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Harrison Redevelopment Agency v. Amaral Auto Center, Inc.

A-3862-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

CONDEMNATION; BLIGHT — A property owner does not waive its right to challenge the taking of its property when it withdraws a portion of the deposited funds and, since the Eminent Domain Act does not contain a time limit within which the property owner can challenge the appropriateness of the taking of a particular property within a blighted area, the property owner is entitled to challenge the condemnation of its property at the time the actual condemnation complaint is filed.

For more than twenty years, a property owner operated an automobile sales and repair business within a municipality. Then, the municipality targeted the property for redevelopment under the New Jersey Local Redevelopment and Housing Law. At a hearing, testimony was given that the property’s condition would exacerbate site circulation and decrease safety at the contemplated development project. A planning board resolution was adopted and, about a year later, an ordinance was adopted for a redevelopment plan that included the property. The agency responsible for the redevelopment plan appraised the property, and after negotiations to purchase the property failed, filed an eminent domain action. The owner defended, chiefly by asserting that its property was not blighted, therefore arguing the taking was not based on a legitimate public purpose. The lower court authorized the condemnation and appointed commissioners because it held that the property owner’s challenge to the blight designation was time-barred. After the owner appealed, it applied to withdraw a portion of deposited funds that the agency had placed with the court for the purchase. With a consent order, the owner withdrew a portion of the deposited funds.

The Appellate Division rejected the lower court’s ruling that the blight defense was time-barred. The lower court found that the owner was required to challenge the designation of its property as a blighted property at the time the redevelopment ordinance was adopted. Under Rule 4:69-6, an action in lieu of prerogative writs must be filed no later than 45 days after the ordinance was adopted. Since the owner challenged the condemnation of its property years later, the lower court found that its challenge was time-barred. The Appellate Division disagreed, holding that the language of the Eminent Domain Act, N.J.S.A. 20:3-5, grants a court that is hearing a condemnation case with jurisdiction over all matters in condemnation, including a property owner’s right to challenge a municipality’s authority to exercise the power of eminent domain. In the context of an eminent domain proceeding, a municipality must demonstrate that the individual properties being taken are either in need of redevelopment or that the taking is necessary for the effective redevelopment of the area in which they are a part. Since the Eminent Domain Act does not contain a forty-five day time limit to challenge the appropriateness of taking an individual property, and the owner was entitled to challenge the condemnation of its property. The Court also noted that, in a separate case, it had determined that the municipality failed to provide property owners in the areas targeted for redevelopment with proper notice. Therefore, in order to avoid an unconstitutional deprivation of their property, property owners in the targeted area were permitted to challenge the validity of the blight designation by way of a defense in the eminent domain proceeding.

The Court also rejected the agency’s argument that the owner had waived its right to challenge the taking of its property when it withdrew a portion of the deposited funds. The agency relied on N.J.S.A. 20:3-27, which provides that a partial withdrawal does not affect or prejudice the rights of the property owner in the determination of compensation. The agency argued that the language of the statute signifies that once a property owner withdraws funds, it waives its right to challenge the condemnation itself and can only challenge the amount of the award. The Court refused to interpret the statute in that manner, noting that other provisions of the statute point to a contrary interpretation. Further, the Court noted that when the parties entered into a consent order with respect to the withdrawal of a portion of the funds, the consent order did not provide that by withdrawing the funds the property owner waived its right to challenge the blight designation.

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