Confusion Over Conflict Arises With Birchwood

The Local Source
By: Cheryl Hehl - Staff Writer
February 28, 2013

CRANFORD — Tuesday night at the Township Committee Workshop meeting resident Liz Sweeney brought out information that could indicate there was a conflict of interest involving builder remedy lawsuits the town has been fighting for years.

Thirty-four years after the New Jersey Supreme Court ruled on a Mt. Laurel case involving affordable housing, the township is still wading through a maze of legal red tape that boxed them into an affordable housing dilemma. But Sweeney thought she may have uncovered a joint venture that was not fully disclosed to the township.

While admitting the information she found while perusing a court file in Elizabeth baffled her, Sweeney told the Township Committee Tuesday night at the Workshop Meeting that she was quite taken back by what appeared to her as a very likely conflict of interest.

The information concerned the Lehigh Acquisition Corporation, the developer of the 555 South Ave. and Myrtle St. site where 163 units were proposed to be built years ago. But because the township fought the project, the developer filed a builder’s remedy lawsuit against the township that evolved into a series of court battles, appeals and legal bills that continue to mount.

Sweeney’s discovery could throw a wrench into the legal mess if it can be proven there was a business arrangement between two developers and a partner in the same law firm that participated in defending the township in one of the builder’s remedy lawsuits, specifically the Birchwood Avenue development, which the township has spent more than a half million dollars fighting.

Sweeney told the governing body that in 2006 Woodmont Properties filed a lawsuit against Lehigh Acquisition Corporation alleging some type of fraud, but that case was dismissed with prejudice.

What interested Sweeney was the fact the law firm of Florio, Perrucci, Steinhardt, & Fader has a connection to Woodmont and the township attorney representing Cranford in the Birchwood Avenue legal battle, Philip Morin.

In 2009, Sweeney said, Woodmont met with Lehigh Acquisition Corporation to discuss a joint venture, but that never developed. What the resident found perplexing was that Michael Perrucci, founder and managing partner of Florio, Perrucci Steinhardt, and Fader, is also a developer with Woodmont Properties.

According to a Bethlehem, PA Patch article dated Feb. 12, 2012 that Sweeney referred to, Perrucci received an unofficial and non-binding consent to use a 30-acre parcel of land to construct a 312-unit apartment complex and small strip mall. But it was the name of his company that jarred Sweeney.

“Developer Michael Perrucci and his Woodmont Properties would build a 13-building apartment complex and small strip mall with 20,000 square-feet of retail space along route 191,” the Bethlehem Patch article noted, adding that the development was 25 percent smaller than the 420-unit project he originally wanted to build. According to the law firm’s website, Perrucci was admitted to practice law in New Jersey as well as Pennsylvania and New York, the three states where the firm has offices. Perrucci, the website noted, has extensive experience in municipal, real estate, land use and zoning.

Sweeney suggested that, at the least, a perceived conflict of interest existed if Morin represented the township in the Birchwood Avenue builder’s remedy lawsuit, especially if the founder and owner of the firm where he is a partner is a developer with Woodmont Properties.
“Has Florio, Perrucci, Steinhardt & Fader given full disclosure?” she asked the governing body, but they seemed as confused as the resident at this discovery.

Each of the state’s 566 municipalities have a constitutional obligation to accommodate low and moderate income housing as a result of Supreme Court cases known as Mt. Laurel decisions. This was followed by the Fair Housing Act of New Jersey in 1985, which created the Council on Affordable Housing.

Had Cranford sought certification with COAH, as required by law and filed a plan outlining how they were going to fulfill their obligations for affordable housing, neither the South Avenue nor Birchwood Avenue builder’s remedy lawsuits would have occurred.

Mayor Tom Hannen questioned Township Attorney Robert McCarthy about the 555 South Ave. builder’s remedy lawsuit, asking if that was a separate appeal, but the attorney explained it was not an appeal at all.

“It is not an appeal but rather an interlocutory appeal, which a municipality can seek but is rarely granted,” he said, adding that this can be done after a final judgement is handed down on builder’s remedy appeals.

Resident Rita LaBruta said it appeared that Perrucci is part owner with Woodmont in some fashion, mentioning that if Morin is a partner in Perrucci’s firm, that was a conflict of interest because he represented the township in the past on the Birchwood builder’s remedy lawsuit.
“I don’t know what we are doing here. This is too convoluted for me,” LaBruta added.

Hannen was just as perplexed and unable to respond to either Sweeney or LaBruta regarding their questions until the township investigated the information brought forth.

“We will try to get answers for you,” the mayor said.
Former Mayor Mark Smith, a Republican who is against both the South Avenue and Birchwood Avenue developments, did not mince words about how things looked to him as a resident.

“It looks like Woodmont might have had a piece of us for years,” he said flatly, adding “and I think our rights have been violated.”