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The Housing Authority of the City of New Brunswick v. Haleluk

A-5942-06T3 (N.J. Super. App. Div. 2009) (Unpublished)

CONDEMNATION; CONFLICTS OF INTEREST — There has to be at least a prima facie basis to establish that an attorney representing a condemning authority has a conflict of interest, and to reverse the issuance of a condemnation order, the conflict must be so significant as to taint the proceedings and even in such a case, its effect may be diluted by the use of a jury.

Pursuant to a redevelopment agreement between a municipal agency and its designated developer, a municipality offered to purchase a property based on its fair market value as set forth in an appraisal from a third party. When no agreement was reached on the purchase price, the municipality commenced condemnation proceedings and eventually took title to the property. The former owner sued, claiming the municipality failed to act in good faith.

The lower court confirmed the municipality’s authority to exercise its power of eminent domain. The former owner was awarded an amount as just compensation. He appealed the amount awarded. A jury returned a verdict with a higher award of compensation. Nevertheless, the former owner appealed this judgment as well, and requested a new trial.

The Appellate Division remanded the matter to the lower court. The lower court determined that the parties had entered into a global settlement of all issues relating to the condemnation and entered an order to that effect. Once again, the former owner appealed. This time, the Appellate Division affirmed the lower court’s findings and conclusions that a settlement had been reached by the parties, and remanded the matter to the lower court for enforcement of the settlement. The lower court permitted the former owner to withdraw funds from the court and concluded that the former owner had no grounds to justify his failure to abide by the outcome of the appeal. The former owner filed another motion for a new trial and claimed non-waivable conflicts of interest among the municipality, the municipality’s counsel, and the county where the municipality was situated. He claimed that the counsel for the municipality also represented the redeveloper and was thus engaging in a prohibited conflict of interest requiring voiding of the condemnation. The Court found that the county was not involved in the case and held that there was no basis to hold there was a conflict so significant as to taint the proceedings. It also opined that any possible conflict that could have occurred was diluted by the fact that the matter went to a jury. There were no allegations of conflicts affecting the jury. It further noted that the former owner: (a) was represented by independent counsel who had the opportunity to present any allegations of bad faith on the part of the municipality; (b) had a jury trial to determine the condemnation award; and (c) had the opportunity to present his evidence as to the property’s value. Further, the lower court ruled that the former owner was “out of time” to request setting aside the condemnation order because other actions had been taken, and to void the case ab intitio would dramatically impact innocent third parties, such as the redeveloper, mortgage companies, and the current and potential tenants of the redevelopment project in progress. The former owner appealed again.

The Appellate Division affirmed again. As to the conflict of interest claim, it agreed with the lower court that the proceedings were not tainted by any conflict of interest and held, in any event, that there was no prejudice to the former property owner resulting from such a conflict. The Court stated that even if the same law firm represented both the municipality in this case and the redeveloper in various other matters, the former property owner failed to demonstrate how this constituted a conflict of interest in this matter. Moreover, it found that: (a) there did not appear to be any conflict in the positions taken by the municipality and the redeveloper throughout the condemnation proceedings; and (b) the redeveloper was not a party to this case.

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