STATE OF NEW JERSEY v. J & J REALTY COMPANY, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0556-04T50556-04T5

A-0557-04T5

STATE OF NEW JERSEY, by the COMMISSIONER

of TRANSPORTATION,

Plaintiff-Respondent,

v.

J & J REALTY COMPANY, a New Jersey

Corporation,

Defendant-Appellant,

and

R & G DEVELOPMENT COMPANY, a Partnership

consisting of Julius B. Racier and Jack

Glantz, THE BANK OF NEW YORK, a Banking

Corporation of New York, Successor to

NATIONAL UNION BANK OF NEW JERSEY, by

Merger, FLEET NATIONAL BANK, a National

Banking Association, Successor to UNITED

JERSEY BANK/NORTHWEST, by Various Mergers,

STATE OF NEW JERSEY, P.C. RICHARD & SON

LONG ISLAND CORPORATION, a Corporation of

New York, ETHAN ALLEN INC., a Corporation

of Delaware, WHIPPANY MANOR-WAYNE, INC., a

Corporation of New Jersey, and TOWNSHIP OF

WAYNE, in the County of Passaic, a

Municipal Corporation of New Jersey,

Defendants.

____________________________________________________

STATE OF NEW JERSEY, by the Commissioner

of Transportation,

Plaintiff-Respondent,

v.

ALICIA NORDQUIST,

Defendant-Appellant,

and

THE ANTHONY WAYNE CHARCOAL OVENS, INC.,

a Defunct Corporation of New Jersey,

TOWNSHIP OF WAYNE, in the County of Passaic,

a Municipal Corporation of New Jersey,

Defendants.

 
_____________________________________________

Argued February 8, 2006 - Decided September 1, 2006

Before Judges Wecker, Fuentes and Graves.

On appeal from the Superior Court of New

Jersey, Law Division, Passaic County,

L-4322-03 and L-4386-03.

James M. Turteltaub and William J. Ward

argued the cause for appellants in both

appeals (Carlin & Ward, attorneys; Mr.

Turteltaub, Mr. Ward, John J. Carlin,

and Arthur G. Warden, III, of counsel

and on the brief).

David R. Patterson, Deputy Attorney General,

argued the cause for respondent in both

appeals (Zulima V. Farber, Attorney General,

attorney; Michael Haas, Assistant Attorney

General, and Mr. Patterson, on the

brief in A-0557-04T5; Patrick DeAlmeida,

Assistant Attorney General, of counsel,

and Diane Glass, Deputy Attorney General,

on the brief in A-0556-04T5).

PER CURIAM

Defendants J & J Realty Company and Alicia Nordquist are neighboring commercial property owners whose right of direct access to westbound State Highway 46 (Route 46) has previously been revoked by the State pursuant to the Highway Access Management Act, N.J.S.A. 27:7-89 to -98, specifically, N.J.S.A. 27:7-94a and N.J.A.C. 16:47-1.1 to -9.1. The revocation was undertaken by the State as part of its plan for a major highway improvement project to widen Route 46 for many miles. Defendants' direct access to the westbound roadway was eliminated to allow construction of an acceleration lane to ease the traffic flow in the area of the interchange of Routes 46, 23, and Interstate Route 80.

In administrative proceedings to revoke access, which were completed in 1999 pursuant to the Highway Access Management Code, N.J.A.C. 16:47-4.1 to -4.43, J & J reached a settlement with the State in which it agreed that the "alternative access" to its property as proposed was "reasonable." See N.J.S.A. 27:7-94c. Nordquist's administrative appeal from the initial determination of an administrative law judge was affirmed by the Commissioner of Transportation; Nordquist did not appeal that final decision.

In conjunction with the same planned highway improvement project, the State subsequently exercised its power of eminent domain to acquire temporary construction easements over each defendant's property, for an estimated four-month period of time beginning on an unspecified future date, as may be required to complete the highway project. It is those acquisitions, pursuant to the Eminent Domain Act, N.J.S.A. 20:3-1 to -50, that are at issue in these appeals.

As Judge Passero concluded in the Law Division, neither defendant has a viable, timely right in this action to challenge the earlier revocation. The property owners' denial of direct access to the highway was not before the Law Division and is not before this court. All that is before us is the State's right to take temporary easements by eminent domain, and the proper measure of damages for such taking.

It is plain under current law that severance damages are not available for loss of direct highway access. As Judge Passero concluded:

While it's true that an owner of land abutting a highway may not be shut off from all access and his right of access must be consonant with traffic conditions and reasonable police requirements, it is also true that limitation of access, so long as reasonable access to the highway system remains, is not a taking by eminent domain, but is accomplished under the police power and is not compensable.

See State v. Weiswasser, 149 N.J. 320, 340-41 (1997); High Horizons Dev. Co. v. State, 120 N.J. 40, 48 (1990). The judge recognized that there may be a reasonable concern about the fairness of that rule, but correctly concluded that any change is a matter for the Legislature.

As a matter of law, that revocation of the right of direct highway access pursuant to the Highway Act is deemed an exercise of the State's police power and not a compensable "taking." High Horizons, supra, 120 N.J. at 48; State v. Nat'l Amusements, Inc., 244 N.J. Super. 219, 223 (App. Div. 1990), certif. denied, 127 N.J. 327 (1991). As a matter of "public policy," there is no right of compensation for that revocation itself, irrespective of whether it actually causes the property owner some loss. High Horizons, supra, 120 N.J. at 48-49.

As provided by N.J.S.A. 20:3-6, prior to filing complaints in these eminent domain actions, the State first undertook to purchase a temporary easement from each defendant property owner, offering J & J $150,000 and Nordquist $11,000 for the temporary use of a portion of their respective properties. After each defendant refused, the State followed the procedure set forth in N.J.S.A. 20:3-17: the State filed its "declaration of taking" along with its offer to each property owner and filed its Verified Complaint and Order to Show Cause, seeking a declaration of its right to take the temporary easements and a referral to Commissioners to determine the just value of each.

Judge Passero rejected each defendant's cross-motion to dismiss the State's complaint for condemnation, stating that neither defendant had met its burden of proving that the State failed to undertake bona fide negotiations or failed to make a just offer of compensation as required by N.J.S.A. 20:3-6. See State v. Carroll, 123 N.J. 308, 315-24 (1991).

The judgments entered in each case provided in material part, that the State "duly exercised its power of eminent domain"; that three Commissioners were appointed "to fix the compensation to be paid"; that the earlier revocation of highway access was "finally adjudicated" and "reasonable alternative access" provided with no compensation due; that "the measure of damages caused . . . by the State's acquisition of a temporary construction easement is to be measured by the rental value" of the easement without regard to "any business loss"; that the valuation dates would be the dates the State's complaints were filed, to cover the actual use of the easement; and that the Commissioners were not to hear evidence of any other claimed damages. The order specifically declared that the property owners were not entitled to, and therefore could not submit evidence of "severance damages" resulting from the prior denial of highway access, or damages for loss of business during the construction.

In response to defendants' arguments that it was unfair to allow the State to have the value of the easements set as of an earlier date, for a taking that would occur at some indeterminate date in the future, possibly years later, the judge provided, at paragraph 10 of each judgment:

Notwithstanding the entry of this Order, if there is an undue delay under the totality of circumstances in the State's commencement of its use of the temporary construction easement area and/or an undue delay in the State's completion of the work on the temporary construction easement area . . . either party may apply to this Court for an adjustment of the valuation date and accrual period described . . . above or for such other relief as may be just and proper.

Defendants now appeal virtually identical Orders for Final Judgment and Appointing Commissioners, entered August 18, 2004. On appeal, defendants first contend that the State's complaint should be dismissed because the description of the easement to be acquired is too vague, both in its start date and in its duration, to allow them to evaluate the State's offers and thus satisfy N.J.S.A. 20:3-17(e). They also argue that compensation for the temporary easement should begin as of the date of the declaration of taking, because the declaration itself has placed a cloud on their use and the value of their properties that will continue until the termination of the easement. Defendants argue that the judge erred in excluding severance damages and barring them from submitting to the Commissioners evidence of the full damages they claim.

Defendants contend that the terms and conditions of the State's temporary easement on each property and the uncertainty of the future date and duration of its exercise, when combined with the loss of direct highway access, causes loss of business to their present or potential commercial tenants and thus reduces the rental or sale value of their properties. To support that argument, defendants rely upon State v. Van Nortwick, 287 N.J. Super. 59 (App. Div.), certif. denied, 143 N.J. 320 (1995) (Van Nortwick II). The State and the judge correctly distinguished Van Nortwick on the ground that in that case, the State took title to a substantial piece of the defendant's property in conjunction with changing the property's highway access. As a result of the change in the dimensions of the property, future modifications of the property would not meet zoning requirements and would require variances. The court in Van Nortwick clearly recognized that the highway access change alone was not compensable. 287 N.J. Super. at 62-63 (citing our prior opinion in the same case, State v. Van Nortwick, 260 N.J. Super. 555, 558 (App. Div. 1992), certif. denied, 143 N.J. 320 (1995) (Van Nortwick I)).

Paragraph 10 of each order, while creating uncertainty as to the finality of the damages to be assessed by the Commissioners, nonetheless appears to provide a reasonable remedy to address defendants' reasonable concerns about the future value of the easements. Paragraph 10 essentially protects defendants from the State's invocation of res judicata or collateral estoppel in the event of an unreasonable passage of time before exercise of the State's right.

The judge found the proper measure of damages for the taking of temporary easements to be "the rental value of the property taken" for the period of its actual use, relying on State v. Sun Oil Co., 160 N.J. Super. 513, 527 (Law Div. 1978) ("Where a temporary construction easement is taken for highway purposes and the property is rented, the rental value of the property taken is the normal measure of damages and is awarded for the period taken.").

Rental value of the land involved, not a business loss, is the proper measure of damages for a temporary easement of this nature. [Citations omitted]

There is a special reason why evidence [of business losses] of this character is inadmissible as proof of damages of the taking [of] a temporary construction easement. The business loss is actually attributable to the disruption of the highway during the period of reconstruction rather than to the occupancy of the temporary easement area. Highway construction is carried out in the exercise of the police power, and inconvenience or injury to adjoining property owners, arising from reasonably necessary operations on the right of way, is not compensable as a "taking" of their property in the constitutional sense.

[Ibid. (quoting Commonwealth v. Fister, 373 S.W.2d 720, 723 (Ky. 1963)) (all but the last alteration in original).]

Defendants offer no persuasive alternative measure, and we have found none. Based upon our review of the record, neither defendant presented sufficient evidence that the additional measures of damage they seek are attributable to the compensable taking of a temporary easement and not to the uncompensable changed highway access. For example, we would have anticipated evidence that a tenant has refused to renew its lease at the current or market value as a result of the State's impending construction easement, or that a real estate expert has attested to the impact that the anticipated exercise of the State's construction easement has had on new or renewal leases.

Affirmed substantially for the reasons set forth by Judge Passero in an oral decision placed on the record on April 6, 2004, as summarized and modified in a decision settling the form of order and placed on the record on June 30, 2004.

 

Although we denied defendants' motions to consolidate the appeals, the cases were argued together by the same counsel of record, and we address both appeals in this opinion.

(continued)

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A-0556-04T5

September 1, 2006