N.J. Court Finds No “Temporary Taking” During Abandoned Condemnation Proceeding

A New Jersey Appellate Court ruled against several landowners in Long Branch who sought compensation for losses they allegedly suffered during the pendency of a condemnation action that the city eventually abandoned. In the absence of an actual “declaration of taking,” the Court held in its October 16 opinion, the landowners were not entitled to compensation.

The case arose from condemnation actions that Long Branch commenced in 2005 and 2006 to implement a redevelopment plan for an area that it had found to be “in need of redevelopment.” The trial court rejected motions to dismiss filed by the defendants in those actions, granted judgments in favor of the City, and appointed condemnation commissioners.

The trial court’s decision, however, predated the Supreme Court’s landmark opinion in Gallenthin Realty Development, Inc. v. Borough of Paulsboro, which held that the New Jersey Constitution requires a finding of actual blight before private property may be taken for purposes of redevelopment. The Appellate Division reversed the judgment and remanded the case to the Law Division to give the City a chance to show that it could meet the Gallenthin standard. Instead, the City entered into settlement negotiations and, in 2009, abandoned the eminent domain proceedings.

In settling the matters, the City agreed to pay the defendants’ litigation expenses, as required by the Eminent Domain Act. Some of the settling defendants released any claims for further compensation from the City, in exchange for eligibility to seek redeveloper status. Other defendants chose to retain the right to seek further compensation from the City. They filed their actions in 2010, alleging that they were entitled to “just compensation” for the “temporary taking” of their property during the abandoned condemnation actions. The trial court granted summary judgment to the City, and the landowners appealed.

The landowners did no better in the Appellate Division, which rejected their claims on both legal and factual grounds. First, the Court held, under the statute there is no taking of property until the municipality files and records a “declaration of taking,” which Long Branch had not done. The Court also rejected the landowners’ argument that the trial court’s judgment in the original condemnation proceedings had declared that a taking had occurred; that judgment merely authorized the City to proceed with its condemnation action.

Finally, the Appellate Division rejected the landowners’ argument that a compensable taking had occurred “under general constitutional principles.” Declining to decide whether the Eminent Domain Act provides property owners with their exclusive remedy in terms of compensation, the Court — agreeing with the Law Division — found that the record contained no factual support for the landowners’ claims that their properties had lost value and that they were unable to sell or develop their properties during the original condemnation actions. The Court easily distinguished cases where the condemnor had placed an absolute moratorium on development, and where an ordinance had the effect of “freezing” development of the plaintiff’s property for a year.

Indeed, under the Court’s reasoning, it is difficult to see how the landowners could have prevailed on their constitutional claim even if they had presented evidence of diminution in value or inability to sell or develop their land during the condemnation actions. Cases like Pheasant Bridge Corporation v. Township of Warren have held that mere diminution in value or impairment of marketability does not constitute a taking.

Hoagland seeks to draw a bright line in condemnation cases: after the declaration of taking is filed and recorded, the landowner is entitled to compensation, but the landowner will not be able to obtain statutory compensation, and almost certainly will not be able to obtain compensation in constitutional grounds, for problems encountered before that key event.

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