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NJ Capital Partners, LLC v. Oakland Planning Board

A-2354-08T1 (N.J. Super. App. Div. 2010) (Unpublished)

INVERSE CONDEMNATION; ATTORNEYS FEES — A party whose property is inversely condemned as a result of a zoning board’s denial of a variance that would allow the property owner to make economic use of its property is entitled to an award of attorney’s fees beginning with the date of the filing of its complaint that resulted in the declaration that the property had been inversely condemned.

Seeking to create fourteen residential lots on approximately fifty owned acres, a developer submitted a subdivision application to a municipal planning board. The application sought variances from the municipality’s steep slope ordinance. The developer asserted that the variance was necessary for access to the property, and if not granted, the developer contended that the property would be inutile. The board denied the application, finding that granting the variance would be detrimental to the public good because the integrity of the slopes would be substantially compromised and this would create undue risks and hazards to the public. The developer filed suit, alleging the board’s decision was arbitrary and capricious, and that the denial resulted in an inverse condemnation of its property. The lower court entered judgment affirming the board’s denial, but allowed the suit to proceed to trial on the inverse condemnation claim. At trial, a planner for the municipality testified that there was an alternative access route to the property that did not require a steep slope variance; however, the developer’s engineer testified the suggested plan had already been considered and rejected by the county planning board as unsafe and unacceptable. The lower court ruled the board had never formally rejected the alternative plan and remanded the matter.

The board held hearings on remand at which hearings the evidence supported the steep slope variance over the alternative plan. Nonetheless, the board adopted the alternative plan. The developer filed another suit, alleging the board’s decision was arbitrary and capricious. It requested a finding that its property had been inversely condemned. The case was tried, and the lower court found that the alternative plan lacked credibility, and that the board had acted arbitrarily and capriciously in adopting the alternative plan. The court indicated it would then proceed to consider the inverse condemnation claim. The parties soon advised the court they had settled the claim, notably by the municipal attorney’s letter saying that the municipality would purchase the property for $5,100,000 and stipulating as to inverse condemnation in order to allow the developer to seek costs and counsel fees in accordance with the Eminent Domain Act. The parties could not agree on an amount to cover costs and fees, and the developer moved for relief. The court ruled the developer could bring a motion for reasonable fees and costs with respect to the claim for inverse condemnation, but only for the period after the developer knowingly waived condemnee status by agreeing to the settlement terms.

The lower court later ruled that the proper date was the date the court had found the board’s approval of the alternative plan to be arbitrary and capricious. This was the date the developer proved the steep slope ordinance permitted no reasonable use of the property. The court entered an order awarding the developer $50,000, which the developer appealed.

The Appellate Division affirmed the lower court’s limited award of only the attorney fees and costs provided under the Eminent Domain Act, finding the lower court gave appropriate weight to the municipal attorney’s letter describing settlement terms. The Court also affirmed the lower court’s decision that the developer’s inverse condemnation claim only ripened when the lower court reviewed the board’s decision approving the alternative plan and concluded that it was arbitrary and capricious. It was only then, with no viable access to the property, that the developer met the burden of proving the steep slope ordinance deprived it of all economically viable use of the land.

The Court, however, concluded that the developer was entitled to recover fees and expenses from the date of filing of the complaint that eventually resulted in that lower court’s decision, and remanded the matter for further proceedings. The Court stated that this particular complaint was the one that had sought a declaration that the property had been inversely condemned because the board had arbitrarily and capriciously adopted an access plan that was neither viable nor safe.

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