NEW JERSEY SPORTS AND EXPOSITION AUTHORITY VS. TOWN Â OF KEARNY(L-2039-16, HUDSON COUNTY AND STATEWIDE)
A-5152-15T1
| N.J. Super. Ct. App. Div. | Nov 20, 2017Background
- NJSEA (merged with NJMC) is authorized to acquire property by eminent domain and to provide solid waste disposal; it operated the Keegan Landfill in Kearny, a contaminated 110-acre former landfill reopened for remediation and tipping fees.
- In 2005 Kearny and NJMC/NJSEA executed a lease: NJSEA would operate and close/remediate the landfill at its sole cost, fund a post-closure escrow, and return the property at lease end for recreational use; Kearny would bear no landfill costs.
- Over time NJSEA sought to extend operations and amend permits; negotiations with Kearny failed in 2015–2016, and NJDEP warned that without a new lease operations would have to cease.
- NJSEA adopted a resolution to use eminent domain (March 2016), offered $1.88M pre-condemnation (based on an appraisal), and filed a condemnation complaint in May 2016; the trial court denied Kearny’s summary judgment and entered final judgment authorizing the taking.
- Kearny appealed, arguing (1) Contract Clause violation, (2) bad faith, (3) NJSEA failed to “turn square corners,” and (4) equitable estoppel based on prior NJMC/NJSEA representations promising return and recreational conversion.
Issues
| Issue | Plaintiff's Argument (Kearny) | Defendant's Argument (NJSEA) | Held |
|---|---|---|---|
| Whether condemnation violated the Contract Clause | Taking repudiates NJSEA/NJMC’s prior contractual promises (return property, fund recreation), so Contract Clause barred eminent domain to avoid obligations | Eminent domain is an essential sovereign power not contracted away; NJSEA authorized to condemn to fulfill statutory public purpose (solid waste disposal) | Rejected plaintiff's argument; no Contract Clause violation — NJSEA properly exercised statutory eminent domain power |
| Whether NJSEA acted in bad faith | NJSEA used condemnation to avoid contractual obligations and undervalued property (offered $1.88M vs. alleged $3M obligation) | NJSEA acted to secure continued public service (waste disposal); no evidence of fraudulent or pretextual motive | No bad faith shown; Kearny failed to prove dishonest or ulterior purpose by clear and convincing evidence |
| Whether NJSEA failed to "turn square corners" | NJSEA improperly used eminent domain to gain bargaining/litigation advantage and depart from prior representations | NJSEA complied with all procedural and pre-litigation requirements; "square corners" doctrine targets procedural unfairness or gamesmanship | No violation: NJSEA followed procedures and did not employ tactics the doctrine condemns |
| Whether NJSEA is estopped from condemning based on prior representations | NJMC/NJSEA statements and promotional materials induced reliance and should estop NJSEA from taking contrary action | No knowing, intentional misrepresentation or detrimental reliance shown; Kearny benefited from remediation and lease payments | Estoppel not available against NJSEA here; no proof of required elements (intentional misrepresentation, detrimental reliance) |
Key Cases Cited
- United States Trust Co. v. New Jersey, 431 U.S. 1 (1977) (Contract Clause limits state action but sovereign powers like eminent domain/ police power cannot be contracted away)
- Township of West Orange v. 769 Associates, LLC, 172 N.J. 564 (2002) (courts defer to condemnor’s determination of necessity absent fraud or abuse)
- F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418 (1985) (public bodies must "turn square corners" and deal fairly with property owners)
- State v. Lanza, 27 N.J. 516 (1958) (determination of public use is primarily legislative)
- Klumpp v. Borough of Avalon, 202 N.J. 390 (2010) ("turn square corners" requires forthright governmental conduct; additional notice obligations may apply)
- Township of Readington v. Solberg Aviation Co., 409 N.J. Super. 282 (App. Div. 2009) (bad faith in condemnation requires clear and convincing proof)