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New Jersey Sports and Exposition Authority v. Renepar Realty Co.

December 15, 2008


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6830-06.

Per curiam.


Argued November 19, 2008

Before Judges Rodríguez and Waugh.

Plaintiff New Jersey Sports and Exposition Authority (Authority) appeals the September 21, 2007, order of the Law Division permitting the withdrawal of funds deposited in court by the Authority in connection with its condemnation of an interest in real property owned by defendant Renepar Realty Co., L.L.C. (Renepar). We reverse and remand to the Law Division for entry of an order compelling Renepar to redeposit the funds in court.

The Authority condemned a small piece of property owned by Renepar for the construction of a New Jersey Transit rail link to the Meadowlands Sports Complex, which is owned and operated by the Authority. Specifically, the Authority acquired a permanent easement on which the rail tracks are to be installed. This area is about half an acre, is on the northwestern edge of the property, and runs parallel to the existing New Jersey Transit Pascack Valley rail line. The Authority also acquired a temporary construction and permanent maintenance easement. The Authority obtained title to the easements on or about October 12, 2006, by depositing its appraised value of $18,700 with the court.

The Authority's condemnation complaint noted that it would object to any withdrawal of funds because the property is environmentally contaminated and the funds would be needed to pay for cleanup costs. The New Jersey Department of Environmental Protection (NJDEP) and the United States Environmental Protection Agency (EPA) have required the Authority to remediate the easement areas as a condition of building the rail line. The Authority's environmental consultant has estimated the cost to remediate the easement areas at $2.14 million.

The Authority's appraisal valued the property "as if remediated," i.e., it disregarded any evidence of pollution. In addition, the appraisal valued the easements as if they formed a fee simple property interest, because the property, which has a highest and best use as conservation land, is not buildable. Accordingly, the rights acquired, for all intents and purposes, are the equivalent of a fee simple interest.

On or about October 18, 2006, the trial court entered an Order for Final Judgment and Appointing Commissioners. A Commissioners' hearing was held on February 16, 2007. The Commissioners agreed with the value conclusion of the Authority's updated appraisal: $19,100. Because Renepar did not appear at the hearing, it was barred from further litigating the valuation issue. See N.J.S.A. 20:3-13(a). On or about April 4, 2007, the Authority deposited an additional $400 with the court to account for the increase in value reflected by the Report of Commissioners.

On August 3, 2007, Renepar filed a motion to withdraw all funds deposited with the court. The Authority opposed the motion. On September 21, 2007, the motion judge heard oral argument and granted the motion. After stating that "[t]he real issue here is, is Renepar liable at all to [the Authority] for remediation costs of the easement," the court held that the Authority could not use the funds to offset remediation costs "because it would be physically impossible to remediate [an easement,] a non-possessory interest in land." The motion judge went on to explain that as an easement owner, the Authority has no duty to remediate the parcel. Clearly, however, that is not the position taken by the NJDEP and EPA, which had already required remediation. The motion judge acknowledged that she gave no consideration to the impact of State and Federal environmental laws.

The Authority filed a notice of appeal on October 11, 2007. The Authority argues that the withdrawal was barred by the "trust-escrow" approach to condemnation, which is discussed in the Supreme Court's opinion in Housing Authority v. Suydam Investors, L.L.C., 177 N.J. 2 (2003). The theory is that a property with substantial remediation issues is valued at its full remediation value and the amount needed for the remediation is retained in escrow until the remediation is complete. Renepar argues that the approach is not applicable here because, as the motion judge held, it is not possible to remediate something as non-corporeal as an easement.

We disagree. First, Renepar received full value for the property rather than the lesser value of the easement. Second, both defendant and the Authority will have remediation responsibilities for the property. There can be little doubt that Renepar's share will be larger than the amount that was deposited. We see nothing inequitable about putting that money in trust, nor are we convinced that it would work an unlawful pre-judgment attachment. The motion judge was not free to ignore the reality of the situation, i.e., that the Authority was obligated to perform the clean-up by both the NJDEP and EPA. Justice nor equity are not served by allowing Renepar access to the funds deposited in court, given its clear obligations with respect to the remediation. Indeed, it would be especially inequitable for Renepar to receive the funds based on a theory that there is no obligation to remediate when the amount of compensation was calculated based on the assumption that the property had already been remediated.

Consequently, we reverse the order of September 21, 2007, and remand the matter to the Law Division for further proceedings in accordance with this opinion. At any rate, Renepar must redeposit the entirety ...

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