Posted by: Patricia Salkin | December 20, 2011

New Jersey Appellate Court Overturns City Council Resolution Based on Attorney’s Conflict of Interest

The plaintiff, Kane Properties sought variances before purchasing a parcel of land to build a twelve-story residential building and also a day care center in an area zoned purely industrial.  Skyline Condominium Association opposed the variances.  After several hearings, the Hoboken Board of Adjustments decided to grant the variance.  They found, from testimony offered by Kane, that it was difficult to have an industrial building on the property because of the extensive residential units surrounding the area.  The board ultimately concluded that the city’s zoning was outdated and not allowing a variance would result in the property becoming unusable.                          

Skyline appealed the board’s decision to the city council.  Two weeks after the board’s decision, however, Skyline’s attorney, Michael Kates, was appointed corporation counsel for the city of Hoboken.  Although Kates discontinued representation of Skyline for the appeal and was only at the city for a short time, there was some overlapping time where the board heard the appeal and Kates was employed as corporate counsel. 

During the appeal, plaintff Kane objected to Kates continuing as the advising council for the matter and, subsequently, Kates recued himself.  After Edward Buzak took over as council for this case, however, Kates remained involved.  Kates exchanged memorandum with Buzak regarding how to handle general zoning appeals and   Buzak referenced this memo to his own advice letter regarding the Kane matter, even “cc”ing Kates.  

After hearing evidence, the city council voted to grant the variance for the day care and deny all others.  After the decision but before concluding the process, the city council held a meeting to edit and finalize the resolution; Buzak was not present at this meeting but Kates was.  Besides giving advice, Kates also signed and approved the final resolution which denied most of the variances. 

This decision was appealed by Kane to the New Jersey appellate division.  Kane argued that he was entitled to the variance as matter of law and also that the decision was tainted by the participation of Kates.  First, the court explains that it must give deference through a presumption of validity to the city council’s holding, not the board’s holding.  Given this presumption and the evidence showing that the case was basically a policy dispute, the court decides the city council’s decision was reasonable and Kane was not entitled  not prevail as a matter of law. 

Next, the court turns to whether Kates’ participation tainted the board’s decision.  The court begins by asserting that Kates certainly had a conflict of interest.  His representation of Skyline in the past  meant Kates could not ethically provide advice regarding this appeal.  Next, the court finds that through the memos, presence and advice at the meeting, and finally signing the resolution, Kates, continued to participate both directly and indirectly in the proceedings. 

The court explains that the inquiry is whether a reasonable citizen would find “an appearance of improper influence.”  Here, the court is worried that an appearance of impropriety would discourage citizens from trusting the board’s decisions.  The court asserts, however, that not all conflicts will require a new hearing.  Here, the relevant facts are that the case could have gone either way and that all parties agreed the zoning laws were outdated.  These facts combined could lead residents to believe the city was forcing developers to apply for zoning ordinances so they could “reserve that relief for the politically well-connected.”  Thus, given these facts and the probability of public concern, Kates, finds the court, should have been screened completely from the application.  It was improper for Kates to give any advice, to be present during the meeting, and especially to sign the resolution. 

The court holds that the city council’s resolution must be vacated and remands the case.  Since, however, the record from the board was obtained before any conflict of interest, the court clarifies that it is not ordering new evidentiary hearings.  The city council must allow new oral arguments and reconsider the appeal as if they had never heard it before. 

Kane Properties, LLC v. City of Hoboken, 30 A.3d 348 (N.J. Super. A.D. 11/16/2011) 

This opinion can be accessed at: http://lawlibrary.rutgers.edu/courts/appellate/a3903-10.opn.html

 

 


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