NJ Appeals Court Addresses Loss of Pre-existing Nonconforming Structures

In Mikhail v. Lauritsen, the Appellate Division of the New Jersey Superior Court addressed when municipalities may extinguish a nonconforming use. The court specifically considered the test for determining when a nonconforming use has been more than partially destroyed in making this evaluation.  Legal Background N.J.S.A. 40:55D-68 authorizes the restoration or repair of a nonconforming structure in the event that it is partially destroyed. It states: Any nonconforming use or structure existing at the time of the passage of an ordinance may be continued upon the lot or in the structure so occupied and any such structure may be restored or repaired in the event of partial destruction thereof. The terms "partial destruction" and "total destruction" are not defined. Under existing precedent in New Jersey, the determination of the level of destruction of a nonconforming structure must be made on a case-by-case basis. In Motley v. Seaside Park Zoning Bd., 430 N.J. Super. 132 (App. Div. 2013), the Appellate Division held that the test of whether a nonconforming use or structure may be restored or repaired is “whether there has been some quantity of destruction that surpasses mere partial destruction." Id. at 144. Facts of the Case  Plaintiff Magdi Mikhail owns Block 150, Lot 2.01, located at 11-15 Main Street in the Borough of South River, New Jersey. Plaintiff's parcel contained a two-story and a three-story mixed-use building. The three-story building contained a boarding house, which was a pre-existing, nonconforming use. Plaintiff applied for a use variance proposing to create a single first floor for both buildings, with the upper floors of the three-story building continuing to serve as a boarding house and the bottom floor to contain a pizzeria, the latter having been opposed by the Zoning Board of Adjustment in 2010. The Borough of South River Zoning Board of Adjustment (the Board) granted the use variance pursuant to conditions necessary to perfect the variance for the pizza restaurant. However, flooding from Superstorm Sandy and a subsequent fire less than two weeks later caused serious damage to the property. Thereafter, Defendant Glenn P.W. Lauritsen, acting in his capacity as the Borough's Zoning and Construction Officer, issued a notice of unsafe structure. Lauritsen further determined that the upper floors of the three-story building were unsalvageable. In response, Plaintiff hired Luis R. Perez, a professional engineer, to evaluate the structural integrity of the building. Perez issued a letter report certifying the building could be repaired. A subsequent report from the Borough engineer determined that both the second and third floors would not be salvaged. Given the damage to the property, the Board informed Plaintiff that he was required to apply for a variance to rebuild the boarding house. It later declined to issue a zoning permit to restore the boarding house, contending that the destruction to the building extinguished the pre-existing nonconforming use. The Board of Adjustment concluded: “The destruction of the second and third floors is more than partial destruction; the [boarding] house use is substantially totally destroyed.” Plaintiff then filed suit, challenging the Board's decision as unsupported by credible evidence and arbitrary, capricious, and unreasonable and without legal or factual basis. The trial court upheld the Board's decision. It found that because the upper two floors sustained most of the damage caused by the fire, and because the second and third floors of Building 11 operated entirely independently of the use of the first floor, there was more than partial destruction. Accordingly, the pre-existing nonconforming use was extinguished. Appeal Court’s Decision The Appellate Division upheld trial court’s decision. “Substantial evidence in the record supports the finding that the second and third floors were more than partially destroyed as a result of the fire and that the Board's decision was not arbitrary, capricious, or unreasonable,” the court concluded. In reaching its decision, the appeals court employed different reasoning than the trial court. The panel also rejected the plaintiffs’ argument that the statute permits a nonconforming use to continue if the structure in which it is located is only partially destroyed. According to the Appellate Division, N.J.S.A. 40:55D-68 does not distinguish between a nonconforming use and a nonconforming structure. To reach its conclusion that the nonconforming use was more than partially destroyed, the Appellate Division applied definition of "structure" under the Municipal Land Use Law (MLUL), which is "a combination of materials to form a construction for occupancy, use or ornamentation whether installed on, above, or below the surface of a parcel of land.” The court further determined: Under N.J.S.A. 40:55D-68, the upper levels of Building 11 are considered independent "structures" separate and apart from Building 11 as a whole. Because distinct floors are considered separate structures, an analysis considering the destruction of only the second and third floors is appropriate. Applying this analysis to the facts of the case, the court noted that the structural damage to the second and third floors of the building was significant. “In addition to other damage, Building 11 suffered the loss of its entire roof, damage to its bricks and blocks, complete destruction of the third floor ceiling joists and studs, and partial loss of the floor of the third floor,” the court highlighted. “The second floor was also severely damaged. All that remained was the four exterior walls, and some of the ceiling joists, flooring, interior wall studs and windows, but no wall coverings, floor coverings, HVAC, plumbing, sewer, or electric,” it added. The court further concluded that the Board properly focused on the destruction of the second and third floors containing the boarding house rather than the damage to Building 11 in its entirety, and that Board's findings and determinations are amply supported by substantial credible evidence in the record. “In particular, there is substantial evidence in the record that the nature and extent of the damage to Building 11 exceeds any reasonable notion of a mere partial destruction,” the court wrote. “We discern no basis to conclude the determination of the Board was arbitrary, capricious, or unreasonable.” Key Takeaway for New Jersey Municipalities The Appellate Division’s decision provides valuable guidance in how to determine whether a structure has been more than partially destroyed for the purposes of extinguishing a pre-existing, nonconforming use. When conducting this analysis for multi-use buildings, municipalities should focus on each statutorily distinct "structure" rather than the whole building's condition. For more information about the court’s decisionin Mikhail v. Lauritsenor the legal issues involved, we encourage you to contact a member of Scarinci & Hollenbeck’s Government Law Group.