NEW JERSEY SPORTS AND EXPOSITION AUTHORITY VS. TOWN OF KEARNY(L-2039-16, HUDSON COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5152-15T1
NEW JERSEY SPORTS AND
EXPOSITION AUTHORITY,
Plaintiff-Respondent,
v.
TOWN OF KEARNY,
Defendant-Appellant,
and
STATE OF NEW JERSEY, by and through
the TIDELANDS RESOURCE COUNCIL,
THEODORE C. WILDMAN, and all of
his heirs, successors and assigns,
MIMI DEVELOPMENT CORPORATION, its
successor HUDSON MEADOWS URBAN
RENEWAL DEVELOPMENT CORPORATION,
and its further successor, SONEE
URBAN RENEWAL CORPORATION,
Defendants.
Submitted October 11, 2017 — Decided November 20, 2017
Before Judges Fuentes, Koblitz, and Manahan.
On appeal from the Superior Court of New
Jersey, Law Division, Hudson County, Docket
No. L-2039-16.
Castano Quigley LLC, attorneys for appellant
(Gregory J. Castano Jr., on the brief).
Lowenstein Sandler LLP, attorneys for
respondent (James Stewart and Rachel Warren,
on the brief).
PER CURIAM
Appellant Town of Kearny (Kearny) appeals from an order
denying its motion for summary judgment and from an order granting
a final judgment authorizing the New Jersey Sports and Exposition
Authority (NJSEA) to exercise its power of eminent domain relating
to the Keegan Landfill.
Kearny raises the following points on appeal:
POINT I
WHETHER THE CONDEMNATION VIOLATES THE
CONTRACTS CLAUSE OF THE UNITED STATES
CONSTITUTION.
POINT II
WHETHER NJSEA'S CONDEMNATION OF THE KEEGAN
LANDFILL WAS BROUGHT IN BAD FAITH.
POINT III
WHETHER NJSEA DID NOT "TURN SQUARE CORNERS"
WHEN IT CONDEMNED THE KEEGAN LANDFILL.
POINT IV
WHETHER THE NJSEA IS ESTOPPED FROM USING
EMINENT DOMAIN TO AVOID ITS CONTRACTUAL
OBLIGATIONS BECAUSE OF ALLEGED INDUCEMENTS
MADE BY NJMC PRIOR TO THE EXECUTION OF THE
LEASE AGREEMENT.
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Having considered these arguments in light of the record and
controlling law, we affirm substantially for the reasons set forth
in the comprehensive, well-reasoned thirty-three page written
opinion of Judge Peter F. Bariso, Jr. We add the following.
NJSEA is the zoning and planning agency for the Hackensack
region. In February 2015, NJSEA and the New Jersey Meadowlands
Commission (NJMC) merged and became collectively known as NJSEA.
N.J.S.A. 5:10A-1 to -68. NJSEA is authorized to acquire any real
property within its jurisdiction if the commission finds it
necessary or convenient to do so for any of its authorized
purposes, including temporary purposes, in accordance with the
Eminent Domain Act of 1971. N.J.S.A. 20:3-1 to -50. One of
NJSEA'S authorized purposes is to "provide solid waste disposal
and recycling facilities for the treatment of solid waste."
N.J.S.A. 5:10A-7(k).
The Keegan Landfill consists of approximately 110 acres
located northeast of Bergen Avenue in Kearny. The majority of the
disposal activity occurred at this site during the 1960s and 70s.
The landfill was not properly remediated, and contaminated
leachate regularly discharged into the adjacent fresh water marsh,
resulting in underground fires.
According to the appraisal report dated March 16, 2016, the
estimated market value of the fee simple interest in the Keegan
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Landfill is $1,880,000. By letter dated May 3, 2016, NJSEA offered
to purchase the landfill from Kearny for the market value.
On January 11, 2005, a special public meeting was held in
Kearny Town Hall Council Chambers to discuss the future of the
Keegan Landfill. The meeting included Kearny's mayor and council,
and representatives of the NJMC. The NJMC representatives outlined
their plan to temporarily re-open and remediate the landfill. NJMC
also declared its intention to return the landfill property at the
end of the lease term to Kearny for use as a potential recreational
area. Additionally, NJMC would provide a funded escrow account
for Kearny to use post-closure.
Following the meeting, NJMC and Kearny jointly drafted and
mailed to all Kearny residents a promotional piece entitled "The
Kearny-NJMC Green Space Initiative." The goal of the initiative
was described as "a comprehensive plan to remediate the
contaminated Keegan Landfill in Kearny, repair flood-control
waterways east of Schuyler Avenue, restore the Kearny Marsh and
construct additional parks and recreation sites for residents."
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On June 14, 2005, Kearny and NJMC executed a lease agreement
to implement the Green Space Initiative.1 The lease, in pertinent
part, recited:
WHEREAS, [NJSEA] intends to fund the landfill
closure (and the remediation of the adjacent
Kearny Marsh owned by [NJSEA]) through
revenues generated by disposal of Type 13
construction and demolition waste and Type 27
industrial waste (but not including asbestos
or chemical waste) at the Keegan Landfill; and
. . . .
WHEREAS, as part of this project the [NJSEA]
will assume sole responsibility, without
financial assistance or contribution from
Kearny, for the design and implementation of
a closure plan approved by the Department of
Environmental Protection [NJDEP]; and
WHEREAS, upon completion of operations and
closure of the Keegan Landfill, [Kearny] shall
undertake the installation of recreational
facilities on the demised premises, which
shall incorporate, to the extent practicable,
the requirements of N.J.A.C. 7:2A-9 for
grading and final cover; and
WHEREAS, the [NJSEA] shall, upon the
completion of operations and closure of the
Keegan Landfill, convey to [Kearny] the
closure escrow account it has established in
accordance with N.J.A.C. 7:26-2A.9, at which
time [Kearny] shall assume sole responsibility
for all post-closure requirements for the
Keegan Landfill pursuant to that rule;
. . . .
1
The lease was amended on June 15, 2005, to revise the schedule
for the payment of fixed rent in favor of Kearny, in exchange for
which Kearny agreed to a six-month extension of the lease term.
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After the cessation of Disposal Operations at
the Keegan Landfill, the [NJSEA] shall pay to
[Kearny] the funds described in Section 7B,
on the condition that [Kearny] shall use this
money to fund the installation of recreational
facilities at the Demised Premises and the
Retained Premises.
. . . .
No Costs to Town. It is the intention of the
parties that [Kearny] shall have no expenses
whatsoever with respect to the Demised
Premises or the Retained Premises during the
Lease term and the [NJSEA] agrees that it will
provide, at its sole cost and expense, for the
closure of the Keegan Landfill.
. . . .
At the end of Disposal Operations and the
completion of closure, the [NJSEA] shall
transfer to [Kearny] the post-closure escrow
account created in accordance with the
requirements of N.J.S.A. 13:1E-109 and
N.J.A.C. 7:26-2A.9(g), and [Kearny] shall
accept the account and assume sole
responsibility to perform the required post-
closure activities at both the Demised
Premises and the Retained Properties.
. . . .
The [NJSEA] shall on the last day of the Term,
peaceably and quietly surrender the Demised
Premises to [Kearny].
In December 2006, NJMC published a comprehensive action plan
containing statements related to the re-opening of the property.
The plan stated that "[a]fter the full closure of [the Keegan
Landfill] in 2013, the [NJSEA] will have completed its shift from
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operating and closing landfills to reusing them." The plan also
stated that it "include[s] closure costs of the landfill and post-
closure costs to convert the landfill to a nature park or a golf
course in 2013."
One year later, NJMC authored a "Closure/Post[-]Closure
Financial Plan" for the Keegan Landfill that stated, "[t]he purpose
of reopening this former landfill is to allow the collection of
tipping fees to obtain the necessary funding to properly remediate
(close) the site in accordance with NJDEP regulations." In July
2008, NJMC authored a "Closure and Post-Closure Care Plan" for the
Keegan Landfill that stated, "[a]fter closure, the Keegan site
will be returned to [Kearny]. It is anticipated that the site
will remain as passive open space." The plan further stated that
"[u]ltimately, as the site will return to [Kearny], the final long
term end use will be determined by [Kearny]." Five months later,
NJMC reopened the Keegan Landfill under a Temporary Certificate
of Authority to Operate issued by NJDEP.
According to the certification of Thomas Marturano, the
Director of Solid Waste and Natural Resources at NJSEA, beginning
in 2014, NJSEA determined that it was in the public interest to
extend the operating life of the Keegan Landfill and commenced
negotiations to extend the lease agreement with Kearny. In a
letter dated June 9, 2015, NJSEA requested that Kearny complete
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negotiations for the continued operation of the Keegan Landfill.
Additionally, NJSEA addressed Kearny's alleged obligation to fund
post-closure activities.
The parties continued negotiations and exchanged
correspondence on July 24 and July 30, 2015, without reaching an
accord. By letter dated September 18, 2015, NJDEP advised the
parties that absent a new lease or extension that allows continued
operation of the landfill, NJSEA and Kearny would be required to
begin preparations for termination of operations and
implementation of closure of the landfill in the near future.
Further, the parties were advised that without a complete
application for renewal at least ninety days prior to the
expiration date, NJSEA must terminate the receipt of waste on or
prior to June 20, 2016.
In February 2016, the Kearny Town Council adopted a resolution
authorizing the issuance of a Notice to Quit/Demand for Possession
and Compliance Lease Obligations. Kearny's counsel subsequently
sent the notice via email and overnight mail to NJSEA.
On March 17, 2016, NJSEA adopted Resolution 2016-10, which
authorized the use of eminent domain to acquire the underlying
property. By letter dated May 3, 2016, NJSEA made Kearny a pre-
condemnation offer to acquire the Keegan Landfill for $1,880,000.
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Two weeks later, Kearny responded to NJSEA's pre-condemnation
offer by urging NJSEA to reconsider its use of eminent domain.
On May 19, 2016, NJSEA filed a verified condemnation complaint
with the trial court. Five days later, the court entered an order
to show cause and an order for deposit. In lieu of an answer,
Kearny filed a motion for summary judgment on June 10, 2016, which
NJSEA opposed. Oral argument was heard on June 24 and July 15,
2016. Two weeks after the conclusion of oral argument, the court
entered an order denying Kearny's motion for summary judgment and
entering a final judgment approving the taking and appointing
condemnation commissioners.
Two days later, Kearny filed a notice of appeal with this
court followed by a motion for a stay pending appeal, which the
court denied by order dated August 19, 2016. Kearny then filed a
motion for a stay pending appeal to this court, which we denied
on September 23, 2016. Kearny moved to the Supreme Court for a
stay pending appeal two weeks later. The Court denied the stay
on December 6, 2016.
An appellate court reviews a grant of summary judgment de
novo, using the same standard as the trial court. Turner v. Wong,
363 N.J. Super. 186, 198-99 (App. Div. 2003). Thus, the appellate
court must determine whether a genuine issue of material fact is
present and, if not, evaluate whether the court's ruling on the
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law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307
N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608(1998).
I.
We first address the argument that the condemnation action
violated the Contract Clause of the United States Constitution.
Under the United States and New Jersey Constitutions, a government
body is permitted to take private property for public use in
exchange for just compensation. U.S. Const. amend. XIV § 2; N.J.
Const., art. I, ¶ 20. "Eminent domain is the power of the State
to take private property for public use. . . . It is a right
founded on the law of necessity which is inherent in sovereignty
and essential to the existence of government[.]" Twp. of W. Orange
v. 769 Assocs., LLC, 172 N.J. 564, 571 (2002). Although the power
of eminent domain is held exclusively in the legislative branch
of the government, various state agencies have been given the
authority by the State Legislature to condemn private property for
just compensation because it is not feasible for the Legislature
to directly oversee all condemnation actions. Wes Outdoor
Advertising Co. v. Goldberg, 55 N.J. 347, 351 (1970).
Here, Kearny argues that NJSEA's exercise of eminent domain
to condemn the Keegan Landfill violated the Contract Clause of the
United States Constitution. Kearny states that "the state
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government does not have free reign to simply disregard its pre-
existing contractual obligation, even if needed to satisfy an
'important public interest.'"
In United States Trust Company v. New Jersey, a case that
both Kearny and NJSEA cite in support of their respective
arguments, the Court held that the Contract Clause "limits
otherwise legitimate exercises of state legislative authority, and
the existence of an important public interest is not always
sufficient to overcome that limitation." 431 U.S. 1, 21, 97 S.
Ct. 1505, 1517, 52 L. Ed. 2d 92, 109 (1977). The Court also held
that "the Contract Clause does not require a State to adhere to a
contract that surrenders an essential attribute of its
sovereignty." Id. at 23. The Court further held that a state's
police power and a state's eminent domain power are examples of
these essential attributes of sovereignty that cannot be
"contracted away." Id. at 24.
NJSEA is authorized to acquire by eminent domain any real
property within its jurisdiction if NJSEA determines it necessary
or convenient to do so for any of its authorized purposes.
N.J.S.A. 5:10-29; N.J.S.A. 5:10-5(m); N.J.S.A. 13:17-6(g). One
of NJSEA's authorized purposes is to provide solid waste disposal
and recycling facilities for the treatment of solid waste.
N.J.S.A. 5:10A-7(k).
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In 2014, NJSEA determined that NJSEA'S continued operation
of the Keegan Landfill served as a vital public function that was
in the public interest. After failing to negotiate an extension
of the lease agreement with Kearny, and after Kearny sent NJSEA a
"Notice to Quit/Demand for Possession and Compliance with Lease
Obligations," NJSEA decided that it needed to use its eminent
domain power to ensure continued operation of the landfill.
In reaching this decision, Judge Bariso held, and we agree,
NJSEA did not violate the Contract Clause as it was duly authorized
to use eminent domain to condemn the landfill; it exercised that
authority in furtherance of one of its stated purposes; and eminent
domain is an essential attribute of state sovereignty that cannot
be contracted away.
II.
We next address the bad faith argument. A reviewing court
"will not upset a municipality's decision to use its eminent domain
power 'in the absence of an affirmative showing of fraud, bad
faith or manifest abuse.'" Twp. of W. Orange, supra, 172 N.J. at
571 (quoting City of Trenton v. Lenzner, 16 N.J. 465, 473, cert.
denied, 348 U.S. 972, 75 S. Ct. 534, 99 L. Ed. 757 (1955)). Great
discretion usually is afforded to condemning authorities in
determining what property may be taken for public purposes. See
Texas E. Transmission Corp. v. Wildlife Preserves, Inc., 48 N.J.
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261, 269 (1966) (stating "where the power to condemn exists the
quantity of land to be taken as well as the location is a matter
within the discretion of the condemnor"). Our courts recognize
that it is the responsibility of the Legislature to determine what
constitutes a public use. State v. Lanza, 27 N.J. 516, 530 (1958).
Bad faith refers to "the doing of an act for a dishonest
purpose" and "contemplates a state of mind affirmatively operating
with a furtive design or some motive of interest or ill will."
Twp. of Readington v. Solberg Aviation Co., 409 N.J. Super. 282,
310-11 (App. Div. 2009). "When considering a claim of bad faith
in the context of an eminent domain action, courts traditionally
distinguish between the motives of the individuals who adopted the
legislation and the purposes of the condemnation itself." Id. at
311. "Courts will generally not inquire into a public body's
motive concerning the necessity of the taking. . . ." Mount Laurel
Twp. v. Mipro Homes, L.L.C., 379 N.J. Super. 358, 375 (App. Div.
2005). Whether a taking is for a public use "is largely a
legislative question beyond the reach of judicial review except
in the most egregious circumstances." Ibid. The burden rests
with the party claiming bad faith to prove the alleged impropriety
by clear and convincing evidence. Twp. of Readington, supra, 409
N.J. Super. at 311.
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Kearny argues that NJSEA's condemnation action was instituted
in bad faith because "it used eminent domain to avoid its pre-
existing contractual obligations." Kearny submits as an example
of bad faith, NJSEA's "gross under-valuation of the property that
disregards its contractual obligation to have paid [Kearny] $3
million for recreational facilities at the end of the lease.
Instead, the NJSEA seeks to pay [Kearny] a mere $1.8 million."
This offer was tendered by the NJSEA predicated upon an appraisal
of the landfill conducted at its behest. The Appraisal Report,
dated March 16, 2016, stated the estimated market value of the fee
simple interest in the Keegan Landfill as $1,880,000.
NJSEA’s stated reason for institution of condemnation
proceedings was to continue the operation of the landfill in
accordance with its statutorily authorized purpose of providing
solid waste disposal. NJSEA determined that it would be in the
public interest to continue its operation of the landfill and,
consistent therewith, commenced negotiations with Kearny to extend
the lease agreement. NJSEA also took the requisite steps to amend
its Solid Waste Management Plan, which included notice to the
public and a public hearing to receive comments. NJSEA further
engaged in the process of amending its Solid Waste Permit to allow
for the continued operation of the landfill.
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In support of its assertion of bad faith, Kearny has failed
to present any evidence that NJSEA sought to use the landfill for
any purpose other than its continued operation. Nor has Kearny
offered any evidence that NJSEA’s enunciated purpose was pre-
textual. As the burden rested with Kearny to prove bad faith by
clear and convincing evidence of NJSEA’s dishonest or ulterior
purpose, its claim of bad faith failed and Judge Bariso’s rejection
of that claim was proper.
III.
Kearny next argues that the judgment authorizing NJSEA's
exercise of eminent domain must be reversed because NJSEA failed
to "turn square corners" when it condemned the Keegan Landfill.
Kearny argues that NJSEA did not "turn square corners" by choosing
to use its powers of eminent domain instead of honoring its pre-
existing contractual obligations. Kearny further argues NJSEA's
exercise of eminent domain was calculated as a method to seek a
"bargaining and litigation advantage" over Kearny. We disagree.
In dealing with the public, public bodies must "turn square
corners." F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J.
418, 426 (1985). Regarding condemnation, a public body "has an
overriding obligation to deal forthrightly and fairly with
property owners." Ibid. A public body "may not conduct itself
so as to achieve or preserve any kind of bargaining or [litigation]
15 A-5152-15T1
advantage over the property owner" and "[i]ts primary obligation
is to comport itself with compunction and integrity . . . ." Id.
at 427.
As noted by Judge Bariso, in condemnation actions, the "turn
square corners" doctrine applies primarily where a public body
seeks to avoid a procedural or pre-litigation requirement, giving
itself a litigation advantage. See Klumpp v. Borough of Avalon,
202 N.J. 390, 413 (2010) (noting that government should provide
additional notice, other than the physical invasion of real
property, to affected property owners before and after a physical
taking); see also Rockaway v. Donofrio, 186 N.J. Super. 344, 354
(App. Div. 1982) (dismissing plaintiff's condemnation of property
for failure to comply with its statutory obligations under N.J.S.A.
20:3-6).
Kearny does not challenge NJSEA's compliance with any
procedural or pre-litigation requirements of its eminent domain
powers as it is without dispute that NJSEA meticulously complied
with those requirements. As such, Kearny’s "square corners"
argument fails.
IV.
Finally, we address the estoppel argument. "Equitable
estoppel is 'rarely invoked against a governmental entity.'"
Middletown Twp. Policemen's Benevolent Ass'n v. Twp. of
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Middletown, 162 N.J. 361, 367 (2000) (quoting Wood v. Borough of
Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)).
Principles of equitable estoppel "'are relevant in assessing
governmental conduct' and impose a duty on the court to invoke
estoppel when the occasion arises." Middletown, supra, 162 N.J.
at 367. "The essential elements of equitable estoppel are a
knowing and intentional misrepresentation by the party sought to
be estopped under circumstances in which the misrepresentation
would probably induce reliance, and reliance by the party seeking
estoppel to his or her detriment." O'Malley v. Dep't of Energy,
109 N.J. 309, 317 (1987).
"Equitable estoppel may be invoked against a [public body]
'where interests of justice, morality and common fairness clearly
dictate that course.'" Middletown, supra, 162 N.J. at 367 (quoting
Gruber v. Mayor and Twp. Comm. of Raritan, 39 N.J. 1 (19622)).
Doctrines of estoppel may be applied against the State, but are
not applied "to the same extent as they are against individuals
and private corporations." See Bayonne v. Murphy, 7 N.J. 298, 311
(1951) (the government may not be bound or estopped by unauthorized
acts of its officers when performing certain government
functions).
Kearny argues that NJSEA is estopped from using its eminent
domain powers because of the statements and publications of NJMC,
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NJSEA's predecessor, which were made and published prior to the
execution of the lease agreement. As noted above, these
representations included NJMC's intention to return the property
to Kearny at the end of the lease term for potential recreational
use, and its intention to provide a funded post-closure escrow
account for Kearny's use.
Kearny also argues that NJSEA's statements during the January
2005 public hearing and the subsequent promotional piece
demonstrate "a deliberate and explicit course of conduct to bait
[Kearny's] elected official and residents into an agreement that
apparently generated substantial revenues that may have been
mismanaged by [NJSEA]. Kearny asserts that common fairness and
equity "dictate that the NJMC and NJSEA be bound by their prior
representations and contract." Again, we disagree.
Although the condemnation action may be inconsistent with the
goal of the landfill’s takeover as stated by the NJMC in 2005, we
discern no basis to employ estoppel. There is no proof that the
NJMC knowingly or intentionally misrepresented the purpose for re-
opening the landfill, i.e., its remediation. Nor has Kearny
demonstrated reliance on the public statements and the promotional
piece to its detriment. To the contrary, Kearny clearly benefitted
both from the landfill’s remediation and from the substantial
lease payments it received.
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Affirmed.
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