May 4, 2009
CITY OF LONG BRANCH, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
ANTHONY CANGEMI AND LYNDA CANGEMI, HUSBAND AND WIFE, DEFENDANTS-APPELLANTS, AND CITY OF LONG BRANCH, LONG BRANCH SEWERAGE AUTHORITY AND PERTH AMBOY SAVINGS INSTITUTION, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5884-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: March 4, 2009
Before Judges Axelrad and Parrillo.
In this condemnation action, defendant property owners, Anthony and Lynda Cangemi, appeal from a jury verdict asserting a variety of issues, including the weight of the evidence, deprivation of a peremptory challenge due to nondisclosure of a friendship between the trial judge and jury foreperson, and incorrect polling. Defendants also appeal from a post-judgment order for repayment of a mortgage to the City of Long Branch (Long Branch) resulting from the transfer of title to the property. We affirm.
By Resolution #38-96 adopted on January 23, 1996, Long Branch's governing body designated defendants' property located at 7 Franklin Terrace, Block 225, Lot l0, in Long Branch as part of the Pier Village Sector of the Oceanfront Broadway Redevelopment Area. On January 23, 200l, Long Branch adopted Ordinance #1-01, authorizing the institution of eminent domain proceedings to acquire the property. The property spans 3,310 square feet, with a frontage of forty feet along Franklin Terrace and an average depth of approximately eighty-two feet. It was improved with a two-story plus basement residential building containing a total area of approximately 1,632 square feet above grade. The dwelling space consisted of a 684 square foot finished basement apartment, a 912 square foot first floor unit, and a 720 square foot second floor unit. There was also a 400 square foot apartment in the converted garage at the rear of the property. Thus the total gross dwelling area of both buildings was 2,716 square feet.
On October 21, 1997, defendants gave a mortgage to Long Branch in the amount of $59,315 on the subject property. The mortgage was given in connection with funds defendants received as a result of a Regional Contribution Agreement (RCA) between Long Branch and the Township of Middletown in which the latter agreed to fund the rehabilitation of 150 housing units in Long Branch. Defendants received the RCA funds upon the condition the property be rented to low and moderate income families for a period of ten years.
On December 18, 2001, Long Branch filed a complaint to acquire defendants' property by eminent domain. On February 27, 2002, Long Branch filed a Declaration of Taking and deposited its estimated fair market value of $182,000 with the Clerk of the Superior Court, Trust Fund Unit. An Amended Complaint and Declaration of Taking was filed on February 28, 2003. On December 3, 2007 trial commenced and concluded on December 6, 2007, at which time the jury awarded defendants $218,000 as just compensation for the taking of their property. An Order for Judgment was filed on December l9, 2007.
Defendants then filed a motion for a new trial and/or additur. Long Branch filed a cross-motion for repayment of the mortgage on the property. Defendants' motion was denied after oral argument on January 18, 2008. Oral argument was held on Long Branch's motion on February 29, 2008, and the motion was granted by order of May 16, 2008. This appeal ensued.
On appeal, defendants argue the verdict is against the weight of the evidence, specifically contending the appraisal evidence presented by Long Branch's expert was not based on comparable sales that were in any way reflective of beach block properties. Defendants further argue they were deprived of a fair trial by: (1) their inability to exercise a peremptory challenge because of the nondisclosure by the trial judge that she and the proposed jury foreperson were long and close personal friends, and (2) the judge's failure to properly poll the jury to discover whether at least five of the six jurors concurred in the verdict as required by Rule 1:8-2(c) and Rule 1:8-10. Defendants further contend their involuntary transfer of the property resulting from condemnation did not violate the mortgage provision requiring repayment upon the conveyance of title within ten years. They urge that Long Branch be estopped from taking such position which they claim is contrary to the intent of the parties to the transaction. We have considered these arguments in light of the record and applicable legal standards and find them unpersuasive.
Long Branch presented the appraisal of Hugh McGuire, who estimated the fair market value of the subject property as of December l, 2001 to be $189,300.*fn1 Defendants' expert, Michael Ehrenberg, appraised the property as of that date at $380,000. Both experts were New Jersey Certified General Real Estate Appraisers. McGuire was also a New Jersey licensed real estate broker and held an MAI designation from the Appraisal Institute, a CRE designation from the National Association of Realtors, and a CTA license from the State of New Jersey authorizing him to serve as a tax assessor. Ehrenberg was a senior member of the American Society of Appraisers. McGuire related that he testified as an expert in the Tax Court about once a week for the past twenty years, and in numerous counties had been appointed by the Superior Court as its own expert in the valuation of real property and testified as an expert on behalf of both the condemnor and property owners. He had also been appointed by the court as a condemnation commissioner in Monmouth County. Ehrenberg explained that he had testified before the Monmouth County Condemnation Commission, various tax boards and the Tax Court, planning boards, and zoning boards. After hearing the appraisal evidence in detail and reaching conclusions as to the credibility of the expert opinions, the jury returned its verdict in the amount of $218,000 as just compensation for the taking of defendants' property.
In denying defendants' motion for a new trial as against the weight of the evidence, the court stated:
As we say, a motion for a new trial is addressed to the sound discretion of the trial judge, Baumann v. Marinaro, 95 N.J. 380, 389 (1984). Under Rule 4:49-1(a), the trial judge may order a new trial when having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, it clearly and convincingly appears that there was a miscarriage of justice under the law.
In this case, the value of the property was established through the testimony of two expert witnesses. Each party presented an expert witness who used the comparable sales approach. The jury had the opportunity to review that testimony. The numbers were totally different. . . . But each attorney was given the opportunity to present a case [and] [t]o cross examine the witnesses on the other side. Each attorney presented photographic evidence, map evidence. There was, each expert was, -- gave his or her qualifications.
So from reviewing the testimony, I find that the verdict was not against the weight of the evidence. The jurors could have decided anywhere in that range, and they decided kind of I guess on the low end. . . .
Defendants reassert on appeal that it is a miscarriage of justice for the jury to have given any credence to McGuire's sales comparables, which were all inland properties, urging that any opinion expressed by him to the effect that the beach influence was offset by the character of the neighborhood was simply a net opinion. They further contend the only comparable sale in Long Branch was the Seaview property that sold in October 2000 for $332,500, and was located on the northern edge of the Redevelopment Zone and one-half block from the beach, which their expert utilized and McGuire did not. According to defendants, their appraiser's time-adjusted unit price of $102,435 indicates a value of over $400,000 for the four-unit sale property, and since the verdict was slightly more than half the value indicated by the only sale within a block of the Long Branch beach, the jury must not have fairly considered this sale to reach its verdict. Thus, defendants submit, the jury completely misconstrued the appraisal evidence.
We disagree. No precise guidelines exist to the degree of similarity required in order to admit comparable sales testimony. Moorestown Twp. v. Slack, 85 N.J. Super. 109, 114 (App. Div.), certif. denied, 43 N.J. 452 (1964). The general standard is that "such similarity need not obtain in all comparative respects, so long as there is sufficient similarity in some significant respects to permit the expert testifying, or the fact-finder, to draw rational probative valuation inferences. . . ." Ibid.
McGuire used as comparables three multi-family properties in Long Branch located to the west of the subject one with sales dates of January, May, and September 2000. He explained he only selected sales of properties in Long Branch to value the subject property because he "felt going outside of Long Branch and looking at the demographics outside of the area, they are truly not comparable" as he did not believe a buyer of the subject property in December 2001 would have looked at comparable sales in other municipalities to determine what to pay for the property. McGuire then made adjustments for time, location, dwelling area, lot size, and condition to reflect the differences in the various characteristics of the sales properties to arrive at his opinion of the subject property's fair market value as of that date. Pertinent to defendants' challenge, McGuire reported that "[t]he subject is located less than one block from the beach, however, property values in the area remain low." He testified that he found the beach block location a positive characteristic affecting its market value and took that factor into account when he compared it with the other properties. However, the appraiser also took into account that the subject property was in a "deteriorated area" with a "multitude of boarded up and vacant buildings," which is "not a good area to walk through." Thus, McGuire explained to the jury that "although it has the amenity of the beach, it also has a lot of negatives" so he "kind of equaled them out." McGuire further related that although all three of the sale properties were inferior to the subject for beach influence because they were located further to the west, the locations generally were considered superior because of the physical condition of the neighborhood, lack of vacant and boarded up structures, and high percentage of owner-occupied properties. For this reason, he made no locational adjustment to two of the properties, deeming their locations similar to the subject property, although he adjusted the sale furthest to the east upward for location as inferior because it was located in a neighborhood influenced by commercial properties. Based on his expertise and experience, McGuire arrived at a value indicated by the sales comparison approach for the subject property of $189,300.
Ehrenberg relied on the Seaview Avenue sale as the only comparable sale in Long Branch. He explained he expanded his search out of Long Branch to the two communities that he believed had similar demographics and average sales prices and access to the ocean, utilizing three beach block properties: a three-unit home in Bradley Beach, eight miles south of Long Branch; and a four-unit and three-unit home in Belmar, ten miles south of Long Branch. Ehrenberg explained his adjustments and his reasons for arriving at an opinion of market value for the subject property of $380,000 ($95,000 a unit). He was extensively cross-examined on his choice of comparables and adjustments, particularly regarding the differences between the Seaview property and the subject one. As an example, testimony was elicited about the two-story building located north of Franklin that went down the entire block and past Melrose which apparently impaired the subject property's view of and access to the beach, as opposed to the completely unobstructed view and access of the Seaview property.
Defendants' counsel had strategically chosen not to question McGuire about why he did not utilize the Seaview property as a comparable, arguing instead in summation it was because McGuire had prepared his report pre-condemnation and had not kept abreast of the sales as he had claimed. The jury heard extensive appraisal testimony about the subject property and neighborhood and a comparative sales analysis of four sales in Long Branch and three sales in neighboring towns with detailed explanations of their adjustments. They also viewed charts and other portions of the appraisers' reports, along with photographs and maps. Both experts used an approved appraisal methodology and chose comparable sales and made adjustments based on their professional judgment. After analyzing the conflicting evidence and assessing the knowledge and credibility of both experts, the jury made a reasonable and rational determination of the fair market value of the subject property. That the jury ultimately selected a number closer to Long Branch's expert's, which they were free to do, presumably meant they found Long Branch sales to be the appropriate indicators of value and were satisfied with McGuire's rationale of offsetting the beach and the poor neighborhood conditions. Moreover, based on the jury's choice of a value higher than that suggested by McGuire leads to the inference that the jurors did give consideration to the Seaview property, although they were not bound by Ehrenberg's adjustments. Defendants' dissatisfaction with the verdict is not a basis to set it aside. See Ridgewood v. Sreel Inv. Corp., 28 N.J. 121, 129 (1958) (stating that weighing of conflicting expert testimony is solely the function of the jury); Mahoney v. Podolnick, 168 N.J. 202, 229 (2001) (holding that a jury verdict should not be disturbed unless a manifest injustice shocking the judicial conscience would result).
Defendants next argue the apparent longstanding social relationship between the trial judge and the jury foreperson, which became apparent post-trial, should have been disclosed during voir dire so they would have had an opportunity to exercise a peremptory challenge. In their motion for a new trial, defendants expressed the belief that judges often are more likely to identify with the government's position than with a property owner's and thus any hint of a close association between a prospective juror and the trial judge is a cause of concern to a property owner and is a likely candidate for a peremptory challenge. They argued there might have been some subtle nuances during trial from the judge that because of the relationship deprived them of a fair trial.
It is neither clear from the record nor from counsels' recollections of the trial at what point the trial judge recognized the jury foreperson. In response to defendants' post-trial motion, the judge explained:
At the conclusion of the trial, the foreperson approached and hugged the Court and said . . ., "Can I say hello now." The Court, and when she did that, I was just as shocked as everyone else. So I noted, and people were walking in and out at the time. So I thought something should be said.
And I said, and this is what I remember what I said, I explained that she -- that I was associated as a Public Defender with the foreperson's husband, many years before. And I had not seen the foreperson in many years. She's not a very best friend or she was just an old friend. Someone I had known for a long time. I've been on the bench 16 years. So I haven't been working there l6 years, and I don't know the last time before that that I ever saw the foreperson, whose husband is an attorney obviously. So that's what, that's my recollection of what happened. (emphasis added).
The court denied defendants' motion, observing they made no attempt to show "how the connection between the Court and the foreperson influenced the jury verdict in any way." The judge further noted she used the Model Civil Charges advising the jury that it makes the decision, that it is not to infer anything from the court's ruling, and that the court held no opinion on the merits of the case. The judge concluded "that a juror who holds the Court in such high regard as defendant seems to think, would follow these instructions with scrupulous exactitude."
In support of this argument on appeal, defendants point to what they characterize as "several harshly worded rulings sustaining objections to various lines of cross-examination employed by defense counsel," some out of the presence of the jury. The position advanced at oral argument was that the deprivation of defendants' right to potentially exercise a peremptory challenge constitutes reversible error when combined with the judge's error of not properly polling the jurors, infra. We are not persuaded by defendants' argument and discern nothing in the record to indicate they were deprived of a fair trial. The judge's acquaintance was with the juror's husband, not the juror, and was over sixteen years prior to trial, and it appears there was no social interaction in the interim. Moreover, we are satisfied defendants were treated fairly by the court and the jury, and the jurors properly followed the judge's instructions to decide the case based on the evidence. See State v. Manley, 54 N.J. 259, 270 (1969) (courts rely upon the jurors' ability and willingness to follow instructions).
Defendants now assert as plain error that the trial judge improperly polled the jury, clearly producing an unjust result.
R. 2:10-2; Ragusa v. Lau, 119 N.J. 276, 284 (1990). Defendants argue the individual jurors were not polled as to whether they agreed with the verdict so there was no way to determine whether at least five-sixth of the jury concurred in the $218,000 award as required by Rule 1:8-2(c). According to defendants, without the correct poll, we cannot ascertain with certainty that no juror had been coerced or induced to agree to a verdict to which he or she has not fully assented, and unlike Ragusa there are no facts present here to indicate the jurors had no qualms about registering a dissent with the court had they believed the verdict was wrong. Defendants urge that the correct poll becomes that much more critical in light of the relationship between the trial judge and the foreperson.
The jury reached its verdict by a 6-1 vote. At defendants' request, R. 1:8-10, the court polled the jury, stating:
[W]e don't have to know who the person who didn't agree was. All we want to know is that if you agree that that was the verdict, that it was six to one, that the amount would be $218,000. So no one has to say, gee, I'm the one who didn't agree. . . .
[T]he clerk will call your name and you will just let us know whether you agree that that is the verdict, the entire verdict.
Juror number one stated, "This is the verdict. . . . And I agree to it," and each juror in turn stated "Agree" or "I agree."
Contrary to defendants' assertion, the jury was not simply asked whether the verdict as announced by the foreperson was, in fact, the verdict in terms of the amount of money. Although it would have been preferable for the judge simply to have asked each juror "whether the announced verdict [was] his or her verdict," Ragusa, supra, 119 N.J. at 285, it is evident from the context that that was the nature of the judge's question. And although each juror's concurrence was not technically voiced, the responses demonstrated that each juror agreed with the $218,000 verdict, which was reached by a 6-1 vote. There is not a scintilla of evidence in the record that any juror was coerced or induced to agree to a verdict to which he or she did not fully assent to or that any prejudice inured to defendants by the polling procedure conducted by the trial judge. Accordingly, any inadequacy in the polling procedure would be harmless at best.
We turn now to defendants' challenge to the grant of Long Branch's motion for repayment of the $59,315 mortgage to secure the loan made pursuant to the RCA from Middletown Township for rehabilitation of rental properties for affordable housing. The mortgage provides for continued deferment of the loan provided the property is rented or sold as low or moderate income housing during a ten-year period, after which the obligation is terminated. It further states that "[i]f Mortgagor conveys title to the mortgaged property within ten years of the date of this mortgage, 100% of the grant amount shall be repaid upon such conveyance" and "if the owners rent, sell or transfer title to the property other than [in accordance with the affordable housing conditions] during the ten (10) year term of the loan, the owners will be considered in default of the loan conditions and required to repay the loan at the time of a tenant move, sale, or transfer of title." Furthermore, the City may declare defendants in default of the note and mortgage if "the ownership of the Property is changed for any reason."
Defendants argued to the trial court that they did not violate the plain language of the mortgage because they did not voluntarily convey the property within the ten-year period, rather, title was transferred to Long Branch pursuant to its statutory authority under the Eminent Domain Act. They additionally argued that equitable estoppel should bar the repayment. According to defendants, they complied with their end of the bargain by renting the property in accordance with the affordable housing program with the expectation that at the end of the ten-year period the loan would be forgiven. They urged that the interests of justice, morality and common fairness should preclude Long Branch from getting a windfall after having condemned the property.
On March 31, 2008, the court placed its decision on the record,*fn2 stating:
Based on the fact that the [mortgage] document is clear, that the [no-]waiver provision [which permits the lender to exercise any right it has under any law even if it has delayed in exercising a right or has agreed in an earlier instance not to exercise that right] would apply even if Ms. Christenberry made the representation she is alleged to have made, and no oral changes are permitted [under the agreement], the Court concludes that the mortgage must be enforced.
Defendants further argue that it would be inequitable to require repayment of the mortgage and request the Court to apply equitable estoppel to the City's claim for repayment. . . . [E]quitable estoppel is rarely applied against municipalities. Linden v. Benedict Motel Corp.[,] 370 N.J. Super. 372, 393 (App. Div. 2004).
In the instant case, the defendants' immediate plan was to rent the property as a commercial venture to low and moderate income families. To accomplish this end they borrowed approximately $60,000 to renovate the property and bring it up to code. Approximately four years later the City condemned it and paid into court the fair market value, which would of necessity included the increase in value occasioned by the improvements provided by Long Branch through the RCA.
The defendants have had access to the $182,000 that was paid into Court since December 2001. They will receive interest on the difference between the deposit and the jury verdict. In these circumstances, it appears that the equities favor the City of Long Branch and the public policy related to the renovation and rehabilitation of housing stock.
Defendants renew their arguments, adding that the "interests of justice, morality and common fairness require that the City of Long Branch be estopped from adopting a position that is patently an attempt to avoid paying compensation for its taking of the property." We find defendants' arguments no more persuasive than did the trial judge and affirm substantially for the reasons she articulated on the record. Although the ten-year contract requirement was cut short by six years through no fault of their own, the language of the mortgage is clear and defendants did not satisfy all the express conditions for the loan to have been forgiven. Moreover, in considering the equities, defendants voluntarily entered into the transaction and received a substantial benefit of funds to renovate and refurbish the units with the knowledge the property was in the Oceanfront Broadway Redevelopment Area and there was a possibility of eminent domain. Moreover, the record is clear the property had a higher fair market value by virtue of the renovations, which presumably led to a higher condemnation award. McGuire expressly testified he considered the two buildings on the property in "good condition" for purposes of his sales comparison adjustments as they "had been renovated a couple of years prior," enumerating there was a new roof, siding and windows, and the bathroom, kitchen and electricity had been upgraded. Finally, defendants were paid just compensation by Long Branch for the taking of their property as determined by a fair and impartial jury. They are not being penalized by having to repay the loan nor is Long Branch receiving a windfall; the repaid funds will be recycled in connection with the RCA and allotted to rehabilitate other affordable housing stock or returned to Middletown under the RCA agreement.