Town of Kearny v. Discount City of Old Bridge, Inc.
16 A.3d 300
| N.J. | 2011Background
- DVL and James entered into a lease of a portion of the Del Toch property with a condemnation clause that assigns all tenant damages to the landlord upon eminent domain action.
- Kearny designated the Passaic Avenue area as in need of redevelopment, including the Del Toch parcel, under LRHL and published notices; James did not receive individual notice as a non-record owner, but DVL did as record owner.
- Kearny designated a redeveloper (initially Forest City Ratner, then DVL Kearny Holdings) and entered a redeveloper agreement in 2007 that contemplated condemnation of leaseholds with DVL bearing costs and James to be terminated or relocated.
- DVL offered James a relocation sum, but negotiations were not bona fide, and no full appraisals or methods were disclosed; James rejected offers, and no further negotiations occurred.
- May 2008 condemnation actions were initiated against James; trial court and Appellate Division addressed whether James had rights to compensation and whether bona fide negotiations occurred, with remand on the compensation issue.
- The Court ultimately held that a leasehold interest can be condemned, that the lease condemnation clause does not bar compensation to James, and that DVL failed to conduct bona fide negotiations; the condemnation complaint was to be dismissed and remanded for proper negotiations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a non-record owner may challenge blight designation after condemnation | James argues it should have standing to challenge blight as condemnee. | DVL and Kearny argue only record owners get individualized notice; James is foreclosed. | James foreclosed; notice limited to record owners; no separate challenge permitted. |
| Whether a leasehold interest can be condemned separate from fee simple | James seeks compensation for its leasehold as a condemnee. | DVL or Kearny would be the condemnee; leasehold is not independently compensable. | A leasehold interest can be condemned; lessee may be entitled to just compensation if bona fide negotiations occur. |
| Whether DVL's duties to negotiate with James were fulfilled under N.J.S.A. 20:3-6 | DVL failed to provide a full, disclosed, one-price offer with appraisals; negotiations not bona fide. | Redeveloper’s obligation to negotiate is sufficient; the contract afforded DVL discretion. | DVL failed bona fide negotiations; condemnation complaint remanded for proper negotiations. |
| Whether the lease condemnation clause bars James's compensation | Clause terminates the lease and assigns damages to landlord, barring tenant compensation. | Clause should be narrowly construed and not to defeat tenant compensation when landlord’s fee is not taken. | Clause not enforceable to bar James's just compensation; contract interpretation favors tenant rights. |
Key Cases Cited
- Iron Mountain Information Mgmt., Inc. v. City of Newark, 202 N.J. 74 (N.J. 2010) (non-record owner not entitled to individualized notice; public notice suffices)
- Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 191 N.J. 344 (N.J. 2007) (blighted area determination must satisfy LRHL requirements)
- DeRose (Harrison Redevelopment Agency v. DeRose), 398 N.J. Super. 361 (App.Div. 2008) (fair notice and challenge rights for property owners under redevelopment process)
- City of Atlantic City v. Cynwyd Invs., 148 N.J. 55 (N.J. 1997) (unit rule in eminent domain; negotiations with fee owner primary)
- Valentine v. Lamont, 13 N.J. 569 (N.J. 1953) (constitutional limits on eminent domain power)
- Whispering Woods at Bamm Hollow, Inc., 222 N.J. Super. 1 (App.Div. 1987) (appellate standard for compensation and negotiation deficiencies)
- N.J. Zinc Co. (State v. N.J. Zinc Co.), 40 N.J. 560 (N.J. 1963) (unit rule and compensation principles in condemnation)
- Katz (Katz, 334 N.J. Super. 473), 334 N.J. Super. 473 (App.Div. 2000) (eminent domain negotiation and compensation framework)