Recovering litigation costs when condemnation is abandoned

West Orange v. 769 Associates LLC (A-5677-05)

In an unanimous decision of the Appellate Division issued on December 24, 2007, and approved for publication, Judge Jose Fuentes writing for the panel, ruled that a property owner can recover litigation costs under the provision in the Eminent Domain Act, N.J.S.A. 20:3-26(b). At issue in the litigation was whether the property owner’s legal contest of the right to take was the cause for the abandonment of the condemnation case. In a ruling reversing the trial court, which had trimmed the litigation fees sought by the property owner, the appellate court said:

“in the context of an abandonment of condemnation action, the right to recover costs and counsel fees is not contingent upon the success of the property owner’s defense strategy.…[S]tated differently, to recover costs and professional fees in an abandonment setting, a property owner does not have to show a causal link between its legal efforts resisting the condemnation and the condemning authority’s decision to abandon the taking.”

This decision is a corollary to the Supreme Court’s decision in West Orange v. 769 Associates, LLC, 172 NJ 564 (2002) where the court ruled that the taking contemplated by West Orange was a legitimate public purpose. Thereafter, West Orange and the property owner entered into a Consent Agreement whereby West Orange formally abandoned the condemnation action. This resulted in the property owner seeking legal fees and costs under N.J.S.A. 20:3-26(b) which provides:

 “...if the court renders final judgment that the condemnor cannot acquire the real property by condemnation or, if the condemnation action is abandoned by the condemnor, then the court shall award the owner any right or title to or interest to such real property, such sum that will reimburse such owner for his reasonable costs, disbursements and expenses actually incurred, including reasonable attorney, appraisal and engineering fees.”

The Appellate Court concluded that the trial judge properly excluded pre-litigation expenses and those arising from a prerogative writ suit that challenged a related municipal planning board decision, since those fees and costs did not arise from the “four corners” of a condemnation action. The Appellate Court also affirmed the trial court’s disallowance of counsel fees incurred in attending municipal hearings, reproducing municipal records and obtaining transcripts of the sessions of the municipal governing body.  Download the opinion here.