Opinion
DOCKET NO. A-1362-13T3
04-09-2015
HARRISON REDEVELOPMENT AGENCY, Plaintiff-Respondent, v. FER BOULEVARD REALTY CORP., Defendant-Appellant, and CSX CORP.; GENERAL MOTORS CORP.; GREGORY JUDGE; MDC INVESTMENT PROPERTY II LLC; NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY; TOWN OF HARRISON; UNITED NEW JERSEY RAILROAD AND CANAL COMPANY, C/O NORFOLK SOUTHERN CORP., Defendants.
Anthony F. Della Pelle argued the cause for appellant (McKirdy & Riskin, PA, attorneys; Mr. Della Pelle, of counsel and on the brief; Richard P. De Angelis, Jr., and Cory K. Kestner, on the brief). Gregory J. Castano, Jr., argued the cause for respondent (Castano Quigley LLC, attorneys; Mr. Castano, of counsel and on the brief; Salvatore G. Roccaro, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino, Simonelli, and Leone. On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1981-11. Anthony F. Della Pelle argued the cause for appellant (McKirdy & Riskin, PA, attorneys; Mr. Della Pelle, of counsel and on the brief; Richard P. De Angelis, Jr., and Cory K. Kestner, on the brief). Gregory J. Castano, Jr., argued the cause for respondent (Castano Quigley LLC, attorneys; Mr. Castano, of counsel and on the brief; Salvatore G. Roccaro, on the brief). PER CURIAM
After a four-day condemnation trial, a jury awarded defendant FER Boulevard Realty Corporation ("FER") compensation of $8 million for its property in the Town of Harrison in Hudson County. The property had been taken by plaintiff Harrison Redevelopment Agency ("HRA") pursuant to its eminent domain authority. The jury's award was $3.8 million dollars less than the valuation that had been ascribed by FER's real estate appraisal expert.
FER now appeals, alleging that the trial court improperly prohibited testimony from its representative. FER claims that the court also erred in permitting its expert to be cross-examined with various materials that the expert had not relied upon and which had not been disclosed by HRA in pretrial discovery.
Among other things, FER contests HRA's use during cross-examination of a sign ordinance inadvertently copied from the zoning code of the wrong municipality. HRA's counsel quoted from that wrong ordinance in an attempt to impeach FER's expert's valuation of one or more buildings on site that have displayed a rooftop commercial sign. The expert had opined that the right to have such a sign was worth $620,000 in the marketplace, while HRA's expert had ascribed no value to that item.
FER additionally contends that the court erred in rejecting its request to charge the jury that the sign ordinance's abandonment provision, which opposing counsel had stressed during cross-examination and closing argument, was contrary to the terms of N.J.S.A. 40:55D-68, which is a provision of the Municipal Land Use Law ("MLUL"), N.J.S.A. 40:55D-1 to -163, and therefore unenforceable.
Lastly, FER appeals the court's denial of its new trial motion, which had argued cumulative prejudice from these alleged trial errors.
For the reasons that follow, we affirm the majority of the evidentiary rulings now being challenged on appeal. However, we must reverse the court's rulings as to the sign ordinance.
The record and briefs present significant legal and factual issues concerning the validity of the Town of Harrison's abandonment provision within its sign ordinance. These issues arise because the provision, like the one read to the jury from the wrong municipality, appears to fail to require proof in accordance with the application of N.J.S.A. 40:55D-68 that the property owner intended to abandon the use of the sign.
The substantial questions implicating the ordinance's validity required notice to the municipality and a right to intervene in this case under Rule 4:28-4(a)(1). Such notice was not provided here after HRA's late injection of the terms of the abandonment provision into the trial on cross-examination of the final witness.
Moreover, the trial court never ruled on the validity of the sign ordinance's abandonment provision and its conformity with the MLUL, despite FER's request to charge the jury that it is invalid. Such a definitive ruling on this key question of law was required, assuming a lack of the owner's intent to abandon the sign, before the jury deliberated over the sign's alleged value. The sign was a significant, albeit not huge, portion of the competing expert appraisals.
Because the verdict form that the parties agreed to use in this case unfortunately was not segregated by building or item, we cannot determine the actual extent to which the trial errors relating to the sign issue may have affected the jury's lump-sum award for the whole property. Consequently, we remand for additional proceedings relating to the sign issue and a potential new trial, depending on the outcome of those proceedings.
I.
A.
The subject property consists of approximately ten acres located at 700 Frank E. Rodgers Boulevard South in the Town of Harrison. The property contains a total of 770,342 square feet of improved space, including ten separate industrial buildings. It is located in what has been described as an historically industrial neighborhood in Harrison, bounded on the west by Frank E. Rodgers Boulevard, which is a county road that connects the property to Newark's Ironbound neighborhood. The parcel is in close proximity to Interstate Route 280, the New Jersey Turnpike, and mass transit services.
As of HRA's date of taking, April 14, 2011, FER was the record owner of the subject property, having purchased it in 1999 for $5.25 million. The property contained ten buildings, designated as Number Zero through Number Nine. The property had not been used or occupied since 1995.
Moishe Mana was later identified to HRA as being the principal of FER.
According to the appraisal conducted by HRA's real estate expert, Richard Polton, the unoccupied property had a value of $2.97 million as of the date of taking. As we will elaborate, infra, Polton contended that most of the parcel had no positive market value, except for Building Number One, which Polton opined could be used only for parking.
Conversely, FER's valuation expert, Robert Von Ancken, valued the property at $11.8 million. Von Ancken conceded that six of the ten buildings on the site had no market value. However, Von Ancken opined that Building Number One could be used for warehousing as well as for parking. He also contended that three other buildings on site could be used for warehousing and storage. As we have already noted, Von Ancken's valuation included a $620,000 component for the value of a sign on top of Building Number Four and Building Number Five.
Prior to trial, the case was presented to a panel of condemnation commissioners, who valued the property at $10.2 million. Both parties were dissatisfied with the commissioners' determination, and the matter consequently proceeded to a jury trial in June 2013.
B.
At the trial, Polton, a certified real estate appraiser, testified for HRA as its valuation expert. Polton was qualified by the court, without objection, as an expert witness.
Based on his on-site inspection and appraisal, Polton provided the jury with an overview of the property's permitted uses under the pertinent zoning code. Of those permitted uses, Polton opined that limited portions of the property were appropriate to be used productively, only as a public garage, public parking lot, warehousing, and possibly for limited industrial and manufacturing uses.
In cross-examining Polton, FER's counsel referred Polton to a Town of Harrison ordinance which defined various permitted uses within the ordinance. FER's use of this ordinance, which also was not submitted into evidence, differed from HRA's use of similar materials (discussed infra, in Part II(B)(3)), on Von Ancken's cross-examination, in primarily two ways: (1) Polton indicated some level of familiarity with the ordinance, and (2) FER's counsel did not read aloud the specific language of the ordinance. However, FER's counsel did ask Polton for his interpretation of whether certain permitted uses were covered under the ordinance presented, although he did not raise the sign ordinance or the abandonment provision within it.
During the course of his testimony, Polton described each of the ten buildings in detail, including their physical structure, layout, accessibility, and condition. Polton stated that the "basic condition" of the property was "in very poor shape" as a whole. He noted there was "a lot of" graffiti, the buildings had many broken windows, and the structures "had deteriorated because of water penetration."
FER's expert, Von Ancken, likewise described the premises' physical condition on a building-by-building basis, noting such details as the presence of basement flooding or debris on the ground due to a fallen ceiling.
Polton opined that Building Number One was the only building on site as to which value could be attributed, based on its potential use for both covered and rooftop parking. As for the remaining nine buildings, Polton testified that "none" of them were conducive to serve as parking facilities. He found that those other buildings "were in such deteriorated condition that [he] couldn't find any reasonable use" for any of them.
Relying exclusively on the "income approach" to perform his valuation, Polton calculated that the subject property was worth $2.97 million as of the date of taking. This valuation was based on the renovation of Building Number One for its highest and best use as a parking facility.
Real estate experts commonly choose among three widely-accepted appraisal methods for valuing commercial property: the comparable sales approach, the cost approach, and the income approach. State ex rel. Comm'r of Transp. v. 200 Route 17, L.L.C., 421 N.J. Super. 168, 171 n.1 (App. Div.), certif. denied, 208 N.J. 601 (2011).
Polton specifically rejected the alternative "cost approach" in this case. He did so because the buildings were "so obsolete" and the cost of demolishing them would be "so high" that he could not derive, through a cost approach, a "reasonable value" for the property.
Polton also rejected the alternative "sales comparison approach" for valuation in this case, because the property consisted of a collection of ten buildings on a single parcel of land. He testified that he was unable to identify any comparable properties that would similarly function as one economic unit. He believed no such comparable properties existed in the New Jersey marketplace for a ten-acre parcel with 700,000 square feet of industrial space in multiple buildings.
Von Ancken, who likewise is a certified real estate appraiser, testified for FER on two days of the trial. He similarly was deemed qualified by the court to testify as a real estate appraisal expert without objection.
Von Ancken offered contrasting opinions about the property's highest and best use, based on his evaluation of its physical characteristics and location, its historical use, and the warehousing market demand. He attributed value to four of the buildings on the subject property: Building Numbers One, Seven, Eight, and Nine.
Like Polton, Von Ancken did not apply the "cost approach" in calculating the fair market value of the subject property. Von Ancken did apply the income approach, as did Polton, but he additionally used the sales comparison approach for one of the buildings.
Consistent with his pretrial expert reports, Von Ancken testified that the subject property was worth $11.8 million as of the date of taking. This total figure comprised $7.5 million for Buildings One, Eight, and Nine and $4.3 million for Building Seven.
The $7.5 million total for these three buildings included a value of $1.54 million for the parking lot and $620,000 for the sign. By contrast, Polton did not attribute any market value to the sign.
Von Ancken concluded that the highest and best use of the three one-story buildings would be for warehouse space. Von Ancken further stated that Building Number Seven would be a good candidate for use as a mini-storage facility. Because the demand for office space in that particular neighborhood "wasn't good," Von Ancken did not consider office space as an appropriate highest and best use for the site.
During the course of Von Ancken's cross-examination, HRA's counsel confronted him with several items that had not been disclosed to FER during pretrial discovery. We discuss those items, infra, within our legal analysis in Part II.
After deliberations, the jury awarded FER the lump sum of $8 million. Alleging various trial errors, FER moved for a new trial, which the judge denied in a written opinion.
This appeal by FER ensued. HRA has not cross-appealed, despite the fact that the jury's award substantially exceeded Polton's valuation.
II.
Under the Eminent Domain Act of 1971, N.J.S.A. 20:3-1 to - 50, and constitutional principles, a governmental entity is required to pay the property owner "just compensation" for the taking of private property for the government's use. "Just compensation" has been defined as "the fair market value of the property as of the date of the taking, determined by what a willing buyer and a willing seller would agree to, neither being under any compulsion to act." Borough of Saddle River v. 66 E. Allendale, LLC, 216 N.J. 115, 136 (2013) (quoting State v. Silver, 92 N.J. 507, 513 (1983)).
The property's "highest and best use" is the most relevant factor to determine this fair market value, although "all reasonable uses of the property" should be considered. State v. Caoili, 135 N.J. 252, 260 (1994). The highest and best use is the use that produces the highest value, provided the use can be legally and physically achieved. Cnty. of Monmouth v. Hilton, 334 N.J. Super. 582, 587-88 (App. Div. 2000), certif. denied, 167 N.J. 633 (2001).
Generally, the determination of a property's highest and best use is based on zoning conditions at the time of taking. State v. Gorga, 26 N.J. 113, 116 (1958). The factfinder must determine "what a willing buyer and a willing seller would agree to, neither being under any compulsion to act," 66 E. Allendale, supra, 216 N.J. at 136. As the Supreme Court has noted, the trial court should avoid having the jury hear "speculative evidence" when determining what a reasonable buyer and reasonable seller would be willing to pay. Id. at 142. With this general legal framework in mind, we turn to the specific issues FER raises.
A.
As its primary point on appeal, FER argues that the trial judge improperly disallowed fact testimony from the owner or a representative of the owner. FER contends that property owners have an absolute right to testify at a condemnation trial. More specifically, FER asserts that the proffered testimony about the property's actual physical condition was relevant to the question of fair market value. In addition, FER contends that the testimony would have been probative to rebut Polson's testimony that the property had not been properly maintained.
In opposition, HRA argues that "only qualified appraisers" may testify at a condemnation trial. HRA also contends that neither a property owner's "state of mind" nor his "subjective feelings regarding condemnation" are relevant to fair market value.
Procedurally, FER attempted at least three times to introduce fact testimony from an owner's representative, first in two pretrial motions in limine and again during the course of the trial itself. Although the judge initially expressed a willingness to allowing the owner's testimony, she ultimately barred it.
The issue first cropped up in a motion in limine by HRA the court heard in May 2013, a month before trial. This particular motion focused on the use for which FER originally intended to use the subject property upon purchasing it in 1999. HRA argued that such testimony about the owner's original intent on acquisition in 1999 was irrelevant for the purposes of establishing the property's fair market value as of the 2011 taking date.
Further, HRA expressed concern that admitting such testimony from the owner's representative would "cause the jury to speculate" as to "why is it that the property as of April 2011 is in such deplorable condition." Such juror speculation would potentially be prejudicial to HRA, which had been engaged in large-scale redevelopment activities and rezoning in the area during that same time frame. HRA's counsel proffered that, if need be, it had a rebuttal witness who would testify that he had advised FER not to purchase the property because FER would not be able to use it for the intended use of storage.
For general background concerning the redevelopment in Harrison, including the ultimate construction of the Red Bull Arena, see Harrison Redevelopment Agency v. DeRose, 398 N.J. Super. 361 (App. Div. 2008).
In response, FER argued that an owner's reason for purchasing the property in the first place was "highly pertinent" to aid the jury in evaluating the property's "highest and best use." According to FER, that highest and best use involved using the parcel as a warehousing and storage facility.
FER's counsel could not specifically identify at the May 2013 oral argument which representative of the owner he proposed to have testify. He stated that it would "more likely" be Erez Shternlicht or possibly Fran Parker, both of whom were identified as employee witnesses authorized to speak on behalf of the owner. In any event, according to FER's counsel at that time, FER's owner Mana would not himself be testifying.
After hearing these arguments, the trial judge initially ruled that FER would be allowed to present one owner representative, Shternlicht, to testify about the property's intended use at the time it was purchased in 1999. The judge also ruled that HRA would be permitted to offer a rebuttal witness. The court's May 6, 2013 order memorializing that ruling stated that FER "is barred from introduction of any testimony or evidence of [FER]'s owners, agents, or employees other than the testimony of Erez Shternlicht."
Subsequently, HRA moved for reconsideration of rulings that the court had made at the May 6, 2013 hearing. In addition, FER submitted a cross-motion for reconsideration, seeking to substitute the testimony of Shternlicht with that of Mana at trial. The judge heard oral argument on these motions on June 7, 2013, a few days before jury selection.
In its cross-motion, FER explained that it wished to offer the testimony of Mana instead of Shternlicht, who was no longer employed by Mana and who apparently had moved to California. FER's counsel asserted that he "was not aware personally" of this detail at the time of the May 6, 2013 hearing. FER further argued that substituting Mana for Shternlicht would not cause prejudice to HRA and would be a "vindication of [FER]'s right to call the witnesses he wishes to call" at trial.
The nature of the owner's testimony that FER proffered at the June 2013 pretrial hearing differed slightly from what FER had initially proposed at the May 2013 hearing. This time, FER contended that the owner's testimony would relate to "the physical adaptability of the property to the highest and best use of warehousing, self storage, dead records storage, [and] parking[.]" In addition, FER suggested that Mana would testify that, before HRA's taking, "he provided security and routine maintenance to prevent [the property] from deteriorating further[.]" FER's counsel did acknowledge that the rezoning changes which occurred "as a result of the redevelopment plan," which effectively disallowed FER's originally intended use of the property, would not be submitted into evidence, based on the court's prior rulings.
In opposition, HRA reiterated its legal position that the owner's original intended use in 1999 was irrelevant to determining the property's 2011 fair market value. HRA further argued that the potential testimony from Mana essentially amounted to a disguised attempt by FER to "inflame the [j]ury to think that the Town or the Government prevented them from doing something that they intended to do in 1998."
Counsel for HRA referred to two earlier unpublished decisions of the trial court, in which the questions of original intended use and beneficial use of the subject property had been fully litigated and decided. Citing the principle of offensive collateral estoppel, HRA vigorously argued that it should be entitled to rely upon those prior decisions. Additionally, HRA submitted that the testimony from the appraisal experts for each side at the condemnation trial would adequately address the question of the property's April 2011 value.
Counsel provided to us copies of those two prior decisions in post-oral argument submissions.
Reflecting more about these issues at the June 2013 hearing, the judge expressed concern that the proposed testimony from Mana would have the potential to confuse the jury. The judge also expressed concerns about how the jury would react to potential references to prior litigation if Mana testified. Given these concerns, the judge decided that she would not let Mana testify. However, the judge was inclined to have her prior ruling from May 2013, allowing Shternlicht to testify, remained unchanged, albeit with strong limitations placed on topics as to which Shternlicht would not be permitted to testify.
Thereafter, a vigorous exchange among the judge and counsel ensued, in which they continued debating the allowable scope of Shternlicht's proposed testimony. Following that exchange, the judge reconsidered her original ruling to allow Shternlicht's testimony:
[T]his [case] is about the experts, and we're going to allow it [to] be about the experts . . . . And I think we've come to the same resolve, allowing this [j]ury to make a determination on just compensation based on what they believe from the experts.
. . . .
[t]hen I'm not going to allow Mr. Shternlicht . . . I'm going to reverse myself on that, I'm going to allow just the experts to testify[.]
[(Emphasis added).]
The court's ruling on this issue is memorialized in an order dated June 7, 2013. Specifically, the order recited that "[u]pon reconsideration, the [c]ourt directs that [FER] is barred from submitting the testimony of Erez Shternlicht, for reasons set forth on [the] record."
FER's final attempt to have a client representative testify arose at trial on June 13, 2013, when its counsel made a renewed oral application to call Mana to the witness stand. FER argued that Mana's testimony should be allowed to rebut the testimony of Polton, HRA's appraisal expert, on two points specifically. First, FER's counsel wished to call Mana to rebut Polton's testimony that no money was spent on the maintenance of the property since FER purchased it in 1999. Second, FER sought to have Mana rebut Polton's testimony that there was no security provided around the property. FER's counsel argued that these two subjects were separate and distinct from the previously-proffered testimony about Mana's original intended use of the subject property. FER's counsel argued that these questions of maintenance and vandalism stemming from an alleged lack of security were relevant to the issue of the property's valuation.
HRA's counsel opposed this renewed attempt to have Mana testify. He argued that Polton's testimony on these subjects was "ancillary to the description" of the property as depicted in photographs shown at trial, and that there was no need for Mana to counter it.
The judge denied the application, finding it "a far stretch" to have Mana take the stand. The judge added that she was "not convinced that anything that has been said by Mr. Polton affects the condition of the property that would affect valuation."
On balance, we are satisfied that the trial judge did not misapply her discretion in her ultimate decision to disallow Mana or another owner's representative from testifying. To be sure, some authorities do recognize a general receptivity to allowing property owners to testify at condemnation proceedings:
The owners of property being condemned are, obviously, key witnesses. It is the value of their land which is being decided by the jury. Their emotional attachment to the land will come out in their testimony. They can best describe the property and their description will likely be in language which is understandable to the jury. The land owners can describe the uses to which they have put the property, the improvements made, and other unique features that make the land more valuable.
[Nichols on Eminent Domain, Ch. G8, § G8.10[5][c][ii] (Matthew Bender, 3rd ed. 2014) (emphasis added).]
In most jurisdictions, a property owner is permitted to testify as to his opinion of the value of the property. Ibid. However, the content of a property owner's testimony is not unlimited, and there are differing views as to what type of testimony is permitted:
The [property] owner may introduce evidence of the highest and best prospective use even though such owner has no plans to sell the property or utilize it for that use. The prospective use will not be admissible, however, if the asserted use is fanciful, speculative, or conjectural, or if it depends on a variance which legally cannot be granted. While the authorities are in full accord in their rejection of speculation and conjecture, "they are far from definite in their demarcation of the point at which the conjecture, speculation and remoteness may be said to vanish, leaving only those elements which necessarily enter into the calculations of a prospective purchaser."
[Nichols, supra, Ch. 18, § 18.05[3] (quoting Metro. Water Dist. v. Adams, 116 P.2d 7, 19 (Cal. 1941) (emphasis added)).]
Appellate cases from other states at times have found inadmissible certain types of testimony from property owners. For example, in North Carolina, a farm owner's testimony about potential uses of the condemned farm was inadmissible as "too speculative" and "remote," absent any evidence that the owner had taken steps toward the potential future uses prior to the time of taking. City of Wilson v. Hawley, 577 S.E.2d 161, 164 (N.C. Ct. App. 2003). Also in North Carolina, it has been found improper for a property owner to testify as to the "uses to which he had intended to devote" the property. State v. Johnson, 191 S.E.2d 641, 657 (N.C. 1972). However, such testimony as to future uses would be permitted if the owner had affirmatively taken steps to adapt the property for such uses, prior to the date of taking. Town of Hillsborough v. Crabtree, 547 S.E.2d 139 (N.C. Ct. App.), rev. denied, 553 S.E.2d 213 (N.C. 2001).
In Texas, an appellate court found that it was improper to admit the property owner's testimony as to his planned use of the property upon purchasing it, which was sixteen years prior to the date of taking. State v. Harrison, 97 S.W.3d 810, 814 (Tex. App. 2003). In that case, the property owner was permitted at trial to testify that he had planned to commercially develop the property in 1980. Ibid. At the time of the property's condemnation in 1996, however, the property owner was using the property for grazing cattle and had not taken any steps toward using the property for commercial purposes. Ibid. The court held that permitting this testimony was in error, because the property owner's intentions "were never acted on, and were therefore only subjective[.]" Ibid.
FER principally relies on Department of Environmental Protection v. Fairweather, 298 N.J. Super. 421 (App. Div. 1997). In Fairweather, the property owner was found to have been improperly restricted at trial from testifying about how much he had paid to construct two retaining walls on the property. Id. at 427. These two walls were described as being "in extremely good condition" and "exhibit[ing] no physical obsolescence" at the time of taking. Id. at 425. In addition, the walls were described at trial as being "an integral part of the property," because they "prevent[ed] the house from sliding into the canal[.]" Id. at 425-26. We concluded in that context that the evidence from the owner of the walls' original cost to build was relevant to establishing fair market value, in part because the improvement was "of an unusual kind or description with the value not readily discernable." Id. at 426.
HRA cites several cases, some of them quite old, that support the notion that an owner has no absolute right to testify as a fact witness in a condemnation case. In Port of N.Y. Authority v. Howell, 68 N.J. Super. 559 (App. Div.), certif. denied, 36 N.J. 144 (1961), the property owner argued on appeal that its desire not to sell the property should have been a factor in the trial court's determination of fair market value. Id. at 565. At trial, the owner had not been permitted to offer testimony that appellant, and other property owners in the immediate vicinity, were unwilling to sell their properties, in an attempt to explain the lack of commercial development in that particular neighborhood. Id. at 564. We upheld the trial court's exclusion of the proffered testimony, finding that the desire of a property owner to sell, or not to sell, the property was not a factor that should be considered as one which a hypothetical buyer and a hypothetical seller would weigh in a purchase and sale negotiation. Id. at 565.
In Riley v. Camden & Trenton Railway Co., 70 N.J.L. 289 (E. & A. 1904), the appellant condemnor argued on appeal that two witnesses for the property owner, her husband and a neighboring property owner, should not have been allowed to testify at trial because they lacked knowledge or experience that would qualify them to provide such testimony. Id. at 289. Both witnesses had been permitted to testify at trial based on their level of familiarity and acquaintance with the property, by virtue of having lived on or in close proximity to the property. Ibid. The Court of Errors and Appeals reversed, finding that it was erroneous to permit such testimony, because "[t]here was not a scintilla of evidence to show that either of these witnesses had any expert knowledge of real estate values, much less any special experience in the loss of value arising from the destruction of shade trees," and "[m]ere observation of a piece of real estate, although continued and attentive, is not sufficient to qualify one as an expert respecting its value." Id. at 290.
In Walsh v. Board of Education of Newark, 73 N.J.L. 643 (E. & A. 1906), the Court of Errors and Appeals found that the testimony of the condemned property's prior owner was inadmissible because he lacked "special knowledge" that would assist the jury ("there were shown on his part no opportunity to observe, and no actual observation, in the locality of the land which fitted him to speak of its value"). Id. at 647.
Lastly, HRA cites to Hilton, supra, 334 N.J. Super. at 582, which contained the following language:
For the reasons we have already stated, we concur that a property owner's subjective feelings regarding a proposed condemnation are hardly relevant, if relevant at all, in determining, based on appropriate objective factors, what he would be likely to do based solely on prevailing market conditions without threat of condemnation. In short, an owner's wish not to have his property condemned should not factor into the determination of fair market value once it is condemned.
[Hilton, supra, 334 N.J. Super. at 595-96 (emphasis added).]
We draw from these cited authorities the following nuanced principle: whether a subject property owner's testimony may be permitted to testify as a fact witness at a condemnation trial turns on the specifics of the proffered testimony. In particular, the admissibility question should hinge upon (1) the nature of the factual issues involved; (2) the owner's knowledge about those discrete issues; (3) whether there is other testimony or evidence already in the trial record that would make the owner's testimony cumulative or distracting; and (4) whether the testimony, even if relevant, would otherwise be subject to exclusion in the court's discretion under N.J.R.E. 403.
These principles are subject to the Legislature's declaration in N.J.S.A. 2A:83-1 that any witness with knowledge of comparable sales of property may testify about those comparable properties. That statute is inapplicable here, as the testimony proffered from FER's owner was essentially about the subject property itself, not about comparable properties.
Under N.J.R.E. 403, evidence may be excluded even if it is relevant, "if its probative value is substantially outweighed by the risk of (a) undue prejudice, confusion of issues, or misleading the jury or (b) undue delay, waste of time, or needless presentation of cumulative evidence." N.J.R.E. 403.
Here, the proffered testimony consists of: (1) FER's originally intended use (as FER argued at the May 6, 2013 pretrial hearing) for warehousing and storage, (2) the physical adaptability of the property and the owner's provision of security and routine maintenance (as FER later argued at the June 7, 2013 pretrial hearing), and (3) the owner's provision of security and routine maintenance (as FER argued at trial on June 13, 2013).
FER's first proffer qualifies as a "speculative" topic, on which testimony was properly barred. There was no evidence presented to suggest that FER's owner took any steps to use the property in accordance with his original wishes. The trial court had ample reason to bar such testimony about intended use from the owner.
As a caveat to that, we do not foreclose testimony from the owner on remand concerning the pivotal question of an intent to abandon the use of the sign. See Part II(B)(3), infra.
FER's second and third proffers concerning security and routine maintenance were also reasonably rejected by the trial judge. The physical condition of the ten buildings was amply demonstrated through photographs that were submitted into evidence at trial. In addition, the competing experts testified about the physical conditions. They did not express significant differences in their observations of those physical conditions and the limitations of the buildings. If anything, Von Ancken had a somewhat more optimistic view of the extent to which those buildings could be rehabilitated. His greater level of optimism was evidenced by his attributing value to four of the ten buildings on the property, as compared to Polton attributing value to only one building. The trial judge rightly expressed concern on multiple occasions about the risk of prejudice or jury confusion, under N.J.R.E. 403, if testimony on these subjects were permitted. These concerns included a well-founded perception that allowing such testimony by the owner would inject an emotional aspect on a topic that could just have easily been covered through expert testimony.
"As a general rule, admission or exclusion of proffered evidence is within the discretion of the trial judge whose ruling is not disturbed unless there is a clear abuse of discretion." Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 92 (App. Div. 1991). We discern no such abuse of discretion here with respect to the exclusion of the owner's testimony.
B.
We turn to FER's argument that the court erred in allowing HRA's trial counsel to cross-examine Von Ancken with various materials that were not disclosed in discovery. With one major exception relating to the sign ordinance, we sustain the judge's decision to allow this cross-examination.
In approaching these issues, we are mindful that our case law has generally emphasized the importance of cross-examination in "ascertaining the truth of a matter." Jamgochian v. N.J. State Parole Bd., 394 N.J. Super. 517, 536 (App. Div. 2007), aff'd as modified, 196 N.J. 222 (2008). The scope of cross-examination of experts who have testified to value in land damages cases is very broad. Cnty. of Ocean v. Landolfo, 132 N.J. Super. 523, 528 (App. Div. 1975); see also Nichols, supra, Ch. 23, § 23.08[2]. In the context of property appraisals, "[t]he weight to be given to an expert's appraisal of land depends . . . upon his candor, intelligence, knowledge, and especially upon the facts and reasoning which are offered as foundation of his opinion." Landolfo, supra, 132 N.J. Super. at 528.
In Landolfo, we held that the plaintiff county should have been permitted to cross-examine the defendant landowner's expert witness as to the extent of his reliance on non-comparable sales properties, which had been excluded from the evidence at trial. Id. at 529. The court opined that the inadmissibility of that comparative sales evidence
did not lessen [its] potential for undermining opinion testimony [on] which [it] appeared to have been based . . . . Inadmissibility of such sales to state value is no index of its availability on cross-examination to determine the weight, if any, given by the expert to the sales declared lacking in comparability as a matter of law.
[Ibid.]
This broad latitude notwithstanding, the right to cross-examination is not unbounded. The trial court is afforded considerable discretion in setting and enforcing the boundaries of permissible cross-examination. State v. Wakefield, 190 N.J. 397, 452 (2007), cert. denied, 552 U.S. 1146, 128 S. Ct. 10, 74 L. Ed. 2d 817 (2008); see also Glenpointe Assocs. v. Twp. of Teaneck, 241 N.J. Super. 37, 54 (App. Div.), certif. denied, 122 N.J. 391 (1990) (applying this principle to the cross-examination of a property appraisal expert witness). An appellate court ordinarily will not disturb such constraints imposed by the trial court without a showing of "clear error and prejudice." Wakefield, supra, 190 N.J. at 452.
1.
FER complains about HRA's introduction of a newspaper clipping that it described as "advertising . . . for a building for parking on 96 Freylinghuysen Avenue." The advertisement was from the publication, the Village Voice, and was dated October 17, 2012. The manner in which HRA's counsel introduced the advertisement unfolded as follows:
Q. I'd ask you [to] look at this, please. It's a two-page document. [T]ell me if you know what that is.
A. I don't know what it is.
Q. Okay. Is it self-descriptive? Does it say the Village Voice, October 17, 2012?
A. Well, that's what it says. Yes.
Q. And I'd like you to turn to the second page, please. And is there an advertisement there for a building at 96 Frelinghuysen [sic] Avenue?
Immediately after this exchange, FER's counsel objected. HRA's counsel argued that she wished to offer the advertisement to impeach Von Ancken's credibility, because the advertisement was for one of the comparable sales properties that Von Ancken had included in his appraisal report as a comparable for one of the buildings on the subject property in this case. In response, FER's counsel asserted that opposing counsel could not cross-examine on the advertisement because it was unauthenticated.
While acknowledging that HRA's counsel should not have stated to Von Ancken that the advertisement, as the judge termed it, was "self-explanatory," the judge overruled FER's objection, yet instructed HRA's counsel to "not cross[] the line" in her questioning. In her written opinion denying FER's new trial motion, the judge noted that this was a proper way of challenging the expert's credibility and that the newspaper advertisement is self-authenticating and thus required no extrinsic evidence of authenticity, under N.J.R.E. 902(f) ("[p]rinted materials purporting to be newspapers or periodicals.").
We agree. The advertisement legitimately called into question Von Ancken's valuation of Building Seven, to which he attributed $4.3 million in value. The advertisement showed that one of the comparable properties for Building Seven ultimately sold for $2.8 million, whereas Von Ancken had valued that particular building at over $3 million. Notably, Building Seven was the sole building for which Von Ancken applied only the sales comparison approach. Because Von Ancken used the sales comparison approach for Building Seven, HRA was entitled to attempt to undermine the credibility of that analysis. See Landolfo, supra, 132 N.J. Super. at 528.
The wording of N.J.R.E. 902(f) is identical to that of F.R.E. 902(6), which recognizes that there is little likelihood that a newspaper or periodical would be forged. Although that inherent element of trustworthiness does not necessarily extend to all contents of a newspaper or periodical, there is nothing about the Village Voice advertisement in this case that suggested a lack of trustworthiness.
2.
FER's counsel also objected to HRA's counsel's use on cross-examination of a municipal site plan resolution, which reflected the January 1999 approval of the parking lot on the subject property. The site plan approval had been obtained by a preceding owner.
After HRA's counsel introduced this resolution during cross-examination, Von Ancken testified that he did not recognize the document nor did he recall having previously seen it. He did not recall specifically which documents or information that he had relied on in making a statement in his appraisal report that approval for a 483-space commuter parking lot had been received in 1999.
HRA asserted that it was entitled to introduce this resolution to impeach Von Ancken's credibility because his appraisal report referred to approval received for the commuter parking lot. In opposition, FER argued that the resolution could not be used during Von Ancken's cross-examination because Von Ancken had already testified that he did not recognize the document and had not relied on it in developing his appraisal report. The court overruled FER's objection and allowed the cross-examination to proceed. There was no redirect examination by FER.
In her written post-trial opinion, the judge found that HRA's use of the resolution was a proper method of witness impeachment. In addition, she found that the resolution would be self-authenticating as an official public document, under N.J.R.E. 902(a). We concur.
The use of the prior resolution in this context was a proper way to undermine Von Ancken's credibility. Von Ancken's report specifically referred to approval that had been obtained for the parking lot on Building One, to which significant value was attributed. Moreover, on cross-examination, he acknowledged that he had based that assertion on information that FER's counsel had provided to him. Upon further questioning, he also acknowledged that he was aware that the approval had lapsed in 1999 and that he had "made the assumption" that approval for a "similar plan" for parking would be obtained in the future. The fact that Von Ancken had not examined the municipal site plan resolution reflecting the terms of the approval for the parking lot reasonably called into question the thoroughness and reliability of his appraisal calculations.
Because the parking lot comprised a significant portion of the value attributed to the property and because Von Ancken made specific reference to this particular approval, we aqree with the judge's determination that HRA's use of the resolution for impeachment purposes was proper.
3.
The final — and most troublesome — issue on this appeal concerns HRA's cross-examination of Von Ancken concerning the municipal sign ordinance. To place this issue in proper context, we first relate the pertinent aspects of Von Ancken's direct examination concerning the sign issue, and his expert testimony supporting a $620,000 value for the rooftop commercial sign.
When he described both the income approach and the sales comparison approach used for Buildings One, Eight, and Nine, Von Ancken specifically articulated that his analysis of the subject property's value included value attributable not only to the buildings themselves but also value attributable to the sign atop Buildings Four and Five, and the value of the roof parking located atop Building One. However, Von Ancken did not expound upon any assumptions that he had made regarding the sign, in order to arrive at his calculation.
The photograph was not reproduced in the record on appeal. From the trial transcript, it appears that the sign has rested atop both Building Four and Building Five, perhaps straddling the roofs of the buildings.
Von Ancken later testified that, in order to determine a value attributable to the sign, he compared it to other income-generating signs. Von Ancken also stated that the subject property's sign was "very valuable" because it could face both the Interstate 280 highway and Frank E. Rodgers Boulevard.
Von Ancken's testimony on direct therefore suggested that he valued the sign as a two-sided sign. In addition, he stated that the sign was approximately eighty-five feet in length and approximately thirty feet in height. In describing how he applied his income approach analysis, Von Ancken factored in the amount of rental income that the sign could generate on an annual basis.
Similarly, in describing how he applied the sales comparison approach, Von Ancken testified that he relied on billboard rental rates for what he considered to be three comparable billboards, presumably of similar size and located in similar locations, in order to estimate the amount of rental income that the sign located on the subject property could generate.
Von Ancken estimated in his report that the subject property's sign could generate $48,000 per year. Capitalizing the value of the sign based on that estimated annual revenue, Von Ancken determined that the sign had a value of $620,000.
On cross-examination, HRA's co-counsel at trial attempted to impeach Von Ancken in several ways. Von Ancken was able to identify the sign to which he had referred in his direct examination, as being located on top of Buildings Four and Five, from a photograph that HRA's counsel had marked for identification. Von Ancken acknowledged that the subject property had not been used since 1995, as was stated in his report and also the report of HRA's expert, Polton.
Von Ancken maintained that he valued the sign as it was being used as of the April 14, 2011 valuation date, which was as a one-sided sign. However, he later acknowledged on cross-examination that he also considered the future value of the sign, as a two-sided sign, and compared it against billboards that also are two-sided. Von Ancken asserted that his determination of the sign's estimated $620,000 value included the possibility that the sign could be used for either general advertising or for advertising only the subject property itself.
HRA's co-counsel then asked Von Ancken on cross-examination about whether he was familiar with the laws regarding outdoor advertising. Although Von Ancken asserted in response that he had reviewed what type of sign would "most likely [be] permitted," he also testified that he believed that "if the proper application was made . . . that there could be a reasonable probability . . . to permit a . . . double[-]sided sign." Von Ancken acknowledged that an appraiser would need to know that the use of the property that he was valuing was legally permissible. He also asserted that his $620,000 valuation of the sign took into consideration that the sign's use would be legally permissible, "or that there would be [a] reasonable probability to obtain permission to do something with the sign."
HRA's co-counsel proceeded to cross-examine Von Ancken on these issues by reading aloud from what she thought was the sign ordinance from the Town of Harrison in Hudson County. In actuality, counsel inadvertently read instead from the sign ordinance of a different municipality, the Township of Harrison in Gloucester County.
The three specific provisions on which HRA co-counsel relied during her cross-examination to impeach Von Ancken's testimony on this subject were:
(1) Township of Harrison, N.J., Code § 225-89 (2002) ("General regulations"), specifically sub-section (B)(4), which reads: "No roof sign shall be permitted, and no sign shall project above the main cornice line of the building to which a sign is affixed."
(2) Township of Harrison, N.J., Code § 225-99 (2002) ("Dimensional requirements"), specifically that billboard signs are restricted to a maximum width of thirty feet and a maximum height of thirty feet from the ground level.
(3) Township of Harrison, N.J., Code § 225-97 (2002) ("Abandoned signs"), specifically requiring that a sign "related to the use of a property which becomes vacant and unoccupied for a period of six months or more" be removed within thirty days of the date of abandonment.
These ordinance provisions generally align with the Town of Harrison ordinances at Harrison Municipal Code 17-93.4, 17-93.3, and 17-93.6, respectively, although we need not delve here into all of the discrete similarities and differences between the relevant ordinances of the two municipalities.
It was the provision regarding abandoned signs under § 225-97 from the Township ordinance on which HRA co-counsel specifically obtained Von Ancken's acknowledgment that the sign would not be legally permissible, on the grounds that the subject property had been unoccupied for a period of time much greater than six months.
The two municipal sign ordinances, which HRA's co-counsel had confused, are not identical. To be sure, the proper ordinance from the Town of Harrison that FER cites, entitled "Nonconforming signs," does permit a nonconforming sign to continue to exist, as FER asserts. See infra, Town of Harrison, N.J., Harrison Municipal Code, 17-93.6 (1998). However, Von Ancken's testimony was not impeached using an ordinance regarding nonconforming signs. His testimony was impeached based on an ordinance regarding the removal of an abandoned sign, Township of Harrison, N.J., Code § 225-97, for which there is a similar, but not identical, ordinance from the Town of Harrison.
Those ordinances, from each of the Township of Harrison and the Town of Harrison, both require the removal of a sign that is located on a property that becomes unoccupied for a period of time. Because such a sign must be removed for a six-month period of disuse in the Township of Harrison, and for a sixty-day period of disuse in the Town of Harrison, the ordinance from the Township of Harrison, alluded to on cross-examination, is actually more lenient than that of the Town of Harrison, as related to the removal of such signs.
Nevertheless, it is quite plausible that either ordinance — the one from the Township or the one from the Town — regarding the removal of signs located on an unoccupied property could be found legally invalid under the MLUL. Each ordinance requires removal of a sign on an unoccupied property, without considering the owner's subjective intent to abandon the property, which, as the discussion, infra, shows, is impermissible under the MLUL. Thus, it is very likely here that the jury received an incorrect impression that the sign on the subject property would be considered abandoned solely because of its long period of disuse and, thus, was legally impermissible.
Compounding that potential prejudice to FER is the fact that HRA's co-counsel focused in summation on what she described as Von Ancken's inadequate analysis of the sign's potential viability. As HRA's counsel argued to the jury, "And we had him go through the housing ordinance that said [you] can't have [the sign]. It's been sitting there too long, the dimensions are all wrong, but [Von Ancken] insisted that you could . . . make it a two-sided sign" (emphasis added).
FER's counsel requested a jury instruction that the ordinance presented to the jurors (actually from the Township of Harrison, although then mistakenly assumed to be from the Town of Harrison) regarding abandoned signs (§ 225-97), which was read aloud at trial, is facially invalid, because it deems a sign to have been abandoned after a six-month period of disuse, without considering the owner's subjective intent. Expressing concern that the jury would get the wrong impression about the state of the law, FER proposed an instruction to articulate something to the effect that "the Town of Harrison [cannot] say the use of the existing sign has been abandoned just because the sign was not in actual use for a proscribed period of time."
The judge declined to give the requested instruction, in part because the validity of the ordinance had not been challenged in any litigation. The judge did expressly permit the parties to comment on the ordinance's validity during summations, which neither side ultimately did.
The MLUL, specifically N.J.S.A. 40:55D-68, has been construed as allowing a property owner to indefinitely continue a nonconforming use. S & S Auto Sales, Inc. v. Zoning Bd. of Adjustment for Stratford, 373 N.J. Super. 603, 622 (App. Div. 2004). A municipality may not adopt an ordinance that automatically presumes that a nonconforming use or structure has been abandoned, without considering the owner's subjective intent to abandon. Ibid. In S & S, this court recognized that the owner bears the burden of proving such intent, and that "intent must be continuing and definite." Id. at 624. The passage of time may be one factor, but, alone, is not dispositive in determining whether the owner intended to abandon the property. Ibid.
Under N.J.S.A. 40:55D-68, then, either § 225-97 (from the Township of Harrison) or § 17-93.7 (from the Town of Harrison) might be found facially invalid, because neither sign ordinance provides for consideration of an owner's subjective intent to abandon. However, the trial judge never made a definitive legal ruling on that question, either before the jury was charged or in her post-trial decision.
In fact, it would have been procedurally improper for the trial court to strike down the abandonment provision under the MLUL without advance notice and an opportunity to intervene being afforded to the Town of Harrison. Rule 4:28-4(a)(1) specifically requires that the party questioning the "validity of an ordinance . . . of a governmental subdivision of this State . . . shall give notice of the pendency of the action to the attorney or chief legal officer of the governmental subdivision." R. 4:28-4(a)(1). No such notice was provided here.
We note that the HRA is a separate redevelopment agency established by the Town of Harrison, and is not the Town itself or its governing body.
We do not fault FER's counsel for failing to provide such notice here, as the injection of the sign ordinance was an eleventh hour trial tactic by HRA. Unfortunately, the parties did not exchange Rule 4:25-7 submissions, in which HRA's reliance on the sign ordinance might have been disclosed in advance of trial. In any event, the legal validity of the ordinance's abandonment provision was not suited to disposition without such notice. It would have been improper for the judge to grant FER's request for a jury instruction stating that the ordinance was invalid in that setting. It likewise would have been improper for counsel to take up the judge's invitation to argue over the ordinance's validity or invalidity to the jury.
We suggest that the Supreme Court's Civil Practice Committee might wish to consider amplifying Rule 4:25-7 and the related Appendix XXIII of the Rules of Court to require litigants to disclose in advance of trial any statutes, regulations, or ordinances that they plan at trial to use, or to assert their violation, or question their validity. For one thing, such required formal pretrial disclosure might have prevented here the misuse at trial of an ordinance from the wrong municipality.
Because the validity of the sign ordinance's abandonment provision was a critical aspect of the dispute over the $620,000 valuation for the sign, the trial was unfortunately tainted by that unresolved issue. There is no way to tell if the jury awarded zero value for the sign, the full $620,000 advocated by Von Ancken, or a figure somewhere in between those extremes.
The matter consequently must be remanded to the trial court to resolve these issues. The trial court shall first require FER to proffer evidence that it had no intent to abandon the rooftop sign. If FER makes a prima facie showing of a lack of such intent, then the trial court shall address the abandonment provision's validity, on proper notice to the Town of Harrison. If, on remand, the court concludes that the abandonment provision is indeed in conflict with the MLUL and thus invalid, then the matter must be retried. At the retrial in that circumstance, the court shall reconsider allowing FER's owner to testify to a jury on the limited question of his intent (or lack of intent) to abandon the use of the sign before the date of taking.
We express no view here as to whether the two unreported opinions in the prior litigation would have preclusive effect on such intent-related testimony. That preclusion issue, if it becomes germane, will need to be addressed by the trial court in the first instance.
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Since the verdict form was general and not segregated by building or item, we cannot carve out the impact of this potentially critical trial error. However, on a retrial the parties may stipulate to narrow the issues and isolate only the sign item and its associated valuation.
The trial court's rulings are affirmed in part and vacated in part relating to the sign issue. The matter is remanded for proceedings relating to the abandonment provision of the sign ordinance. Depending upon the outcome of those proceedings, a potential new trial shall be conducted, consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION