On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket No. CPM-L-68-93.
Before Judges Skillman, Wallace, Jr. and Carchman.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
The issue presented by this appeal is whether a condemnor in a partial taking case is entitled to an abatement of interest on the condemnation award for the "fair rental value" of the remainder of the property even though the condemnee was deprived of beneficial use of the acquired property as of the date of taking.
In a prior appeal in this case, we affirmed a jury verdict awarding defendant $1.00 for the taking of an easement in front of its property and an additional $37,000 for severance damages to the remainder. City of Ocean City v. Maffucci, 326 N.J. Super. 1 (App. Div.), certif. denied, 162 N.J. 485 (1999). The facts are set forth in detail in our prior opinion and only need to be summarized briefly to set the framework for discussion of the legal issue presented by this appeal.
As part of a project to protect the beach by constructing new sand dunes along seven miles of beachfront, plaintiff Ocean City sought to acquire easements from the owners of beachfront properties. Defendant owns one of those properties, which is occupied by a two-story condominium with separate apartments on the first and second floors. When the City was unable to negotiate a purchase price for an easement in front of defendant's property, it brought this condemnation action by filing a complaint and declaration of taking on January 27, 1993. The City made no deposit into court at the time of the taking.
The dune construction project in front of defendant's property was started around the same time as the taking and was completed in December 1994. When the project was completed, the ocean view from the first floor apartment was completely obstructed and the direct access to the beach formerly enjoyed by occupants of the condominium was eliminated by nine-foot high dune grasses. As a result, the occupants had to use a pathway eighty feet from the property to gain access to the beach. In addition, the City constructed an alleyway on part of the easement for the public to use in walking to the beach access pathway.
In our prior opinion, we upheld the trial court's ruling that defendant was entitled to severance damages for the loss of the ocean view and direct access to the beach and infringement of the occupants' privacy rights caused by the City's taking of the easement and construction of new sand dunes and an alleyway:
Where the property taken constitutes only a part of a larger parcel, the owner is entitled to recover, inter alia, the difference in the fair market value of his property in its "before" condition and the fair market value of the remaining portion thereof after the construction of the improvement on the portion taken. Items such as view, access to beach property, freedom from noise, etc. are unquestionably matters which a willing buyer in the open market would consider in determining the price he would pay for any given piece of real property. [Id. at 20 (quoting Pierpont Inn, Inc. v. State, 74 Cal. Rptr. 521 (1969).]
Subsequent to the issuance of our opinion affirming the $37,001 verdict for the partial taking, defendant filed a motion with the trial court seeking interest on the award. Defendant noted that the order memorializing the verdict stated that defendant was entitled to interest from the date of the taking to the date of judgment but failed to establish the amount of interest.*fn1 The City opposed defendant's motion, arguing that even though defendant was entitled to interest, any award of interest is subject, under N.J.S.A. 20:3-31, to abatement for the "fair rental value" of the property during the period for which interest is payable, and that the fair rental value of defendant's property during the pendency of the condemnation proceeding far exceeded the interest on $37,001.
The trial court concluded that defendant was entitled to interest from the date of the taking because the taking "impaired" defendants' use of the remainder and "[t]he award of interest is intended to compensate for that impairment." The court rejected the City's argument that defendant is not entitled to any interest because the fair rental value of the property after the taking exceeded the interest on the severance damages, noting that "the value of the beachfront home has been adversely impacted not only by the taking of the easement but also by what was constructed on it and the consequences of that construction." Accordingly, the court entered an order awarding defendant $19,525.65 in interest from the date of the taking on January 27, 1993 to the issuance of its opinion on April 10, 2001, plus an additional $3.94 per diem from that date to the date of payment.*fn2 We agree with the trial court's analysis and therefore affirm the award of interest.
To satisfy the constitutional requirement that an owner of private property taken for public use receive "just compensation," N.J. Const., Art. I, par. 20, a condemnee must be paid interest on the condemnation award for the period between the actual taking and payment for the taking. State v. Nordstrom, 54 N.J. 50, 54 (1969); State, by State Highway Comm'r v. Seaway, Inc., 46 N.J. 376, 380-81 (1966). However, if notwithstanding the initiation of condemnation proceedings, "the owner has not been disturbed in the possession, and has had a profitable use of the premises, or has received the rents for them pending the appeal, these circumstances should be taken into account and the interest abated accordingly." Nordstrom, supra, 54 N.J. at 54 (quoting Metler v. Easton & Amboy R.R. Co., 37 N.J.L. 222, 224-25 (Sup. Ct. 1874)). Thus, the controlling factor in determining whether a condemnee has a constitutional right to unabated interest on a condemnation award is whether the condemnation proceedings "restrict[ed] the profitable use or enjoyment of the property" during the period preceding payment of the award. Id. at 55.
The constitutional requirement of the award of interest for delay in a condemnee's receipt of payment for the value of its property was codified in the Eminent Domain Act of 1971. N.J.S.A. ...