Rezem Family Associates, LP v. Borough of Millstone, 2011 WL 1432181 (App. Div. April 15, 2011). Plaintiff (“Rezem”) owned a 67-acre tract of vacant land. Rezem entered into a series of contracts to sell the land to developers. Each of those purchasers ultimately cancelled the contract. Plaintiff asserted that this was because the Township wished to frustrate any development on the site, in order to keep it as open space due to the property’s alleged “historic” nature. Rezem alleged that, among other fraudulent tactics, the Township had knowingly used false historic information, including maps that others had prepared negligently or fraudulently for the Township.
Eventually, plaintiff sold the land to Somerset County, at a price below the prices of the prior contracts of sale. Rezem then sued the Township and other municipal defendants under the federal Civil Rights Act, 42 U.S.C. §1983, and on other theories, for the difference in the sales price and punitive damages. Plaintiff also sued the mapmakers for negligence and fraud.
The Law Division granted defendants’ motion to dismiss the complaint for failure to state a claim. The Appellate Division affirmed in an opinion by Judge Ashrafi.
In order to win a Civil Rights Act case in the land use context, a plaintiff must show governmental misconduct that “shocks the conscience.” Defendants argued that their alleged misconduct did not rise to that level. The Law Division disagreed, holding that, giving Rezem the benefit of the doubt, as is required at the motion to dismiss stage, a jury might find that Rezem’s allegations sufficed in this regard. But the Law Division granted dismissal on a different basis: neither Rezem nor any of the contract purchasers had ever actually applied to change the zoning of the property or seek development approvals or variances. This failure to exhaust remedies afforded under New Jersey land use law was a prerequisite to filing a Civil Rights Act complaint.
The Appellate Division did not reach the “shocks the conscience” issue, but affirmed the Law Division’s ruling regarding the failure to exhaust land use remedies. Citing several prior appellate cases, Judge Ashrafi concluded that “[i]n the absence of any attempt to make use of available procedures and remedies, Rezem’s complaint improperly converts a zoning case into civil rights litigation.”
Judge Ashrafi affirmed the dismissal of the negligence and fraud claims against the mapmakers too. The Law Division had rightly held that those defendants owed no duty to Rezem. Besides, reliance was an element of both fraud and negligence claims, and Rezem had not relied on the maps. On the contrary, plaintiff had challenged the maps as inaccurate.
Finally, the panel rejected the municipal defendants’ cross-appeal seeking their attorneys’ fees as “prevailing parties” under the Civil Rights Act. As Judge Ashrafi noted, unlike successful Civil Rights Act plaintiffs, who should ordinarily recover fees unless special circumstances would make a fee award unjust, successful defendants must show that the plaintiff’s lawsuit was “frivolous, unreasonable or without foundation” in order to get counsel fees. The Law Division had found that some of Rezem’s claims were stronger than others, and only after “a careful review of the controlling law” had that court reached the decision to dismiss the case. The case was not frivolous, so the municipal defendants were not entitled to fees. The Appellate Division agreed.