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Gloucester County Improvement Authority v. Gallenthin Realty Development

August 8, 2012

GLOUCESTER COUNTY IMPROVEMENT AUTHORITY, PLAINTIFF-RESPONDENT,
v.
GALLENTHIN REALTY DEVELOPMENT, INC., DEFENDANT-APPELLANT, AND STATE OF NEW JERSEY, BOROUGH OF PAULSBORO, COLONIAL PIPELINE, ATLANTIC CITY ELECTRIC CO., AND PAULSBORO ACQUISITION CORP., DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-2718-10.*fn1

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 26, 2011

Before Judges A. A. Rodriguez, Sabatino and Ashrafi.

Gallenthin Realty Development, Inc. (Gallenthin) appeals from the November 16, 2010 final judgment and order appointing condemnation commissioners signed by Judge Michael J. Hogan, in favor of the Gloucester County Improvement Authority (Authority). We affirm.

These are the relevant facts. Gallenthin is the current owner of a 63.92 acre parcel of undeveloped land in the Borough of Paulsboro. This appeal concerns the efforts by the Authority to acquire this parcel. In 2001, the Authority began to plan for the construction of a marine terminal on the Delaware River (Port Terminal Project). In connection with this project, Paulsboro entered into a ninety-nine-year lease for an industrial site in Paulsboro. The Authority also acquired adjacent properties from private owners.

The project required the construction of a roadway connecting I-295 to the Port Terminal Project site. This new access was intended to reroute truck traffic away from residential neighborhoods. Gloucester County agreed with the New Jersey Department of Transportation to design, construct, maintain, and operate the new access route.*fn2

Because several of the potential access routes to the Port Terminal Project site would cross over land owned by Gallenthin Realty, the Authority sought to acquire this property, which has been vacant since 1998. It is zoned as a marine industrial business park.

In early 2006, the Authority sought access to the Gallenthin property, pursuant to N.J.S.A. 20:3-16, in anticipation of a condemnation action to build the access road. Gallenthin refused access. The Authority sued to gain access. On May 25, 2006, the Law Division entered an order granting the Authority access to the property.

Gallenthin then sought to remove the dispute to the federal court. United States District Court Judge Jerome Simandle remanded the matter to the Law Division. On April 4, 2008, the Law Division granted the Authority access to the Gallenthin property. Once the Authority had actual access, its engineers determined that the preferred location of the access route would require condemnation of a 3.663 acre parcel of the Gallenthin property in fee simple and .310 acres in a permanent construction easement and a storm-water retention basin. The engineers also determined that the access project would require the acquisition of other adjacent property.*fn3

The Authority retained Jerome McHale of J. McHale & Associates, Inc. (McHale) to determine the just compensation for the taking of the Gallenthin property. McHale concluded that the fair market value of the Gallenthin property, plus damage to the remainder, was $404,000 as of January 5, 2009. The Authority adopted a resolution accepting the appraisal report and authorizing an offer of $404,000. George Gallenthin, III, on behalf of Gallenthin, met with representatives of the Authority and rejected the $404,000 valuation. A long period of negotiations followed. There were additional meetings, exchange of information, and other attempts to reach an acceptable figure. In addition, George Gallenthin, III, the company's principal shareholder, who also served as its counsel and its counsel pro hac vice at oral argument, was sent overseas on military duty for a period of a year.

After several months, the Authority requested that Gallenthin provide a counter offer or respond to the offer.

Finally, in late December 2009, Gallenthin provided the Authority with an appraisal report prepared by Richard M. Chaiken, setting the fair market value of the property, plus damage to the remainder, at $4,938,000. Chaiken's appraisal was premised upon the highest and best use of the property being a dredge spoils transfer station. Chaiken did not address any of the impediments to this proposal, but simply noted that such transfer stations would be required by the dredging of the Delaware and that the property was conveniently sited -- with river and rail access -- for this use. Chaiken further assumed that the Authority's ...


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