TOWNSHIP OF BLOOMFIELD v. BLOOMFIELD DAVAL CORP

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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5248-15T4

TOWNSHIP OF BLOOMFIELD, a
public body corporate and
politic of the Township
of New Jersey,

Plaintiff-Appellant,

BLOOMFIELD DAVAL CORP.,

Defendant-Respondent,

and

STATE OF NEW JERSEY,

Defendant.
______________________________________

Argued February 13, 2018 – Decided April 10, 2018

Before Judges Hoffman, Gilson and Mayer.

On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket No.
L-4758-12.

Kevin P. McManimon argued the cause for
appellant (McManimon Scotland & Baumann, LLC,
attorneys; Kevin P. McManimon, of counsel and
on the briefs; Frances E. Barto, on the
briefs).
Anthony F. Della Pelle argued the cause for
respondent (McKirdy, Riskin, Olson and Della
Pelle, PC, attorneys; Anthony F. Della Pelle,
of counsel; Richard P. De Angelis, on the
brief).

PER CURIAM

Following a jury trial in this condemnation action, plaintiff

Bloomfield Township (Township) appeals from a June 22, 2016 final

judgment awarding defendant Bloomfield Daval Corporation

(defendant)1 $2,900,000 as just compensation for defendant's

property located in the Township, at 14 Lackawanna Place. On

appeal, the Township argues the trial judge erred by denying its

motion to preclude defendant's experts from testifying as to a

proposed mixed-use project, asserting it was neither legally

permissible nor financially feasible. Additionally, the Township

argues the judge erred by granting defendant's motion to preclude

plaintiff's expert from testifying as a rebuttal witness. We

reject plaintiff's first argument, but conclude the second

argument has merit. We therefore reverse and remand for a new

trial.

1
Plaintiff's complaint also named the State of New Jersey as a
defendant "by reason of corporation franchise taxes that may be
due and unpaid by Bloomfield Daval Corp." The State did not file
an answer or otherwise enter an appearance.

2 A-5248-15T4
I

We discern the following facts from the trial record.

Defendant's property consisted of a historic two-story train

station, 3617 square feet in size, and situated on .62 acres.

Although listed in National and State Historic Registers, the

building remained unused for twenty years, and fell into disrepair.

Additionally, New Jersey Transit holds a permanent easement,

allowing access from Lackawanna Place through the train station

to the eastbound train platform, as well as the tunnel underneath

the tracks to the westbound platform. Thus, any development of

the property would require the approval of the Township, the New

Jersey Federal Historic Society, and New Jersey Transit. Located

within the Township's designated redevelopment area, the property

met all of the requirements for that area.

In 2008, the Township adopted a redevelopment plan and parking

study to revitalize the Township's downtown area. In accordance

with that plan, the Township and Haberman Building Corporation

(HBC), an affiliate of defendant, entered into a Memorandum of

Understanding (MOU) in September 2009, concerning the

redevelopment of the property. In October 2009, the Township

adopted a resolution, designating HBC as the conditional

redeveloper for the property. The record does not indicate what

transpired after the adoption of the resolution in 2009; however,

3 A-5248-15T4
in September 2011, the Township passed an ordinance terminating

HBC's conditional redeveloper designation and the MOU.

In February 2012, the Township authorized the acquisition of

defendant's property through eminent domain. The Township

commissioned Robert McNerney, an appraisal expert, to prepare a

report on the highest and best use for the property. According

to McNerney's May 2, 2012 report (McNerney Report), renovation of

the existing train station on the property constituted the highest

and best use of the property. McNerney valued the market value

of the fee simple estate at $440,000.

In June 2012, the Township filed an eminent domain action

against defendant. The trial court entered an order granting the

Township's request for the taking and appointed commissioners to

determine just compensation, which they fixed at $506,433.

Defendant appealed the commissioners' award and the matter

proceeded to trial.

Both parties retained expert witnesses to assist at trial.

Defendant hired appraiser Jon Brody, who authored a report (Brody

Report) that concluded the highest and best use of the property

4 A-5248-15T4
was a mixed-use project consisting of thirty-four residential

dwelling units and 12,876 square feet of commercial space.2

Along with other experts, the Township hired Andrew Janiw of

Beacon Planning and Consulting, LLC to provide expert testimony

regarding the likelihood a developer could secure funding for a

mixed-use project. In his report (Janiw Report), Janiw concluded

a mixed-use project for "the subject property is incapable of

receiving financing for development."

Prior to trial, defendant moved in limine to bar Janiw's

testimony and consideration of his report, along with other

Township expert reports and witnesses. Judge Dennis Carey denied

defendant's motion, ruling that "the finder of fact is entitled

to hear [the] information in whatever context the trial judge

allows it."

At trial, the Township moved in limine to preclude defendant's

expert testimony regarding the mixed-use project. The Township

argued the mixed-use project did not satisfy the highest and best

use test as the project was neither legally permissible nor

financially feasible. The trial judge rejected the Township's

argument and denied its motion, finding "there is a sufficient

2
Brody later issued an amended report, reducing the potential
square footage of commercial space to 12,536.

5 A-5248-15T4
basis to let that issue go to the jury." Additionally, defendant

renewed its motion to preclude the Township from presenting Janiw's

testimony regarding the lack of financial feasibility for the

mixed-use project; however, the trial judge stated he would not

consider the renewed motion as Judge Carey already denied it.

Just before trial testimony began, the Township requested the

trial judge reconsider his denial of its in limine motion to

preclude Brody's expert testimony regarding the mixed-use project;

in the alternative, the Township requested the judge to conduct

an N.J.R.E. 104 hearing, as recommended in Borough of Saddle River

v. 66 E. Allendale, LLC,
216 N.J. 115, 143 (2013). The judge

granted the alternative request and held an N.J.R.E. 104 hearing,

where defendant presented testimony from Brody and Marc Parette,

a licensed architect and planner. At the end of the hearing, the

judge ruled in favor of defendant, concluding Brody's proffered

testimony was not "overly speculative."

The trial was largely a contest of experts focusing on the

fair market value (FMV) of the property as of the taking. The

experts provided their opinions on the highest and best use of the

property, guided by the parameters that the use was (1) legal and

permissible; (2) physically possible; (3) financially feasible;

and (4) maximally productive. Cty. of Monmouth v. Hilton,
334 N.J. Super. 582, 588 (App. Div. 2000).

6 A-5248-15T4
The Township presented expert testimony from McNerney, who

offered his opinion that the property had a FMV of $450,000. He

testified that "the highest and best use" for the subject property

would be a complete renovation of the first floor of the existing

building for retail use. McNerney further stated that "the dollars

that would have to be expended [for] any other use wouldn't make

any economic sense."

Defendant presented Brody's testimony that the highest and

best use of the property was a mixed-use project consisting of

thirty-four residential dwelling units and 12,536 square feet of

commercial space. Brody considered a development plan prepared

by Parette, whose plan called for renovating the existing train

station and developing a mixed-use project on either side and

above the train station. That plan took advantage of the shared

parking facilities across the street to accommodate any parking

generated by the redevelopment. Brody also relied on the expert

testimony of Mark Gordon, a "transit-oriented development"

consultant, who testified regarding the desirability of a mixed-

use development in close proximity to a train station. Brody

estimated the FMV of the taking at $3,207,000.

Before the Township called Janiw to provide rebuttal

testimony regarding financial feasibility of the mixed-use

7 A-5248-15T4
project, defendant renewed its motion to bar him from testifying.3

Defendant argued Janiw was not a licensed appraiser and therefore

was not qualified "to offer a value conclusion about a piece of

real estate." Counsel for the Township requested the opportunity

to demonstrate that Janiw possesses the credentials to offer an

opinion on the crucial issue of the financial feasibility of

defendant's proposed mixed-use project. Without explanation, the

judge did not afford the Township the opportunity to present

Janiw's credentials4 and testimony in an N.J.R.E. 104 hearing.

The trial judge acknowledged he was not in possession of the

briefs the Township submitted to Judge Carey, when he previously

denied the same motion; nevertheless, the judge granted

defendant's motion barring Janiw's testimony, concluding his

proffered testimony was "too speculative."

3
The Janiw Report included a five-year income and value analysis
and a projected pro forma cost analysis for the mixed-use project
proposed by defendant's architect. Based upon this analysis,
Janiw opined "the cost to construct the collateral" would far
exceed its value; as a result, he concluded the project was
"incapable of receiving financing for development."
4
According to Janiw's curriculum vitae, he holds undergraduate
and graduate degrees in civil engineering and construction
management. He has more than thirty years' experience "in the
negotiation and finance of real estate transactions and the
development of commercial and residential properties." He was
also the "Vice President of the Real Estate Lending Group at
National Westminster Bank and Director of Acquisitions for a
regional real estate development firm."

8 A-5248-15T4
The Township then offered Maurice Stack as a rebuttal real

estate appraiser. Stack criticized the Brody Report for lacking

any real analysis as to how the property – if developed pursuant

to the Parette development plan – would proceed; for lacking

information on the train station's "deteriorated condition"; for

lacking information on how much the whole development plan would

cost; and other important details. Notably, Stack testified all

of the comparable sites used by Brody had on-site parking and he

disputed the modest adjustment utilized by Brody regarding the

absence of on-site parking. According to Stack, the adjustment

needs to reflect the cost of purchasing the parking spaces from

the shared parking garage.

After hearing the testimony from the various experts, the

jury found that $2,900,000 constituted just compensation for

defendant's property. On June 22, 2016, the trial judge entered

an order for final judgment and fixed the just compensation at the

amount awarded by the jury. This appeal followed.

"The admission or exclusion of expert testimony is committed

to the sound discretion of the trial court." Townsend v. Pierre,

221 N.J. 36, 52 (2015) (citing State v. Berry,
140 N.J. 280, 293

(1995)). The abuse of discretion standard applies to a trial

court's decision to bar an undisclosed witness or a rebuttal

9 A-5248-15T4
witness. Wymbs v. Twp. of Wayne,
163 N.J. 523, 543-44 (2000);

Casino Reinvestment Dev. Auth. v. Lustgarten,
332 N.J. Super. 472,

497 (App. Div. 2000). Trial courts generally have discretion to

limit or exclude witnesses. State v. Hill,
121 N.J. 150, 169

(1990).

N.J.R.E. 702 and 703 frame the analysis for determining the

admissibility of expert testimony. N.J.R.E. 702 allows opinion

testimony from experts qualified in their fields. N.J.R.E. 703

addresses the foundation for expert testimony. Expert opinions

must "be grounded in 'facts or data derived from (1) the expert's

personal observations, or (2) evidence admitted at the trial, or

(3) data relied upon by the expert which is not necessarily

admissible in evidence but which is the type of data normally

relied upon by experts.'" Townsend,
221 N.J. at 53 (quoting Polzo

v. Cty. of Essex,
196 N.J. 569, 583 (2008)).

"The net opinion rule is a 'corollary of [N.J.R.E. 703] . . .

which forbids the admission into evidence of an expert's

conclusions that are not supported by factual evidence or other

data.'" Id. at 53-54 (alteration in original) (quoting Polzo,
196 N.J. at 583). Therefore, courts require an expert to "'give the

why and wherefore' that supports the opinion, 'rather than a mere

conclusion.'" Id. at 54 (quoting 66 E. Allendale,
216 N.J. at
144). The net opinion rule requires experts to "identify the

10 A-5248-15T4
factual bases for their conclusions, explain their methodology,

and demonstrate that both the factual bases and the methodology

are reliable." Id. at 55 (quoting Landrigan v. Celotex Corp.,
127 N.J. 404, 417 (1992)). In short, the net opinion rule prohibits

"speculative testimony." Harte v. Hand,
433 N.J. Super. 457, 465

(App. Div. 2013) (quoting Grzanka v. Pfeifer,
301 N.J. Super. 563,

580 (App. Div. 1997)).

However, simply because the opinion may be subject to attack

on cross-examination for not including other meaningful

considerations, does not make it a net opinion. Rosenberg v.

Tavorath,
352 N.J. Super. 385, 402 (App. Div. 2002) (citing

Rubanick v. Witco Chem. Corp.,
242 N.J. Super. 36, 55 (App. Div.

1990)); see also Glowacki v. Underwood Mem'l Hosp.,
270 N.J. Super.
1, 16-17 (App. Div. 1994) (declining to strike an expert's

testimony as a net opinion as "[a]ny shortcoming in his method of

analysis was explored and it was for the jury to determine the

weight his opinion should receive.").

N.J.R.E. 104(a) provides a "judge may hear and determine"

matters relating to "the qualification of a person to be a witness,

or the admissibility of evidence" outside the presence of the

jury. The decision to conduct an N.J.R.E. 104 hearing rests within

the sound discretion of the trial court. Kemp ex rel. Wright v.

State,
174 N.J. 412, 432 (2002). However, when the trial court's

11 A-5248-15T4
ruling on admissibility may prove "dispositive of the merits, the

sounder practice is to afford the proponent of the expert's opinion

an opportunity to prove its admissibility at a [N.J.R.E.] 104

hearing." Id. at 432-33.

A. Defendant's Mixed-Use Project Testimony

The record reflects no real dispute that the applicable zoning

for the subject property would permit a mixed-use project

consisting of residential and commercial uses. Instead, the

Township's argument regarding legal permissibility of the proposed

mixed-use project concerns the issue of parking. Defendant's

position was that the project would use parking off site. The

Township argued that there was no on-site parking in the proposed

project and, therefore, it was not legally permissible; however,

the applicable zoning did not require on-site parking. We view

this issue as a jury question, which goes to the weight and

credibility of the opinions of the various experts. We discern

no abuse of discretion in the trial court's decision to allow

defendant's experts to testify regarding a mixed-use project.

Regarding the financial feasibility of the proposed mixed-

use project, Brody testified that he completed his own analysis

and also relied on a study performed by Gordon.5 As noted, experts

5
The record before us does not include the Gordon study.

12 A-5248-15T4
are permitted to rely on other experts so long as that is a

consistent practice in the testifying expert's area of expertise.

Townsend,
221 N.J. at 53. In fact, the Township does not argue

that Brody could not rely on Gordon's report; instead, the Township

argues that there simply was no reasonable basis for opining that

the proposed mixed-use project was financially feasible. The

trial court fully explored that issue in an N.J.R.E. 104 hearing

and found sufficient evidence to allow the jury to evaluate the

argument. We discern no abuse of discretion in that decision.

B. Janiw's Rebuttal Testimony

Judge Carey originally denied defendant's motion to preclude

Janiw's testimony and report prior to trial. However, the trial

judge overturned Judge Carey's order and granted defendant's

renewed motion to preclude Janiw's rebuttal testimony that

defendant's specific mixed-use project was not financially

feasible.

The Township first argues the trial judge erred in disturbing

Judge Carey's pre-trial ruling. Traditionally, judges "sitting

in the same court and in the same case should not overrule the

decisions of each other." Clarkson v. Kelly,
49 N.J. Super. 10,

16 (App. Div. 1958) (citing TCF Film Corp. v. Gourley,
240 F.2d 711, 714 (3d Cir. 1957)). However, "there may be exceptional

circumstances under which the rule is not to be applied." Ibid.

13 A-5248-15T4
Regarding motions in limine, "[o]ur courts generally

disfavor in limine rulings on evidence questions . . . ." Cho v.

Trinitas Reg'l Med. Ctr.,
443 N.J. Super. 461, 470 (App. Div.

2015) (quoting State v. Cordero,
438 N.J. Super. 472, 484-85 (App.

Div. 2014)), certif. denied,
224 N.J. 529 (2016). While "a trial

judge 'retains the discretion, in appropriate cases, to rule on

the admissibility of evidence pre-trial,' . . . we have cautioned

that '[r]equests for such rulings should be granted only

sparingly." Ibid. (alteration in original) (internal citation

omitted) (quoting Cordero,
438 N.J. Super. at 484).

When Judge Carey denied defendant's motion to bar Janiw from

testifying, he stated, "But I think that the finder of fact is

entitled to hear this information in whatever context the trial

judge allows it. But . . . I don't think I'm in a position to

strike any of the report today . . . and, therefore, I'll deny

that application." While Judge Carey denied defendant's motion

to preclude Janiw's report and testimony, his comments indicate

he was deferring any final ruling to the trial judge. Therefore,

we find nothing improper in the trial judge's consideration of

14 A-5248-15T4
defendant's motion to preclude Janiw's testimony, despite Judge

Carey's previous order denying the motion.6

Alternatively, the Township argues the trial judge abused his

discretion in granting defendant's motion to bar Janiw's testimony

since he followed the methodology cited by this court in State v.

Simon Family Enterprises, L.L.C.,
367 N.J. Super. 242, 253 (App.

Div. 2004), and directly rebutted Brody's testimony regarding

financial feasibility. Defendant counters by attacking the

methodology used by Janiw, arguing the "pro forma, land residual

analyses" have been rejected by this court as inadmissible, citing

Lustgarten. Defendant further argues that Janiw was not qualified

to testify as to fair market valuations, as he was not a licensed

real estate appraiser.

We have found it improper for an appraiser to project "a

hypothetical building on vacant land, and capitalizing

hypothetical income anticipated to be derived therefrom, without

considering the multitude of unknown variables in erecting,

leasing, operating and financing the project." State v. Mehlman,

118 N.J. Super. 587, 592 (App. Div. 1972). Additionally, we have

6
However, considering the dispute over Janiw's qualifications
and the admissibility of his opinions, the trial court should have
held an N.J.R.E. 104 hearing to address these important issues.
See Kemp,
174 N.J. at 432-33.

15 A-5248-15T4
found attempts "to arrive at fair market value of vacant land by

capitalizing income expected to be realized from buildings not yet

built or financed was struck down as too speculative, being a

serious departure from principle and an unsound approach." Ibid.

We previously addressed the use of expert testimony regarding

the valuation of a vacant lot in Lustgarten. In that case, the

Casino Reinvestment Development Authority (CRDA) condemned

property located near the Atlantic City Convention Center, which

was under construction at the relevant appraisal date. Lustgarten,

332 N.J. Super. at 478-79. We noted that "[i]n New Jersey, 'a

court will not permit an expert to testify to the value of vacant

land based on the projected income which could be earned from the

operation of a building which might be erected thereon, because

such a valuation is too speculative.'" Id. at 491 (quoting State

v. F & J P'ship,
250 N.J. Super. 19, 26 (App. Div. 1991)).

The trial judge here found Janiw's testimony too speculative

to allow, concluding that "Lustgarten . . . is controlling in this

particular case despite Simon . . . ." We recognize that "the

trial court has a wide range of discretion regarding the

admissibility of proffered rebuttal evidence"; however, the ruling

must not "unfairly prevent[] a plaintiff from attempting to rebut

a material predicate of the defense theory testified to on the

16 A-5248-15T4
defendant's case." Weiss v. Goldfarb,
295 N.J. Super. 212, 225-

26 (App. Div. 1996), rev'd on other grounds,
154 N.J. 468 (1998).

We find the case under review distinguishable from

Lustgarten. In contrast to the challenged testimony in Lustgarten,

Janiw's proposed testimony did not concern an expert "picking a

possible use." Lustgarten,
332 N.J. Super. at 491. Instead,

Janiw's testimony would have addressed the specific mixed-use

project proposed by defendant, and rebutted Brody's claim that the

project was financially feasible. We further note Janiw's

methodology tracked the methodology prescribed in Simon.
367 N.J.

Super. at 253.

Regarding defendant's argument that Janiw lacked an

appraiser's license, this fact should have gone to the weight of

his testimony, not to its admissibility. Janiw's extensive

experience in the financing of real estate transactions and the

development of commercial and residential properties was

inexplicably ignored by the trial court. Janiw was prepared to

testify as to alleged flaws in Brody's appraisal method. This

testimony was highly relevant to support plaintiff's challenge to

defendant's evidence as to the value of the property.

Moreover, we note that the Janiw Report did not offer an

opinion as to the value of the property. Instead, his testimony

would have provided appropriate rebuttal evidence regarding

17 A-5248-15T4
financial feasibility. The trial judge found Lustgarten

controlling; however, Lustgarten only barred the method of

projecting possible income for the valuation of property, not for

financial feasibility.

Furthermore, as we explained in Simon, financial feasibility

is determined by estimating future gross income from an expected

use, and then subtracting "[v]acancy and collection losses and

operating expenses . . . to obtain likely net operating income,"

and ultimately, the expected "rate of return on invested capital."

Simon,
367 N.J. Super. at 253. Janiw would have presented such

an analysis if the trial judge had not granted defendant's motion

to preclude his testimony. We further stated in Simon that "as

long as the opinions offered are not speculative or unreliable and

do not fail as net opinions . . . they should be presented to the

jury and tested through rigorous cross-examination." Id. at 254

(internal citation omitted). Thus, Janiw's proposed testimony was

appropriate rebuttal testimony to challenge Brody's conclusion

that the mixed-use project was financially feasible. Accordingly,

the trial court mistakenly exercised its discretion when it barred

Janiw's testimony.

The trial judge seemed to reason that because some of the

same criticisms of Brody's methodology were raised during

plaintiff's cross-examination of Brody, Janiw's rebuttal was

18 A-5248-15T4
repetitive or unnecessary. However, an attorney's questions do

not constitute evidence at trial. Arguably, Janiw's rebuttal

testimony would have supplied appraisal standards from an expert

witness that may have affirmed in the jurors' minds the relevancy

and legitimacy of plaintiff's counsel's cross-examination of

Brody. Because of the exclusion of Janiw's rebuttal testimony,

there was no evidence in the record, for example, that Brody's

failure to adjust for time or markets might have resulted in an

inaccurate valuation. Where a rebuttal witness is prepared to

offer non-repetitive, substantive testimony that directly attacks

the value of defendant's expert testimony, "the exclusion of such

testimony has the capacity of producing an unjust result."

Lustgarten,
332 N.J. at 498 (citing R. 2:10-2). The error here

requires a new trial.

Reversed and remanded. We do not retain jurisdiction.

19 A-5248-15T4

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