Essex County Vo-Tech eminent domain complaint dismissed

New United Corporation v. Essex County Vocational-Technical School Board of Education [A-2014-10T2]

By William J. Ward and Winifred E. Campbell

Yesterday the Appellate Division unanimously dismissed a condemnation complaint filed by the Essex County Vocational-Technical Schools Board of Education (ECVS) for the acquisition by eminent domain of property owned by New United Corporation, consisting of 7.5 acres adjacent to Interstate 280, which was the former site of the United Hospital facility in Newark. Download New United Corporation v. Essex County Vocational-Technical School Board of Education.

The court ruling was based on the condemnor’s failure to engage in bona fide negotiations as required by N.J.S.A. 20:3-6, et al., of the Eminent Domain Act. The ECVS used its power of eminent domain with the intent to construct a county-wide regional school that would consolidate several existing technical and vocations schools in surrounding communities. In overturning the condemnation, the court stated, “[t]he record reveals nothing that remotely resembles bona fide negotiations by the Board of Education.”

The Eminent Domain Act requires the condemnor to engage in “bona fide negotiations” with a condemnee before commencing an eminent domain action. N.J.S.A. 20:3-6. This provision “encourage[s] public entities to acquire property without litigation…saving both the public and the condemnee the expense and delay of court action.” Township of W. Orange v. 769 Assocs., LLC, 198 N.J. 529 (2009).  A cornerstone to protecting the Constitutional rights of property owners is the requirement that government entities seeking to exercise their power of eminent domain deal “forthrightly and fairly” with property owners. Jersey City Redevelopment Agency v. Costello, 252 N.J. Super. 247, 257 (App. Dic.), certif.. den. 126 N.J. 332 (1991).

In this matter, the ECVS made an offer to New United on August 31, 2010. Pursuant to the Eminent Domain Act, New United had 14 days in which to respond to the Board’s offer before the Board could file a complaint in condemnation. N.J.S.A. 20:3-6. New United responded twice to the Board’s offer, on Sept 2, 2010 and on September 8, 2010. In each response, New United requested additional information from the Board as to the basis for its offer. In addition, New United provided evidence of a recent appraisal for the property and evidence of rental income that had not been considered in the Board’s offer. The Board made no reply to New United’s attempts to negotiate and instead filed a condemnation complaint.

The ECVS’s failure to comply with the Eminent Domain Act’s pre-litigation requirements is fatal. The Appellate Division remanded the matter to the trial court for final judgment dismissing the complaint without prejudice. This decision emphasizes the importance of government candor and fairness in protecting the landowner’s Fifth Amendment rights.

Pursuant to N.J.S.A. 20:3-26(b) the property owner will be entitled to attorneys’ fees and costs incurred in contesting the eminent domain action in both the law and appellate division. R.2:11-4. See our prior blog post, Property owners get counsel fees on abandonment of condemnation (April 4, 2009). In addition, the property owners may claim damages pursuant to N.J.S.A. 20:3-24.

This decision represents a major setback for Essex County. The County had originally purchased a portion of the site as the intended relocation of the Essex County Hospital in Cedar Grove for $6.5 million. The relocation of the hospital never occurred, the County allowed its investment to deteriorate from lack of maintenance, and it changed its agenda. New United Corp. alleged that this change in direction by the County was a direct result of multiple law suits and court orders obligating the County to repair and maintain its portion of the site. In addition, the County deposited its estimated compensation of $4.8 million in the Superior Court Trust Funds for the acquisition in the eminent domain proceeding. Thus, the County has made a total investment of $11.3 million in this project with nothing to show for it.

 

William J. Ward, Esq. argued the case on behalf of First Steps Services for Children, Inc. and Winifred Campbell, Esq. assisted in writing the appellate brief. 

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