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RLR Investments, LLC v. Town of Kearny

2010 WL 2650478 (U.S. Ct. App. 3d Cir. 2010) (Unpublished)

REDEVELOPMENT; CONDEMNATION — So long as a public purpose exists, a non-blighted individual property may be included in the taking of a larger blighted area.

A municipality adopted a resolution designating a motor freight company’s property as in need of redevelopment. In preparation for the redevelopment, the municipality entered the property and conducted environmental tests, including drilling and excavation. The company filed a complaint in the United States District Court challenging the entry onto its property, the environmental testing, and the land designation as being in need of redevelopment. The municipality filed a motion to dismiss all counts. The United States District Court ruled that the federal claims should be dismissed and declined to hear the alleged state violations.

On appeal, the United States Court of Appeals affirmed. Under the Constitution, private property cannot be taken by government unless for a public purpose and only when just compensation is paid to the property owner. The Court held that New Jersey’s Local Redevelopment and Housing Law, which permits the entry by a municipality onto property to conduct investigations or tests, does not permit the entry onto and testing of private property without a justifying public purpose. The law was enacted to alleviate conditions of deterioration and promote social and economic improvement of municipalities. Specifically, the Court affirmed the lower court’s ruling that even if the entry and environmental testing constituted a taking, those actions were done for a public purpose – to ensure the company’s land was viable for the municipality’s redevelopment plans for economic development.

The property owner also argued that its property was fully productive and not blighted, but the Court held that so long as a public purpose exists, a non-blighted individual property may be included in the taking of a larger blighted area. Additionally, the Court noted that a property owner’s right to be heard as to whether its property is in need of redevelopment is preserved if the owner failed to receive sufficient notice, the owner can raise that as a defense in an eminent domain action by the government. The company had argued that the lack of notice of blight resulted in a final determination that violated federal due process protection. The Court responded that the company could still challenge the “in need of redevelopment” finding in any future condemnation proceeding.

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