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Township of Hamilton v. Fieldstone Associates, L.L.P.

A-3577-06T2 and A-3754-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

CONDEMNATION; OPEN SPACE — Once a municipality settles a condemnation case, thereby limiting its potential liability by stipulating to the value of the property, it has an obligation to pay the agreed-upon price even if the municipality does not appropriate funds to pay its settlement obligation.

An owner of a fifty acre tract of land in a residential zone actively sought to build a residential housing development there. In order to preserve open space, the municipality planning board included the site as part of its open space program, and the municipality filed a condemnation action to acquire the property. The municipality and the owner agreed on a price, but the municipality didn’t want to use local funds. Therefore, it applied for state and county grants or loans. With the Court’s approval, the municipality agreed to pay interest for one year as it explored funding options. During this time, local community members alleged that the municipality overpaid for what they believed to be undeliverable wetlands-containing worthless property. Expert studies reported that the land could be developed. Based upon the studies, the New Jersey Department of Environmental Protection (DEP) issued a favorable letter of interpretation and the State Legislature appropriated a no-interest loan to cover three-quarters of the municipality’s acquisition cost.

A citizens group filed a motion to intervene in the action and asked for time to submit an expert report’s designed to rebut the letter of interpretation. The lower court denied the application. The owner subsequently filed a motion to enforce settlement, and the lower court ruled that, as a matter of equity, the municipality could forgo its interest payments if it paid the settlement amount in full. Appeals were taken by the municipality’s governing body to repudiate the settlement of the condemnation case because of its desire to refuse to appropriate funds to pay obligations due under the settlement in succeeding years, and the citizens group to intervene in the lower court proceedings.

The Appellate Division affirmed the lower court’s rulings in favor of enforcing the agreement and denying standing to the citizens group. The Court agreed with the lower court’s finding that the municipality had enough money on hand to cover its exposure for the budget year in which it authorized settlement, while ensuring, through the settlement, its reliance on state and county funds to cover the full settlement amount. The Court found that the municipality had the authority to limit its potential liability by entering into a consent order stipulating to the value of the property, thus settling a case. At this point, the municipality had entered into a consent order providing for the taking of property through condemnation and the payment of just compensation, and so was constitutionally and statutorily obligated to pay for the land. The Court also agreed that the motion to intervene was untimely and would have caused undue delay or prejudice to the litigants. The Court also saw the application as moot given that the Legislature had already appropriated adequate funds for the acquisition.

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