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Township of Montville v. MCA Associates

August 18, 2008


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3718-02.

Per curiam.


Argued April 9, 2008

Before Judges Parker, R. B. Coleman and Lyons.

This is an eminent domain action in which the Township of Montville (Township) condemned property owned by Montville Center Associates (MCA) for the purpose of preserving open space. MCA did not contest the condemnation, but challenged the amount of compensation awarded.

MCA appeals from three orders: (1) an order entered on March 29, 2005, denying MCA's motion in limine; (2) an order entered on July 21, 2006 dismissing MCA's third party complaint against the Department of Environmental Protection (DEP) and its Commissioner; and (3) a consent judgment entered on March 8, 2007 in favor of MCA in the amount of $2,684,500.

In June 1999, the Township began the condemnation process, seeking an appraisal for MCA's property. MCA opposed the Township's inspection of the property for appraisal purposes.

In August 1999, the Township adopted a resolution authorizing condemnation proceedings for the property since MCA had rejected a purchase offer for the appraised amount of $780,000.

In January 2002, the Township filed a verified complaint in condemnation and sought an order to show cause for access to the property to conduct an investigation and tests necessary to identify and remediate any environmental liabilities associated with the property. In April 2002, the parties entered into a consent order whereby MCA agreed to provide the Township with access to the property. Thereafter, that litigation was dismissed.

In November 2002, the Township filed a verified complaint seeking to condemn MCA's property for open space purposes. The Township also filed a declaration of taking and a notice of lis pendens.

On December 19, 2002, the court entered an order to show cause why judgment should not be rendered appointing three commissioners to fix the just compensation for the property. The court entered an order, pursuant to N.J.S.A. 20:3-18, requiring the Township to deposit $1,286,000 into court, which represented the Township's estimate of just compensation for MCA's property. Montville was thereby entitled to immediate and exclusive possession of the property. N.J.S.A. 20:3-19.

In February 2003, a judgment was entered in favor of the Township, which then appointed commissioners to fix just compensation. On August 27, 2004, the commissioners rendered a report fixing compensation for the property at $1,345,000 and on October 6, 2004, the commissioners revised the report, increasing the amount to $1,348,000.

In September 2004, MCA appealed the commissioners' report to the Law Division. In December 2004, MCA moved in limine for a determination as to whether a 1977 consent judgment in Robins v. Dep't of Env. Prot., Docket No. C-3461-75 (Ch. Div. May 5, 1977), (1) ran with the land; (2) controlled and established MCA's development rights for valuation/just compensation purposes; and (3) established that any subsequent environmental regulation would not limit those development rights in determining just compensation.

On March 29, 2005, the court entered an order granting MCA's motion in part and denying it in part. The order stated that the court found "as a matter of law that the 1977 Consent Judgment does not bar subsequent environmental regulations, specifically freshwater wetlands regulations, from being applicable to the property and the jury will be instructed accordingly." Paragraph three of the order stated that "MCA is entitled to offer the Consent Judgment into evidence and present testimony and argument to the jury that the Consent Judgment affects the determination of the fair market value of the property." The order further permitted MCA to move for leave to file a third party complaint against the DEP.

In April 2005, MCA filed a third party complaint against the DEP, alleging inverse condemnation and/or a regulatory taking of its property under state and federal law.

In September 2005, the DEP moved in lieu of an answer to dismiss the third party complaint. That motion was denied and the DEP filed its answer to the third party complaint, denying liability and asserting affirmative defenses.

In February 2006, the DEP moved for summary judgment. That motion was denied in an order entered on March 3, 2006. The DEP moved for clarification and reconsideration. In an order entered on July 21, 2006, DEP's motion for reconsideration was granted and the third party complaint against the DEP was dismissed.

Thereafter, Montville and MCA "reached agreement as to the just compensation payable to [MCA] for the property acquired as set forth in the Complaint," valued at the time of the taking, and entered into a consent judgment on March 8, 2007. In accordance with 2007 the consent judgment, Montville agreed to pay MCA $2,648,500 as just compensation for the property, with credits for the amounts previously paid. MCA, however, reserved its right to appeal the March 29, 2005 order denying its motion in limine and the July 21, 2006 order dismissing the third party complaint against the DEP.

The 2007 consent judgment provided that if MCA did not appeal from the March 29, 2005 order, or if MCA appealed and we affirmed, the 2007 consent judgment would be final and binding on the parties. If MCA appealed the March 29, 2005 order, and we reversed, however, the 2007 consent judgment "shall be without prejudice to either party and shall be deemed inoperative."

On April 23, 2007, MCA filed a notice of appeal from the two orders and the consent judgment.

The property subject to the condemnation consists of forty-two acres, designated Lots 12 and 13, Block 138. MCA purchased the property in 1996 from James Nuckel. Nuckel, who was the president and principal of MCA, purchased the property in 1993 from the Bank of New York. Prior to that, the property was owned by Perry Robins and Irene Jacobs, brother and sister, who inherited it from their father in 1970.

In 1976, Robins and Jacobs filed a complaint against the DEP, the Township and the Township Tax Assessor, alleging inverse condemnation against the DEP based upon its application of flood control regulations which purportedly rendered the property unmarketable and undevelopable. Against the Township and tax assessor, Robins and Jacobs alleged that the assessed value of the property failed to take into account the limitations on development and potential marketability resulting from the DEP's flood control regulations.

In May 1977, the parties entered a consent judgment with the DEP. Neither the Township nor the tax assessor were parties to the 1977 consent judgment. In accordance with the 1977 consent judgment, the property was divided into two zones: west (zone one) and east (zone two) of the floodwater encroachment line, anticipating that there would be no development in zone one, and placing certain restrictions on any development in zone two consistent with the regulations in effect at the time. With respect to possible future regulations, the 1977 consent judgment provided:

8. In the event that plaintiffs' rights with respect to the said property shall be affected by subsequent statutory modification by the legislature of the State of New Jersey, there is hereby reserved to plaintiffs such rights in condemnation or other rights as may be provided by law and this ...

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