COUNSEL:

Ira Karasick and Frank Askin argued the cause for appellants/cross-respondents (Mr. Karasick and Joan Pransky, attorneys and on the brief; Mr. Askin and Cathy Cardillo, on the reply brief).

Michele A. Querques argued the cause for respondents/cross-appellants (Giordano, Halleran & Ciesla, attorneys; Ms. Querques, of counsel and on the briefs; Steven M. Berlin and Lynette J. Carhart, on the brief).

OPINION: The opinion of the court was delivered by PRESSLER, P.J.A.D.

This is a defamation and related-tort action brought by plaintiffs, James LoBiondo, Jr., Denise LoBiondo, and their corporation, D. LoBi Enterprises, Inc., against defendants Grace Schwartz [FN 1] and her three adult daughters, Janice DeMarco, Karen Schwartz and Marilyn Kallareou. Grace Schwartz owns a house in Sea Bright, a municipality bordering the Atlantic Ocean. In 1986 plaintiffs bought a modest one-story beach club directly across the street from Mrs. Schwartz and proceeded over the next five years, both with and without required governmental approvals, to enlarge and to attempt to enlarge it substantially, both physically and functionally. Mrs. Schwartz and her daughters objected, rallying neighbors by distributing flyers and talking to them, appearing at planning board [FN 2] and council meetings, and writing letters to municipal, county, and state officials complaining of plaintiffs' flouting of land use laws and state and local regulations. That activity was the basis of this suit, filed in October 1991, by which plaintiffs alleged defamation, intentional infliction of emotional distress and tortious interference with business advantage and sought both compensatory and punitive damages. Defendants counterclaimed, asserting causes of action sounding in malicious abuse of process, malicious prosecution, and intentional infliction of emotional distress.

[FN 1] "Mrs. Schwartz" refers in this opinion to Grace Schwartz.

[FN 2] Sea Bright has a "combined" planning board and zoning board. See N.J.S.A. 40:55D-25c(1).

Defendants' self-protective actions forming the gravamen of this suit can only be understood in the context of plaintiffs' activities. In 1986 LoBiondo and his wife, through their corporation, bought the Surfrider Beach Club. It was then a modest one-story affair with a pool, lockers and cabanas, and a snack bar and was open only during daylight hours in the summer. Plaintiffs had plans to significantly expand the scope of the club's operations and to transform the physical structure as well. The first phase of their development, attended by what can only be generously characterized as Mr. LoBiondo's pattern of disingenuousness with local officials and neighbors, commenced in January 1987 and reached a conclusion of sorts at the Planning Board meeting of June 9, 1987. The intervening five months involved intense community opposition as well as ongoing debate within the Planning Board, which was itself philosophically divided by the insistence of some members on compliance with land use regulations and the expressed viewpoint of others that developing ratables was the Board's primary function.

In general terms, this is what happened. LoBiondo applied for a building permit in January 1987 for the stated purpose of placing new siding on the building and making roof repairs. He represented that the cost of construction was less than $2,500 and paid $15 for the permit. He promptly began construction to increase the height of the building. Since there was no permit covering any such construction nor, of course, any application therefor, the neighbors became concerned as to precisely what was happening at the club. The Planning Board was equally unaware and confessed its "embarrassment" with this state of affairs at its February 1987 meeting, which Mr. LoBiondo was asked to attend to explain his plans. Suffice it to say that between that time and the June 9, 1987, resolution of the Board, this much became clear. LoBiondo's plan evolved from repairing the roof and installing new siding to constructing a fully enclosed second-story area, referred to as the great room. At the February meeting, when only the second-story sundeck was proposed, the Board advised LoBiondo, who had brought only a hand-drawn sketch, that he required site plan approval with submission of proper and certified plans showing, for example, the weight-bearing capacity of the roof. He was permitted to proceed with the interior cosmetic work but told not to proceed with any exterior work until approval was granted. It appears, however, that he went beyond the terms of that instruction. We note that although this was LoBiondo's first foray into the beach club business, he had a college degree in business administration, had attended law school for two years and had previously submitted local land use applications.

At the March meeting, LoBiondo presented his great room concept, explaining that he was planning to use it for member buffets two or three times a week. He had brought with him "material" respecting the weight-load capacity, but had not submitted it prior to the meeting. He then requested a waiver of the site plan process, candidly admitting that "he felt the construction required no more than a building permit if it were being done in stages." Again the tension among the Planning Board members was palpable, illustrated by the observation of one that site plan approval for the addition of a second story was required "even if it were done in ten stages" and the comment of another that "he would like to see the work continue." The resolution reached at that meeting required LoBiondo to submit a detailed set of plans to the township engineer for review and determination of the necessity for site plan approval, despite the Board attorney's opinion that site plan approval was necessary. The matter was carried to the April meeting, when the evolving elaboration of LoBiondo's plans was again discussed, albeit informally, because of LoBiondo's failure to provide adequate notice of the meeting. During the discussion LoBiondo represented that there would be no change in the use of the club "per se," that the great room would be used exclusively for members, that he planned karate and aerobic classes there as well as member buffets on Fridays and Saturdays, and that he was not planning any kind of public dining facility or licensed liquor service. Community objectors, including Mrs. Schwartz, were also heard. Another vocal objector was a Mrs. Viviano, who expressed concern with the planned height of the facility, its size, and most importantly, its lack of a sprinkler system.

Hearings continued at the May 12, 1987, meeting. Since the sealed plans had not been filed prior to the meeting, final site plan approval was withheld over LoBiondo's objection that his submission was complete. The Board instead granted approval conditioned upon the engineer's forthcoming report to be presented at the June meeting. LoBiondo again stated that he did not plan to obtain a liquor license or to install a public restaurant. He reaffirmed that there would be no cooking on the premises for the buffet -- the food would be brought in -- and the snack bar kitchen would not be enlarged, and that all the club's new facilities would be for beach club members only. He also maintained that there were 258 parking spaces on the premises.

The Board's next meeting, on June 9, concluded the first phase of LoBiondo's expansion. The engineer's report listed twenty-five deficiencies in LoBiondo's plans. LoBiondo requested a waiver thereof, which was ultimately granted by the Board based expressly upon his numerous representations. First, he claimed that there were already 258 parking spaces and a 17-foot by 10-foot dumpster on the premises for refuse removal. He represented that his plans included no second-floor lighting because the club would be closing at 8 p.m. and the gates would then be locked. He then modified this to say that while the club would close at 8 p.m. in June and September, "it may be later in the summer months." One Board member opined that if LoBiondo "felt he needed additional lighting for insurance purposes he would have it." The Board also considered a letter from the building inspector stating that among other requirements the building meets "firematic standards of the Borough," an obviously incorrect statement because it was several years later that LoBiondo had actually hooked up the sprinkler system to a water supply. Again, LoBiondo repeated his no liquor--no public dining representations. Finally, after the Board's vote granting final site plan approval based on these representations, one of Mrs. Schwartz's daughters, defendant Marilyn Kallareou, announced to the Board that she had just counted the parking spaces and there were less than 258. She also said the dumpster was only three feet by twelve feet. Members of the public, including Mrs. Schwartz and Mrs. Viviano, expressed their objections again. All to no avail. We further note that at trial LoBiondo admitted that prior to the June 1987 meeting he had hired a private investigator to talk to the objectors. LoBiondo further conceded that the detective was "wired" in order to surreptitiously record the conversations and that he did not disclose his true identity to the objectors.

Three days following the Planning Board's resolution granting site plan approval coupled with the waiver of the twenty-five deficiencies, LoBiondo filed municipal court complaints against his adversaries, charging both Marilyn Kallareou and Grace Schwartz with acts of criminal trespass and harassment. He also filed a municipal court complaint against Mrs. Viviano, which he withdrew after a relative of hers interceded on her behalf. Mrs. Schwartz proved that she was not in Sea Bright when the conduct of which she was accused took place and was acquitted of the charges against her. Finally, LoBiondo withdrew the complaint against Marilyn Kallareou in exchange for Mrs. Schwartz's withdrawal of a noise complaint she had filed against the Surfrider in August 1988. We note incidentally that another neighbor, a Mrs. Twait, had written a letter to the editor of a local newspaper, published in October 1987, complaining of various litter and garbage left on the beach by the club. LoBiondo filed a municipal court harassment complaint against her too. She was acquitted at her municipal court trial after producing photographs substantiating the facts stated in her letter.

Mrs. Schwartz's 1988 noise complaint plays a significant role in this increasingly bizarre saga. In July 1988 LoBiondo had made the great room available to a member, Mrs. Springman, for a surprise birthday party for her husband. There were eighty guests and, by Mrs. Springman's admission, amplified music. At 11:30 p.m., Mrs. Schwartz, whose house was seventy-five feet from the club, called the police to complain of the loud noise at that hour. Shortly after midnight, the responding police officer arrived at the club. According to the report he contemporaneously filed, Mrs. Springman agreed to turn the music down and said that the party was just winding down anyway. By the time of trial eight years later, however, the officer was unable to recall that there was any noise when he arrived, despite Mrs. Springman's testimonial admission of the presence of eighty guests and a disc jockey. It is also significant to note that Mrs. Springman claimed to have been embarrassed by the police visit. She nevertheless did not cancel her membership at the club, although she and the ten other families with whom she had joined the club had decided prior to that event to join a different club the following season. She testified that she had met Mrs. LoBiondo by chance in the spring of 1989. Mrs. LoBiondo offered her discounts amounting to $3,000 on her club membership if she rejoined, and she and all ten other families in fact did so.

The next series of events leading to the filing of this action involved LoBiondo's effort to use the great room for a public year-round restaurant. To begin with, the borough's zoning ordinance had been amended in 1989 to eliminate restaurants as a permitted use in the district in which the Surfrider was located. We gather from the record that there were restaurants and nightclubs in the southern end of town that were not entirely trouble free, and the purpose of the amendment was to preserve the residential and family character further north. In any event, in apparent disregard of the new zoning restriction and obvious disregard of the numerous and repeated representations made in 1987 respecting the members-only use of the club, LoBiondo, in early 1990, began to plan a full-blown dining facility which he believed required only that he obtain a certificate of occupancy for that use. He so applied to the building inspector, Daniel F. Staehle.

The building inspector had information from his predecessor that the Surfrider had been previously inspected by the Department of Community Affairs (DCA), to whom Mrs. Schwartz had earlier complained and that the DCA had required an additional means of egress, exit doors swinging in the direction of the egress, panic hardware, exit signs, and a sprinkler system. The inspection disclosed that these requirements had still not been met and Staehle issued a building permit to LoBiondo in order to complete that work. Upon its completion, LoBiondo refiled for a certificate of occupancy for use of the great room as a private dining facility. LoBiondo also applied for a municipal club liquor license, which was denied in May 1990. In the meantime, the building inspector was unsure whether the new use needed a variance or site plan approval. He did know that it required approval of the Monmouth County Board of Health which had not yet been given. As those events were occurring, public opposition, including Mrs. Schwartz's, was growing. The record leaves no doubt that in June 1990, after denial of the municipal club liquor license and while the borough officials were still considering whether a variance was required, LoBiondo sent a printed invitation to the public at large inviting membership in the Surf Club, a dining and dancing facility that would be open at the Surfrider in the summer daily from 6 p.m. to 2 a.m., and serving lunch and dinner in the off-season. The invitation also contained this egregious and blatant misrepresentation:

A private club liquor license has been approved by the State of New Jersey ABC. Currently we are waiting for approval from the town of Sea Bright, in the future, this will allow us to serve a full bar.

Finally, I reviewed with Mr. LoBiondo the issue concerning the "Surf Club" flyer. My client agrees and acknowledges that any such use of Surfrider Beach Club can not occur until the Sea Bright Planning Board has had an opportunity to interpret my client's rights to make Surfrider Beach Club available to non-swim club members. Until the Planning Board has had an opportunity to fully review both the past use of Surfrider Beach Club and my client's plans for the future, Surfrider will not be made available to members of the public for non-swim club functions.

Mrs. Schwartz promptly filed an action in lieu of prerogative writs in the Law Division complaining of the Planning Board interpretation action as arbitrary, unreasonable and capricious. The matter was heard by Judge Theodore Labrecque, who reversed the Board's action by oral decision rendered on April 28, 1992, of which we take judicial notice. N.J.R.E. 201(b)(4). Judge Labrecque reviewed the Planning Board minutes of the February to June 1987 meetings and of the 1990 and 1991 Planning Board minutes as well as the other municipal actions that we have described. Based on essentially the same record that was before the court in this action, Judge Labrecque reversed the Planning Board determination that LoBiondo had a valid non-conforming public restaurant use based on the 1987 site plan approval. This, in part, is what he said:

This court has analyzed and scrutinized Mr. LoBiondo's 1987 and 1991 testimony and is somewhat overwhelmed by the fact that the sworn testimony in 1987 is impeached by the sworn testimony of 1991. Additionally, Mr. LoBiondo contradicted his testimony in several places. This court has tried to square the board's findings with Mr. LoBiondo's 1987 and even the 1991 testimony and has difficulty doing so. In 1987 Mr. LoBiondo gave testimony which clearly, unambiguously and unequivocally stated his position that there would be no public restaurant on his premises. This court also adds to this the fact that there were several neighboring landowners who gave testimony directly opposite to that of Mr. LoBiondo in the 1991 hearing.

This court must also look to the fact that there was no 1987 site plan application or approval for a public restaurant on the second story of Surfrider. Even though a restaurant was a permitted use in a B-3 Zone in 1987, no such site plan application for this use was presented. This court is also confronted by Surfrider's failure to abide by the Sea Bright Ordinance sections dealing with public restaurants. While Surfrider may have satisfied the requirements of the ordinance sections pertaining to beach clubs, a different set of regulations are mandated for restaurants.

Mindful that this court cannot substitute its judgment for that of a planning board. This court is constrained to hold that on this record Surfrider has not demonstrated such a lawful restaurant use which should be accorded the safety of protections guaranteed by N.J.S.A. 40:55D-68 and as further defined by N.J.S.A. 40:55D-5 (a non-conforming use is a use or activity which was lawful prior to the adoption, revision or amendment of the Zoning Ordinance but which fails to conform to the requirements of the Zoning District in which it is located by reasons of such adoption, revision or amendment.)

Accordingly, this court finds that the Sea Bright Planning Board's determination that Surfrider had a lawful pre-existing, non-conforming use was arbitrary and unreasonable in light of all the evidence presented to it. The Board's decision is reversed.