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Township of Middletown v. Cavadas Realty, Inc.

A-1389-02T3 (N.J. Super. App. Div. 2004) (Unpublished)

EMINENT DOMAIN; SETTLEMENTS—When a property owner refuses to honor a settlement agreement entered into in lieu of a taking by eminent domain, the governmental party may sue for specific performance or, in the alternative, for the appointment of commissioners, without triggering all of the rights that the property owner would have had in a condemnation proceeding.

As an alternative to a condemnation, a municipality contracted to buy 1.08 acres of land for $165,000. A subsequent survey revealed that the property actually measured .693 acres. As a result, the contract was revised to reduce the price to $160,000 and to postpone the closing date. The municipality initialed the changes but the property owner refused to sign the amendment. Instead, the seller said it would back out of the deal unless it was paid more money. The municipality then applied for an order for specific performance, or, in the alternative, an order directing the appointment of Commissioners for the purpose of setting a price. After a hearing, the seller agreed to the new purchase price but, on the scheduled closing date, he told his attorney that he would not close and that he intended to retain new counsel.

The seller’s new attorney argued that the seller was foreign born and had been pressured into the new, reduced price agreement. He also contended that the municipality had not complied with N.J.S.A. 20:3-6, which requires public bodies to negotiate in good faith and to provide condemnees with a copy of its appraisal before initiating condemnation proceedings. The lower court rejected these arguments and ordered that title be conveyed to the municipality for $160,000.

The Appellate Division also rejected the seller’s arguments. First, it pointed out that this was not a condemnation matter. The seller had voluntarily entered into a negotiated settlement. The municipality’s request for the appointment of condemnation Commissioners was only an alternative remedy sought in the event its request for specific performance was denied. Such a request for alternative relief does not trigger the statutory requirements. Further, a settlement agreement is a contract. Consequently, courts consistently refuse to vacate final settlements unless there are compelling circumstances to do so. The Appellate Division held there were no such circumstances here. There was no evidence that the seller disputed the price adjustment at the time it was made. Furthermore, there was no evidence supporting the seller’s assertion that he was pressured into settling.

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