Homeowners and Gas Pipeline-Adversaries Once Again

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The increase in oil prices has been a boom for natural gas suppliers as many property owners convert from oil to natural gas.  To meet demand and extend service, gas companies are installing new pipelines throughout New Jersey and, in most cases, the pipelines are being installed on private property.  When a gas company like Transco knocks on your door to inquire about placing a pipeline on your property, you need to understand your legal rights and what the pipeline company can, and cannot do.

First, pipeline projects are generally not performed by your local municipality, but a pipeline company.  Gas companies can obtain the power of eminent domain to take property in order to install and construct pipelines, but they first must jump through certain hoops to obtain that power.  Those laws are beyond the scope of this article.

Second, the majority of the eminent domain cases involving pipelines are "partial takings". A partial taking usually involves the acquisition of an easement which allows the gas company to not only construct an underground pipeline on your property, but gives the company the right to come back on your property for repairs to the pipeline. Also, the easement will generally restrict what a property owner can do with his or her property in the easement area.  For example, the easement may prohibit the property owner from building a pool or structure in the easement area, or possibly limiting the type of tree that can be planted in the easement area.

Third, partial takings are much more complicated then complete takings since the damage analysis is often very complicated.  Under New Jersey law, the pipeline company must pay fair compensation for (1)  the value of the property actually taken, and (2) any damage to the remainder of the property owned by the homeowner. The damage to the remainder often requires a detailed analysis of potential future uses and how those uses are restricted by the pipeline.

Finally, in some cases a property owner may prefer to have the gas company’s pipeline take their entire property so they can move to a new location.  In order for a property owner to force the pipeline to acquire the entire parcel, the property owner must proceed under the Uneconomic Remnant Doctrine– a difficult task.

Stark & Stark's Eminent Domain Group has represented many property owners in gas pipeline cases and can help protect your rights.

Hurricane Sandy and the Tax Assessor

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New Jersey adopted a law that may help property owners whose property was damaged by Hurricane Sandy.  However, you need to act quickly to take advantage of the law.
 
New Jersey assesses real property on an annual basis using October 1 of each year as the date of valuation.  For example, 2013 tax assessments are based upon the condition and value of property as of October 1, 2012.  Since Hurricane Sandy arrived after the valuation date, any decrease in value caused by Hurricane Sandy may not be relevant in a 2013 tax appeal.
 
However, there is an exception to the rule.  If your property sustained significant damage that caused a “material depreciation” in the value  between October 1, 2012 and January 1, 2013, you may be entitled to a reduction in your tax assessment.
 
The law in question  (N.J.S.A. 54:4-35.1) provides:
When any parcel of real property contains any building or other structure which has been destroyed, consumed by fire, demolished, or altered in such a way that its value has materially depreciated, either intentionally or by the action of storm, fire, cyclone, tornado, or earthquake, or other casualty, which depreciation of value occurred after October first in any year and before January first of the following year, the assessor shall, upon notice thereof being given to him by the property owner prior to January tenth of said year, and after examination and inquiry, determine the value of such parcel of real property as of said January first, and assess the same according to such value.
 
To take advantage of this law, you need (1) a building or structure that was damaged, (2) the damage must cause the value to be materially depreciated, and (3) you must notify the tax assessor of the damage before January 10, 2013.  It is advisable to send a written notice to the tax assessor, via certified mail, immediately and follow up with a call.  You may access the statewide directory of tax assessors here.
 
If you have any questions or need assistance in sending a notice to your local assessor, please contact Timothy P. Duggan, Esquire, at 609-895-7353 or tduggan@stark-stark.com.

Stark & Stark Wins Case For Property Owner Against Rowan University

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On May 17, 2011, Timothy P. Duggan, Chair of Stark & Stark’s Eminent Domain and Property Valuation Group, was successful in obtaining a jury verdict in a condemnation action for $4,450,000. Mr. Duggan represented the owner of an old bank building which was taken by Rowan University. When Rowan University and the property owner could not reach an agreement on the amount of just compensation, the matter was tried before a jury in Camden County, New Jersey.
 

Rowan University’s appraiser initially valued the property at $2.8 million, however, nine months after the complaint was filed, Rowan attempted to reduce its offer to $2.35 million. Prior to the start of trial, Mr. Duggan was successful in having the new appraisal stricken, which resulted in Rowan University being forced to rely upon its initial appraisal of $2.8 million.
 

The property owner’s appraiser opined to a value of $4,580,000. The jury listened to the testimony of four experts (two appraisers and two architects), and several fact witnesses, and rendered a verdict of $4,450,000.

Stark & Stark Shareholder Comments on New Jersey Supreme Court Decision in Eminent Domain Case

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Timothy P. Duggan, Chair of Stark & Stark’s Condemnation & Eminent Domain Group, was quoted in the March 18, 2011 NJ Biz article, N.J. Supreme Court decision could affect commercial lease negotiation.

Mr. Duggan comments on the recent New Jersey Supreme Court decision on a Kearny eminent domain case which would affect the majority of commercial lease negotiations in the state. Mr. Duggan states that the decision “is going to have a minimal impact on the majority of condemnation cases, because in the majority of condemnation cases, the government will take the entire property from the owner.”

You can read the full article online here.

 

Billboards: Real or Personal Property When Taken by The Government

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On November 1, 2010, the New Jersey Supreme Court refused to review a decision by the Appellate Division of the Superior Court of New Jersey holding that a billboard located along the New Jersey Turnpike was not “real property” under the Eminent Domain Act of 1971. New Jersey Turnpike Authority v. Witt, et. al., Docket No. A-0995-09T3 (App. Div. July 15, 2010).

 

On June 26, 2009,  the New Jersey Turnpike Authority (“NJTA”) filed a complaint seeking to acquire property containing an office building and a double-sided billboard.  The billboard was owned by an outdoor advertising company who leased part of the property from the owner to construct the billboard.  The billboard company opposed the taking arguing that the billboard was real property and, as a result, the NJTA was required to enter into bona fide negotiations to purchase the billboard prior to filing suit.   The outdoor advertising company’s argument was based primarily upon N.J.S.A: 20:3-2-(d), which defines property as:
 

Land, or any interest in land, and (1) any building, structure or other improvement imbedded or affixed to land, and any article so affixed or attached to such building, structure or improvement as to be an essential and integral part thereof, (2) any article affixed or attached to such property in such manner that it cannot be removed without material injury to itself or to the property, (3) any article so designed, constructed, or specifically adapted to the purpose for which such property is used that (a) it is an essential accessory or part of such property; (b) it is not capable of use elsewhere; and (c) would lose substantially all its value if removed from such property.
 

The outdoor advertising company argued that its billboard, which stood 43 feet tall above the ground and was imbedded in the ground in a 20 x 20 x 5 foot slab of concrete, was an “improvement imbedded or affixed to the land” and thus compensable property.  The property owner and NJTA disagreed and argued that the billboard was personal property.
 

The Appellate Division reviewed the statutory definition of property and concluded that the key issue is not how the billboard is attached to the property, but whether it is an “essential and integral part of the land.”  In reviewing the facts before the court, the Appellate Division agreed with the property owner which argued that a billboard is not part and parcel to the property, “but merely a trade fixture owned by LaMar that is located on the property.”  The Court also found that the specific language in the lease stating that the “landlord agrees that the sign shall remain tenant’s personal property” clearly shows that the outdoor advertising company “never considered the billboard as real property and reserved its right to remove the billboard at anytime during the terms of the lease.”

 

Although billboard cases may not be as common as one would think, the decision clearly stresses the importance of evaluating all potential rights being acquired in a condemnation case.  The analysis must include an extensive review of the applicable statutes and case law, and a thorough understanding of real property law.

Appellate Division Sides with Property Owner Finding that Interest on a Condemnation Award is Not Limited to the Judgment Rate

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In most eminent domain cases, the government will deposit the pre-litigation offer with the Superior Court of New Jersey shortly after the complaint is filed.  The property owner (or lien holders) is entitled to withdraw the funds without effecting his or her right to seek additional money from the government. If the property owner is successful in recovering additional money (ie., proving the property is worth more than the government’s appraised value), the government must pay interest on any additional money awarded to the property owner.

   

Recently, the Appellate Division reversed a trial court judge who held that the property owner was limited to the judgment rate of interest on the additional award of just compensation.  The property owner wanted to present evidence of a more reasonable rate of interest, (10 year treasury rate plus 290 basis points) which was much higher than the judgment rate of interest.  At stake was an additional $500,000 for the property owner.

   

The Appellate Division agreed with the property owner and held that the judgment rate of interest is not controlling in eminent domain cases.  Rather, the court held that the trial court should have held an evidentiary hearing to determine the applicable rate of interest.  The Appellate Division did not think an evidentiary hearing was not required in all cases and that under certain circumstances, the trial court can make its determination based upon certifications.  However, in this case, an evidentiary hearing was merited.

   

This case is an important decision for larger cases where there are substantial amounts of time between the filing of a complaint and the ultimate conclusion of the case.  In this particular case, the complaint was filed on March 7, 2001, funds deposited on May 3, 2001, but the award was not finally confirmed until March 28, 2008.  The property owner was entitled to just additional interest which accrued over approximately 7 years.

Stark & Stark Shareholder Comments on Senators' Amendments to Eminent Domain Legislation

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Timothy P. Duggan, Shareholder of Stark & Stark’s Condemnation group, was quoted in the June 16, 2009 NJ Biz article, Senators announce amendments to eminent domain legislation. The article discusses the recent amendments to State Senate majority leader Steve Sweeney (D-West Deptford) and State Senator Ronald Rice’s (D-Newark) previously proposed eminent domain legislation, which would allow  redevelopment in the state while still providing protection and fair compensation to property owners if eminent domain is required.

Mr. Duggan states that you need a good compromise by making certain that redevelopment is allowed to go forward in some areas, such as inner cities, while curbing abuses in areas that are truly not blighted. Mr. Duggan also comments on effects the recent economy has had on several redevelopment plans in the area.

You can read the full article online here.

Court Rules Against Property in Case Where Tenant Was Relocated But the Property Was Never Taken

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What recourse, if any, does a property owner have when the government relocates a tenant to a new property in anticipation of acquiring the first property by eminent domain, but subsequently decides not to take the property?  The answer depends on the length and terms of the lease.
 

The Appellate Division of the Superior Court of New Jersey recently affirmed a trial court’s decision finding that the property owner was without recourse when its tenant was relocated and the New Jersey School Construction Corporation (“NJSCC”) decided not to acquire the property.  R.A.R. Development v. Associates v. New Jersey Schools Constr. Corp., 2008 WL 2663403 (N.J. Super. A.D. 2009).  In this particular case, NJSCC targeted a property for acquisition in order to build a new school.  After making an offer to acquire the property but before filing a condemnation complaint, NJSCC agreed to relocate a commercial tenant located at the property in question.  Since the relocation was going to take more than one year at a cost of approximately $5 million, NJSCC did not want to wait for the condemnation complaint to be filed before starting the relocation process.  When the move was almost complete, NJSCC decided not to acquire the property.  The property owner was extremely upset since it lost a tenant occupying over 100,000 square feet of space.
 

The property owner filed a lawsuit against the NJSCC alleging several causes of action, including tortuous interference with contractual and economic advantage, estoppel and inverse condemnation.  In terms of the tortuous interference claims, the court found that the NJSCC acted in good faith and pursuant to its statutory rights since New Jersey law permits the relocation of tenants prior to acquiring property by eminent domain (subject to certain requirements).  In terms of the estoppel argument, the court found that the property owner did not rely to its detriment on any representations of the NJSCC concerning the relocation of its tenants.  Finally, the court dismissed the inverse condemnation claim finding that the lease was at the end of its term (1 month remaining at the time the tenant completed its move) and the tenant had paid all rent due through the term of the lease.  In rejecting the property owner’s agreement that it was entitled to compensation for the taking of its renewal option, the court held that a “landlord’s expectation that the tenant will exercise the right of renewal does not confer on the landlord a recognized property interest subject to just compensation for its taking.”
 

The property owner in this case was harmed, but without recourse.  When negotiating with a condemning authority, one must keep in mind that New jersey law allows a condemning authority to change its mind at various stages of the process with little regard for the property owner’s rights.

New Jersey Supreme Court Sides With Property Owner in Dispute Over Legal Fees in Eminent Domain Case

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On April 9, 2009, the  New Jersey Supreme Court reversed the decision of the Appellate Division in a case analyzing a condemning authority’s obligation to reimburse a property owner for legal fees and expenses in a condemnation case.  Township of West Orange v. 769 Associates, LLC, ___, N.J. __  WL. 962687 (2009).  The New Jersey Supreme Court held that a property owner is entitled to reimbursement of his or her attorney fees and expenses as a matter of right once a condemnation complaint is filed and later abandoned by the condemning authority.  More importantly, New Jersey Supreme Court held that the property owner may recover attorney fees and other professional fees incurred  prior to the complaint being filed providing the attorney fees and expenses are directly related to the government’s efforts to acquire the property.  In this particular case, the Court found that the date of the accrual of the right to recover attorney fees and expenses was the date the Township adopted an ordinance authorizing the municipality to acquire the property by eminent domain.  The New Jersey Supreme Court also discussed the criteria to be used by a court in evaluating the amount of attorney fees and expenses to be awarded.
 

This is a very important case for property owners since it makes it clear that attorney fees and expenses can be recovered in the event the government files a condemnation action and later abandons the taking.  However, if a property owner spends a substantial amount of time and money negotiating with the condemning authority and the complaint is never filed, there is no right to recover attorney fees and expenses.  A complaint must be filed.  In addition, property owners may now look to recover attorney fees and expenses incurred prior to the filing of the complaint providing the attorney fees and expenses are directly related to the taking of the property and are incurred after the property is targeted for condemnation.

Stark & Stark Shareholder to Serve As Co-Chair of 4th Annual CEL International Eminent Domain Seminar

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Timothy P. Duggan, Shareholder and member of Stark & Stark's Condemnation group, will serve as Co-Chair of the 4th Annual CLE International Eminent Domain Seminar. The seminar will be held Friday April 17, 2009 at the Hilton in Newark, New Jersey.


In addition to serving as program co-chair, Mr. Duggan will present a seminar entitled Case Law and Legislative Update: Year In Review. The full-day program will provide eminent domain best practices tips, expert trial techniques, a discussion on how to control redevelopment without condemning property, basic and special concerns for valuation, and the new COAH rules driving redevelopment in New Jersey.



You can access the full seminar brochure, as well as registration information, here. (PDF)

Older Entries

November 20, 2008 — Almighty Tax Lien Loses Battle to Environmental Escrow in Condemnation Action

January 14, 2008 — Upon Abandonment, Condemnor Must Pay Legal Fees and Expenses

November 2, 2007 — What are your views on eminent domain?

August 3, 2007 — Eminent Domain in New Jersey Conference

July 31, 2007 — Somerville Seizes Supermarket's Lease

June 21, 2007 — Eminent Domain and the Art of Compromise

June 14, 2007 — New Jersey Supreme Court Reviews The Blighted Areas Clause of the New Jersey Constitution And Strikes And Invalidates a Redevelopment Designation

June 1, 2007 — When Partial Takings Become Complete

April 18, 2007 — Balancing Redevelopment and Property-Owner Rights

February 23, 2007 — Eminent Domain in New Jersey

January 16, 2007 — Appellate Division Affirms Case Awarding Relocation Assitance

January 11, 2007 — Achieving Redevelopment through Proper Planning and Cooperation

December 7, 2006 — BREAKING NEWS - NJ Supreme Court's Decision in Mt. Laurel v. MiPro

November 29, 2006 — New Jersey Public Advocate Weighs In On Appeal of Lodi Case

November 22, 2006 — Court Issues Stay in Solberg Airport Condemnation Case

October 11, 2006 — Eminent Domain - When Your Property Is Taken And The Project Stalls

October 10, 2006 — More on Eminent Domain in Trenton

October 4, 2006 — Eminent Domain - Trenton's Lamberton Street Development

September 18, 2006 — Eminent Domain - Solberg Airport - Readington New Jersey

September 15, 2006 — New Jersey Legal Update - Podcast # 46

August 24, 2006 — Redeveloper May Not Intervene in Condemnation Proceedings

August 22, 2006 — When Government Inversely Condemns Property by Regulation, Magnitude of State Interest Has No Bearing Upon Just Compensation

August 3, 2006 — Seizure of South Bound Brook Property on Appeal

July 14, 2006 — New Jersey Legal Update - Podcast # 39

June 27, 2006 — New Jersey Eminent Domain Reform

June 21, 2006 — New Jersey Eminent Domain Reform on the Doorstep

May 19, 2006 — NJ Public Advocate's Report on Eminent Domain for Private Redevelopment

May 11, 2006 — The Redevelopment of South Bound Brook New Jersey

April 6, 2006 — Controlling School Construction Costs

February 22, 2006 — Duggan Discusses Eminent Domain in Debt & Equity Journal

February 16, 2006 — Legislative Update on Eminent Domain

January 30, 2006 — Mipro Case To Be Heard By New Jersey Supreme Court

January 23, 2006 — Star Ledger Special Report on Eminent Domain

January 16, 2006 — Approval of Expanding Redevelopment Area and Amendments to Plan Found Arbitrary and Capricious

January 11, 2006 — Duggan Quoted on Kelo in Wall Street Journal

December 2, 2005 — Another Redevelopment Plan Successfully Challenged

November 29, 2005 — Pre-Litigation Negotiations: Property Owner Must Do More Than Complain or Reference Tax Assessment

November 8, 2005 — Court Sets Deadline for Filing Declaration of Taking in Condmenation

October 24, 2005 — Mount Laurel Township v. Southern Burlington County NAACP

October 6, 2005 — No Federal Forum for Constitutional Claims Brought Under Taking Clause

October 6, 2005 — Duggan Comments on SCC Financial Problems

September 28, 2005 — Eminent Domain - New Anti-Kelo Legislation

September 20, 2005 — Use of Eminent Domain To Halt Development

September 13, 2005 — Eminent Domain - Township of Bloomfield v. 1101 Washington Street

August 4, 2005 — Eminent Domain - Long Branch New Jersey

August 3, 2005 — Eminent Domain - Full and Fair Compensation

July 29, 2005 — Eminent Domain Podcast

July 18, 2005 — Eminent Domain Podcast - Relocation Benefits for Businesses in Condemnation Proccedings

June 27, 2005 — Kelo v. New London - A Ringing Endorsement of Economic Development Takings

June 24, 2005 — Kelo Decided - What Do Property Owners Do Now?

June 6, 2005 — The Redevelopment of Downtown Bloomfield New Jersey

February 23, 2005 — Supreme Court Hears Arguments Closely Watched Eminent Domain Case (Kelo v. City of New London)

January 24, 2005 — Condemnation

December 29, 2004 — Property Rights - Condemnation

December 13, 2004 — Eminent Domain - Condemnation

November 9, 2004 — Eminent Domain - Redevelopment

November 9, 2004 — Eminent Domain - Condemnation

November 9, 2004 — Eminent Domain - Kelo v. City of New London

September 15, 2004 — Eminent Domain

September 1, 2004 — Protecting Your Property In The Age of Redevelopment, New Schools, and Public Benefit

September 1, 2004 — Condemnation - Redevelopment