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Paterson Redevelopment Agency v. Schulman

Decided: January 4, 1979.


On certification to the Superior Court, Appellate Division.

For modification and affirmance -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman, Clifford, Schreiber and Handler. For reversal -- None. The opinion of the court was delivered by Pashman, J.


The main issue in this case involves the extent to which defendants Max and Sally Schulman are entitled to reimbursement for relocation expenses incurred as a consequence of the condemnation of their business property. Also at issue is the propriety of defendants' failure to exhaust administrative remedies prior to filing an appeal to Superior Court. Defendants claim entitlement under the Constitution, the Relocation Assistance Act, N.J.S.A. 20:4-1 et seq., and a consent order entered into with plaintiff Paterson Redevelopment Agency.

On May 20, 1974, the Paterson Redevelopment Agency (Agency) filed a Verified Complaint in Condemnation in order to gain possession of 101-103 and 105-107 River Street in Paterson. These buildings were owned by Max and Sally Schulman and consisted of a one-story office building (105-107) and a four-story warehouse (101-103). Due to the Agency's immediate need for the office building, defendants

were permitted to move goods and merchandise into the warehouse at 101-103. Defendants continued to operate their business at this time, using the River Street warehouse and a public warehouse located in Totowa.

Subsequently, on July 8, 1974 the Agency and defendants entered into a consent order signed by Superior Court Judge Edward F. Johnson. That order provided, in relevant part, that:

(c) The cost of moving the goods, chattels, and merchandise of the defendant, Wamac Inc., from 105-107 River Street to 101-103 River Street shall be paid for by the [Agency] who shall also pay the costs of moving the goods, chattels and merchandise from the first floor of 101-103 River Street to a public bonded warehouse.

(d) The Paterson Redevelopment Agency shall pay the storage charge for the goods, chattels and merchandise of the defendant in said public bonded warehouse for a period not to exceed December 31, 1974.

(e) The defendants shall be permitted to remain in the four story building at 101-103 River Street, Paterson, New Jersey, until December 31, 1974, but shall have the right to vacate said premises sooner. The cost of moving the goods, chattels and merchandise from the building at 101-103 River Street and from the public bonded warehouse where the defendant stored its goods, chattels and merchandise and the relocation expenses of the defendants shall be paid and billed to the Paterson Redevelopment Agency.

The Agency supplemented this agreement by a letter in which it was provided, among other things, that:

3. [The Agency] will provide reimbursement for all reasonable and necessary in-and-out handling charges associated with and related to the merchandise to be stored.

At the time it entered into the consent order, the Agency expected that federal funding would be available and intended to have reimbursement made in accordance with federal guidelines. Defendants were informed of these plans and were given a federal relocation handbook. Only city funds, however, were ultimately utilized.

Although the consent order required defendants to move from the River Street warehouse no later than December 31, 1974, they remained there, with the Agency's permission, until March 1975. At that time the defendants' business was moved to Carlstadt.

On December 20, 1974, the condemnation commissioners awarded defendants $103,535 for the River Street property. Defendants appealed this award to the Superior Court. Before trial, however, the parties agreed to accept the commissioners' report as to the value of the land and buildings without prejudice to defendants' right to seek compensation for relocation expenses.

When the parties failed to reach agreement as to relocation expenses, the matter proceeded to trial. The Agency objected to the trial being conducted on grounds of failure to exhaust administrative remedies, inasmuch as defendants had never presented their claims to the Agency for final administrative determination. The court rejected this contention, and a trial was held to determine the compensability of 24 moving expense items claimed by defendants.

At the end of the six-day trial, the court found that defendants were entitled to a reimbursement of $105,136.12, of which the Agency had already paid $25,218.25. It approved many of the 24 listed items and modified or rejected others. Judgment for the amount still owing, $79,917.87, was entered on October 21, 1976. Included in the judgment was interest at 8% per annum running from the date of the taking.

The Appellate Division, in an unpublished per curiam opinion dated December 14, 1977, affirmed except as to the payment of interest. This item was held to accrue not from the date of the taking but rather from the date that a particular expense was actually incurred. We granted the Agency's petition for certification. 76 N.J. 237 (1978).


At every stage of the proceedings below, the Agency has contended that the defendants failed to exhaust their

administrative remedies. In its view defendants should have initially presented their claims to the Agency, N.J.A.C. 5:11-6.4, requested a hearing, and only then appealed any unfavorable determination to the Superior Court. We conclude that the Agency is correct as to the proper procedure, but that the interests of justice require that we presently decide this case rather than remand it to the Agency.

The Agency correctly relies upon R. 4:69-5, which states:

Except where it is manifest that the interest of justice requires otherwise, actions under R. 4:69 should not be maintainable as long as there is available a right of review before an administrative agency which has not been exhausted.*fn1

Furthermore, N.J.S.A. 20:4-19 provides that

Any person or business concern aggrieved by final administrative determination, concerning eligibility for relocation payments authorized by this act may appeal ...

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