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Jersey City Redevelopment Agency v. Clean-O-Mat Corp.

April 11, 1996

JERSEY CITY REDEVELOPMENT AGENCY, A BODY CORPORATE AND POLITIC OF THE STATE OF NEW JERSEY, AND NEWPORT CITY DEVELOPMENT COMPANY, A NEW JERSEY GENERAL PARTNERSHIP, PLAINTIFFS/APPELLANTS/CROSS-RESPONDENTS,
v.
CLEAN-O-MAT CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, AND THE FOURTEEN FLORENCE STREET CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS/RESPONDENTS/CROSS-APPELLANTS, AND STATE OF NEW JERSEY; CITY OF JERSEY CITY, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY; JERSEY CITY SEWERAGE AUTHORITY, A BODY CORPORATE AND POLITIC OF THE STATE OF NEW JERSEY; THE TRUST COMPANY OF NEW JERSEY, A BANKING CORPORATION OF THE STATE OF NEW JERSEY; MECCA & SONS TRUCKING CO. (A/K/A MECCA TRUCKING), A NEW JERSEY CORPORATION; FOURTEEN FLORENCE STREET WAREHOUSE CORPORATION, A NEW JERSEY CORPORATION; AND COCOA GRINDING CO. OF AMERICA, A NEW JERSEY CORPORATION, DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Hudson County.

Approved for Publication April 11, 1996.

Before Judges Michels, Baime and Villanueva. The opinion of the court was delivered by Baime, J.A.D.

The opinion of the court was delivered by: Baime

The opinion of the court was delivered by BAIME, J.A.D.

These appeals and cross-appeals have their genesis in a condemnation action commenced by Jersey City Redevelopment Agency (JCRA) against Clean-O-Mat Corporation (COM) and The Fourteen Florence Street Corporation (Florence). As part of its plan to rehabilitate blighted areas along its northern waterfront, Jersey City authorized Newport Associates Development Company (Newport) to acquire properties within the boundaries of the project. With respect to properties Newport could not purchase, Jersey City authorized JCRA to institute condemnation proceedings. Newport thus joined JCRA's actions against COM and Florence. Following initial skirmishes, the parties entered into a settlement agreement that was incorporated in a consent judgment. Unfortunately, the consent judgment was not the end, nor the beginning of the end, nor even the end of the beginning of the parties' disputes. Instead, it spawned an explosion of fragmented and protracted litigation over which four different Judges presided and which occupies literally thousands of pages of transcript. Despite the diversity of the claims and counterclaims advanced, we discern two common threads - the valuation of COM's property and the claims among the parties concerning the transfer of the owners' interests to Newport and JCRA. A jury fixed just compensation for the taking of COM's property in the amount of $2,200,000. COM was also awarded approximately $175,000 in relocation expenses and prejudgment interest at the judgment rate rather than at its mortgage rate. However, its claim for counsel fees was denied. Newport lost its action to compel Florence to specifically perform extensive renovations required by the consent judgment. Newport was also denied damages arising from COM's delay in vacating its property but was granted attorneys' fees expended in pursuing this claim. The parties filed separate appeals and cross-appeals, which we now consolidate. We affirm the judgments and orders from which these appeals and cross-appeals are taken with the exception of the order awarding Newport counsel fees respecting its unsuccessful claim for delay damages.

I.

Although this case has a lengthy and tortured procedural history, we recite only those facts critical to our Disposition of the issues raised.

This litigation concerns two properties included in Jersey City's northern waterfront redevelopment project known as "Newport City." The properties in question were COM's, located at 606 Henderson Street in Jersey City, and Florence's, located at 574-88 Henderson Street. Jerry Mecca was the sole shareholder of both COM and Florence. Jersey City's governing body defined the borders of the redevelopment area and passed an ordinance containing a redevelopment plan, which the developer, Newport, would follow. As we noted, the plan called for Newport to purchase all necessary property interests within the project area, but the City authorized JCRA to acquire through condemnation those properties Newport could not otherwise obtain.

On March 8, 1985, JCRA filed a condemnation complaint against COM, setting the value of COM's property at $500,000, reflecting $34,550 for the land and $465,450 for the "improvements." The complaint named Florence as a tenant in COM's property, as well as other defendants not involved in this appeal. On the same day, JCRA filed a separate condemnation complaint against Florence, fixing the value of Florence's property at $1,200,000 based on a land value of $115,000 and improvements worth $1,085,000. COM and Florence answered jointly, alleging that JCRA had engaged in various illegalities and conspiracies, had abused its authority by including their properties in the redevelopment project, and had failed to negotiate in good faith as required by law.

On November 4, 1987, the parties executed a settlement agreement which was incorporated in a consent judgment. The agreement declared that certain significant renovations to the Florence structures and grounds would make the property compatible with the redevelopment plan, thus obviating the need for condemnation. Florence was to submit detailed plans and specifications to Newport for its review. Upon Newport's approval, Florence was to complete the renovations in accordance with the plans. Florence also agreed to maintain the buildings as a warehouse for a ten year period and not to lease them without Newport's consent. Finally, it was agreed that trial of the condemnation complaint would be held in abeyance for six to nine months, during which time Florence was to make "substantial progress" in performing the renovations. If "substantial progress" was not made within this period, or if the renovations were not completed within two years, JCRA was authorized to condemn the property and transfer it to Newport.

The future of the COM property was also contingent, but in a different way. COM was required to "deliver possession of the [property], free of debris and in good order" to Newport by January 15, 1988. COM could extend that date by two months upon the condition that it cooperate with Newport in determining whether Newport's contiguous building could be demolished without unreasonably affecting occupancy of COM's building. The parties were not confident of that possibility, however, as evidenced by the fact that valuation of the COM property was to "forthwith proceed to trial."

It soon became apparent that the settlement agreement was merely a lull in the gathering storm, a false armistice between the warring parties. In May 1988, Newport moved to enforce the agreement. Following an evidentiary hearing, the Law Division rendered an oral opinion in which it found that COM had "willfully" failed to vacate its property and that Florence had failed to submit construction plans and specifications as required by the consent judgment. The court ordered COM to vacate its property within five days and directed Florence to submit the required renovation plans within twenty days.

Both COM and Florence moved for reconsideration. Following hearings on that motion, the parties entered into a consent order on July 29, 1988. The order required COM to deliver possession of its property to Newport in "broom clean condition" by September 1, 1988. Newport was to be awarded $10,000 for each day COM failed to "deliver actual possession of the premises and building." The order further provided that Newport's claim for damages arising from COM's prior failure to vacate was to be tried by another Judge. Under the order, COM agreed to accept $119,200 from JCRA for relocation expenses and to submit any further disputes regarding "loading costs" for resolution by administrative proceedings pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Relocation Act).

On September 1, 1988, COM physically vacated its premises, and on September 7, 1988, Newport received a deed to the property from JCRA. However, on September 8, 1988, Jersey City's municipal council approved a resolution revising the redevelopment plan by removing COM's and Florence's properties as well as several others from the redevelopment area. On September 9, 1988, the council instructed Jersey City's construction officer not to issue "any demolition or other permits related to" the properties that might be eliminated from the project, including those belonging to COM and Florence. That same day, defendants' attorney sent a letter to Public Service Electric & Gas, advising it to "contact [its] legal department before attempting to remove or alter" the utility connections to either the COM or Florence buildings. On September 22, 1988, the council adopted an ordinance eliminating COM's and Florence's properties from the redevelopment project.

Newport then filed a motion with the Law Division seeking to invalidate the ordinance revising the redevelopment plan and to hold COM, Florence, and Jersey City in contempt. The court did not immediately act upon these applications but instead directed Jersey City's building inspector to "grant or deny Newport's application for a demolition permit . . . on or before 4:00 p.m. on October 5, 1988." Appeals to this court and the Supreme Court were rejected on October 7, 1988, and demolition of COM's building began that day. Thereafter, the Law Division invalidated Jersey City's ordinance revising the redevelopment plan on the grounds that it conflicted with the consent judgment entered on November 4, 1987, and was not enacted in accordance with statutorily mandated procedures.

It will be recalled that the July 1988 consent order reserved Newport's right to damages based upon COM's failure to vacate its property as required by the November 1987 consent judgment. The trial on that issue was conducted in January 1990. We need not describe the evidence in detail. Suffice it to say, Newport's project manager testified that as a result of COM's delay the development could not proceed as planned, and demolition of COM's neighboring building, which shared a common wall with COM's building, had to be accomplished in pieces rather than by a wrecking ball, which he testified "is the least expensive and the quickest way." He further asserted that other design and construction changes also became necessary. In contrast, COM's expert testified that, although demolition costs might have increased because of COM's delay in delivering possession of the premises, Newport was not otherwise inconvenienced in a substantial way. Mecca testified that he was not involved in introducing the ordinance to revise the ...


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