On appeal from the Superior Court of New Jersey, Law Division, Mercer County, L-1944- 93.
Before Judges Baime, Fall and Axelrad.
The opinion of the court was delivered by: Axelrad, J.T.C. (temporarily assigned).
As amended January 16, 2002.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: November 15, 2001
The issue in this case involves the rates of interest to be applied from the date of filing of the condemnation complaint less credit for the monies deposited. Plaintiff, Township of West Windsor ("Township"), appeals the Law Division's award of pre- and post-judgment interest to defendant condemnee, Yvette Nierenberg ("Nierenberg"),*fn1 calculated on the prime rate compounded annually, claiming that the proper rates of interest should have been under the lower simple interest rates set forth in Rule 4:42-11.
Nierenberg owned a parcel in West Windsor which encompassed approximately fifty acres. In l992, she conveyed a thirteen-acre portion to the Township. The remaining approximately thirty-eight acres had 1,250 feet of frontage and were available for residential development. On May 3, 1993, the Township filed a complaint for condemnation of this parcel and deposited its estimate of just compensation of $1,210,000 into court.*fn2
Thereafter, the parties engaged in numerous legal battles. Suffice it to say that the contest over the appropriate valuation date of the property pursuant to N.J.S.A. 20:3-30(c) was pursued all the way to our Supreme Court. Township of West Windsor v. Nierenberg, 150 N.J. 111 (1997) (holding, in a four-three split, that the date of the Township's letter to the development partnership in June l988, expressing interest in acquiring the land to build a park, was the date of valuation pursuant to N.J.S.A. 20:3-30(c)). During the pendency of the litigation, we permitted both parties to intervene in Casino Reinvestment Development Authority v. Hauck, 317 N.J. Super. 584 (App. Div. l999), aff'd, 162 N.J. 576 (2000). Although the Haucks presented arguments on appeal both as to the rates of interest to be applied and to the duration of interest, the intervenors limited their arguments to the narrow issue as to when interest commences. Ibid. We affirmed the trial judge's decision that interest runs from the date of commencement of the action, unless there is a taking on an earlier date, and held that it was not error to award interest at the simple rates set by Rule 4:42-ll, which track the Cash Management Fund rates, under "the particular circumstances of the case." Hauck, supra, 317 N.J. Super. at 594.
On appeal to the Supreme Court, the Haucks again argued both the interest rate and accrual issues. The intervenors elected only to argue the accrual issue. Nevertheless, in affirming our decision, the Supreme Court stated:
We simultaneously granted certification to Intervenor-Appellant Yvette Nierenberg who claimed that our decision could affect the outcome in a pending condemnation action involving her property in West Windsor. Township of West Windsor v. Nierenberg, 150 N.J. 111, 695 A.2d 1344 (1997). Like the Haucks, she is bound by our disposition here. [Hauck, supra, 162 N.J. at 578, n. l].
The condemnation commissioners subsequently awarded $2,625,000 as the fair market value of the Nierenberg property. Both parties appealed and then settled at that amount, leaving as the sole issue for the trial court the rate of interest from May 3, 1993, less credits for the monies paid into court.
The parties filed certifications and briefs as to their respective positions on the appropriate rates of interest. The Township argued that the rates set forth in Rule 4:42-11 should govern, and that, in any event, those rates should be applied under the doctrines of res judicata and collateral estoppel because of the Supreme Court's decision in the Hauck case. Nierenberg submitted a certification from Thomas R. Angers, Director of Research of Glenmede Trust Company, in support of the prime rates of interest or the national mortgage survey rates for ten-year commercial mortgages.
The court conducted an evidentiary hearing to resolve the interest rate question. Plaintiff presented the expert testimony of Patrick Gaughan, an economics and finance professor at Fairleigh Dickinson University, and president of Economatrix Research Associates, a firm specializing in consulting and testifying as to damages in personal injury and commercial litigation. He concluded that Rule 4:42-11 rates for tort cases should apply in condemnation awards except in times of extraordinary volatile interest rates. He concluded that when market rates are stable, pre-judgment interest should be based on Rule 4:42-ll simple interest rates. In times of volatile rates, commercial rates were appropriate on a case by case basis. Based on his analysis of the interrelation between inflation and interest rates over a thirty-year period, he concluded that from the period of 1993 to the present the market interest rates were "relatively stable" and that there was an absence of a "significantly changing phenomenon" that existed at the time of Township of Wayne v. Cassatly, 137 N.J. Super. 464 (App. Div. l975), certif. denied, 70 N.J. 137 (1976). Therefore, he opined that Rule 4:42-11 rates were appropriate, resulting in the amount of interest due of $363,875.*fn3 He further concluded that "risk" should not be added despite the fact that risk is involved in most commercial investments.
Nierenberg presented Angers as an expert at trial. His company manages high net worth portfolios. He used interest rates related to real estate, taking into consideration the element of "risk." He predicated interest on the prime rates, a rate paid by favored borrowers on loans,*fn4 and the national mortgage survey rates, the commercial rate for ten-year mortgages.*fn5 According to Angers, these rates represented the minimum interest rate that an individual, such as Nierenberg, would incur if she borrowed money in the market place on the basis of her real estate, and would best indemnify her for the loss of use of compensation to which she was entitled as a result of the condemnation. He described New Jersey's Cash Management Fund, Rule 4:42-11, as a low risk investment, slightly ...