Materials from National Business Institute seminar in 2013 regarding New Jersey eminent domain law

1. NATIONAL BUSINESS INSTITUTE
Eminent Domain From
Start to Finish
June 3, 2013

2. The Panel
2
Anthony F. Della Pelle, Esq. , CRE (Moderator)
John H. Buonocore, Jr. Esq.
Thomas M. Olson, Esq.
Paul T. Beisser, III, MAI, CRE
Value Research Group, LLC
William W. Northgrave, Esq.
McManimon, Scotland & Baumann, LLC
Lawrence H. Shapiro, Esq.
Ansell, Grimm & Aaron, P.C.
Mark W. Sussman, MAI, CRE
Lasser Sussman Associates, LLC

3. Course Outline
3
The Eminent Domain Process
 Condemnor vs. Condemnee Perspectives
Calculating Just Compensation: Appraisers’
Insights
Relocation Assistance
Challenging the Right to Condemn
Trial Practice and Strategy
Ethics in Condemnation

4. The Eminent Domain Process
4
Constitutional and Legislative Grant of Authority
Enabling Legislation – Municipal, County, Special
Agency, State and Federal Governments
Public Use Requirement
Requirement for Just Compensation

5. Just Compensation
5
"...nor shall private property be taken for public use without
just compensation."
U.S. Const. Amend. V
"Private property shall not be taken for public use without
just compensation. Individuals or private corporations shall
not be authorized to take property for public use without
just compensation first made to the owners."
N.J.S.A. Const. Art. 1, Sec. 20

6. Just Compensation
6
Compensation for the property taken
Reduction in value (damages) to any remaining
property
Interest
Indemnity for loss
Attorneys’ fees and costs not generally recoverable
by condemnee

7. Legal Resources
7
Eminent Domain Act - N.J.S.A.20:3-1 et seq.
Rule 4:73 (Condemnation)
Relocation Assistance Act - N.J.S.A. 20:4-1 et seq.,
N.J.S.A. 27:7-72, et seq. and regulations - N.J.A.C.
5:11-1; N.J.A.C. 16:6-1.1 et seq.
Local Redevelopment and Housing Law – N.J.S.A.
40A:12A:-1, et seq.

8. Legal Resources (cont’d)
8
21 New Jersey Practice,
Skills and Methods,
Eminent Domain

9. Legal Resources (cont’d)
9

10. Legal Resources (cont’d)
10
The Appraisal of Real Estate, 13th Ed. Appraisal
Institute
Eaton, Real Estate Valuation in Litigation, 2d Ed.,
Appraisal Institute
New Jersey Condemnation Law Blog:
www.njcondemnationlaw.com

11. Eminent Domain Act of 1971
11
N.J.S.A. 20:3-1 et seq.
Uniform procedure applicable to all proceedings in
which the power to condemn is being exercised,
except acquisitions by PANYNJ which proceed
pursuant to N.J.S.A. 32:1-77, et seq.
Applies to “inverse” actions

12. Four-Step Process
12
Attempt at amicable resolution through bona fide
negotiations
Final judgment on authority for and due exercise of
power by condemnor
Commissioners’ Hearing
Jury Trial on appeal from Commissioners’ Report on
the issue of just compensation

13. Single
Issue -Value - Controversy
13
Fact finder is concerned with just compensation only
- Court adjudicates all other issues (e.g., title,
proceeds allocation)
One award representing the value of all interests in
the property (“unit rule”)
Award must take into account all damages, both
present and prospective - no further proceedings or
relief

14. What Constitutes “Property”
14
Real vs. Personal Property
As to real estate, “functional unit” test for “fixture”
issues
Interplay between functional unit and moving
expenses as relocation benefit
* N.J.S.A. 20:3-2(d)
* State v. Gallant, 42 N.J. 583 (1964)

15. Date of Value
15
Pursuant to N.J.S.A. 20:3-30, the earliest of the
following events:
Date possession is taken by the condemnor
Complaint date
Date on which condemnor substantially affects use
and enjoyment of property
Declaration of “blight” or “in need of
redevelopment” determination, but see N.J.S.A.
20:3-38
* See Kirby Forest Industries v. U.S., 467 U.S. 1 (1984)

16. Prelitigation Matters
16
Prelitigation Entry and Inspection/Evaluation
 N.J.S.A. 20:3-16
Title Searches
Parcel Surveys
Appraisal
Environmental Inspections
Right of Entry

17. Bona Fide Negotiations
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Notice of appraisal inspection
Written offer by certified mail
Offer not less than approved appraisal
Description of property to be acquired
Disclosure of all appraisals obtained
Minimum 14 days for reply to offer
Must address issues raised by owner

18. Litigation - Phase 1
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Complaint
Order to Show Cause
Declaration of Taking
Order Permitting Deposit
Notices
Answer
Judgment Appointing Commissioners

19. Complaint
19
Must include:
 a statement showing the
amount of compensation
offered by the condemnor;
 a reasonable disclosure of the
manner in which the amount
has been calculated.
“Reasonable disclosure” by the
condemnor includes furnishing
the condemnee with:
 the map
 a description of land to be
acquired
 the identity of the
improvements to be acquired, if
any
 a statement of the full fair
market value
 a description of the appraisal
valuation method or methods
relied upon
(cont’d)

20. Complaint (cont’d)
20
 a breakdown of the appraised
value allocated to the land to be
acquired, and improvements to
be acquired, if any;
Data concerning comparable sales
or leases relied upon in
determining the amount of
compensation offered which shall
include:
 names of seller and purchaser or
landlord and tenant,
 the location of the property by
block, lot, street, street number,
and municipality,
 date of sale or date and duration of
lease
 the consideration for the sale or
amount of rent
 the book and page number of the
recording of the deed of the
comparable sale
 any unusual factors concerning the
property known to the condemnor
which may affect value.

21. Parties
21
Join all parties with an interest in the property, e.g.:
 Tenants, holders of easements, occupants
 Mortgagees and other lienholders
 Municipality (for taxes)
Only those parties who are joined have their interest foreclosed
by the proceedings.
Easements are to be condemned separately as a “DE” parcel
together with the property which it serves; the area of the
easement should be designated on the serviant parcel as “SE” and
the appraisal should adjust accordingly.

22. Order to Show Cause
22
Action is brought in a summary manner pursuant to
R.4:67.
May be presented to the court ex parte.
No summons, but language is consistent
Served within the state at least 10 days before the
return date

23. Declaration of Taking
23
Basically, a “deed” from the condemnor to itself
Fixes the property and rights acquired based on legal
description
Recorded in County Clerk/Register’s office

24. Order for Deposit
24
Provides for deposit of estimated compensation
(usually the amount of the offer per the appraisal)
May be obtained ex parte

25. Abandonment of Action
25
 Provided no declaration of taking has been filed, the action may be
unilaterally abandoned by the condemnor
 at any time before, or within 30 days after, the filing of the award of
commissioners;
 or in the event of an appeal from the award, at any time before, or
within 30 days after, the entry of judgment;
 or in the event that a hearing before commissioners is waived, at any
time before, or within 30 days after, judgment has been entered in the
action. [N.J.S.A. 20:3-35]
 Otherwise, condemnee must consent to abandonment
 Entitlement to fees costs and expenses. N.J.S.A.20:3-26(b)
 West Orange v. 769 Associates, LLC, 397 N.J. Super. 244 (App. Div.
2007)

26. Answer
26
Must raise all defenses to the right to take and
manner of exercise of the power of eminent
domain.
Failure to deny the authority of the condemnor to
condemn in the manner provided for by the rules
constitutes a waiver of the defense.
All issues other than those related to value and
damages must be determined by the court prior to
the appointment of commissioners.

27. Answer (cont’d)
27
Must demand a jury trial if one is desired.
Must be served and filed in accordance with the
Rules or pursuant to Order to Show Cause
Non-contesting appearance may be filed in lieu of
answer; valuation issues preserved. N.J.S.A. 20:3-
12(c).

28. Denial of Right to Condemn
28
When the authority to condemn is denied, all further steps
in the action are stayed until the issue of the right to take
has been finally determined.
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)
There is no discovery on the issue of the right to condemn
except by leave of court. N.J.S.A. 20:3-12(d).

29. Some Defenses to Taking
29
No public purpose – bad faith, pretext
Lack of necessity
Failure to pass requisite authorizations
Indefinite description
Failure to engage in bona fide negotiations. N.J.S.A.
20:3-6

30. Return Date of Order to Show Cause - The Right to Take
Condemnor’s Procedural and Substantive
Compliance with Eminent Domain Act
Hearing may be required
* R. 4:67-5; R. 4:73-1
* Bergen County v. Hackensack, 39 N.J. 377 (1963)
30

31. Judgment Appointing Commissioners
31
Final Judgment as to
Right to Take and Due
Exercise of Power
Appoints 3
Commissioners
Jurisdiction now with
Commissioners
Appealable as of right
Stay of further
proceedings upon
appeal?

32. Deposits into Court
32
The amount of the initial deposit may not be less than the
amount of the prelitigation offer N.J.S.A.20:3-18 which
itself may not be less than the amount of the condemnor's
approved appraisal.
Deposits into Superior Court are by administered by the
Clerk of Superior Court, Trust Fund Unit, which holds the
funds in an interest-bearing account.

33. Withdrawals from Court
33
By motion and petition
Request for dismissal of other defendants
Processing withdrawal from Trust Funds Unit
Condemnor’s ability to preserve portion of deposit
for site remediation
Consideration of possession issues

34. Litigation - Valuation Proceedings
34
Valuation (Appraisal)
Commissioner’s Hearing Procedure
Jury or Bench Trial – de novo

35. Elements of Fair Market Value
35
Willing buyer & seller
Neither being under a compulsion to act
Being fully informed of all facts and circumstances
about the acquired property (even if not known on
date of value)
Owner is not limited to value for the use to which
property is currently being put - owner entitled to
value for highest and best use. State v. Caoili, 135
N.J. 252 (1994)

36. Entire Taking
36
•Just compensation determined by “fair
market value” of the property as of the
date of value

37. Partial Taking – Two Methods of Valuation
37
• Before and After method
value of entire parcel before taking
– value of remainder after taking = just
compensation
• Per Se method
value of land taken + diminution in value (or
damages) to remainder = just compensation

38. “Wide Factual Inquiry”
38
• of “all material facts and circumstances – both
past and prospective – that would influence a
buyer or seller interested in consummating a
sale of the property”
State of New Jersey by Commissioner of Transportation v. Silver, 92 N.J. 507 (1983)
Village of South Orange v. Alden Corporation, 71 N.J. 363 (1976)

39. Mitigation – Cost to Cure
39
3 Basic Rules:
Evidence of cost of restoring remaining property
can be no greater than decrease in marked value if
left uncured
Cannot be speculative (reasonable and certain –
previously written existing boundaries of tract)
Duty to mitigate by condemnee
State of New Jersey v. Sun Oil, 160 N.J.Super. 513 (Law Div. 1978)
State of New Jersey by Commissioner of Transportation v. Weiswasser, 149 N.J. 320
(1997)

40. Commissioners’ Hearing
40
Non-binding arbitration
Provide reports 15 days in advance
Obtain Award, File Appeal
No appearance = no right to appeal
* Borough of Keyport v. Maropakis, 332 N.J. Super. 210
(App. Div. 2000)

41. Appeal from Award of Commissioners
41
File within 20 days of service of award
May be relaxed up to 30 days for good cause
Non-relaxable thereafter
Party may not rely on appeal filed by adversary -
Adversary may withdraw
* City of Long Branch v. Spanos, A-2936-04T1, 2006 W.L.
1627977 (App. Div. 2006)

42. Litigation - Trial “De Novo”
42
Condemnor proceeds first
No burden of proof
Condemnation trial is an "evidential construction of
a hypothetical sale”
Wide discretion in admission and rejection of
evidence
Jury view of condemned property. R.4:73-7
Environmental considerations – valuation as if
“remediated”

43. Condemnor’s Perspective
43
Obligations of the Condemning Authority
"…the power to take property through eminent domain is one of the most
intrusive aspects of sovereignty“ [State, by Comm'r of Transp. v.
D'Onofrio, 235 N.J. Super. 349 (Law Div. 1989)].
"…in the condemnation field, government has an overriding obligation to
deal forthrightly and fairly with property owners…. (i)t may not
conduct itself to achieve or preserve any kind of bargaining or
litigational advantage over the property owner…. Its primary
obligation is to comport itself with compunction and integrity, and in
doing so government may have to forgo the freedom of action that
private citizens may employ in dealing with one another. [F.M.C.
Stores, Co. v. Morris Plains, 100 N.J. 418 (1985)].

44. Condemnor’s Perspective (Cont’d)
Special Considerations
a. Obligation to "Go First"
- pre-acquisition "Homework" (inspections, title searches, surveys,
appraisals, environmental inspections).
- Bona fide negotiations expansion of "reasonable disclosure" in manner
offer calculated.
- Commission Hearings
b. Stake Out Fair, Defensible Position
44

45. Condemnor’s Perspective (cont’d)
45
Main Goal
a.obtain payment of just compensation: paying neither too
much nor too little for condemned property
Damnum Absque Injuria
Certain Classes of Damages are not compensable as a matter
of law. Basic concept: damages, to be compensable, must
result from the partial taking of a property and not
something else.

46. Condemnor’s Perspective (Cont’d)
Damnum Absque Injuria (cont’d)
(1) Loss of business; franchise, future or current profits, tenants or
good will
State v, Comm'r of Transp. v. Hess Realty Corp., 226 N.J. Super. 259
(App. Div. 1988), certif. den. 113 N.J. 229 (1989), cert. den. 493 U.S.
964 (1989)
but see
State, by Comm'r of Transp. v. Arifee, 2009 N.J. Super. Unpub. LEXIS
2333
46

47. Condemnor’s Perspective (cont’d)
47
Damnum Absque Injuria
(2) Damages resulting from condemnor's use of land acquired from
others (power lines on adjoining property)
P.S.E. & G. Co. v. Oldwick Farms, Inc. 125 N.J. Super. 31 (App. Div. 1973),
certif. den. 64 N.J. 113 (1973)
(3) Loss of visibility resulting from condemnor's use of land acquired
from others
State, by Comm'r of Transp. v. Weiswasser, 149 N.J. 320 (1997)

48. Condemnor’s Perspective (Cont’d)
Damnum Absque Injuria (cont’d)
(4) Revocation or Modification of Access and provision of
"reasonable alternative access" pursuant to State Highway Access
Management Act, N.J.S.A. 27:7-89 et seq.
State v. Marlton Plaza Assocs., L.P., 426 N.J. Super. 337 (App. Div. 2012),
certif. denied __ N.J. __ (2012)
- regulation of access accomplished by police power and is not a taking
- administrative scheme regulating access provides adequate protections
to property owners
48

49. Condemnor’s Perspective (Cont’d)
Damnum Absque Injuria (cont’d)
(5) Damages attributable to general circuity of travel, changed
traffic patterns or erection of barrier
 State v. Monmouth Hills, Inc. 140 N.J. Super. 449 (App.
Div. 1970), certif. den. 57 N.J. 133 (1970)
 State, by Comm'r of Transp. v. Charles Investment Corp.,
143 N.J. Super. 541 (Law Div. 1976), aff'd 157 N.J. Super.
14 (App. Div. 1977), aff'd o.b. 76 N.J. 86 (1978)
49

50. Condemnor’s Perspective (cont’d)
50
Damnum Absque Injuria (cont’d)
(6) Noise and vibration impacts absent proof that there is
measureable increase in noise level and/or vibrations
caused by taking and proof that such impacts are reflected
in the marketplace.
State, by Comm'r of Transp. v. Carroll, 123 N.J.
308 (1991)

51. Condemnor’s Perspective (Cont’d)
General Benefits of Project May Not Offset Damages
Borough of Harvey Cedars v. Karan, 425 N.J.
Super. 155 (App. Div. 2012) certif. granted 210 N.J.
478 (2012)
51

52. Successful Handling of Condemnation Case Requires:
52
Appreciation of Constitutional Magnitude of Issues
Careful Attention to Procedural Details
Careful Attention to Substantive Details
Familiarity with the Property and the Valuation
Concepts

53. Questions?
53
Anthony F. DellaPelle, Esq., CRE
adellapelle@mckirdyriskin.com
www.mckirdyriskin.com
Lawrence H. Shapiro, Esq.
lhs@ansellgrimm.com
www.ansellgrimm.com