New Jersey Transit Corporation v. Mary Franco , 447 N.J. Super. 361 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3802-12T4
NEW JERSEY TRANSIT CORPORATION,
Plaintiff-Appellant/ APPROVED FOR PUBLICATION
Cross-Respondent,
October 19, 2016
v.
APPELLATE DIVISION
MARY FRANCO, CAROL FRANCO,
M & C FRANCO & CO.,
Defendants-Respondents/
Cross-Appellants,
and
NORTH COUNTY COLLISION, INC.;
VANESSA EXPRESS CO., INC.; CITY
OF HOBOKEN; TOWNSHIP OF WEEHAWKEN;
CITY OF UNION CITY; COUNTY OF HUDSON;
PUBLIC SERVICE ELECTRIC AND GAS COMPANY;
UNITED WATER COMPANY; NORTH HUDSON
SEWERAGE AUTHORITY; NEW JERSEY
DEPARTMENT OF ENVIRONMENTAL PROTECTION,
Defendants.
______________________________________
Argued January 5, 2016 – Decided October 19, 2016
Before Judges Reisner, Leone, and Whipple.
On appeal from the Superior Court of New
Jersey, Law Division, Hudson County, Docket
No. L-6300-09.
Victoria A. Flynn argued the cause for
appellant/cross-respondent (DeCotiis,
FitzPatrick & Cole, LLP, attorneys; Michael
J. Ash, of counsel and on the briefs; Ms.
Flynn, on the briefs).
Paul V. Fernicola argued the cause for
respondent/cross-appellant (Paul V. Fernicola
& Associates and Joseph R. Torre, P.A.,
attorneys; Mr. Fernicola, of counsel and on
the briefs; Robert E. Moore, on the briefs).
The opinion of the court was delivered by
LEONE, J.A.D.
Plaintiff New Jersey Transit Corporation appeals from the
March 4, 2013 final judgment for $8,150,000, which the jury
awarded as just compensation for plaintiff's condemnation of a
property ("Property") owned by defendants Mary Franco, Carol
Franco, and M & C Franco & Co. Defendants cross-appeal a
February 12, 2014 order placing $1,967,865 in escrow to cover
estimated costs for environmental cleanup of the Property.
We hold defendants' proposal to build a cul-de-sac on its
Weehawken lots to serve proposed apartment buildings on other
lots requires either a use variance for a private driveway or
acceptance by Weehawken as a public street. Because defendants
failed to show a reasonable probability that Weehawken would
have granted either form of relief, we reverse the March 4, 2013
final judgment and remand for a new trial on just compensation.
Because the trial court properly calculated the escrow based on
the estimated remediation cost for the highest and best use used
2 A-3802-12T4
to calculate defendants' award, we affirm the February 12, 2014
order.
I.
The 1.89-acre Property was comprised of three parcels in
three different municipalities. A 51,362-square-foot parcel was
in the City of Hoboken's "Light Industrial" zone but was cut off
from the rest of Hoboken by the tracks of the Hudson-Bergen
Light Rail System on the Property's southern border. A 21,687-
square-foot parcel was in the City of Union City's "Multi-
Family – Residential" zone but was cut off from the rest of
Union City by the Palisades Cliffs on the Property's western
border. The remaining 9585-square-foot parcel was in the
Township of Weehawken's R-3 "One, Two (2) and Three (3) Family
Residence Zone." The Property's northern border was West 18th
Street and its elbow intersection with West 19th Street, two
one-way Weehawken streets which provided road access
respectively from and to the Property. The Property's eastern
border was an industrial building. The Property contained an
industrial garage in 2009 and previously had other industrial
uses.
In 2009, plaintiff filed a complaint in condemnation to
acquire the Property for public use pursuant to N.J.S.A. 27:25-
13(b). Plaintiff offered $934,500 for the Property, subject to
3 A-3802-12T4
the need to remediate any contamination. Commissioners awarded
just compensation of $1,350,000. Plaintiff and defendants
sought a trial de novo in the Law Division.
Plaintiff's original appraisal report valued the Property
at $990,000 if used for industrial development. Defendants'
original appraisal report valued the Property at $9,996,000 if
used for: a twelve-story, seventy-two-apartment high-rise
building in the Union City parcel; a four-story, fifty-four-
apartment mid-rise building in the Hoboken parcel; and five
townhouses in the Weehawken parcel. Defendants proposed road
access to the Property by a private driveway extending
Weehawken's West 19th Street.
The trial court adjourned the trial date, permitting
plaintiff to produce a new appraisal report and defendant to
respond. Plaintiff's second appraisal report recognized the
highest and best use of the Property was for multifamily
dwellings. The report valued the Property at $1,650,000 if used
for thirty-five multifamily residences.
Defendants' second appraisal report valued the Property at
$9,273,655 if used just for the high-rise and mid-rise
buildings. The report deleted the five townhouses from the
Weehawken parcel, which would instead be used for a cul-de-sac
providing access from West 19th Street.
4 A-3802-12T4
Plaintiff produced rebuttal reports, stating defendants'
proposed project would not receive municipal approval and
estimating remediation would cost $1,967,865. Defendants
produced final concept plans containing the cul-de-sac. On
October 3, 2012, the court denied plaintiff's motions in limine
seeking to exclude defendants' concept plans and expert reports.
After a seven-day trial, the jury determined just
compensation for the Property was $8,150,000, plus interest and
costs. The court's March 4, 2013 order entered final judgment
for $8,150,000, ordered the deposit in escrow of $1,967,865 as
the estimated cost to remediate the contamination, and denied
defendants' motion to bar plaintiff from filing a cost recovery
action. Plaintiff appealed, and defendants cross-appealed.
We temporarily remanded for a hearing on the estimated
remediation costs. On February 12, 2014, the trial court
entered an order keeping the $1,967,865 in escrow. Defendants
amended their cross-appeal to appeal that order.
II.
We must hew to our standard of review. Plaintiff's appeal
challenges the trial court's denial of its requests to exclude
expert testimony and reports concerning municipal approval of
defendants' proposal. We must apply a "deferential approach to
a trial court's decision to admit expert testimony, reviewing it
5 A-3802-12T4
against an abuse of discretion standard." Townsend v. Pierre,
221 N.J. 36, 53 (2015) (citation omitted). However, we must
also consider whether a variance "was needed in the first
instance. That is purely a question of law . . . subject to de
novo review." Nuckel v. Borough of Little Ferry Planning Bd.,
208 N.J. 95, 102 (2011).
III.
"In a condemnation action the determination sought is the
amount of just compensation. Just compensation is a function of
the value of the property in light of its highest and best use,
which is ordinarily evaluated in accordance with current zoning
ordinances." Borough of Saddle River v. 66 East Allendale, LLC,
216 N.J. 115, 119 (2013). "To constitute the 'highest and best
use,' a use must be . . . 'legally permissible'" in that zone.
Hous. Auth. v. Suydam Inv'rs, L.L.C., 177 N.J. 2, 20 (2003)
(citation omitted); see 66 East Allendale, supra, 216 N.J. at 137.
However, "[c]ertain circumstances may permit valuation to
include an assessment of a change in the permitted use of a
property, but only if there is a reasonable probability that a
zoning change would be granted." 66 East Allendale, supra, 216
N.J. at 119. "If valuation of a property based on another use
is to be considered by a jury, the determination of reasonable
probability of a zoning change must be made by the judge before
6 A-3802-12T4
the evidence is presented to the jury, and it must be made
clearly to enable appellate review." Ibid. Thus, "condemnation
actions may include competing experts opining over the
likelihood of obtaining a zoning change if the court first
determines that there is a reasonable probability of such a
change." Id. at 142.
The crucial issue on appeal is whether the creation of a
cul-de-sac on the Weehawken parcel of the Property would have
required and received approval by Weehawken.1 State law provides
"[n]o permit for the erection of any building or structure shall
be issued unless the lot abuts a street giving access to such
proposed building or structure." N.J.S.A. 40:55D-35. To
provide access from the high-rise and mid-rise buildings to an
abutting street, and to provide a driveway between the
buildings' parking garages and the street, defendants proposed a
cul-de-sac extending Weehawken's West 19th Street. The cul-de-
sac would occupy the majority of each of the lots in Weehawken.
1
Plaintiff also notes the complexity of seeking land-use
approvals for a property in three different municipalities.
However, on appeal plaintiff does not contest that the high-rise
building in the Union City parcel could be developed as of
right. Nor does plaintiff show that Hoboken would not have
granted a use variance allowing the construction of the mid-rise
building. Indeed, Hoboken's 2004 Master Plan proposed the
section of Hoboken cut off by the Light Rail tracks be rezoned
as residential to be more similar to Weehawken's zoning.
7 A-3802-12T4
A.
Use of defendants' Weehawken parcel as a cul-de-sac would
be a "use" of that land. The Township of Weehawken Code (Code)
provides: "Use shall mean the specific purpose for which land or
a building is designed, intended, occupied or maintained." Code
§ 23-3.1. "No building or premises shall hereafter be erected
or used for any purpose other than a purpose permitted in the
zone in which the building or premises is located[.]" Code §
23-4.2. A driveway is not included in the definition of a
"[s]tructure," and is thus not within the definition of
"[b]uilding," but it remains a use of the land and the premises.
Code § 23-3.1.
The permitted uses for lots in Weehawken's R-3 "One, Two
(2) and Three (3) Family Residence Zone" were one-, two-, and
three-family dwellings; townhouses with driveways covering not
more than twenty-five percent of the lot; clubs; and specified
accessory uses. Code §§ 23-5.2 to -5.4. The R-3 Zone did not
list the use of a lot solely or primarily as a street, driveway,
or cul-de-sac as a permitted, conditional, or accessory use.
The situation here resembles that in Nuckel. There, our
Supreme Court considered whether a developer who proposed to
place a driveway on one lot to service a hotel on the adjacent
lot was "required to obtain variances under the Municipal Land
8 A-3802-12T4
Use Law (MLUL), N.J.S.A. 40:55D-1 to -163, specifically N.J.S.A.
40:55D-70(d)(1) and (2)." Nuckel, supra, 208 N.J. at 97.2
N.J.S.A. 40:55D-70 provides "[t]he board of adjustment shall
have the power to . . . d. [i]n particular cases for special
reasons, grant a variance . . . to permit: (1) a use or
principal structure in a district restricted against such use or
principal structure[.]"
In Nuckel, supra, the zoning ordinance did "not address
driveways, access roads, or the like as permitted uses or
conditionally permitted uses in the [zone]." 208 N.J. at 98.
The Supreme Court observed that was "likely because, as a rule,
. . . a driveway is considered an accessory use." Id. at 104.
However, the Court emphasized that the zoning ordinance in
Nuckel defined an accessory use as "a use which is customarily
incidental and subordinate to the principal use of a lot or a
building and which is located on the same lot." Ibid. (citation
omitted). The Court ruled such language "precludes the
characterization of a driveway on [one lot] as accessory to the
hotel on [another lot]." Ibid. The Court then reasoned: "[I]f
it is not accessory, what is the nature of the driveway? We
conclude that it must be a new principal use." Id. at 105.
2
Here, the only issue is a variance under N.J.S.A. 40:55D-
70(d)(1), which is also referred to as a "use variance," "D
variance," or "(d)(1) variance."
9 A-3802-12T4
Though acknowledging the argument that "[a] driveway in
itself is neutral," the Court in Nuckel ruled that, under such
an argument, "neutrality only allows a driveway to 'take[] color
from the uses'" which it serves. Ibid. (alterations in
original) (quoting Beckmann v. Township of Teaneck, 6 N.J. 530,
536 (1951)). "It does not prevent a driveway from constituting
a new 'use' in and of itself." Ibid. In any event, such an
"argument, at best, would allow the driveway to be characterized
as a new principal hotel use, but not an accessory use." Ibid.
In Nuckel, the lot containing the driveway was zoned for
hotels but already had a principal use, an auto-body shop. Id.
at 97-98. The Court held, because the municipal "Code prohibits
more than one principal use, a (d)(1) variance is required" for
use as a driveway. Id. at 105.
Like the zoning ordinance in Nuckel, Weehawken's zoning
ordinance provides: "Use, Accessory shall mean a use which is
customarily incidental and subordinate to the principal use of a
lot or a building and located on the same lot therewith." Code
§ 23-3.1. Therefore, using the Weehawken lots for a cul-de-sac
to serve as the driveway for the high-rise and mid-rise
apartment buildings in the adjacent lots would constitute "a new
principal use." Nuckel, supra, 208 N.J. at 105. Because that
principal use is not permitted in Weehawken's R-3 zone, "a
10 A-3802-12T4
(d)(1) variance [was] required." Ibid.; see Cox & Koenig, N.J.
Zoning & Land Use Admin. § 38-1, at 786-77 (2016).
Similarly here, a use variance would be required even if
the cul-de-sac could be viewed as taking its color from the uses
which it would serve. Nuckel, supra, 208 N.J. at 105. Such an
argument, at best, would allow the cul-de-sac to be
characterized as a new principal use, namely high-rise and mid-
rise apartment buildings. See Cox & Koenig, supra, § 38-5, at
795-96 (finding it "logical that construction of accessory
driveways on [lots on which there was no preexisting use] should
imbue them with the characteristics of the use they served" on
adjacent lots). Because such a use was not permitted in
Weehawken's R-3 zone, a use variance would be required even
under this argument. See Angel v. Bd. of Adjustment, 109 N.J.
Super. 194, 196-99 (App. Div. 1970) (requiring a variance for a
driveway on one lot serving a use in another lot where that use
is not permitted in the former lot).
Accordingly, we hold a use variance was required to the
extent defendants sought to use their Weehawken lots as a
private cul-de-sac connecting the high-rise and mid-rise
apartment buildings to the Weehawken streets. However,
defendants' experts never opined there was a reasonable
probability Weehawken would grant such a variance.
11 A-3802-12T4
Defendants' principal experts were engineer Robert L.
Costa, planner Peter G. Steck, and appraiser Jon P. Brody.
Based on Costa's original proposal for a private driveway to
connect West 19th Street to the high-rise and mid-rise apartment
building use in the other lots, Steck testified in his November
28, 2011 deposition that "there would probably need to be a D
variance approval in Weehawken for the driveway" because "the
accessory component of the use takes the coloration of the
principal use."3 However, Steck did not opine on the likelihood
Weehawken would grant a use variance. Steck's original April
19, 2011 report failed to mention the need for this use
variance. Brody also failed to mention the need for a use
variance from Weehawken either in his April 20, 2011 original
appraisal report or his November 28, 2011 deposition.
On January 20, 2012, the trial court heard plaintiff's
motion to strike defendants' original expert reports.
Plaintiff's counsel argued Steck's report was "deficient for
failure to recognize that Weehawken and Weehawken's land use
boards had jurisdiction over both the improvements in Hoboken
3
At trial, Steck confirmed that because "a private driveway
through Weehawken" would be an "accessory use [which] takes on
the coloration of the principal use, . . . it would have
triggered the need for a use variance." Steck acknowledged he
"didn't form an opinion" on whether Weehawken would have granted
a use variance.
12 A-3802-12T4
and Union City by virtue of the access through the Weehawken
parcel." Defendants' counsel agreed Steck "overlooked the fact
that that private driveway, because it provides access to the
permitted use in Union City and to the Hoboken parcel[,] . . .
is as much a part of those high-rise and mid-rise developments
as the buildings themselves and that it technically required a
use variance from Weehawken for that private driveway" because
"the Weehawken zone only allows townhouses."
Defendants' counsel "wanted to amend the report to resolve
the access issue to eliminate the need for the use variance."
Thus, defendants filed three revised expert reports right before
the January 20, 2012 argument on plaintiff's motion to strike
defendants' original expert reports.4
B.
Defendants' revised expert reports tried to avoid the need
for Weehawken's approval by offering to dedicate the cul-de-sac
as a public street. Costa's January 16, 2012 revised concept
4
On January 23, 2012, a motion judge denied plaintiff's motion
to strike defendants' original expert reports. The court
instead allowed plaintiff to re-depose defendants' three experts
and to produce rebuttal reports in response to defendants' new
expert reports. Plaintiff has not expressly appealed that
order. Plaintiff has expressly appealed the May 24, 2012 order
by another motion judge denying defendants' motion to strike
plaintiff's rebuttal reports but allowing defendants to produce
rebuttal reports. In any event, plaintiff has not shown either
order was an abuse of discretion.
13 A-3802-12T4
plan included the cul-de-sac as a "proposed right of way
dedication to West 19th Street." Steck's January 17, 2012
revised report proposed "the entire 9,585 square foot
[Weehawken] parcel would be dedicated to the Township of
Weehawken as a public right-of-way thereby providing compliant
lot frontage and public road access to the Union City and
Hoboken portions of the tract." Steck's report claimed this
would "not involve any zoning review and consequently would be
permitted in Weehawken's R-3 Zone." Brody's January 18, 2012
revised appraisal report agreed the "highest and best use is for
[the Weehawken parcel] to be employed as [a] cul-de-sac
extension of West 19th Street providing access for the
development of the balance of the site, [namely] those lands
lying in Hoboken and Union City." Brody again assumed no need
for approval by Weehawken.
However, "[a]n individual cannot, at his pleasure, create
public highways for his own benefit upon his own land, and
impose upon the public the burthen of maintaining them." Holmes
v. Mayor of Jersey City, 12 N.J. Eq. 299, 308 (E. & A. 1857);
see Roger A. Cunningham & Saul Tischler, Dedication of Land in
New Jersey, 15 Rutgers L. Rev. 377, 381-82 & nn.29-31 (1961).
"Of course, the public is not under any duty to accept a
dedication of land." Cunningham & Tischler, supra, 15 Rutgers
14 A-3802-12T4
L. Rev. at 395 & n.99. Thus, "[a] city is not required to
accept a dedicated street." N.J. Junction R.R. Co. v. Mayor of
Jersey City, 68 N.J.L. 108, 109 (Sup. Ct. 1902), aff’d o.b., 70
N.J.L. 826 (E. & A. 1904). "Dedication and acceptance are
separate and distinct matters." Englander v. Township of West
Orange, 224 N.J. Super. 182, 188 (App. Div. 1988). "It is
settled that mere dedication of streets . . . does not
constitute them public highways, unless or until such streets
are in some way accepted by public authorities[.]" Highway
Holding Co. v. Yara Eng'g Corp., 22 N.J. 119, 127 (1956).
"Once an owner of land makes an offer of dedication, . . .
[t]he offer remains in place until the municipality accepts or
rejects it[.]" Township of Middletown v. Simon, 193 N.J. 228,
241 (2008). Generally, "the actual dedication to public use is
consummated when the dedication is accepted by an appropriate
ordinance or resolution of the municipality." State v. Birch,
115 N.J. Super. 457, 464 (App. Div. 1971). The Legislature has
provided: "The governing body of every municipality may make,
amend, repeal and enforce ordinances to . . . accept any street,
highway, lane, alley, square, beach, park or other place, or any
part thereof, dedicated to public use, and thereafter, improve
and maintain the same." N.J.S.A. 40:67-1, -1(b); see N.J.S.A.
15 A-3802-12T4
40:67-2.5 Acceptance of "dedication may also be accomplished by
other 'official conduct which manifests an intent to treat the
land in question as dedicated to the public use.'" Englander,
supra, 224 N.J. Super. at 188 (quoting Birch, supra, 115 N.J.
Super. at 464); see State v. Township of South Hackensack, 111
N.J. Super. 534, 539 (App. Div. 1970) (requiring acceptance by
conduct to be "unequivocal, clear and satisfactory"), certif.
denied, 57 N.J. 433 (1971). Thus, whether by ordinance or by
official conduct, it would be Weehawken's choice whether to
accept defendants' offer to dedicate the cul-de-sac.
Steck's revised report suggested Weehawken's engineer could
simply review defendants' offer of dedication. However, it is
generally the governing body which accepts the dedication. In
his February 14, 2012 deposition, Steck acknowledged defendants
could only make "an offer to the governing body of Weehawken to
accept [the cul-de-sac] as a public street." Neither Steck nor
defendants' other experts ever opined there was a reasonable
probability Weehawken's governing body would accept the
dedication.
Absent Weehawken's acceptance of defendants' "dedication,"
defendants would "retain[] ownership" of the Weehawkin lots.
5
Similarly, "[a] municipality that wishes to reject a dedication
may pass an ordinance to that effect." Simon, supra, 193 N.J.
at 242; see N.J.S.A. 40:67-1, 19.
16 A-3802-12T4
Township of Middletown v. Simon, 387 N.J. Super. 65, 75 (App.
Div. 2006), aff'd in part, rev'd in part, 193 N.J. 228. Thus,
the proposed cul-de-sac would remain the private driveway of
defendants, who "as the titleholder at all times had the right
to use the property lawfully, subject, however, to the
dedication." Osterweil v. City of Newark, 116 N.J.L. 227, 231
(E. & A. 1936). However, as set forth above, a use variance
would be required to use the Weehawken parcel lawfully as a
private driveway.
Thus, Weehawken's approval was necessary whether the cul-
de-sac was private or dedicated for public use. Indeed, it
would be contrary to the purposes of the municipal regulation of
land use to allow a party to escape the need to obtain a use
variance by making an offer to dedicate which the municipality
will not accept. "It is the intent and purpose of" the MLUL
"[t]o encourage municipal action to guide the appropriate use or
development of all lands in this State" and "[t]o ensure that
the development of individual municipalities does not conflict
with the development and general welfare of neighboring
municipalities." N.J.S.A. 40:55D-2(a), (d).
Although ordinances accepting or rejecting an offer to
dedicate a driveway as a public street are not "zoning
ordinances," they reflect "zoning considerations." Howell
17 A-3802-12T4
Props., Inc. v. Township of Brick, 347 N.J. Super. 573, 581
(App. Div.), certif. denied, 174 N.J. 192 (2002). Therefore,
under 66 East Allendale, we hold defendants were required to
show a reasonable probability Weehawken would either grant a use
variance for the cul-de-sac or accept the dedication of the cul-
de-sac as a public street. See N.J. Transit Corp. v. Mori, 435
N.J. Super. 425, 428, 432-33 (App. Div. 2014). Defendants'
experts offered neither opinion, rendering their opinions
legally inadequate. Indeed, they offered the legally-inaccurate
opinion that Weehawken had no say in the matter.
C.
Prior to trial, plaintiff filed a motion in limine to bar
introduction of the revised concept plans prepared by Costa and
the revised expert reports by Steck and Brody, and to bar their
testimony.6 Plaintiff contended the experts' opinions failed to
analyze whether there was a reasonable probability Weehawken
would grant a use variance. Plaintiff also argued it was
6
Plaintiff earlier filed a motion to strike defendants' expert
reports and concept plans. A third motion judge denied that
motion on August 10, 2012, stating only "no prejudice shown to
moving party for 10 day late service of report." Plaintiff
appeals that order but has not shown it was an abuse of
discretion to grant that extension or to allow the slightly
altered July 3, 2012 concept plans. To the extent plaintiff's
motion to strike raised the larger issues raised by its motion
in limine, it is sufficient that we address the motion in
limine.
18 A-3802-12T4
speculative that Weehawken would accept dedication of the cul-
de-sac. As a result, plaintiff moved to strike the experts'
opinions as net opinions. Alternatively, plaintiff asked the
court to hold an evidentiary hearing under N.J.R.E. 104 to
determine the admissibility of the experts' opinions.
After hearing argument, the trial court denied plaintiff's
motion on October 3, 2012. The court ruled the opinions of
defendants' experts were not net opinions, and found the
development was legally permissible, for two reasons.
First, the trial court relied on Steck's testimony
concerning the Residential Site Improvement Standards (RSIS).
The court found "it is reasonably probable in light of
anticipated compliance with RSIS that Weehawken would approve
development of the cul-de-sac." However, Steck did not testify
the RSIS made it reasonably probable Weehawken would accept the
cul-de-sac as a public street. Rather, Steck testified that the
proposed cul-de-sac was in full compliance with the RSIS, that
the municipality was obligated to accept those standards, and
that, if a site plan was required, "Weehawken would be obligated
to accept it as a conforming RSIS cul-de-sac." However, Steck
testified he would "leave it up to the attorneys to say whether
in such a situation Weehawken would be obligated to accept it as
a public street."
19 A-3802-12T4
In any event, the RSIS are "a uniform set of technical site
improvement standards" that address the "technical requirements"
for "construction work on, or improvement in connection with,"
site improvements such as streets in residential developments.
N.J.S.A. 40:55D-40.1, -40.2(e), -40.2(f); see Northgate Condo.
Ass'n v. Borough of Hillsdale Planning Bd., 214 N.J. 120, 143
(2013). For example, the RSIS establish a cul-de-sac's maximum
average daily traffic, width, radius, grade, and construction
materials. N.J.A.C. 5:21-4.1, -4.2 nn.(e), (m), -4.19. Such
RSIS provisions "supersede any site improvement standards
incorporated within the development ordinances of any
municipality." N.J.S.A. 40:55D-40.5.
However, the RSIS do not purport to determine whether cul-
de-sacs may be built on one lot to serve a use on another lot,
whether use variances should be granted, or whether offers of
dedication should be accepted. Rather, the Legislature stressed
such "policymaking aspects of development review are best
separated from the making of technical determinations."
N.J.S.A. 40:55D-40.2(g); see N.J. State League of Municipalities
v. Dep't of Cmty. Affairs, 158 N.J. 211, 218, 226 (1999). The
Legislature expressly provided: "Nothing contained in this act
shall in any way limit the zoning power of any municipality."
N.J.S.A. 40:55D-40.6. Similarly, "[n]othing contained in these
20 A-3802-12T4
rules shall be construed to limit the powers of any municipality
to establish and enforce any requirement concerning . . .
reservation of areas for public use," including streets.
N.J.A.C. 5:21-1.5(d), (d)(1); see N.J.S.A. 40:55D-38(b)(4), -44.
Accordingly, defendants, by proposing a cul-de-sac constructed
in compliance with the RSIS, could not deprive Weehawken of its
power to decide whether to grant a use variance or accept an
offer of dedication as a public street.7
Second, the trial court cited the opinion of plaintiff's
planner that the cul-de-sac was unnecessary because defendants'
Property was not "landlocked." Plaintiff's planner claimed a
narrow finger of the Property, protruding between the adjacent
industrial building and the Light Rail tracks, connected to
"Adams Street," a paper street on the Hoboken parcel. There was
a dispute whether the paper street could be developed as it was
cut off from the streets of Hoboken by the Light Rail tracks.
Further, even if developed, the paper street would still route
traffic from the Property onto the same Weehawken streets.
7
Plaintiff also contends the trial court improperly prohibited
it from responding to Costa's revised concept plans and from
offering testimony on whether they satisfied the RSIS. On
remand, to the extent defendants assert those concept plans
satisfy the RSIS, plaintiff shall have an opportunity to
respond.
21 A-3802-12T4
More importantly, defendants' experts admittedly did not
propose use of that paper street or that narrow finger of the
Property to provide road access. Indeed, such use would be
inconsistent with defendants' proposed development, which placed
the mid-rise building as close as legally possible to both the
Light Rail tracks and the adjacent industrial building, thus
precluding any vehicular access from either the mid-rise or
high-rise buildings to the narrow finger or the paper street.
Instead, defendants' experts opined road access was needed
through a cul-de-sac on the Weehawken parcel. The issue before
the trial court was the validity of their opinion that Weehawken
did not need to approve the cul-de-sac. Their opinion would
have been undermined by the possibility of alternate road
access. See Angel, supra, 109 N.J. Super. at 198 (upholding the
denial of a use variance for an access road because the
developer's property was not "landlocked" and had "a viable
alternative" means of access). Further, using that alternate
access would have been incompatible with the proposed 126-unit
development on which defendants based their appraisal.
Thus, we reject the trial court's reasons for denying
plaintiff's motion in limine to exclude the opinions of
defendants' experts, which were inadmissible because they were
legally inadequate and legally inaccurate. As in 66 East
22 A-3802-12T4
Allendale, supra, the trial court did not perform its
"gatekeeping function by screening out potentially unreliable
evidence and admitting only evidence that would warrant or
support a finding that a zoning change is probable." 216 N.J.
at 138 (quoting State v. Caoili, 135 N.J. 252, 264 (1994)).8
D.
The erroneous admission of defendants' expert testimony was
prejudicial. Before the jury, Costa testified Weehawken's land
use ordinance had no "jurisdiction or authority over the cul-de-
sac." Steck testified that "Weehawken does not have any
discretion," that "when an owner builds something in accordance
to the RSIS standards, the municipality must accept it," and
that "[a]pproval is not needed from Weehawken." He told the
jury the authorities in Weehawken "have to accept the cul-de-
sac." Brody testified he relied on Costa and Steck. Thus,
"[t]he experts' testimony did not cure the deficiency in the
required analysis for reasonable probability" but only
compounded it. 66 East Allendale, supra, 216 N.J. at 145.
Because their testimony was legally incorrect and legally
inadequate, "the quality of the evidence that the jury was
8
Because the reports were inadmissible for the reasons set forth
above, we need not consider whether they were also inadmissible
as net opinions or whether the trial court should have held a
hearing under N.J.R.E. 104.
23 A-3802-12T4
allowed to consider undermined the soundness of the jury's
property valuation determination." Id. at 119.
Moreover, it was unclear whether there was a reasonable
probability Weehawken would grant a use variance or accept
defendants' offer to dedicate the cul-de-sac as a public street.
The proposed cul-de-sac would have been considered a "Street" as
defined in Weehawken's Code § 23-3.1, but it was not depicted on
an official map or Weehawken's most recent Master Plan.
Weehawken requires such streets meet certain requirements:
Streets not shown on the Master Plan or
Official Map shall be arranged so as to
provide the appropriate extension of
existing streets and shall be suitably
located to accommodate prospective traffic
and to provide access for firefighting
and/or emergency equipment and shall be
coordinated so as to compose a convenient
system consistent with the Official Map, if
any, and with streets shown on the Master
Plan.
[Code § 22-10(c)(1) (emphasis added).]
Plaintiff's rebuttal reports included a traffic review,
which stressed West 19th Street and West 18th Street were
"narrow local streets" restricted to one-way traffic which
"experience low traffic volume demand and are difficult to
navigate by large vehicles." Plaintiff's traffic expert opined
it would be hard for fire trucks to access the cul-de-sac. He
added that there was "[n]o provision for circulation around the
24 A-3802-12T4
[proposed high-rise and mid-rise buildings] for fire access,"
that "safe access for emergency vehicles is not provided," and
that "[t]he lack of access and the limitations of the cul-de-sac
may be unacceptable to the local fire departments and emergency
services." Plaintiff's engineering expert noted the vast
majority of the units in both the high-rise and the mid-rise
buildings were inaccessible to fire apparatus, which was
unlikely "to be approved by the local fire department."
The report of plaintiff's planning expert noted defendants'
proposed high-rise and mid-rise apartment buildings were
inconsistent with the surrounding Weehawken low-density
residential neighborhood and "the Weehawken Master Plan, which
places an emphasis on preserving the character of its one-,
two- and three-family and townhouse residential neighborhood."
He opined Weehawken would object due to "the lack of capacity on
West 18th and West 19th Streets to handle traffic generated by
the development." He reasoned, as the proposed development was
inaccessible from the rest of Hoboken and Union City, that those
cities would ask Weehawken to provide fire and other emergency
services to the high-rise and mid-rise buildings and that
Weehawken would object given the limits on emergency access.
Plaintiff's planning expert opined: "The notion that
Weehawken would ever grant use variance approval for any plan
25 A-3802-12T4
that accommodates what amounts to dense residential development
projects in an area served exclusively by local residential
streets without providing any benefit to Weehawken whatsoever is
beyond comprehension." Similarly, he opined it was "highly
unlikely that Weehawken Township would accept the public road
dedication" of the cul-de-sac because it would require Weehawken
taxpayers to pay "to maintain a roadway that is utilized
exclusively by residents of developments who do not pay property
taxes in Weehawken."
Thus, Weehawken's approval could not be assumed. See Menlo
Park Plaza Assocs. v. Planning Bd., 316 N.J. Super. 451, 461-62
(App. Div. 1998) (rejecting the "[p]laintiff's desire for an
outlet road from its proposed development into another
municipality," which would "turn a quiet dead-end residential
street into a busy thoroughfare," "would detrimentally alter the
character of the neighborhood," and would "provide[] no benefit
to" that municipality), certif. denied, 160 N.J. 88 (1999); cf.
Howell Props., supra, 347 N.J. Super. at 579-88.
E.
Accordingly, the prejudicial error in denying plaintiff's
motion in limine, and thus allowing defendants' experts to offer
trial testimony which was legally inadequate and legally
incorrect, "necessitate[s] a new trial on the issue of just
26 A-3802-12T4
compensation." 66 East Allendale, supra, 216 N.J. at 119.
Prior to the new trial, the trial court shall permit defendants
to prepare amended reports to alter the project proposed in the
three municipalities or to proffer legally-adequate expert
opinion on whether there was a reasonable probability Weehawken
would either grant a use variance for, or accept the dedication
of, the cul-de-sac. The court shall allow plaintiff to respond
to any amended reports or opinions offered by defendants. The
court must then "examine the evidence proffered in support of
the reasonable probability of a zoning change and determine
whether it can render its required determination based on the
papers." Id. at 143. If not, the court shall hold "a pretrial
N.J.R.E. 104 hearing." Ibid. "[O]nly when the trial court has
first determined that the evidence is of a quality to allow the
jury to consider the probability of a zoning change should the
jury be permitted to assess a premium based on that zoning
change[.]" Id. at 142.
We express no opinion on whether defendants will be able to
show such a reasonable probability. Nonetheless, we reject
plaintiff's argument that testimony showing a reasonable
probability would be improper because the cul-de-sac has not yet
been constructed or because approval has not yet been received
or is not certain. See, e.g., id. at 139 (noting a jury could
27 A-3802-12T4
consider the reasonable probability of "future variance
approval[,] . . . potential subdivision," and "future site plan
approval when determining fair market value"); State v. Hope
Road Assocs., 266 N.J. Super. 633, 645 (App. Div. 1993) (noting
a jury could consider "the township's willingness to accept
. . . a means of ingress and egress"), modified in part, 136
N.J. 27 (1994); see also Caoili, supra, 135 N.J. at 267-70
(distinguishing State v. Inhabitants of Phillipsburg, 240 N.J.
Super. 529 (App. Div. 1990)). If the court finds a reasonable
probability, "the jury may consider the probability of the
future zoning change or variance approval in determining the
premium a buyer and seller would fix to the property." 66 East
Allendale, supra, 216 N.J. at 140; see State v. 200 Route 17,
L.L.C., 421 N.J. Super. 168, 179 (App. Div. 2011).
IV.
We next consider defendants' cross-appeal, which arises
from the undisputed fact that the Property is contaminated. In
Suydam, supra, our Supreme Court held "contaminated property
that is the subject of condemnation is to be valued as if it has
been remediated." 177 N.J. at 7. "[T]he condemnor should
appraise as if remediated and deposit that amount into a trust-
escrow account in court." Id. at 24. The contamination issue
28 A-3802-12T4
is reserved for a subsequent "cost-recovery action" in which the
condemnor can "recover any remediation costs." Id. at 22, 24.
Pending the cost-recovery action, "the condemnor may seek
an order requiring a portion of the award to be set aside to
satisfy the condemnee's clean-up and transfer obligations." Id.
at 7. "When there is a dispute over the amount however, a
trial-type hearing will be held under R. 4:73-9(b) at which the
condemnor will bear the burden of supporting the estimate of
[such] transactional costs." Id. at 26; see Casino Reinvestment
Dev. Auth. v. Teller, 384 N.J. Super. 408, 416 (App. Div. 2006)
("Cleanup and remediation costs are transactional costs
attendant to the condemnation proceeding.").
Here, we remanded for such a Suydam hearing. The parties
submitted expert testimony and exhibits, including plaintiff's
original and revised Property Acquisition and Environmental Cost
Estimating (PAECE) reports. Plaintiff relied on its revised
PAECE report, which called for removal of contaminated soil,
hazardous materials, drums, and underground storage tanks.
In particular, plaintiff proposed to remove up to two feet
of soil significantly contaminated by polychlorinated biphenyls
(PCBs) from the northern two-thirds of the Property and to cap
the Property with asphalt. Plaintiff asserted such remediation
was needed to meet the requirements of the United States
29 A-3802-12T4
Environmental Protection Agency (EPA) for remediating PCBs in
"[h]igh occupancy areas." 40 C.F.R. § 761.61(a)(4)(i)(A)
(2016). The EPA defines a "[h]igh occupancy area" as any area
where an unprotected individual would spend more than "an
average of 16.8 hours or more per week," such as "a residence."
40 C.F.R. § 761.3. The cost of remediating PCBs for such
sustained occupancy accounted for most of the revised PAECE
report's total estimated remediation cost of $1,967,865.
Defendants contended the remediation of PCBs should be only
that required for a "[l]ow occupancy area," with exposure of
less than 16.8 hours per week. Ibid. As a result, defendants'
expert estimated remediation would cost below $500,000.
Defendants stressed that plaintiff originally condemned the
Property with the intent to use it as the location of a shaft
for the construction of the ARC Commuter Tunnel under the Hudson
River. Thereafter, that project was cancelled. In its revised
PAECE report, plaintiff stated: "The proposed use of this
property has not been finalized, although NJ TRANSIT intends to
use it for Public Transportation purposes."
After a three-day hearing, the trial court credited
plaintiff's evidence and discredited defendants' expert. The
court found that "[p]laintiff met its burden to prove that [its]
cost estimation is not 'frivolous or exaggerated,' and that such
30 A-3802-12T4
estimate is founded on reasonable and extensive environmental
assessment of the property." On February 12, 2014, the court
ordered the $1,967,865 to remain in escrow pending final
determination of remediation costs at a cost-recovery action.
Defendants contend the estimate of remediation costs should
have been based on the use of the Property which plaintiff
originally intended — a tunnel shaft. Plaintiff contends the
trial court properly based the estimated remediation costs on
the highest and best use for the Property — residential
development.
In considering these contentions, we find guidance in
Suydam. There, our Supreme Court chose to value condemned
contaminated property "as if remediated" rather than "as is."
Suydam, supra, 177 N.J. at 23. The Court stressed that "'[t]he
inquiry is not limited to the actual use of the property on the
date of taking but is, rather, based on its highest and best
use.'" Id. at 20 (citation omitted). The Court ruled "that
valuing property as if remediated assures just compensation
insofar as it relates to the notion of 'highest and best use.'"
Id. at 23. The Court rejected valuing the property "as is"
because "its contaminated state will necessarily circumscribe
its uses, concomitantly diminishing its fair market value."
Ibid.
31 A-3802-12T4
Moreover, the Court in Suydam was concerned that parties
not get "a windfall." See ibid. The Court emphasized the value
of the property "as if remediated" was an "enhanced value
[which] is to be generated by the incurring of a transactional
cost." Id. at 25. "[T]he estimated value in a contamination
case has a component that is altogether outside the property
itself — the transactional cost that will be incurred to give
the condemnee the benefit of the as if remediated value." Id.
at 26. The Court found "withholding only the estimated
transactional costs, which, in reality, do not belong to the
condemnee," resulted in "no unfairness to the condemnee." Ibid.
"What would be unfair would be to value the property as if
remediated and allow the condemnee to withdraw that enhanced
amount without a withholding to secure the transactional costs."
Ibid.
Here, the trial court awarded defendants the enhanced value
of the Property if used, and remediated, for residential
development. Placing one "residence" or more on the Property
would involve sustained occupancy sufficient to make it a
"[h]igh occupancy area" and thus require more extensive
remediation under EPA standards. 40 C.F.R. § 761.3. The
estimated cost of such remediation was "folded into the
estimate" of the Property's value and did not belong to
32 A-3802-12T4
defendants. Suydam, supra, 177 N.J. at 25-26. Withholding that
estimated cost was not unfair to defendants. By contrast,
defendants would receive an unfair windfall if they were awarded
the enhanced value of the Property as if remediated for
residential development, without withholding the cost of such
remediation.
Accordingly, we hold the escrow for the estimated costs of
environmental cleanup of a condemned contaminated property
should be based on the remediation necessary to achieve the
highest and best use of the property used to calculate the
amount of the condemnation award. This approach, like the
approach adopted in Suydam, "most fairly treats both the
condemnor and the condemnee." See id. at 27.
Defendants rely on Borough of Paulsboro v. Essex Chemical
Corp., 427 N.J. Super. 123 (App. Div.), certif. denied, 212 N.J.
460 (2012). However, there "both parties' experts and the trial
court attributed a lower value to the property because . . . [it
was] occupied by a closed landfill." Id. at 131. Here, by
contrast, defendants received a higher value for the Property
because it was treated as remediated for residential
development.
Defendants contend the Property would have been a "[l]ow
occupancy area" if used for a tunnel shaft, the contaminated
33 A-3802-12T4
soil would have been removed in constructing the shaft, and they
should not have to escrow for construction costs. However,
defendants' contentions lost their premise when the ARC Commuter
Tunnel project was cancelled. In any event, defendants'
contentions do not address the correct use. Because defendants
were awarded compensation based on the highest and best use of
residential development, it is appropriate to escrow the
estimated amount needed to remediate for that use.
For the same reason, it is not dispositive what, if any,
alternate use plaintiff will have for the Property now that the
tunnel project has been cancelled. Indeed, defendants argue it
would be unfair to make the remediation estimate depend on
plaintiff's ultimate choice of an alternate use.
Defendants argue plaintiff will never remediate the
Property to the level needed for residential development. That
concern is addressed in Suydam. Under Suydam's approach,
defendants will receive the portion of the escrowed amount which
plaintiff does not spend to remediate the Property:
[A] portion of the award sufficient to cover
cleanup costs is escrowed or held in trust
until the exact amount of cleanup costs has
been determined. Once response costs are
determined, a corresponding amount
representing the owner's liability is then
disbursed from the trust or escrow account.
Only the surplus, if any, is paid to the
owner.
34 A-3802-12T4
[Suydam, supra, 177 N.J. at 25 (quoting 7A
Nichols on Eminent Domain § 13B.03(4), at
13B-68 (Patrick J. Rohan & Melvin A. Reskin
eds., 3d ed. 2002)).]
Thus, if plaintiff does not incur the full cost of remediating
the Property to the "high occupancy" level, defendants will
receive the resulting surplus funds from the escrow.
Defendants challenge the calculation of the estimated
remediation costs. We may not "'disturb the factual findings
and legal conclusions of the trial judge unless we are convinced
that they are so manifestly unsupported by or inconsistent with
the competent, relevant and reasonably credible evidence as to
offend the interests of justice.'" Klumpp v. Borough of Avalon,
202 N.J. 390, 412 (2010) (citations omitted). We reject
defendants' challenges for substantially the reasons given in
the trial court's February 12, 2014 written opinion.
The trial court's Suydam hearing served to "obviate the
concern" raised by defendants "over frivolous or exaggerated
cleanup cost[]" estimates which "tie up the condemnee's award."
Suydam, supra, 177 N.J. at 26-27. Defendants fault the pace of
remediation, but they will be entitled to interest on any unpaid
balance due to them when the escrow is distributed. N.J.S.A.
20:3-31.
Defendants stress plaintiff's original PAECE report
estimated cleanup costs would be only $158,254. However,
35 A-3802-12T4
plaintiff's initial appraisal asserted the highest and best use
of the Property was industrial. Defendants then convinced
plaintiff and the trial court the highest and best use of the
Property was residential development. The revised PAECE report
stated "the appraisers for NJ TRANSIT and the property owner
have found a highest and best use of residential development,"
so the more stringent EPA requirements would have to be met "due
to the high occupancy development scenario for the subject
property." Thus, it was appropriate for plaintiff to change its
estimate of remediation costs to reflect the more stringent
remediation requirements for such sustained occupancy. 40
C.F.R. § 761.61(a)(4)(v).9
Furthermore, plaintiff's original PAECE report was merely
"a preliminary environmental assessment" based on limited
testing done while defendants were in possession of the
Property. Suydam, supra, 177 N.J. at 26. In Suydam's companion
case, the Supreme Court stated "a complete initial environmental
investigation prior to condemnation is neither possible nor
desirable in many cases because of the extent of the disruption
it might entail." N.J. Transit Corp. v. Cat in the Hat, LLC,
9
Defendants claim plaintiff's changed estimate was triggered by
the cancellation of the tunnel project. Even if true, it is
irrelevant, as remediation costs were properly estimated based
on the use on which defendants' just compensation was awarded.
36 A-3802-12T4
177 N.J. 29, 42 (2003). The Court recognized that, as a
practical matter, "the most invasive environmental testing
ordinarily takes place after condemnation when construction of a
project begins. That is why the value as if remediated
including transactional costs is merely an estimate" and why the
condemnor can increase its estimate based on later testing.
Ibid.
As set forth in the trial court's opinion, plaintiff
advised defendants the estimate might increase. We reject
defendants' argument that plaintiff failed to "turn square
corners" regarding the revised estimate. F.M.C. Stores Co. v.
Borough of Morris Plains, 100 N.J. 418, 426 (1985) (citation
omitted); see State v. Town of Morristown, 129 N.J. 279, 286
(1992).
Defendants argue plaintiff waived its right to bring a
cost-recovery action. However, plaintiff has consistently
reserved that right in its complaint and thereafter. See
Suydam, supra, 177 N.J. at 24; Cat in the Hat, supra, 177 N.J.
at 41. We find "no factual foundation for" waiver. Hous. Auth.
v. Suydam Inv'rs, L.L.C., 355 N.J. Super. 530, 544 (App. Div.
2002), aff’d o.b. in part, rev'd in part, 177 N.J. 2, 28 (2003).
Finally, defendants claim judicial estoppel because
plaintiff asserted in other litigation that a different property
37 A-3802-12T4
condemned for the ARC Commuter Tunnel may have public uses,
including for a different rail tunnel. However, plaintiff's
assertions in the other litigation made no mention of
defendants' Property. Plaintiff certainly did not assert
defendants' Property would be used for a tunnel shaft, nor did
the other court rely on such an assertion. See Bhagat v.
Bhagat, 217 N.J. 22, 36 (2014). In any event, the escrowed
estimated remediation costs depended on its use for residential
development, as that was the basis for defendants' award.
Defendants' remaining arguments "are without sufficient
merit to warrant discussion." R. 2:11-3(e)(1)(E).
V.
We reverse the March 4, 2013 final judgment and remand the
case for a new trial on just compensation. We affirm the
February 12, 2014 order. We do not retain jurisdiction.
38 A-3802-12T4