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Chatterjee v. Atlantic City Board of Education


April 10, 2008


On appeal from the Department of Community Affairs, Docket No. OCA-276-04.

Per curiam.


Telephonically Argued: January 10, 2008

Before Judges Axelrad and Sapp-Peterson.

Petitioners, Sushil Chatterjee and Abdur Rafiq, are Atlantic City homeowners whose single family properties were subject to condemnation by the Atlantic City Board of Education (BOE) in connection with a building project for the school system. Chatterjee's 1577 square foot (sf), three-story attached rowhouse was located at 58 North Windsor Avenue and Rafiq's 1380 square foot, semi-detached home was located at 45 Richmond Avenue. Both properties were located in the "Lower Chelsea" area of the city, at the southern end, directly above Ventnor.

In the fall of 2002, the BOE submitted a Workable Relocation Assistance Plan (WRAP) to the Department of Community Affairs (DCA) for payment of additional replacement housing expenses to displaced homeowners, including petitioners, which it determined to be $15,000 per property pursuant to N.J.S.A. 20:4-5. On April 1, 2003, counsel for petitioners and other affected property owners sent correspondence to the DCA challenging the WRAP and requesting DCA demand the BOE "stop all condemnation activities until such time as a proper WRAP is established."*fn1

Subsequent to December 23, 2002, the BOE filed a condemnation complaint in the Superior Court, Law Division. On September 12, 2003, the parties, through present counsel, executed consent orders for judgment in the condemnation action, filed September l7, providing that just compensation for the acquisition of Chatterjee's and Rafiq's properties was $131,250 and $140,000, respectively, and they agreed to vacate by September l2. The orders further provided for the BOE to pay each of them $15,000, plus statutory relocation expenses (moving, closing costs, etc.) (all of which were paid), further stating:

7. [BOE] understands and agrees that by execution of [these] Consent Order[s], defendant[s Chatterjee and Rafiq are] not waiving any rights regarding [their] appeal filed April l, 2003 with the . . . ("DCA").

9. The parties acknowledge there are still outstanding issues regarding additional replacement housing payments and the legitimacy of the Workable Relocation Assistance Plan, and it has been determined by the Court that the appropriate forum in which these issues should be addressed, at least in the first instance, is the Department of Community Affairs, and there presently being a request for a hearing before the Department of Community Affairs, these issues are to remain outstanding and are not resolved, waived or determined by the dismissal of the Answer.

Meanwhile, in May 2003, Rafiq purchased a 2296 square foot duplex located at 20 N. Hillside Avenue in Ventnor, approximately seven blocks south of the Ventnor-Atlantic city boundary, for $215,000. In August 2003, Chatterjee purchased a 1840 square foot single family home at 29 N. Bartram Avenue in Atlantic City (Lower Chelsea area) for $217,000.

Petitioners' application contesting the amount of relocation aid provided to them under the Relocation Assistance Act, N.J.S.A. 20:4-1 to -22, proceeded before the OAL. Petitioners urged the BOE was obligated to pay the cost of comparable replacement housing, and that the $15,000 was insufficient. They argued if they can prove comparable replacement sale or rental housing is not available, the BOE must exceed the $15,000 limitation contained in N.J.S.A. 20:4-5a*fn2 pursuant to its authority to "take such action as is necessary or appropriate to provide such housing by use of funds authorized for such project" under N.J.S.A. 20:4-9. The Administrative Law Judge (ALJ) adopted the BOE's position that the relocation funds were statutorily limited to $15,000.

On February 23, 2005, the DCA Commissioner modified and remanded the ALJ's initial decision and remanded for further factual determinations. Reading N.J.S.A. 20:4-5 with N.J.S.A. 20:4-9, in light of the remedial purpose of the Relocation Assistance Act, the Commissioner stated:

I therefore reject the finding that the $15,000 limitation set forth in . . . N.J.S.A. 20:4-5 is determinative. I find, instead, that the determinative principle is that the displacing agency must provide meaningful relocation assistance, including comparable alternative housing, before it can displace the petitioners, and that it may use project funds, if necessary, for such purpose. As provided in N.J.A.C. 5:11-3.7, the amount that the petitioners are entitled to shall not exceed the difference between the acquisition price and cost of comparable housing, as determined by a list of at least three comparable properties, an area-wide survey or some other method approved by the Department.*fn3

I therefore remand this matter to the Office of Administrative Law for a determination of what additional assistance in relocation, including, without limitation, how much additional compensation, if any, is required to meet the [BOE's] responsibilities under the relocation statutes and to provide petitioners with the difference between the acquisition price paid for their properties, plus money already paid by the [BOE], and the cost of comparable alternate housing. [(emphasis added).]

The ALJ conducted a hearing on March 16 and 17, 2006. Petitioners testified, and presented the testimony of Kevin Corcoran, an Atlantic City real estate broker. The BOE presented the testimony of its relocation officer, Annie Reid, and Howard Rosen, a real estate appraiser. Petitioners testified about their ethnic backgrounds and their preferences for remaining in the unique, ethnically diverse neighborhood of Lower Chelsea. Chatterjee explained that he rides his bike to work at the Tropicana, which he is able to do from this neighborhood. Rafiq's grocery store is located about four blocks from his former house and about twelve blocks from his current house. Both stated Reid had met with them around December 2002 and they had indicated they wanted to remain in the neighborhood, i.e. "from Monument to Jackson." Both found their own replacement properties. Chatterjee looked only in the Lower Chelsea neighborhood and was told about the Bartram house from someone at work. He began negotiations in July 2003, and closed in September. Rafiq testified Reid sent him a packet of information about houses in February 2003, and he visited 39 N. Raleigh Avenue, which was old, in very poor condition, and was listed for more than he was then being offered for his house. He limited his search to the Lower Chelsea area and found a duplex right over the Ventnor border. Rafiq testified he could not afford the mortgage without renting out half, which left his family with approximately the same amount of living space of their previous home.

Corcoran testified about the uniqueness of the ethnically diverse Lower Chelsea neighborhood, where his office is located, and the status of the Atlantic City real estate market in 2003. He opined that the properties and neighborhoods north of Lower Chelsea are inferior to those in Lower Chelsea. He testified that properties similar to petitioners' houses that were taken over by the BOE were not available in Lower Chelsea at the time they were searching for new housing. Corcoran noted the only property for sale in Lower Chelsea in early 2003 was 39 North Raleigh, and he corroborated Rafiq's observation that it was seventy-five years old and in poor condition, and that it sold "as is" for the asking price of $139,000. He agreed that the houses petitioners purchased constituted an upgrade over the old houses, but opined they had no alternative. When asked on direct what he thought the value of a home like petitioners' original houses would be, Corcoran gave the conclusory reply that based on Rosen's appraisal report stating they were in good condition, a home like Chatterjee's would "probably" be "in the $160[,000]'s" and Rafiq's "in the $170[,000]'s." Corcoran also commented negatively about the locations of many of the properties used in Rosen's report.

Reid testified about the process of relocating twenty-seven families for this project, that many of the families wanted to remain in Lower Chelsea, and how she sought to accommodate the location preferences of the displaced property owners but by law was not permitted to limit the search to one specific area. She stated petitioners were emphatic about remaining in the neighborhood and neither petitioner wanted her help to find housing. Rafiq informed her in March or April 2003 he found a property he wanted to purchase.

In a colloquy with the ALJ following the close of her testimony, Reid made the "off the cuff" remark that she would have awarded each petitioner a total of $22,000 in relocation funds had she known she was not limited to $15,000 under the statute. After reviewing Rosen's appraisal report, however, she stated she had reached a different conclusion. As to Chatterjee, she adjusted for the difference in size between the land area and gross living space of both houses (land- 1248 sf (old) v. 3440 sf (new); living- 1577 sf (old) v. 1840 sf (new)), concluding the new one was about 50% larger, and arrived at a value of $108,500, half of Chatterjee's $217,000 purchase price, for the new home. Because Chatterjee received $131,250 as just compensation for his old house, Reid testified she would have awarded him $0 in relocation aid. She used the same analysis as to Rafiq, based on the gross living area of 1380 square feet for his old home and 2296 square feet for his new home, concluding the gross living area had doubled and dividing his $215,000 purchase price in half. Because he received $140,000 in just compensation, which is more than $107,500, she also would have awarded him $0 in relocation aid.

Rosen testified about the characteristics of petitioners' old and new properties. He also testified about properties listed on South Jersey Short Regional Multiple Listings Service available for sale from January to May 2003 in Atlantic City. Other than the North Raleigh property, none were in the Lower Chelsea area. Rosen explained the primary criteria for his list of "generally comparable" properties was its type based on the gross data, i.e. Chatterjee's list contained nine row-homes and Rafiq's list contained thirteen semi-detached single family homes. He qualified that none of these properties could be regarded as comparables for valuation purposes because they were just offerings and not sales.

In an October l7, 2006 initial decision, the ALJ set forth a detailed statement of the testimony, finding Corcoran "extremely knowledgeable about the demographics of Atlantic City" and placing "significant weight on his testimony." The ALJ made the following comments regarding Reid's testimony:

Reid did not explain why she had not utilized this approach [size analysis of properties] when initially awarding the relocation monies. Nor could she clearly delineate her computations, particularly in the case of Chatterjee.*fn4 She made no reference to allowing for moving expenses or loss of personal property. She made no direct reference to the statutory and regulatory scheme involved. In fairness, she was asked to perform her calculations in the midst of her testimony, not the best atmosphere for careful reflection.

The ALJ then recited the statutes and regulations, including the definition of "[c]omparable replacement dwelling," N.J.A.C. 5:11-1.2, which includes a dwelling that is:

(1) Decent, safe and sanitary; (2) Functionally equivalent and substantially the same as the former dwelling with respect to number of rooms, areas of living space, age and state of repair, provided that it is standard and adequate in size to accommodate the family or individual; (3) In an area not subjected to unreasonable adverse environmental conditions from either natural or man-made sources; (4) In an area not generally less desirable than the area in which the acquired dwelling was located in regard to public and commercial facilities; (5) In an area reasonably accessible to the displaced person's present or potential place of employment; (6) Open to all persons regardless of race, color, religion, age, sex, marital or handicapped status or national origin . . . .

The ALJ further noted the Commissioner's ruling of the non-applicability of the $15,000 limitation as the law of the case.*fn5

The ALJ commented that the BOE's efforts at assistance were "woefully inadequate" but rejected a number of petitioners' contentions, stating: (1) the search for comparable housing should not be limited to the neighborhood, or even the municipality, where the displaced persons resided; (2) Chatterjee's desire to be within bike-riding distance is not dispositive for locating comparable replacement housing, as "reasonably accessible" to employment under the regulations includes available public transportation; and (3) nothing in the law requires a displaced person to be relocated to a neighborhood with the same ethnic composition and amenities previously enjoyed and, in fact, basing comparable housing on the ethnic composition of a neighborhood is contrary to its defined requirement of being available to all persons regardless of race or national origin. The ALJ concluded that petitioners failed to prove comparable housing was not available.

The ALJ found that petitioners located comparable housing, though substantially larger than their old homes, and based on the Commissioner's decision, were entitled to a replacement housing payment that equaled the difference between the acquisition price and the reasonable cost, on the open market, of a comparable replacement dwelling, not capped at $15,000. The ALJ noted that despite the Commissioner's reference to the criteria for estimating the cost of comparable housing as contained in N.J.A.C. 5:11-3.7, i.e., (1) at least three comparable properties as shown by a market study, (2) an area-wide survey, or (3) an alternative method approved by the DCA, neither party provided such analysis, even when he offered them the opportunity following the hearing.

The ALJ was not convinced by petitioners' argument that comparable sales data could not be offered based on Corcoran's opinion that "a truly comparable home did not exist in the market," noting petitioners could have relied on an area-wide survey beyond "Atlantic City proper." He further rejected petitioners' assertion that the purchase price of their new dwellings, clearly upgrades, constituted the reasonable cost of a comparable dwelling, noting the absence of a financial comparison of the values of the old and new properties when adjusted for number of rooms, areas of living space, age, and state of repair. See N.J.A.C. 5:11-1.2.

On the other hand, the ALJ acknowledged the BOE's zero replacement cost award determination was inadequate. Moreover, Rosen had acknowledged that his list of properties were merely offers and not sales, and were not intended for comparison purposes but only to show that other properties were available to petitioners. Thus, the ALJ determined, he was "left with no choice but to FIND that neither party has produced either a list of three comparable properties or an area-wide survey to establish the amount of an appropriate award." He was "therefore placed in the anomalous position of holding that while the inadequacy of Ms. Reid's award necessitates that respondent's action be REVERSED, the failure of petitioners to provide proofs in accordance with the Commissioner's decision" required reversal of the $15,000 award and entry of a relocation assistance award of $0. By final decision of November l5, 2006, the DCA Commissioner adopted the ALJ's initial decision. This appeal ensued.

On appeal, petitioners argue that the BOE failed to provide meaningful relocation assistance in that Reid did not locate, identify or make available comparable replacement homes. They contend if no replacement housing existed, the appropriate remedy would have been dismissal of the condemnation until such time as there were adequate assurances of available relocation housing, citing the Commissioner's statement in her remand decision that N.J.S.A. 20:4-5 recognizes that the "inability to relocate displaced persons to comparable alternate housing would be a bar to displacement." According to petitioners this case presents unique circumstances because the BOE moved forward with the taking despite having failed to comply with its relocation obligations, which calls for a unique remedy. They emphasize that the condemnor created the circumstances and all doubts as to the reasonableness of the remedy should be resolved in favor of the innocent relocatee.

On appeal, petitioners renew the argument they made to the ALJ that no comparable replacement home existed and the homes purchased are the most comparable under the circumstances. Petitioners argue those purchase prices form a proper basis for calculating the differential, particularly since the BOE failed to provide any proofs to support a lesser amount calculated pursuant to N.J.A.C. 5:11-3.7. Thus Chatterjee would be entitled to an additional $70,750 and Rafiq to an additional $60,000 in relocation funds.*fn6 Alternatively, petitioners contend Corcoran's testimony provided a more than adequate "city-wide" survey from which one could adopt his opinion regarding value (between $160,000 and $170,000) of what a comparable home would have cost in the relevant market if it existed. Under this theory, Chatterjee, who had the smaller of the subject homes and thus the lower of the Corcoran range, would be entitled to an additional $13,750 relocation payment ($160,000 - $146,250) and Rafiq to an addition $15,000 relocation payment ($170,000 -$155,000).*fn7

The BOE argues deference to the factfinding of the ALJ and to the agency's interpretation of the Relocation Assistance Act, particularly as to the definition of a comparable replacement dwelling and the proofs required to calculate this cost and arrive at an appropriate relocation payment to petitioners under N.J.S.A. 20:4-5. Based on oral argument, however, we are not under the impression the BOE is zealously urging the $15,000 relocation payment already made to petitioners should be invalidated. As the issue of the initial award was not before the ALJ and the sole issue on remand was petitioners' entitlement, if any, to an additional relocation award, we thus reverse the agency's decision to the extent it invalidates the initial agreement between the parties, and the resulting payment of $15,000 each, for relocation assistance under N.J.S.A. 20:4-5. We affirm the determination, however, that despite being given the opportunity to supplement the record, petitioners failed to present adequate proof of entitlement to additional funds.

The scope of judicial review of a final agency determination is severely limited. In re Carter, 191 N.J. 474, 482 (2007); In re Musick, 143 N.J. 206, 216 (1996). We will not upset the determination of an administrative agency absent a showing that it was arbitrary, capricious or unreasonable; that it lacked fair support in the evidence; or that it violated legislative policies expressed or implied in the act governing the agency. In re Musick, supra, 143 N.J. at 216; Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963); Boardwalk Regency Corp. v. N.J. Casino Control Comm'n, 352 N.J. Super. 285, 306 (App. Div.), certif. denied, l74 N.J. 366 (2002). We defer to the factfinding of the ALJ, reached on sufficient credible evidence in the record, see Close v. Kordulak Bros., 44 N.J. 589, 599 (1965), and the expertise of the agency in interpreting its regulations, see R & R Mktg., L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175 (1999). But for exceeding the scope of the remand, we are satisfied the ALJ's findings, adopted by the Commissioner, were adequately based in the record and supported by law.

There is clearly bad blood between the parties but this case is not about a challenge to the condemnation or a challenge to the WRAP; it is about whether petitioners are entitled to additional relocation funds. Although the ALJ recognized that the condemning agency's efforts at assistance were "woefully inadequate," the record is also clear that petitioners were not interested in having Reid assist them in locating other housing and were only interested in looking in the Lower Chelsea neighborhood. Chatterjee in particular was adamant about relocating there. Although it would be preferable to remain in the neighborhood, and undoubtedly that would be the first attempt made by the displacing agency, considering twenty-seven families were relocating and there was limited housing available in the market at the time in that neighborhood, the search for comparable replacement housing, as defined in N.J.A.C. 5:11-1.2, would have to be expanded beyond those boundaries. Accepting Corcoran's opinion that the areas of Atlantic City north of Lower Chelsea were not comparable locations, the ALJ logically concluded, consistent with the law, that proofs should have been submitted as to comparable housing in neighboring communities of Ventnor, Margate, Longport, and Brigantine. The appropriateness of that conclusion is particularly evident by Rafiq's ultimate purchase of a home over the municipal boundary line in Ventnor.

The law does not support petitioners' position of an entitlement to essentially the identical housing situation previously enjoyed by the displaced person in terms of exact route to work and ethnic composition. Recognizing we do not live in a perfect world, the definition of "comparable replacement dwelling" contains qualified language such as "[f]unctionally equivalent and substantially the same as the former dwelling," in an area "not subjected to unreasonabl[y] adverse environmental conditions," "not generally less desirable . . . in regard to public and commercial activities," and "reasonably accessible to the displaced person's present or potential place of employment." Ibid. (emphasis added). Thus, there is ample basis in fact and law for the ALJ's conclusion that petitioners failed to prove that comparable housing was not available.

As petitioners emphasize, this was not a situation in which they were returning to "square one" to address the replacement housing payment already made by the BOE. Rather, under the law of this case, petitioners were given the opportunity to demonstrate entitlement to an additional replacement housing payment. Under these circumstances, the burden was on petitioners to present sufficient competent evidence to calculate the amount. As determined by the Legislature and authorized agency, the total payment must equal the difference between the "reasonable cost, on the open market, of a comparable replacement dwelling, and the acquisition price." N.J.A.C. 5:11-3.7(b); N.J.S.A. 20:4-5. The manner in which that amount is to be calculated, as determined by the DCA and reiterated by the Commissioner in her remand decision, is based on a market study of three comparable sales, an area-wide schedule, or some other method approved by the agency. N.J.A.C. 5:11-3.7(c).

Corcoran presented extensive, credible testimony about the Atlantic City housing market. His testimony could be considered an "area-wide survey." However, his solitary conclusory statement that petitioners' houses would "probably" have sold in the $160,000 to $170,000 range in the spring of 2003 cannot be interpreted as anything other than a net opinion, and therefore cannot be considered to any extent as a competent expression of the reasonable cost of a comparable replacement dwelling. Petitioners had the opportunity for Corcoran to elaborate upon what appeared to be an offhand statement of value through further testimony and to present additional documentary evidence post-trial but did not avail themselves of it. As a realtor with over thirty years' experience, Corcoran could have been requested to offer some type of market analysis to support the $160,000 to $170,000 range as a reasonable cost of a comparable replacement dwelling, perhaps referencing the comparables listed in Rosen's appraisal for the condemnation*fn8 and presenting additional sales outside of Atlantic City.

Petitioners could also have made reference to their new dwellings for purposes of calculating the reasonable cost of a comparable dwelling. As it is undisputed petitioners purchased upgraded properties substantially larger than their old homes, however, they are not entitled to utilize the gross amount of their purchase price to calculate the replacement housing expense. Petitioners are entitled to the reasonable cost of a comparable dwelling, not to a windfall. Under these circumstances, the burden was on petitioners to provide a mathematical analysis comparing the values of the old and new properties when adjusted for number of rooms, areas of living space, age, state of repair, and whatever other factors their expert deemed appropriate. If Corcoran disagreed with Reid's analysis that the old and new properties should merely be compared as to square footage of living space and/or lot size, it was incumbent on petitioners to present such proofs to support credible adjustments to their $217,000 and $215,000 purchase prices to arrive at the "reasonable cost of a comparable replacement dwelling." They did not. Accordingly, petitioners have not established entitlement to additional relocation assistance.*fn9

Petitioners also argue they are entitled to an award of counsel fees under the condemnation statute, N.J.S.A. 20:3-26(b)*fn10 because the condemnation was illegal and should never have been permitted to continue. According to petitioners, this is the functional equivalent of a dismissal after the filing of a declaration of taking, for which a condemnee is entitled to fees, because the taking should have been dismissed due to the BOE's failure to provide adequate relocation assistance. We disagree.

Preliminarily, the condemnation action was not dismissed but was resolved by a consent judgment for fair compensation to both petitioners. Regardless, the proceeding that is the subject of this appeal arose out of petitioners' challenge to the WRAP and the amount of their statutory relocation benefits with the DCA, not a challenge to the condemnation. This distinction was expressly recognized in the September l7, 2003 consent judgment in the condemnation action, which amicably settled all claims pertaining to the condemnation and acknowledged the outstanding issues regarding additional replacement housing payments and the legitimacy of the WRAP pending before the DCA. We also note that N.J.S.A. 20:4-18 recognizes the separate nature of condemnation and relocation proceedings, as it provides:

The payments authorized in th[e Relocation Assistance Act] shall not be construed as creating in any condemnation proceeding brought under the power of eminent domain any element of damages not in existence on the effective date of this act and such payments are to be in addition to the just compensation established in the condemnation proceedings but only to the extent they are not otherwise included within the condemnation award.

In summary, we reverse the agency's decision to the extent it invalidates the initial agreement between the parties and the resulting payment of $15,000 each for relocation assistance under N.J.S.A. 20:4-5. We affirm the judgment for $0 additional funds.

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