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Professional Plan Examiners of New Jersey Inc. v. Lefante

December 20, 1984


Appeal from the United States District Court for the District of New Jersey (Newark)

Author: Sloviter

Before: SLOVITER, BECKER Circuit Judges, and FULLAM, District Judge*fn*


SLOVITER, Circuit Judge

The underlying issue on the merits in this litigation is whether certain provisions of New Jersey's Uniform Construction Code Act, enacted in October 1975, and regulations promulgated thereunder are unconstitutional and violate the antitrust laws. The particular issues before us are whether the district court erred in extending its order temporarily restraining the state agency from enforcing the Act against plaintiffs for more than four years without holding any hearing on a preliminary injunction and without making any findings of fact or legal conclusions, and whether the court erred in abstaining pending state court action. We conclude that the district court failed to follow the proper procedures in extending the restraints and improperly abstained from deciding the plaintiffs' constitutional claims.


On October 7, 1975, New Jersey enacted the Uniform Construction Code Act, N.J. Stat. Ann. § 52:27D-119 et seq., (West 1984-85 Supp.) which was intended "to establish and provide for uniform building and construction standards and uniform enforcement policies and practices throughout the entire state." New Jersey State Plumbing Inspectors Ass'n v. Sheehan, 163 N.J. Super. 398, 401 394 A.2d 1244, 1245 (App. Div. 1978). The Department of Community Affairs (DCA) was required to promulgate "a State Uniform Construction Code," N.J. Stat. Ann. § 52:27D-123a (West 1984-85 Supp.). The Act provided that enforcement functions could be carried out either by DCA or by certified municipal officials, see N.J. Stat. Ann. §§ 52:27D-125 and 128 (West 1984-85 Supp.). It also provided, as interpreted in the regulations, that a municipality could, under certain circumstances, use private agencies for plan review and inspection provided that the private agency was authorized by DCA, N.J. Stat. Ann. § 52:27D-137 (West 1984-85 Supp.); N.J. Admin. Code tit., 5 §§ 23-4.12 to 4.15.

The DCA adopted a comprehensive regulatory code, the Uniform Construction Code (Code), which contains separate subcodes for specified subjects, such as building, fire protection, plumbing, electrical and energy. N.J. Admin. Code tit. 5, § 23-3. The Code contains regulations providing, inter alia, for the licensing of both municipal enforcement officials and private agencies. N.J. Admin. Code tit. 5, § 23-5.1. The limitations imposed on the role of a private agency under the regulations form the gravamen of plaintiffs' challenge to the regulations.

Plaintiff-appellee Professional Plan Examiners (PPE), a private firm, was formed by and employs engineers who had worked for the New Jersey Department of Labor and Industry, Bureau of Engineering and Safety doing plan reviews, until the Bureau was eliminated in 1975. A major portion of PPE's business in reviewing plans that builders are required to submit with their application to begin construction to ascertain whether the Code's requirements have been met. According to PPE, the regulations threaten it with the loss of most of its business. PPE complains that, as interpreted by DCA, a private agency seeking to perform plan review must contract directly with the municipality rather than with the architect or builder, and must be paid by the municipality. It also claims it is disadvantaged because a private agency wishing to perform plan review is required to undertake the field inspection of construction as well, but when the DCA conducts the plan review, it is free to leave the inspections to local municipal officials. Further, it attacks the regulations that exclude a private plan review agency, such as PPE, from conducting Class I plan review (of the largest or most hazardous buildings) in any town or city where the construction officials and all subcode officials are not licensed as Class I.

On July 25, 1977, PPE brought suit in the New Jersey Superior Court, Appellate Division, challenging the regulations as unconstitutional under the state and federal constitutions and as creating a monopoly for the DCA in Class I review. The suit was settled by consent order without reaching the merits.*fn1

On November 28, 1978 PPE, its president, and employees (jointly referred to as PPE) filed their complaint against the Commissioner of the DCA, now Joseph LeFante, and against Charles Decker, a DCA Bureau Chief, and William Connolly, DCA's Director of the Division of Housing & Urban Development (jointly referred to as DCA) in the United States District Court for the District of New Jersey, seeking declaratory and injunctive relief and damages. In Count I of the Amended Complaint PPE alleges the unconstitutionality of the regulations, in Count II PPE challenges the failure to grant their employees licenses, and in Counts III and IV plaintiffs contend that defendants' acts violate the antitrust laws.

On the same day, the district court entered a temporary restraining order enjoining enforcement of the regulations against PPE on the basis of affidavits by the individual plaintiffs that set forth the injury to PPE if defendants continued to interpret the statute and regulations and to act so as to prevent PPE from performing plan review on major projects. The hearing on issuance of preliminary injunction was originally scheduled for December 7, 1978. The district court, with the consent of the DCA, first postponed the hearing to January 9, 1978, and thereafter in a series of orders, continued to postpone the hearing date for almost three years, still with the consent of DCA. The court also, by a series of extensions, continued the earlier restraints until October 19, 1981 to permit discovery.

The docket shows that on August 26, 1981, defendants filed a notice of intent to move to dismiss the complaint for failure to state a claim. On or about October 19, 1981, the court heard argument on the extension of the "preliminary restraints." On December 18, 1981 the district court denied the motion to dismiss, staying the federal action pending resolution of the plaintiffs' applications for licenses in state administrative proceedings. Again, the original temporary restraints were continued.

The plaintiffs were granted licenses by DCA in December 1982. In May 1983 the DCA moved to restore the case to the active calendar, and moved again to dismiss the federal complaint or for summary judgment, to lift the stay, and to remove all restraints. The court denied the motion on September 26, 1983, and continued the stay to allow the state courts to interpret some of the regulations.

The September 26, 1983 order stated summarily, "For the reasons stated in the record at the hearing . . . 1. The defendant's motion to restore this action to the active calendar is DENIED. 2. The motions for summary judgment and for dissolving temporary restraints previously entered are moot."

The only "reasons" stated at the hearing did not relate to the need for temporary restraints or a preliminary injunction but instead related to abstention, and were given during the following colloquy:

THE COURT: Where a municipality needs a class one expert to come in because they don't have it, they can't hire private consultants, they must go to the Department of Community Affairs and have their staff, do the work. If they have their own class one HHS, then they may hire an outside consultant.

So this says, you can hire where you don't need them, and you may not hire them where you do need them. And nobody can hire outside consultants --

MR. CHERNOSKI: We're not saying that, sir.

THE COURT: That might raise a different question, not ...

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