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New Jersey Transit Corporation v. Hartz Mountain Development Corporation

A-3086-09T2 (N.J. Super. App. Div. 2010) (Unpublished)

CONDEMNATION — New Jersey’s condemnation statutes impose an obligation on a government entity seeking condemnation to deal forthrightly and fairly with property owners, including to reveal to a property owner whether or not, in a condemnation of only part of the owner’s land, the condemning authority would deposit contaminated soil on the condemned portion.

A governmental transit authority had undertaken an improvement project under which it was to build a bridge that would elevate a street above railroad tracks so that the roadway would no longer cross those tracks at grade level. The bridge construction would generate excavated soil, and the ditch dredging would produce sediment that the authority intended to use as fill in accordance with a soil reuse plan prepared by its environmental consultant. The project required the authority to obtain three permanent and two temporary construction easements on a portion of a landowner’s five parcel property. In order to acquire the necessary easements for the project, the authority had the easements appraised and conducted an environmental investigation of the property. The report concluded the property was likely contaminated. With its formal offer letter to purchase the property, the authority included an environmental report by the same environmental consultant. Though the report did not explicitly refer to the details of the earlier soil reuse plan, it described the plan to use the soil as fill and that the excess soil not reused on site would be disposed of or recycled.

Negotiations broke down, and the authority filed suit to acquire the easements by way of condemnation. During a lower court hearing, the landowner raised the issue of whether the authority had engaged in good faith bona fide negotiations by not disclosing whether it intended to use contaminated project fill on the landowner’s property. The court entered final judgment for the authority, finding that it had the power to condemn the easement parcels. It appointed condemnation commissioners. The landowner moved for reconsideration, claiming that newly revealed information within the soil reuse plan should have been made known to it in the environmental report. The lower court denied the motion, expressly finding the soil reuse plan was referenced, fully disclosed, and not hidden. The landowner appealed, contending the transit authority lacked the power to condemn because by withholding details of the soil reuse plan, it failed to negotiate in good faith, resulting in a reduced purchase offer below actual fair market value since the appraisal had not considered the use of contaminated soil on the condemned property.

In that appeal, the Appellate Division affirmed. It set forth that the governing condemnation statutes impose an obligation on a government entity seeking condemnation to deal forthrightly and fairly with property owners. The Court held that, here, the landowner was a sophisticated real estate developer who did not rebut the good faith presumption afforded a governmental authority in negotiations prior to any condemnation proceeding. It was undisputed that the landowner had received the environmental report at the start of negotiations, and that the report referenced the soil reuse plan in clear language. Additionally, the landowner had claimed that the supplemental documents it had in connection with the reconsideration motion spoke of reusing contaminated soil from dredging activities that the authority had concealed during negotiations. The Court found the documents actually indicated that the dredging would not involve significant hazardous material contamination Thus, the Court failed to see how the supplemental documents provided evidence of bad faith, as the environmental report expressly referenced “regulated” soil and referenced a soil reuse plan that the landowner would have appreciated and could have asked to review. The Court concluded that the transit authority had made reasonable disclosures and provided adequate appraisal information such that the landowner was able to conduct informed and intelligent negotiations.

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