The Show Must Go On, Despite the Uncertainty in Affordable Housing Legislation

by:  Katharine A. Muscalino

The Appellate Division recently held that the pending uncertainty regarding affordable housing legislation, resulting from the elimination of the Council on Affordable Housing and Appellate Division’s rejection of the Third Round Fair Share rules is no excuse for courts to dismiss builder’s remedy lawsuits.  In Bonnabel v. Township of River Vale, the trial court dismissed a builder’s remedy lawsuit because it was uncertain as to the legal standard that would ultimately apply to the builder’s remedy.  In addition to the builder’s remedy lawsuit, the builder had filed an appeal of COAH’s third round certification of the Township’s plan.  If the builder fails to prevail in his challenge to the third round certification, the fair share plan enjoys a presumption of validity and the builder must prove his builder remedy claims by “clear and convincing evidence”.  If the builder were successful in his appeal of the third round certification, the Township’s fair share plan would not have a presumption of validity and the builder’s remedy suit would be subject to a less stringent standard.  Because the appeal of the third round certification remains in limbo pending the Supreme Court’s consideration of the third round rules, the trial court dismissed the builder’s remedy action without prejudice, specifying that the  plaintiff could refile his complain once the COAH appeal was decided, the governing standard was established.  All time periods, causes of action, and defenses were to be preserved.

The Appellate Division overturned the trial court’s dismissal, finding that the uncertainty surrounding the applicable legal standard did not constitute a failure to state a viable claim or non-justiciability.  It ordered that the case be reinstated, and directed the trial court to either 1) stay the case in full until the COAH waiver appeal was decided; 2) stay a trial but allow discovery to proceed; or 3) let the case proceed to trial, with the court making findings under both scenarios.  If the court were to proceed with trial, the judge would address whether the builder’s trial proofs overcame the presumption of validity, and if they fail to do so, whether they at least satisfy the lesser proof standard.

The case will be helpful to builders who struggle to make progress in development while municipalities and courts continue to drag their feet as they await the New Jersey Supreme Court’s decision on the Third Round rules.

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