. EQUITY

SUPERIOR COURT OF NEVII JERSEY
HUDSON VICINAGE

Brennan Courthouse
583 Newark Avenue
Jersey City, New Jersey 07306

CHAMBERS OF
BARRY P. SARKISIAN
PRESIDING JUDGE

 

NOT FOR PUBLICATION WITHOUT THE 
WRITTEN APPROVAL OF THE COMMITTEE ON OPINIONS

LETTER OPINION

Jonathan P. Vuotto, Esq. Daren R. Eppley, DAG
Riker Danzig Scherer Hyland State of New Jersey
Perretti, LLP Office of the Attorney General
Headquarters Plaza Dept. of Law Public Safety
one Speedwell Avenue PO Box 093

Morristown, New Jersey 07962 Trenton, New Jersey 08625

Jean L. Cipriani, Esq.

Gilmore Monahan

10 Allen

Box 1540

Toms River, New Jersey 08754

Re: City of Jersey City v. SMI LL, LLC c/o Suntex Ventures LLC, and NJDEP
Docket No. HUD-C-1-18 
Date of Oral Argument: January 16, 2018
Date of Decision: January 19, 2018

Dear Counsel:

Introduction

Presently before the Court is Plaintiff, the City of Jersey City?s application for preliminary

injunctive relief enjoining Defendants SMI LL, LLC c/o Suntex Ventures LLC (?Suntex?) and New
Jersey Department Of Environmental ProtectiOn 'frOm exchting a Term'Sheetfa??d'

proposed lease amendment under Which, Plaintiff contends, Defendants would be able, to

proceed with a development project designed to expand and create new marina uses at Liberty

. 1

State Park, a public park located in Jersey City. Plaintiff contends that Defendants have violated
the existing lease agreement governing the DEP and Suntex?s present relationship under which
Suntex operates an existing marina on the north end of Liberty State Park. In addition to this .
injunctive relief, Plaintiff ultimately seeks an order that the Term Sheet and proposed lease
amendment be declared invalid and unenforceable. More specifically, Plaintiff contends that
Defendantsviolated the existing lease agreement by failing to allow for competitive/public
bidding for this project, and (ii) Suntex?s acceptance of the Term Sheet outside of the twenty-day
acceptance window set forth in the existing lease.

With respect to the ?twenty day window argument? Plaintiff asserted, initially, on
information and belief, that Defendants violated the Lease by SUntex?s failure to accept the Term
Sheet within the twenty-day window provided for in paragraph forty-six of the Lease. No party
contests the fact that the Term Sheet was delivered, by DEP to Suntex on November 30, 2017.
Plaintiff contended that Suntex failed to accept the Term Sheet untilDecember 27, 2017, several
days after the twenty-day deadline set forth in-paragraph forty-six of the Lease had expired.
However, Defendant DEP, in their opposition, provided uncontroverted evidence, in the form of
an e? ?mail chain, that Suntex actually accepted this Term Sheet and prOvided an executed copy
of the Term Sheet to DEP within the twenty day window. At oral argument, Plaintiff conceded
this point and withdrew this position.

On January 2, 2018, this Court ordered Defendants to return on January 16, 2018 and
show cause why such injunctive relief should not be issued. As part of its January 2, 2018 order,
the CoUrt temporarily enjoined and restrained Defendants from accepting the terms of that
certain Term Sheet proposed by DEP to Suntex, dated November 30, 2017 (?Term Sheet?)
and/or proceeding with the proposed terms contained therein and/or the development project
proposed therein, and temporarily enjoining and restraining Defendants from executinga certain

proposed lease amendment (the ?proposed Lease Amendment?) and/or othenIvise proceeding
with the matters contained therein. The Court ordered this temporary relief before having the
opportunity for a full consideration of Defendant objectionto the injunctive relief sought by
Plaintiff that is now before the Court.

. For the reasons set forth below, the Court finds that thismatter is not ripe for adjudication
and that this Court cannot grant?the injunctive relief Plaintiff seeks, given that (1)'the proposed
Lease Amendment is not finalized, and (2) will be subject to additional procedural controls
designed to give the DEP input from various State and Federal agencies as well as the general
public that must occur prior to the initiation of this development project. Accordingly, Plaintiff?s
applicatiOn Is denied.

Facts

This matter involvesa proposal for a lease amendment under which Suntex, the lessor of
theexistinig marina located on the north end of Liberty State Park Would expandits usage area in
that marina and construct, maintain, and use a new marina IOCated at the southernend of Liberty 
State Park. DEP, as the owner Of the park, seeks to amend its pre?existinglease with Suntex in
exchange for additional rents and Suntex?s agreement to take responsibility forthe repair of the

bulkhead section of thenOIth end marina. Accordingly, on November 30, 2017, DEP provided
Suntex with a proposed'Term Sheet and proposed Lease Amendment, which set forth the 
procedures for which DEP and Suntex would negotiate a lease amendment and required permits
and approvals upon which this lease amendmentwould' be conditioned on.

The Term Sheet provides the parties shall enter into a negotiation period of thirty (30)
days to enter into a ?mutUally satisfactory lease agreement. However, ?[t]he Lease shall be
contingent upon Tenant obtaining all necessary approvals? from the following non-exclusive list
of State and Federal Agencies. -

State Bond CoUnsel
The State HOuse Commission
The Ogd-en R-ooney Process

U. S. Army Corps of Engineers (USACE)
U. S. National Park Service (USNPS), including compliance with the existing
Record of Decision for Northern Marina ExpanSion Section 106 of the National 
Historic PreserVation Act of 1966
Land Use Regulation including, but not limited to, Freshwater and CoaStal
Wetlands, Coastal Area Facility Review, Flood Hazard, and Threatened and
Endangered Species
Riparian/Tidelands
Any other applicable approvals.

At oral argument, the DEP acknowledged that these are minimum
procedures/hearings that will take place before the proposed Lease Agreement can be
approved. -

The Term Sheet also provides that there will be public hearings in which the 
DEP will solicit input from thegeneral public and interested parties prior the ultimate acceptance
by the DEP of this Amended Lease. More specifically, page 6 of the Term Sheet provides as
follows:

Additionally, DEP is responsible for ensuring compliance with standard reporting and public
hearing requirements as specified by PL. 1993, c.38, known as the Ogden-ROOney
process. This process includes submitting a report to various legislative committees
identifying all advantages and diSadvantages,benefits and detriments of this conveyance
and two (2) public hearings to be held to solicit input from the general public and interested
stakeholders. The report prepared by DEP will cOntain various commissioned reports
supporting the terms of the Lease and DEP anticipates one hearing will be held in Liberty
State Park. The Ogden- Rooney process will conclude with a vote before the State House
Commission for final approval of the Lease.

By way of factual background, the City of, Jersey City deeded 1657acres of land to the
. State in 1965, which were used to create Liberty State Park. Between 1.975 and 1977, the State
acquired additional land for the park, financed in part by the Green Acres Land Acquisition Act,

. 3

 J. S. A. 13. 3-4. The park opened on June 14,1976 and a Master Plan for the park was
created In 1977.1

In 1987, DEP and Liberty State Park Development Corporation entered into a
lease ?prime' lease? dated June 12,1987 as modified by first amendment dated September 21,
1,988 and by second amendment dated March 4,1996 under which would be
responsible as a sub landIOrd for the develOpm,ent construction, maintenance and operation of a.
full service marina complex located on approximately 50. 648 acres of land and contiguous water
on the north end of Liberty State Park (the ?north end marina?). On February 26, 1996 
sublet the north end marina to Dimeling, Schreiber Park pursuant to a written

agreement (the ?Lease?).

On October 11, 1996, the tenant assigned its interest in the Lease to Liberty
Landing Marina, L.L.C. Then on May 15, 2003, assigned all of its interest in the Lease
to DEP terminating the-prime lease and leaving DEP as the landlord in?control of the north end
marina. Subsequently, on March 7, 2005, Liberty Landing Marina, astenant assigned its interest
- in the Lease to New Liberty Landing Marina, LLC, and in 2010 New Liberty Landing Marina, LLC,
in turn, assigned its interest to Suntex LL Marina, LLC. On October 22, 2015, Suntex LL Marina,
LLC assigned its interest in the Lease to Defendant, Suntex. Thus, DEP currently leases the
north end marina to Suntex pursuant to the lease agreement that was entered into between
and on February 26, 1996 referred to herein as the Lease.

Pursuant to the Lease, Suntex has a right of first refusal for any additional marina related
uses in Liberty State Park. As set forth in paragraph forty?six of the Lease,

Landlord and Sublandlord each hereby agree that to the extent of its respective fee or
leasehold interest in and to the following described portions of Liberty State Park, no such
portion shall be used by Landlord, Sublandlord or by any third parties over whom Landlord
and Sublandlord has control, whether via a sale or lease of such portion(s): as to the
. entirety of Liberty State Park for the duratiOn of the Primary term (buy not with respect to
any Renewal Term) for a marina or marina related facilities, and/or as to the Restricted
. Area, for a period of fifteen (15) years from the commencement of the PrimaryTerm, for a
restaurant, commercial food service or other commercial retail operation which is the same
as or substantially similar to those being operated by Subtenant on the Premises pursuant
hereto (the ?Retail Operations? Without such porti0n(s) first being offered to the Subtenant
herein either on the same terms and conditions as?shall have been offered or, if used
directly by Sublandlord for such purposes, would have been offered to such third parties.

At such time as Landlord or Sublandlord intends to add a use in an areaand during a time
as to which the foregoing covenants apply, whether by itself or an affiliate or by a third
party via a sale or lease of a parcel falling within such area, Landlord or Sublandlord
may either before, as part of or after a request for proposals and/or competitive
negotiations, submit a proposal regarding such transaction to Subtenant and upon

 

1 _S_ee Jersey Citvv. State Dep?t of Envtl- Prot. 227 N. J. Super. 5, 11 (App. Div 1988) (?The Master Plan itself

described a large marina project for the South Embankment of the Park and boat slips at the northern end of the

Park. -
4,

receipt thereof Subtenant shall. have twenty (20) days within which to accept or reject suCh
proposal by written notice to Landlord or Sublandlord (the ?Notice of Acceptance?). Failure
to give such NOtice of Acceptance within the aforesaid time shall automatically constitute a
rejection. In the event that the proposal is properly accepted in accordance herewith, the 
necessary documentation with respect thereto shall be prepared and executed by the
parties within thirty (30) days after such acceptance. lf Said proposal IS not so accepted by,

. Subtenant, the Landlord and Sublandlord, as the case may be, each shall be free to
operate for its own account the marina ,restaurant commercial food service and/or the
Retail Operations, as the case may be, or to proceed with. the third party transaction
provided, however, in the-event of the latter, if such third' party transactiOn is not concluded 
on materially the same terms as offered to Subtenant, then any subsequent third party offer

"failing within'the scope of this paragraph will again be subject to the Subtenant?s rights of
first refusal hereunder (emphasis added). 

The Plaintiff contends that the Term Sheet and proposed Lease Amendment be declared
invalid due to the 5 failure to offer competitive/public bidding forthis project before offering it
to Suntex and argue that a reasonable construction of paragraph forty-six of the Lease and, in
particular, the highlighted language, above, mandates that the DEP engage in competitive
bidding before offering the Term Sheet to Suntex.

Moreover, Plaintiff asserts that the citizens of Jersey City will be harmed if Defendant?s
proposed Lease Amendment is permitted to go fon/vard, given that DEP has failed to conduct
necessary studies to: ensure that the Proposed South-End Marina includes adequate
waterfront public access; (ii) ensure that the Proposed South?End Marina takes adequate care to
account for conservation conCerns; and ensure that the Proposed South? End Marina takes
adequate care to account for enVIronmental degradation, water pollution, air pollution, and land
pollutions concerns.

In opposition to this appliCation, Defendant DEP, joined by Defendant Suntex, contends
that this matter is not justiciable as it is not ripe for adjudication given that there is no executed
lease agreement which Plaintiff seeks to invalidate. They also contend that this Court does not
have jurisdiction, given that challenges to final agencyde'terminations are supposed to be heard
before the Appellate Division. Furthermore, Defendants assert that Plaintiff does not have
standingjhere as non-parties to the Lease. Apart from these justiciability concerns, Defendants
also contend that any immediate and irreparable harm that might be suffered 'by Plaintiff is
mitigated by the extensive negotiations and approval procedures outlined in the Term Sheet and
proposed Lease Amendment and required under State law. More specifically, the DEP avers
that there will be no acceptance of the Lease Amendment prior to further negotiations between
the DEP and Suntex and that any accepted Lease Amendment would be subject to additional
State and Federal agency approvals and public hearings.

Additionally, Defendants assert that the DEP Is not s'ubje?ct to the State? 3 public bidding
laws under ?20 and that the authority to lease the land In Liberty State
Park IS governed by the procedures set forth' In N. S. A. 13: 1D- 51e etSeg. (the ?Ogden- RoOney
Act?). Defendants contend that the Ogden- R?ooney Act procedures, and the permits/acceptances
Suntex is required to obtain under the Term Sheet, provide additional environmental oversight



and ensure meaningful public participation before the proposed Lease Amendment could
become effective .

Discussion

As an initial matter, we must determine whetherthe Cityof'Jersey City has standing in its
7 ultimate claim for declaratory relief in which it seeks to have the COurt declare the Term' Sheet
and proposed Lease Amendment unenforceable. Defendants cOntest Jersey City?s standing to
seek such relief as a non?party to the underlying Lease or Term Sheet.

It is true that the City of Jersey City, as a municipality, ordinarily would not ordinarily have
standing to challenge the action of a?State agency solely for the purpose of asserting the rights
of the general public. Countv of Bergen v. Port of New York Authority, 32 N.J. 303, 316 (1960)..
However, as the Appellate Division already determined when considering Jersey City?s challenge.
to the constructiOn of the north end marina in 1988, ?JerSey City, which? initially donated 165
acres for Liberty State Park and which is located. adjacent to the park, and. its citizens do. have a
special, regional interest? and have standing to assert the rights of its constituency. Jersey
City v. State Dep?t of Envtl. Prot. 227 N.J. Super. 5, (App.'Divf 1988).

The concept of ?standing? refers to a party?s entitlement to maintain an action before the
cOurt. N.J. Citizen Action v. Riviera Motel Corp., 296 N.J. Super. 402, 409 (App. Div. 1996),
certif. granted, 152 113 (1997), appeal dismissed as moot, 152M 361 (1998) (citingM 
State Chamber of?Commerce v. N.J. Election Law Enforcement C?omm?n, 82 N.J. 57, 67 (1980)).
In order to demonstratestanding, a plaintiff must have a ?sufficient stake? in the outcome of the
litigation, a real adverseness with respect to the subject matter, and there must be a substantial 
likelihood that the plaintiff will suffer harm in the event of an unfavorable decision.? at 409?1 0
(citing N.J. State Chamber of Commerce, supra, 82 N.J. at 67). However, ?New Jersey CoUrts
take a liberal view of standing. .the threshold to prove a part?s standing is ?fairly low.
EnviroFinance Group, LLC v. Environmental Barrier Co. LLC, 440 N. J. Super. r325, 340 (App.
Div. 2015) (internal citations omitted).

Defendant, DEP contends that Plaintiff has no standing here despite the Appellate COurt?s 
decision in Jersey City, Supra 227 N. J. Super at 5. In the 1988 case, there was an existing
lease agreement that gave Liberty State Park Development Corporation authoriZation to develop!
the park and enter into third- -party contracts, so long as it had DEP approval. at 12. Here,
there Is no executed Lease Amendment, and therefore, DEP Claims that Plaintiff cannot have
standing as a non-party toga lease,where no such agreement even yet exists. Here, the Court 
disagrees. Plaintiff here is objecting to the violation of an existing lease, namely, the, lease
agreement entered into in 1 994 by Defendant?s predeCeSsors. The fact that the proposed Lease
Amendment is not yet executed only strengthens Plaintiff?s interest in this controversy, given that 
one of its main contentions is that it is being unfairly excluded from competitive bidding for the
marina expansion project.2 Moreover, for the reasons already enunciated in Jersey City, subra

 

2 While this interest gives Plaintiff standing here, the Court IS not finding that DEP was required to engage in this
competitive bidding process S_ee i_nfra pg. 8.

6'

'227 NJ. Super at the Court here finds that Plaintiff has standing to assert the rights of its
constituency given the environmental and public interest c0ncerns set forth in the Certification of
- Sam P?esin attached to Plaintiff?s application.

Next, we must determine whetherthe Court has jurisdiction, over this matter or whether it'
should be transferred to the Appellate Division for review. ?The. Appellate Division has been
vested with exclusive jurisdiction to. review any action?or- inaction of a-state administrative
agency.? See New JerSey Dept. of Environmental Protection, 337 NJ. Super. 1,;9
(App. Div. 2001) (citing Pascucci v. Vaqott, 71- M40, 51-54 (1976)). This eXCIUSivejurisdiction 9
even extends to actions that are essentially declaratory in nature. (citing Equitable Life
Mortqaqe Realty Investors v. New Jersey Div." of Taxation, 151, NJ. Super. 232, 237?381
(1976)). Therefore, if a challenge to an action or inaction Of a state administrative agency is
brought before the Court, we are obligated to tranSferthe matterto the Appellate Division on the
motion of a party or on our own initiative. l_bid at 10; R. 1: 1-3 

 

In Jersey City, supra 227 N. J. Super, the Appellate Division heard a challenge to the
5 initial lease of the north end marina to Suntex? prede.cessor At the trial court level in
1987, Judge Humphreys, then Assignment JUdge of Hudson County, denied the application for
injunctive reliefstopping work on the marina and transferred the actions to the Appellate Division
because the plaintiffs were challenging a final decision of a state agency-The Appellate Division
affirmed itsjurisdiction overthe matter, given that the lease had been executed, public hearings
had been Conducted, and the DEP had reached a final determination that it was going to lease a
portion ?of Liberty State Park to Suntex?s predecessor in interest. Here, the City of Jersey City
brings this application after the execution of the Term Sheet, but prior the effectuation of the
proposed Lease Amendment. According to theTerm Sheet, DEP and Suntex are required to
. ?use commercially reasonable efforts to enter into a mutually satisfactory leaseagreement? after
the Term Sheet is accepted. This negotiation period is to last? thirty (30) days and any lease
resulting thereof is subject to Suntex obtaining a litany of permits/approvals, including approval
from the State House Commission, the US. Army Corps of Engineers and the US. National
Park Service. Moreover this proposed Lease Amendment is subject to the Ogden-Rooney
process under which the DEP must receive input from various state agencies and conduct at
least two public hearings to'obtain input from the public and interested stakeholders. Thus, the .
acceptance of the Term Sheet here and the promulgation of a. proposed Lease Amendment-is
not a final agency determination. Once there is a final agency determination, jurisdiction would
vest in the Appellate Division. 

Finally, the Court finds that this matter is not ripe for our consideration.

There IS a ?two- -part test to determine ripeness of the controversy: (1) the fitness of Issues
fOr judicial review and (2) the hardship to the parties if judicial review is withheld at this
time. In determining whether an issue is fit for judICIal review, we conSIder whether review
would require additional factual development. -

K. Hovnanian- Cos. of N. Cent. Jersey, N.J. Dep?t of Envtl. N.J. Super. 1-, 9-10
(App. Div. 2005). (quoting 966 Video v. Mayor Twp. Comm. of Hazlet Tp., 299 NJ. Super. 501,

7..

515?16 (Law Div. 1995)).

In Jersey City v.'State Dep?t of Envtl Protec., the Appellate Court found that the case
before it was ripe for appellate review where facts surrogUnding that controversy had been firmly
established. 227N. J. Super. rat9. There, the lease had been finalized, and? ?[i]nterested persons
had the chance to present their views to the public Officials who made the planning decision .
through the many public hearings, and other formal and informal avenues. M. As set forth.
above, the proposed, Lease Amendment here has not been finalizedor executed. Prior to this .
proposed Lease'Amendment?s finalization, Suntex and DEP must engage in a'period of
negotiation In which the terms of the proposed LeaseSAmendment are subject to change. Even
then, any mutually agreed upon Lease Amendmeht would then be contingent on Suntex
obtaining permits or apprOvals from various agencies, including the State Bond Counsel, The
State House Commission, the US. Army Corps of Engineers, and the US. National Park
Service. Moreover, because the land in Liberty State Park was acquired by theDEP with Green .
Acres fUnds, N.J.S.A. 13:1 e_t ?ahe Ogden-Rooney process), requires that-a report be
prepared outlining all of the advantages and disadvantages of the proposed conVeyance and
that two public hearing be held to obtain input from the general public and interested
stakeholders. -

 

Plaintiff?s argument that certain language in paragraph 46 of the lease mandates that the
DEP inengage in competitive. bidding. before offering the term sheet to Suntex is without merit.
The language in paragraph 46 of the Lease is clear and unambiguous. This paragraph gives
_Suntex the right of first refusal over the expansion of any marina uses in Liberty State Park and
then provides that the DEP ?may either before, as part of or after a request for proposals and/or
competitiVe negotiations, submit. a proposal regarding such transaction to? Suntex. This
language does not create a condition whereby DEP must request proposals and competitive
negotiations, it gives DEP the option to do so.

More importantly, there is no legal requirement for DEP to. engage in competitive bidding
for the recreational facilities contemplated underthe Suntex term sheet. When determining
whether the DEP wasSubject to the State?s public bidding laws when leasing out the original
north end marina, our Appellate DiviSion held that ?the public bidding laws are not applicable to
these transactions. There is no specific provision in the statutes requiring adherence to the
public bidding procedures where State land is leased for recreational development purposes.?
Jersey City 227 NJ. Super. 5, 19 (App. Div. 1988) (findingth?atthe development of a marinais a 
recreational development purpose). The DEP has broad statutory authority to develop State
parks pursuant the terms ofthe Lease' Is not
obligated to conduct public bidding or competitive negotiations

Lastly, and for the reasons set forth above, the Court finds that Plaintiff?s claim that the
public?s interest or the environment might be affected in drastic ways without this declaratory
relief is untimely. Defendants are required to engage in the Ogden-Rooney process in which the
public will have opportunity to voice its'concern and the. plan. Will haveto pass environmental
muster with the. US. National Park Service that 'will include compliance with existing
environmental 'regulations. OnCe the, proposed Lease Amendment passes throughthese

8? .

procedures, designed to protect the very interests Plaintiff Is advocating, the matter may be ripe
fOr judicial review before the Appellate DiviSion not this Court.

Conclusion

Given the above findings, the Court Is not In a position to Issue a preliminary injunction to .
Plaintiff under the factors set forth in Crowe v. DeGioia, 90 J. 126, 447 2d 173 (1982).
Accordingly, the Court denies Plaintiff?s applicationfor injunctiVe relief and removes the
temporary restraints imposed on Defendants pursuant to its January2, 2018 Order. 4

Since this decision is dispositive of Plaintiff?s declaratory judgment action in its entirety,
the complaint is dismissed.

so ORDERED, A

    

 

n. Barry P. farkisian,