Mount Laurel Township v. Southern Burlington County NAACP

This case involves a taking of property pursuant to a judgment of repose which approved Mount Laurel’s plan to meet its obligations to build 814 affordable housing units. The plan was incorporated into a judgment of repose entered December 3, 1997. Mount Laurel Township argued that the entry of the judgment of repose on December 3, 1997 was the appropriate date of valuation since it was the date upon which “action was taken by the condemnor which substantially affects the use and enjoyment of the property by the condemnee.” See, N.J.S.A. 20:3-30(c). The property owner argued that the correct date of valuation was the date the complaint was filed on May 8, 2002. Since property values were rising between 1997 and 2002, the date of valuation would have a significant impact on the just compensation to be paid to the property owner.

The court reviewed the legislative history and cases interpreting section (c) of N.J.S.A. 20:3-30 and found that “substantial affect” upon the use and enjoyment of the property is occasioned when the “condemnor takes action which directly, unequivocally and immediately stimulates an upward or downward fluctuation of value and which is directly attributable to a future condemnation.” In short, there must be a causal nexus between the increase or decrease in value of the property and the acts taken by the condemning authority. Without this casual link, subsection (c) does not apply.

In the Mount Laurel case, the court reviewed the judgment of repose and letters drafted by the Township’s attorney. Of particular importance was the provision in the judgment of repose which states that the judgment is effective “unless modified by further order.” In addition, the developer’s attorney wrote to the condemnee’s attorney advising him that it was possible that “none of defendants’ land would be needed for the project.” Further, the 1997 judgment was modified in June 2001 to reduce amount of property taken by Mount Laurel.

The court concluded that the record before the court not include any evidence that the increase in the property’s value was due to the 1997 judgment of repose. In fact, the court found that it was undisputed that the increase was caused by inflationary circumstances. Since there was no causal nexus between the judgment of repose and the increase in the value of the property, the Appellate Division found that the proper date of valuation was the date of the filing of the complaint.

In rising markets such as the one we are confronted with today, property owners generally want a later date of valuation. However, there are certain exceptions (i.e., change in zoning) which may make it beneficial to use an earlier valuation date. Nevertheless, the proper valuation date should be discussed with your attorney and appraiser when developing your litigation strategy.