Two recent decisions in New Jersey once again addressed good faith negotiations that are required of condemning authorities prior to commencing condemnation litigation.  In County of Morris v. Randolph Town Center Assocs., L.P., the property owner appealed the lower’s court’s decision arguing that the condemning authority failed to fully disclose certain aspects of the project in its appraisal, and also violated the duty to negotiate in good faith.  A copy of the Appellate Division’s decision in Randolph may be found here.

Similarly, in County of Bergen v. Rosemarie Arnold (available here), defendant Rosemarie Arnold (“Arnold”) alleged that the County’s (“Bergen”) “take it or leave it” offer failed to constitute as a bona fide negotiation, and thus Bergen was abusing its power of eminent domain.  Nevertheless, the trial court in Arnold and the Appellate Division in Randolph each concluded that the condemning authorities fully complied with the requirements of bona fide negotiations, and thus were entitled to duly exercise its’ power of eminent domain. 

In Randolph, the County of Morris (“Morris”) proposed to take an easement on a strip of undeveloped land for road widening and drainage.  Morris gave notice to Randolph of the proposed taking and thereafter forwarded its constructions plans to Randolph.  Morris conducted an inspection of the property conducted, which Randolph declined to attend.  Morris thereafter completed its appraisal, and made its offer of compensation to the property owner. 

Meanwhile, in Arnold, Bergen initially sought a temporary easement of one year for use of Arnold’s property during the reconstruction of a bridge nearby.  Arnold alleged that despite having not entered into any agreement for the temporary easement, Bergen entered onto her property to proceed with the project, and during the process damaged her property.  In response to Arnold’s complaints, Bergen requested and later received from Arnold an invoice of the damages claimed.  Thereafter, Bergen offered to compensate her for the damages and also made an offer for three (3) permanent easements.  It was determined by Bergen after the project that permanent easements were necessary for ongoing maintenance and repairs of the bridge in the future. 

The negotiation processes in both cases were different.  In Randolph, the property owner waited nearly five (5) months to respond directly to Morris’ initial offer for the easement.  When Randolph did respond, it initially provided a memorandum that addressed concerns about the impact of the proposed taking on the remainder of the property and, after consideration, Morris concluded that the proposals by Randolph were not feasible due to pre-existing requirements on the land set forth by the NJDEP.  In the end, a compromise between Morris and Randolph could not be reached and Morris thereafter proceeded with the condemnation action.

In determining whether a condemning authority satisfied the good faith negotiation requirement of N.J.S.A. 20:3-6, the Appellate Division in Randolph stated that the analysis was “a context-sensitive inquiry.”  Comparing the facts here to prior cases such as County of Morris v. Weiner, the Appellate Division examined the actions of both parties during the negotiation process.  Unlike in Wiener, the facts of Randolph demonstrated Morris’ diligence and willingness to negotiate a settlement with Randolph.  The Appellate Division in Weiner rejected the condemnor’s actions of an “offer on a take-it-or-leave-it basis,” and stated that to require nothing more than an offer and a time period for acceptance or rejection “would simply eviscerate the bona fide negotiations requirement from the statute.”  Here, the Appellate Division found that Randolph “was generally unresponsive to the County’s advances,” while Morris complied promptly with Randolph’s’ requests and provided articulated reasons for rejecting Randolph’s counteroffers.  The court went further stating that Randolph did not even address the material issue (i.e. valuation) but “instead raised concerns about the underlying construction, which could have been raised at the planning stage of the project.”  In light of these facts, the Appellate Division concluded that Morris satisfied the bona fide negotiation requirement and affirmed the lower court’s ruling.  

In contrast to Randolph, prompt communications went back and forth between the two parties in Arnold.  In response to Bergen’s offer, Arnold twice timely requested an opportunity to hire an independent appraiser, and twice requested an explanation as to Bergen’s necessity of the easements. The rift between the parties was the fact that Arnold was not satisfied by Bergen’s explanation with respect to its necessity for the easements. Although Bergen responded and explained its position, Arnold contended that the explanation given was insufficient.  Two months after their last correspondence to this effect, Bergen filed a condemnation action.

The trial court in Arnold likewise concluded that Bergen “entered into and maintained bona fide negotiations.”  Similar to the findings of the Appellate Division in Randolph, the trial court here indicated that Arnold failed to provide any evidence of value to counter Bergen’s offer, and concluded that although Arnold had the right to retain her own appraiser, “she does not have the right to enjoin [Bergen] from initiating a condemnation action indefinitely while she contemplates getting an independent appraisal.”  In addition, the court deemed Arnold’s continued refusal to accept Bergen’s explanation of the necessity of the easements even after Bergen “proffered a rational, competent response” as an indication of “[d]efendant’s failure to cooperate.”  In light of the court’s determination that Bergen engaged satisfactorily in bona fide negotiations, the court found that Bergen did not act in bad faith in its institution and litigation of the condemnation action.  

Going forward, are these two decisions a sign of courts shifting the burden to the condemnees during the negotiation process once an offer is made by the condemnor?  Or were the facts of these cases sufficient to hold that the condemnors did enough to engage in bona fide negotiations?  Where should the line be drawn in the future?  

McKirdy & Riskin’s Harry J. Riskin and Thomas Olson served as counsel to the property owner in the County of Morris v. Weiner case cited above.

The Federal Circuit of Appeals issued its opinion in Lost Tree Village Corp. v. United States, a regulatory takings case, on June 1, 2015.  Our Owners’ Counsel colleague Robert Thomas beat us to the punch (of course), and provided an excellent case synopsis in his Inverse Condemnation blog, available here.  In brief, the Court of Claims held that the government’s denial of a permit to fill 4.99 acres of wetlands constituted a per se regulatory taking under Lucas v South Carolina Coastal Commission, 505 U.S. 1003 (1992), and that there was a regulatory taking under Penn Central v. New York City, 438 U.S. 104 (1978).  The Circuit Court affirmed the Lucas Taking, and found that it was unnecessary to reach the trial court’s alternate holding.

The U.S. Army Corps of Engineers denied the permit application in 2004, and the owner sued alleging that the property was worth $4.8 million with a permit and $25,000 without a permit.  The government did not genuinely dispute the owner’s valuation, but argued that the relevant parcel included other lands owned by Lost Tree, which argument was successful before the Circuit Court ruled on the first appeal that the relevant parcel was the 4.99 parcel.  On remand, the trial court found that the permit denial resulted in a loss in value of of 99.4%.  The question presented was thus “whether residual value from non-economic uses precludes application of Lucas and requires application of Penn Central’s balancing test.”  The Circuit Court agreed with the government that “a Lucas taking is rare” but concluded that Lost Tree was an example of the breed, however rare.  The Court also rejected the government’s argument that sale – even for nominal consideration – was an economic use that precluded application of Lucas’ per se taking doctrine.

In affirming, the Circuit Court also relied on (and perhaps resurrected) Loveladies Harbor, Inc. v. United States, 28 F. 3rd 1171 (Fed Cir. 1994) a case which concerned Bayfront property on Long Beach Island.  There, the Federal Court also found a categorical Lucas taking of 12.5 acres of Barnegat Bayfront property caused by the Army Corps (and DEP’s) denial of a fill permit.

We’ll keep an eye out for the petition for certiorari.

Last week, a New Jersey Superior Court judge granted a landowner’s summary judgment motion to dismiss the Township of Lakewood’s (“Township”) condemnation actions.  In Tp. of Lakewood v. Garzo, the Township instituted four condemnation actions after designating areas as being “in need of” redevelopment.  The Township initially believed that it had owned the subject properties for more than forty years by virtue of a foreclosure judgment issued in 1973 (no property taxes were paid on the subject properties for over 40 years).  In July 2014, the Township adopted an ordinance authorizing the Township to move forward with the condemnation proceedings.  By August 2014, the Township hired an expert to appraise the subject properties and the reports were finalized by October 1, 2014.  The Township proceeded to file its condemnation actions with the court on December 5, 2014.

While proceeding with its plan, the Township failed to notice that a recent deed was recorded on October 7, 2014 naming the pro se defendant in the present matter, Kenneth Garzo, as the current owner of the subject properties.  The Township did not provide the appraisal report to Garzo nor engage in any communication or negotiation with him because the Township was blind to this recent development.  As a result, Garzo filed a summary judgment to dismiss the condemnation actions for failing to provide him the opportunity to accompany the appraiser during the inspection of the properties, and for not receiving an offer in writing prior to the December 5, 2014 commencement date of the complaints.  In addition, Garzo argued that the Township failed to comply with the bona fide negotiations requirement of N.J.S.A. 20:3-6 before a condemnation action is instituted.  In response, the Township argued that Garzo’s interpretation of the statute was misguided.  Contrary to Garzo’s understanding of the statute, the Township claimed that N.J.S.A. 20:3-6 permits the court to waive the negotiation requirement if the holder of title is “unknown, resides out-of-state, or for other good cause.”  Given that Garzo resides in California, the Township thus argued that the statute permits the court to dispense with the negotiation requirement.

The court was not persuaded by the Township’s argument.  The court’s decision to dispense with the negotiations requirement is entirely discretionary as the statute clearly indicates that the court “may dispense with the necessity of such negotiations if the title holder resides out-of-state.”  The court’s decision to decline exercising its discretion to dispense with the negotiation requirements was due, in part, to the Township’s neglect to notice the recorded deed prior to filing its complaint.  The Township’s reliance solely on the tax rolls for verifying and confirming the current owners of the properties was simply inexcusable by the court.  Moreover, Garzo may have resided in California but after recognizing the condemnation action filed against the properties, he expressed willingness to negotiate with the Township making the bona fide negotiation requirement all the more important.

This was certainly not the first time a condemning authority failed to comply with N.J.S.A. 20:3-6.  In Borough of Rockaway v. Donofrio, a 1982 Appellate Division decision, the condemning authority made a monetary offer to the landowner but, among other things, failed to permit the owner to accompany the condemnor’s appraiser and also failed fully disclose the purpose and critical details of the proposed partial taking.  The Appellate Division set precedent by dismissing the condemnation action “for [the Borough’s] failure to honor the statute.”

Given what is at stake, one would expect the condemning authority to be more careful and diligent in their efforts in identifying the owners of the properties.  The Township of Lakewood certainly fell short and now heads back to square one.

A copy of the court’s opinion in Garzo may be found here.

McKirdy & Riskin‘s Ed McKirdy and Jack Buonocore served as counsel to the property owner in the Rockaway v. Donofrio case cited above.

Under California law, if the Court finds that the government’s final settlement offer was unreasonable and the property owner’s demand was reasonable, the Court is permitted to award the property owner its litigation expenses.

So, after exchange of appraised valuations of $3.8M (government) and $10,875 (owner), the government offered to settle the case for $5M – subject to approval by the Federal Transit Auth.; San Francisco Municipal Transportation Agency, and the San Francisco Board of Supervisors. The owner responded with a demand of $8.6M. The case did not settle and the jury awarded the owner $7.3M.  The owner moved post-trial for award of litigation costs arguing that the government’s settlement offer was unreasonable as a matter of law because it was a contingent offer. The trial judge denied the owner’s application finding that the government’s final offer was not unreasonable.

The owner appealed, and on May 26, 2015, the Court of Appeal reversed and remanded in a published opinion found here.  The Court first explained that the purpose of the statute “is to promote settlement of valuation disputes in eminent domain proceedings and guarantee full recompense to the landowner in case of unnecessary litigation.” (Slip op. at 3).  The Court found, in short, that a contingent settlement offer is no settlement offer at all.  And further reasoned, “[k]eeping in mind the statute‘s purposes of promoting settlement and making a property owner whole for the cost of unnecessary litigation, we do not think the Legislature intended to make a condemnee choose between entering into an uncertain and contingent bargain or risk losing any chance of recovering its litigation expenses if it proceeds to trial.” (Slip op. at 4).

Again, there is no similar statutory provision here in New Jersey, but a similar concept – that every dollar a property owner spends litigating its right to just compensation is a dollar less than their constitutional due. See Rockaway v. Donofrio, 186 N.J. Super. 344 (App. Div. 1982).  A similar law was proposed back the late 1960’s when New Jersey’s Eminent Domain Act was being revamped.  One of the proposals of the Eminent Domain Revision Commission was to allow the Court to order payment of the property owner’s litigation costs if the ultimate award exceeded 25% of the offer amount.  Sounds similar to the law examined in this case.

Maybe it’s time for a new Eminent Domain Revision Commission here in New Jersey.

Following up on our post here on the Ramsey v. Commissioner case, the Virginia Supreme Court recently reversed a jury verdict in favor of DOT that would have required the owner to repay a portion of the initial offer monies.  The Court ruled that it was error for the trial court to have precluded the owner from introducing into evidence the DOT’s initial appraisal that was almost 2.5 times greater than the appraisal and testimony relied upon by DOT at trial.  The court’s decision reminds us of a familiar quote:  “Government is not completely free to play fast and loose with landowners — telling them one thing in the office and something else in the courtroom.” U.S. v. 320 Acres of Land, 605 F. 2d 762 (5th Cir. 1979).

Good luck on the remand!

Last week, a divided New Jersey Supreme Court ruled that condemning agencies do not have to prove that properties within an area “in need of redevelopment” have a deleterious effect on the surrounding area in order for those properties to be taken via eminent domain.  The 3-2 majority opinion, authored by Justice Barry Albin, concluded that, so long as there is substantial evidence in the record that the legislative definitions set forth in New Jersey’s Local Redevelopment and Housing Law (“LHRL”) are met, a court is bound to affirm a local government’s redevelopment designation.  The decision has stirred debate in the legal community as to whether the criteria for condemning property for redevelopment purposes has been eased, and whether it represents a departure from the Court’s landmark 2007 decision in Gallenthin Realty Development, Inc. v Borough of Paulsboro, 191 N.J. 344 (2007).

The recent case, 62-64 Main Street, LLC v. City of Hackensack, involved a 2008 determination by the Hackensack Planning Board that five downtown properties, consisting of two dilapidated buildings and poorly maintained parking lots, satisfied the statutory criteria of the LRHL set forth in N.J.S.A. 40A:12A-5(a)(b) and (d) for an area “in need of redevelopment”  .  In particular, the Board concluded that the buildings were boarded up, were “substandard and unsafe for occupancy”, and that adjoining parking areas were “unsightly and not well-maintained”.  The Board’s recommendations led to the designation by the Hackensack City Council in 2011 that these 5 parcels, together with 6 others, qualified as an area “in need of redevelopment”. The property owners challenged the designation on the basis that their properties did not meet the constitutional standard for blight set forth in the 2007 Gallenthin decision.  The trial court disagreed, holding that the heightened criteria of Gallenthin only applied to properties designated under N.J.S.A. 40A:12A-5(e), and thus upheld the designation.  In an unpublished opinion, the Appellate Division reversed the trial court’s decision, finding that Gallenthin required a determination that the property in question suffered from “deterioration or stagnation that negatively affects surrounding areas”.  The Supreme Court agreed to hear the case in 2013.

The Supreme Court held that the Blighted Areas Clause of the New Jersey 1947 Constitution is an affirmative grant of authority to local agencies to redevelop and revitalize areas that have become blighted, and that both the framers of the Constitution and the subsequent Legislatures were mindful of the importance of the constitutional property rights at stake, including those who crafted and adopted the LRHL in 1992.  As such, the Court reasoned that the legislative classifications of blight set forth in the LRHL and in prior statutes were adequate, except for the redevelopment/blight classification of N.J.S.A. 40A:12A-5(e), which is limited to “underutilized” properties and was found in Gallenthin to require additional evidence that such underutilized state also negatively affected other properties in order to pass constitutional muster.  Accordingly the Hackensack Court concluded that blight designations under other criteria of the LHRL can and do presume that the blight exists if substantial evidence is presented in satisfaction of that legislative criteria, without having to prove any separate negative effect on the surrounding area.

Chief Justice Stuart Rabner issued a blistering dissent, finding that the Court had taken a step backward from Gallenthin, and that any blight determination should require that both components  of Gallenthin — “deterioration or stagnation” and negative impact upon “surrounding properties” in order to proceed and allow the use of eminent domain.

The impact of the Hackensack ruling is not likely to be felt for some time.  Critics of the opinion have suggested that the criteria for condemning properties under the LHRL has now been eased, and that it may have opened the door for another round of abuse of property rights in New Jersey that was common prior to the 2005 decision of the United States Supreme Court in Kelo v. New London, and more directly the 2007 New Jersey high Court decision in Gallenthin, a variety of other cases which followed where local redevelopment powers were more closely scrutinized and, in many instances, curtailed.  That trend, coupled with the economic recession which started several years ago, caused a dramatic downturn in local redevelopment activity in New Jersey.  Will Hackensack help bring it back?

A copy of the Court’s opinion in the Hackensack case is available here.

Related posts on the topic and decision:

Pacific Legal Foundation (which submitted an amicus brief to the Supreme Court)

New Jersey Law Journal:  Justices Ease Criteria for Condemning Property

Record:  State Supreme Court Sides With Hackensack on Redevelopment Plan

The New Jersey Supreme Court decided Townsend v. Pierre on March 12, 2015.  It was not a condemnation case but is relevant to any civil litigation involving expert witnesses.  The case arose out of a terrible accident involving a motorcycle and an automobile.  The motorcycle t-boned the car and the motorcyclist died.  The decedent’s estate brought a negligence and wrongful suit against numerous defendants, including the owner of the property adjacent to the intersection where the accident occurred.  All defendants were granted summary judgment by the trial court, but the Appellate Division reversed as to the property owner.  The property owner’s negligent maintenance of its landscape trees at the intersection (i.e. failure to trim) allegedly made it impossible for vehicles operating along the right of way to see oncoming traffic from the stop sign and such was the “proximate cause” of the motorcyclist’s death.

Here’s a link to the google map showing the location of the accident at the intersection of Garland Lane and Levitt Parkway. The motorcyclist was traveling east on Levitt Parkway, and the car was making a left hand turn from Garland onto west-bound Levitt Parkway.  It is easy to see how a car would not be able to see oncoming traffic from the stop sign on Garland (even without the untrimmed shrubbery) because it’s too far back.  However, the uncontested evidence was that the driver of the car stopped at the stop sign line, and then inched forward while stopping intermittently (at least 4 times) until she was in a position to see oncoming traffic.  It was only then that she proceeded to make the left turn onto Levitt Parkway with the unintended consequence of the fatal accident.  There was no evidence contradicting these facts.

Plaintiff’s expert noted the following with respect to these uncontested facts:

“I am mindful of the testimony of Noah Pierre regarding her allegedly stopping four (4) times before proceeding. However, given her testimony that the bushes obstructed her view of eastbound traffic on Levitt Parkway, and given that she never saw the approaching motorcycle, I reasonably conclude that she did not have an unobstructed view of Levitt Parkway when she proceeded into the roadway.” [Slip op. at 11].

So, plaintiff’s expert’s opinion was based on a fact that was contradicted by the evidence.  In other words, the fact – unobstructed view before making the turn – was undisputed.  The expert’s opinion that the property owner’s negligence was a proximate cause of the accident turned on the fact that the driver’s view was obstructed by the shrubbery.  Untrue.

The Supreme Court therefore affirmed the trial court’s grant of summary judgment, reasoning, in part, a “party’s burden of proof on an element of a claim may not be satisfied by an expert opinion that is unsupported by the factual record or by an expert’s speculation that contradicts that record.” [Slip op. at 21].  Further, the Court found it improper for the expert to invent the facts needed to support his opinion.  Essentially, the expert opined that the driver of the car must have been mistaken when she testified that her view of oncoming traffic was unimpeded.  Absent fact support for such a statement, the expert’s opinion was rejected as a ‘net opinion’, i.e. one without factual support.

While not so novel a holding, property owners are cautioned to keep their hedges trimmed….

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