New Jersey Eminent Domain Law Blog

On June 15, 2009, the United States Supreme Court granted certiorari in the case of Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, Docket No. 08-1151. This is the Court’s first sojourn into the takings issue since June 2005, when the court issued three opinions in the Kelo, Lingle and San Remo Hotel cases. See post in the  ABA Journal online, "Surprise! Supreme Court grants cert in beach taking case," and related links.

This is a regulatory takings case where the Florida Supreme Court, in a 5-2 decision, rejected the beachfront property owners’ challenge to a state law authorizing beach replenishment through creation of sand dunes and asserting public ownership to the created land area. The Florida Supreme Court concluded that the law did not constitute a compensable taking. See Robert H. Thomas' post at Inverse Condemnation blog:

In Walton County v. Stop the Beach Renourishment, Inc., 998 So.2d 1102 (Fla. Sep. 29, 2008), the Florida Supreme Court held that a state statute which prohibits "beach renourishment" without a permit did not effect a taking of littoral (beachfront) property, even though it altered the long-standing rights of the owners to accretion on their land and direct access to the ocean. The cert petition presents these questions:

The Florida Supreme Court invoked "nonexistent rules of state substantive law" to reverse 100 years of uniform holdings that littoral rights are constitutionally protected. In doing so, did the Florida Court's decision cause a "judicial taking" proscribed by the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that eliminates constitutional littoral rights and replaces them with statutory rights a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

Is the Florida Supreme Court's approval of a legislative scheme that allows an executive agency to unilaterally modify a private landowner's property boundary without a judicial hearing or the payment of just compensation a violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution?

The case has interesting implications in many states, and specifically New Jersey,  where the Army Corps of Engineers, operating through local municipalities, is seeking to accomplish beach replenishment along the entire length of Long Beach Island. See our January 29 post, "Eminent domain in Harvey Cedars."
 

On May 21, the New Jersey Supreme Court granted certification to petitioner Iron Mountain Information Management, Inc. in a case which could be a precedent setting decision in eminent domain law. See the Appellate Division opinion in Iron Mountain Information Management, Inc. v. City of Newark et al (A6561-06) and discussion in our previous blog post, Notice to commercial tenants in eminent domain cases (March 23, 2009). The Supreme Court will consider the issue of notice to a commercial tenant within a redevelopment area under the Local Redevelopment Housing Law, as well as the underlying issue of blight. Below are the relevant documents that have been submitted to the Court and the order granting certification:

Order granting Petition for Certification

Petition for Certification

City of Newark Opposition Brief

Reply Brief in Support of Petition for Certification

West Orange v. 769 Associates  (A-113-07)

Today the New Jersey Supreme Court unanimously decided that a condemnee may recover counsel fees and costs upon abandonment of a condemnation proceeding, pursuant to N.J.S.A. 20:3-26 (b), from the point at which the property is formally targeted for condemnation through the filing of the condemnation complaint and ensuing litigation. The court held that calculation of fees, as in all other cases, is governed by the reasonableness principles of RPC 1.5. Significantly, the Court held that, in the context of abandonment,  the right to recover costs and fees is not contingent to any degree on the success of the property owner’s defense strategy and, therefore, was not subject to modification by the application of RPC 1.5(a)(4) regarding the amount involved or the results obtained. Justice Virginia Long wrote for the Court. Download the opinion.

However, fees associated with the filing a prerogative writ, such as fighting a blight designation, are not recoverable. The tolling point in pre-litigation begins once the property owner receives notice that the property will be formally targeted for condemnation, such as receipt of an offer letter based on an appraisal. In the pre-litigation period,  any fees incurred in order to participate in bona fide negotiations per N.J.S.A 20:3-6, such as the costs of attorneys, appraisers, engineers and other experts, apply.  A condemnation complaint must be filed, and it must be either abandoned - no longer required for the project, or dismissed due to defenses raised by propery owner. The trial court has the discretion to mitigate the fees.

Listen to the N.J. Supreme Court oral arguments in West Orange v. 769 Associates LLC.

See prior blog post on the on the appellate division decision, "Recovering litigation costs when condemnation is abandoned" (December 28, 2007).

 Iron Mountain Information Management, Inc. v. City of Newark et al (A6561-06).
Download the case here.

Commercial tenants are not entitled to notice provisions of the Local Redevelopment Housing Law according to a recent decision of the New Jersey Appellate Division. In a unanimous decision approved for publication, the court affirmed Summary Judgment granted by the trial court to the City of Newark. The tenant, Iron Mountain Document Systems, Inc., has a long-term lease of a 350,000 square foot building, located at the corner of McCarter Highway and Edison Place. In addition to its lease, Iron Mountain negotiated an option to purchase and maintains a right of first refusal with the landlord.

Plaintiff, the sole tenant in the building, has occupied the property since August 28, 1996, when it entered into a long-term lease with the owner, the Berkowitz Company, to rent the property until August 31, 2014, with the option to extend the term of the lease for two successive five year periods.

The lease also afforded plaintiff the option to purchase the property "at a fixed formula during the period from September 1, 2006 [to] December 31, 2008," and provided plaintiff a right of first refusal if another party offered to purchase it. Finally, the lease entitles plaintiff to share, according to a fixed formula, in any proceeds realized by Berkowitz if the property is taken by eminent domain, but only if the taking occurred prior to September 1, 2007. [Slip Opinion at 4]

Matter of Do Not Destroy Brooklyn v. Urban Dev. Corp. (2009 NY Slip Op 01395). On February 26, the New York Appellate Division, First Part, upheld a lower court ruling by Justice Joan Madden dismissing a lawsuit filed by a group of plaintiffs opposing the Atlantic Yards project. The project would be the largest redevelopment project ever undertaken in New York City. It would include a new 18,000 seat arena for the New Jersey Nets basketball team owned by developer Bruce Ratner. The arena is window dressing for a massive real estate development of 16 towers and 6000 residential units on a 22 acre site located at Flatbush and Atlantic Avenues in downtown Brooklyn. Although the developer won this legal round,  Ratner was negotiating with the MTA about cutting costs as recently as January. And, of course, financing for a project of this size in the current economic climate remains as questionable now as it was in September when Goldman Sachs refused to comment in the Newark Star-Ledger on the financing of the $950 million arena. 

Can one Bergen County municipality, Cliffside Park, use the power of eminent domain to condemn a property for a public works garage (DPW) in Fairview, an adjacent town? This unique issue is before Assignment Judge Peter Doyne, and his opinion on whether Cliffside Park  has standing to move forward to trial is slated for March 16. Borough of Cliffside Park v. Pedigree Holding Group (Ber-8236). 

Cliffside Park lost its own municipal garage site when the municipality chose to redevelop the site (it was in an “area in need of redevelopment”) as part of a large redevelopment project.  Fairview property owner Bridget Tapkas leased her property to Cliffside Park, but Cliffside Park wants to own it outright and has threatened to condemn if they cannot acquire it through negotiation. Cliffside Park offered $1.3 million for the property. Tapkas won’t sell because she wants to save it for future expansion. Her family’s truck dealership is located on an adjoining parcel.

Fairview initially backed Tapkas in her dispute with Cliffside Park. "They are using, or misusing, the power of eminent domain outside the borders of Cliffside Park in the furtherance of the redevelopment plan," Fairview's Special Counsel Carmine Alampi told the Bergen Record in late January. Two weeks later, Alampi made a 180 degree turn and spoke out about teaming up with Cliffside Park to create a joint DPW garage facility on the Tapkas property. According to Alampi, Fairview would "reconsider our opposition to the condemnation." This latest twist presents a thornier problem for Judge Doyne. The case is already a nest of municipal intrigue.  

After 22 years in Newark, Multicolor Corp.'s building was condemned for the Prudential Center arena and the property owner was forced to move out of the building pictured above in April 2007. The property owner, Jorge Aguayo, is still waiting for relocation assistance.

Denial of Relocation Benefits by the City of Newark, Newark Housing Authority and their developer, the New Jersey Devils

A disturbing trend has occurred with the downturn of the redevelopment market. The taking agencies and their developers are refusing to comply with the Relocation Assistance Act N.J.S.A. 20:4-1 and the Regulations N.J.A.C. 5:11:1. This Act and the Regulations obligate the taking agency to pay any owner occupant displaced by a public project relocation benefits. Relocation benefits vary according to the size and complexity of the displaced operation. Generally, they include the cost of moving all furniture fixtures and equipment to the relocation site. They also include the cost of reestablishing the business – new phones, computer hook ups, etc. Where there is production equipment requiring reinstallation and debugging, relocation will pay the costs of installing the equipment and modifying the new building to accommodate the equipment being moved. N.J.A.C. 5:11-39 (a) (1-5). See blog post “Relocation Assistance: The step-child of eminent domain.” (January 11, 2007)

The Newark Housing Authority (NHA) has taken the extraordinary position that they will not pay multiple tenants dislocated for the Prudential Arena project for the New Jersey Devils. This forces these tenants to litigate for payments to which they are entitled by statute. All relocation litigation is before the Office of Administrative Law (OAL). There is no provision in the statute or regulations to reimburse the dislocated tenant for attorneys’ fees and costs. Beyond that, the refusal to pay puts the businesses in jeopardy. Some businesses have temporarily moved equipment into storage. However, their business equipment is captive until the moving and the storage fees are paid. Multicolor Corporation was condemned and the company was forced to move their plant to Coplay, Pennsylvania, in April 2007. See "Fuzzy Math," Star-Ledger (March 20, 2007). The company’s equipment remains in storage. No payments have been made for the move and the storage, and the new building requires substantial modifications to accommodate the large, heavy equipment required to manufacture their product.

The only option available to aggrieved property owners is the OAL route which routinely takes 6-8 months and is not final as the head of the agency – in these cases, the Division of Community Affairs can accept, modify or reverse the OAL judge.
 

A new and insidious attack on property owner rights is being undertaken by the Borough of Harvey Cedars on Long Beach Island. In December 2008, Harvey Cedars filed eminent domain complaints against beach front property owners. The borough seeks the right to acquire an easement across the width of ocean frontage. The stated purpose: Protect the oceanfront properties from beach erosion by constructing a 25-foot high sand dune.The easement is permanent, with the right to come on to the property and replenish the dune as required. The easement is assignable – to whom we don’t know. The easement area will be planted with vegetation – dune grass or pine trees? They’re not saying.
 

Settlement discussions in the Long Branch eminent domain cases began on December 22 before Judge Thomas W. Cavanagh, Jr., who was designated by Monmouth County Assignment Judge Lawrence Lawson to conference legal counsel and concerned parties in City of Long Branch vs. Anzalone. The case was remanded to Judge Lawson by the Appellate Division (See the opinion issued August 7, 2008). Subsequent cross petitions for certification filed with the Supreme Court by the City of Long Branch and the property owners were denied. A key player in the settlement discussions, which will continue on January 15, will be the designated developer - a joint venture of Hovnanian subsidiary Matzell and Mumford and the Applied Companies of Hoboken.

Union Township business owner Raul Rodriguez was one of 22 property owners who successfully fought the blight designation and the use of eminent domain in Union Township, New Jersey.

This Friday, December 5, attorneys for Union Township will move before the Hon. Walter R. Barisonek for reconsideration of the court's rejection of the township's redevelopment plan. The township will present their alternative theory for rehabilitation, in place of redevelopment. This theory is equally without merit, as was the township's original argument in support of redevelopment, based on the findings of fact and conclusions of law issued by Union County Assignment Judge Walter R. Barisonek issued on October 18, 2008. Judge Barisonek's 55-page oral opinion rejected Union Township’s attempt to blight its downtown area. Download the transcript of Judge Barisonek's opinion here.

Judge Barisonek's opinion is significant for two reasons. The court rejected Union’s attempt to find this area located at the intersection of Stuyvesant and Morris Avenues to be an area in need of redevelopment. The Planning Board had adopted the opinion of its planning expert, The Metro Company, that the properties within the study area were blighted under the Local Redevelopment Housing Laws (LRHL). N.J.S.A. 40A:12-5c, d and e. The court first identified a misapplication of the law by the Planning Board based on the erroneous advice of counsel, Planning Board Attorney, Daniel McCarthy and Special Redevelopment Counsel Jennifer Credidio of McManimon & Scotland, Newark, New Jersey. The court found that the advice of counsel was misleading involving the use of the term “blighted area”. N.J. Constitution, Article 8, Sec. 3, paragraph 1 and “area in need of redevelopment” as found and defined in the LRHL N.J.S.A. 40a:12-5. It should be noted that the New Jersey courts have found these phrases to be synonymous. See N.J.S.A. 40A:12A-6(c) and Concerned Citizens of Princeton, Gallenthin Realty Development, Inc. v. Borough of Paulsboro, 191 N.J. 344 (2007). The court also cited the recent Appellate Division case of City of Long Branch v. Anzalone, Docket No. A-0067-06T2, which was decided on August 7, 2008, and reiterated that the blighted areas clause of the New Jersey Constitution controls when redevelopment is the sole public purpose for a taking. Anzalone, supra. at p. 16.