CITY OF LONG BRANCH v. DENNIS S. SPANOS and THEONIE F. SPANOS, his wife

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2936-04T12936-04T1

CITY OF LONG BRANCH,

a Municipal Corporation of

the State of New Jersey,

Plaintiff-Respondent,

v.

DENNIS S. SPANOS and

THEONIE F. SPANOS, his wife

Defendants-Appellants,

and

FIRST UNION NATIONAL BANK,

formerly known as First

Fidelity Bank, N.A., City of

Long Branch and Long Branch

Sewerage Authority,

Defendants.

 
 

Argued April 26, 2006 - Decided June 14, 2006

Before Judges Conley, Weissbard, and Sapp-Peterson.

On appeal from Superior Court of New Jersey,

Law Division, Monmouth County, L-1953-02.

Kenneth D. McPherson, Jr. argued the cause for

appellants (Waters, McPherson, McNeill, attorneys;

Mr. McPherson, of counsel and on the brief; Jorge

R. de Armas, on the brief).

Paul V. Fernicola argued the cause for respondent

(Bowe & Fernicola, attorneys; Mr. Fernicola, of

counsel and on the brief).

PER CURIAM

Defendants Dennis S. Spanos and Theonie F. Spanos appeal from a Law Division order of January 7, 2005 granting a motion by plaintiff City of Long Branch (the City) to enter a final judgment fixing just compensation for two lots owned by defendants that plaintiff took by condemnation. We reverse.

I

The chain of events leading to the present appeal began in 1982 when defendants purchased adjacent vacant lots in the City of Long Branch as a retirement investment. The two lots are identified as 32 Ocean Avenue North, Block 297, Lots 21 and 22, with a total land area of 23,478 square feet.

Two years later, in 1984, the City issued a broad blight declaration, covering defendants' property and much of the adjacent land. Defendants put their future plans of building and operating a restaurant on the property on hold. In early 1987, defendants received a letter from counsel for the Long Branch Redevelopment Agency, offering to buy their property for $127,000. Defendants declined. Shortly thereafter, defendants were approached by a nearby property owner, who offered to buy their lots for $650,000, but the deal fell through. In December 1988, the City revalued its property for tax purposes and assessed the current market value of defendants' lots at $414,800.

On January 9, 1996, the City enacted Ordinance 50-95 (the 1996 Ordinance), applicable to "waterfront mixed residential units," presumably in an effort to spur owner development. The ordinance increased the maximum permitted development density of the land to which it applied from eighteen units per acre to thirty units per acre and eliminated a prior requirement that at least forty percent of development be permitted uses other than residential use.

On January 23, 1996, the City adopted Resolution No. 38-96, designating much of the City's oceanfront, including defendants' property, as a redevelopment area. Defendants' property was designated as within the Beachfront North Sector of the Oceanfront Broadway Redevelopment Area (the Redevelopment Area). The City adopted a plan for the Redevelopment Area on May 14, 1996 and subsequently amended the plan. On January 23, 2001, the City adopted Ordinance No. 2-01, authorizing it to institute eminent domain proceedings to acquire defendants' property.

In accordance with eminent domain procedure, the City retained an appraiser, Hugh A. McGuire of McGuire Associates, to appraise defendants' property. The report prepared by McGuire, which estimated the market value of defendants' land as of August 11, 2000, valued the property at $152,600. At the applicable time, the property was zoned as RC-4, which permits a range of both residential and commercial development. McGuire's appraisal determined that the "highest and best use" of the vacant property was "for an assemblage with other property to form a legal size plot in accordance with the zoning regulation," as the lot size was below the minimum two-acre requirement. In arriving at the assessed value, McGuire's appraisal relied on zoning Ordinance 20-8.9 and did not mention the less-restrictive 1996 Ordinance, which had amended Ordinance 20-8.9.

After negotiations between the City and defendants regarding the value of the property failed, the City filed a verified complaint on April 25, 2002 and an Order to Show Cause on April 30, 2002. On August 2, 2002, an Order for Payment Into Court and Possession was signed. On August 26, 2002, the City filed a Declaration of Taking and submitted $152,600 to the Clerk of the Superior Court.

A condemnation commissioners' hearing was held on November 25, 2002. The City's real estate appraiser was the only witness, and the City's appraisal report was the only report entered into evidence. No mention was made of the 1996 Ordinance or its potential applicability. Following the hearing, the commissioners fixed compensation to be paid by the City at $294,000. On December 6, 2002, the City filed a notice of appeal from the commissioners' award. Defendants never filed a cross-appeal.

After receiving the City's notice of appeal, defendants' counsel contacted the appraiser retained by defendants, Jon Brody of Appraisal Consultants Corp., to ensure that his report would be timely prepared. Brody, however, explained that he would be unable to complete the appraisal until the issue of whether the 1996 Ordinance applied to the Redevelopment Area, which was being decided in another case, City of Long Branch v. Discover Sales, was resolved. On September 26, 2003, a Case Management Order was entered directing that defendants' expert report would be due forty-five days after the Discover Sales ruling. The original trial date of April 21, 2003 was rescheduled for March 29, 2004 and again for September 27, 2004, still awaiting the decision in Discover Sales.

On July 9, 2004, a decision was rendered in Discover Sales, finding that the 1996 Ordinance did not apply to properties in the redevelopment area. Because the September 27, 2004 trial date would be approaching shortly after the forty-five day window in which defendants could submit their appraisal report, defendants' counsel sought a brief trial adjournment. A case management conference was scheduled for December 10, 2004, and a new trial date of January 15, 2005 was fixed.

On August 19, 2004, Brody submitted his appraisal of defendants' lots, stating that, as of April 25, 2002, the market value of the property was $1,070,000. Brody's report found that, subject to the assemblage process in accordance with the applicable zoning regulations, the highest and best use of the land "taking full advantage of its location within a few hundred feet of the Atlantic Ocean . . . was for mid-rise or townhouse residential development similar to other residential development taking place in the Long Branch and nearby communities."

On September 16, 2004, the Discover Sales decision was reversed upon reconsideration. An order was entered on November 5, 2004, stating that "Ordinance 50-95 . . . is applicable to the RC-1, RC-2, RC-3, RC-4, and C-4 Zones." Thus, the Discover Sales litigation ultimately determined that the less-restrictive 1996 Ordinance is applicable to defendants' land.

On November 17, 2004, the City withdrew its appeal of the commissioners' award and filed a motion for entry of Final Judgment Fixing Just Compensation in the amount of $294,000. Defendants cross-moved to remand the matter for another commissioners' hearing so that the value of defendants' property could be assessed consistent with Discover Sales. On January 7, 2005, the court granted the City's motion for final judgment and denied defendants' motion for a remand. The judge reasoned that any prejudice to defendants occurred as a result of their failure to file a cross-appeal, and that, due to that failure, established case law did not give the judge "discretion to not grant the application of plaintiffs to withdraw their appeal."

II

On appeal defendants raise a multitude of issues as follows:

POINT I

SPANOS HAS BEEN DENIED HIS CONSTITUTIONAL RIGHT TO RECEIVE JUST COMPENSATION DUE TO THE CITY OF LONG BRANCH'S DELIBERATE DECISION NOT TO DISCLOSE TO THE CONDEMNATION COMMISSIONERS THE EXISTENCE OF ZONING ORDINANCE AFFECTING THE VALUE OF THE PROPERTY.

POINT II

THE CITY OF LONG BRANCH'S FAILURE TO TURN "SQUARE CORNERS" IN FAILING TO DISCLOSE OR UTILIZE PROPER ZONING REQUIRES THAT THE MATTER BE REMANDED.

i) Affirmative Duty Of Disclosure

ii) "Square Corners" Precluded Concealment Of The 1996 Ordinance

POINT III

IN LIGHT OF THE CITY'S INEQUITABLE GAMESMANSHIP GENERAL PRINCIPLES OF EQUITY PREVENT LONG BRANCH FROM EXPLOITING THE FAILURE OF SPANOS TO TIMELY FILE A CROSS APPEAL DOCUMENT.

A. Inequitable Assertion Of The Cross- Appeal Defense At The Eve Of Trial After Twenty Two Months Of Pre-Trial Adjournments And Case Management.

B. Given Its Period Of Prolonged Silence In The Face Of Spanos' Reasonable Belief That His Value Contentions Were Viable The City Should Be Estopped From Requiring A Formal Notice Of Appeal Of Commissioners' Award.

POINT IV

THE TRIAL COURT COMMITTED LEGAL ERROR IN DETERMINING THAT A FORMAL CROSS APPEAL IS ABSOLUTELY REQUIRED IN ORDER TO CONTINUE PROSECUTING AFFIRMATIVE VALUE CONTENTIONS.

A. Adequacy Of Substantive Compliance With The Stark Cross-Appeal Guidance.

POINT V

THE TRIAL COURT ERRED IN HOLDING THAT THE COURT LACKED DISCRETION TO RELAX ANY CASE LAW MADE REQUIREMENT OF FILING A CROSS-APPEAL

i) Rule Text Distinguished

ii) Absence Of Undue Prejudice To The City

POINT VI

THE TRIAL COURT DID NOT FAIRLY WEIGH THE UNDUE PREJUDICE THAT WOULD RESULT TO THE APPELLANT AND THE PUBLIC'S INTEREST IN ASSURING THAT A PRIVATE PROPERTY OWNER RECEIVE JUST COMPENSATION FOR A GOVERNMENTAL TAKING WITHOUT NEEDLESS LITIGATION.

A. The Trial Court Misinterpreted Tenenbaum As Granting The City Unfettered Authority To Withdraw An Appeal Of A Condemnation Commissioners' Award.

B. The Present Case Is Clearly Distinguishable From Stark And Tenenbaum Because None Of The Policy Concerns Favoring Unconditional Dismissal Of A Condemnor's Appeal Are Present In The Matter Sub Judice.

C. Public Interest In Fair Proceedings

D. Long Branch Does Not Have a Cognizable Interest In Unconditionally Withdrawing Merely To Preserve An Inadequate Award.

We agree with defendants that a formal cross-appeal was not required in these circumstances to preserve their right to challenge the condemnation award and that, as a result of the Condemnation Commissioners' failure to consider the 1996 zoning ordinance, defendants were arguably deprived of their right to fair compensation. In view of our disposition, we have no need to address the arguments advanced in defendants' Points II and III.

III

In granting the City's motion for final judgment and denying defendants' motion for a remand, the trial judge, after discussing the relevant case law, explained:

Any detriment or prejudice to the property owner is really as a result of there not being a cross appeal filed in connection with this matter. And to the extent that there is not one, I don't think I have any discretion to not grant the application of plaintiffs to withdraw their appeal.

Obviously both counsel acknowledge that there is no authority for me to remand the matter for a new commissioners hearing or there's no cases to that extent. I expressed some concern that the result may appear unjust here, to the extent that both parties understood that the defendants were unhappy with the commissioners award and thought that the value of the property was in excess of the commissioners award. And the case had proceeded you know, to trial.

. . . .

But as I read [State, by the Comm'r of Transp. v.] Tenenbaum, [ 151 N.J. Super. 273 (App. Div. 1977)] and as I read [State, by the State Highway Comm'r v.] Stark, [ 95 N.J. Super. 152 (Law Div. 1967)], and as I read the statute and as I read the rules, this Court really does not have the ability to allow plaintiff to file a notice of appeal of the commissioners -- or defendants to file a late notice of appeal of the commissioners' award and that the failure to object to the commissioners' award and file an appeal from that is fatal to the defendants' argument.

So based on . . . Tenenbaum, I find that in weighing the public interest and in weighing the prejudices here, that the equities lie on behalf of -- and the law lies on behalf of the City of Long Branch.

The court in Stark and in Tenenbaum set forth all of the reasons why a cross appeal is necessary. The same was not filed in this case and for all those reasons I'm going to deny the defendants' cross motion to remand to the commissioners and I'm going to grant plaintiff's motion to withdraw the appeal and for the entry of a final judgment, fixing the compensation in accordance with the commissioners' award.

On appeal, we defer to a trial court's findings of fact unless they are so "wholly insupportable as to result in a denial of justice." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). However, a "trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995). Thus, when assessing a trial court's conclusions of law, we engage in de novo review. Lawson Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 398 (1999). Such is the case here.

As noted above, the trial judge determined that he lacked the ability to permit defendants to file a late notice of cross-appeal and did not have discretion to deny the City's application to withdraw its appeal. Defendants argue that the trial court erred in finding that a formal cross-appeal was required under the circumstances presented. We agree.

The relevant statute, court rules, and case law firmly establish that an individual wishing to appeal a condemnation commissioners' award must file a notice of appeal or, if an initial appeal has already been filed by the adversary, a notice of cross-appeal. Appeals of condemnation commissioners' awards are governed by N.J.S.A. 20:3-13, which provides that, "[a]ny party who has appeared at the hearings of the commissioners

. . . may appeal from the award of the commissioners. Such appeal shall be taken within the period and in the manner provided by the rules." Rule 1:3-4(b) directs that enlargement of time for appeal from reports of condemnation commissioners is governed by R. 4:73-6(a). Rule 4:73-6, in turn, provides that, "[a]n appeal from the report of the commissioners shall be taken by an appellant by filing a notice of appeal with the deputy clerk of the Superior Court in the county of venue within 20 days after the date of service . . . but the court for good cause shown may extend the time for a period not exceeding 30 days." R. 4:73-6(a).

Although R. 4:73-6 is silent regarding whether a party must timely file a cross-appeal in order to protect its rights in the action after its adversary has filed an initial appeal, the two cases considering this precise issue, taken together, establish that the filing of a cross-appeal is generally required. The matter was first addressed in State, by the State Highway Comm'r v. Stark, 95 N.J. Super. 152 (Law Div. 1967). The late Justice Morris Pashman, then sitting in the Law Division, emphasized that no rule or statute prohibits a plaintiff from withdrawing its appeal and that a plaintiff's right to do so in a condemnation proceeding is "even more compelling" because it is based on a determination that the public interest will best be served by not prosecuting the appeal. Id. at 160. Moreover, Judge Pashman recognized the harm that could arise from infringing the State's discretion in such matters, noting that, if the State cannot dismiss an appeal once it has been commenced, it might hesitate to take appeals at all, especially in borderline cases. Id. at 161.

Despite these strong governmental interests, Judge Pashman indicated that the trial court's consent is a prerequisite to dismissal of an appeal and that the "court can evaluate any prejudice which would result to the various litigants, as well as affording additional protection to the public interest." Ibid. Given the lack of precedent and the fact that the defendants believed that they were adequately protected by virtue of the plaintiff's appeal, the judge allowed the defendants to file a late notice of appeal. Id. at 163. The judge, cautioned, however, that:

Generally . . . it is best that in future cases an appeal or cross-appeal be filed within time by all parties who are dissatisfied with the award of the commissioners. Issue should be joined by all interested parties regardless of the fact that another party to the controversy appealed in the first instance. By so doing the rights of all parties would be protected against dismissals and other contingencies which might arise, with only a modicum of effort and diligence on their part.

[Ibid.]

We reaffirmed the principle that parties must file a notice of appeal or cross-appeal in order to preserve their appeal rights in condemnation cases in State, by the Comm'r of Transp. v. Tenenbaum, 151 N.J. Super. 273 (App. Div. 1977). There, a hearing was held before the condemnation commissioners on July 30, 1976, and the State filed a notice of appeal on August 20, 1976. Id. at 275. The defendants did not file a notice of appeal or cross-appeal, and, on December 29, 1976, the State moved to withdraw its appeal. Ibid. The panel opined that the rules governing the time period in which to appeal a report of the commissioners are mandatory and may not be relaxed in accord with R. 1:1-2, which generally allows relaxation of a rule if adherence to it would result in an injustice. Id. at 276-77. Thus, we held that "neither the Law Division nor this court may extend the time for filing an appeal or cross-appeal." Id. at 277.

In reaching its conclusion, the Tenenbaum court cited with approval the public interest concerns referenced in Stark. It then concluded:

The clear import of R. 4:73-6(a) is that if a party is dissatisfied by an award of condemnation commissioners he must file his notice of appeal within the specified period of time. The potential problems arising from the failure timely to file an appeal are clearly set forth in State v. Stark, supra. Whatever prejudice the defendants may suffer results not from the State's conduct but rather from defendants' failure to comply with the mandate of Stark.

. . . [T]he State is engaged in a countless number of condemnation actions and the process of prosecuting such matters necessitates reevaluation of the many cases from time to time to determine where the State's limited resources may best be utilized as well as when the public treasury may be exposed to potentially greater liability. The State's discretion should therefore be uncircumscribed in the absence of compelling reasons to the contrary so that it may reassess the cases it has appealed and determine when it is not in the public interest to proceed further in those cases where the property owner has not filed an appeal or cross-appeal.

[Id. at 279-80.]

Thus, the clear mandate of Stark and Tenenbaum is that a party must generally file a cross-appeal in order to preserve its rights once its adversary has appealed.

Nevertheless, defendants argue that even if the filing of a formal cross-appeal is implicitly required by R. 4:73-6, the rule is not absolute and unrelaxable. We agree.

Although Tenenbaum establishes a general rule that courts should not relax the time period in which to file an appeal or cross-appeal of condemnation awards, it did recognize that exceptions may occasionally be warranted: "[t]he State's discretion [to withdraw its appeal] should therefore be uncircumscribed in the absence of compelling reasons to the contrary." Id. at 279 (emphasis added). Additionally, the court noted that the consent of the trial court is always a prerequisite to dismissal of an appeal and that the court must "evaluate any prejudice which would result to the litigants, as well as affording protection to the public interest." Ibid.

Indeed, the comments to the current court rules support the notion that courts do have some discretion to relax the cross-appeal requirement in the interests of justice. Specifically, the comments cite the following language from Stark, supra, as the applicable authority in this regard:

Stated simply, the doctrine is that a party who has not filed an appeal within the prescribed time cannot do so at its whim subsequent to the time of the dismissal of an appeal that had been taken by an adversary. The parties must join issue by filing a cross-appeal in accordance with the time provisions set forth in R.R. 4:92-6. Needless to say, the court possesses a certain amount of flexibility to remedy any injustice which might result from the application of the above.

[Pressler, Current N.J. Court Rules, comment 1 on R. 4:73-6 (2006) (quoting Stark, supra, 95 N.J. Super. at 164).]

Thus, although the comments state the general rule that all parties unsatisfied with a condemnation commissioners' award must timely file an appeal or cross-appeal, they recognize that, consistent with Stark and Tenenbaum, an exceptional case may warrant an extension of the time period set forth in the rules. Ibid. We conclude that the circumstances of this case, which we discuss hereafter, constitute a compelling situation in which to relax the cross-appeal requirement.

IV

Defendants argue that they were denied their constitutional right to receive just compensation because the City deliberately decided not to disclose the existence of the 1996 Ordinance, which affected the value of the subject property. They contend that a commissioners' award based on a faulty premise cannot be a basis for a final judgment and that the property's fair market value must be reassessed in light of the 1996 Ordinance.

The New Jersey Constitution recognizes that the government may take private property for public use. N.J. Const., art. I, 20; Hous. Auth. of the City of New Brunswick v. Suydam Investors, 177 N.J. 2, 6-7 (2003). The landowner, however, has a constitutional right to receive just compensation for the condemned property. Borough of Rockaway v. Donofrio, 186 N.J. Super. 344, 352 (App. Div. 1982), certif. denied, 95 N.J. 183 (1983). Accordingly, in eminent domain proceedings, the condemnor must pay a fair market value for the subject property. Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 126 (1997) (citing State v. Gorga, 26 N.J. 113, 115 (1958)). In other words, "'the State must try as nearly as possible, employing objective standards, to replace the land which has been earmarked for public use with equivalent public funds.'" Ibid. (quoting State v. Nordstrom, 54 N.J. 50, 53 (1969)).

The Eminent Domain Act of 1971 (the Act), N.J.S.A. 20:3-1 to -50, governs the condemnation process. Pursuant to the Act, before filing a complaint, the condemnor must engage in bona fide negotiations with the condemnee and must make a "reasonable disclosure" of the manner in which the amount of the offer was calculated. N.J.S.A. 20:3-6. The Court has noted that, "[b]ecause the purpose of that disclosure requirement is to protect property owners, 'reasonable disclosure' has been -- and should be -- construed liberally in favor of broad disclosure to property owners." State v. Morristown, 129 N.J. 279, 286 (1992) (quoting State, by the Comm'r of Transp. v. Carroll, 123 N.J. 308, 316-17 (1991)). Thus, the Act requires reasonable disclosure of all information relating to the manner in which the offer was calculated. Id. at 287.

If the negotiation process fails to settle the matter, the condemnor may file a complaint, and the matter will proceed to a condemnation commissioners' hearing. N.J.S.A. 20:3-8; N.J.S.A. 20:3-12. Rule 4:73-1, which details the requirements for a condemnation complaint, provides that reasonable disclosure includes a "statement of the full fair market value including a description of the appraisal valuation method or methods relied upon . . . and data concerning comparable sales or leases relied upon . . . and any unusual factors known to the condemnor which may affect value." R. 4:73-1 (emphasis added); see also Morristown, supra, 129 N.J. at 288.

Fair market value in the context of condemnation proceedings has been defined as "'what a willing buyer and a willing seller would agree to, neither being under any compulsion to act.'" State v. Caoili, 135 N.J. 252, 260 (1994) (quoting State v. Silver, 92 N.J. 507, 513 (1983)). Stated another way, fair market value is the "'value that would be assigned to the acquired property by knowledgeable parties freely negotiating for its sale under normal market conditions based on all surrounding circumstances at the time of the taking.'" Ibid. (quoting Silver, supra, 92 N.J. at 514). In determining the fair market value for condemnation purposes, the applicable inquiry is not the current use of the property at the time of the taking but rather the property's "'highest and best use.'" Suydam Investors, supra, 177 N.J. at 20 (quoting County of Monmouth v. Hilton, 334 N.J. Super. 582, 587 (App. Div. 2000), certif. denied, 167 N.J. 633 (2001)). The highest and best use is that use which, at the time of the appraisal, is the "'most profitable, likely use or alternatively, the available use and program of future utilization that produces the highest present land value provided that use has as a prerequisite a probability of achievement.'" Ibid.

The reasonableness of a property's highest and best use must be considered in the context of the applicable zoning regulations. Caoili, supra, 135 N.J. at 260; see also State, by Comm'r of Transp. v. Van Nortwick, 287 N.J. Super. 59, 70 (App. Div.), certif. denied, 143 N.J. 320 (1995). Accordingly, zoning restrictions governing the subject property are "material factors" in assessing fair market value. Ibid. (citing State, by the Comm'r of Transp. v. Inhabitants of Phillipsburg, 240 N.J. Super. 529, 541 (App. Div. 1990)).

Here, the 1996 Ordinance was not revealed by the City in either its pre-complaint negotiations or at the condemnation commissioners' hearing. Thus, the "fair market value" of defendants' property was assessed within the context of zoning ordinance 20-8.9, which had been amended by the 1996 Ordinance. Significantly, the 1996 Ordinance was less restrictive than prior zoning, as it increased the maximum permitted development density from eighteen units per acre to thirty units per acre and eliminated the requirement that at least forty percent of development be permitted uses other than residential use. Because it imposed fewer restrictions on development, logic dictates that application of the 1996 Ordinance would increase the value of defendants' property.

Indeed, the City recognized the effect of the 1996 Ordinance on the value of property to which it applies in its brief in the Discover Sales matter. Specifically, in introducing the issue of whether the 1996 Ordinance applies to the redevelopment area, the City conceded:

This issue affects the valuation of the condemned property. If the Ordinance does apply to properties located within the redevelopment zone, then the value of the property would increase since the maximum permitted density would increase from 18 units per acre to 30 units per acre and there would be no requirement that, at least, 40% of a Waterfront Mix Residential Development be developed with a permitted use other than residential.

Thus, it is clear that the 1996 Ordinance increases the value of the property to which it applies, and would therefore be a "material factor" in determining fair market value. Caoili, supra, 135 N.J. at 260. Even if the City were completely unaware that the 1996 Ordinance might apply to defendants' property when it initiated the eminent domain proceedings, the City at least became aware of the issue during 2001 when the Discover Sales litigation commenced. Thus, by the time the City filed its complaint in this matter on April 25, 2002, it knew that the 1996 Ordinance might apply to the redevelopment area and could affect the valuation of those properties. As such, the City had an obligation to disclose its potential applicability as an "unusual factor[] known to the condemnor which may affect value." R. 4:73-1.

The City's argument that the applicability of the 1996 Ordinance is inapposite because the ordinance only modified bulk requirements for a waterfront mixed residential development and defendants' appraisal report identifies a mid-rise development as the property's highest and best use is unpersuasive. The City's basic contention is that, because defendants' appraisal report cites a mid-rise development as the highest and best use, and the 1996 Ordinance only applies to the Waterfront Mix Residential use and did not amend the bulk requirement of a mid-rise use, the 1996 Ordinance is irrelevant to the property's valuation. This argument, however, fails to take into account the fact that the City's appraiser assessed the highest and best use as "an assemblage with other property to form a legal size plot in accordance with the zoning regulation." (emphasis added). Thus, the City's valuation of defendants' property, which was the only appraisal report presented at the condemnation commissioners' hearing, was based upon the outdated and more restrictive zoning ordinance 20-8.9. If the applicability of the 1996 Ordinance had been considered, the appraisal value, by the City's own admission, would have been higher.

Further, defendants were not, as the City suggests, "locked into" their expert's report of August 19, 2004. That report was rendered without the benefit of the final Discover Sales judgment. Defendants' expert was, and remains, free to modify or supplement his report based on the 1996 ordinance. Thus, the failure of defendants to learn of the potential applicability of the 1996 Ordinance during the condemnation proceedings led to an appraisal value and commissioners' award that was in all likelihood lower than the full fair market value of the property. Under these circumstances, the protection of defendants' undeniable constitutional right to receive just compensation for their condemned land compels a remand.

V

Finally, we comment on the public interest basis for the trial judge's rulings. He said:

[D]efendants argue that, there's really no public interest at stake because of the limitations with respect to the public funds and that this is a blighted area for redevelopment. I don't find those arguments to be persuasive. Wilson v. Long Branch,[ 27 N.J. 360 (1958)] talks about blighted areas and the good that redounds the community in general, and the statutory reasons why, you know, we have blighted areas, legislation and how that impacts generally on the public good. Clearly there were public funds at issue here, and there was a public interest with respect to this, to this matter.

Thus, the trial judge focused on the public good resulting from the redevelopment of blighted areas and the use of public funds. The judge found that, consistent with Tenenbaum, supra, "any detriment or prejudice to the property owner is really as a result of there not being a cross appeal filed in connection with this matter."

On appeal, defendants argue that the trial court did not consider the undue prejudice that would result to defendants' interest and to the public's interest in assuring that private property owners are given just compensation for a governmental taking. Defendants contend that the public interest in conservation of funds is not the only pertinent public interest in condemnation actions and that basic fairness and justice are also counterbalancing public concerns. We agree.

As the trial judge correctly recognized, an important public interest lies in the government's redevelopment of blighted areas, as it can "make the difference between continued stagnation and decline and a resurgence of healthy growth." Wilson v. Long Branch, 27 N.J. 360, 370 (1958). Allowing the State ample discretion to decide which appeals to pursue is another important factor, as it directly relates to the use of the public treasury. Stark, supra, 95 N.J. Super. at 160; Tenenbaum, supra, 151 N.J. Super. at 279. Nevertheless, in condemnation proceedings, the public interests in redeveloping blighted areas and conserving public funds are not the only relevant considerations. Rather, the State has a "duty to protect both the public interest and private rights." State, by the Comm'r of Transp. v. D'Onofrio, 235 N.J. Super. 348, 355 (Law Div. 1989). To that end, "it is assumed that the state will act responsibly in an effort to make an appropriate fair market offer as required by the [Eminent Domain Act]." Ibid.

The few cases interpreting Tenenbaum have recognized that a plaintiff does not possess the absolute right to withdraw an appeal. The Supreme Court has cited Tenenbaum for the propositions that an appeal can only be withdrawn with the consent of the court and that a court will typically permit the voluntary dismissal of an appeal unless it will result in prejudice to the appellee. State v. Gaffey, 92 N.J. 374, 382 (1983) (citing Tenenbaum, supra, 151 N.J. Super. at 279). Similarly, the Law Division has recognized that the voluntary dismissal of an appeal is subject to the discretion of the court, which must "evaluate any prejudice which would result to the litigants, as well as to the public interest, if a dismissal without prejudice were granted." Sansone Oldsmobile-Cadillac v. Bd. of Adjustment of the Borough of Shrewsbury, 211 N.J. Super. 304, 312 (Law Div. 1986) (citing Tenenbaum, supra, 151 N.J. Super. at 279).

Here, the trial court did not adequately consider the prejudice that would result to defendants before permitting the City to voluntarily withdraw its appeal of the commissioners' award. This case is clearly distinguishable from the facts presented in Tenenbaum, which led the court to conclude that the prejudice suffered by the defendants resulted not from the State's conduct but rather from the defendants' failure to file a timely cross-appeal. Tenenbaum, supra, 151 N.J. Super. at 279. Although the defendants in Tenenbaum hired a real estate expert subsequent to the State's filing of its appeal, the State moved to withdraw its appeal just four months after it filed the notice of appeal. Id. at 275. There was no suggestion that the State's actions during that time conveyed an implied understanding that the defendants had preserved their right to appeal. Moreover, no issue was presented regarding the proper zoning regulation to apply when assessing the property's value.

In contrast, here the City remained silent regarding defendants' failure to file a cross-appeal for a nearly two-year period, while the matter was case-managed and the trial date was repeatedly postponed to allow defendants to obtain an appraisal report post-Discover Sales. As the trial judge recognized, the City was fully aware that defendants were dissatisfied with the commissioners' award, which they believed to be too low, and were also pursuing the matter to trial. The City's prolonged silence on this issue and sudden attempt to use defendants' failure to file a cross-appeal to bar their claims contributed to the prejudice suffered by defendants, who expended significant time and resources with the understanding that they also had a valid claim on appeal.

Furthermore, the City's failure to disclose the existence of the 1996 Ordinance during either its appraisal process or the commissioners' hearing contributed to the prejudice suffered by defendants, as it likely resulted in a lower commissioners' award than if the property had been properly assessed in light of the less-restrictive 1996 Ordinance. If the City is permitted to withdraw its appeal, and defendants' property is never assessed according to the proper zoning regulation, defendants' constitutional right to receive just compensation, Rockaway, supra, 186 N.J. Super. at 352, would be infringed. Thus, permitting the City to withdraw its appeal would cause defendants significant prejudice, not all of which can be attributed to their failure to file a cross-appeal.

Moreover, permitting the City to withdraw its appeal at this late stage in the pre-trial proceedings would do nothing to further the purposes of the cross-appeal requirement, as set forth in Stark, supra. See Price v. N.J. Mfrs. Co., 182 N.J. 519, 524-27 (2005) (concluding, when examining equities and weighing prejudice, that equitable tolling of statute of limitations would not offend policies underlying time bar); W.V. Pangborne & Co., Inc. v. N.J. Dep't of Transp., 116 N.J. 543, 563 (1989) (same). Specifically, the Stark court explained that a general cross-appeal requirement in condemnation actions would serve to circumvent the mistrust that can arise in such matters; prevent a party who was initially satisfied with the award from "sitting back and waiting for favorable economic changes" and then filing an appeal after the diligent party had been granted a dismissal of its appeal; lucidly set forth the issues involved and the parties' contentions; avoid calendar problems and delaying tactics; prevent parties from relying on others to perform their duties; and avoid general confusion. Stark, supra, 95 N.J. Super. at 163-4. Here, however, both parties understood that defendants were unhappy with the award from the beginning and were pursuing the appeal by obtaining an appraiser's report and seeking trial adjournments until the report could be completed based on accurate zoning information. No calendaring problems were caused by defendants' cross-appeal omission, as the matter was case managed with the understanding that their rights had been preserved.

The prejudice to defendants and the public interest in ensuring fair condemnation proceedings appear to outweigh any prejudice to the City's interest and the public's interest in conserving public funds. Although deciding a different issue -- whether the State must provide the condemnee with all appraisals that it obtained for purposes of making a condemnation offer -- the principles cited by the Law Division in D'Onofrio, supra, 235 N.J. Super. at 348, are equally applicable here:

[T]he power to take property through eminent domain is one of the most intrusive aspects of sovereignty. . . . Thus, the state should not be heard to complain when the property owner seeks the fullest vindication of the rights of ownership. If the judicial process of determining just compensation is equitable, the state loses nothing by disclosing additional information. It merely satisfies the legislative objective to assure that every reasonable consideration is given to a property owner before this invasive power is exercised.

[Id. at 353.]

Accordingly, the City cannot claim prejudice due to defendants' attempt to receive full fair market value for their property in light of the applicable zoning regulations. Defendants' right to receive "every reasonable consideration" before the invasive power of eminent domain may be exercised warrants a remand so that their land may be properly valued. The unique circumstances of this case, which include an infringement of defendants' unquestionable constitutional right to receive just compensation, and significant resulting prejudice to defendants, taken together, constitute "compelling circumstances" that justify relaxing the cross-appeal requirement of Stark, supra, and Tenenbaum, supra, and require a remand.

 
Reversed and remanded for further proceedings consistent with this opinion.

Mrs. Spanos is now deceased.

R.R. 4:92-6 is the predecessor to current R. 4:73-6. See Pressler, Current N.J. Court Rules, note on R. 4:73-6 (2006).

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A-2936-04T1

June 14, 2006