Bulletin Board Magazine, 2017 Volume 4

Legal/Legislative

INTRAFAMILIAL PROPERTY TRANSFERS / INNOCENT PARTY GRANTS Cedar Knolls 2006, LLC v. NJDEP

U.S. Home transferred responsibility for the common areas and management of the community to the Association. Individual members of the Association were bound to arbitration clauses included in purchase agreements. Various claims were made by the Association including claims asserted on behalf of individual members. The developer moved to compel arbitration under the purchase agreements and related documents. Questions arose as to whether claims alleging violations of the Planned Real Estate Development Full Disclosure Act (PREDFDA) and of the developer’s fiduciary duties were asserted on the behalf of individual members of the Association or on behalf of the Association, which argued it was not subject to arbitration agreement. The Court remanded to the trial court to allow the Association to file an amended complaint to clarify which claims were direct Association claims and which were brought on behalf of individual homeowners. In the underlying pleadings, all asserted claims were brought on behalf of the Association and its members, creating confusion. The Court remanded to allow the Association to separate out the asserted claims. While arbitration is a favored form of relief, it “should not be compelled when it cannot be shown the Plaintiff consented to arbitrate.” With remand, the Court temporarily set aside the order compelling arbitration of the PREDFA and fiduciary duty claims. The decision appears to be fact specific in that, assuming the remand results in a determination that the PREDFA and fiduciary duty claims were direct Association claims, the underlying Association documents apparently did not include arbitration provisions binding on the Association. Arguably, the court’s holding should not extend to associations where applicable governing documents contain express arbitration provisions applicable to association claims.

The property in question was acquired in 1977 by Robert Higginson and then was transferred several times after 1983 from parents to children, including transfers via trusts. Ownership of the property ultimately was established in Cedar Knolls 2006, an entity created by Higginson’s son. DEP denied the LLC’s application for innocent party grant funding for remediation of the property. The Appellate Division reversed the denial interpreting the legislative history of both the Brownfield Act and ISRA in favor of the applicant. Interfamilial transfers of property constitute an exception to a “change in ownership” that would otherwise trigger ISRA with respect to an industrial use and are exempt from ISRA compliance. The court construed the statutes together finding that ISRA and the Brownfield Act are part of a unified legislative strategy for remediation of contaminated sites. The court was not dissuaded by the fact that the “change in ownership” definition under ISRA is not expressly part of the Brownfield Act. “Innocent party grants were clearly intended to help the owners of a contaminated property defray the costs of remediation if they were not responsible for the contamination and had acquired the property prior to enactment of [ISRA], assuming they satisfied the other requirements.” The legislature was concerned with the substance and continuity of ownership rather than with technicalities of the legal form and concluded DEP improperly denied the grant request.

Legal/ Legislative by Michael J. Gross, Esq., Steven M. Dalton, Esq. and Steven W. Ward, Esq. Michael J. Gross is a Partner & Chair, and Mr. Dalton is a Partner of Giordano, Halleran & Ciesla, P.C.

The cost to remediate contaminated sites can be significant and the scope of liability under environmental laws is deliberately broad. In many cases under theories of strict, joint and several liability, property owners inherit liability for environmental contamination caused by predecessor owners. The affirmative innocent purchaser defense is intended to provide a mechanism to limit such liability exposure. However, under New Jersey law, innocent purchasers must complete all appropriate inquiry prior to property acquisition and complete remediation of known contamination to limit liability exposure with respect to later discovered environmental conditions. State funding may be an option in some cases to assist innocent parties in completion of remediation. The Hazardous Discharge Site Remediation Fund Innocent Party Grant is available to persons who acquire property prior to December 31, 1983, who continue to own that property until grant monies are released to them, and who did not cause the environmental condition or use the types of substances that require remediation. Cedar Knolls 2006, LLC v. NJDEP addressed the question of whether interfamilial transfers occurring after 1983 negate the ability to qualify for innocent party grant funding for remediation. The Appellate Division held that the transfer of property among family members prior to distribution of the grant monies and after 1983 did not negate the ability of the applicant to qualify as an innocent party for purposes of an innocent party grant.

PINELANDS PROTECTIONACT SUPERCEDES THE MLUL

Michael J. Gross

Peg Leg Webb v. NJ Pinelands Commission

map.” Further, the Commission found that the invalidation of the rezoning placed the municipality out of compliance with the CMP and the Township should have either passed another ordinance, or in the alternative, applied to the Commission for certification of the prior ordinance. Accordingly, the Commission held that the approval was properly “called up”. On appeal, the Appellate Division reaffirmed the legal precedent that “the Act and the regulations promulgated under it supersede the MLUL.” In doing so, the court found that “the ordinance was not in compliance with the CMP, and the CMP trumps the ordinance.” The decision succinctly summarizes the authority of the Commission related to the local approval process. Those developing in the Pinelands should be familiar with Pinelands review procedures to avoid project delays. ARBITRATION OF ASSOCIATION CLAIMS Greenbriar Oceanaire Community Association v. U.S. Home Corp. In a decision approved for publication, the Appellate Division addressed arbitration of direct homeowners association claims as compared to claims of the association made on behalf of individual homeowners. The court held that arbitration applied to claims brought on behalf of individual homeowners but not to direct claims of the association.

In a recent unpublished decision, the Appellate Division reaffirmed that the Pinelands Protection Act (Act), as well as any associated regulations, supersede the authority of municipalities under the Municipal Land Use Law (MLUL). Specifically, the Comprehensive Management Plan (CMP) adopted by The Pinelands Commission (Commission) supersedes a land use approval issued by a municipal planning board. The Commission recommended that certain property in Jackson Township be rezoned from Rural Development (RD) to Forest Area (FA), which rezoning was subsequently adopted in 2005. The Township’s rezoning was challenged and the trial court invalidated the rezoning for lack of proper procedure. In 2012, petitioner obtained preliminary site plan approval for a resource extraction facility from the Township’s Planning Board, which assumed the property was still zoned RD based on the court invalidation of the rezoning. Resource extraction was a permitted conditional use in the RD zone, but not permitted within the FA zone. The Commission “called up” the approval for review. After a hearing before an Administrative Law Judge (ALJ), the Commission adopted the ALJ’s decision, which held that the trial court’s invalidation of the municipal rezoning “did not change the designation of the subject property from RD to FA on the CMP’s land capability

Steve Dalton

Continued ›

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