Presentation at CLE International Annual National Eminent Domain Law Conference - Las Vegas, NV

1. December 12, 2017
Anthony F. DellaPelle, Esq., CRE

2.  Practice limited to eminent domain, condemnation, redevelopment and real estate
tax appeals
 30+ years representing property owners and special counsel to condemning
authorities in eminent domain matters
 Author, New Jersey Condemnation Law Blog, www.njcondemnationlaw.com
 Co-Author, The Law of Eminent Domain, New Jersey Chapter – American Bar
Association
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Anthony F. Della Pelle, Esq. , CRE®
adellapelle@mckirdyriskin.com
www.mckirdyriskin.com
•Shareholder, McKirdy, Riskin, Olson & DellaPelle, PC ,
Morristown, New Jersey
•Certified Civil Trial Attorney by NJ Supreme Court
• New Jersey Representative, Owners’ Counsel of America
• Member, Counselors of Real Estate®

3.  Constitutional and Legislative Grant of Authority
◦ Western Union Tel. Co. v. Penn. R.R. Co., 195 U.S. 540 (1904)
 Enabling Legislation – Municipal, County, Special
Agency, State and Federal Governments
◦ Cincinnati v. Louisville & N.R. Co., 223 U.S. 390 (1912)
 Public Use Requirement
◦ Kohl v. United States, 91 U.S. 367 (1875)
 Requirement for Just Compensation
◦ Bauman v. Ross, 167 U.S. 548 (1897)
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4.  Project planning and property investigations
 Attempt at amicable resolution through bona fide
negotiations
 Final judgment on authority for and due exercise
of power by condemnor
 Commissioners’ Hearing
 Trial/jury trial on appeal from Commissioners’
Report on the issue of just compensation
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5.  The power of eminent domain is not automatic – it must be granted
through legislative action
◦ Boom Co. v. Patterson, 98 U.S. 403 (1878)
 The legislature may delegate the power to other agencies
◦ Luxton v. North River Bridge Co., 153 U.S. 525 (1894)
 Acts concerning the power of eminent domain are generally strictly
construed (C.J.S., Eminent Domain, Sec. 2)
◦ Delaware, L & W.R. Co. v. Morristown, 276 U.S. 182 (1928)
 The power may only be exercised for the purposes, in the manner
and subject to the conditions prescribed by the legislature
◦ Berman v. Parker, 348 U.S. 26 (1954)
 Executive Orders cannot authorize eminent domain
◦ Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952)
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6.  What are the legislative actions that can authorize
eminent domain?
◦ Statutes
◦ Local agency ordinances
◦ Resolutions?
 Federal/State/County/Local/other
 Specific government agencies usually have specific
eminent domain powers
 How the power is exercised may ordinarily be subject to
an omnibus procedural eminent statute (e.g., Eminent
Domain Act)
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7.  Public utilities can exercise eminent domain
◦ Statutory Grant
 Natural Gas Act (15 U.S.C. 717F(h)
 State statutes
◦ Requires Administrative/Regulatory approval
◦ Limited Authority
 Limited to designated area and properties
 Subject to restrictions imposed by authorization
 Must compensation precede taking/preliminary entry authorized?
 Jurisdictional issues for regional, interstate, international projects
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8. 1. Federal Law and Court – Penn East
a) Federal Statute authorizing project and condemnation
b) Regulatory process through FERC
c) Federal court and jurisdiction
d) Disclosure requirements
e) Litigation process – no jury trial and different procedures
1. State Law and Court – South Jersey Gas
a) State statutes authorizing project and condemnation
b) Regulatory process through BPU
c) State court and procedures
d) Safeguards to property owners through Eminent Domain Act
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9. Public Utilities – Prior Public Use Doctrine:
a)The general rule is that a private company that has been authorized to exercise general
eminent domain powers cannot do so on land that has already been devoted to public use.
State Highway Commission v. Hoester, 362 S.W. 2d 519 (Mo. 1962)
b)See U.S. v. Carmack, 329 U.S. 230 (1946), which contains dictum suggesting that eminent
domain authority delegated to private entities (such as utility companies) is limited and therefore
subject to a more stringent standard of review than similar delegations to governmental actors.
c)Examples and exceptions :
• Will a balancing test be used? See Texas Eastern v. Wildlife Preserves, Inc., 225 A.
2d 130 (N.J. 1966)
• Water company’s rights not exclusive. City of Raton v. Raton Ice Co. 191 P. 518
(N.M. 1920)
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10.  Failure to deny the authority to condemn will ordinarily result in
waiver of the defense
 When the authority to condemn is denied, all further steps in the
action are typically stayed until the issue of the right to take has
been finally determined.
 Is determination of right to condemn a final judgment?
 Does “finally determined" mean exhaustion of the appellate process
if appellate review is sought?
◦ N.J.S.A. 20:3-11
◦ Bridgewater Tp. v. Yarnell, 64 N.J. 211 (1974)
◦ County of Sussex v. Merrill Lynch, 351 N.J. Super 1 (App. Div. 2002)
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11.  Are counterclaims permitted without leave of court?
 Right to discovery on the issue of the right to condemn? N.J.S.A.
20:3-12(d).
 When must defenses be raised – Order to Show Cause, other
triggering order or rules
 Who may raise defenses:
◦ State v. Cuyahoga Court of Common Pleas, 603 N.E. 2d 1005 (Ohio 1992)
(leaseholder may raise defenses even though owner does not)
◦ Honolulu v. F.E. Trotter, (757 P.2d 647)(Hawaii 1988)(unrecorded leaseholder has
standing to object to taking)
◦ City of Shakopee, 295 N.W. 2d 495 (Minn. 1980)(purchase option holder has
standing to object)waiver of the defense
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12.  No public purpose – bad faith, pretext
 Lack of necessity/arbitrary and capricious exercise
of power
 Failure to pass requisite authorizations
 Indefinite description
 Failure to identify necessary parties
 Failure to engage in bona fide negotiations.
N.J.S.A. 20:3-6
 All issues other than just compensation to be
adjudicated
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13.  Condemnor’s Procedural and
Substantive Compliance with
Eminent Domain Act and applicable
rules
 Hearing may be required – summary
proceeding/evidentiary hearing?
* R. 4:67-5; R. 4:73-1
* Bergen County v. Hackensack, 39 N.J.
377 (1963)
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14.  Court will not substitute its judgment for legislative
judgment – deference to legislative determination
of necessity
◦ Hawaii Housing Auth. v. Midkiff, 467 U.S. 229 (1984)
◦ National R.R. Passenger Corp. v. Boston & Maine Corp.,
503 U.S. 407 (1992)
 Private use vs. valid public purpose
◦ Berman v. Parker, 348 U.S. 26 (1954)
 Other procedural objections
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15.  $$2+MM oceanfront home on Long Beach Island – 18 mile long
barrier island
 Borough condemns a “dune easement” to allow US Army Corps of
Engineers to construct a 22-foot high dune on the property
 Borough offers $300 for easement; contends damages are “de
minimus”
 Owner’s appraiser: loss of views cause $500,000 of damages
 Owner moves in limine to bar Borough appraisal which contends that
taking creates “special benefits” via storm protection provided by dune
 Evidence excluded by trial court as “general benefit”
 Jury awards $375,000 in damages
 Trial court ruling affirmed by Appellate Division

16. Before After

18. Harvey Cedars v. Karan – the setting:
 Supreme Court grants certification before Superstorm Sandy
 Superstorm Sandy causes catastrophic property losses
 Areas with engineered dunes “fare much better” than those without
 Dune/storm replenishment efforts are renewed in earnest along the
Shore – project ALSO converts private beaches to public beaches
 Public perception and media portrayal paints “holdout” oceanfront
property owners as greedy, selfish, obstructionists
 Amicus curiae status granted to State of New Jersey and other
interest groups
 Politics and policy take over – at the expense of the law?
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19. Harvey Cedars v. Karan – 214 N.J. 384 (July, 2013):
 general-benefits doctrine is “at odds with contemporary principles of
just-compensation jurisprudence”
 Jury only permitted to hear “one side” of the story
 Could result in a “windfall” to the property owners at public expense
 Just compensation in partial taking must be based upon a
consideration of “all relevant, reasonably calculable, and non-
conjectural factors that either decrease or increase the value of the
remaining property”
 Court recognizes that the loss of view is compensable, but requires
rehearing permitting evidence regarding the impact of the storm
protection benefits upon the value of the property as an offset to
damages
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20. Harvey Cedars v. Karan – the implications:
 Did Karan cause the “holdouts” to change course and donate their
properties?
◦ Mr. and Mrs. Karan settle for $1 – WHY?
 What impacts will or may it have on just compensation determinations,
from the condemnor’s offers to the commissioners’ awards and jury
awards that result?
 Does the decision provide guidance on whether the “benefits” can be
offset against the value of the part taken, or against severance
damages only?
 Related issues: loss of access, ambiguity in description of rights
obtained and scope of rights retained
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21.  Continued vilification of “holdouts” – approximately 300 (10%) require takings
 USACOE to build under Project Partnership Agreements
 State (NJDEP) control over project as “Non-Federal Sponsor”
 Municipal role and conflict with State
 “Emergency” measures under Disaster Control Act taken
 Declaratory judgment actions instituted
 Condemnations begin
 Issues presented on right to condemn:
◦ Does proper legislative authorization exist?
◦ Easements vs. Fee Simple Interests
◦ Lack of necessity in some matters
◦ “Bona Fide” Negotiations
◦ Other procedural issues
 The latest from the pending cases and what lies ahead
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22.  Q&A?
 Thank you!
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Anthony F. DellaPelle, Esq., CRE®
adellapelle@mckirdyriskin.com
www.mckirdyriskin.com
www.njcondemnationlaw.com