Borough of Merchantville v. Malik & Son (072255)
218 N.J. 556
| N.J. | 2014Background
- Malik owned the Property in Merchantville designated for redevelopment; Malik defaulted on a mortgage held by LB, which obtained a final foreclosure judgment on Feb 28, 2011 and transferred rights to LB the next day.
- The Borough adopted a redevelopment plan Sept 26, 2011 and engaged an appraiser who valued pre-renovation value at $270,000 and a renovation-impaired value of $0.
- The Borough offered Malik $270,000 Nov 11, 2011, enclosing the appraisal; Malik rejected the offer, arguing it did not satisfy liens and encumbrances and inviting further discussion.
- LB notified the Borough in Nov 2011 that it held a final foreclosure judgment and that a Sheriff’s Sale was imminent; LB sought to meet to discuss compensation for the Property.
- Dec 5, 2011: Borough filed a declaration of taking and deposited $270,000; LB moved to dismiss arguing lack of bona fide negotiations with LB as real party in interest; trial court ruled Borough satisfied pre-taking obligations; Appellate Division affirmed.
- The Supreme Court affirmed the Appellate Division, holding negotiations were required only with the fee title holder or record holder of the interest being condemned; LB lacked standing to challenge the negotiations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether N.J.S.A. 20:3-6 requires negotiations with the foreclosure holder. | LB contends the statute extends negotiation duty to the foreclosure judgment holder. | Borough says duty is limited to the title of record; LB not entitled to pre-taking negotiations. | No; negotiations limited to title holder or interest holder, not the foreclosure holder. |
| Whether LB had standing to challenge the negotiations. | LB argues it is a real party in interest with substantial stake. | Statute limits negotiations to record titleholder; standing not implied. | LB lacks standing to challenge bona fides of negotiations. |
| Whether Borough satisfied bona fide negotiations with Malik. | LB asserts the offer and appraisal were not credible or fair; Borough circumvented protections by using LB’s interest. | Borough provided appraisal, used one-price offer, and engaged Malik in good faith. | Borough satisfied pre-taking negotiation duties with Malik; no duty to negotiate with LB. |
| What constitutes a bona fide offer and ongoing negotiation under the Act. | Even if rejected, there should be continued discussions when credible value evidence is provided. | If owner refuses to cooperate, duty to continue negotiations may end. | One-price offer with appraisal; ongoing negotiations may occur if owner provides credible value; otherwise not required. |
Key Cases Cited
- City of Atlantic City v. Cynwyd Invs., 148 N.J. 55 (1997) (limits negotiations to title holder of record; broader condemnee interests protected later)
- Town of Kearny v. Disc. City of Old Bridge, Inc., 205 N.J. 386 (2011) (confirms taking less than fee simple; negotiations with fee owner only when fee is being condemned)
- State by Commissioner of Transportation v. Carroll, 123 N.J. 308 (1991) (adopts one-price offer and outlines duty to continue discussions with credible value evidence)
- Hardyston Nat’l Bank v. Tartamella, 56 N.J. 508 (1970) (right of redemption; valuation timeline after foreclosure sale)
- Weiner v. County of Morris, 222 N.J. Super. 560 (App. Div. 1987) (conv. duty to negotiate may continue if evidence supports value; candor in offer)