N.J.S.A. 20:3-26(b), part of the Eminent Domain Act of 1971, provides:
“If the court renders final judgment that the condemnor cannot acquire the real property by condemnation or, if the condemnation action is abandoned by the condemnor, then the court shall award the owner of any right, or title to, or interest in such real property, such sum as will reimbursed such owner for his reasonable costs, disbursements and expenses actually incurred, including reasonable attorney, appraisal and engineering fees.”
Despite the clear language in the statute, not all courts have allowed property owners to recover legal fees when a condemning authority decides to abandoned a condemnation case. For example, a case decided in 1999 denied a request for allowance of legal fees and expenses in a condemnation action where Essex County filed a condemnation complaint, but abandoned the lawsuit before the commissioners held their hearing. Essex County v. RAR Development, 323 N.J.Super. 505 (Law Div. 1999). The Essex County court relied upon a case from 1941 which held that a property owner’s right to receive attorneys was “conditioned” upon the public entity abandoning the condemnation action within 20 days after the filing of the commissioners’ report or jury’s verdict. Since the case in question did not reach the commissioners’ hearing stage, the court denied the request for legal fees and expenses.
On December 24, 2007, the Appellate Division of the Superior Court of New Jersey decided a case which rejected the Essex County decision. West Orange Township v. 769 Associates, LLC, ___ N.J.Super. ___, 2007 WL 4472101 (N.J.Super.A.D. 2007). In 769 Associates, the Appellate Division found that the entitlement to reimbursement of legal fees and expenses is triggered upon the filing of the condemnation action. Once the complaint is filed, any abandoned entitles the property owner to reimbursement of legal fees and expenses. In rejecting the Essex County decision, the Appellate Division found that the trial court in Essex County erred when it relied upon a decision interpreting a statute which had been repealed. The Appellate Division continued by declaring:
“Here, by contrast, there is simply not textual support in N.J.S.A. 20:3-26(b) for such a limitation. Under our current law, the only condition that must be satisfied to trigger the right of reimbursement is the abandonment of a condemnation action by the public entity. The point in time in which this occurs is not a relevant consideration in determining whether reimbursement is warranted.”
The Appellate Division also held that legal fees and expenses incurred prior to the filing of the condemnation complaint cannot be recovered by the property owner. This is somewhat problematic because often times a property owner retains counsel to negotiate with the condemning authority before the condemnation complaint is filed.
769 Associates is an important case for two reasons. First, is it seems to over-rule Essex County, although there is an argument that the Appellate Division’s discussion of the Essex County case is dicta and not binding on lower courts. Second, as set forth in the blog posting discussing the Township of Pemberton v. Berardi decision, a condemnor does not have to commit to the taking until many months into the case. Now, as a result of the 769 Associates case, property owners have some recourse if a condemnation case is abandoned by the condemning authority late in the case.