTINGENCY: This vacation is
contingent upon Avalon Anchorage Marina
obtaining all approvals from the State of
New Jersey Department of Environmental
Protection as may be required by the Coastal
Area Facilities Review Act [(CAFRA)] and
from the Avalon Planning/Zoning Board for
the construction of improvements at its
property located at 863 21st Street within a
period of two (2) years from the date of
adoption of this Ordinance. In the event
Avalon Anchorage Marina fails to obtain the
necessary approvals within two (2) years
from the date of this Ordinance[,] the
vacation shall be void and the Borough shall
retain its existing right of way. Evidence
of compliance with this condition shall be a
resolution from Borough Council
acknowledging same upon presentation of
proof of the required municipal land use
approvals and a CAFRA permit from the
appropriate authorities.
[Borough of Avalon, Ordinance No. 585-2007.]
The resolution of site plan approval likewise does not
condition approval on construction of the improvements designed
for the public benefit. The only reference to those
1
The Borough extended that period for an additional year with
the adoption of Ordinance No. 617-2009 on May 27, 2009.
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improvements is contained in that portion of the resolution
summarizing the testimony at the public hearing as follows:
1. Applicant's engineer, A. Christopher
Eaton, P.E. . . . stated that . . . the fuel
docks would remain and that a boat ramp will
replace the existing boat lift. . . .
2. Applicant's architect, Jerry Blackman,
A.I.A. testified that . . . the proposed
boat ramp would be maintained and available
for public use. . . . He stated that the
walkways along the water were dedicated to
public use . . . .
3. Peter Lomax, the project's environmental
consultant . . . indicated that based upon
previous meetings with the Department of
Environmental Protection, the State appeared
in favor of the project, citing the public
boardwalk and retention of boat slips as
favorable.
5. One of Applicant's principals, Charles
Johnson, testified . . . that the fuel
storage would be upgraded in response to the
need and demands of the boating public and a
public restroom was proposed.
[Emphasis added.]
Following the DEP's issuance of the CAFRA permit to Marina
in March 2010, the Borough Council "[i]n reliance upon the Site
Plan approval and the CAFRA [p]ermit received by [Marina], both
of which included the Public Benefits, . . . adopted Resolution
No. 98-2010 dated June 9, 2010, confirming that [Marina] had
complied with the conditions of the Ordinances vacating a
portion of 20th Street." See Resolution No. 98-2010, "A
5 A-4817-15T2
Resolution Acknowledging and Confirming Compliance by Avalon
Anchorage Marina, LLC with the Conditions Set Forth in Ordinance
No. 585-2007, Adopted June 13, 2007." The Resolution sets forth
the contingency contained in Ordinance No. 585-2007, recites the
history of the matter, references and attaches as exhibits the
"documentary proof . . . to substantiate compliance" with the
contingency and resolves that "Avalon Anchorage Marina, LLC has
complied with all of the conditions set forth in Ordinance No.
585-2007, . . . as amended by Ordinance No. 617-2009 . . .
concerning the vacation of portions of 20th Street in the
Borough of Avalon," and thus that "the public right, title and
interest in, along, upon and over the land . . . be and hereby
is vacated, surrendered and extinguished," and directs its
recording. Resolution No. 98-2010 was recorded in the Cape May
County Clerk's Office on June 14, 2010, in Book S7 at pages 423
through 489.
Marina sold the property to Anchorage in February 2012. In
February 2016, Anchorage submitted a revised site plan to the
Planning/Zoning Board without the fuel dock or boat ramp.
Shortly thereafter, the Borough filed this action to invalidate
the street vacation or compel Anchorage to enter into an
agreement with the Borough "imposing permanent conditions on the
Anchorage Property" requiring "that any future use . . . include
6 A-4817-15T2
the Public Benefits" which agreement "shall be recorded in the
Cape May County Clerk's Office and which conditions shall run
with the land."
Judge Sandson entered an order to show cause, directing
service of the complaint and setting a briefing schedule and
return date. Upon receipt of the pleadings, Anchorage filed an
answer and a motion to dismiss. After hearing argument, the
judge directed additional briefing and set a short period for
discovery in order to permit the Borough to ascertain whether
Anchorage's principal had actual knowledge of Marina's agreement
to construct the public benefit improvements in exchange for the
vacation of a portion of 20th Street.
After conducting that discovery, the Borough conceded it
was without any information to indicate actual knowledge of the
agreement on the part of Anchorage. The Borough argued,
however, that Anchorage failed to make reasonable inquiry into
the consideration given for vacating the street; that the
expiration of the CAFRA permit without construction of the
public benefit improvements, resulted in a breach of the
agreement, including the implied covenant of good faith and fair
dealing; that none of the sworn representations of
representatives of Marina, noted in the recorded documents, had
been carried out; and that the failure to construct the public
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benefits before expiration of the CAFRA permit resulted in both
a failure of consideration and of the underlying purpose of the
street vacation. The Borough maintained the absence of any
public benefit rendered the street vacation ultra vires and thus
null and void.
Anchorage argued, among other things, that although the
Planning/Zoning Board approved a plan which contained a fuel
dock and a boat ramp, nothing in the approval or the ordinances
required those elements to be included in the redevelopment;
that it was entitled to rely on the recorded resolution that
Marina had "complied with all of the conditions . . . concerning
the vacation of portions of 20th Street"; and that its right to
the vacation had vested, precluding the Borough from divesting
it of its property right.
Judge Sandson, relying on Island Venture Associates v. New
Jersey Department of Environmental Protection, 179 N.J. 485(2004), determined that Anchorage was not on notice of any
unsatisfied condition of the street vacation and thus could not
be bound to construct the improvements.
The Court finds this matter is subject
to the ordinance and resolution which
provide that the street is to be vacated
upon Anchorage's obtaining . . . all
approvals from the State of New Jersey
Department of Environmental Protection as
may be required by the . . . Coastal Area
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Facilities Review [A]ct and from the Avalon
Planning and Zoning Board. . . . Anchorage
has in fact met these conditions.
The ordinance does not specifically
provide for any condition premised on public
benefits. The portion of 20th Street South
was vacated to [Marina]. Later Anchorage
purchased it after completing a search, a
proper search, certainly nothing that . . .
has been presented to me shows that it was
not a proper search of the Cape May County
records. In their search such public
interest elements were not and could not be
recorded as condition of which if not met
the Borough could at any time rescind the
vacation of 20th Street[.]
How could that have been done? How
could the . . . Borough of Avalon . . .
reflect that if this was . . . truly their
position? They could have established a
reverter that would have been right in the
street vacation. Such a reverter never
existed. . . . [T]his court has seen many
cases in which a municipality retains a
reversionary interest. In the event certain
things, specifically conditioned things are
not entered it would be in the deed of
vacation, it would be clearly reviewable and
searchable by a buyer.
This did not happen here. I think that
the interests of the sanctity of the
Recording Statute here overcomes a long and
protracted argument made by [plaintiff's
counsel]. And I understand his argument. .
. . I don't think that [counsel's]
argument, if I follow it to its fair and
full conclusion, would have provided a buyer
of real estate with any . . . reasonable
notice whatsoever of what Avalon's
conditions were. The fact that it was
contained . . . in one of the chain of
municipal approvals leading to the vacation
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I don't think is adequate. I don't think
that it provides fair notice. I think that
it would subvert . . . the high public
interest that . . . this State has in the
sanctity of its recording statutes[.]
[I]f I were to now say to [defendant]
. . . that you'd better read everything
because you'd better satisfy the public
interest. I don't think that's what's
called for in our law in this area.
Additionally, as I said, there's no reverter
clause in the agreement between [Marina] and
the Borough indicating that the vacated
portion of land would revert back to the
Borough should the public interest elements
not be met.
What is important to note is that there
was a contingency in . . . [O]rdinance [Nos.
585-2007 and 617-2009], that does state if
the approvals were not timely obtained. In
fact, those were observed . . . by [Marina]
and in fact they did get that, the one CAFRA
extension and then they got the CAFRA
permit. Thus I think it's clear that the
Borough knew to include a contingency when
it so desired. However no contingency was
included regarding . . . the possibility of
rescinding the vacated portion of 20th
Street should the public interest elements
not be met.
The fact is that the alleged conditions
which the Borough seeks to rescind were not
recorded and as such when Anchorage
purchased the property after it conducted a
search it was not noticed of such alleged
conditions. Therefore the property was
purchased with notice of what was recorded
and no conditions allowing the Borough of
Avalon to rescind its vacation of 20th
Street were included. And I don't think
that a reasonable buyer in such a case
should be deprived of his ownership of real
10 A-4817-15T2
property based upon his own analysis of
whether or not the public interest was met.
Judge Sandson thus entered a final order providing that
Anchorage's right in the vacation
is fully vested, and is not subject to any
contingencies, conditions subsequent, or
reverters, and as such Anchorage, and its
heirs, successors and assigns, is under no
obligation to provide any public benefits,
including but not limited to a boat ramp,
public walkway, or gasoline dock facilities
at the marina located at 863 21st Street in
Avalon.
This appeal followed.
We agree that Island Venture controls here. Accordingly,
we affirm, substantially for the reasons expressed by Judge
Sandson in his opinion from the bench. We add only the
following.
We accept the Borough's contention that a municipality may
vacate a portion of a public street in favor of an abutting
landowner only in the public interest. See generally N.J.
Const. art. VIII, § 3, ¶ 3 (prohibiting donation of land by any
municipal corporation); Palisades Props., Inc. v. Brunetti, 44
N.J. 117, 137-38 (1965) ("It is clearly established that a
municipality may vacate a street where such action serves the
general public interest.").
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Further, the Borough would have acted well within its
powers to have conditioned the vacation on the landowner's
agreement to construct and maintain in perpetuity the public
benefits contemplated by the grant, that is the boardwalk, boat
ramp and fuel dock. See Palisades, supra, 44 N.J. at 139(noting "a municipality has the power, and under certain
circumstances the duty, to append a condition to a street
vacation to assure that the land thus relieved of the public
easement will be employed for the purposes upon which the
municipality based its conclusions that it was for the general
public interest"). The problem here is the municipality failed
to do so, instead, conditioning the vacation only on the
landowner obtaining its CAFRA permit and site plan approvals,
neither of which compelled construction of the public benefits.
There is no support for the Borough's argument that the failure
to have effectively secured the public benefit intended, renders
the vacation void ab initio.
Notwithstanding its failure to have drafted an effective
condition to secure the benefits on which the vacation was
based, the Borough may well have been able to compel the
landowner requesting the street vacation to build and maintain
the improvements. See id. at 130. It is, however, another
matter altogether to enforce such an unexpressed restriction
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against a subsequent purchaser without knowledge of the
condition. See Island Venture, supra, 179 N.J. at 494 (noting a
good faith, innocent purchaser is "precisely the type of
purchaser whom the Legislature sought to protect when enacting
the Recording Act").
The recorded resolution states in plain and unmistakable
terms that Marina had "complied with all of the conditions" set
forth in the Ordinances conditionally granting the street
vacation and thus "the public right, title and interest in,
along, upon and over the land" was thereby "vacated, surrendered
and extinguished." Having reviewed each of the attachments
recorded with that document, we agree with the trial court that
none would put a purchaser on notice that the street vacation
was contingent on any public benefit improvements.
We need not reach Anchorage's contention that because the
street vacation had vested, the Borough was without authority to
divest it of its right in the property, relying on Stockhold v.
Jackson Township, 136 N.J.L. 264 (E. & A. 1947). We do not
agree that Stockhold stands generally for the proposition, as
Anchorage asserts, that "[u]nder the law in New Jersey, once the
right to a street vacation has vested, neither the municipality
nor the Court can impair or void such a right." As we have
already observed, we think it likely the Borough could have
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compelled Anchorage's predecessor in title to construct the
public benefit improvements or relinquish the property vacated
under the facts presented. That case, however, is not the one
presented. It is enough to find, as the trial court did, that
because Anchorage was a good faith, innocent purchaser without
knowledge of the agreement between its predecessor and the
Borough, it took title free of the unexpressed condition of
which it had no notice.
We are not unmindful that this result deprives the public
of the significant benefits of a public access walkway along the
water, a fuel dock and a boat ramp anticipated when the Borough
agreed to vacate a portion of 20th Street. We note only that
the power to have effectively conditioned the street vacation on
those benefits was in the Borough, and that the Recording Act
shields the subsequent purchaser from having to construct the
improvements having never been noticed of any such obligation.
See Island Venture, supra, 179 N.J. at 495.
We affirm the dismissal of the Borough's complaint,
substantially for the reasons expressed in Judge Sandson's
thorough and thoughtful oral opinion of June 7, 2016.
Affirmed.
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