Borough of Saddle River v. 66 East Allendale, LLC (070525)
77 A.3d 1161
| N.J. | 2013Background
- Borough of Saddle River condemned a 2.13-acre split-zoned parcel owned by 66 East Allendale, LLC for a public park; day-of-taking valuation date was November 8, 2006.
- Property is split O‑1 (office) and R‑1 (residential); O‑1 ordinance limited improved lot coverage to 30%; East Allendale proposed a 10,000 sq ft bank with 42% lot coverage requiring a c‑2 (flexible) bulk variance and a use variance for parking in the R‑1 portion.
- East Allendale’s experts (planner/engineer Hals, planner Steck, appraiser Brody) opined a reasonable probability the bulk variance would be granted and based valuation ($5,250,000) on that assumption; Borough’s experts proposed a smaller 3,312 sq ft bank conforming to current zoning and valued the property at $1,325,000.
- Trial court admitted East Allendale’s expert testimony, declined a full pretrial Rule 104 hearing on reasonable probability, allowed the jury to hear variance‑probability evidence, and the jury awarded $5.25 million.
- Appellate Division affirmed; Supreme Court reversed, holding the trial court failed to perform the Caoili gatekeeping function properly and that expert opinions lacked sufficient foundation on the MLUL positive/negative criteria for a c‑2 bulk variance.
Issues
| Issue | Borough's Argument | East Allendale's Argument | Held |
|---|---|---|---|
| Whether court satisfied Caoili gatekeeping before admitting evidence that a zoning change (bulk variance) was reasonably probable | Trial court must determine reasonable probability before jury hears evidence; here court deferred and thus allowed speculative evidence | Trial court may manage procedure under N.J.R.E. 611 and hear testimony, deciding admissibility during trial; no abuse of discretion | Reversed: court must make the reasonable‑probability determination using the proper legal standard (here, c‑2 criteria) before submitting the question to the jury unless the record plainly permits a pretrial ruling |
| Whether experts (Hals, Steck, Brody) offered admissible opinions on probability of variance or only net (unsupported) opinions | Experts’ reports/testimony failed to analyze how variance met both MLUL positive and negative criteria; opinions were conclusory net opinions without the required "why and wherefore" | Experts provided factual and legal bases (comparables, local practice, hardship, design mitigations) to support reasonable probability | Held: Experts’ opinions lacked adequate foundation on c‑2 positive/negative criteria; insufficient for gatekeeper finding, so jury should not have considered that valuation premised on the variance |
| Whether the jury instruction and timing (admissibility decided before deliberation rather than pretrial) cured the error | Judge’s midtrial rulings and final determination before closing were inadequate; letting jury hear speculative evidence undermined valuation | Timing and trial management were within discretion; jury could weigh credibility after hearing live testimony | Held: Timing did not satisfy Caoili’s requirement that the court screen speculative evidence before jury consideration unless the threshold could be resolved on the papers; remand for new trial on just compensation |
| Whether Brody’s appraisal independent of variance‑probability foundation was admissible | Brody’s valuation relied on Hals’s unsupported conclusion regarding variance probability, so appraisal lacked independent foundation | Brody had appraisal methodology and comparables supporting value; he independently adjusted for approval risk | Held: Because Brody relied on Hals’s deficient variance‑probability opinion, his valuation could not stand to support the jury award; new trial required |
Key Cases Cited
- State by Highway Comm’r v. Gorga, 26 N.J. 113 (recognizing court must determine probability of zoning change before jury considers it)
- State by Comm’r of Transp. v. Caoili, 135 N.J. 252 (establishing two‑step gatekeeper test: court first must find reasonable probability of zoning change before jury may consider it)
- Borough of Harvey Cedars v. Karan, 214 N.J. 384 (discussing constitutional right to just compensation)
- Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344 (expert must provide the "why and wherefore," not a bare net opinion)
- TSI E. Brunswick, LLC v. Zoning Bd. of Adjustment of E. Brunswick, 215 N.J. 26 (quality of proofs necessary to establish positive and negative variance criteria)
- Lang v. Zoning Bd. of Adjustment, 160 N.J. 41 (negative criteria requirement for variance)
- Kaufmann v. Planning Bd. for Twp. of Warren, 110 N.J. 551 (positive criteria and MLUL purposes in variance analysis)