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New Jersey Appellate Court Rejects Default Approval Upon Planning Board's Failure To Act, Absent Bad Faith or Egregious Conduct by Board



October 31, 2002

New Jersey’s Appellate Division recently reversed a default approval of a general development plan which the trial court granted for failure of the municipal planning board to act within the determination period set forth in the statute. In doing so, the Appellate Division demonstrated once again that it will go to great lengths to avoid default approvals even where the Municipal Land Use Law (“MLUL”) would otherwise seem to mandate them. The decision, Eastampton Center, LLC v. Planning Board of the Township of Eastampton, ___ N.J. Super. ___, 805 A.2d 456 (App. Div. 2002), was decided on August 20, 2002 and has been approved for publication.

The saga of Eastampton Center, LLC (“Developer”) began in 1986, when it acquired a 210-acre tract in Eastampton Township, Burlington County. At the time of acquisition, the property was zoned solely for agricultural use. After a series of rezonings, it ultimately came to be zoned Town Center, which allowed both residential and commercial uses. Meanwhile, in the late 1990s, the Township undertook various efforts, including master plan amendments and zoning changes, to preserve open space.

Developer proposed 577 residential units, including 300 single-family homes, together with 210,000 square feet of commercial development, on the tract. The project would have increased Eastampton’s total housing stock by 25%. On September 2, 1998, Developer submitted an application to the Township of Eastampton Planning Board (the “Planning Board”) seeking approval of a General Development Plan (GDP). The Planning Board’s consultants recommended that the application be deemed incomplete because it did not include various of the statutory requirements (e.g., land use and open space plan, circulation plan, etc.) which had been adopted in the municipal ordinance by reference to the MLUL, N.J.S.A. 40:55D-45.2. The Planning Board accepted these recommendations and made such a determination on October 14, 1998. Developer made various additional submissions to the Planning Board on October 20, 1998 and October 29, 1998, although the Planning Board maintained that the latter submission was not actually received until November 2, 1998. The Planning Board’s consultants again identified various items which had not been submitted and therefore recommended another determination that the application was incomplete. The Planning Board again made such a determination on December 16, 1998. This action occurred just within, or just outside, the 45-day period within which the Planning Board must make a completeness determination, depending on whether the submission was actually received on October 29, 1998 or November 2, 1998.

Developer, clearly becoming impatient, advised the Planning Board on January 13, 1999, of its position that the Planning Board had no authority to declare the application incomplete because the Township had not, as required by statute, adopted by ordinance a checklist for GDP applications (instead, the Township merely incorporated as its checklist the items in the MLUL, by reference to the relevant section of the MLUL). Developer also demanded an immediate hearing on the completeness issue, although the Planning Board simply ignored this request.

In early February, 1999, Developer, now even more impatient, took the statutory steps to demand a default approval for failure to take any action within the statutory period for reaching a decision on the merits of the application. The Township refused to issue a default approval, and Developer appealed to the Superior Court. Meanwhile, the following month, the Township rezoned the subject property to implement the revised master plan. Pursuant to the new zoning, all residential use was prohibited on Developer’s property.

The trial court found Developer’s position persuasive and awarded a default approval. This is significant because it confers certain vested rights that would protect Developer from zoning changes, including the zoning changes adopted in March, 1999. Although the case had a somewhat complex procedural history, the salient points of law established by the Appellate Division’s opinion can be summarized as follows:

First, the Court concluded that adoption of a checklist by reference to the MLUL “effectively sets forth the requirements of a GDP application.” Thus, the Court rejected Developer’s contention that the Township lacked authority to deem the application incomplete for failure to adopt a valid checklist of application requirements. Next, the Court turned its attention to the dispute about whether the Planning Board rendered a completeness determination within the 45 days allowed by statute. Focusing on the size of the project and the issues identified by the Planning Board’s consultants in their reports recommending that the application be deemed “incomplete”, the Court noted the difference in the duration of vested rights accorded by GDP approval (20 years) versus that by site plan or subdivision approval (up to 5 years). The Court explained, “we are convinced that given the impact of GDP approval, and the relatively short period – 95 days allowed for action on an application for a major subdivision or a site plan of more than ten acres or ten units, the Board was entitled to take a strict view of the required elements of plaintiff’s GDP application.” With respect to the claim that the Planning Board’s action was untimely by several days, the Court was not at all troubled by this technicality. Indeed, it explained that “we see no need for resolution of that disputed fact, since even assuming a three day delay in the Board’s determination of incompleteness, we find no basis for the “drastic remedy” of automatic approval of the GDP’s completeness, much less for automatic approval of the application itself.”

Next, the Court considered the award of default approval of the application itself. Since the Court ruled that the application was incomplete, as a matter of law the determination period could not begin and, therefore, as a matter of law there could not be a valid default approval. Nevertheless, the Court elected to engage in an extensive discussion relative to the trial judge’s error in awarding default approval. Reviewing a series of prior decisions in which New Jersey courts have established the principle that default approvals should be awarded with caution, the Court nevertheless explained that “[d]espite the seemingly mandatory language of N.J.S.A. 40:55D-10.3, there is ample precedent for a court to deny automatic approval to a development application, especially where the municipal board’s failure to act within the statutory deadline is technical or inadvertent, and where there is no evidence of intentional delay or inattention to the application.” The Court then recited a series of past decisions in which what appeared to be a clear failure to act within the required determination period nevertheless, due to mitigating factors, did not justify the award of default approval. These include where the board was operating under an understandable misconception of law (Manalapan Holding Co. v. Planning Board of the Township of Manalapan, 92 N.J. 466, 480 (1983) and Allied Realty v. Borough of Upper Saddle River, 221 N.J. Super. 407, 418-19 (App. Div. 1987)); where a technical violation of the law, such as a violation of the Open Public Meetings Act, occurred (Precision Industrial Design Co. v. Beckwith, 185 N.J. Super. 9, 18 (App. Div. 1982)); where an inadvertent mistake, such as misplacing the development application, resulted in inaction (D’Anna v. Planning Board of Township of Washington, Morris County, 256 N.J. Super. 78, 83 (App. Div. 1992)); or where the applicant appeared to consent to an extension of time (Star Enterprise v. Wilder, 268 N.J. Super. 371, 376-77 (App. Div. 1993)). Against this precedent, the Court concluded that “the course of events created by the parties bespeaks innocent inadvertence and misapprehension.” Thus, “[t]he remedy of automatic approval under the circumstances here would be disproportionately weighed against the public interest.”

To make this decision a complete rejection of default approvals arising from inaction with respect to completeness, the Court expressly disapproved the holding in Purwin v. Bernards Township Planning Board, 221 N.J. Super. 243 (Law Div. 1987), “to the extent that it granted automatic approval to a minor subdivision application because it found the Planning Board erred in determining the application to be incomplete and therefore obviously did not act on the merits within the required time after the application was deemed complete.” Purwin was the only reported decision which awarded what appears in the statute to be a mandatory default approval when a planning or zoning board fails to render a completeness determination, and therefore a decision on the merits, within the period provided by statute.

Finally, adding insult to injury, the Court ruled that pursuant to the “time of decision” rule, Developer has no vested rights and therefore is subject to the new zoning adopted in March, 1999. The Court found that Developer had “ample notice and ample opportunity to present a complete general development plan for approval long before the new zoning ordinance was adopted.” Further, the Court found no special equities or reliance on the part of Developer that would mitigate against this harsh result, and in fact found that the public interest justifies its application against Developer.

The lesson for developers from Eastampton Center is that absent obstructionism by the board or evidence of bad faith, default approval is not a realistic remedy where the board fails to render a timely completeness determination and as a result takes no action on the merits of the application within the applicable determination period.