NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 29, 2013.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1821-04.
Jeffrey D. Gordon and Gary S. Rosensweig argued the cause for appellant (Archer and Greiner, P.C., attorneys; Mr. Gordon, Mr. Rosensweig, and A. Paul Genato, on the brief).
Anthony F. Della Pelle argued the cause for respondent Lotta Lettuce J.T.S. Farms, LLC (McKirdy & Riskin, P.A., attorneys; Mr. Della Pelle, of counsel; Cory K. Kestner, on the brief).
Helene P. Chudzik, Senior Deputy Attorney General, argued the cause for respondent Department of Environmental Protection (Jeffrey S. Chiesa, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Chudzik, on the brief).
Before Judges Yannotti, Harris, and Hayden.
This is an eminent domain and declaratory judgment action relating to a farmer's well and the water rights associated with land located in Montville. Plaintiff Township of Montville appeals from the Law Division's orders of March 25, May 12, and December 2, 2011, which together found that (1) aspects of Montville's local legislation restricting the establishment and operation of wells within the municipality was preempted by state law and defendant Department of Environmental Protection (DEP) regulations; (2) Montville had temporarily taken certain property rights of defendant Lotta Lettuce J.T.S. Farms, LLC (Lotta Lettuce) through inverse condemnation; and (3) Lotta Lettuce was entitled to reallocation of certain costs, disbursements, and expenses pursuant to N.J.S.A. 20:3-26(c). We affirm in part and reverse in part.
The parties' dispute has its genesis in 1998, when Montville and Lotta Lettuce's predecessor-in-title entered into a license agreement giving Montville the right to enter the twenty-eight-acre property (Block 32, Lot 28 on the municipality's tax map) and install a "water production test well." Montville sought to use the well to monitor water levels in the Towaco Valley Aquifer —— serving Montville's 20, 000 residents —— located beneath the subject property. The license agreement was for five years, with an expiry in November 2003. According to DEP records, the monitoring well was installed in August 1998. In March 2002, Lotta Lettuce acquired the property as protected farmland and continued to devote the land to agricultural uses.
On February 25, 2003, Montville adopted Ordinance No. 2003-12, which, except for individual private residences, sought to prohibit new commercial wells in the area of Lotta Lettuce's property. Lotta Lettuce immediately (and informally) objected to Ordinance No. 2003-12, writing, "the . . . Right to Farm Act[, ] N.J.S.[A]. 4:1C-1 et seq.[, ] clearly and unequivocally prohibits the Township from enacting requirements that will have the direct or indirect effect of preventing . . . farming use of the property."
In short order, Montville conceded that Lotta Lettuce was exempt from Ordinance No. 2003-12, and hence was entitled to drill a well of its own. In the letter recognizing Lotta Lettuce's rights, Montville also expressed the municipality's interest in acquiring a permanent easement for the monitoring well already on the property because the license agreement was to expire in November 2003.
On July 14, 2003, Lotta Lettuce provided Montville with written notice that the license would not be renewed, and requested that, pursuant to the terms of the license agreement, Montville "remove all improvements placed on the licensed area, seal the well and restore the property." Accordingly, by its terms, the license agreement expired on November 19, 2003. Notwithstanding the end of the arrangement, Montville did not cap the well, and its employees continued to make use of it from time to time for monitoring purposes.
On January 27, 2004, Montville adopted Ordinance No. 2004-05, which authorized its municipal attorney to "take any and all legal steps and proceedings . . . to acquire title to a portion of Block 32, Lot 28 . . . from Lotta Lettuce . . . for public use and purposes by the Township of Montville." Although the title of the ordinance was "Ordinance Authorizing the Acquisition of a Well Access Easement Over a Portion of Block 32, Lot 28, (Lotta Lettuce J.T.S. Farms, LLC) By Condemnation" the enactment section of the ordinance made no mention of the well, water rights, or an access easement to the wellhead.
Five months later, on June 25, 2004, Montville filed the pleading that started this litigation: a one-count eminent domain complaint stating its intention to acquire through condemnation a "permanent easement" consisting of 4982.70 square feet on Block 32, Lot 28. The complaint said nothing about the well itself or the water rights under the surface. Montville offered $1000 as compensation for the property interest it sought to acquire based upon an August 7, 2003 appraisal report. Montville did not then file a declaration of taking pursuant to N.J.S.A. 20:3-17, nor did it deposit the estimated compensation with the clerk of the Superior Court in accordance with N.J.S.A. 20:3-18.
On September 29, 2004, Lotta Lettuce filed its answer and counterclaim. It asserted that although Montville had the authority to acquire lands or rights therein by condemnation pursuant to N.J.S.A. 40A:12-5(a)(1), it denied that "such authority [had] been properly exercised with respect to the subject property."
In its counterclaim, Lotta Lettuce sought limited declaratory relief relating to Montville's alleged abandonment of the monitoring well itself and the appurtenances that remained on Lotta Lettuce's land. The counterclaim did not expressly seek inverse condemnation remedies for either a physical invasion or a regulatory taking. After the issues were joined, the parties attempted to resolve their differences through court-sponsored mediation. That process was unsuccessful, and the parties resumed active litigation a few months later in March 2005.
Shortly after Lotta Lettuce's answer and counterclaim were filed, Montville adopted Ordinance No. 2004-64 on October 12, 2004. This ordinance sought to regulate existing irrigation wells, and expressly prohibited the drilling of a new irrigation well unless it "replace[d] an on-site private individual well which was existing and utilized at the time that the building and premises were connected ...