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

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." 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-2487-18T2
NEW JERSEY SPORTS AND
EXPOSITION AUTHORITY,
Plaintiff-Respondent,
v.
TOWN OF KEARNY,
Defendant-Appellant,
and
STATE OF NEW JERSEY, by
and through the TIDELANDS
RESOURCE COUNCIL,
THEODORE C. WILDMAN, and
all of his heirs, successors and
assigns, MIMI DEVELOPMENT
CORPORATION, its successor
HUDSON MEADOWS URBAN
RENEWAL CORPORATION, and
its further successor, SONEE
URBAN RENEWAL CORPORATION,
Defendants.
__________________________________
Submitted March 11, 2020 – Decided April 9, 2020
Before Judges Koblitz, Gooden Brown and Mawla.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-2039-16.
Castano Quigley LLC, attorneys for appellant (Paul V.
Fernicola, of counsel and on the brief; Gregory J.
Castano Jr., on the briefs).
Lowenstein Sandler LLP, attorneys for respondent
(James Stewart and Kent D. Anderson, on the brief).
PER CURIAM
Defendant Town of Kearny appeals from the December 19, 2018 final
judgment for $1,818,000, awarded as just compensation for plaintiff New Jersey
Sports and Exposition Authority's (NJSEA) condemnation of 104.64 acres of the
Keegan Landfill (subject property). The trial court adopted the analysis and
valuation set forth by NJSEA's appraisal. Kearny alleges the trial court made
improper findings as a matter of law and erred when allowing NJSEA's rebuttal
experts to testify. It also argues it was deprived of its right to a jury trial. We
disagree and affirm.
In May 2016, NJSEA filed a verified condemnation complaint with the
trial court. We affirmed "an order granting a final judgment authorizing
[NJSEA] to exercise its power of eminent domain relating to the Keegan
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Landfill." N.J. Sports & Exposition Auth. v. Town of Kearny, No. A-5152-15
(App. Div. November 20, 2017) (slip op. at 2).
On March 9, 2018, NJSEA served expert reports from Jeffrey D. Kendall
and John A. Castner. Nineteen days later, Kearny for the first time made an
unsuccessful request for a jury trial. After depositions, Kearny's motion to bar
the reports and testimony of Kendall and Castner and NJSEA's cross-motion to
bar Kearny's rebuttal experts were denied.
In October 2018, Judge Francis B. Schultz presided over a five-day bench
trial, hearing testimony from eight witnesses. In a comprehensive letter opinion,
he found that NJSEA's expert's valuation of the property was correct: the fair
market value at the time of taking was $1,818,000.
We adopt the factual background to this matter as described in our prior
opinion. Id. at 3-9.
I.
A final determination made by a trial court conducting a non-jury case is
"subject to a limited and well-established scope of review." Seidman v. Clifton
Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). We will not disturb the trial court's
fact-findings unless we are "convinced that those findings and conclusions [are]
'so manifestly unsupported by or inconsistent with the competent, relevant and
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reasonably credible evidence as to offend the interests of justice.'" Greipenburg
v. Twp. of Ocean, 220 N.J. 239, 254 (2015) (quoting Rova Farms Resort v. Inv'rs
Ins. Co., 65 N.J. 474, 484 (1974)). Similarly, "a trial court's decision to admit
expert testimony . . . [is] review[ed] . . . against an abuse of discretion standard."
N.J. Transit Corp. v. Franco, 447 N.J. Super. 361, 369 (App. Div. 2016) (quoting
Townsend v. Pierre, 221 N.J. 36, 53 (2015)).
We review de novo questions of law, only reversing if an error was "of
such a nature as to have been clearly capable of producing an unjust result."
R. 2:10-2; see Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.
366, 378 (1995).
II.
Because "the undisputed evidence demonstrated the actual, ongoing and
continued use of the [s]ubject [p]roperty as a landfill," Kearny argues the trial
court erred in relying upon NJSEA's appraiser's conclusion that the "highest and
best use" of the property is for passive recreation.
When the government takes private property for public use, it must pay
just compensation to the property owner. U.S. Const. amend. V; N.J. Const. art.
I, ¶ 20. "Just compensation is 'the fair market value of the property as of the
date of the taking, determined by what a willing buyer and a willing seller would
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agree to, neither being under any compulsion to act.'" State by Comm'r of
Transp. v. Caoili, 135 N.J. 252, 260 (1994) (quoting State by Comm'r of Transp.
v. Silver, 92 N.J. 507, 513 (1983)). While "all reasonable uses of the property
bear on its fair market value," the "most relevant . . . is the property's highest
and best use." Ibid.
"[H]ighest and best use" . . . is broadly defined as "the
use that at the time of the appraisal is the most
profitable, likely use" or alternatively, "the available
use and program of future utilization that produces the
highest present land value" provided that "use has as a
prerequisite a probability of achievement."
[County of Monmouth v. Hilton, 334 N.J. Super. 582,
587 (App. Div. 2000) (quoting Ford Motor Co. v. Twp.
of Edison, 127 N.J. 290, 300-01 (1992)).]
The "highest and best use" of the property must be: "1) legally permissible, 2)
physically possible, 3) financially feasible, and 4) maximally productive." Id.
at 588.
Kearny's appraiser estimated the value of the entire Keegan Landfill, not
just the subject property, to be worth $23,430,000. He assumed "assemblage":
that a new buyer would also buy the portion of the property already owned by
NJSEA and not at issue in this litigation. He confirmed that because "zone
landfills are legally permissible" and because the property "is an operating
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landfill," its use as such is legally permissible and physically possible. Although
he agreed the property may operate for recreational use, he stated "[i]t won't be
that for at least seven, eight years, or whenever the closure occurs." 1 As to the
property's financial feasibility, the appraiser testified that based on his review
of the income and expenses, the property will make "between $14[] and $16
million a year for the next seven years or so." He explained that because "a
substantial net operating income" is generated, "the landfill is clearly the
maximally productive or generates the highest income from any of the other uses
that this property could be."
In contrast, NJSEA's appraiser, whose evaluation was accepted by the
court, explained that his "appraisal values [were] . . . based on its highest and
best use at the termination of the lease between [NJSEA] and [Kearny]," at
which time operation of the landfill would cease. Although he acknowledged
that NJSEA sought to renew the permit and increase the authorized height limit
of the landfill, he clarified that those requests applied to the property as a whole,
not just the subject property. Calculating the value under the "assumption" that
operation of the landfill would cease, his estimated value of $1,888,000 applied
1
We note as an aside that a March 6, 2020 consent order memorialized an
agreement to permanently close the landfill expeditiously.
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only to the 104.64 acres of condemned property. In the appraiser's "highest and
best use" analysis, he emphasized that due to the "large mound of garbage sitting
in the middle of [the landfill], effectively sitting in a tidal marsh, with steeply
sloped sides, [the landfill] ha[s] virtually no practical utility. You can't . . . do
anything with it, you can't build on it." Because the property is "limited in its
potential uses" and a "very highly constrained site," he concluded recreational
use of the property satisfied the four "highest and best use" factors.
The trial court’s letter opinion explained "that the preponderance of the
evidence supports the plaintiff's position and . . . [']assumption.'" He found that
Kearny's appraiser provided "no reason to assume such cooperation" between
NJSEA and the new purchaser. Furthermore, Kearny's appraiser merely
speculated that "the property already owned by the plaintiff would be used
concurrently with the property at issue here." The trial court also took issue
with Kearny's appraiser's calculation, which "included useless water as part of
the percentage of income that would be split with an allegedly cooperating
plaintiff" and the indemnification of the seller, which the trial court found might
raise concerns for a prospective purchaser. Because "it appeare[d] that the
landfill could not be operated solely on the Kearny portion as that would require
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too many significant alterations," the court accepted NJSEA's appraiser's
testimony that the property is "best suited for passive recreation."
Which appraiser was most convincing is a factual question that we review
for an abuse of discretion. See Greipenburg, 220 N.J. at 254. Because the
court's findings are supported by "adequate, substantial and credible evidence,"
reversal is not warranted. Rova Farms, 65 N.J. at 484.
III.
Kearny argues that the trial court's finding that "the evidence in this case
could not point to a single sale of a public landfill to a private ent ity" is both
irrelevant to the "highest and best use" analysis and factually incorrect because
its own expert in the field of waste management said that such a sale was viable.
The likelihood of the sale of the property contributes to "a comprehensive
market analysis to ascertain the supply and demand characteristics," which is
required when determining the "highest and best use." County of Monmouth,
334 N.J. at 588 (quoting Six Cherry Hill, Inc. v. Twp. of Cherry Hill, 7 N.J. Tax
120, 131 (Tax 1984)). The trial court's finding is supported by the testimony of
three of NJSEA's witnesses who were unaware of similar sales of a public
landfill to a private entity.
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IV.
Kearny argues that the trial court erred in finding that its appraiser's use
of assemblage was speculative. Considering the history of the cooperation and
the lease agreement between the parties, Kearny argues it reasonably
incorporated into its just compensation calculation the value of the property
already owned by NJSEA.
Kearny's appraiser testified:
NJSEA had opened this landfill in 2009. . . . There's a
history of cooperation. And clearly to get to your
highest and best use, to get to this highest value all
parties would want to cooperate so they could share in
that.
He believed that because such cooperation has "been going on for years," after
entering into an agreement, "NJSEA would share the income from the landfill
business with the new buyer of the subject [property]." The court was free to
reject this calculation.
V.
Kearny argues the court's finding that a prospective buyer may be
concerned with the community's resistance to the landfill "has no basis in law
or in any evidence." NJSEA, however, provided such evidence. The court
admitted into evidence a letter from plaintiff, in which it objected to the
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existence of a landfill in its town. While Kearny argues the letter was irrelevant,
NJSEA argued that it demonstrated Kearny's "dual position" as the owner of the
subject property and as the host community of the landfill. The court explained
it would allow the letter into evidence "because a well-informed buyer would
certainly want to know what the town of Kearny has to say about these things"
because it might affect the buyer's decision to go through with the sale.
VI.
Kearny argues indemnity is not relevant to the "highest and best use
analysis." The value of a property, however, is "based on all surrounding
circumstances at the time of the taking." Silver, 92 N.J. at 514. Whether a
purchaser will require an indemnification from the seller is an important
consideration regarding the sale of the subject property, particularly, as the trial
court found, because of "[t]he potential exposure due to some sort of
environmental mishap" present here.
VII.
Kearny argues "[t]he record is devoid of any evidence to support" the
court's conclusion that the landfill could not operate solely on the subject
property. It asserts that by ignoring the testimony of its landfill expert, the court
committed reversible error.
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In examining the impediments surrounding a property, the party
advocating a position "is required to come forward with reliable evidence that
the 'feasibility, suitability and practicability' of its proposal make it reasonably
probable that the development handicaps will be overcome and the requisite
approvals will be secured." Jersey City Redevelopment Agency v. Mack Props.
Co. No. 3, 280 N.J. Super. 553, 566 (App. Div. 1995) (citation omitted).
Although Kearny's expert opined that it would be "technically feasible" to
operate a landfill on only the subject property, he said he analyzed the entire
Keegan Landfill, not just the subject property. To operate the landfill, various
modifications to the subject property would need to be made, such as: capping
the leachate2 lines at the edge of the subject property, shifting the landfill mound
so it would not encroach on NJSEA's property and creating a pump station to
collect and transfer leachate. A permit modification would also be necessary.
Kearny also argues the record is devoid of evidence that "there is too much
competition for the Keegan Landfill." NJSEA's experts, however, testified that
2
Leachate is "a liquid waste product that consists of a diverse mixture of
chemicals as precipitation or applied water moves through the waste." Landfill
Leachate Released to Wastewater Treatment Plants and other Environmental
Pathways Contains a Mixture of Contaminants including Pharmaceuticals,
https://www.usgs.gov/mission-areas/environmental-health/science/landfill-
leachate-released-wastewater-treatment-plants?qt-science_center_objects
=0#qt-science_center_objects (last visited Mar. 18, 2020).
A-2487-18T2
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the landfill faces competition from transfer stations and railroads and it lost two
customers months before the taking. The trial court's conclusion was supported
by sufficient credible evidence.
VIII.
Kearny argues the trial court erred in admitting the testimony of Castner
and Kendall and their reports because they were not qualified to offer opinions
on value and their reports did not comply with Rule 4:17-4(e). Kearny claims
the "reports set forth inadmissible net opinions" that failed to explain "the facts,
reasons or calculations that led to the conclusions."
Rule 4:17-4(e) requires that an expert report provided in response to an
interrogatory "shall contain a complete statement of that person's opinions and
the bases therefor; the facts and data considered in forming the opinions; the
qualifications of the witness, including a list of all publications . . . and whether
compensation has been or is to be paid." While Kendall failed to discuss in his
report whether he was being compensated, NJSEA provided these reports to
Kearny pursuant to Rule 4:73-11, not in response to interrogatories. Kendall
explained in his report that he relied on the "profit and loss statement as provided
by management" and he explained how he arrived at his calculations.
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The net opinion rule "forbids the admission into evidence of an expert's
conclusions that are not supported by factual evidence or other data."
Townsend, 221 N.J. at 53-54 (quoting Polzo v. County of Essex, 196 N.J. 569,
583 (2008)). The expert must "'give the why and wherefore' that supports the
opinion, 'rather than a mere conclusion.'" Id. at 54 (quoting Borough of Saddle
River v. 66 E. Allendale, LLC, 216 N.J. 115, 144 (2013)). The rule, however,
does not require "[a]n expert's proposed testimony . . . be excluded merely
'because it fails to account for some particular condition or fact which the
adversary considers relevant.'" Townsend, 221 N.J. at 54 (quoting Creanga v.
Jardal, 185 N.J. 345, 360 (2005)).
N.J.S.A. 45:14F-21(c) provides that unless an exception applies, only a
licensed or certified real estate appraiser "or a person who assists in the
preparation of an appraisal under the direct supervision of a State licensed or
certified appraiser shall perform or offer to perform an appraisal assignment."
Because neither Castner nor Kendall were real estate appraisers, Kearny argues
they were unqualified to offer opinions on value. Neither of these experts,
however, discussed valuation in their reports or testimony.
After setting forth Castner's qualification, respondent asked that he be
qualified as "an expert witness as to the New Jersey regulations and the
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permitting process for solid waste landfills." Kearny raised no objection and by
stipulation, the court qualified Castner as such. Castner's testimony primarily
"advise[d] the [c]ourt as to the process required and the amount of time it takes
to obtain" permits. Any reference to the sale of the property was within the
context of describing the process of transferring the permit.
Similarly, Kendall was qualified by stipulation "as an expert in the
purchase and sale of . . . solid waste landfills." A "stipulation waives all
challenges to the admissibility of . . . [an] expert's testimony." State v. A.O.,
198 N.J. 69, 87-88 (App. Div. 2009). Kendall explained that he "was asked to
look at [the] Keegan Landfill as a potential purchaser of the landfill and what
price [he] would pay to purchase [it]." He discussed the factors a buyer would
consider when considering purchasing the property and why he would not have
been interested in doing so. While Kendall referred to various expenses and fees
associated with the purchase of the property, such as taxes, value of the present
cash flow and closure costs, he did not provide a value of the property. Instead,
his discussion of valuation was limited to concluding that a sophisticated buyer
would not purchase the property at any price. Castner and Kendall sufficiently
supported their conclusions.
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IX.
Kearny argues the trial court erred when denying its motion for a jury. It
contends that under Rule 1:3-4, the court should have relaxed the time restraint
because NJSEA's "introduction of two new and highly technical expert reports
shortly before [the] trial constituted 'good cause.'"
In a condemnation case, "[t]he appellant in the notice of appeal may
demand trial by jury, or any other party may make such a demand within [ten]
days after service of the notice of appeal." R. 4:73-6(a). Pursuant to Rule
1:3-4, "[u]nless otherwise expressly provided by rule, a period of time thereby
fixed for the doing of an act may be enlarged before or after its expiration by
court order on notice or (unless a court has otherwise ordered) by consent of the
parties in writing." Although the Rule "does not contain any explicit standard
for a court granting an enlargement of time," our court has recognized that a
showing of "'extraordinary circumstances,' such as the 'interest of justice' or
'good cause,'" should be demonstrated by the moving party. Flett Assocs. v.
S.D. Catalano, Inc., 361 N.J. Super. 127, 133 (App. Div. 2003).
In denying Kearny's demand for a jury trial, made fifteen months past the
permitted time, the court did not abuse its discretion. Neither NJSEA nor
Kearny made a jury demand in their notice of appeal to the trial court. The new
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expert reports did not constitute "extraordinary circumstances" warranting
relaxation of the Rule. Kearny's right to a jury trial was not violated.
Affirmed.
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