Kane Properties, LLC v. City of Hoboken, 423 N.J. Super. 49 (App. Div. 2011). Plaintiff had obtained use variances from Hoboken’s Zoning Board of Adjustment. Those variances allowed plaintiff to build a high-rise residential structure. The Skyline Condominium Association (“Skyline”), which operates a nearby residential high-rise, appealed the variances to Hoboken’s governing body. The governing body disapproved the variances on their merits. Plaintiff appealed to the Law Division, which affirmed the governing body’s action. Plaintiff appealed to the Appellate Division, arguing (as it had below) both that the governing body had wrongly disapproved the variances on the merits and that the governing body’s action was poisoned by a conflict of interest involving its Corporation Counsel, Michael Kates. The Appellate Division agreed that there was a conflict of interest, and reversed on that ground alone. Judge Reisner wrote the opinion.
Kates had represented Skyline at the Board of Adjustment level. Two weeks after the Board of Adjustment issued its decision, Kates was named Corporation Counsel for Hoboken. An attorney from another firm took over the representation of Skyline when this matter reached the governing body. “However, there is no dispute that when the City Council heard Skyline’s challenge, Kates was simultaneously employed as the Council’s legal advisor and as a partner in the law firm that had previously represented one of the litigants before the Council.”
Kates recused himself from the matter, but he also forwarded the City Council “a memorandum containing generic advice about how to handle zoning appeals in general.” The governing body retained another firm to advise it on the Skyline appeal. That attorney sent the Council his own memo about the matter, but also attached and referred to Kates’s prior memorandum and copied Kates, as well as counsel for all parties, on the new attorney’s subsequent memo. Plaintiff objected to the Council receiving any advice from Kates, directly or indirectly, as well as to the substance of the Kates memorandum.
At the governing body’s hearing on the Skyline application, Kates was not present. The new attorney handled that matter for the Council, which proceeded to disapprove the variances for the high-rise. But when the Council subsequently met to adopt a memorializing resolution, Kates was the only attorney for the governing body who was present. He answered some procedural questions about the resolution and signed it “Approved” by “Michael B. Kates, Corporation Counsel.”
Judge Reisner found that Kates “indisputably had a conflict of interest” that “tainted” the governing body’s action. Though Kates had recused himself, “the Council proceedings did include his participation, directly and indirectly,” as recounted above. “Kates should have been absolutely and completely screened from this application. No advice with his name on it should have gone to the Council…. Kates should not have been in the room when the Council was voting on the resolution, and he certainly should not have given any advice about it, procedural or otherwise…. Finally, Kates should not have signed the resolution.”
Judge Reisner emphasized that the panel was “not holding that any ethical lapse, however unintentional and de minimus, will void the Council’s otherwise well-considered good faith vote on a zoning application.” But Kates’s failure to “withdraw completely” from the matter, when considered with all the circumstances, required reversal of the Council’s disapproval of the variances. The panel remanded to the City Council to reconsider the record, allow new oral arguments, and deliberate and decide Skyline’s appeal “as though they had never considered it before.”
The conflict of interest principles applicable to land use applications are strict, but are not new. Even a whiff of impropriety, especially on a major application such as plaintiff’s, can poison the process. Counsel and parties both must be vigilant about conflicts of whatever nature. This one could easily have been avoided.