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City of Linden v. Benedict Motel Corp.

February 11, 2004

CITY OF LINDEN, COUNTY OF UNION, NEW JERSEY, PLAINTIFF-APPELLANT,
v.
BENEDICT MOTEL CORP., A NEW JERSEY CORPORATION, A/K/A BENEDICT MOTEL, INC., A NEW JERSEY CORPORATION, A/K/A BENEDICT APARTMENTS CORP., A NEW JERSEY CORPORATION, SWAN ASSOCIATES, A NEW JERSEY GENERAL PARTNERSHIP, SWAN RECREATION, INC. AND BENEDICT MOTEL, INC./FINE & NATHANSON, T/A SWAN MOTEL, A NEW JERSEY GENERAL PARTNERSHIP, STANLEY NATHANSON AND DAVID A. NATHANSON, LORI S. NATHANSON, RANDI NATHANSON, NEW JERSEY NATIONAL BANK, ITS SUCCESSORS, AND/OR ITS ASSIGNS, CITY OF LINDEN - STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Union County, Docket Nos. 4460-00 and 4470-00.

Before Judges Carchman, Wecker and Weissbard.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 17, 2003

As part of a redevelopment plan and to widen Routes 1 and 9, plaintiff City of Linden (City) instituted a condemnation proceeding against the Benedict Motel (Motel) and other interested parties (collectively,"defendants") to effect a partial taking of a fifteen-foot wide strip fronting the Motel. The most dramatic impact of the taking is the elimination of fifteen parking spaces that had existed on the Motel's property fronting on Route 1.

While other claims of error are asserted, the issue dominating this appeal is the legal status of these parking spaces. The City claims that no approval was granted for the parking spaces in the first instance. Relying on our decision in Comm'r of Transp. v. Faps Realty, Corp., 197 N.J. Super. 44 (App. Div. 1984), the City also asserts that the use of such spaces requires maneuvering within the State right-of-way, and the Motel is not entitled to damages for the loss of the spaces.

Judge Beglin determined as a matter of law that the fifteen spaces had been lawfully created and properly utilized, and the Motel was entitled to compensation for remainder damage. The jury returned a verdict in the amount of two million dollars. We affirm.

I.

These are the relevant facts adduced at trial.*fn1 Defendants Stanley Nathanson and his son David Nathanson, partners in the ownership of the Motel located on the northbound side of Routes 1 and 9 in Linden, purchased the property in 1967, at which time the Motel had seventy-two rooms. In 1971, the Motel was expanded to add thirteen units to the second floor, for a total of eighty-five units. Fifteen parking spaces were added to the property front, for a total of eighty-nine parking spaces.

On September 21, 2000, the City filed a complaint to effect a taking of a fifteen-foot wide strip of Motel property, 3,885 square feet of land, to widen Routes 1 and 9. The widening is part of a road improvement project connected with the City's plan to redevelop that area of Linden.*fn2 The City's appraiser Paul T. Beisser valued the land at $115,700.

The Motel is an active enterprise and generates substantial income, which exceeded 1.1 million dollars in 1999 and 1.3 million dollars in 2000. During both years, the occupancy rate exceeded one hundred percent.

Much of the dispute regarding the status of the parking spaces in issue focused on the approvals allegedly granted in 1971 involving the expansion of the motel by an additional thirteen rooms. While the record is expansive and contradictory as to the"legality" of the parking spaces, the claim relies on the recollection of and documentation supplied by Stanley Goodman, the architect retained to perfect the 1971 expansion. Goodman offered that the zoning approval included approval of the parking. He acknowledged that parking was an issue at the time the plan was proposed, and consequently, Goodman was required to provide for thirteen additional parking spaces to obtain approval for the motel expansion. The plan offered at trial did not contain indicia of approval from the City, but the site plan depicted thirteen angled parking spaces in the front of the motel. A critical dispute arose as to whether the zoning approval included approval of this parking. While Goodman was firm in his recollection of the approvals, the City engineer claimed that no record of approval was found except, as the City construction officer indicated, approval for an additional thirteen rooms with no mention or indication of approval for additional parking. This was despite contradictory indications from the City that parking would have been explored if a variance had been required.

Regarding the site plan and the impact of the taking, Goodman stated that he designed the access to allow cars to decelerate while entering the motel, rather than being forced to make a sharp right-hand turn off the busy, fast highway. The motel office was placed in the corner to provide the best vantage point from which to control and monitor the motel's activities. The taking, however, impacted on the property by eliminating the front parking, relocating the office to maintain the ability to supervise the traffic into and out of the motel, and effecting the loss of additional parking spaces due to the relocation of a dumpster. With the loss of the parking, also, the site became a nonconforming use and failed to maintain the number of required spaces per unit. The impact of this was clear. If the motel were to seek any future alterations to the building, the motel would require a variance and the attendant municipal approvals. Not only would the waiver process prove more costly and time-consuming, but the motel had no guarantee of approval.

Critical to the primary issue in dispute, Karl A. Pehnke, plaintiff's expert witness and manager of the road improvement project undertaken by the State Department of Transportation, who conducted an engineering study for the City regarding the impact of the road widening on the Motel, observed that the Goodman plan would not have worked because a car backing out of the space would have only a ten-foot wide aisle in which to maneuver. Pehnke noted that the spaces, though entirely on motel property, were illegal because the aisle of circulation for vehicles entering and backing out of the spaces included the State right-of-way, which he defined as"the area that encompasses both a roadway that the public travels along, as well as a distance beyond the edge of a roadway or a curb-line, or the edge of pavement, which is, basically, what would be your sidewalk area." Here, the claimed right-of-way at the time of the taking was approximately ten feet from the then-existing curb.

As a result, plaintiff's valuation expert Beisser stated that a buyer could not consider the front parking spaces in assessing valuation. Therefore, the condition of the property before the taking and the condition after the taking were the same -- seventy-four"legal" parking spaces and eighty-five rooms, and the taking effected no change to the property. Utilizing comparable land sales and making appropriate adjustments, Beisser concluded that the amount of just compensation was $115,700. Beisser did not utilize the income capitalization method to value the land because he found no damage to the remainder.

Subsequently, Beisser prepared a second alternative appraisal. This appraisal assumed that the fifteen parking spaces were illegally approved and then considered that after the taking and reconfiguration of the parking area, the Motel would retain seven usable spaces. After analyzing the data on an income basis, he opined that the damages to the remainder including the loss of the sign was $500,000.

Defense real estate expert Donald Helmstetter reached a different conclusion and opined that the taking resulted in"significant impact on the ongoing operation of the motel property specifically due to the loss of a number of parking spaces that existed prior to the taking and no longer exist once the taking is complete." The seventy-one parking spaces were not enough to support eighty-five units and therefore, would adversely impact the value of the site. As no convenient off site parking existed to accommodate the motel's parking needs, the loss of parking would result in"a commensurate loss of rental potential for the motel operation." He, too, used an income approach and concluded that the damages including the taking and damages to the remainder was $1,280,500.

Another defense expert Scott Izenberg also valued the property concluding that just compensation for the taking in remainder damages was $2,260,000. Critical to his appraisal, Izenberg calculated the after-taking value of $9,290,000 (as opposed to a before-taking value of $11,550,000) based on a sixty-nine-unit motel, because Izenberg stated that the motel could not rely on the city allowing the motel to operate those units that lack supporting parking spaces.

Contrary to Pehnke's view that the city's after-taking access proposal and the motel's access proposal were substantially the same, defense expert Eric L. Keller concluded that the existing access was unsafe and inappropriate from both a design and operational perspective. Analyzing slope and entry of angle, he observed that vehicles entering and exiting would have to go very slowly so as not to drag their bumpers; furthermore, the design did not conform to state regulations for driveway design. The better access design, Keller stated, placed the access at the north end of the property, resulting in two additional lost spaces. Additionally, the motel proposed to relocate the office to the north side and widen the passageway into the courtyard to allow for two-way traffic, resulting in an additional space being lost. The total parking after the taking would be seventy-one: eighty-nine before-taking spaces, minus fifteen front spaces, minus three spaces due to access and office relocation. The reduced number of parking spaces rendered the motel a nonconforming use.

At the conclusion of the evidence, defendants sought a determination that the front parking spaces were approved spaces such that their loss was a proper element of damages, arguing that they were approved with the approval of the 1971 motel expansion and grandfathered under the 1979 city zoning ordinance. Defendants further argued that the parking was grandfathered under The Highway Access Management Code (Code) regulations, N.J.A.C. 16:47-1.1 to -9.1, implementing the State Highway Access Management Act (Act), N.J.S.A. 27:7-89 to -98, that grandfathered any access and use that existed prior to July 1, 1976. Defendants finally argued, with respect to the front parking, that neither the City nor the State had ever cited the motel for"improper parking or improper use of the State's right of way." Defendants argued that the Act does not prohibit"a car maneuvering in and out of a stall" from crossing the theoretical right of way line, as"any car that utilizes the access utilizes the right of way." The City countered that the front parking issue is a factual matter for the jury to decide, and indeed, whether any parking spaces were lost, and if so, how many, was also a jury issue.

With respect to the additional spaces lost in relocating the driveway, defendants argued for a jury charge regarding their compensability as a result of a change in access. The City responded that the property owner was entitled to reasonable access only, granted by the City approved plan, and that any costs incurred from changing the access point was defendants' choice.

The judge found that the variance for the Motel's expansion was approved and that the approval included the front parking, regardless of the actual number. As the City approved the unit expansion, the parking had to be located in the front as that was the only available location on the site. Judge Beglin found that the City in the grant of the variance, accepted and approved the plan ...


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