This is an eminent domain case which presents the novel question to a New Jersey court as to the definition of the term "bona fide negotiations" found in the Eminent Domain Act of 1971, N.J.S.A. 20:3-6. After a review of all pleadings, briefs, exhibits and testimony, the following findings of fact have been determined.
Since 1968 defendant William Rowland owned and operated various appliance businesses. One of Rowland's businesses was the American Appliance store located on a traffic circle at the intersection of Tilton Road and U.S. Route 40-322 in Egg Harbor Township. On or about September 7, 1978 Rowland received a notification letter from the Division of Right of Way, New Jersey Department of Transportation (NJDOT), which indicated Rowland's property had to be purchased for a public
highway improvement at the traffic circle; that appraisers would visit Rowland's property and Rowland could accompany the appraisers during the survey of the property. The record does not reveal if Rowland did accompany the appraisers. The letter also indicated "negotiations" would ensue once NJDOT approved the appraisal. Upon receipt of this letter Rowland consulted attorney David Brandt, who told Rowland not to obtain an appraisal himself until after NJDOT submitted a written offer. The rationale for such advice was that the offer would assure that NJDOT was definitely going to take the property and that an early appraisal would be stale due to the rising market prices attributable to casino gambling in the nearby Atlantic City area.
On March 13, 1979 NJDOT contacted Rowland and a meeting was scheduled for March 16, 1979. On March 16, 1979 NJDOT negotiator Daniel Murphy was assigned to negotiate the Rowland case. The assignment indicated that negotiations were to be completed by April 20, 1979. Murphy was told that time was of the essence in these negotiations, due to the imminence of construction on the traffic circle. The target date for that construction was March 1, 1979, which obviously was past due at the time of Murphy's assignment. Testimony before this court revealed, in contradiction, that "1980" was the target date. Suffice it to say, there was not much time before the project would be initiated. One of many constraints imposed on the negotiator is that he is not permitted to change the price offered. Such change in the price could only be permitted through the negotiator's superiors upon review of the appraisal and request for a higher price.
On March 16, 1979 Rowland met with E. O. Sattin, District Supervisor of NJDOT, Murphy and Irving Praeger, Project Supervisor of NJDOT. At this meeting Rowland was presented with a written offer indicating an appraised value of the Rowland land for $196,000 and building for $224,000, thus totaling what NJDOT believed just compensation for the taking in the amount of $420,000. This letter also indicated that professional
appraisers had used the market sales, income and cost approaches in their valuation of the Rowland property. Murphy started to discuss the cost approach, but Rowland said he knew the cost, based on the estimates provided in connection with a new American Appliance store planned for the other side of the traffic circle. Murphy also proceeded to discuss the market approach, but Rowland cut him off and said that there were no sales of comparable properties due to the unique features of the Rowland property being sought by NJDOT. There was no discussion about the income approach at this meeting. Also, Rowland did not request, nor did Murphy provide, copies of the State's appraisal reports or disclose any of the comparable sales figures or underlying facts, e.g. , dollar and value components, capitalization rates and rental income, upon which the appraisals were based. At the conclusion of this meeting Rowland indicated he wanted to contact Attorney Brandt about this case, and Murphy indicated he would "wait a while" and contact Rowland after Brandt was consulted. It is noteworthy that Sattin informed Rowland that time was of the essence and there was not much time in which to negotiate due to the imminence of construction.
On March 22, 1979 Murphy called Rowland and was informed that Rowland was still waiting to hear from Brandt. Murphy reminded Rowland of the time problem and requested that Brandt be contacted. Rowland stated he would comply with this request. On March 29, 1979 Murphy was in the area and stopped by Rowland's office; Rowland was not there. Later in the day Rowland called Murphy and indicated word should be coming that afternoon from Brandt. There was no discussion of the substantive aspects of the case during these phone calls.
On March 30, 1979 Murphy met with Rowland at Rowland's office. Rowland indicated that Brandt "was going to have a letter [presumably of representation] in the office" in three days. Murphy and Rowland then proceeded to talk about the case. The income approach, in particular economic rent value, was discussed. Rowland spoke of a business located in the
woods (not specified where) that was paid an economic rent of $5 a square foot and said that his property was worth twice that amount. This culminated in Rowland's "mentioning" the figure of $600,000 as value of his property, based on the use of the economic rent like income approach. Testimony before this court from Murphy indicates that the $600,000 figure was not a demand; however, the mentioned sum did give Murphy the impression that Rowland was not agreeable to the $420,000 offer made by NJDOT. In any event, Rowland did not request any comparable sales information or any additional information that was in the NJDOT's appraisals at this meeting. Also, up to this point, Rowland had not produced any appraisals or citations of errors, other than the use of economic rent, in the NJDOT's appraisals. At this point Murphy believed he had done everything possible that he could do and told Rowland that due to the imminence of construction legal proceedings would soon be started. Throughout the discussions with Rowland, Murphy got the impression that Rowland fully understood what was happening, based on Rowland's excellent business background and intelligent discussion about appraisals.
On April 2, 1979 Praeger sent Rowland a letter indicating that there was yet no acceptance of the NJDOT offer and asking Rowland to reconsider the offer and enter into an amicable settlement. The letter continued that unless NJDOT heard from Rowland in this regard within five days, the case would be forwarded to Trenton headquarters with a recommendation for condemnation. By April 9, 1979, the deadline date, no communication had been received from either Brandt or Rowland. On this same date Murphy filed his recommendation for condemnation report, which eventually reached Andrew Cella, Chief of the Bureau of Acquisitions of NJDOT. On April 27, 1979 Cella sent a letter to Rowland indicating that NJDOT believed its offer was fair, that the $600,000 figure mentioned to Murphy was excessive and that unless Rowland accepted the NJDOT offer within 14 days of the letter date (May 11, 1979) it would be assumed settlement by agreement could not be reached. On
April 30, 1979 Thomas Kondash, Condemnation Coordinator and Right of Way Negotiator, was assigned the Rowland case. It is Kondash's role to continue negotiations, once condemnation has been "authorized" (not necessarily predicated upon the filing of the complaint in condemnation).
Kondash called Rowland on May 2, 1979 and requested a meeting in order to continue negotiations. Rowland responded that he still had not retained Brandt and would get back in touch with Kondash. On May 8, 1979 James V. Hyde, Jr. wrote a verification, apparently based on the Murphy report or in anticipation of failure to settle by the end of the 14-day period, that bona fide negotiations took place and were successful. On May 10, 1979 Rowland informed Kondash that Peter O'Connor had been retained as Rowland's attorney. Kondash immediately called O'Connor and told him to send a letter of representation to NJDOT. There was no discussion between either Rowland or O'Connor and Kondash relative to acceptance of the offer or any counter-offer during the above time period. Kondash did not notify his superior of O'Connor's representation in the case.
The deadline date for acceptance of the offer was May 11, 1979. On this date O'Connor wrote to Kondash and requested an extension of the 14-day period (which Kondash was not authorized to grant) and copies of the appraisal materials (which Kondash was also not authorized to do). Rowland did not accept the offer on this date pursuant to the April 17 letter by Cella. Accordingly, the complaint in condemnation was filed. This filing initiated the procedures found in the ...