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NJ Supreme Court Sees Standing in Tax Lienholders to Challenge Municipal Approval

NJ Supreme Court Sees Standing in Tax Lienholders to Challenge Municipal Approval

On August 2, 2018, New Jersey’s Supreme Court held that a holder of a municipal tax lien may have standing to challenge a local planning board’s approval for a neighboring property.  The syllabus and opinion for this case, Cherokee LCP Land, LLC v. City of Linden Planning Bd. (A-82-16) (079146), may be found here:

In 2013, after a series of transfers, bankruptcy proceedings, and abandonment, Cherokee LCP Land, LLC (“Cherokee”) acquired a Superfund site adjacent to property owned by Goodman North American Partnership Holdings, LLC (“Goodman”).  In that same year, Cherokee Equities, LLC (“Equities”) purchased three tax sale certificates on the Superfund site and initiated tax foreclosure proceedings.  After filing the foreclosure complaint, Equities assigned the certificates to Linden 587, LLC (“Linden 587”), and Linden 587 became plaintiff in the foreclosure proceedings.

Goodman had also submitted a site plan application for development of its property to the City of Linden Planning Board (the “Board”).  Seventeen days before Linden 587 was assigned the certificates, the Board conducted a meeting on Goodman’s application, at which Cherokee attended as an objector.  Notably, Equities and Linden 587 were not in attendance.  Notwithstanding, the Board unanimously approved Goodman’s application with conditions, and Cherokee subsequently offered to sell its Superfund site to Goodman for 2% of the project to avoid litigation.

Cherokee and Linden 587 (hereinafter “plaintiffs”) then filed a complaint in lieu of prerogative writs challenging the Board’s approval.  In response, Goodman moved to dismiss the complaint, arguing in part Cherokee and Linden 587 lacked standing.  The trial court granted Goodman’s motion, finding plaintiffs lacked standing and as such, did not need to reach the merits of the motion.  The trial court noted that neither “Linden 587’s affiliated status with Cherokee” nor its “status as a holder of three liens on the [Superfund site]” conferred standing.

On appeal, the Appellate Division affirmed the dismissal of plaintiffs’ complaint, finding again that plaintiffs lacked standing because it “[did not] appear[ ] before the Board nor file[ ] any objection with the Board.”  The Appellate Division also pointed to the fact Linden 587 had not foreclosed upon the Superfund site or redeemed the tax sale certificates before filing its complaint in lieu of prerogative writs.  As such, Linden 587 “did not have an existing property interest” in the Superfund site.

The Supreme Court granted plaintiffs’ petition for certification to decide whether Linden 587, as the holder of tax sale certificates and as plaintiff in the foreclosure proceedings, had standing as an “interested party” pursuant to N.J.S.A. 40:55D-4, “because its right to acquire or use the [Superfund site] has been destroyed by the Board’s approval of the Goodman plan.”  According no special deference to the trial court’s interpretation of plaintiffs’ standing, the Court held a tax lienholder who can show that its “right to use, acquire or enjoy property is or may be affected” if the application is granted is an interested party and therefore may have standing to challenge a planning board’s approval of a land use application.

While the Court’s conclusion is not determinative of standing, it does highlight the property rights afforded to tax lienholders and the importance of analyzing standing on a case-by-case basis.  The Court’s noting of the specifics of the Goodman project (i.e., that it would eliminate certain points of access to the Superfund site, interfere with an existing easement, and modify stormwater management) are telling of its decision to give plaintiffs’ standing to challenge with a limited possessory interest to the Superfund site.

The Court also added the following guidance: “If the Legislature had intended for only parties required to be notified to have standing, it would have said so and restricted the standing requirements accordingly. Instead, the Legislature allows any ‘interested party’ to appeal a board action, which is discrete from a noticed party under the [Municipal Land Use Law]. Standing does not depend upon ownership or proximity, but rather on meeting the definition of an ‘interested party.’”

As such, the judgment of the Appellate Division was reversed and the matter remanded to the trial court for further proceedings.

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