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Borough of Paulsboro v. Essex Chemical Corporation

July 16, 2012

BOROUGH OF PAULSBORO, PLAINTIFF-APPELLANT,
v.
ESSEX CHEMICAL CORPORATION, DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-699-06.

The opinion of the court was delivered by: Skillman, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued May 29, 2012

Before Judges Grall, Alvarez and Skillman.

The opinion of the court was delivered by SKILLMAN, J.A.D. (retired and temporarily assigned on recall).

In Housing Authority of the City of New Brunswick v. Suydam Investors, L.L.C., 177 N.J. 2, 23-24 (2003), the Court held that contaminated property acquired in an eminent domain action must be valued as if the contamination had been remediated and that the portion of the condemnation award required to pay the costs of remediation should be deposited into a trust-escrow account. The question presented by this appeal is whether this special methodology for valuing contaminated property applies in an eminent domain action for acquisition of property containing a landfill that has been closed with the approval of the Department of Environmental Protection (DEP). We conclude that the Suydam valuation methodology does not apply in such a case because the condemnee, having already obtained approval of its plan for closure of the landfill, is not subject to any additional liability for remediation of the site and thus will receive the full fair market value of its property as determined by ordinary valuation methodologies.

I.

The condemnor involved in this appeal is the Borough of Paulsboro in Gloucester County. The condemnee is Essex Chemical Company. The property is a sixty-seven-acre riverfront tract, with frontage on the Delaware River and Mantua Creek, which includes a closed seventeen-acre landfill. The closure of the landfill, which consists of a forty-foot high mound of gypsum, was approved by the DEP.

In 2002, Essex entered into a forty-year lease of the part of the property where the landfill is located with BP Products North America, Inc. (BP), which has constructed a solar energy facility on that site. Under the terms of the lease, BP assumed responsibility for performing the monitoring and maintenance activities required under the DEP's approval of Essex's plan for closure of the landfill.

The condemnation of the property was the subject of a prior appeal by Essex from the judgment for possession and appointment of condemnation commissioners.*fn1 Borough of Paulsboro v. Essex Chem. Corp., No. A-6577-05 (App. Div. July 13, 2007). In that appeal, we rejected Essex's argument that Paulsboro had not engaged in bona fide negotiations before filing its complaint, because the appraisal upon which Paulsboro based its offer did not value the property "as if remediated," as required by Suydam (slip op. at 3). In rejecting this argument, we stated:

. . . Essex fears that Paulsboro will seek to have the landfill removed and the land flattened as "remediation" at Essex's cost out of the condemnation proceeds deposited in court. We do not read the reservation of rights in the complaint as permitting Paulsboro to recover from Essex any costs incurred for removal of the landfill in order to permit a different use of the area it now occupies. The appraisal is based on the assumption that the landfill portion of the property lacks meaningful utility.

We question whether any attempted action by Paulsboro to deconstruct an encapsulated landfill, closed and approved by the DEP . . . which is in its closure and monitoring stage, would fall within the remediation costs contemplated by Suydam and [N.J. Transit Corp. v. Cat in the Hat, L.L.C., 177 N.J. 29 (2003).] In essence, this closed landfill has the right to exist on the property. [slip op. at 10-11.]

We also observed that Paulsboro's appraisal of the subject property, which was then $1,215,000, "provided the basis for a bona fide fair market value offer for the property as if ...


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