On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3250-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Sabatino and Alvarez.
In this companion opinion to Harrison Redev. Agency v. DeRose, A-0958-06T2 and A-0382-07T2 ("DeRose"), _____ N.J. Super. _____ (App. Div. 2008), and Harrison Redev. Agency v. Amaral Auto Ctr, et al., ("Amaral"), A-3862-06T2, which we also decide today, we consider herein arguments raised by other local property owners, appellants Harrison Eagle, LLP and Promonta Realty Corporation (collectively "Harrison Eagle" or "appellants") in opposition to the Town of Harrison's determination that their properties are in need of redevelopment and therefore may be taken pursuant to the Local Redevelopment and Housing Law ("LRHL"), N.J.S.A. 40A:12A-1 to -49, and the Eminent Domain Act, N.J.S.A. 20:3-1 to -50. The Law Division rejected Harrison Eagle's asserted defenses to the redevelopment designation and the taking of its properties in an order dated February 13, 2007. The court reaffirmed its decision in a subsequent order of April 23, 2007 denying reconsideration and a stay.
For the reasons expressed in DeRose and supplemented in this opinion, we affirm the Law Division's orders in part, vacate them in part, and remand for further proceedings.
Appellants in this case are the owners of seven commercial properties*fn1 in the Town of Harrison. Two of those properties are industrial buildings, with combined dimensions of approximately 200,000 square feet. A portion of that industrial space is used for shaping glass, plastics and steel, and a smaller portion is used to store metal drums. The remaining properties are used for 639 outdoor and 376 indoor parking spaces, located within walking distance to the local PATH station. Appellants' properties, which are not all contiguous with one another, collectively span 9.34 acres. The properties are in a district of Harrison zoned for industrial use.
Harrison Eagle, LLP and Promonta Realty Corporation are business entities owned and operated by family members who are related to the late Irving I. Adler. One of those family members is Steven Adler, an attorney licensed in New Jersey.
Since 1997, the Town of Harrison has pursued a redevelopment initiative involving over 250 acres, nearly one-third of the Town's total area. We incorporate by reference the history of that initiative, as described in our companion opinion in DeRose, including the various proceedings held before the municipal Planning Board and the Town's Mayor and Council and the subsequent creation of respondent, the Harrison Redevelopment Agency ("the Agency").
All seven of Harrison Eagle's parcels are located in the redevelopment zone. Appellants do not dispute that one of their principals, Hanna Adler, received in the mail the Planning Board's notice of its upcoming August 7, 1997 meeting,*fn2 at which the Board addressed its "preliminary investigation" recommending the designation of the area in question for redevelopment. It is also undisputed that appellants were not supplied with any formal notice that the Mayor and Town Council subsequently adopted a resolution in September 1997 designating their properties for redevelopment. Nor were appellants notified that the Mayor and Council thereafter adopted an ordinance in November 1998 approving a redevelopment plan, which likewise contained their properties.
In evaluating the properties currently*fn3 owned by appellants, the Town's planning consultant, Susan Gruel, opined in 1997 that all of those properties were in need of redevelopment because they were "dilapidated," "underutilized," suffering from a "faulty arrangement," or otherwise blighted. Appellants dispute that assessment, contending that their properties have been and remain profitable and productive. Appellants also note that their facilities generate significant commuter parking tax revenues for the Town.
The procedural history involving Harrison Eagle is complicated by parallel litigation it brought in federal court. In October 2001, Harrison Eagle filed a complaint in the United States District Court for the District of New Jersey, challenging the Town's blight designation and the redevelopment plan. The municipal defendants in that federal litigation moved to dismiss the complaint in lieu of an answer. After Harrison Eagle obtained numerous adjournments of that motion, the district court ultimately dismissed its complaint without prejudice in March 2003. Harrison Eagle contends that it did not respond to the motion because it was attempting to negotiate a sale or lease with the Town's redeveloper, Harrison Commons, LLC ("Harrison Commons"). Negotiations intermittently continued from 2001 to about January 2006, but Harrison Eagle and the redeveloper never reached an agreement.
On June 1, 2006, the Agency transmitted to Harrison Eagle an appraisal of the properties with a letter offering to purchase them for the appraisal price of $15.1 million, minus the cost of remediating on-site contamination. The Agency indicated that if Harrison Eagle did not respond within fourteen days, it would file a condemnation action in state court. Harrison Eagle requested three extensions of the fourteen-day period to continue negotiations. The Agency granted those extensions.
After further negotiations stalled, Harrison Eagle filed another federal complaint on July 6, 2006. The complaint advanced the same types of claims that it had made in its first federal action. Again, the Agency filed a motion to dismiss, which apparently has yet to be decided by the federal court.*fn4
Meanwhile, the Agency filed a condemnation action against appellants in the Law Division on July 10, 2006. The Agency's state court filings included a verified complaint, an order to show cause, and a declaration of taking.
Harrison Eagle filed an answer in the Law Division on August 10, 2006. Among other things, Harrison Eagle challenged the Agency's taking on the grounds that (1) the properties were not blighted; (2) the taking was solely for a private purpose; (3) the Agency was not lawfully created; (4) the Town did not properly authorize the Agency to condemn property; and (5) the Agency had not conducted bona fide negotiations with Harrison Eagle prior to filing the condemnation complaint. Those allegations were similar to the ones that Harrison Eagle had advanced in its federal pleadings.
Harrison Eagle also moved to dismiss the Agency's complaint, or, alternatively, for a stay of the state court action, pending a final decision in the federal case. Harrison Eagle requested that if the state court action were not dismissed or stayed, then the Law Division should grant it leave to conduct discovery and, thereafter, a plenary hearing on the Agency's right to condemn its properties. The Law Division judge*fn5 promptly denied Harrison Eagle's stay application and its discovery request, and turned to the merits of the contentions.
After hearing oral argument, the judge issued a written decision on February 13, 2007. In his ruling, the judge granted the Agency's application to proceed with eminent domain, and rejected all of the claims interposed by Harrison Eagle. As a central part of his decision, the judge held that Harrison Eagle was too late in attempting to challenge the blight designation. Observing that "enormous sums of money [had been] already committed to this massive redevelopment," the judge found that it would be "inequitable" to allow Harrison Eagle to contest the designation at this point in time. The judge also held that it made no difference whether Harrison Eagle raised such arguments "by way of prerogative writ or as a defense to a condemnation action."
Apart from his determination of untimeliness, the trial judge found that the proposed condemnation of Harrison Eagle's properties was for a valid public purpose, under the LRHL's criteria set forth at N.J.S.A. 40A:12A-5. The judge also found that the Agency had been lawfully constituted, and that the Town had enacted adequate formal measures to authorize the acquisition of the properties in the redevelopment zone. Lastly, the judge rejected Harrison Eagle's contention that the Agency had failed to conduct bona fide negotiations, as prescribed by N.J.S.A. 20:3-6, before filing its condemnation complaint.
Harrison Eagle moved for reconsideration and a stay pending appeal, which the trial judge denied on April 23, 2007. Harrison Eagle's subsequent requests for a stay pending appeal were denied by this court and thereafter by the Supreme Court. This appeal ensued, which was argued back-to-back with the related appeals in DeRose and in Amaral.
We first briefly address the trial judge's determination that Harrison Eagle's challenge to the blight designation is time-barred under R. 4:69-6. For the reasons that we elaborate today in DeRose, supra, _____ N.J. Super. at _____, the judge erred in not permitting Harrison Eagle to raise such a challenge by way of a defense to the Agency's condemnation action. The deficient notice that the Town afforded to Harrison Eagle, as well as to all other property owners in the redevelopment zone, constitutionally mandates the preservation of such a defense.*fn6
Accordingly, consistent with our rulings in DeRose, this matter must be remanded to the trial court for a determination on the merits of Harrison Eagle's blight challenge. In particular, the trial judge must decide whether the blight designation of Harrison Eagle's properties, or their inclusion as ancillary properties necessary for the overall redevelopment, is supported by substantial evidence, under the standards recently ...