GLOUCESTER COUNTY IMPROVEMENT AUTHORITY VS. GALLENTHIN REALTY DEVELOPMENT, INC. (L-2718-10, BURLINGTON COUNTY AND STATEWIDE)

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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
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2342-15T1
GLOUCESTER COUNTY IMPROVEMENT
AUTHORITY,
Plaintiff-Respondent,
v.
GALLENTHIN REALTY DEVELOPMENT,
INC.,
Defendant-Appellant,
and
STATE OF NEW JERSEY, BOROUGH
OF PAULSBORO, COLONIAL PIPELINE
CO., ATLANTIC CITY ELECTRIC
CO., and PAULSBORO ACQUISITION
CORP.,
Defendants.
__________________________________
Argued October 23, 2017 – Decided July 24, 2018
Before Judges Sabatino, Ostrer and Rose.
On appeal from Superior Court of New Jersey,
Law Division, Burlington County, Docket No.
L-2718-10.
Peter H. Wegener argued the cause for
appellant (Bathgate, Wegener & Wolf, PC,
attorneys; Peter H. Wegener, on the briefs).
James M. Graziano argued the cause for
respondent (Archer & Greiner, PC, attorneys;
James M. Graziano, on the brief).
PER CURIAM
In this condemnation case, defendant Gallenthin Realty
Development (GRD) appeals from the jury verdict establishing
$750,000 as just compensation for the April 23, 2010 taking by
defendant Gloucester County Improvement Authority (Authority) of
roughly three acres of GRD's sixty-three-acre property in
Paulsboro.
GRD's sole point on appeal pertains to an evidentiary ruling.
GRD sought to confront a testifying Authority expert with a
document which, GRD argued, tended to establish that the property's
proximity to a rail line and navigable water enhanced its value.
GRD also intended to introduce the document into evidence. The
court sustained the Authority's objection and barred GRD's use of
the document. The court also denied GRD's motion for a new trial,
in which GRD revisited the issue. Applying our deferential
standard of review, we reject GRD's argument that the trial court
erred in its evidentiary ruling, and we affirm the final judgment.
I.
We previously affirmed the trial court's order approving the
Authority's power to condemn the property, and appointing
commissioners to fix compensation. Gloucester Cnty. Improvement
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Auth. v. Gallenthin Realty Dev., Inc., No. A-2214-10 (App. Div.
Aug. 8, 2012). The matter proceeded to a jury trial after GRD
appealed from the Commissioners' report.
This was only the most recent round in governmental efforts
to obtain GRD's property. The Borough of Paulsboro previously
designated all of GRD's property as an "area in need of
redevelopment" pursuant to N.J.S.A. 40A:12A-5, which would have
made the entire property subject to condemnation. Zoned for a
marine industrial business park, the property is mostly wetlands.
Slightly less than one third, at the northern end, consists of
developable land. The Mantua Creek, which empties at its northern
end into the Delaware River, lies on the property's eastern edge.
A rail spur runs along the western side of the property, although
it was uncertain whether it could carry rail traffic because it
was unclear whether it satisfied Conrail standards. To the north
of the site is the planned Paulsboro Port redevelopment property,
which includes land once used by British Petroleum (BP) as a
packaging site, and land owned by Dow/Essex Chemical. That
property is bounded to the north by the Delaware River, and to the
east by the Mantua Creek.
In 2003, the Borough joined Gallenthin's property in its
redevelopment plans with the larger property to the north, which
had already been designated an area in need of redevelopment.
3 A-2342-15T1
Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 191 N.J.
344, 350-54 (2007). However, GRD appealed, and the Supreme Court
invalidated the designation. Id. at 373.
After the Supreme Court's decision, the Authority sought the
more limited taking at issue here. It condemned 3.395 acres in
fee simple, 0.256 acres in permanent easements, and a 1.73 acre
temporary construction easement. Of the 3.395 acres, slightly
over one acre was utilized for a new roadway, to link the site to
the north with a connection to I-295 to the south. The roadway
entered Gallenthin's property by a bridge over the Mantua Creek,
and then followed a northerly and then north-westerly path across
the uplands portion of GRD's property. Slightly over two acres
of the condemned property consists of a triangle of land to the
north of the road, bounded to the east by the Mantua Creek, but
accessible to the rest of Gallenthin's property by the embankment
along the creek.
The main point of contention at trial was the highest and
best use of the property. The Authority's expert, Jerome McHale,
testified that just compensation was $489,400 since the highest
and best use was future industrial. The Authority's witnesses
depreciated the value of the parcel's access to the Mantua Creek,
contending it was too shallow and narrow to accommodate vessels
that would support a commercially viable marine-related use.
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McHale noted there were many waterfront properties in the area
that did not utilize water access. Authority witnesses also
contended that utilizing the rail line for an intermodal
transportation facility on GRD's property would be uneconomical.
McHale asserted there were many industrial properties with rail
lines in the area that were unused because trucking was preferable.
McHale asserted that neither the existing rail line, nor the
property's location on the Mantua Creek, enhanced the property's
value.
GRD took the opposite position. George A. Gallenthin, III,
an owner of GRD, contended that the creek could accommodate barges,
before the bridge destroyed the feasibility of doing so, in part
because it left only twenty-five feet of clearance between the
creek and the bridge bed. He also testified that the rail spur
had been repaired and utilized by a neighboring landowner in recent
years. GRD argued that its proximity to the Paulsboro Port made
it a desirable location for ancillary port-related uses.
GRD's appraiser, Anthony Graziano, testified that just
compensation was $2,123,000. He explained that the highest and
best use of the property involved the water access and the rail
line. Specifically, he opined that the property could be used for
a dredge transfer station or marine cargo terminal. Graziano
5 A-2342-15T1
opined that rail access and water access each enhanced the value
of industrial property by fifteen percent.
During McHale's redirect examination, he recounted that GRD
had not commercially used its waterfront since 1964. He asserted,
"[I]n 2010 and as of today [the trial was in September 2015] there
is no demand for this type of waterfront property. There[] [are]
other old facilities out there . . . all along the waterfront that
are available if you want to put them to waterfront use. There's
just no demand for that."
On recross-examination, GRD attempted to rebut McHale's
assertion about the lack of demand. GRD's counsel inquired about
Paulsboro's effort to add GRD's property to the redevelopment area
that included the Paulsboro Port. He asked, "And you're aware
that back in 2005, the Borough of Paulsboro had started a
redevelopment project for the Paulsboro port. Right?" McHale
answered, "They did, right, about ten years ago." Counsel then
followed, "Right. And the Borough of Paulsboro wanted this
property . . . " At that point, the Authority's counsel objected.
An extended colloquy followed. GRD's counsel stated that he
intended to confront McHale with a 2005 "certification" from former
Paulsboro Mayor John J. Burzichelli, which was filed by the Borough
of Paulsboro in the first litigation to support the area-in-need-
6 A-2342-15T1
of-redevelopment designation.1 GRD's counsel argued that McHale
had opened the door to proof that there was demand for the property
for waterfront use; and that the Burzichelli certification
demonstrated such demand. Counsel also stated his desire to
introduce the certification into evidence. He proffered the
certification, which stated:
2. The Borough has signed a Ground Lease
with BP Products North America in order to
build a marine terminal and distribution
center along the Delaware River. The Borough
is completing negotiations with the South
Jersey Port Corporation for construction and
operation of a marine terminal.
3. Independent studies have concluded the
development will have an estimated total
impact of over $300 Million Dollars and will
create thousands of new jobs in the
municipality. The project will revitalize the
entire community, strengthen the local
economy, and draw new business to the
surrounding area.
4. The Gallenthin's property is part of the
overall redevelopment area and essential to
the overall redevelopment of the area.
[(Emphasis added).]
GRD contended that Burzichelli's statement in paragraph 4
meant the property was essential to a port project, which in turn
1
Although denominated a "certification," Burzichelli did not
comply with Rule 1:4-4(b). Instead, he certified that his
statements were "true to the best of my knowledge, information and
belief . . . ."
7 A-2342-15T1
meant it was essential because of its water and rail access. GRD
cited references in Gallenthin Realty Dev., Inc. to studies,
preceding designation of GRD's property, which noted that the
property was "not fully productive" as evidenced by the fact that
it was vacant and unimproved, and the rail line was underutilized.
See 191 N.J. at 352. That study made no mention of use of the
property for access to the planned port project to the north.
Ibid. GRD contended Paulsboro, in 2005, did not want the GRD
property included in the redevelopment area in order to provide
road access to the Paulsboro Port; GRD noted that a study at the
time instead recommended a vehicle route north of the GRD property.
The Authority responded that Burzichelli's certification said
nothing about why Paulsboro believed the GRD property was
essential. In particular, it failed to say the property was
essential because of its access to Mantua Creek. The Authority
noted that the redevelopment area already had direct access to the
Delaware River. Nor did the certification state that the property
was essential because the rail spur passed through it. The
Authority noted that GRD had the opportunity to call Burzichelli
as a witness, but did not.
The court sustained the objection, explaining: "I don't think
there's enough before me to say that Paulsboro wanted it for rail
and water, as opposed for some ancillary reason. Integral to the
8 A-2342-15T1
port can be a lot of things." The judge noted that Paulsboro's
successor in interest, the Authority, wanted GRD land for a bridge
and road, "I need something more to show that [the desired
objective in] 2005 was for the rail or water . . . ." Noting that
the Authority's objection was based on relevance grounds, the
judge disavowed reliance on N.J.R.E. 403, stating, "There's no
prejudice. This isn't a[n] [N.J.R.E.] 403 issue."
In denying GRD's motion for a new trial, the court amplified
the reasons for its ruling, stating that the document would lead
to speculation by the jury. "I think it's still very, very
speculative and it doesn't talk in terms of what the Borough was
contemplating its use for." The court also indicated it was
concerned about the hearsay nature of the certification, stating,
"I was worried about Burzichelli not being able to be cross-
examined on it when he could have been available to testify as to
what the plans were . . . ."
II.
GRD's sole point on appeal is that the court erred in (1)
barring GRD from confronting McHale with the Burzichelli
certification on re-cross-examination; and (2) barring GRD from
introducing the certification into evidence. GRD and the Authority
renew and amplify arguments they presented to the trial court.
9 A-2342-15T1
We are guided by a deferential standard of review. "The
trial court is granted broad discretion in determining both the
relevance of the evidence to be presented and whether its probative
value is substantially outweighed by its prejudicial nature."
Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999). Likewise,
a trial court exercises "broad discretion in determining the scope
of cross-examination." Manata v. Pereira, 436 N.J. Super. 330,
343 (App. Div. 2014) (quoting State v. Silva, 131 N.J. 438, 444
(1993)). In applying this standard, an appellate court may not
"substitute its judgment for that of the trial court, unless 'the
trial court's ruling was so wide of the mark that a manifest denial
of justice resulted.'" State v. Perry, 225 N.J. 222, 233 (2016)
(quoting State v. Marrero, 148 N.J. 469, 484 (1997)). There is
no error if there is adequate, substantial, and credible evidence
in the record to support the decision. Estate of Hanges v. Metro.
Prop. & Cas. Ins. Co., 202 N.J. 369, 384 (2010).
We view the court's exclusion of Burzichelli's certification
as a ruling on relevance. "'Relevant evidence' means evidence
having a tendency in reason to prove or disprove any fact of
consequence to the determination of the action." N.J.R.E. 401.
In determining relevance, the trial judge should focus on "the
logical connection between the proffered evidence and a fact in
issue, i.e., whether the thing sought to be established is more
10 A-2342-15T1
logical with the evidence than without it." State v. Hutchins,
241 N.J. Super. 353, 358 (App. Div. 1990).
The test for relevance is broad and generally favors
admissibility. State v. Deatore, 70 N.J. 100, 116 (1976). "The
burden of establishing this connection is not onerous: 'if the
evidence makes a desired inference more probable than it would be
if the evidence were not admitted, then the required logical
connection has been satisfied.'" State v. Garrison, 228 N.J. 182,
195 (2017) (quoting State v. Williams, 190 N.J. 114, 123 (2007)).
We have no doubt that proof of demand for the GRD property
because of its water or rail access would pertain to "a fact of
consequence" in the case. A key issue at trial was whether those
two attributes of the property enhanced its value, or were
inconsequential. The crux of this appeal is whether the
Burzichelli certification made an inference of such demand – by
Paulsboro in particular – more probable than it would be absent
the document.
We recognize the trial court did not recite the standard for
assessing relevance found in N.J.R.E. 401. The court addressed
whether the evidence was sufficient to enable it to conclude – as
opposed to a jury – that Paulsboro wanted the property for its
water and rail access. However, we are satisfied that the court
nonetheless applied the essential test of N.J.R.E. 401 – whether
11 A-2342-15T1
the evidence tended to establish GRD's proposition that Paulsboro
wanted the property in 2005 for its water and rail access.
Applying our deferential standard of review, we uphold the trial
court's assessment that the certification did not support such an
inference.
GRD's proposed use of the certification required multiple
inferential steps. First, the jury would have had to infer that
because Paulsboro deemed the property essential to the
redevelopment area, Paulsboro specifically deemed the property
essential to the port project to the north. Alternatively,
Paulsboro could have deemed the property essential because it was
a vacant, underutilized property. Indeed, the crux of the issue
before the Supreme Court was whether the property was subject to
designation under the redevelopment law simply because it was not
fully productive. Gallenthin Realty Dev., 191 N.J. at 348. GRD's
expert before the Paulsboro Planning Board contended that the
property "was not necessary for the BP/Dow Redevelopment Area."
Id. at 353 (emphasis added). GRD's expert also noted that a
Borough expert's recommendation to designate the property in need
of redevelopment "was based exclusively on N.J.S.A. 40A:12A-5(e),
not . . . that the property may be an important adjunct to the
BP/Dow Redevelopment Area." Ibid. (emphasis added). Hence, GRD's
prior position undermines its present arguments.
12 A-2342-15T1
Second, even if the jury made that first inferential leap,
it would also need to infer the property was essential to the port
project because of the property's own water and rail access. As
noted, the port project's land already had water access directly
to the Delaware, and to the same rail spur that passed through
GRD's property. Paulsboro could have deemed the property essential
to the port project because the property could be used for
ancillary purposes – such as providing road access, or providing
industrial uses that did not exploit the site's own water and rail
access.
Third, even if the jury made those two inferential leaps, it
would need to conclude that Paulsboro's demand in 2005 was
reflective of market demand, and therefore probative of the
property's value, in 2010. Authority witnesses addressed the
lasting negative impact of the 2008 recession on property values
in April 2010. The witnesses contrasted the 2010 economy with
headier times before the recession, and the economic recovery by
the time of trial.
Although not a basis for our decision, we also note that the
Burzichelli certification was hearsay, and, apparently,
inadmissible. The certification was an out of court statement,
offered for the truth of the assertion that the property was
essential to the redevelopment area. See N.J.R.E. 801(c). The
13 A-2342-15T1
Authority ultimately hired Burzichelli ten years later,2 but there
is no evidence that when he made the statement in 2005, he did so
as an agent of the Authority, so as to qualify as a statement of
an agent of a party opponent. See N.J.R.E. 803(b)(4). We are
aware of no other exception to the hearsay rule that would have
enabled GRD to introduce Burzichelli's certification into evidence
for its truth. The fact that the document appeared to be certified
did not make it admissible, putting aside the non-compliance with
Rule 1:4-4. See Jacobs v. Walt Disney World, Co., 309 N.J. Super.
443, 454 (App. Div. 1998) (stating that "factual assertions based
merely upon 'information and belief' are patently inadequate").
In sum, applying the narrow scope of review applicable to
evidentiary rulings in civil trials, we discern no persuasive
grounds to set aside the jury's award and the corresponding
judgment.
Affirmed.
2
We separately grant Gallenthin's motion (M-1601-17) to supplement
the record with evidence of Burzichelli's subsequent employment.
14 A-2342-15T1