# STEVEN I. GROSS VS. KEVIN A. IANNUZZI (L-3360-14 AND L-6543-14, ATLANTIC COUNTY AND STATEWIDE)

> New Jersey Superior Court Appellate Division · June 5, 2019

URL: https://www.frixlaw.com/law-library/cases/4428372

## Case

- **Court:** New Jersey Superior Court Appellate Division
- **Decided:** June 5, 2019
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0018-16T2

STEVEN I. GROSS and GENEVIEVE
GROSS,

Plaintiffs,
APPROVED FOR PUBLICATION
and
June 5, 2019
JERRY DIPIETRO, DAVID ARSHT, APPELLATE DIVISION
BEVERLY ARSHT, IRA SACHS,
ANDREA SACHS, ED MARINELLI,
TONI MARINELLI, MARIA A.
MARINELLI, JEFF STEINIG,
and NIKKI STEINIG,

Plaintiffs-Respondents,

v.

KEVIN A. IANNUZZI,

Defendant-Appellant,

and

CITY OF MARGATE,

Defendant-Respondent.
______________________________

BARRY ABRAHAM and ELLEN
ABRAHAM,

Plaintiffs,
v.

KEVIN A. IANNUZZI,

Defendant-Appellant,

and

CITY OF MARGATE, JAMES
GALANTINO, in his official capacity,
and ROGER RUBEN1, in his official
capacity,

Defendants-Respondents.
______________________________

Argued December 19, 2018 – Decided June 5, 2019

Before Judges Alvarez, Reisner and Mawla.

On appeal from Superior Court of New Jersey, Law
Division, Atlantic County, Docket Nos. L-3360-14
and L-6543-14.

Stephen J. Hankin argued the cause for appellant
(Hankin Sandman Palladino Weintrob & Bell,
attorneys; Stephen J. Hankin, of counsel and on the
briefs).

John S. Abbott argued the cause for respondents City
of Margate, James Galantino, and Roger Rubin.

Salvatore Perillo argued the cause for respondents
(Nehmad Perillo & Davis, attorneys; Salvatore Perillo,
of counsel and on the briefs).

1
This defendant's name was misspelled in the complaint. The correct spelling
is "Rubin."

A-0018-16T2
2
The opinion of the court was delivered by

REISNER, J.A.D.

Defendants Kevin Iannuzzi, the City of Margate (Margate), and two city

officials, James Galantino and Roger Rubin, appeal from a July 14, 2015 trial

court order and an August 16, 2016 order denying reconsideration. For the

reasons that follow, we affirm in part and reverse in part.

The trial court overturned Margate's approval of Iannuzzi's plan to

demolish his beachfront townhome, which was damaged by Superstorm Sandy,

and replace it with an elevated and enlarged free-standing residence. The

court also rejected Iannuzzi's alternate plan to rebuild and elevate the

townhome using its original footprint. In determining that Iannuzzi could not

build a free-standing house and that any replacement structure could not be

elevated, notwithstanding current flood-safety standards, the trial court relied

on a Declaration of Covenants and Restrictions (the Declaration) that took

effect in 1978 when the townhome development was built.

However, in August 2017, after the trial court decided the case, the

Legislature amended N.J.S.A. 58:16A-103 (the Act), concerning flood-safe

construction. The Act, originally adopted in 2013 in response to Sandy,

prohibits enforcement of development ordinances that would prevent certain

flood-safe construction, including the otherwise lawful raising of a Sandy-

damaged structure. The 2017 amendment added row houses or attached
A-0018-16T2
3
townhouses held in fee simple to the definition of "structure" and provided that

deed restrictions could not be enforced to prevent elevation of a Sandy-

damaged structure.2

Our review of the trial court's legal interpretations, including its

interpretation of contracts, is de novo. See Manalapan Realty, LP v.

Manalapan Twp. Comm., 140 N.J. 366, 378 (1995); Cooper River Plaza E.,

LLC v. Briad Grp., 359 N.J. Super. 518, 528 (App. Div. 2003). Applying that

standard of review, we affirm the trial court's order insofar as it precludes

Iannuzzi from razing the townhome and building a free-standing house on the

lot, instead of either repairing or rebuilding the townhome. We agree with the

trial court that, by its terms, the Declaration prevents Iannuzzi from building a

free-standing house without the approval of a majority of the other

homeowners in the townhome development. 3 The trial court also correctly

2
After this case was argued, we permitted the parties to submit supplemental
briefs addressing the 2017 amendment.
3
Plaintiffs argue that even if a majority of the owners approve defendant's
plan, the case should be remanded to Margate's currently-combined
Planning/Zoning Board. They contend that constructing a free-standing house
would be contrary to the terms of the land use approvals for the original
development. However, plaintiffs did not cross-appeal from the trial court's
August 16, 2016 order, which vacated an earlier order remanding the matter to
the Board to hear an administrative appeal from the issuance of a zoning
permit. Accordingly, that land use issue is not properly before us and we
decline to address it. Additionally, the issue is not ripe, because the Board
(continued)
A-0018-16T2
4
determined that the Declaration was not abandoned, did not lapse, and remains

in effect. On these issues, we affirm for the reasons cogently stated by the trial

court in its written opinions dated July 14, 2015, and August 16, 2016, and we

conclude that defendants' arguments do not merit further discussion. R. 2:11-

3(e)(1)(E). We reach a different conclusion with respect to the issue of

elevating the townhome.

Addressing a matter of first impression, we hold that N.J.S.A. 58:16A-

103, as amended, applies to Iannuzzi's individually-owned townhome and

permits him to elevate the structure as required by current flood-safety

standards, despite Declaration provisions that would otherwise preclude him

from doing so. As intended by the Legislature, the amended statute overrides

the Declaration and any local development regulations that might otherwise

prevent Iannuzzi from elevating the townhome. Hence, we reject plaintiffs'

argument that Iannuzzi must obtain dispensation from Margate's

Planning/Zoning Board because raising his townhome would be inconsistent

with the development's original site plan approvals. Likewise, Iannuzzi's

statutory right to elevate his townhome does not depend on whether the

(continued)
never ruled on the appeal, having decided to hold it in abeyance pending the
outcome of this litigation.

A-0018-16T2
5
townhome or the development as a whole suffered "substantial" damage within

the meaning of Margate's flood-safety ordinance.

We further reject plaintiffs' argument that, even if Iannuzzi is permitted

to raise the elevation of the townhome's first floor, he must maintain the

existing height of the roofline by reducing the living space within the

townhome. That cramped interpretation would defeat the legislative purpose

to encourage flood-safe construction. In the circumstances presented here,

Iannuzzi's right to protect his property from flood hazards outweighs his

neighbors' right to preserve their ocean views. 4 Accordingly, we reverse the

trial court order precluding Iannuzzi from elevating the townhome pursuant to

the standards set forth in N.J.S.A. 58:16A-103 as amended.

I

In light of the narrow issue presented, the record evidence can be

summarized as follows. In 1977, a developer obtained Planning Board

approval to construct what, at the time, was an unusual townhouse

development on the beachfront in Margate. The development consisted of one

row of ten attached two-story oceanfront townhomes, and a second row of ten

4
We do not address the issue – not presented here – whether Iannuzzi's
neighbors also have the right to raise the elevation of their townhomes for
flood safety, thereby incidentally regaining their water views. We note that in
the trial court, Margate's attorney argued that all of the unit owners were
legally entitled to elevate their units for flood safety and should do so.

A-0018-16T2
6
attached three-story townhomes located directly behind the first row. The

expressed purpose of this configuration was to give both rows of townhomes

an ocean view. The Planning Board particularly noted that feature in its

resolution approving the development.

Although the townhomes shared party walls that extended down into the

foundation, each was situated on its own subdivided lot, was owned in fee

simple, had its own separate roof and utilities, and was separately assessed and

insured (including flood insurance). There was no homeowners' association

and rooftop condensers were the sole common element.

On August 8, 1978, the developer executed and later recorded the

Declaration, which set forth certain requirements that were to "run with the

land and . . . be binding on all parties having or claiming any right, title or

interest in the described property or any part thereof." The Declaration

required homeowners to obtain approval of at least a majority of the property

owners in order to build additions to their units, and required additions to

conform "to the design of the development." The Declaration covenants were

to remain in force for twenty-five years (from July 1, 1978 to July 1, 2003),

with two additional twenty-five year renewal periods, "unless changed by a

vote of two-thirds of the property owners at the time of expiration." Thus, at

the time either of the first two twenty-five year periods expired, the owners

A-0018-16T2
7
could vote to change the terms of the Declaration. Otherwise, the covenants

would renew unchanged.

On October 29, 2012, Superstorm Sandy damaged all of the

development's beachfront units. Nine of the units were repaired in place,

although for reasons not evident on this record, they were not elevated to

prevent future flood damage. The tenth townhome, located on the southern

end of the row, was so badly damaged that Margate issued a notice of unsafe

structure declaring it uninhabitable. The unit's then-owner did not repair it.

Iannuzzi eventually bought the unit in its damaged condition, intending to

demolish it and replace it with a free-standing house. Iannuzzi obtained a

zoning permit for that construction from Margate's zoning officer. The local

construction code official wrote Iannuzzi a letter advising that the townhome

was substantially damaged by Sandy and any rebuilt structure would have to

be elevated to thirteen feet above flood level, requiring an increase in elevation

of slightly more than four feet.

Plaintiff Steven I. Gross filed an appeal with the Board challenging the

issuance of the zoning permit. Before the appeal was heard, two groups of

plaintiffs, one of which included Gross, filed lawsuits seeking to stop

A-0018-16T2
8
construction of the free-standing house. 5 Iannuzzi defended his right to build

the house. However, in the alternative, he asserted a right to rebuild the

original townhome in place and elevate it to meet flood safety standards.

Plaintiffs vigorously opposed both of Iannuzzi's proposed courses of action,

potentially leaving Iannuzzi with a wrecked oceanfront townhome which he

could not rebuild to current flood safety standards.

In a written opinion issued on July 14, 2015, the trial court rejected

Iannuzzi's claims that the Declaration had expired or was otherwise no longer

effective. The court held that either building a free-standing house or

elevating the townhome in place would constitute an "addition" under the

Declaration, and thus required approval of a majority of the unit owners. The

court also reasoned that the townhouse was not a separate "structure" within

the meaning of N.J.S.A. 58:16A-103, and hence that statute did not authorize

Iannuzzi to elevate the townhome. The trial court remanded to the Board

Gross's appeal from the zoning permit. On August 16, 2016, the trial court

denied Iannuzzi's motion for reconsideration, but vacated the portion of the

prior order remanding the matter to the Board.

As further discussed below, the Legislature then amended N.J.S.A.

58:16A-103. The amendments extended the definition of "structure" to

5
The trial court enjoined Iannuzzi's proposed construction and consolidated
the lawsuits.

A-0018-16T2
9
include townhomes and precluded the enforcement of deed restrictions that

would impede flood-safe construction.

II

Recognizing that safe construction in flood areas requires the elevation

of first floors, the Legislature enacted N.J.S.A. 58:16A-103 to spare owners

from having to obtain variances and other land use approvals in order to

elevate existing buildings, including Sandy-damaged structures, located in

flood-prone areas. As enacted in 2013, the statute provided that:

b. (1) Notwithstanding the provisions of any
other law to the contrary, except as otherwise
provided pursuant to paragraph (2) of this subsection,
a person shall be exempt from any development
regulation, including any requirement to apply for a
variance therefrom, that otherwise would be violated
as a result of raising an existing structure to a new and
appropriate elevation, or constructing a staircase or
other attendant structure necessitated by such raising,
provided, however, this exemption shall apply only to
the minimum extent or degree necessary to allow the
structure to meet the new and appropriate elevation
with adequate means of ingress and egress.

....

c. (1) Notwithstanding the provisions of any
other law to the contrary, except as otherwise
provided pursuant to paragraph (2) of this subsection,
a person shall be exempt from any development
regulation, including any requirement to apply for a
variance therefrom, that otherwise would be violated
as a result of using a new and appropriate elevation
when lawfully repairing or reconstructing a Sandy-
damaged structure, or constructing a staircase or other
A-0018-16T2
10
attendant structure necessitated by use of the new and
appropriate elevation, provided, however, this
exemption shall apply only to the minimum extent or
degree necessary to allow the Sandy-damaged
structure to meet the new and appropriate elevation
with adequate means of ingress and egress. . . .

[N.J.S.A. 58:16A-103(b)(1), (c)(1) (2013).]

Paragraph (b)(2) provides that the exemption does not apply "to a person

who has altered the original dimensions of a structure if, had the alteration not

been made, the structure could have been raised to meet the new and

appropriate elevation either without the exemption or with an exemption of

lesser degree than is needed with the alteration." N.J.S.A. 58:16A-103(b)(2).6

Paragraph (c)(2) contains a similar provision for repair or replacement plans.

N.J.S.A. 58:16A-103(c)(2). Under the 2013 statute, a "Sandy-damaged

structure" meant "any structure that existed on October 28, 2012 and was

damaged or destroyed by Hurricane Sandy," and "original dimensions" meant

"the exact vertical and horizontal dimensions of a structure as it existed on

October 28, 2012." N.J.S.A. 58:16A-103(a).

6
The "[n]ew and appropriate elevation" is "any elevation to which a structure
is raised, or is to be raised, that is equal to or higher than the applicable ne w
[Federal Emergency Management Agency (FEMA)] base flood elevation,
provided, however, in no case shall the new and appropriate elevation exceed
the highest applicable flood elevation standard." N.J.S.A. 58:16A-103(a). The
"[h]ighest applicable flood elevation standard" is defined by reference to flood
elevation standards adopted by FEMA, "plus an additional three feet," or the
applicable flood elevation standard required by the New Jersey Department of
Environmental Protection, "whichever is higher." Ibid.

A-0018-16T2
11
The legislative history clearly expressed the intent to allow flood-safe

construction, notwithstanding local zoning laws.

This bill, as amended by the committee, would
provide a person with a limited exemption from local
land use restrictions when raising an existing structure
to meet certain State or federal flood elevation
standards, if raising the structure would otherwise
result in a violation of the local land use restriction.

In particular, the exemption would allow a
person to raise the structure to the "highest applicable
flood elevation standard," which is defined in the bill
to be the higher of two standards: (1) the new Federal
Emergency Management Agency (FEMA) base flood
elevation plus two additional feet, or (2) any
applicable flood elevation standard required pursuant
to rules and regulations adopted by the Department of
Environmental Protection (DEP) pursuant to the
"Flood Hazard Area Control Act."

A "new FEMA base flood elevation" is defined
in the bill to mean any advisory base flood elevation
or effective base flood elevation proposed or adopted
after October 29, 2012, by the FEMA. A base flood
elevation, as calculated by FEMA, represents the
elevation of a flood with a one percent chance of
occurrence during any given year, commonly referred
to as a "100-year flood." A structure that is not
elevated to the applicable FEMA-issued base flood
elevation for its location is subject to a higher flood
insurance premium under the National Flood
Insurance Program.

For an existing structure, raising the structure to
meet one of these flood elevation standards may, in
certain cases, violate local land use restrictions, such
as a maximum height restriction or a setback
restriction. This bill would provide a partial
exemption from such local land use restrictions, so as
A-0018-16T2
12
to allow a property owner to raise an existing structure
to the highest applicable flood elevation standard
without violating local land use restrictions. The
exemption would apply only to the minimum extent or
degree necessary to meet the higher of the two
standards, as they apply to the location in question.

[Assembly Environment and Solid Waste Committee,
Statement to A. 3890 (May 13, 2013).]

Before its passage, the legislation was amended to broaden its scope to

include "development regulations" as opposed to the narrower term "local land

use regulations" and to make clear that it specifically applied to structures

damaged by Sandy.

These floor amendments would provide for the
exemption to apply to "development regulations," as
defined pursuant to section 4 of the "Municipal Land
Use Law," P.L.1975, c.291 (C.40:55D-4), rather than
to "local land use restrictions." The term
"development regulations" is more accurate for the
purposes of this bill. The amendments would also
provide that the exemption would apply not just when
raising existing structures, but also when using a
raised elevation in the repair or reconstruction of a
structure damaged by Hurricane Sandy. Moreover, the
amendments would clarify that the exemption would
apply not just to the raising of a structure, but also to
the construction of a staircase or other attendant
structure necessitated by such raising. In addition, the
amendments would clarify the scope and applicability
of the exemption by changing the definition of
"highest applicable flood elevation standard" and
"new FEMA base flood elevation," and by
establishing and defining the following new terms:
"existing structure," "new and appropriate elevation,"
"original dimensions," and "Sandy-damaged
structure." . . .
A-0018-16T2
13
[Statement to Assembly with Senate Floor
Amendments to A. 3890 (June 20, 2013).]

In August 2017, the Legislature amended the statute in two significant

respects. Under the 2017 amendments, the definition of "structure" was

expanded to include a row house or townhouse that, as in this case, is owned in

fee simple:

"Structure" means any dwelling or building; however,
in the case of attached townhouses or row houses for
which title to each townhouse or row house building,
including the roof and other structural elements, is
held in fee simple, "structure" means a single
townhouse or single row house. "Structure" shall not
include a unit which is part of a condominium as
defined in P.L.1969, c. 257 (C.46:8B-1 et seq.).

[N.J.S.A. 58:16A-103(a).]

The amendments also added a new section (d) addressing deed

restrictions:

d. Notwithstanding the provisions of any other law to
the contrary, any deed restriction or agreement, no
matter when entered into or made, that prohibits or has
the effect of prohibiting any otherwise lawful raising
or constructing of a structure to a new and appropriate
elevation is contrary to public policy and therefore
shall be unenforceable, except that all other covenants,
easements, and restrictions of a common interest
community shall remain in force, and costs associated
with the construction, repair, or other related
improvements to neighboring properties and common
elements shall be borne solely by the owner of the
structure which will be raised or constructed to a new
elevation.
A-0018-16T2
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[N.J.S.A. 58:16A-103(d) (emphasis added).]

The amendments appear to be a response to the trial court's decision in

this case, and the legislative history leaves no room for doubt as to the

Legislature's continuing intent to sweep away obstructions to flood-safe

construction:

This bill would provide that any deed restriction
or agreement that prohibits or has the effect of
prohibiting any otherwise lawful raising or
constructing of a structure to meet certain flood
elevation standards is contrary to public policy and
therefore unenforceable. The bill would also clarify
how certain exemptions from development regulations
under existing law apply in the case of townhouses or
row houses for which title to each unit is held in fee
simple.

The provisions of the bill declaring . . . the
unenforceability of certain deed restrictions or
agreements would apply in the case of structures being
raised or constructed to a "new and appropriate
elevation," which is a defined term under existing law
and based on certain flood elevation standards set
forth in P.L.2013, c.107 (C.58:16A-103). The bill
also provides that the deed restrictions or agreements
covered by the bill would be unenforceable no matter
when entered into or made.

The bill defines the term "structure" to mean
any dwelling or building; however, in the case of
attached townhouses or row houses for which title to
each unit is held in fee simple, it would mean a single
townhouse or single row house. This definition would
be applicable to the provisions of the bill that render
certain deed restrictions or agreements unenforceable
under the circumstances discussed above. In addition,
the definition would clarify that certain existing
A-0018-16T2
15
exemptions from development regulations prescribed
in P.L.2013, c.107 (which apply when raising,
repairing, or reconstructing certain structures to meet
flood elevation standards) would be applicable in the
case of a single townhouse or single row house, even
when attached to or located within a complex, so long
as title to each unit is held in fee simple.

[Senate Environment and Energy Committee,
Statement to S. 2884 (January 30, 2017).]

Floor amendments, adopted prior to passage, added an exception

excluding units that are part of a condominium, a provision not applicable

here. The amendments also preserved "covenants, easements, and restrictions

of a common interest community" other than those that would block flood-

safety elevation. Statement to Senate with Assembly Floor Amendments to S.

2884 (May 22, 2017). The floor amendments protected neighbors by requiring

that "costs associated with the construction, repair, or other related

improvements to neighboring properties and common elements must be borne

by the owner of the structure which is being raised or constructed to a new

elevation." Ibid.

In their supplemental brief, plaintiffs raise a series of arguments

attempting to distinguish the 2017 amendments. We find those contentions

entirely without merit. They warrant no discussion beyond the following brief

comments.

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Plaintiffs argue first that because the Iannuzzi unit includes a party wall,

and because all of the unit owners share the rooftop condensers, this unit

cannot be considered a qualifying independent structure owned in fee simple

under N.J.S.A. 58:16A-103. In support of this position, plaintiffs argue that in

a 2014 webinar, FEMA stated that for purposes of assessing whether a

structure has been substantially damaged, a row of townhomes with party walls

constitutes a single structure. In amending the Act, our Legislature has clearly

determined to use a different definition of "structure." Further, the Act does

not require a finding of "substantial" damage. Lastly, it is undisputed that

Iannuzzi's deed includes ownership of his unit's roof. Plaintiffs cite no

authority for their assertion that a shared rooftop air-conditioning condenser

defeats Iannuzzi's fee simple title to his townhome.

Plaintiffs next contend that, even if Iannuzzi's unit qualifies as a

"structure" for purposes of N.J.S.A. 58:16A-103, he should not be permitted to

raise it in violation of the Declaration, but instead should be required to give

up the living space on the unit's first floor in order to avoid raising the

roofline. We cannot agree.

In making their argument, plaintiffs ignore that the Declaration is no

longer relevant by virtue of N.J.S.A. 58:16A-103(d), which voids any "deed

restriction or agreement, . . . that prohibits or has the effect of prohibiting any

otherwise lawful raising or constructing of a structure to a new and appropriate
A-0018-16T2
17
elevation." Plaintiffs are correct that the exemption provided by N.J.S.A.

58:16A-103(c)(1) applies "only to the minimum extent or degree necessary to

allow the Sandy-damaged structure to meet the new and appropriate elevation

with adequate means of ingress and egress." But that does not mean Iannuzzi

must abandon the first floor of his unit in order to comply with this provision.

Under the statute, structures are to be raised in their "original

dimensions" to the "appropriate" elevation and no more. N.J.S.A. 58:16A-

103(a), (b)(2), (c)(2). Reading the statute as a whole, we conclude the

requirement that the exemption be as limited as possible must be read in pari

materia with the requirements that the original dimensions of the structure be

maintained and the elevation be no more than necessary. The clear import of

the language is that the owner can raise the entire structure several feet off the

ground, while maintaining the original dimensions of the structure – including

the original amount of living space. Nothing in the wording or history of the

statute remotely suggests that the Legislature intended to require owners of

two-story residences to abandon the first floors of their homes in order to

obtain a flood-protected structure.

Plaintiffs next argue that Iannuzzi must seek an amendment to the

original site plan for the townhouse development because a site plan does not

qualify as a "development regulation" from which Iannuzzi is exempt under

N.J.S.A. 58:16A-103. That argument is without merit.
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N.J.S.A. 58:16A-103(b)(1) provides, in pertinent part, that a person is

"exempt from any development regulation, including any requirement to apply

for a variance therefrom, that otherwise would be violated as a result of raising

an existing structure to a new and appropriate elevation." Under the Municipal

Land Use Law (MLUL), N.J.S.A. 40:55D-4, a "[d]evelopment regulation" is

defined as a "zoning ordinance, subdivision ordinance, site plan ordinance,

official map ordinance or other municipal regulation of the use and

development of land, or amendment thereto adopted and filed pursuant to [this

act]." A "[s]ite plan" is defined as a "development plan of one or more lots."

N.J.S.A. 40:55D-7. Because a development regulation includes a site plan

ordinance, without which there would be no site plans, the exemption

necessarily includes an amendment to a site plan. Holding otherwise would

defeat the Legislature's purpose to allow owners of Sandy-damaged structures

to comply with flood-safe construction measures, without the delays inherent

in variance applications and site plan approvals. To leave no doubt on the

subject, Iannuzzi does not have to obtain the Board's approval in order to

elevate his townhome in accordance with the Act.

Plaintiffs' remaining arguments, invoking "the defenses of equitable

estoppel and unclean hands," are without sufficient merit to warrant discussion

in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed in part, reversed in part.
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4428372. Public record. Not legal advice.
