THE HANSEN FOUNDATION, INC. v. CITY OF ATLANTIC CITY

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

THE HANSEN FOUNDATION, INC.,

a New Jersey not for profit

corporation; and HANSEN

HOUSE, LLC, a New Jersey

limited liability

company

Plaintiffs,

v.

No. 1:21-cv-20392 (NLH/EAP)

CITY OF ATLANTIC CITY, a OPINION

municipal corporation of the

State of New Jersey; the

ATLANTIC CITY ZONING BOARD OF

ADJUSTMENT; and SHEILA Y.

OLIVER, in her official

capacity as Commissioner of

the NEW JERSEY DEPARTMENT OF

COMMUNITY AFFAIRS

Defendants.

APPEARANCES:

Christopher S. D'Esposito, Esq.

Keith Alan Davis, Esq.

Stephanie E. Farrell, Esq.

Nehmad Perillo Davis & Goldstein, P.C.

4030 Ocean Heights Avenue

Egg Harbor Township, NJ 08234

Attorneys for Plaintiffs.

Richard D. Trenk, Esq.

Trenk Isabel Siddiqi & Shahdanian P.C.

290 W. Mt. Pleasant Ave.

Suite 2370

Livingston, NJ 07039

Attorney for Defendants City of

Atlantic City and Atlantic City

Zoning Board of Adjustment

Patrick D. Tobia, Esq.

Gordon & Rees

18 Columbia Turnpike

Suite 220

Florham Park, NJ 07932

Attorney for Defendant

Sheila Oliver

HILLMAN, District Judge

This matter involves a dispute between a group home for

women recovering from drug and alcohol addiction and the City of

Atlantic City, whose enforcement of various zoning provisions

has deemed Plaintiffs’ facility noncompliant. Currently pending

before the court are the Defendant City of Atlantic City /

Atlantic City Zoning Board of Adjustment’s (City Defendants)

Motion to Dismiss Plaintiffs’ Amended Complaint,1 (ECF No. 22) as

well as Defendant Sheila Oliver’s Motion to Dismiss Plaintiffs’

Amended Complaint (ECF No. 31.) For the reasons that follow,

the City Defendants’ motion will be granted in part and denied

in part and Defendant Oliver’s motion will be converted to a

motion for summary judgment.

1 Defendant Atlantic City Zoning Board of Adjustment has joined

in the City of Atlantic City’s motion on the basis that the City

and the Board are “inherently connected” and “share common

defenses to the within litigation.” (ECF No. 30 at 1.)

BACKGROUND

This is not the first time the core dispute between the

parties has been before this Court. See The Hansen Foundation,

Inc. v. City of Atlantic City, 504 F. Supp 3d 327 (D.N.J.

2020)(“Hansen I”). In 2019, Plaintiffs herein filed an action

in New Jersey Superior Court asserting roughly the same mix of

federal and state claims challenging the City Defendants’

outright ban on group homes in the City’s R-2 residential zone.

Id. at 332-33. Relying on Plaintiffs’ assertions of federal

statutory claims, Defendants removed that action to this Court.

Id. at 333. After considering cross-motions for summary

judgment and resolving Plaintiffs’ disparate treatment and

disparate impact claims as originally pled, this Court declined

to rule on Plaintiffs’ other federal claims and one state law

claim under the New Jersey Civil Rights Act (“NJCRA”) as unripe

because City zoning authorities had yet to rule completely on

those claims. Id. at 340-45. Having declined to exercise

jurisdiction over those claims at that time given the procedural

posture of the case, the court remanded the remaining state law

claim under the New Jersey Law Against Discrimination (“NJLAD”)

because by state statute the New Jersey Superior Court had

exclusive jurisdiction over that claim. Id. at 342.

Having apparently exhausted the City administrative process

without success, Plaintiffs’ bring the instant action,

reasserting their claims under the Fair Housing Act, 42 U.S.C. §

3604(f) (“FHA”)(Count One); Americans With Disabilities Act, 42

U.S.C. § 12132 (“ADA”)(Count Two); Rehabilitation Act, 29 U.S.C.

§ 794(a) (“RHA”) (Count Three); NJCRA, N.J.S.A. 10:6-1, 6-2

(Count 4); NJLAD, N.J.S.A. 10:5-12(d) and (g)(Count 5); and a

new claim under the Municipal Law Use Law, N.J.S.A. 40:55D-

10(g)(1)–(2)(“MLUL”)(Count 6). (ECF No. 17.)

City Defendants and Oliver now move to dismiss the First

Amended Complaint (“FAC”) on various grounds; City Defendants

challenging individual counts, and Oliver challenging the FAC as

a whole. Those arguments will be addressed in turn.

DISCUSSION

I. Subject Matter Jurisdiction

This Court has subject matter jurisdiction over Plaintiffs’

federal claims pursuant to 28 U.S.C. § 1331. This Court may

exercise supplemental jurisdiction over Defendants’ state law

claims under 28 U.S.C. § 1367.

II. Standard of Review

When considering a motion to dismiss a complaint for

failure to state a claim upon which relief can be granted

pursuant to Federal Rule of Civil Procedure 12(b)(6), a court

must accept all well-pleaded allegations in the complaint as

true and view them in the light most favorable to the plaintiff.

Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005). A pleading

is sufficient if it contains “a short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a)(2).

“While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and

conclusions, and a formulaic recitation of a cause of action’s

elements will not do.” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007) (alteration in original) (citation omitted).

To determine the sufficiency of a complaint, a court must

take three steps:

First, the court must tak[e] note of the elements a

plaintiff must plead to state a claim. Second, the

court should identify allegations that, because they

are no more than conclusions, are not entitled to the

assumption of truth. Third, whe[n] there are well-

pleaded factual allegations, a court should assume

their veracity and then determine whether they

plausibly give rise to an entitlement for relief.

Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting

Ashcroft v. Iqbal, 556 U.S. 662, 664, 675, 679 (2009)

(alterations, quotations, and other citations omitted).

A court in reviewing a Rule 12(b)(6) motion must only

consider the facts alleged in the pleadings, the documents

attached thereto as exhibits, and matters of judicial notice.

S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd.,

181 F.3d 410, 426 (3d Cir. 1999). “A motion to dismiss should

be granted if the plaintiff is unable to plead ‘enough facts to

state a claim to relief that is plausible on its face.’”

Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at 570).

III. Analysis

A. City Defendants’ Motion2

1. New Jersey Law Against Discrimination

Defendants first argue that Plaintiffs’ NJLAD count, Count

5, is not properly before this Court. Defendants are correct.

As noted above, in Hansen I this Court determined that

“[P]laintiffs' NJLAD claim . . . must be remanded to the

Superior Court for lack of jurisdiction . . . [because the] New

Jersey Superior Court has exclusive jurisdiction over claims of

discrimination in land use policy by a municipality that arise

under N.J.S.A. § 10:5-12.5[.]” Id., 504 F. Supp. 3d at 342.

Despite this earlier ruling, Plaintiffs now claim their NJLAD

claim in the FAC is properly before this Court because they are

suing under N.J.S.A. 10:5-12, as opposed to N.J.S.A. 10:5-12.5

(ECF No. 29 at 9). Plaintiffs misread the statute. Section 12

which Plaintiffs now rely on, pertains to “Unlawful employment

practices, discrimination[,]” as opposed to § 10:5-12.5, which

2 The court shall address the claims in the order in which City

Defendants present same in their Motion, as opposed to the order

in which they appear in Plaintiffs’ Amended Complaint.

specifically pertains to the issue at hand: “Regulation of land

use, housing, unlawful discrimination.”

Plaintiffs further cite to subsections (d) and (g)(1) of

10:5-12 in support of their current LAD claim. Said subsections

— again, both under the title “Unlawful employment practices,

discrimination” — provide as follows:

It shall be an unlawful employment practice, or, as

the case may be, an unlawful discrimination:

d. For any person to take reprisals against any

person because that person has opposed any

practices or acts forbidden under this act or

because that person has sought legal advice

regarding rights under this act, shared relevant

information with legal counsel, shared

information with a governmental entity, or filed

a complaint, testified or assisted in any

proceeding under this act or to coerce,

intimidate, threaten or interfere with any person

in the exercise or enjoyment of, or on account of

that person having aided or encouraged any other

person in the exercise or enjoyment of, any right

granted or protected by this act.

* * * *

g. For any person, including but not limited to,

any owner, lessee, sublessee, assignee or

managing agent of, or other person having the

right of ownership or possession of or the right

to sell, rent, lease, assign, or sublease any

real property or part or portion thereof, or any

agent or employee of any of these:

(1) To refuse to sell, rent, lease, assign,

or sublease or otherwise to deny to or

withhold from any person or group of persons

any real property or part or portion thereof

because of race, creed, color, national

origin, ancestry, marital status, civil

union status, domestic partnership status,

pregnancy or breastfeeding, sex, gender

identity or expression, affectional or

sexual orientation, familial status,

disability, liability for service in the

Armed Forces of the United States,

nationality, or source of lawful income used

for rental or mortgage payments[.]

N.J.S.A. 10:5-12(d), (g)(1).

Clearly, Subsection (d) is inapplicable, as the zoning

issues began prior to Plaintiffs’ opposition to same. With

respect to Subsection (g)(1), none of the defendants can be

deemed a “[p]erson, including but not limited to, any owner,

lessee, sublessee, assignee or managing agent of, or other

person having the right of ownership or possession of or the

right to sell, rent, lease, assign, or sublease any real

property or part or portion thereof, or any agent or employee of

any of these[.]” Instead, Defendants are a municipality and

“local civil or political subdivisions of the State of New

Jersey, or an officer, employee, or agent thereof.” N.J.S.A.

10:5-12.5. As such, this Court’s prior finding that it lacked

jurisdiction is wholly applicable to the instant matter.

Plaintiffs must pursue their NJLAD claims in State court, as was

previously held. Count 5 will be dismissed.

2. New Jersey Civil Rights Act

Next, Defendants move to dismiss Count 4, claiming the FAC

fails to identify an underlying constitutional right. This

Court disagrees. “A person may bring a civil action under the

[NJCRA] in two circumstances: ‘(1) when he's deprived of a

right, or (2) when his rights are interfered with by threats,

intimidation, coercion or force.’" Galicki v. New Jersey, Civil

Action No. 14-169, 2015 U.S. Dist. LEXIS 84365, at *22 (D. N.J.

June 29, 2015)(quoting Felicioni v. Admin. Office of Courts, 961

A.2d 1207, 1218 (N.J. App. Div. 2008)).

To that end,

The NJCRA is interpreted analogously to 42 U.S.C. §

1983. Accordingly, Plaintiff must plead facts

demonstrating a § 1983 violation in order to state a

viable NJCRA claim. To establish a cause of action

under § 1983, Plaintiff must demonstrate that: (1)

there was a violation of a right secured by the

Constitution and laws of the United States, and (2)

the alleged violation was committed by a person acting

under color of state law.

Handelman v. New Jersey, Civil Action No. 16-2325, 2016 U.S.

Dist. LEXIS 95471, at *26-27 (D. N.J. July 12, 2016) (cleaned

up).

However, in relation to the NJCRA,

By its terms, of course, [§ 1983] creates no

substantive rights; it merely provides remedies for

deprivations of rights established elsewhere." City of

Oklahoma City v. Tuttle, 471 U.S. 808, 816, 105 S. Ct.

2427, 85 L. Ed. 2d 791 (1985). Thus, "[t]o establish a

claim under 42 U.S.C. § 1983, [a plaintiff] must

demonstrate a violation of a right secured by the

Constitution and the laws of the United States [and]

that the alleged deprivation was committed by a person

acting under color of state law." Moore v. Tartler,

986 F.2d 682, 685 (3d Cir. 1993). Like § 1983, NJCRA

is a means of vindicating substantive rights and is

not a source of rights itself. Gormley v. Wood-El, 218

N.J. 72, 93 A.3d 344, 358 (N.J. 2014).

Eivich v. E. Greenwich Twp., 1:20-cv-06851,2021 U.S. Dist. LEXIS

42599, at *6 n.3 (D. N.J. March 8, 2021)(emphasis added).

Importantly,

"Section 1983 provides remedies for the deprivation of

both procedural and substantive rights while [the

NJCRA] provides remedies only for the violation of

substantive rights." Tumpson v. Farina, 218 N.J. 450,

477, 95 A.3d 210 (2014). In other words, the NJCRA

does not apply to procedural due process claims.

Mattson v. Aetna Life Ins. Co., 124 F. Supp. 3d 381,

390 (D.N.J. 2015) ("'[A] procedural due process claim

cannot be brought under the NJCRA.'") (quoting Major

Tours, Inc. v. Colorel, 799 F. Supp. 2d 376, 405

(D.N.J. 2011)).

O'Toole v. Klingen, Civil Action No. 14-6333, 2017 U.S. Dist.

LEXIS 5296, at *22-23 (D. N.J. Jan. 13, 2017).

Here, in Count Four of the FAC, Plaintiffs have pleaded

Defendants City and Board, acting under color of state law and

with discriminatory animus towards women in recovery, applied

Code provisions and ordinances that violated concepts of

substantive due process as defined by decisions of the New

Jersey Supreme Court. (Am. Compl. ¶¶ 267-74). Such allegations

sufficiently plead a claim under the New Jersey Civil Rights

Act. In particular, Plaintiffs more than adequately plead a

plausible claim that City Defendants’ definition of a family

unit violates long-established New Jersey law. (Am. Compl. ¶¶

32-35.) Accordingly, City Defendants’ motion to dismiss Count 4

will be denied.

3. Federal Claims

Lastly, the City Defendants move to dismiss all three of

Plaintiffs’ federal claims,3 arguing that Count 6, the MLUL

count, is the predominate claim in this litigation, thereby

compelling dismissal of Plaintiffs’ federal claims in deference

to state court where “this case belongs.” (ECF No. 22-1 at 23-

27.) The court first notes the irony of City Defendants’

position. As set forth above, it is the City of Atlantic City

that first brought this dispute onto this Court’s docket in 2019

by removing Plaintiffs’ initial action that had been originally

filed in state court. Moreover, in litigating Hansen I, City

Defendants sought not to dismiss those claims but instead, to

obtain summary judgment by arguing Plaintiffs’ federal claims

failed on the merits or were unripe. In doing so, City

Defendants never argued that even if said claims were ripe, this

Court should decline to adjudicate them.

Second, City Defendants’ motion conflates justiciability

and jurisdiction when it argues the Court should decline to

exercise “supplemental jurisdiction” over the federal claims in

Counts 1, 2, and 3 because Count 6, a state law claim, is

Plaintiffs’ true core claim. This nomenclature is incorrect as

3 Said claims arise under the: Fair Housing Act, 42 U.S.C. §

3604(f)(Count One); Americans With Disabilities Act, 42 U.S.C. §

12132 (Count Two); and, Rehabilitation Act, 29 U.S.C. § 794(a)

(Count Three).

a matter of statutory definition. By statute, “in any civil

action of which the district courts have original jurisdiction

. . . [the Court] shall have supplemental jurisdiction over all

other claims that are so related to . . . [to the original

jurisdiction claims] that they form the part of the same case or

controversy.” 28 U.S.C. § 1367(a). By definition, this Court

does not exercise supplemental jurisdiction over Counts 1, 2 and

3. Rather, it exercises primary or original jurisdiction over

those claims which authorize to certain aggrieved parties a

federal statutory cause of action. See DeAscencio v. Tyson

Foods, Inc., 342 F.3d 301, 308 (3d Cir. 2003) (“Under section

1367, a district court has authority to exercise supplemental

jurisdiction over non-federal claims arising from the same case

or controversy as the federal claim.”).

Moreover, and importantly, just as City Defendants did not

mount a complete challenge to the federal claims in Hansen I,

they offer no substantive challenge to the merits of Plaintiffs’

FHA, ADA or RHA claims in this case, at this stage. Rather,

what City Defendants appear to really want, without arguing it

per se, is for this Court to abstain from hearing Plaintiffs’

federal statutory claims on the merits. (ECF No. 22-1 at 24-

25.) The Court will decline to accept City Defendants’

invitation.

First, as we have noted, City Defendants, in litigating

Hansen I on the merits, have waived any prudential affirmative

defense such as abstention. See Winston v. Children & Youth

Services, 948 F.2d 1380, 1385 (3d Cir. 1991)(finding abstention

argument had been waived for failure to raise before a decision

on the merits had been reached and for failure to preserve the

issue earlier by discussing same in prior brief).

Second, none of the authorities cited by City Defendants’

counsel for or support the notion that this Court must decline

to adjudicate Plaintiffs’ federal claims on the merits.

DeAscencio does not stand for the proposition that a federal

court should abstain from hearing federal statutory claims

related to state claims. In that case, the court had assumed

jurisdiction and presided over a settlement of a federal

statutory opt-in collective action under the Fair Labor

Standards Act. The issue before the Court of Appeals was,

having assumed federal question jurisdiction in a collective

action, whether it was an abuse of discretion for the district

court to have exercised supplemental jurisdiction over a

belatedly asserted state law based class action. DeAscencio is

of no help to City Defendants here.

Lapid-Laurel, L.L.C. v. Zoning Bd. Of Adjustment of

Township of Scotch Plains, 284 F.3d 442 (3d Cir. 2002), cited at

length by City Defendants, actually stands for the opposite

proposition posed by their motion. In that case, the district

court and Court of Appeals adjudicated on the merits the

Plaintiff’s position that the municipality’s application of its

zoning code violated the FHA as amended. There was no dismissal

of Plaintiff’s federal statutory discrimination claims in Lapid-

Laurel simply because the challenged conduct involved local

zoning laws.

The closest City Defendants come to offering case law to

support their position is Chez Sez III Corp. v. Township of

Union, 945 F.2d 628 (3d Cir. 1991). In that case, the

plaintiff, owner of an adult video shop, challenged a local

zoning board’s adverse ruling against the store on federal

constitutional grounds. Relying on Pullman abstention,4 the

Court in Chez Sez did defer to the adjudicative process in state

court. But there are several meaningful distinctions between

this case and Chez Sez. First, the claim the Chez Sez court

abstained from was a federal constitutional claim. Chez Sez

merely articulates the longstanding prudential principle that a

federal court should not, as a matter of comity, reach a federal

constitutional issue where application of state law may resolve

the dispute. But this is not a case in which constitutional

avoidance should apply. Here, Plaintiffs assert not federal

4 Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496 (1941).

constitutional claims but federal statutory claims. Declining

to hear an otherwise valid statutory discrimination cause of

action expressly created by Congress is not abstention, it is

abdication.

Moreover, the Chez Sez Court not only placed its trust in

the state process, but it also predicted ways a state court

decision would eliminate the adjudication of the federal claim.

Id. at 633. This Court has no such confidence in this case.

The NJLAD claim remanded to state court in Hansen I is a matter

of exclusive state jurisdiction. Yet, for reasons unknown, the

state court has stayed that claim despite its jurisdictional

exclusivity, apparently in deference to this Court. Unlike Chez

Sez, there can be no confidence in such a case that litigation

in state court might resolve Plaintiffs’ statutory claims.

Lastly, as noted above, the City Defendants have waived

application of any abstention doctrine,5 by virtue of removing

Hansen I from state court. Clearly, Plaintiffs were satisfied

to be in state court, where they filed Hansen I initially and

where both their federal and state claims could be heard. For

City Defendants to seek that result now smacks of gamesmanship

5 Defendants cite to Younger v. Harris,401 U.S. 37 (1971) but as

noted above, do not expressly seek abstention under any theory.

and delay merely for the sake of delay in a dispute that is

already years old.6

B. Defendant Oliver’s Motion

Turning now to Defendant Oliver’s motion to dismiss, the

Court will exercise its discretion to convert the motion to one

for summary judgment as contemplated under Federal Rule of Civil

Procedure 12(d). Oliver seeks dismissal of Counts One, Two and

Three of Plaintiffs’ Amended Complaint on the bases of: Eleventh

Amendment immunity; lack of federal jurisdiction over local

zoning decisions; use of an alleged failure to grant an

accommodation as a means by which to obtain a mandamus that

6 In Cradle of Liberty Council, Inc. v. City of Phila., CIVIL

ACTION NO. 08-2429, 2010 U.S. Dist. LEXIS 1082(E.D. Pa. Jan. 7,

2010), our neighboring court astutely recognized the following:

"[I]f the State voluntarily chooses to submit to a federal

forum, principles of comity do not demand that the federal

court force the case back into the State's own system."

Hodory, 431 U.S. at 480. In this respect, the City cannot

assert Younger abstention after already having submitted to

a federal forum without previously raising this argument.

* * * *

[T]he Court recognizes the deference it owes to state

courts in accord with the notions of comity the Younger

doctrine embodies. Allowing the City to at once fully

litigate their case in federal court, but then, at the drop

of the Younger abstention argument, to abandon the federal

forum for a state court favors not the worthy principles of

comity, but the principles of forum-shopping and judicial

inefficiency.

Cradle of Liberty Council, Inc., 2010 U.S. Dist. LEXIS 1082, at

*8-12.

cannot be granted in this forum; and, applicability of a prior

settlement and release (Agreement) between the parties (ECF Nos.

31, 40).

The latter defense appears to have merit on its face and

would also, if sustained, moot the other defenses. However, in

order to consider the defense, this Court must assess the

provisions, scope and enforceability of the purported settlement

agreement. While the court may rely upon an undisputedly

authentic document in ruling on a motion to dismiss, see Mannery

v. Do, Civil No. 22-cv-4451, 2023 U.S. Dist. LEXIS 31845, at *4

(D. N.J. Feb. 27, 2023) (“[A] court may consider . . . any

undisputedly authentic document that a defendant attaches as an

exhibit to a motion to dismiss if the plaintiff's claims are

based on the document."), and here the Plaintiffs do not appear

to contest authenticity, the alleged agreement is nevertheless

outside the four corners of the Amended Complaint. Nor do

Plaintiffs base their claims on it. To the contrary, any

determination by the court that Plaintiffs’ claims are barred by

the settlement agreement makes the agreement antithetical to the

Amended Complaint not a foundation for it.

Under such circumstances, the court may invoke Federal Rule

of Civil Procedure 12(d) and convert the motion to dismiss into

one for summary judgment. See United States v. Estate of Elson,

421 F. Supp. 3d 1, 5 (D.N.J. 2019)(“[I]f, on a motion under Rule

12(b)(6) or 12(c), matters outside the pleadings are presented

to and not excluded by the court, the motion must be treated as

one for summary judgment under Rule 56.”). However, this Court

must first provide the parties notice of its intention to do so

before ruling under Federal Rule of Civil Procedure 56. Id.

(“ All parties must be given a reasonable opportunity to present

all the material that is pertinent to the motion[,]” after

conversion from 12(b)(6) to 56).

CONCLUSION

For the reasons set forth above, the court will grant in

part and deny in part City Defendants’ Motion to Dismiss (ECF

No. 22). Count Five of Plaintiffs’ Amended Complaint will be

dismissed and Counts One, Two, Three, Four and Six may proceed.

Defendant Oliver’s Motion to Dismiss will be denied without

prejudice except to the extent it asserts a defense of an

existing settlement and release. Notice is hereby given that

the court will convert that aspect of Defendant Oliver’s motion

to one for summary judgment. Fed.R.Civ.P. 12(d) and 56.

An appropriate Order will accompany this Opinion.

Dated: _3/21/23___ /s/ Noel L. Hillman J._

Camden, New Jersey Noel L. Hillman, U.S.D.J.