October 4, 2007
TOWNSHIP OF CINNAMINSON, PLAINTIFF,
MALL ASSOCIATES, LLC; YARDLEY ASSOCIATES, DEFENDANTS-RESPONDENTS, AND CASUAL MALE, INC., DEFENDANT-APPELLANT, AND BANK OF AMERICA; ECKERD DRUGS OF DELAWARE; STATE OF NEW JERSEY; MANHATTAN BAGEL COMPANY, INC.; CINNAMINSON LAUNDRY MAT; M. PATHAN; BIG LOTS STORES, INC., DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-1029-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 11, 2007
Before Judges Skillman and Winkelstein.
Defendant Yardley Associates is the owner of a forty-acre mall located in Cinnaminson Township. Yardley leased the property to defendant Mall Associates, LLC,*fn1 which leased parcels to multiple tenants, including defendant Casual Male, Inc. Pursuant to a redevelopment project, the Township condemned the property; the Mall and the Township ultimately agreed upon compensation for the Mall of $10,739,000, and the Township deposited that sum into court.
In this appeal, Casual Male challenges the trial court's November 17, 2006 order that permitted the Mall to withdraw the condemnation funds and dismissed Casual Male's application seeking approximately $900,000 of those funds. Casual Male claims that the trial court deprived it of standing to withdraw a share of the condemnation funds, and that the court substantively erred in determining that Casual Male was not entitled to any portion of the condemnation award. We conclude that Casual Male's arguments are without merit and affirm the trial court's order.*fn2
The facts are straightforward. Casual Male leased a 4300 square foot store from the Mall; the lease was in effect at the time of the condemnation proceedings. The lease contained the following language pertaining to the condemnation award:
15. Eminent Domain
If during the term of this Lease, as a result of a condemnation proceeding . . . a substantial or material portion of the Premises is taken, Tenant may, within thirty (30) days following the date of such taking, terminate this Lease upon written notice to Landlord, which termination shall be effective as of the date of such taking. . . . Nothing herein contained shall prevent Landlord and Tenant from prosecuting claims in any condemnation proceedings for the value of their respective interests. Landlord shall be entitled to the condemnation award attributed to the real property, and Tenant for the taking of its fixtures and equipment, leasehold improvements, relocation expenses, goodwill loss of business or other award not related to the value of the real property. [(emphasis added).]
The Township filed its complaint for condemnation on April 11, 2005, naming multiple defendants, including Casual Male. On August 12, 2005, the trial court entered a judgment of condemnation, subject to certain conditions, none of which apply to Casual Male's claim. On April 28, 2006, the court entered an amended order for final judgment, which included the appointment of commissioners.
The Township filed its declaration of taking on September 25, 2006. Two days later, the court executed a consent order, fixing compensation at $10,739,000, and entering judgment for said sum in favor of the Mall.
On September 29, 2006, the Mall filed a motion to withdraw funds. On October 19, 2006, Casual Male filed a verified cross-claim and order to show cause and a third-party complaint against the Mall. In each action, Casual Male demanded $929,412.27 of the condemnation award for leasehold improvements, fixtures, equipment, relocation expenses, and loss of business. The next day the court dismissed Casual Male's pleadings, but ordered that sum be held in escrow pending further order.
On November 3, 2006, Casual Male argued its claim before the trial judge. The judge acknowledged that while the pleadings were dismissed because they were not technically correct, Casual Male's claim was not substantively dismissed.
Following argument by counsel, the court denied Casual Male's claim to any portion of the condemnation award. The judge found that the lease agreement "[gave] the landlord and tenant the right to fight for an allocation of the fund . . . only to the extent that the condemnation award . . . represents something other than an interest in the real estate." The judge continued:
I am not suggesting by this that Casual Male may not have claims against the owner of this fund, the mall, but [those claims] will have to be fought out in a different forum. One of the reasons why the rules are as we have written them is because the condemnation proceeding is supposed to be summary in nature. You can't even file a counter claim in a condemnation proceeding without leave of Court.
Here, the entire condemnation award is for interest in the real estate. There is not even a colorable interest in the real estate by Casual Male.
We will not disturb the trial judge's factual findings if they are reasonably supported by "adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). On the other hand, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
The United States and New Jersey constitutions provide that where private property is taken by the government for public use, the government must pay just compensation. U.S. Const. amend. V; N.J. Const. art. I, ¶ 20. The object of an eminent domain award is to compensate the owner for loss of the property. State ex rel. State Highway Comm'r v. Gallant, 42 N.J. 583, 587 (1964). It is the property's fair market value that establishes the basis for compensation. Ibid.; see also City of Trenton v. Lenzner, 16 N.J. 465, 476 (1954) (measure of compensation is the fair market value of the property), cert. denied, 348 U.S. 972, 75 S.Ct. 534, 99 L.Ed. 757 (1955).
The Eminent Domain Act of 1971 (Act) defines compensation as: "[T]he just compensation which the condemnor is required to pay and the condemnee is entitled to receive according to law as the result of the condemnation of property." N.J.S.A. 20:3-2(h). Payment in a condemnation proceeding from the condemnor to the condemnee is for the condemnee's interest in land. "Our cases have without exception recognized that claims against the condemnation payment received by the landowner are limited to those based on the interest in the land." Wayne Co. v. Newo, Inc., 75 N.J. Super. 100, 107 (App. Div. 1962). Thus, "[s]trictly speaking, there are no 'damages recoverable by the [l]essee' from the taking authority. Although in some jurisdictions each of the interests in the land taken is separately evaluated and the respective holders of such interests separately compensated, . . . New Jersey is one of the states where a lump sum payment is made for all the interests." Id. at 106.
In New Jersey, just compensation is not permitted for intangible or speculative losses in condemnation proceedings. State ex rel. Comm'r of Transp. v. Cooper Alloy Corp., 136 N.J. Super. 560, 568 (App. Div. 1975).
[D]amages or costs of a speculative nature are always non-compensable. Just compensation generally does not include losses or costs that are incidental to a taking, such as loss to or destruction of good will, loss of profits, inability to relocate or frustration of the condemnee's plans. These items are generally held not to be directly attributable to the realty, but rather peculiar to the owner. The fact that these losses are non-compensable is justified on the grounds that their value is too speculative, remote and too uncertain for accurate measurement; that they depend on various factors not attributable to the land and, accordingly, furnish no reliable criteria for the fixing of market value at the time of the taking. Similarly, loss of business profits derived from a going business conducted on the property taken is not the subject of independent compensation aside and apart from the market value of the land taken. [Ibid. (internal citations omitted).]
A tenant may be heard at condemnation proceedings as to the value of the property condemned, but the tenant is not entitled to have his "'tenancy separately and specifically evaluated in the condemnation award.'" N.J. Sports & Exposition Auth. v. Borough of E. Rutherford, 137 N.J. Super. 271, 284 (Law Div. 1975) (quoting N.J. Highway Auth. v. J. & F. Holding Co., 40 N.J. Super. 309, 314 (App. Div. 1956)). Factors bearing upon a tenant's claim include any unexpired term of the lease, lease options, the characteristics of the demised premises, and any rent reserved. N.J. Highway Auth., supra, 40 N.J. Super. at 316. "[A] tenant may not claim from the award damages for his loss of business, profits, good will, fixtures, cost of removal and the like." Ibid. Simply put, "[t]he tenant's recoverable damage, if any, is ascertained and determined fundamentally by a comparison of the fair value of his leasehold interest and the rent reserved." Ibid.; see also City of Newark v. Cook, 99 N.J. Eq. 527, 537 (Ch. 1926) ("loss of business, profits, good-will, fixtures and cost of removal and the like suffered by the tenants, obviously, are not lands or real estate, or rights or interest therein in the legal sense and not within the criterion fixed by the [eminent domain] statute.").
Against this legal framework we examine Casual Male's claim. While a tenant may be entitled to participate in allocation proceedings based upon its leasehold interest, here, Casual Male contracted away its right to share in the compensation award. See State ex rel. Comm'r of Transp. v. Greg's Hess Station, Inc., 226 N.J. Super. 256, 263 (App. Div. 1988) (franchise holder contracted away right to share in compensation award); aff'd, 115 N.J. 229, cert. denied, 493 U.S. 964, 110 S.Ct. 406, 107 L.Ed. 2d 371 (1989); N.J. Sports & Exposition Auth., supra, 137 N.J. Super. at 279 (tenant by contract gave up claim to portion of condemnation award). In its lease with its landlord, Casual Male agreed that the landlord would be entitled to "the condemnation award attributed to the real property." Casual Male was only entitled to the condemnation proceeds "for the taking of its fixtures and equipment, leasehold improvements, relocation expenses, goodwill loss of business or other award not related to the value of the real property." As we have previously iterated, these damages are not part of a condemnation award in this state.*fn3
Casual Male's remaining arguments, relating to the "unit rule" and to Rule 4:73-9, to the extent that we have not previously addressed them in this opinion, are without sufficient merit to warrant additional discussion. R. 2:11-3(e)(1)(A), (E).
Affirmed. We vacate our December 18, 2006 stay.