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Town of Kearny v. Discount City of Old Bridge

July 20, 2012

TOWN OF KEARNY, PLAINTIFF-APPELLANT,
v.
DISCOUNT CITY OF OLD BRIDGE, INC.; DVL KEARNY HOLDINGS, L.L.C.; FRANKLIN PLASTICS CORP.; AND SPARTECH POLYCOM, DEFENDANTS, AND JAMES FARM MARKET CORP.; AND JAMES WHOLESALE WAREHOUSE, INC., DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2349-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued June 5, 2012

Before Judges Reisner and Simonelli.

The Town of Kearny (Kearny or the condemnor) appeals from an order dated June 10, 2011, awarding James Farm Market Corp. and James Wholesale Warehouse, Inc. (collectively James, or the condemnee) $120,933.38 in counsel fees and costs. We affirm.

I

This appeal is the latest phase of a long-running dispute over Kearny's attempt to condemn a leasehold interest held by James. The tangled history was set forth at length in our unpublished opinion, Town of Kearny v. Discount City of Old Bridge, Inc., Docket No. A-6220-07 (App. Div. Oct. 23, 2009); in the Supreme Court's opinion, Town of Kearny v. Discount City of Old Bridge, Inc., 205 N.J. 386, 393-98 (2011); and in the trial court opinion that is the subject of this appeal.

To briefly summarize, in 2006 and 2007, Kearny designated James' landlord, DVL Kearny Holdings, L.L.C. (DVL), as the conditional redeveloper, and then the redeveloper, of a tract of land that included James' leasehold. See N.J.S.A. 20:3-20; Kearny, supra, 205 N.J. at 405-06 (confirming a municipality's power to condemn a leasehold interest). Under its agreements with Kearny, DVL was responsible for paying all of the costs to acquire the necessary interests in the land that was to be redeveloped. Two pertinent pieces of litigation followed in May 2008: (a) James sued DVL for breach of the lease and other causes of action - arguing, among other things, that DVL was acting in bad faith by serving as both landlord and redeveloper; and (b) Kearny filed a condemnation action against James.

After extensive trial and appellate litigation, the Supreme Court held that where a public entity seeks to condemn a leasehold interest, but not the landowner's fee simple interest, the lessee "has the same rights as any other condemnee, including the right to bona fide negotiations." Id. at 393; see N.J.S.A. 20:3-6 (requiring pre-condemnation negotiation). The Court held that neither DVL nor Kearny engaged in bona fide negotiations with James before Kearny filed its condemnation complaint, and therefore "the condemnation complaint must be dismissed." Kearny, supra, 205 N.J. at 393.*fn1 Pursuant to the Court's decision, the trial court entered an order on March 17, 2011 dismissing the condemnation complaint without prejudice.

Thereafter, James filed motions with the Supreme Court, this court, and the trial court, pursuant to N.J.S.A. 20:3-26(b), seeking counsel fees.*fn2 We remanded the appellate fee motion to the trial court pursuant to Rule 2:11-4, "to be decided together with movant's application for fees in that court." Town of Kearny v. Discount City, Motion No. M-004404-10 (App. Div. April 19, 2011). The current appeal concerns the trial judge's fee award.

In a written opinion issued on June 10, 2011, Assignment Judge Maurice J. Gallipoli held that the Supreme Court's decision, directing that Kearny's condemnation complaint be dismissed, qualified as a final judgment "that the condemnor cannot acquire the real property by condemnation" as set forth in N.J.S.A. 20:3-26(b). He reasoned that our opinion in Morris County v. 8 Court St., Ltd., 223 N.J. Super. 35 (App. Div.), certif. denied, 111 N.J. 572 (1988), was directly on point on that issue, and "[d]espite DVL's counsel's best efforts, one cannot distinguish the undistinguishable."

He also rejected the argument that fees were not warranted because Kearny had not filed a declaration of taking:

Initially, DVL presents a novel argument: that there has been no "final judgment" contemplated by the statute because no declaration of taking was filed and this was only an attempt to "present the unsettled questions of law to the court."

This is a creative argument, but ignores the plain fact that, though James Farm has indeed operated unimpeded on its property, the leaseholders had little practical choice but to incur significant expense to defend against the condemnation proceedings at all levels of our court system. The Supreme Court's analysis of DVL's significant procedural deficiencies indicates that, though no ...


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