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Township of West Orange v. 769 Associates

December 24, 2007

TOWNSHIP OF WEST ORANGE, A MUNICIPAL CORPORATION, PLAINTIFF-RESPONDENT,
v.
769 ASSOCIATES, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY; DEFENDANT-APPELLANT, AND MARICUSA CORP., A NEW JERSEY CORPORATION; LOCAL AMERICA BANK OF TULSA, A FEDERAL SAVINGS BANK; AND AMERICAN CANCER SOCIETY, NEW JERSEY DIVISION, INC., DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-238-98.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued September 25, 2007

Before Judges Coburn, Fuentes and Grall.

Defendant 769 Associates, LLC appeals from the order of the Law Division awarding it $154,721.56 as reimbursement for costs incurred in connection with the defense of this now-abandoned condemnation action filed by the Township of West Orange. The award ordered by the court amounted to a 61.56% reduction of defendant's original request.

Defendant submitted the reimbursement request pursuant to N.J.S.A. 20:3-26(b), which provides that:

If the court renders final judgment that the condemnor cannot acquire the real property by condemnation or, if the condemnation action is abandoned by the condemnor, then the court shall award the owner of any right, or title to, or interest in such real property, such sum as will reimburse such owner for his reasonable costs, disbursements and expenses actually incurred, including reasonable attorney, appraisal, and engineering fees. [(Emphasis added.)]

Defendant now appeals, arguing that the trial court erred in reaching its conclusion as to the amount reimbursable under the statute. After a careful review of the record, and in light of the relevant statutory factors, we affirm in part and reverse in part, the order of the trial court fixing the amount of reimbursement. Our analysis will focus on the part of N.J.S.A. 20:3-26(b) relating to abandonment. Specifically, we are required to determine whether a court may disallow costs incurred by the property owner in an unsuccessful legal challenge of the condemnation, on the basis that such a taking was not in furtherance of a legitimate public purpose.

We now hold that, in the context of an abandonment, the right to recover costs and counsel fees is not contingent to any degree upon the success of the property owner's defense strategy. Under N.J.S.A. 20:3-26(b), a property owner is entitled to recover counsel fees and costs "actually incurred" challenging a condemnation action, even if that defense was ultimately rejected by our Supreme Court. Stated differently, to recover costs and professional fees in an abandonment setting, a property owner does not have to show a causal link between its legal efforts resisting the condemnation, and the condemning authority's decision to abandon the taking.

After the public entity abandons the condemnation action, a reviewing court must then fix the starting point at which costs incurred become recoverable. We thus further hold that, to qualify for reimbursement under N.J.S.A. 20:3-26(b), the costs incurred by the property owner must have occurred within the "four corners" of the condemnation action. That is, the costs must have been incurred by the property owner in direct response to being named a defendant in a proceeding initiated by the public entity pursuant to N.J.S.A. 20:3-8.

Here, a collateral action in lieu of prerogative writs initiated by 769 Associates challenging the West Orange Planning Board's approval of a related subdivision application, is ancillary to the condemnation action, and thus not within the scope of the reimbursement provisions of N.J.S.A. 20:3-26(b). Similarly, pre-litigation expenses, such as counsel fees incurred attending municipal hearings, costs of reproduction of municipal records, and transcription costs of sessions of the municipal governing body, are not recoverable, because they fall outside the "four corners" of the condemnation action.

I.

The history of this condemnation action is set out in great detail in Township of West Orange v. 769 Associates, 172 N.J. 564, 568-71 (2002). We will thus not repeat it here. In that case, the Supreme Court upheld the municipality's assertion that this condemnation action was supported by a legitimate pubLic purpose. Id. at 578. Thereafter, the matter returned to the Law Division for the appointment of condemnation commissioners pursuant to N.J.S.A. 20:3-12, and the preparation of expert reports. Before any determination of value, the parties entered into a consent agreement through which the municipality formally abandoned the condemnation action.

Defendant requested a total reimbursement of $402,476.82. The trial court based its decision to reduce the amount of defendant's application on the following factors: (1) lack of documentation; (2) effective date of reimbursement; (3) success of the claims asserted; and (4) consideration of the factors outlined in R.P.C. 1.5. Applying these criteria, the court conducted a detailed, individual review of the bills presented, ultimately disallowing $247,755.26 from defendant's application.

The trial court disallowed all claims not supported by proper documentation; this totaled $52,100.28. Defendant has not appealed this determination. The ...


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