NEW JERSEY SCHOOLS CONSTRUCTION CORPORATION, et al. v. GUPPY HOLDINGS, L.L.C.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2831-04T32831-04T3

NEW JERSEY SCHOOLS CONSTRUCTION

CORPORATION, a subsidiary of the

NEW JERSEY ECONOMIC DEVELOPMENT

AUTHORITY, a public body corporate

and politic,

Plaintiff-Respondent,

v.

GUPPY HOLDINGS, L.L.C., a New

Jersey limited liability company,

Defendant-Appellant,

and

CITY OF NEWARK, in the County

of Essex, a municipal corporation

of New Jersey,

Defendant.

______________________________________

 

Submitted October 6, 2005 - Decided

Before Judges Fall and Grall.

On appeal from Superior Court of New

Jersey, Law Division, Essex County,

Docket No. L-8821-04.

McCarter & Higgins, attorneys for

appellant (George W.C. McCarter,

of counsel and on the brief).

Carella, Byrne, Bain, Gilfillan, Cecchi,

Stewart & Olstein, attorneys for

respondent (Avram S. Eule, on the

brief).

PER CURIAM

Defendant Guppy Holdings, L.L.C. (Guppy) appeals from a final order appointing condemnation commissioners. Defendant argues that plaintiff New Jersey Schools Construction Corporation (Schools) failed to negotiate in good faith as required by N.J.S.A. 20:3-6 and the trial court erred in denying his motion to dismiss Schools' condemnation complaint on that basis. We affirm.

The property at issue is Block 4230, Lot 43, known as 677-681 South Orange Avenue in the City of Newark. Dr. Ruben Fleurantin purchased the property for $70,000 in 1994.

Schools became interested in the property as a site for a project in 2002. On August 8, 2002, a consultant retained by Schools conducted an environmental survey. On February 12, 2003, Mary Ellen Coghlan, accompanied by Dr. Rubin Fleurantin, inspected and appraised the property. She assigned a fair market value of $40,000 based upon comparable sales and the condition of the structure. By letter dated June 16, 2003, Schools wrote to Dr. Fleurantin and advised him of its intention to acquire his property in accordance with the Emininent Domain Act of 1971, N.J.S.A. 20:3-1 to -50.

One year later, Guppy acquired the property. It obtained a final judgment in a tax sale foreclosure action on June 11, 2004, and through it "an indefeasible estate of inheritance in fee simple" in the subject property. Guppy failed to record the judgment.

Schools did not learn about defendant's acquisition until it received information about the tax sale certificate through a title search. After further investigation, Schools' attorney learned that Guppy had obtained title.

Schools' attorney commenced negotiations with defendant in August 2004, two years after its first inspection of the property. Guppy advised that it would not sell the property for an amount "anywhere near" the $40,000 appraised value. Guppy questioned the similarity of the comparable sales the appraiser

utilized and the fact that its property taxes for 2003 were based on an assessed value of $179,600. According to Guppy, plaintiff refused to budge from its $40,000 offer. Schools' attorney understood that Guppy preferred to proceed directly to condemnation.

In any event, by letter dated August 19, 2004, Schools' attorney wrote to Guppy confirming its agreement to record the judgment of foreclosure and enclosing the 2003 appraisal as Schools had promised. In that letter, the attorney agreed to present Schools with any updated appraisal Guppy wished to provide.

By November 9, 2004, Guppy had not responded to the August 19 letter, and Schools filed an order to show cause and verified complaint seeking condemnation pursuant to R. 4:67-2, and

R. 4:73-1. By order dated November 9, 2004, the court set the return date for December 10, 2004.

On November 11, 2004, Schools' attorney wrote to Guppy advising of the filing of the complaint and its intention to file an updated appraisal and inviting Guppy to submit any materials it would like to have the appraiser consider.

Apparently Guppy had retained counsel. By letter also dated November 11, 2004, Guppy's attorney wrote to Schools' attorney rejecting the $40,000 offer as "grossly inadequate" and contrary to Schools' obligation to negotiate in good faith. Guppy was served with the order to show cause and verified complaint on November 15, 2004.

On December 1, 2004, Guppy moved to dismiss Schools' complaint for failure to comply with its obligation to negotiate in good faith pursuant to N.J.S.A. 20:3-26.

Judge Costello denied defendant's motion on January 11, 2005, and entered final judgment on January 12, 2005. The judge found:

Defendant's contention that plaintiff did not negotiate in good faith is misplaced. It is undisputed that plaintiff made an offer supported by an appraisal. The offer was rejected, but no counteroffer was made. There is an undisputed statement by an attorney for plaintiff to the effect that the parties agreed to have the value dispute resolved through a condemnation complaint. There is undisputed evidence that the prior sale price and [tax] re-evaluation were considered (although deemed to be irrelevant) by plaintiff. Their position does not approach the disapproved level of the condemnor in County of Morris v. Weiner, 222 N.J. Super. 560 (App. Div.) certif. denied, 111 N.J. 573 (1988). Accordingly, judgment is entered and [the] commissioners appointed (see companion order).

We affirm, substantially for the reasons stated and add the following to address the claims raised on appeal.

While Guppy debates the judge's reference to certain facts as "undisputed," it did not file a reply to Schools' certifications and there is no genuine dispute about a fact material to the question of whether Schools negotiated in good faith.

The obligation to negotiate in good faith is statutory. N.J.S.A. 20:3-6 provides that good faith negotiations must include:

an offer in writing by the condemnor to the prospective condemnee . . . 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 inspection of the property. . . . A rejection of said offer or failure to accept the same within the period fixed in written offer, which shall in no case be less than 14 days from the mailing of the offer, shall be conclusive proof of the inability of the condemnor to acquire the property or possession thereof through negotiations. When the holder of the title is unknown, resides out of the State, or for other good cause, the court may dispense with the necessity of such negotiations. Neither the offer nor the refusal thereof shall be evidential in the determination of compensation.

"The Legislature certainly intended that the Act's requirements of a fair offer, reasonable disclosure, and bona-fide negotiations be construed and applied in a manner protective of property owners. . . ." State by Comm'r of Transp. v. Carroll, 123 N.J. 308, 315 (1991). Nonetheless, as our courts have recognized, "we would be short on realism . . . were we not to note that it takes at least two to negotiate and the record should be reviewed with that in mind." Id. at 323 (quoting Monmouth County v. Whispering Woods at Bamm Hollow, Inc., 222 N.J. Super. 1, 9 (App. Div. 1987), certif. denied, 110 N.J. 175 (1988)).

Guppy acquired its interest in the subject property after the condemnation negotiations commenced. Schools had appraised the property in the presence of its prior owner and promptly contacted Guppy when it learned that Guppy had acquired it through foreclosure. Although Guppy explained the basis for its disagreement with the appraisal, Guppy did not propose or even suggest an amount that would address the deficiency it perceived.

This is not a case in which the condemnor failed to make "a reasonable disclosure of the manner in which the amount of . . . offered compensation has been calculated." See Morris County v. 8 Court Street Ltd., 223 N.J. Super. 35 (App. Div.), certif. denied, 111 N.J. 572 (1988). Nor, as Judge Costello noted, is it a case like Morris County, supra, 222 N.J. Super. at 565, in which the condemnor refused to alter its position in the face of "'concrete and highly credible evidence' of a higher value, i.e., a recent bank mortgage appraisal and a third-party offer

. . . ." Carroll, supra, 123 N.J. at 317-18 (quoting and discussing Weiner). The tax assessed value, upon which Guppy relies, is not conclusive in a condemnation proceeding. See generally Bergen County Sewer Auth. v. Little Ferry Borough, 15 N.J. Super. 43 (App. Div. 1951).

"The State's duty to negotiate in good faith can be tempered by a property owner's failure to cooperate." Carroll, supra, 123 N.J. at 323. Judges must recognize that in some cases "'invitations by a condemning authority to negotiate are ignored or tardily answered, and [in such cases judges must] determine the point at which the condemnor's invitation matures into an attempt to acquire the property through bona fide negotiations.'" Ibid. (quoting Morris County, supra, 222 N.J. Super. at 567). We see no error in Judge Costello's determination that the critical point was reached and passed when Guppy, after initially rejecting Schools' offer, let two and one-half months expire before responding to a letter inviting further negotiations.

 
Affirmed.

"An order adjudicating the right to condemn and appointing condemnation commissioners is considered to be a final judgment that is appealable as of right." See N.J.S.A. 20:3-2(j), Hous. Auth. of City of New Brunswick v. Suydam Investors, L.L.C., 355 N.J. Super. 530, 540 (App. Div. 2002), rev'd on other grounds, 177 N.J. 2 (2003).

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A-2831-04T3

November 14, 2005