NORTH HUDSON SEWERAGE AUTHORITY, ETC. VS. HARTZ MOUNTAIN INDUSTRIES (L-1722-14, HUDSON COUNTY AND STATEWIDE) (CONSOLIDATED)

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APPROVAL OF THE APPELLATE DIVISION
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Although it is posted on the internet, this opinion is binding only on the
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5011-15T1
NO. A-5201-15T1
NORTH HUDSON SEWERAGE AUTHORITY,
a Body Corporate and Politic of
the State of New Jersey,
Plaintiff-Respondent,
v.
HARTZ MOUNTAIN INDUSTRIES, INC.,
a New York Corporation,
Defendant-Appellant,
and
STATE OF NEW JERSEY and TOWNSHIP OF
WEEHAWKEN, a Municipal Corporation
of the State of New Jersey,
Defendants.
______________________________________
NORTH HUDSON SEWERAGE AUTHORITY,
a Body Corporate and Politic of
the State of New Jersey,
Plaintiff-Respondent,
v.
HARTZ MOUNTAIN INDUSTRIES, INC.,
a New York Corporation, STATE OF NEW JERSEY,
and TOWNSHIP OF WEEHAWKEN, a
Municipal Corporation of the
State of New Jersey,
Defendants.
1500 HARBOR BOULEVARD PARTNERS,
LLC,
Appellant.
___________________________________
Argued March 14, 2018 – Decided July 26, 2018
Before Judges Fuentes, Koblitz and Manahan.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket No. L-
1722-14.
Anthony F. Della Pelle argued the cause for
appellant Hartz Mountain Industries, Inc. (in
A-5011-15) (McKirdy and Riskin, PA, attorneys;
Anthony F. Della Pelle, of counsel and on the
brief; Daniel Kim, on the brief).
Dennis J. Drasco argued the cause for
appellant 1500 Harbor Boulevard Partners, LLC
(in A-5201-15) (Lum, Drasco and Postian, LLC,
attorneys; Dennis J. Drasco and Kevin J.
O'Connor, of counsel and on the brief).
John J. Curley argued the cause for respondent
(John J. Curley, LLC, attorneys; John J.
Curley, of counsel; Jennifer J. Bogdanski, on
the brief).
PER CURIAM
1500 Harbor Boulevard Partners, LLC (1500 Harbor) appeals
from a December 8, 2014 order denying its motion to intervene in
a condemnation claim filed by North Hudson Sewerage Authority
(NHSA) against Hartz Mountain Industries, Inc. (Hartz), the State
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of New Jersey, and the Township of Weehawken.1 After a bench
trial, Hartz appeals from a May 20, 2016 award of $569,774.61 in
compensation damages. We consolidate these appeals for the purpose
of writing one opinion. We affirm the denial of intervention and
remand for reconsideration of the condemnation award.
On April 14, 2014, NHSA sought four easements on Hartz
property, a ninety-acre tract known as Lincoln Harbor, which has
been under development for thirty years. Hartz had built a 582-
unit luxury apartment complex called Estuary on a riverfront
portion of Lincoln Harbor with unimpeded views of the New York
City skyline. Hartz owns approximately ninety-two percent of
Estuary.
NHSA's four easements were needed to construct and maintain
a sewer pipeline to manage Weehawken storm water. Permanent
Easement B provides for the installation, operation, and
maintenance of a ninety-six inch sewer pipe that is located within
the right of way of Riverview Terrace, a private street owned by
Hartz. The total area of Permanent Easement B is 14,424 square
feet. Temporary Easement A, lasting ten months, is designed to
provide sufficient space for construction activities for Permanent
1
Neither the State of New Jersey nor the Township of Weehawken
appeared in the litigation.
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Easement B. The area of Temporary Easement A is 19,638 square
feet.
Permanent Easement D provides for the construction of a
platform above the Hudson River as well as the construction of a
superstructure for two sewer outfalls that will discharge storm
water and treated sewage below the Hudson River's surface. The
total area of Permanent Easement D, the Outfall Facility, is 17,875
square feet, and it will be constructed level with the existing
Hudson River Walkway.
Each new outfall constructed on this platform will have hidden
netting chambers that will be equipped with a system to catch
floatables – solid objects larger than one-half inch in diameter.
The netting system will be accessed from the top of the platform
and is maintained by a truck and boom system that removes and
replaces the nets periodically. Temporary Easement C, lasting
twelve months, is designed to provide space for the construction
of Permanent Easement D. The total area of Temporary Easement C
is 4600 square feet.
On June 23, 2014, the trial court entered final judgment
allowing NHSA to exercise its eminent domain power and appointing
Condemnation Commissioners to determine just compensation.
N.J.S.A. 20:3-12. On November 19, 2014, 1500 Harbor filed an
unsuccessful motion to intervene in the condemnation action
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pursuant to Rule 4:33-1 and requested an extension of the date for
the Commissioners' hearing. The motion was denied on December 8,
2014. Five weeks later, a hearing was held before the Condemnation
Commissioners. Two weeks later, the Commissioners issued their
report, awarding $129,816 compensation to Hartz for the permanent
easements and $11.25 per square feet for the temporary easements.
Both NHSA and Hartz appealed from the Commissioners' report.
I.
1500 Harbor owns the property known as "Pier D". It had
received zoning approvals to build a 227 unit luxury residential
development on the site. The Outfall Facility will be located
within two feet of 1500 Harbor's property.
At the hearing for the motion to intervene, 1500 Harbor argued
it may be entitled to severance damages because of the Outfall
Facility and asserted unity of ownership and unity of use, giving
it a sufficient interest to intervene in the underlying
condemnation action. 1500 Harbor argued the severance damages
would stem from the anticipated diminution in value of the soon-
to-be-built north-facing apartments of 1500 Harbor's residential
development due to the interruption in the view. 1500 Harbor's
counsel stated that Hartz holds a significant ownership interest
in 1500 Harbor.
5 A-5011-15T2
The motion judge expressed concern "that the intervention at
this point by 1500 Partners does not seem to me to fit into the
summary proceeding course that is to be taken by condemnation
actions." The judge also stated that even if the court were to
accept both 1500 Harbor's unity of ownership and unity of use
arguments, the issue regarding severance damages appeared
premature and speculative. The judge also expressed concern
regarding the fact that 1500 Harbor claims unity of ownership yet
did not seek to participate earlier in the condemnation action.
For these reasons, the motion court denied 1500 Harbor's motion
to intervene, noting that if 1500 Harbor's property suffers
damages, it could seek recovery in a separate action. We agree.
Intervention in a condemnation case is governed by the general
intervention rule, Rule 4:33. Pressler & Verniero, Current N.J.
Court Rules, cmt. 1.1 on R. 4:73-2 (2018). Rule 4:33-1 requires
the moving party to show "an interest in the subject matter of the
litigation, an inability to protect that interest without
intervention, lack of adequate representation of that interest,
and timeliness of the application." Pressler & Verniero, cmt. 1
on R. 4:33-1. "As the rule is not discretionary, a court must
approve an application for intervention as of right if the four
criteria are satisfied." N.J. Dep't of Envtl. Prot. v. Exxon
Mobil Corp., 453 N.J. Super. 272, 286 (App. Div. 2018) (quoting
6 A-5011-15T2
Meehan v. K.D. Partners, LP, 317 N.J. Super. 563, 568 (App. Div.
1998)).
"Rule 4:33-1 is construed 'liberally.'" Allstate New Jersey
Ins. Co. v. Neurology Pain Assocs., 418 N.J. Super. 246, 254 (App.
Div. 2011) (quoting Meehan, 317 N.J. Super. at 568). "Consistent
with this liberal construction, our courts take a practical
approach in determining whether a moving party has a cognizable
interest in litigation that it is entitled to protect by
intervention." Id. at 254-55 (citing Am. Civil Liberties Union
of N.J., Inc. (ACLU NJ) v. Cty. of Hudson, 352 N.J. Super. 44, 67-
69 (App. Div. 2002)).
"[W]here intervention of right is not allowed, one may obtain
permissive intervention under [Rule] 4:33-2." ACLU NJ, 352 N.J.
Super. at 70 (quoting Atl. Emp'rs Ins. Co. v. Tots & Toddlers Pre-
School Day Care Ctr., 239 N.J. Super. 276, 280 (App. Div. 1990)).
Pursuant to Rule 4:33-2, a court may permit anyone to intervene
in an action "upon timely application if the claim or defense and
the main action have a question of law or fact in common." Exxon
Mobil, 453 N.J. Super. at 286 (alterations omitted). 1500 Harbor
did not seek permissive intervention.
When a public entity "takes private property for a public
use, the property owner is entitled to 'just compensation' under
our State and Federal Constitutions." Borough of Harvey Cedars
7 A-5011-15T2
v. Karan, 214 N.J. 384, 388 (2013) (citing U.S. Const. amend. V
and N.J. Const. art. IV, § 6, ¶ 3). In a condemnation action, the
parties are to include the "record owner, the occupant, if any,
such other persons appearing of record to have any interest in the
property and such persons claiming an interest therein as are
known to the plaintiff." R. 4:73-2.
"In condemnation cases, severance damages are awarded only
when there is a partial taking of a parcel of realty, the
uncondemned parcel and the condemned parcel are functionally
integrated, and there exists a unity of ownership." Union Cty.
Improvement Auth. v. Artaki, LLC, 392 N.J. Super. 141, 150 (App.
Div. 2007) (citing Hous. Auth. of Newark v. Norfolk Realty, 71
N.J. 314, 324 (1976)).
Rule 4:33-1, governing intervention as of right, is subject
to de novo review. Exxon Mobil, 453 N.J. Super. at 285. 1500
Harbor argues that the motion court erred when it denied 1500
Harbor's motion to intervene because the Outfall Facility is within
two feet of 1500 Harbor's property and will clearly affect its
property interests. Although 1500 Harbor claims it will suffer a
diminution in value of the apartments facing the Outfall Facility,
it has not argued that it could not otherwise seek remedies in a
separate action. The motion judge stated that a claim for damages
"may ripen into a claim based upon a theory of inverse
8 A-5011-15T2
condemnation." Therefore, 1500 Harbor has not shown that the
disposition of the underlying action impairs or impedes its ability
to protect its interest.
Lastly, 1500 Harbor did not file its motion to intervene
until one month after receiving an October 2014 public notice
issued by the Army Corps of Engineers regarding the scope of the
Outfall Facility and its proximity to 1500 Harbor's property. 1500
Harbor notes that NHSA's "Complaint and Declaration of Taking
. . . described only the lands to be taken and did not specifically
describe the sewer facilities to be constructed pursuant to the
easements (which directly causes the severance damages to [1500
Harbor's] property)." The motion court, however, expressed
concern regarding why 1500 Harbor did not move to intervene in the
matter sooner, if it had unity of ownership with Hartz.
1500 Harbor's counsel was not prepared to present evidence
of damages to 1500 Harbor's property, but instead set forth 1500
Harbor's belief that its north-facing apartments would diminish
in value due to the construction of the Outfall Facility. The
letter submitted by 1500 Harbor from McLaren Engineering Group
discussed what the engineers saw as possible problems that
construction of the Outfall Facility could cause to 1500 Harbor's
property.
9 A-5011-15T2
Reviewing the evidence presented by 1500 Harbor de novo, we
agree with the motion judge that, even if it could prove unity of
use and ownership, the possible damages are speculative and could
be addressed in a later proceeding. The delay in moving to
intervene given a unity in ownership also would have delayed the
entire proceedings. We affirm the order denying intervention.
II.
A.
We are compelled to reverse the award of condemnation damages
and remand for reconsideration due to certain erroneous rulings.
"The concept of 'unity of ownership' . . . is flexible and does
not require a rigid definition of ownership on the basis of bare
legal title." Artaki, 392 N.J. Super. at 149. "[A]ll parcels of
real property, whether contiguous or noncontiguous, that are in
substantially identical ownership . . . shall be treated as if the
entire property constitutes a single parcel." Norfolk, 71 N.J.
at 325. (alteration in original) (emphasis in original) (quoting
Uniform Eminent Domain Code, § 1007 (1974)).
Paul Beisser, NHSA's expert, valued the taking using the
comparable sales approach. He concluded that the underlying land
value was $1.8 million – $41.32 per square foot of each easement
area. Albert F. Chanese, Hartz's expert, valued the taking using
the same methodology, and concluded that the underlying land value
10 A-5011-15T2
was $11.6 million – $265.70 per square foot of each easement area.
The court fully accepted Hartz's valuation of the property. Hartz
does not appeal from this determination and NHSA does not cross-
appeal.
Each expert also rendered opinions about the value of the
specific easements. Beisser reduced his value of the property
subsumed by Permanent Easement B by ten percent to reflect the
value of the limited easement interest. Although Permanent
Easement D was ultimately developed, Beisser attributed no value
to Easement D because, in his opinion, Easement D could not be
developed. He determined that the value of Temporary Easements A
and C should be based upon an eight-percent rate of return that
was derived from the market value of the easement areas. He
ultimately concluded that just compensation for the takings was
$128,000, adjusted to $150,000 to reflect favorable market
conditions.
Chanese concluded that Permanent Easement B represented
twenty percent of the bundle of rights to that property, and valued
this taking at $766,489. He concluded that Permanent Easement D
represented twenty-five percent of the bundle of rights and valued
this taking at $1,187,344. Chanese ultimately concluded that the
total value of Easements B and D was $1,953,833, and the total
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value of the two permanent easements and the two temporary
easements was $2,463,300.
Chanese also concluded that Hartz suffered severance damages
because of the taking. He concluded that Permanent Easement D
would affect the view by a portion of Estuary residents because
Estuary would be in direct view of the netting chamber and capture
vault. He concluded that this construction would translate to a
three-percent reduction in the value of the entire property, or
severance damages of $2,910,000. Therefore, he concluded the
total value of the taking at $5,373,000.
Our standard of review of trial court findings after an
evidentiary hearing is limited. Gnall v. Gnall, 222 N.J. 414, 428
(2015). The court's decision, however, must be based on
substantial evidence in the record. Ricci v. Ricci, 448 N.J.
Super. 546, 564 (App. Div. 2017).
Hartz argues that the trial court's decision to allocate a
two-percent fee for the taking of Permanent Easement B, a one-
percent fee for Permanent Easement D, and no severance damages to
Estuary, was unsupported by the record. With respect to Permanent
Easement B, Hartz states that the trial court's conclusion was
based on a faulty premise – that B was a "replacement of an
already-existing easement." Hartz accurately states that B
encompassed 14,424 square feet and was "not previously encumbered
12 A-5011-15T2
by an easement." Defendant's own expert assessed a ten-percent
fee for Easement B, yet the court assessed a fee of only two
percent.
Hartz further argues that the trial court incorrectly noted
"that the only detriment to the encumbered parcel is the presence
of the pipe with no further access nor plan for continued
maintenance nor access to it." In fact, the easement granted
access for maintenance.
The trial court found that "Permanent easement B represented
a replacement of an already-existing easement and represents two
percent of the bundle of rights" because "Permanent easement B,
only very slightly, impacts on the surface area of the Estuary
. . . ." It found that Permanent Easement B did not "affect the
use or the utility of the property, at all." It calculated the
value of NHSA's taking at $76,649.14, two percent of the total
value of the land taken for Permanent Easement B.
As to Permanent Easement D, Hartz contends that the trial
court "erroneously speculated that the 'decorating scheme' would
somehow cure the sign of trucks and other equipment." Hartz argues
that the design of the system could change at any moment, but this
is its only opportunity to "receive compensation." Last, Hartz
contends that the trial court incorrectly determined that the
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impact of a truck utilized monthly to help maintain the sewer
outfall structure is negligible.
With respect to Permanent Easement D, the court found that
"the land on which the platform is to be constructed has very
little, if any, development potential" because of the "presence
of the existing sewer outfall" and the "allowable density of the
development" would not be reduced. It continued: "The Court
acknowledges that the permanent easement D may create a slight
visual impediment of the New York City skyline by a few of the
occupants of the Estuary." It recognized the "decorating scheme"
would help "blend in" the "apparatus." Furthermore, it found the
"periodic presence of the boom truck would be negligible because
of the expressed lack of frequency of the use of this equipment
. . . ." For these reasons, it found a one-percent fee for the
imposition of Permanent Easement D, valued at $47,493.87.
The Fifth Amendment to the United States Constitution and
Article I, Paragraph 20 of the New Jersey Constitution provide
that private property may not be taken for public use without just
compensation made to the owners. N.J.S.A. 40A:12-4(a) provides:
Any county or municipality may acquire:
Any real property, capital improvement,
personal property or any interest or estate
whatsoever therein, including easements,
water, water power, or water rights, either
within or without the county or municipality,
except that no such property belonging to the
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State or any of its agencies, a county or any
municipality shall be acquired without its
express consent.
Property is defined under the eminent domain statute as "land,
or any interest in land." N.J.S.A. 20:3-2(d). "An easement
constitutes an interest in land, and the owner must be compensated"
for its value. Twp. of Manchester Dep't of Utils. v. Even Ray
Co., Inc., 315 N.J. Super. 122, 132 (App. Div. 1998). "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 E. Allendale, LLC, 216 N.J. 115, 119 (2013).
"[T]here is no precise and inflexible rule for the assessment
of just compensation. The Constitution does not contain any fixed
standard of fairness by which it must be measured. Courts have
been careful not to reduce the concept to a formula." State v.
Caoili, 135 N.J. 252, 271 (1994) (quoting Jersey City Redevelopment
Agency v. Kugler, 58 N.J. 374, 387-89, (1971)).
The court, as a factfinder, "may accept some of the expert's
testimony and reject the rest. That is, a factfinder is not bound
to accept the testimony of an expert witness, even if it is
unrebutted by any other evidence." Torres v. Schripps, Inc., 342
N.J. Super. 419, 430-31 (App. Div. 2001) (citations omitted). But
15 A-5011-15T2
findings must be based on substantial evidence. Ricci, 448 N.J.
Super. at 564.
The trial court calculated the taking of Permanent Easement
B based on its "replacement of an already-existing easement" and
the nominal effect it would have on the surface area. The court
failed to explain in what way even the defense expert so
dramatically overvalued the percent of damages, at ten percent
rather than the two percent the judge found.
B.
Our Supreme Court, in State by Comm'r of Transp. v. Silver,
92 N.J. 507, 514 (1983), wrote:
[W]here only a portion of a property is
condemned, the measure of damages includes
both the value of the portion of land actually
taken and the value by which the remaining
land has been diminished as a consequence of
the partial taking. The diminished value of
the remaining property constitutes the
severance damages visited upon that property
as a result of the taking.
Regarding the effect on the Estuary, the trial court wrote:
"Severance damages are not appropriate and will not be awarded.
Although the property is impacted by these easements, the Court
does not find that they [] so substantially impact the premises
to represent a diminution in the total value of the property to
justify an award." The court also found no unity of ownership.
16 A-5011-15T2
The court erred in finding no unity of ownership because
Hartz owned "only" 92.5% of Estuary. In Artaki, 392 N.J. Super.
at 149-50, we wrote, "The concept of 'unity of ownership' suggests
that physically separate parcels are owned in their entirety by
one owner or set of owners. The concept, however, is flexible and
does not require a rigid definition of ownership on the basis of
bare legal title." The "fluid interpretation of the unity of
ownership" was addressed by the New Jersey Supreme Court in
Norfolk, 71 N.J. at 324. Id. at 150.
When determining unity of ownership, the Court addressed the
question of "whether strict unity of title in a given entity must
exist, or whether ownership is a matter of substance rather than
form so that identity of beneficial interest will suffice."
Norfolk, 71 N.J. at 324. The Court concluded:
However, the concept of eminent domain
requires that the realities underlying
corporate ownership of land be fairly
recognized. Normal business considerations,
including due regard for federal tax
consequences, may indicate that a bifurcated
ownership of the assets of a functionally
integrated enterprise is more desirable than
ownership by a single entity. The law should
not require businessmen to ignore otherwise
sensible economic planning decisions in order
to retain their right to full actual damages
consequent upon a public taking.
[Ibid.]
17 A-5011-15T2
Thus the trial court's conclusion that there was no unity of
ownership because "Estuary is owned by three different entities,
with Hartz possessing only a 92.5% interest in that property" is
incorrect.
In evaluating unity of use, the court overlooked that the
entire Lincoln Harbor has been developed by Hartz, that the site
has been treated as a "single planned development unit," and that
Hartz essentially controls Estuary. Additionally, and most
importantly, because Estuary is contiguous to the easement
property, unity of use need not be demonstrated. Manalapan Twp.
v. Genovese, 187 N.J. Super. 516, 521 (App. Div. 1983) ("[T]o
recover severance damages, an owner must prove either that the
parcels were contiguous or that they were constituent parts of one
economic unit.").
The trial court focused on its perception that Hartz had to
prove a unity of use, writing:
To establish a unity of use, the landowner
must demonstrate that any non-contiguous lots
were constituent parts of a single economic
unit. Cty. of Middlesex v. Clearwater Vill.,
Inc., 163 N.J. Super. 166, 174 (App. Div.
1978); State v. Whitehead Bros. Co., 210 N.J.
Super. 359, 366 (Law Div. 1986).
[(Emphasis added).]
NHSA does not dispute that the Estuary and the "part taken"
are, in fact, contiguous, but rather argues that the parcels are
18 A-5011-15T2
not part of a single economic unit. To recover severance damages,
Hartz need only prove "either that the parcels were contiguous or
that they were constituent parts of one economic unit." Manalapan,
187 N.J. Super. at 521 (emphasis added). Because Hartz
demonstrated both unity of ownership and that the parcels were
contiguous, Hartz is entitled to recover severance damages.
We reverse and remand with regard to the award for Easement
B as well as severance damages for Estuary. The court should
explain the foundation for its awards.
A-5201-15 is affirmed. A-5011-15 is reversed and remanded
for reconsideration. We do not retain jurisdiction.
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