Opinion
DOCKET NO. A-1072-13T3
04-06-2016
CITY OF NEWARK, Plaintiff-Respondent, v. ORR INVESTMENTS, INC., Defendant-Appellant, and NEW JERSEY DEPARTMENT OF COMMUNITY AFFAIRS, Defendant.
Vincent D. Commisa, attorney for appellant. DeCotiis, FitzPatrick & Cole, LLP, attorneys for respondent (Michael J. Ash, of counsel and on the brief; Megan E. Sassaman, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Leone and Whipple. On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3268-13. Vincent D. Commisa, attorney for appellant. DeCotiis, FitzPatrick & Cole, LLP, attorneys for respondent (Michael J. Ash, of counsel and on the brief; Megan E. Sassaman, on the brief). PER CURIAM
Defendant Orr Investments, Inc. (defendant), appeals the trial court's order approving the taking by plaintiff City of Newark (Newark) of defendant's private property for public use pursuant to the Eminent Domain Act (EDA), N.J.S.A. 20:3-1 to -50. We affirm.
I.
The following facts are largely drawn from the certification and documents attached thereto of Anson Orr (Orr), the owner of defendant. Defendant owned several residential buildings (the Property) located on Irvine Turner Boulevard in Newark. On May 7, 1997, Newark entered into an agreement with defendant for defendant to renovate the Property. Newark granted $600,000 in "HOME" funds subsidizing the creation of affordable housing in Newark. In November 1997, Newark amended the initial agreement so that the affordable housing funds would "be provided in the form of a non-interest bearing, 10 year deferred payment loan." On December 30, 1997, the New Jersey Department of Community Affairs (DCA) through its Balanced Housing Program agreed to fund the project in an amount not to exceed $542,000. On April 9, 1998, Newark granted defendant a final site plan approval for the renovation of the Property.
In 2003, Newark "executed a tax lien foreclosure to seize the [P]roperty" from defendant for unpaid real estate taxes. According to Orr, he paid all of the real estate taxes then due, which totaled $88,000, even though Newark had advised Orr "not to be concerned about real estate taxes during the development period since they would be paid exclusively from the development budget."
On June 7, 2004, the DCA sent a letter to the Newark Department of Economic and Housing Development (Department) reaffirming its commitment to the project and assuring Newark and defendant that "State funds will remain obligated for the project." The DCA conveyed its understanding that Orr, on behalf of defendant, was in the process of obtaining a construction loan and that he "intends to proceed with the project upon closing the loan." Soon thereafter, defendant entered into a "Construction and Permanent Mortgage and Security Agreement" with the Bank of New York agreeing to provide financing in the amount of $450,000. However, according to Orr, defendant was unable to utilize the funds during the next four years, and the financing commitment was terminated in October 2008.
Orr alleged that in September 2004, Newark's "required" architect, David Abramson, "refused to continue the project citing work overload and scheduling conflicts." As a result, in October 2004, defendant agreed with Alzra Design Group, P.C. (Alzra) to take Abramson's place as the architect.
In April 2005, the Department noted the "time delays surrounding" the project. Nonetheless, the Department agreed to increase the HOME "funds allotted this project from the original Six Hundred Thousand ($600,000.00) to Nine Hundred Forty Nine Thousand Sixty One Dollars ($949,061), an increase of Three Hundred Forty Nine Thousand Sixty One Dollars ($349,061)." Newark City Council approved and signed a resolution to that effect in November 2005.
In November 2006, defendant received construction permits and an "Order to Proceed" from Newark, which allowed construction to begin. According to Orr, in June 2007, construction was in "full force," but Alzra failed to provide revised "framing drawings" for the project. According to Orr, in December 2007, the City Director, Michael Meyers, froze and refused to provide and/or release any additional funding for the project.
On February 6, 2008, Newark sent defendant, via certified and regular mail, a "Notice of Intention to Take Possession of Abandoned Property" pursuant to the Abandoned Properties Rehabilitation Act (APRA), N.J.S.A. 55:19-78 to -107. This notice advised defendant that the Property was an "abandoned property" as defined in N.J.S.A. 55:19-81, and that its continued abandonment could result in Newark's commencing legal action to transfer possession and control of the Property for rehabilitation. The notice also required defendant to prepare and submit a plan of rehabilitation for the Property. Defendant failed to do so. As a result, Newark placed the Property on the "abandoned property list," pursuant to N.J.S.A. 55:19-55 of the New Jersey Urban Redevelopment Act (NJURA), N.J.S.A. 55:19-20 to -77.
Construction on the premises restarted in July 2008. In November 2008, Orr met with representatives of the Department to discuss a construction timeline. At this meeting, Orr committed to meet several requirements including submitting revised budgets, executing construction agreements, obtaining building permit applications, and completing an application for bank financing. According to Orr, he complied with all of these requirements except for obtaining bank financing because Newark had not provided building permits or the promised public funding needed to support an application for private financing.
In July 2009, Newark sent defendant a letter advising that the contract for the project "expired on September 7, 2007," and that "[t]he HOME funds for this project were originally authorized over ten years ago. Since the origination of this project, [Newark] has provided several opportunities to extend the project deadline and has met with you repeatedly to try to assist you to complete your project." Newark pointed to the lack of progress on the rehabilitation, and defendant's inability to meet the "milestones outlined in [its] construction schedule," including the requirements established at the November 2008 meeting. Thus, Newark "re-programmed the remaining funds that have not been spent on" the project. This July 2009 letter effectively terminated the project.
Several years later, on June 27, 2012, Newark sent defendant a letter advising that because the Property had remained on the abandoned property list, Newark was "considering acquiring the Property in order to redevelop and/or repair it." As a result, Newark advised Orr that an appraiser would be at the Property in July 2012. The appraisal determined that the Property had a negative value. Nonetheless, on February 19, 2013, Newark made a written offer to defendant of $5000 "for the purchase of a fee simple interest in the Property." Newark advised that if defendant failed to accept the $5000, then Newark would have authority to condemn the Property pursuant to APRA. After defendant refused to engage in bona fide negotiations, Newark filed a verified complaint seeking to take the property pursuant to the authority granted it in APRA and NJURA and in accordance with the procedures of the EDA.
Judge Thomas R. Vena issued an order to show cause. On the September 20, 2013 return date, the court resolved the matter on the pleadings and affidavits. The court determined that Newark was "duly vested and has duly exercised its powers of eminent domain to acquire the Property as described within the Verified Complaint." Moreover, Judge Vena appointed three disinterested commissioners to appraise the Property.
Defendant appeals the trial court's finding that Newark properly sought to take the Property under eminent domain.
II.
"New Jersey courts traditionally have granted wide latitude to condemning authorities in determining what property may be condemned for 'public use.'" Twp. of Readington v. Solberg Aviation Co., 409 N.J. Super. 282, 310 (App. Div. 2009) (quoting Twp. of West Orange v. 769 Assocs. L.L.C., 172 N.J. 564, 572 (2002)), certif. denied, 201 N.J. 154 (2010). "Condemnation procedures are set forth in the [EDA] and in R. 4:73-1 to -11." City of Orange Twp. v. Empire Mortg. Servs., Inc., 341 N.J. Super. 216, 221 (App. Div. 2001). "An action in condemnation shall be brought in the Superior Court in a summary manner pursuant to R. 4:67." R. 4:73-1. In such summary actions, if "the affidavits show palpably that there is no genuine issue as to any material fact, the court may try the action on the pleadings and affidavits." R. 4:67-5. "We review the court's findings as if they were made after a summary judgment motion," Matter of Estate of Baker, 297 N.J. Super. 203, 207 (App. Div. 1997), except that the defendant "is not entitled to favorable inferences such as are afforded to the respondent on a summary judgment motion," Grabowsky v. Twp. of Montclair, 221 N.J. 536, 549 (2015). "A ruling on summary judgment is reviewed de novo." Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014). We must hew to this standard of review.
III.
This litigation arises from Newark's 2008 placement of the Property on the abandoned property list under the NJURA. The NJURA and APRA collectively authorize municipalities to take affirmative steps towards remedying the existence of abandoned properties because such properties "act[] as a significant barrier to urban revitalization and to the regeneration of the State's urban centers." N.J.S.A. 55:19-79(d). Moreover, "[a]bandoned properties . . . create a wide range of problems for the communities in which they are located, fostering criminal activity, creating public health problems and otherwise diminishing the quality of life for residents and business operators in those areas." N.J.S.A. 55:19-79(a).
N.J.S.A. 55:19-81 of the APRA provides the mechanism through which property may be deemed "abandoned" and then placed on the abandoned property list pursuant to N.J.S.A. 55:19-55 of the NJURA. N.J.S.A. 55:19-81 provides:
any property that has not been legally occupied for a period of six months and which meets any one of the following additional criteria may be deemed to be abandoned property upon a determination by the public officer that:
a. The property is in need of rehabilitation in the reasonable judgment of the public officer, and no rehabilitation has taken place during that six-month period;
b. Construction was initiated on the property and was discontinued prior to completion, leaving the building unsuitable for occupancy, and no construction has taken place for at least six months as of the date of a determination by the public officer pursuant to this section;
c. At least one installment of property tax remains unpaid and delinquent on that property in accordance with chapter 4 of Title 54 of the Revised Statutes as of the date of a determination by the public officer pursuant to this section; or
d. The property has been determined to be a nuisance by the public officer in accordance with [N. J.S.A. 55:19-82.]
[N. J.S.A. 55:19-81.]
To officially place property on the abandoned property list, the municipality must provide adequate notice to the property owner. See N.J.S.A. 55:19-55(d). The municipality must publish the addition of the Property on the list in the "official newspaper of the municipality," and then send notice "by certified mail, return receipt requested, and by regular mail, to the owner of record of every property included on the list." Ibid. "An abandoned property shall not be included on the abandoned property list if rehabilitation is being performed in a timely manner, as evidenced by building permits issued and diligent pursuit of rehabilitation work authorized by those permits." N.J.S.A. 55:19-55(b). A municipality may "delete properties [from the abandoned property list] at any time when the public officer finds that the property no longer meets the definition of an abandoned property." Ibid.
If a property owner wishes to challenge the determination that its property is "abandoned," the owner must appeal that "determination to the public officer within 30 days of the owner's receipt of the certified notice or 40 days from the date upon which the notice was sent." N.J.S.A. 55:19-55(e). If the public officer issues an "adverse determination," the property owner may appeal that determination through a "summary proceeding in the Superior Court, Law Division, sitting in the county in which the property is located" within "20 days of the date of the notice of decision mailed by the public officer." N.J.S.A. 55:19-55(f). In initiating a summary proceeding, the "sole ground for appeal shall be that the property in question is not abandoned property." Ibid. However, the "failure to institute an action of appeal on a timely basis shall constitute a jurisdictional bar to challenging the adverse determination, except that, for good cause shown, the court may extend the deadline for instituting the action." Ibid.
Here, in the February 8, 2008 Notice of Intention to Take Possession of Abandoned Property, Newark made findings pursuant to N.J.S.A. 55:19-81 that the Property was abandoned because it was vacant for six months and (1) the Property was in need of rehabilitation and no rehabilitation had been performed in the last six months; (2) at least one installment of the Property tax remained unpaid and delinquent; (3) the Property was unfit for human habitation; (4) the Property's vacancy increased the risk of fire to the Property and adjacent property; (5) the Property was subject to unlawful entry; (6) there was vermin or the accumulation of debris, uncut vegetation or the physical deterioration of the structure; and (7) the dilapidated appearance or other condition of the Property materially affected the welfare of the residents in the area. The last five findings suggested, even if they did not explicitly state, that "[t]he property has been determined to be a nuisance" under N.J.S.A. 55:19-81(d). The second finding clearly invoked N.J.S.A. 55:19-81(c), even though Orr in his appellate brief makes the unsupported claim that he paid taxes after the 2007 notice. In any event, it is undisputed that the Property was "in need of rehabilitation . . . , and that no rehabilitation has taken place for at least six months" at the time of the 2007 notice, and throughout the eminent domain proceedings. Thus, the Property met the definition of "abandoned property" under N.J.S.A. 55:19-81, even if defendant installed security fencing around the Property.
Following the determination that the Property was "abandoned," Newark had to give adequate notice to defendant of the determination. Newark exceeded the notice requirements of N.J.S.A. 55:19-55(d). First, the notice of the Property's inclusion on the abandoned property list was published in the Star Ledger, the official newspaper of Newark, on February 4, 2008. Second, Newark sent the February 6, 2008 notice to Orr, as the owner of record, via certified mail, return receipt requested, and regular mail. Third, "out of an abundance of caution," Newark posted the notice on the Property so that anyone visiting the premises would become aware of the Property's inclusion on the list. Newark also recorded the notice and notice of a lis pendens against the Property, with the Essex County Register.
The notice informed defendant that it had thirty days to challenge Newark's determination that the Property was abandoned pursuant to N.J.S.A. 55:19-55(e). In addition, defendant had to submit a rehabilitation plan to Newark as required by N.J.S.A. 55:19-86. Defendant failed to appeal the adverse determination to the public officer and to submit a rehabilitation plan. Thus, defendant is jurisdictionally barred from challenging the public officer's determination. N.J.S.A. 55:19-55(f). Indeed, Judge Vena found that N.J.S.A. 55:19-55 "couldn't be more clear" and that "the Court just doesn't have jurisdiction" to hear defendant's claim that the Property was not abandoned. We agree.
Defendant argues that the meetings he had with Newark officials during and after 2008 led him to believe that the Property was no longer considered abandoned. However, the Property was never removed from the abandoned property list, and defendant never complied with the procedural requirements in N.J.S.A. 55:19-55(e) and (f) for challenging the public officer's determination that the Property is abandoned. The meetings were focused instead on rehabilitating the Property so that it could become habitable. Moreover defendant failed to comply with several of the requirements established during the November 2008 meeting, and the Property has remained unoccupied, uninhabitable, and in a state of disrepair. Thus, defendant also failed to take steps to remedy the issues at the Property so it no longer met the definition of an abandoned property. See N.J.S.A. 55:19-55(b).
As the Property was properly considered abandoned property for several reasons, and defendant failed to properly challenge that determination, or remedy the reasons, we find that Newark acted appropriately in deeming the Property abandoned pursuant to N.J.S.A. 55:19-81, placing it on the abandoned property list pursuant to N.J.S.A. 55:19-55, and not removing it from the abandoned property list.
IV.
"Failure of an owner or lienholder to remove a property from the abandoned property list within the period of time for appeal of inclusion of the property on the list pursuant to [N.J.S.A.] 55:19-55[] shall be prima facie evidence of the intent of the owner to continue to maintain the property as abandoned property." N.J.S.A. 55:19-56(c)(1). "The clearance, development, redevelopment, or repair of property being maintained as abandoned property pursuant to paragraph (1) of this subsection shall be a public purpose and public use for which the power of eminent domain may be exercised." N.J.S.A. 5:19-56(c)(2). Thus, once property has been placed on the abandoned property list and the appeal period has run, a municipality is then permitted to utilize its power of eminent domain to take the property.
In order to exercise its power of eminent domain, a municipality must comply with the mandates of the EDA. The EDA provides a "number of protections to a landowner before property can be taken by the government." Id. at 155 n.7. The "Legislature has mandated that a condemnor engage in bona fide negotiations with the owner of real property prior to filing a declaration of taking." Hous. Auth. v. Suydam Investors, L.L.C., 177 N.J. 2, 15 (2003). N.J.S.A. 20:3-6 provides, in pertinent part,
that no action to condemn shall be instituted unless the condemnor is unable to acquire title or possession through bona fide negotiations with the prospective condemnee, which negotiations shall include an offer in writing . . . setting forth the property and interest therein to be acquired, the compensation offered to be paid, and a reasonable disclosure of the manner in which the amount of such offered compensation has been calculated, and such other matters as may be required by the rules. Prior to such offer the taking agency shall appraise said property and the owner shall be given an opportunity to
accompany the appraiser during the inspection of the property.
[N.J.S.A. 20:3-6.]
Once bona fide negotiations have failed, a condemnor may file a verified complaint that "shall demand judgment that condemnor is duly vested with and has duly exercised its authority to acquire the property being condemned, and for an order appointing commissioners to fix the compensation required to be paid." N.J.S.A. 20:3-8. After a court has determined that a condemnor is "authorized to and has duly exercised its power of eminent domain, the court shall appoint 3 commissioners to determine the compensation to be paid by reason of the exercise of such power." N.J.S.A. 20:3-12(b).
Here, defendant received a letter indicating Newark's intent to engage in "bona fide negotiations" on February 19, 2013. The letter adhered to all of the statutory requirements, including setting forth that the offer was $5000; that the amount was calculated pursuant to the APRA's requirements for establishing the fair market value of an abandoned property, see N.J.S.A. 55:19-102; and that Newark intended to commence condemnation proceedings fourteen days after the date of the letter. N.J.S.A. 20:3-6. Defendant refused to engage in bona fide negotiations with Newark, which then vested Newark with the power to institute condemnation proceedings within fourteen days. Even then, Newark did not begin condemnation proceedings until April 24, 2013, when it filed its verified complaint.
"The New Jersey Constitution provides that '[p]rivate property shall not be taken for public use without just compensation.'" 62-64 Main Street, L.L.C. v. Mayor & Council of City of Hackensack, 221 N.J. 129, 144 (2015). As N.J.S.A. 55:19-56(c)(2) deems taking abandoned property as a "public purpose," Newark was authorized to and duly exercised its power of eminent domain once it filed its verified complaint seeking such relief. N.J.S.A. 20:3-8. Indeed, Judge Vena properly made such a finding and proceeded to appoint commissioners to value the Property in accord with N.J.S.A. 20:3-12.
"'[A] reviewing court will not upset a municipality's decision to use its eminent domain power "in the absence of an affirmative showing of fraud, bad faith or manifest abuse."'" Solberg Aviation, supra, 409 N.J. Super. at 310 (quoting 769 Assocs., L.L.C., supra, 172 N.J. at 571). "'Bad faith is referred to as the doing of an act for a dishonest purpose. The term also "contemplates a state of mind affirmatively operating with a furtive design or some motive of interest or ill will."'" Id. at 310-11 (citations omitted). "The party claiming that a municipality has acted in bad faith has the burden of proving the improper action by clear and convincing evidence." Id. at 311.
Defendant argues that all of the problems leading to the failure of the rehabilitation project were caused by Newark, and that those problems constituted bad faith and manifest abuse. Defendant cites Newark's "delays" in assisting defendant obtain financing and in approving building permits between 1998 and 2008, Newark's "required" architect's repeated delays, and its dispute with Bank of New York in obtaining financing. However, all of those alleged problems surrounding the failed renovation project at the Property occurred before the rehabilitation project was cancelled in 2009. Newark did not seek to utilize its power of eminent domain to take the property until approximately four years later, in 2013. Utilization of that power was justified by the Property's continued presence on the abandoned properties list, which in turn reflected defendant's failure after 2009 to rehabilitate the Property.
Defendant also argues that the trial court erred in not allowing discovery or holding an evidentiary hearing to determine whether Newark created the problems causing the failed rehabilitation project. However, this appeal is from Judge Vena's order finding that Newark properly exercised its eminent domain powers, and is confined to the issues relevant to that order. Therefore, defendant had no right to seek discovery relating to problems that occurred prior to the rehabilitation project's cancellation in 2009, which were irrelevant to whether Newark had the authority to condemn the Property in 2013. Moreover, "[t]here shall be no discovery on the issue of the authority to condemn except by leave of court." N.J.S.A. 20:3-12; see R. 4:73-11(a); see also State Comm'r v. Carroll, 123 N.J. 308, 320 (1991) (Rule 4:73-11 "provides that parties to a condemnation proceeding may not employ the normal discovery devices except by leave of court."). As defendant never sought leave of a court, any claim that defendant was deprived of discovery is meritless.
Defendant did ask the trial court for an evidentiary hearing to consider the problems allegedly caused by Newark in the rehabilitation project. However, as the alleged problems were irrelevant to the authority of Newark to exercise eminent domain, Orr's certification did not raise "a genuine issue as to any material fact," and the trial court properly declined to hold an evidentiary hearing. R. 4:67-5.
We express no opinion on the merits, if any, of a civil action alleging breach of contract between Newark and defendant. --------
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION