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State v. North Beach 1003, LLC

Superior Court of New Jersey, Appellate Division

June 22, 2017

STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
NORTH BEACH 1003, LLC, a New Jersey limited liability company, Defendant-Appellant and STATE OF NEW JERSEY, DEPARTMENT OF THE TREASURY, DIVISION OF TAXATION, Defendant. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
SHANIN SPECTER and TRACEY SPECTER, Defendants-Appellants, and GE CAPITAL MORTGAGE SERVICES, INC., a New Jersey corporation or its successor, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
THOMAS R. KLINE, Defendant-Appellant. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
ROBERT S. HEKEMIAN, Defendant-Appellant, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware foreign profit corporation, or its successor, as nominee for TD BANK, N.A., Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
RICHARD CAROLAN and TINA CAROLAN, Defendants-Appellants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
JEANETTE F. FRANKENBERG and LOUIS CAMPISANO, Defendants-Appellants, and THE PROVIDENT BANK, a New Jersey domestic limited liability company, or its successor, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
BEVERLY T. CAMMARANO QUALIFIED PERSONAL RESIDENCE TRUST, BEVERLY T. CAMMARANO and ROBERT J. CAMMARANO as co-trustees, Defendants-Appellants, and BANK of AMERICA, N.A., Defendant. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
BARBARA J. WELDON, Defendant-Appellant. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
COLLEEN M. ROWE and KELLY A. ROWE, Defendants-Appellants. OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
KEVIN KLINGERT and KRISLYN KLINGERT, Defendants-Appellants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
PATRICIA ROBERTS TRUST, PATRICIA ROBERTS as trustee, and SCOTT GUSMER, Defendants-Appellants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
DAVID CASTELBLANCO and LAURA ENGELHARDT, Defendants-Appellants, and FIRST REPUBLIC BANK, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
RICHARD MALOUF and MARILYN MALOUF, Defendants-Appellants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
FREDERICK SMITH, SANDRA S. HOLDER-BROWN as trustee for SANDRA S. HOLDER-BROWN TRUST, and DEBORAH A. SMITH, Defendants-Appellants, and SANTANDER BANK, N.A., Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
MICHAEL VAN KRALINGEN and SANDRA MILLER as trustees of the VAN KRALINGEN RESIDENCE TRUST II, Defendants-Appellants, and 0.238-Acres of Land in The Borough of Point Pleasant Beach, Ocean County, New Jersey and INVESTORS SAVINGS BANK, Defendants-Respondents. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
DENNIS LA PLANTE and CATHERINE LA PLANTE, Defendants-Appellants, and 0.232-Acres of Land in The Borough of Point Pleasant Beach, M&T BANK CORPORATION, as successor to HUDSON CITY SAVINGS BANK, and U.S. SMALL BUSINESS ADMINISTRATION, Defendants-Respondents. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
COURTNEY M. ALESSO and JOHN A. ALEXY, co-trustees of the COURTNEY M. ALESSO 2012 TRUST, Defendants-Appellants, and 0.259-Acres of Land In The Borough of Point Pleasant Beach, Ocean County, New Jersey, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
MINALKUMAR A. PATEL LIVING TRUST, MINALKUMAR A. PATEL and ASRA WARSI as trustees, and ASRA WARSI LIVING TRUST, MINALKUMAR A. PATEL and ASRA WARSI as trustees, Defendants-Appellants. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
NEIL KAHANOVITZ and SUZANNE KAHANOVITZ, Defendants-Appellants, and MANASQUAN SAVINGS BANK, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
JILL P. GILES REVOCABLE TRUST, JILL P. GILES, as trustee, Defendants-Appellants, and MANASQUAN SAVINGS BANK, Defendant-Respondent. NINA RITTER, SHARON CRUZ, LAWRENCE E. BATHGATE, II, AUSTIN FRAGOMEN and GWENDOLYN FRAGOMEN, SMATCO, LP, ANN F. MESTRES, LOWELL MILLAR and JENNIFER MILLAR, Plaintiffs-Appellants,
v.
STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
RAYMOND BRAUN and JAYNE K. BRAUN, Defendants-Appellants, and NEW YORK COMMUNITY BANCORP, Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
THOMAS BUCKLEY and KAREN BUCKLEY, Defendants-Appellants, and TD BANK NORTH, INC., d/b/a TD BANK, N.A., Defendant-Respondent. STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
GERARD LOSURDO and NINA LOSURDO, Defendants-Appellants, and U.S. BANK, N.A., Defendant-Respondent.

          Argued May 2, 2017

         On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket Nos. L-3067-15, L-3071-15, L-3077-15, L-3066-15, L-3069-15, L-2919-15, L-3289-15, L-3286-15, L-3420-15, L-3410-15, L-3319-15, L-3287-15, L-3285-15, L-3438-15, L-0442-16, L-0444-16; L-0443-16, L-3206-15, L-3205-15, L-3288-15, L-2949-15, L-3204-15, L-3292-15, and L-3275-15.

          Scott A. Heiart argued the cause for appellants North Beach 1003, L.L.C., Shanin Specter and Tracey Specter, Thomas R. Kline, Robert S. Hekemian, and Richard Carolan and Tina Carolan (Carlin & Ward, P.C., attorneys; Mr. Heiart, on the briefs).

          Mark S. Winter argued the cause for appellants Jeanette F. Frankenberg and Louis Campisano (Stern Lavinthal Frankenberg & Norgaard, L.L.C., attorneys; Mr. Winter, on the briefs).

          John H. Buonocore, Jr. and Anthony F. DellaPelle argued the cause for appellants Beverly T. Cammarano Qualified Personal Residence Trust, Beverly T. Cammarano and Robert J. Cammarano as co-trustees, Barbara J. Weldon, Colleen M. Rowe and Kelly A. Rowe, Kevin Klingert and Krislyn Klingert, Patricia Roberts Trust, Patricia Roberts as trustee, and Scott Gusmer, David Castelblanco and Laura Engelhardt, Richard Malouf and Marilyn Malouf, Frederick Smith, Sandra S. Holder-Brown as trustee for Sandra S. Holder-Brown Trust and Deborah A. Smith, Michael Van Kralingen and Sandra Miller as trustees of the Van Kralingen Residence Trust II, Dennis La Plante and Catherine La Plante, Courtney M. Alesso and John A. Alexy, co-trustees of the Courtney M. Alesso 2012 Trust, Minalkumar A. Patel Living Trust, Minalkumar A. Patel and Asra Warsi as trustees, Asra Warsi Living Trust, Minalkumar A. Patel and Asra Warsi as trustees, Neil Kahanovitz and Suzanne Kahanovitz, Jill P. Giles Revocable Trust, Jill P. Giles as trustee, Nina Ritter, Sharon Cruz, Lawrence E. Bathgate, II, Austin Fragomen and Gwendolyn Fragomen, SMATCO, L.P., Ann F. Mestres, Lowell Millar and Jennifer Millar, Raymond Braun and Jayne K. Braun, Thomas Buckley and Karen Buckley, and Gerard Losurdo and Nina Losurdo (McKirdy & Riskin, P.A., attorneys; Mr. Buonocore and Mr. DellaPelle, on the briefs).

          David C. Apy, Assistant Attorney General, and Ronald L. Perl, argued the cause for respondent Department of Environmental Protection (Christopher S. Porrino, Attorney General, and Hill Wallack, L.L.P., attorneys; Melissa H. Raksa, Assistant Attorney General, of counsel; David S. Frankel, Kristina L. Miles, Bruce A. Velzy, Deputy Attorneys General, and Dale Laster Lessne, on the brief).

          Before Judges Yannotti, Fasciale, and Gilson.

          OPINION

          GILSON, J.A.D.

         These consolidated appeals present the questions whether the New Jersey Department of Environmental Protection (DEP) has the authority to condemn private property to take perpetual easements for shore protection purposes and whether the easements can allow public access to, and use of, the areas covered by the easements. We hold that the DEP has such authority and the easements that allow for publicly funded beach protection projects can include public access and use. Thus, we affirm the trial court's final judgments finding that the DEP properly exercised its power of eminent domain and appointing commissioners to determine the value of the takings. We also affirm the trial court's orders denying defendants' motion to dismiss the DEP's complaints and granting summary judgment to the DEP on the declaratory judgment action brought by certain appellants.

         I.

         Under the New Jersey public trust doctrine, the State holds ownership over all shore-lined lands that are flowed by the tide up to the mean high water mark. City of Long Branch v. Jui Yung Liu, 203 N.J. 464, 475 (2010) (citing O'Neill v. State Highway Dep't, 50 N.J. 307, 323 (1967)). Accordingly, New Jersey has historically managed, protected, and developed its shoreline.

         Over the past several decades, the federal government has assisted New Jersey in protecting coastal communities from the impacts of storms and beach erosion. In 1986, Congress enacted the Water Resources Development Act (WRDA), 33 U.S.C.A. § 2211 to § 2227. Under the WRDA, the federal government will pay between fifty to sixty-five percent of the costs of such projects and the State will be responsible for the remaining balance. 33 U.S.C.A. § 2213.

         In the aftermath of Superstorm Sandy, Congress passed the Disaster Relief Appropriations Act of 2013 (Sandy Act), Pub. L. No. 113-2, 127 Stat. 4. The Sandy Act authorizes the Army Corps of Engineers (Army Corps) to construct beach replenishment and dune construction projects to protect the New Jersey shoreline. The Sandy Act also provides that the federal government will fund one hundred percent of the costs for the completion of some of the projects. The State's contribution for those projects can be deferred and financed over a period of thirty years.

         In September 2013, Governor Chris Christie issued Executive Order No. 140. That order established the Office of Flood Hazard Risk Reduction Measures within the DEP and gave it responsibility "for the rapid acquisition of property vital to [Sandy] reconstruction efforts[.]"

         To facilitate the projects authorized by the Sandy Act, the Army Corps partnered with the DEP. The DEP was responsible for gaining physical access to the property along the New Jersey shoreline needed to construct and maintain the projects. Two projects are at issue on these appeals. The Long Beach Island Project (the LBI Project) and the Manasquan Inlet to Barnegat Inlet Storm Damage Reduction Project (the Manasquan Project).[1]Those Projects consist of a dune and berm system extending the entire eighteen-mile length of Long Beach Island and fourteen miles along northern Ocean County from Berkeley Township to Point Pleasant Beach.

         Under its agreements with the Army Corps, the DEP must obtain all necessary property interests before the Army Corps will begin to construct the Projects. In that regard, the project partnership agreements between the DEP and the Army Corps provide that the DEP is to acquire all "real property interests . . . required for construction, operation, and maintenance of the Project[s], " including the "lands, easements and right-of-way required for the Project[s]."

         After Superstorm Sandy, the State, working with various municipalities, undertook efforts to secure voluntary conveyances of the property interests needed for the Projects. While many property owners voluntarily granted easements, other property owners declined to give voluntary easements. Thus, the DEP initiated actions to acquire the remaining easements through eminent domain proceedings.

         Certain appellants in these consolidated appeals own twenty-three properties on Long Beach Island or in northern Ocean County. They refused to provide voluntary easements to the DEP. The DEP filed condemnation complaints against the owners of those twenty-three properties. Those property owners are referred to as the North Beach 1003 defendants, the Frankenberg defendants, and the Cammarano defendants. The owners of seven other properties brought a declaratory judgment action against the DEP. They are referred to as the Ritter appellants.

         Before filing eminent domain actions, the DEP had an appraiser, Richard Hall, appraise the properties owned by the North Beach 1003, Frankenberg, and Cammarano defendants. Hall first wrote to each property owner, informing them that he would be conducting an appraisal and inviting them to provide him with relevant information and to attend his inspection. Only a few defendants responded to Hall and attended his inspection. As a consequence, Hall was not given access to the homes of most defendants, including the home owned by the Frankenberg defendants.

         Once the appraisals were completed, the DEP sent those appraisals to defendants and offered to purchase easements for between several hundred dollars and several thousand dollars. Attorneys for defendants then informed the DEP that they would like to negotiate those offers. The DEP responded that defendants would need to obtain their own informal appraisals to commence meaningful negotiations. Defendants requested time to obtain such appraisals. Defendants also requested the DEP answer certain questions concerning Hall's appraisals and his methodology. In addition, the Frankenberg defendants requested a reappraisal since Hall had not inspected the interior of their home. The Frankenberg defendants also provided the DEP with photographs of the views from the interior of their home and allowed representatives of the DEP and the Army Corps to inspect their home.

         Eventually, the DEP set a deadline for receiving defendants' appraisals. When the deadline passed without receipt of appraisals from defendants, the DEP commenced condemnation actions in late 2015 and early 2016.

         In the condemnation complaints against the North Beach 1003, Frankenberg, and Cammarano defendants, the DEP sought perpetual easements under N.J.S.A. 12:3-64. The proposed easements would allow for the "construction, periodic nourishment, and continued maintenance of the Project[s'] dunes and berms system." The easements also provided the right for the public to access and use the areas covered by the easements.

         Defendants responded with answers and motions to dismiss the complaints, contending that the DEP lacked statutory authority to take easements. Defendants also contended that the DEP did not have the authority to take perpetual easements, which provided for a public beach. Additionally, defendants asserted that the DEP had failed to engage in bona fide negotiations as required by the Eminent Domain Act (EDA), N.J.S.A. 20:3-1 to -50.

         On March 4, 2016, the trial court heard oral argument in the matters involving the North Beach 1003, Frankenberg, and Cammarano defendants. Thereafter, on March 28, 2016, the trial court issued a written opinion explaining that it would grant the DEP's orders to show cause and deny defendants' motions to dismiss. The court held that the DEP was statutorily authorized to take private property for "public beach purposes and for shore protection purposes." Specifically, the trial court held that both N.J.S.A. 12:3-64 and the EDA permitted the DEP to take a property interest less than a fee simple, such as perpetual easements. The court also held that, because federal funding was conditioned on public access and use, the DEP had the discretion to include public access and use as part of the easements. Finally, the court found that the DEP had complied with all pre-litigation steps required by the EDA, including engaging in bona fide negotiations with the property owners. See N.J.S.A. 20:3-6.

         Having held that the DEP properly exercised its power of eminent domain, on April 5, 2016, the trial court entered orders for final judgments in favor of the DEP and appointed commissioners to determine the value of the takings.[2]

         Separately, in 2015, the Ritter appellants filed a declaratory judgment action seeking a ruling that the DEP could not rely on N.J.S.A. 12:3-64 to acquire easements on their properties. The Ritter appellants moved for summary judgment and the DEP cross-moved for summary judgment, arguing that the Ritter appellants' action was premature since the DEP had not yet commenced condemnation proceedings against their properties. The trial court granted summary judgment to the DEP in an order entered on April 8, 2016. The court relied on its March 28, 2016 opinion, holding that the DEP had authority to condemn private property. The court also found that the Ritter appellants were seeking an advisory opinion because the DEP had not yet filed condemnation actions against those property owners.

         The North Beach 1003, Frankenberg, and Cammarano defendants now appeal the orders of final judgments entered in their actions. The Ritter appellants appeal the April 8, 2016 order granting summary judgment to the DEP and dismissing their declaratory judgment action. All the appeals were consolidated because they present similar issues. One property owner who was initially part of these consolidated appeals has resolved the dispute with the DEP while these appeals were pending. We denied appellants' request for stays of the Projects pending these appeals, but we accelerated the consolidated appeals.

         II.

         In challenging the orders and judgments entered by the trial court, appellants present eight arguments, six of which relate to all appellants, and two of which are specific to the North Beach 1003 and Frankenberg defendants. Specifically, appellants argue that the trial court erred by (1) holding that the DEP had statutory authority to acquire easements; (2) interpreting N.J.S.A. 12:3-64 to allow for the taking of easements; (3) interpreting N.J.S.A. 12:3-64 to allow for the protection of public beaches; (4) interpreting our decision in State v. Archer, 107 N.J.Super. 77 (App. Div. 1969); (5) determining that the EDA authorized the DEP to take easements; (6) allowing the DEP to take perpetual easements; (7) finding that the DEP conducted bona fide negotiations with the North Beach 1003 defendants; and (8) finding that the DEP acted in good faith in dealing with the Frankenberg defendants.

         We first address the DEP's statutory authority to condemn property and thereby address appellants' first, second, fourth, and fifth arguments. Next, we examine whether the DEP can take a perpetual easement that allows for public access, which will address appellants' third and sixth arguments. Finally, we will address the last two arguments raised by the North Beach 1003 and Frankenberg defendants concerning the bona fide negotiations by the DEP and the agency's compliance with the pre-litigation procedures in the EDA.

         Initially, we identify our standard of review. We use a plenary standard to review questions of law. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Thus, we review de novo the question whether the DEP has statutory authority to condemn private property and take perpetual easements allowing for public access and use. We defer to the trial court's factual findings regarding the negotiations conducted by the DEP. Tractenberg v. Township of West Orange, 416 N.J.Super. 354, 365 (App. Div. 2010) (quoting Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 484 (1974)). Accordingly, we will reverse such factual findings only if "they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence." Rova Farms, supra, 65 N.J. at 484. To the extent that established facts are applied to legal questions, however, we owe no special deference to the trial court. Manalapan, supra, 140 N.J. at 378.

         A. The DEP's Authority to Condemn Private Property and Take an Easement.

         The power of eminent domain, under which the State may take private property for a public purpose, "is an inherent and a necessary right of the sovereignty of the state." Valentine v. Lamont, 13 N.J. 569, 575 (1953), cert, denied, 347 U.S. 966, 74 S.Ct. 776, 98 L.Ed. 1108 (1954). That power rests with the Legislature. State by Comm'r of Transp. v. Township of South Hackensack, 111 N.J.Super. 534, 543 (App. Div. 1970), certif. denied, 57 N.J. 433 (1971). Our State Constitution provides that when the State takes private property for a public purpose, it must pay "just compensation." N.J. Const, art. I, ¶ 20.

         Our Constitution also allows the Legislature to delegate the power of eminent domain to state agencies or political subdivisions:

Any agency or political subdivision of the State . . ., which may be empowered to take or otherwise acquire private property for any public . . . use, may be authorized by law to take or otherwise acquire a fee simple absolute or any lesser interest, and may be authorized by law to take or otherwise acquire a fee simple absolute in, easement upon, or the benefit of restrictions upon, abutting property ...

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