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New United Corporation and Dr. Clyde Pemberton v. Essex County Vocational-Technical Schools Board of Education

April 3, 2012

NEW UNITED CORPORATION AND DR. CLYDE PEMBERTON, PLAINTIFFS-APPELLANTS,
v.
ESSEX COUNTY VOCATIONAL-TECHNICAL SCHOOLS BOARD OF EDUCATION, ESSEX COUNTY, AND JOSEPH DIVINCENZO, COUNTY EXECUTIVE, DEFENDANTS-RESPONDENTS. ESSEX COUNTY VOCATIONAL-TECHNICAL SCHOOLS BOARD OF EDUCATION A/K/A ESSEX COUNTY VOCATIONAL TECHNICAL SCHOOLS, PLAINTIFF-RESPONDENT,
v.
NEW UNITED CORP., DEFENDANT-APPELLANT, AND FIRST STEPS SERVICES FOR CHILDREN, INC., DEFENDANT-RESPONDENT, AND CITY NATIONAL BANK OF NEW JERSEY, CITY OF NEWARK, UNITED STATES OF AMERICA, STATE OF NEW JERSEY, ESSEX COMMUNITY HEALTH SERVICES, INC., LIVING NEW, INC., UNITED LIVING, INC., MUZIK MEDIA, LLC, AND WEST MARKET PLAZA, LLC, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5999-10 and Docket No. L-7474-10.

Per curiam.

New Jersey Court of Appeals a2014_10a2302_10.pdf

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 8, 2012

Before Judges Fuentes, Graves, and J. N. Harris.

These consolidated appeals originate in the efforts of respondent Essex County Vocational-Technical Schools Board of Education (the Board of Education) to exercise its "awesome power . . . to take property for public use without the owner's consent." Hous. Auth. of New Brunswick v. Suydam Investors, LLC, 177 N.J. 2, 6 (2003) (citing 1 Nichols on Eminent Domain § 1.11 at 1-7 (Sackman ed., 3d ed. 2002)). Because we conclude as a matter of law that the Board of Education failed to properly align its taking efforts with the strict measure of the Eminent Domain Act of 1971 (the Eminent Domain Act), N.J.S.A. 20:3-1 to -50, we reverse and remand for the entry of a final judgment dismissing the condemnation complaint without prejudice.

I.

There is a lengthy background to this case that we will not explicate in detail, except as necessary to illuminate the issues on appeal. Part of that history was explored by us in the interlocutory appeal captioned, New United Corporation v. County of Essex, No. A-3168-08 (App. Div. April 19, 2010).

Appellant New United Corporation (New United) is owned by appellant Dr. Clyde Pemberton. New United owns one of three commercial condominium units located at the 6.84-acre United Hospital Medical Center campus in Newark. The other two condominium units are controlled by the County of Essex (the County).*fn1

As owners of condominium units in the same regime, New United and the County have been engaged in numerous controversies and disputes since the Master Deed was filed in 1999. In December 2005, their differences spilled into the still-pending litigation (Docket No. L-8794-04) (the 2005 lawsuit) initiated by New United. The dispute revolved around New United's assertions that the County had (1) abandoned its two condominium units, (2) failed to properly maintain their physical integrity (thereby placing the public at risk of harm) and (3) tortiously damaged New United's right to enjoy the economic benefits of its single condominium unit. Ultimately, that litigation resulted in the joinder of the condominium association as a party, the appointment of a temporary custodial receiver to ensure that necessary repairs be undertaken at the site, and the imposition of special assessments against the County to pay for the remediation.

At the time the condominium organization was created, it was believed that the County would relocate the Essex County Hospital Center from Cedar Grove into its two condominium units at the Newark campus, and New United would lease and use its condominium unit for medical purposes. This vision remains unfulfilled.

As the 2005 lawsuit progressed, the parties engaged in several discussions in an effort to settle and resolve their numerous differences. Many alternatives and variations were discussed, but one potential solution involved the negotiated sale of New United's condominium unit so that it could be incorporated into a contemplated new vocational-technical school on the site.

In order to be prepared to transform the settlement discussions into a concrete plan of action, an appraisal was commissioned in early 2010 to value the entire campus. In May 2010, Hendricks Appraisal Company, LLC (Hendricks) was formally retained by the Improvement Authority "to perform appraisals of the buildings and property . . . know[n] as New United Hospital." New United was aware of the retention of an appraiser and permitted an inspection of its condominium unit. A ninety-eight page appraisal report, dated May 17, 2010, was authored by Mark E. Hendricks. The report indicated that as of March 12, 2010, there were two slightly different valuations for the property: (1) "as is" and (2) "without Master Deed [restrictions] and [with a] zone change." Hendricks opined that under the latter situation, "the Market Value of the property, in fee simple interest and subject to assumptions, conditions, and other provisions" was $5,550,000. The projected value of the property "as is" revealed a total of $5,490,000, of which $4,850,000 was allocable to New United's condominium unit and $640,000 to the County's condominium units.

In time, New United suspected that the County had an ulterior motive for conducting the appraisal, which was unconnected with the potential settlement of the 2005 lawsuit. On May 26, 2010, New United's attorney wrote to the County's counsel suggesting "that we abandon any settlement issues related to the litigation, and embark on the formal condemnation process." New United claimed that the appraisal's sole purpose was to enable "the parties . . . [to] use it as a tool to assist in settling this litigation." New United expressly rejected the use of the appraisal for any other purpose, including as "a formal condemnation appraisal."

Meanwhile, the Board of Education was taking steps designed to develop the campus for school purposes. In May 2010, incipient efforts were made by the Board of Education to amend its capital budget by increasing line item appropriations to cover the projected cost of the land and construction. Separately, the Board of Education tasked an architect to prepare amendments to the Board of Education's Long Range Facilities Plan (LRFP), which would be submitted for approval to the New Jersey Department of Education (the Department). On June 14, 2010, the Board of Education voted to amend its LRFP to consolidate three of its schools into one "State of the Art Campus" to be located at the Newark site, and to acquire the necessary property to house the new facility. In late July 2010, the Board of Education finally submitted an application for land acquisition to the Department pursuant to N.J.A.C. 6A:26-7.1. The application's scope was not limited to New United's interests; instead, it applied to the entire Newark site, which was described as consisting of 7.03 acres of land. On August 17, 2010, the Department approved the land acquisition.

Formal contact between New United and the Board of Education preceded the Department's approval. On June 28, 2010, the Board of Education offered to purchase New United's condominium unit for $4,850,000 (less any remediation costs for mold or asbestos contamination). In the letter making this offer, the Board of Education's attorney attached a copy of Hendricks's May 17, 2010 appraisal report. The letter invited New United to provide the Board of Education with "any additional information you may wish to provide concerning the evaluation of the Property," and sought permission to enter the condominium unit "to have appropriate professionals evaluate same for mold, asbestos and/or other contaminants, if any and the cost of remediating same." Finally, the letter promised that if the Board of Education received no response from New United within a fourteen-day period, "condemnation proceedings will, as a matter of necessity, be instituted."

Coincidentally, because the 2005 lawsuit had not settled, the matter continued apace. On July 26, 2010, three months after our remand, the Law Division granted New United's motion for partial summary judgment and ordered the County to make certain emergency repairs to the campus by October 1, 2010. That same day, New United filed the first action (Docket No. L-5999-10) at issue in this appeal. It sought declaratory and injunctive relief -- including a request for temporary and preliminary restraints -- enjoining defendants Board of Education, the County, and Joseph DiVincenzo, County Executive from "taking any action to seize [New United's] property by condemnation pursuant to the Eminent Domain Act or other law." The Law Division denied New United's emergent application for an order prohibiting the Board of Education from taking any steps in furtherance of condemnation. The court ruled that such request was premature because the Board of Education had not yet received approval from ...


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