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Affordable Housing Advisors Subject to Conflict Rules



August 29, 2003

By: Paul M. HaugeNancy A. Lottinville

In 1987, David Kinsey was appointed by the trial judge to serve as special master in a Mount Laurel fair housing case involving the Township of Berkeley Heights in Union County and several developers. Zygmunt Wilf had a financial interest in one of those development companies, K & K Developers, Inc. Years later, between 1994 and 1997, Kinsey performed planning services for two companies in which Wilf had a financial interest, although he never worked for K & K and never had Wilf himself as a client. In Deland v. Township of Berkeley Heights, 824 A.2d 185 (N.J. App. Div. 2003), the Appellate Division held that because of the influential role of special masters and the great public importance of Mount Laurel cases, special masters should be subject to the strict conflict-of-interest rules that apply to judges. Under this exacting standard, Kinsey’s indirect and professedly innocent relationship with Wilf was enough to disqualify him from serving as special master.

The litigation was initially settled in 1989, when Berkeley Heights rezoned two sites for affordable housing and entered into developer’s agreements with the owners of the two properties. In 1997, after construction was completed at one of the sites, the owner contracted to sell the other site to K & K. Kinsey later found that Berkeley Heights had satisfied its obligations under both the 1989 settlement and a subsequent order entered in 1995, and the township filed a motion to delete the second site from its fair housing plan. Kinsey recommended that the motion be denied. The court did deny the motion. Berkeley Heights then moved to acquire the site by eminent domain for open space and recreational uses. It also moved to disqualify Kinsey, based on information about his relationship with Wilf that had only recently come to light. For its part, K & K moved for an order enjoining Berkeley Heights from interfering with its development plans, including any action to exercise its eminent domain powers. The court denied the township’s motions, and granted K & K’s motion.

The Appellate Division held that the trial court had erred in refusing to disqualify Kinsey. The court recognized that planners who serve as special masters also provide advice to both municipalities and developers in other Mount Laurel cases, creating the potential for a conflict whenever a Mount Laurel site changes hands. The court also recognized the cost and delay that result when a special master has to be replaced. “Nevertheless,” the court held, we conclude that strict conflict of interest rules should apply to Mount Laurel special masters. Although the role of such a master is advisory only, the master’s recommendations may be highly influential in some circumstances. Moreover, Mount Laurel cases are matters of great public sensitivity. Consequently, courts must strive to preserve an appearance of complete partiality in the decision-making process.” The applicable Rule of Court requires disqualification of a judge whenever there is “any reason which might preclude a fair and unbiased hearing or judgment, or which might reasonably lead counsel or the parties to believe so.” R. 1:12-1(f). Under this standard, the court held, Kinsey should have been disqualified.

The disqualification of Kinsey did not alone invalidate the trial court’s denial of Berkeley Heights’ motion to delete the site from its plan, which the court then affirmed. However, the court reversed the trial court’s order enjoining the township from taking the site by eminent domain. While this would achieve the same result as the proposed deletion of the site from its fair housing plan, it would not affect the owner in the same way. To take the parcel, the court noted, Berkeley Heights would have to pay the owner the fair market value of the property as currently zoned. Thus, as long as it is willing to pay the owner this full value, the township is free to condemn the property and achieve the result it desired.

The holding of Deland on the role of eminent domain powers in Mount Laurel litigation strikes a fair balance between the statutory rights of municipalities and the constitutional rights of developers. But while it is essentially a procedural holding, the conflict-of-interest rule established by Deland will have a much more important practical impact on Mount Laurel cases, making them even more complicated and time-consuming. The Deland court itself considered a potential conflict that was remote, indirect, and several years old. Parties, judges, and prospective special masters in future Mount Laurel cases will have to perform much more thorough conflict searches than they are accustomed to doing in order to avoid the problems faced by Kinsey and the parties in Deland.