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Town of Kearny v. Discount City of Old Bridge

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 The tangled history was set forth at length in our unpublished opinion, Town of Kearny v. Discount City of Old Bridge, Inc., Docket No. A-6220-07 (App.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 official declaration of taking was filed, the gears of the eminent domain process had already begun turning.

Judge Gallipoli then addressed the reasonableness of the fee application. Relying on Township of West Orange v. 769 Associates, LLC, 198 N.J. 529, 532 (2009), he found that the property was "formally targeted for condemnation" when Kearny filed "an eminent domain proceeding" on May 8, 2008. He also found that James' lawsuit against DVL, concerning the condemnation clause of its lease, was "triggered by and related to" the condemnation action. He reasoned that the Supreme Court's opinion treated James' contract claims as worthy of extended discussion; thus the fees for asserting those claims were recoverable as part of James' overall defense strategy for fending off the condemnation. He found that "the fees and costs applied for are reasonably related to the totality of the condemnation proceedings, and . . . the fees and costs are reasonable themselves." He awarded James $95,168.09 for the trial court litigation, and $25,765.29 for the proceedings in the Appellate Division.

After Judge Gallipoli rendered his decision, the Supreme Court decided James' separate motion for fees solely for the appeal to that Court. In opposing the Supreme Court motion, DVL argued, as it had before Judge Gallipoli, that N.J.S.A. 20:3-26(b) did not apply, because "no final judgment has been rendered that the condemnor cannot acquire the property by condemnation." DVL also argued that if fees were awarded, the amount should be reduced because not all of James' legal arguments were successful. Kearny joined in opposing the fee application. Without issuing a separate opinion, the Supreme Court issued an order awarding James $16,903.93 in fees and costs, which was the entire amount sought. Town of Kearny v. Discount City, Motion No. M-1490 (June 28, 2011).

II

We review a judge's legal interpretations de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Van Horn v. Van Horn, 415 N.J. Super. 398, 409 (App. Div. 2010). However, apart from legal questions, we review a trial judge's fee award for abuse of discretion, and we will not disturb the award except "on the rarest occasions." Rendine v. Pantzer, 141 N.J. 292, 317 (1995). Based on the record presented, we find no legal errors and no abuse of discretion in Judge Gallipoli's decision.

On this appeal, Kearny once again recycles the argument that "this is a matter in which no final judgment has been rendered that the condemnor cannot acquire the property by condemnation." It also contends that Judge Gallipoli should not have awarded fees for time spent on James' lawsuit against DVL, which Kearny characterizes as being completely separate from the condemnation action. And, it contends that "the fees awarded by the trial court were not reasonable." These arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons stated in Judge Gallipoli's opinion. We add the following comments.

Kearny contends that James' fee application is not authorized by N.J.S.A. 20:3-26(b), because there is no final judgment that Kearny cannot condemn the leasehold. However, as Judge Gallipoli correctly noted, the Morris County case is on point and is directly contrary to Kearny's argument here. See Morris County, supra, 223 N.J. Super. at 38-39. Further, the Supreme Court implicitly rejected the same argument when it awarded fees to James.

The Court likewise implicitly rejected Kearny's argument that James' fee award should be reduced for claims that were asserted in the contract action rather than in the condemnation action. We agree with Judge Gallipoli that West Orange is directly on point in support of James' position. Not only were the contract and condemnation actions inextricably intertwined, but DVL, which has acted as Kearny's surrogate throughout these proceedings, admitted as much when it moved to consolidate the lawsuits in May 2008. In that motion, DVL argued that "[t]he two cases have a 'common nucleus of operative facts,'" and "[t]he disposition of one case, of necessity, will have a material impact upon, and quite likely will be completely dispositive of, the other action." Although DVL and not Kearny was the defendant in James' lawsuit, DVL was the designated redeveloper, and the action was "directly related" to Kearny's "efforts to condemn [James'] property." West Orange, supra, 198 N.J. at 545.

Finally, Kearny argues that the fees were not reasonable. However, in the proceedings before Judge Gallipoli, Kearny did not identify any specific hours billed for the trial court or Appellate Division matters that it claimed were unreasonable or unnecessary.*fn3 Nor did either side request a plenary hearing on the fee application. We decline to consider the issue for the first time on this appeal. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

Affirmed.


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