Just months after opening for business, a small New Jersey bank has found itself in a legal tussle with the state’s largest over the right to operate in the wealthy New York suburb of Englewood Cliffs.
North Jersey Community Bank opened with one office and $13 million of capital, but its assets have mushroomed to $90 million.
Now the $33 billion-asset Commerce Bancorp Inc. of Cherry Hill says North Jersey is operating in a district that is not zoned for bank branches and has sued to shut down the main branch of the 9-month-old bank.
Commerce, which says its own application to open a branch in Englewood Cliffs was denied, claims that North Jersey failed to apply for proper zoning variances and was granted a permit illegally.
Michael Lubin, an attorney for Commerce, said, “It appeared to Commerce that the lawsuit was necessary to bring the matter to the attention of the courts, because in our opinion it was not dealt with fairly on the municipal level.”
Commerce filed the suit last month in the Superior Court of New Jersey in Bergen County. The defendants are North Jersey Bank, the borough of Englewood Cliffs, the borough’s Zoning Board of Adjustment, and the zoning officer who granted North Jersey’s permit.
North Jersey’s chairman said the complaint is baseless. An attorney for the borough of Englewood Cliff said Wednesday that even if the zoning permit was granted illegally, Commerce waited too long to appeal.
Still, Commerce has the resources to press its case. Mr. Lubin said it also plans to investigate ties between North Jersey Bank shareholders and Englewood Cliffs officials.
With a per capita income in excess of $100,000, the borough is obviously an attractive market for banks. Commerce has 23 branches in Bergen County and, according to Mr. Lubin, wants to open its first Englewood Cliffs branch on a site roughly two blocks from North Jersey Bank’s headquarters.
In its suit, Commerce claims that the Zoning Board of Adjustment violated the equal-protection clause of the federal and state constitutions in letting North Jersey open in the same business district where Commerce was denied a permit.
But Frank Sorrentino, North Jersey Bank’s chairman, said he believes Commerce filed the suit because it feels threatened.
“The fact is that we were just a de novo bank opening up in January, and they did not feel we posed a threat,” Mr. Sorrentino said. “But when we became the fastest-growing bank in New Jersey, I think they woke up and paid attention.”
Mr. Sorrentino did not dispute that the site of North Jersey’s main branch (it now has two) is not zoned for bank branches. But Commerce’s case is baseless, he said, because more than two-thirds of the building is used as headquarters space, a permissible use.
Because the branch portion takes up so little space, the Zoning Board of Adjustment decided to approve the application and building permit without a variance, he said.
“I think this is just another example of Commerce Bank using a heavy hand in how they do business,” Mr. Sorrentino said. “When they can’t get what they want going through the normal procedures, they use lawsuits and litigation like it’s part of their marketing plan.”
Commerce said in its suit that it was denied a permit to construct a branch in Englewood Cliffs, but Borough Attorney E. Carter Corriston Sr. disputed that claim.
Mr. Corriston said that Commerce approached the mayor and council about considering a zoning change for a Commerce branch. The borough’s Planning and Zoning Board is reviewing the request, he said.
Also, he said, Commerce would have had to appeal within 45 days after North Jersey Bank was granted a certificate of occupancy. Since it did not, it cannot file a valid lawsuit, Mr. Corriston said. (Commerce did file an appeal, but not within 45 days.)
In an interview, Mr. Lubin implied that North Jersey Bank was granted an application because of its connections. Mr. Sorrentino is on the city’s Planning Board, and North Jersey’s shareholders include a borough councilman and the Zoning Board of Adjustment chairman.
“We are not saying at this time that this was the reason their application was approved, but we intend to do a full investigation to find out if North Jersey’s connections to government officials had anything to do with its approval,” said Mr. Lubin, of the Gallo Geffner Fenster PC firm in Paramus, N.J.
This is not the first time a local business has been accused of using ties to Englewood Cliffs officials to circumvent zoning laws. In 2002 local residents sued the borough and Unilever Bestfoods claiming a permit for Unilever to expand its Lipton Tea plant was granted illegally. The suit was settled last year, minutes before it was to go to trial.
Mr. Sorrentino said that his bank received no special treatment, and that it is not uncommon for public officials to be on the board of a community bank. He said they invested in North Jersey Bank because they believed there is a need for a community bank in Englewood Cliffs.
Two of the three other branches in town are of large out-of-state banks. The third is of the $1.5 billion-asset Interchange Financial Services Corp. of Saddle Brook, N.J., which bought out Englewood Cliffs’ only community bank in 2003.
“Whenever you go into a community to start a bank, you’ve got to get community leaders involved,” Mr. Sorrentino said. That’s a standard formula for success.”
