SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
DKM Residential Properties Corporation (DKM) developed and constructed the Cherry Valley Country Club
(Cherry Valley) residential development in the Township of Montgomery (Township). As certificates of
occupancy were obtained from the Township between 1995 and 1998, DKM sold the
homes in the development and retained a possessory interest only in a few
of the non-residential structures. In May 2000, the Townships construction department began receiving
letters from Cherry Valley homeowners about improper installation of the stucco-like exterior finish
that was applied to their homes. The homeowners maintained that the installation was
not in accordance with the manufacturers specifications and that as a result, moisture
had penetrated the homes, causing decay, rotting, and mold accumulation.
On investigation, the Townships construction official determined that the installation had not
complied with the manufacturers specifications and was in violation of the New Jersey
UCC. The Township official consulted a representative of the Department of Community Affairs
(DCA) and was advised that the Township had the authority to bring an
enforcement action against DKM. Thereafter, the Townships construction official prepared five notices of
violation (NOVs) identifying sixty-two individual instances of violation, all but one of them
pertaining to the residences. The NOVs set forth a timeframe for correction of
the alleged defect and further contained a specific provision for the imposition of
fines for the failure to make the corrections within the specified timeframe.
DKM appealed to the Townships Construction Board of Appeals (Board), challenging the
NOV on several grounds, including a challenge to the Townships jurisdiction based on
the fact that DKM no longer owned the properties. DKM also filed a
complaint in lieu of prerogative writ 2001 against the Township and the Board,
seeking to have the NOVs vacated and the Board enjoined from proceeding with
a hearing. DKM moved for summary judgment, and the Board moved to dismiss
the complaint for failure to exhaust administrative remedies. The Board and the Township
later moved for summary judgment.
While the motions for summary judgment were pending, the Board conducted three days
of hearings in the various NOVs then pending and rendered decisions concluding, among
other things, that the Township had authority to issue NOVs and that the
faulty installation constituted code violations. The Board ordered DKM to submit a remediation
plan, subject to the consent of the involved homeowners.
Thereafter, the Law Division stayed all aspects of the Boards decision, with
the exception of the requirement that DKM submit a remediation plan. In respect
of the complaint, the Law Division granted summary judgment to the Township and
the Board and dismissed DKMs complaint. In so doing, the court rejected DKMs
argument that the Township lacked the authority under the UCC to issue an
NOV to a builder once a certificate of occupancy had issued. The stay
granted to DKM was vacated.
On appeal, the Appellate Division reversed the judgment below and remanded for entry
of an order vacating the summary judgment entered in favor of the Township
and the Board, reinstating the amended complaint, and granting summary judgment to DKM.
The panel held that neither the UCC nor its regulations authorized the Township
to bring an enforcement proceeding against DKM concerning property that DKM no longer
owned. Rather, the court determined that the municipal enforcing agency was authorized to
bring an enforcement proceeding against a builder/owner/developer only during the construction process. Among
other concerns, the panel expressed concern about homeowners using the Codes regulatory enforcement
process to pursue private claims, thereby unfairly shifting the cost of such actions
to unaffected taxpayers.
The Supreme Court granted the Townships and the Boards petition for certification.
HELD: A municipal construction official has the authority under the Uniform Construction Code
Act to cite a developer for a construction code violation in respect of
property that has been conveyed and for which a certificate of occupancy has
issued.
1. The UCC Act is remedial in nature, and designed to address directly
matters affecting health, safety, and welfare. By its own terms, its provisions must
receive liberal construction to advance its purposes. The UCC Act charges the DCA
Commissioner with all powers to effectuate its purposes, including the power to enforce
the UCC and related subcodes. He is assisted in that responsibility by locally
appointed and State-certified municipal construction officials and subcode officials (municipal enforcing agency). (pp.
8-12)
2. Because the penalties under the UCC accomplish goals other than merely to
secure immediate compliance with the Act by exerting a continuing and increasing penalty
for an unabated condition, the penalty section does not evince a legislative intent
to restrict penalty enforcement to actions only against the landowner in possession, and
not against a violating developer who had been issued a certificate of occupancy
on the property. (pp. 12-14)
3. The UCC Act and its regulations reasonably permit the issuance of an
NOV and the imposition of a penalty against a developer after a certificate
of occupancy has issued. (p. 14)
4. Absent any express or clearly implied limitation on the municipal enforcing agencys
authority, there is no general lack of power on the part of the
municipal enforcing agency to issue an NOV with an appropriate penalty to a
developer notwithstanding that a certificate of occupancy may have issued. (pp. 16-17)
Judgment of the Appellate Division is REVERSED.
JUSTICES LONG, ZAZZALI, WALLACE, and RIVERA-SOTO join in JUSTICE LaVECCHIAs opinion. CHIEF
JUSTICE PORITZ and JUSTICE ALBIN did not participate.
SUPREME COURT OF NEW JERSEY
DKM RESIDENTIAL PROPERTIES
CORP.,
Plaintiff,
v.
THE TOWNSHIP OF MONTGOMERY
and THE CONSTRUCTION BOARD OF
APPEALS OF THE TOWNSHIP OF
MONTGOMERY,
Defendants-Appellants.
Argued October 13, 2004 Decided January 24, 2005
On certification to the Superior Court, Appellate Division, whose opinion is reported at
363 N.J. Super. 80 (2003)
Trishka Waterbury argued the cause for appellants (Mason Griffin & Pierson, attorneys; Ms.
Waterbury and Kristina P. Hadinger, of counsel).
William John Kearns, Jr., argued the cause for amici curiae New Jersey State
League of Municipalities and New Jersey Institute of Local Government Attorneys (Kearns, Vassallo
& Kearns, attorneys).
Christine D. Petruzzell argued the cause for amicus curiae New Jersey Builders Association
(Wilentz, Goldman & Spitzer, attorneys).
JUSTICE LaVECCHIA delivered the opinion of the Court.
We granted certification in this matter to determine whether the Uniform Construction Code
Act, N.J.S.A. 52:27D-119 to 141 (UCC Act), permits a municipal construction official to
cite a developer for a construction code violation in respect of property that
has been conveyed and for which a certificate of occupancy has issued. The
Appellate Division concluded that municipal officials lacked authority to act in those circumstances.
DKM Residential Props. Corp. v. Tp. of Montgomery,
363 N.J. Super. 80, 83
(2003). Because we discern no such limitation to be express or implied from
the UCC Act, and because the Act itself directs that the powers conferred
be liberally construed, we reverse and remand.
I.
DKM Residential Properties Corporation (DKM) developed and constructed the Cherry Valley Country Club
(Cherry Valley) residential development in the Township of Montgomery (Township). Between 1995 and
1998 as certificates of occupancy were obtained from the Township, DKM sold the
homes in the development and retained a possessory interest only in a few
structures (a tennis clubhouse, golf clubhouse, cabana pool building, and maintenance building).
In May 2000, the Townships Construction Department began receiving letters from Cherry Valley
homeowners about improper installation of the synthetic stucco-like exterior finish (called Exterior Insulating
Finish System (EIFS)) that was applied to their new homes. The homeowners enclosed
engineering reports concluding, after inspection, that the EIFS was not installed according to
manufacturers specifications. As a result of the improper installation, moisture had penetrated exterior
walls and had caused decay, rotting, and mold accumulation in the homes.
Upon reviewing the reports submitted, the Townships construction official determined that the installation
had not complied with the manufacturers specifications and was in violation of the
New Jersey Uniform Construction Code (Code), N.J.A.C. 5:23-1.1 to -12.12. The municipal construction
official consulted a representative of the Department of Community Affairs (DCA) and was
advised that the Township had the authority to bring an enforcement action against
DKM and, so, the Townships construction official prepared five notices of violation (NOVs)
See footnote 1
identifying sixty-two individual instances of violation. Sixty-one of the violations pertained to single-family
homes. The remaining violation pertained to the clubhouses and maintenance center owned by
DKM. The NOVs stated that DKMs failure to correct the violations within a
specified timeframe would result in the imposition of fines in the amount of
$500 per week.
The first NOV issued on December 12, 2000. It alleged that DKM had
installed improperly the EIFS of nine homes and demanded that DKM reinstall the
EIFS by January 8, 2001. DKM appealed to the Townships Construction Board of
Appeals (Board), initially challenging the NOV on three grounds: the Township lacked jurisdiction
because DKM no longer owned the properties; there was no violation of the
Code; and the Townships compliance demands were unreasonable. An added fourth challenge claimed
that because the Township failed to serve the NOVs on the homeowners when
DKM was served, the NOVs were void.
DKM also filed a complaint in lieu of prerogative writ in February 2001,
naming as defendants the Township and the Board. The action sought to have
the NOV vacated and the Board enjoined from proceeding with a hearing. DKM
moved for summary judgment, and the Board and the Township moved to dismiss
the complaint for failure to exhaust administrative remedies. A motion for summary judgment
was filed later by defendants.
From February through July 2001, while the motions were pending, the Township issued
the four other NOVs concerning various properties. Each required compliance by a specific
date. DKM appealed to the Board on each and amended accordingly its complaint
pending in the Law Division.
See footnote 2
The Board conducted three days of hearings and rendered decisions memorializing the Boards
conclusions that: 1) the Township had the authority to issue NOVs; 2) the
faulty installation of EIFS constituted a Code violation; 3) the compliance dates demanded
in the NOVs were reasonable; and 4) the NOVs were not invalidated merely
because the homeowners were not served concurrently with DKM. The Board ordered DKM
to submit a remediation plan, subject to the consent of the homeowners whose
properties were the focus of the first NOV.
On April 3, 2001, the Law Division stayed all aspects of the Boards
decision, with the exception of the requirement that DKM submit a remediation plan.
See footnote 3
In respect of the complaint, the court granted summary judgment to the Township
and the Board, and dismissed DKMs complaint. In so doing, the court rejected
DKMs purely legal argument that the Township lacked authority under the UCC Act
to issue an NOV to a builder once a certificate of occupancy had
issued. The stay granted to DKM was vacated.
DKM appealed and, thereafter, its motion for a stay pending appeal was denied
by the Law Division, by the Appellate Division, and by this Court. On
the merits of DKMs appeal, however, the Appellate Division reversed the judgment below
and remanded for entry of an order vacating the summary judgment entered in
favor of the Township and the Board, reinstating the amended complaint, and granting
summary judgment to DKM. DKM Residential Props., supra, 363 N.J. Super. at 95-96.
The panel held that neither the UCC Act nor its regulations authorized the
Township to bring an enforcement proceeding against DKM concerning property that DKM no
longer owned. Id. at 91-92. The court determined that the municipal enforcing agency
was authorized to bring an enforcement proceeding against a builder/owner/developer only during the
construction process. Id. at 92. A contrary result, the court stated, would undermine
the UCC Acts purposes of encouraging innovation, eliminating regulatory measures that unnecessarily increase
new development costs, and increasing the feasibility of modern construction. Id. at 91.
The Appellate Division panel also expressed concern about homeowners using the Codes regulatory
enforcement process to pursue private claims, thereby unfairly shifting the cost of such
actions to unaffected taxpayers. Id. at 95. In a concurring opinion, Judge Wefing
noted the absence of any allegation in the NOVs of improperly issued certificates
of occupancy or the abandonment of homes due to substandard construction, suggesting that
such allegations might have made the Townships argument more sympathetic. Id. at 96.
We granted the petition for certification filed by the Township and Board.
179 N.J. 311 (2004). DKM has not participated in the proceedings before us. We
take from DKMs non-participation that the particular violations are no longer in controversy
and we are confronted here only with the legal challenge to the municipal
enforcing entitys authority to act against a developer after a certificate of occupancy
has issued. We are benefited here by the vigorous involvement of both the
New Jersey Builders Association (NJBA) and the New Jersey League of Municipalities (League),
which were granted amicus curiae status.
II.
The Legislature enacted the UCC Act in 1975 to address the escalating costs
of construction. L. 1975, c. 217, § 1. The enactment states clearly its purpose:
to reduce construction expense by eliminating the divergent and burdensome municipal construction codes
in existence at the time. N.J.S.A. 52:27D-120. Accordingly, the UCC Act provides for
promulgation by the DCA Commissioner of a uniform construction code to establish unitary
up-to-date construction standards, and further provides for standardization of enforcement practices to preempt
conflicting municipal policies. N.J.S.A. 52:27D-122(b), -122.1(a), and -123.1. The UCC Act is remedial
in nature, and designed to address directly matters affecting health, safety and welfare.
See Cyktor v. Aspen Manor Condo.,
359 N.J. Super. 459, 467 (App. Div.
2003) (quoting Commissioner of DCAs discussion of UCC Acts purpose). By its own
terms, its provisions must receive liberal construction to advance its purposes. N.J.S.A. 52:27D-141.
The UCC Act charges the DCA Commissioner with all powers necessary or convenient
to effectuate its purposes, including the power to enforce the uniform construction code
and related subcodes (collectively, the Code) promulgated pursuant to the UCC Acts authorization,
and to prosecute, or cause to prosecute, violators of the UCC Act or
its Code. N.J.S.A. 52:27D-124; see also Cyktor, supra, 359 N.J. Super. at 466-67.
The Commissioner is assisted in that responsibility by locally appointed and State-certified municipal
construction officials, and subcode officials (collectively known as the municipal enforcing agency). N.J.S.A.
52:27D-126; see also N.J.S.A. 52:27D-127 (establishing construction boards of appeals to hear and
decide appeals from decisions by enforcing agencies).
The specific power in question here is the municipal enforcing agencys authority to
issue a notice of a violation to a builder concerning construction for which
a certificate of occupancy has issued. To address the issue, we turn first
to the penalty provision, N.J.S.A. 52:27D-138, which authorizes the imposition of sanctions in
the form of monetary penalties on violators of the UCC Act or the
Code. Subsection a. addresses the issuance of penalties to any person or corporation,
who
(1) Violates any of the provisions of [the] act or rules promulgated hereunder;
(2) Constructs a structure or building in violation of a condition of a
building permit;
* * *
(4) Makes a false or misleading written statement, or omits any required information
or statement in any application or request for approval to an enforcing agency
or the department. . . .
2. Unless an immediate hazard to health and safety is posed, the construction
official shall permit such time period for correction as is reasonable within the
context of the situation.
DKM RESIDENTIAL PROPERTIES
CORP.,
Plaintiff,
v.
THE TOWNSHIP OF MONTGOMERY
and THE CONSTRUCTION BOARD OF
APPEALS OF THE TOWNSHIP OF
MONTGOMERY,
Defendants-Appellants.
DECIDED January 24, 2005
Justice Long PRESIDING
OPINION BY Justice LaVecchia
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
Specifically, the NOVs alleged: 1) violation of the 1995 Council of American
Building Officials (CABO) code § 703.1, a sub-code that specifies that [a]ll exterior walls
shall be covered with approved materials designed and installed to provide a barrier
against the weather. . .; 2) failure to install the EIFS in accordance
with manufacturers specifications, as approved by the Building Officials and Code Administrators (BOCA);
and 3) violation of N.J.A.C. 5:23-2.21, which sets forth requirements for construction control.
Footnote: 2
The fifth NOV, to which the parties refer, does not appear in the
record before us. However, because DKM is no longer participating in the appeal
or contesting any issues, the record deficiency appears to be of no moment.
Footnote: 3
We note that DKM filed another amended complaint, but nonetheless submitted a
plan to the Board under protest. The Board reviewed the remediation plan and
directed certain revisions for the plans approval. DKMs final remediation plan was accepted
by the Township and included all the homes that were listed in the
five NOVs, with the exception of those homes that currently were being remediated
or had been remediated. The final remediation plan required all aggrieved homeowners to
consent in writing to the remediation that DKM would undertake. The consent form
stated that if the homeowner declined remediation by DKM, DKM would be under
no further obligation pursuant to the NOVs. The plan also revoked all fines
levied against DKM, but preserved the Boards right to re-institute the fines if
DKM failed to comply with the schedule included with the final remediation plan.
Those fines were to accrue on the basis of $500 per week, beginning
with the original compliance date of October 5, 2001, for the homes listed
in the first three NOVs. Fines for homes listed in the last two
NOVs would run, if at all, from the date of DKMs failure to
comply with the revised schedule.
Footnote: 4
Other violations listed in N.J.S.A. 52:27D-138 are not pertinent in this appeal.
Footnote: 5
We take note of the rule proposal and rule adoption notices published
in the New Jersey Register by the DCA that clarified the municipal enforcing
authoritys powers and specifically recognized the authority to issue citations for health and
safety violations after a certificate of occupancy or of approval has issued. See
35 N.J.R. 2423(a);
35 N.J.R. 4713(a); N.J.A.C. 5:23-2.23(p). Although those regulations post-date this
litigation and do not control the question we address, it appears from that
recent rule promulgation that the DCA considers a municipal enforcing agency to have
continuing authority to issue NOVs. We express no view on the breadth of
that authority, as the regulations application is not before us.