Daily Development for Wednesday, February 4, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

Here is an Ira Meislick Contribution.  We hope to have some DD’s from non-New Jersey cases from Ira before too long.

ZONING AND LAND USE; PROCEDURE; CONFLICTS OF INTEREST: A public official is disqualified from participating in proceedings where he or she has a conflicting interest that may interfere with the impartial performance of that official's duties and the issue is not whether there is an actual conflict, but if there is a potential for conflict that would appear to taint the public official's partiality. Mountain Hill, L.L.C. v. Township Committee of the Township of Middletown, A-2404-06T2 (N.J. Super. App. Div. 2008)

A developer challenged municipal zoning ordinances on the basis that the mayor's involvement in the process constituted a conflict of interest that should have disqualified her from participating. A principal of the developer and the mayor developed a business relationship over a period of time when they both served on a municipal committee. The mayor owned a title company and did title work for the principal, the principal's wife, and later for the developer. After the developer filed a variance application with the municipality, the mayor did not disqualify herself from the proceedings. Instead, she elected to terminate her relationship with the developer and cease doing title work for it.

The lower court found that the conflict arising from the title work performed several years before the ordinances were adopted did not taint the mayor's performance of her duties. The developer appealed and the Appellate Division reversed, noting that under common law, later codified in the Municipal Land Use Law (MLUL), a public official is disqualified from participating in proceedings in which he or she has a conflicting interest that may interfere with the impartial performance of that official's duties.

The issue is not whether there is an actual conflict but if there is a potential for conflict that would appear to taint the public official's impartiality. The Court then noted that the question of whether the mayor's involvement as a title officer required her disqualification was governed by the Local Government Ethics Law (Ethics Law). The Ethics Law applies a "financial or personal involvement" test to determine if a public official should be disqualified for a conflict of interest. The Court then considered whether the mayor or her title company's financial involvement with the developer or its principals required her disqualification.

The Court rejected the municipality's argument that the major's providing title work for the developer had to be contemporaneous with her participation in the zoning proceedings in order to disqualify her. The Court noted that the fundamental question was whether the title work had the capacity to impair the mayor's objectivity and "tempt [her] to depart from [her] sworn public duty." The Court found that a reasonably informed citizen, knowing of the significant involvement of the mayor in the proceedings and of the major's issuing title insurance policies to the developer's principals, might reasonably expect that the mayor's objectivity or independent judgment would be tainted. The Court rejected the municipality's argument that the conflict was limited to times contemporaneous to the time of the ordinances because limiting a disqualifying conflict of interest in that manner would erode the public's confidence in the integrity of its elected officials and appointed representatives.

The Court found that the public might reasonably perceive that the involvement of the mayor with the developer, with whom she had done business, would impair her objectivity. The Court noted that such suspicion is especially true when the ordinance under consideration is being hotly contested, as it was in this case. Therefore, the Court found that the ordinances were invalid due to the mayor's failure to withdraw from participation when she had a conflict of interest.

Comment: For a perhaps more generous view, see the following recent unreported case, also from New Jersey: 

ZONING AND LAND USE; PROCEDURE; CONFLICTS OF INTEREST: Where a planning board's member's law firm has not represented an applicant and quite some time has passed since any member of that law firm represented any part owner of an applicant, there is no requirement that the board member recuse herself or himself. Meyer v. MW Red Bank, LLC, 401 N.J. Super. 482, 951 A.2d 1060 (App. Div. 2008), Unpublished.

A developer, originally a limited liability company, sought a variance as part of its application to redevelop a parcel as a mixed use development. The chair of the zoning board recused himself from the variance hearing on the variance because he had represented one of the developer's part-owners in the purchase of a house. An attorney who represented objectors in a previous related matter before the board inquired whether the acting chair, who was involved with the previous matter had any conflict of interest. The acting chair said she had no conflicts of interest regarding the developer's variance request and the board subsequently approved the developer's variance request.

The objector's attorney brought an action against the zoning board challenging the acting chair's participation in the hearing on the basis that the acting chair's father, a retired judge, held a position at same the law firm where the zoning board chair was a partner. The lower court dismissed the action, finding that any conflict of interest on the part of the chair could not be imputed to the acting chair, and that the acting chair's father's status at the law firm as "of counsel" could not be reasonably expected to impair the acting chair's ability to make an unbiased determination. The lower court also found that the objector's attorney had the opportunity to apply for a stay of the variance grant pending the outcome of the previous matter on the basis of the acting chair's purported conflict of interest, but failed to do so. As a result, he was barred from raising the challenge to the acting chair's participation.

On appeal, the Appellate Division pointed out that the law firm had never represented the developer and that it had been more than two years since any member of the law firm represented the part-owner of the developer or of any of its subdivisions. It also pointed out was that the acting chair's father only had an indirect connection to the representation of the developer's part-owner. The Court found that the chair's decision to recuse himself from the matter was a choice he made individually. It agreed with the lower court that there was no requirement that the acting chair do the same. Additionally, it found that the attorney had the opportunity during discovery to find out any additional facts regarding the chair's relationship to the developer's part-owner and if the relationship improperly influenced the acting chair's judgment. As a result of its findings, the Court upheld the zoning board's approval of the developer's variance request.

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