NJ Appeals Court Holds Council Members Were Not Disqualified Under the Common-Impact Exception

This post was authored by Matthew Loescher, Esq.

The case arose after the trial court found that the Borough of Englewood Cliffs failed to comply with its constitutional obligations and awarded a builder’s remedy to allow affordable housing to be built in the Borough. Following this decision, the Borough negotiated and entered into settlement agreements to allow affordable housing to be built. After a change in the membership of the Borough’s council, however, the Borough moved to vacate the settlement agreements – contending that two council members who had voted for the agreements had conflicts of interest. In this case, the Borough appealed from the order denying its motion to vacate the settlement agreements and the final judgment enforcing those agreements.

The record reflected that the Borough was aware of the alleged conflicts before it entered into the settlement agreements. Specifically council member Mehta had raised the conflicts in June 2020 and again in October 2020, and the Borough opposed Mehta’s position both in his litigation and at the council hearing to consider the settlement agreements. Additionally, council member Sylvan negotiated for a waiver of a right to challenge the settlement agreements. The court found that these facts established a clear and binding waiver by the Borough.

The court next noted that the trial judge found that council members Tsabari and Aversa were not disqualified under the common-impact exception – finding that the settlement agreements with Sylvan and Fair Share concerned the development of affordable housing in the Borough and that affordable housing impacted all the Borough’s residents. The trial court judge further found that the approvals of the settlement agreements were analogous to the adoption or updating of a master plan. The court determined that while the Sylvan settlement agreement involved specific property, the impact of the agreement was to satisfy the Borough’s overall obligation to allow affordable housing. As such, that obligation was not site-specific, but Borough-wide. Accordingly, no council member had an interest that was different from any other Borough resident.

The Borough next argued that the trial court erred in finding that it breached the settlement agreements and in awarding Sylvan counsel fees and costs. Pursuant to Article VII, paragraph 7.11 of the Sylvan settlement agreement, the parties expressly waived their right “to challenge the validity or the ability to enforce” the settlement agreement. Thus, Borough agreed to waive “any and all” claims and appellate rights related to the DJ Action in both agreements. When the Borough brought its motion to vacate the settlement agreements, it violated those provisions and thereby breached the agreements. Similarly, the settlement agreements with both Fair Share and Sylvan also stated that if a party breached the agreement, the other party would be entitled to counsel fees and costs. The court therefore rejected the Borough’s arguments and affirmed the awarding of these fees.

Matter of Application of the Borough of Englewood Cliffs, 2022 WL 2760666 (NJ App. 7/15/2022)