1. Right to Take Issues and Dilemmas
Anthony F. DellaPelle, Esq., CRE
December 12, 2017

2. Anthony F. Della Pelle, Esq. , CRE®
Practice limited to eminent domain, condemnation, redevelopment and real estate tax appeals
30+ years representing property owners and special counsel to condemning authorities in eminent domain matters
Author, New Jersey Condemnation Law Blog,
Co-Author, The Law of Eminent Domain, New Jersey Chapter – American Bar Association
Anthony F. Della Pelle, Esq. , CRE®
Shareholder, McKirdy, Riskin, Olson & DellaPelle, PC , Morristown, New Jersey
Certified Civil Trial Attorney by NJ Supreme Court
New Jersey Representative, Owners’ Counsel of America
Member, Counselors of Real Estate®

3. The Power of Eminent Domain
Constitutional and Legislative Grant of Authority
Western Union Tel. Co. v. Penn. R.R. Co., 195 U.S. 540 (1904)
Enabling Legislation – Municipal, County, Special Agency, State and Federal Governments
Cincinnati v. Louisville & N.R. Co., 223 U.S. 390 (1912)
Public Use Requirement
Kohl v. United States, 91 U.S. 367 (1875)
Requirement for Just Compensation
Bauman v. Ross, 167 U.S. 548 (1897)
Redevelopment Law issues
Atlantic City - casino issues
Wide discretion

4. Typical ED Process Project planning and property investigations
Attempt at amicable resolution through bona fide negotiations
Final judgment on authority for and due exercise of power by condemnor
Commissioners’ Hearing
Trial/jury trial on appeal from Commissioners’ Report on the issue of just compensation

5. The Right to Condemn
The power of eminent domain is not automatic – it must be granted through legislative action
Boom Co. v. Patterson, 98 U.S. 403 (1878)
The legislature may delegate the power to other agencies
Luxton v. North River Bridge Co., 153 U.S. 525 (1894)
Acts concerning the power of eminent domain are generally strictly construed (C.J.S., Eminent Domain, Sec. 2)
Delaware, L & W.R. Co. v. Morristown, 276 U.S. 182 (1928)
The power may only be exercised for the purposes, in the manner and subject to the conditions prescribed by the legislature
Berman v. Parker, 348 U.S. 26 (1954)
Executive Orders cannot authorize eminent domain
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952)

6. The Right to Condemn
What are the legislative actions that can authorize eminent domain?
Statutes
Local agency ordinances
Resolutions?
Federal/State/County/Local/other
Specific government agencies usually have specific eminent domain powers
How the power is exercised may ordinarily be subject to an omnibus procedural eminent statute (e.g., Eminent Domain Act)

7. The Right to Condemn Public utilities can exercise eminent domain
Statutory Grant
Natural Gas Act (15 U.S.C. 717F(h)
State statutes
Requires Administrative/Regulatory approval
Limited Authority
Limited to designated area and properties
Subject to restrictions imposed by authorization
Must compensation precede taking/preliminary entry authorized?
Jurisdictional issues for regional, interstate, international projects

8. The Right to Condemn – Choice of Forum for Utility Takings
Federal Law and Court – Penn East
Federal Statute authorizing project and condemnation
Regulatory process through FERC
Federal court and jurisdiction
Disclosure requirements
Litigation process – no jury trial and different procedures
State Law and Court – South Jersey Gas
State statutes authorizing project and condemnation
Regulatory process through BPU
State court and procedures
Safeguards to property owners through Eminent Domain Act

9. The Right to Condemn Public Utilities – Prior Public Use Doctrine:
The general rule is that a private company that has been authorized to exercise general eminent domain powers cannot do so on land that has already been devoted to public use. State Highway Commission v. Hoester, 362 S.W. 2d 519 (Mo. 1962)
See U.S. v. Carmack, 329 U.S. 230 (1946), which contains dictum suggesting that eminent domain authority delegated to private entities (such as utility companies) is limited and therefore subject to a more stringent standard of review than similar delegations to governmental actors.
Examples and exceptions :
Will a balancing test be used? See Texas Eastern v. Wildlife Preserves, Inc., 225 A. 2d 130 (N.J. 1966)
Water company’s rights not exclusive. City of Raton v. Raton Ice Co. 191 P. 518 (N.M. 1920)

10. Denial of Right to Condemn
Failure to deny the authority to condemn will ordinarily result in waiver of the defense
When the authority to condemn is denied, all further steps in the action are typically stayed until the issue of the right to take has been finally determined.
Is determination of right to condemn a final judgment?
Does “finally determined" mean exhaustion of the appellate process if appellate review is sought?
N.J.S.A. 20:3-11
Bridgewater Tp. v. Yarnell, 64 N.J. 211 (1974)
County of Sussex v. Merrill Lynch, 351 N.J. Super 1 (App. Div )

11. Denial of Right to Condemn
Are counterclaims permitted without leave of court?
Right to discovery on the issue of the right to condemn? N.J.S.A. 20:3-12(d).
When must defenses be raised – Order to Show Cause, other triggering order or rules
Who may raise defenses:
State v. Cuyahoga Court of Common Pleas, 603 N.E. 2d 1005 (Ohio )(leaseholder may raise defenses even though owner does not)
Honolulu v. F.E. Trotter, (757 P.2d 647)(Hawaii 1988)(unrecorded leaseholder has standing to object to taking)
City of Shakopee, 295 N.W. 2d 495 (Minn. 1980)(purchase option holder has standing to object)waiver of the defense

12. Some Defenses to Taking
No public purpose – bad faith, pretext
Lack of necessity/arbitrary and capricious exercise of power
Failure to pass requisite authorizations
Indefinite description
Failure to identify necessary parties
Failure to engage in bona fide negotiations. N.J.S.A. 20:3-6
All issues other than just compensation to be adjudicated
Trenton v. Lenzner, 16 N.J. 465 (1954)(parking facility for proprietary use)
West Orange v. 769 Associates, 172 N.J. 564 (2002)(roadway primarily serving residential development)
Texas Eastern v. Wildlife Preserves, 48 N.J. 261 (1967)(necessity)
Hillsborough v. Robertson, 260 N.J.Super. 37 (Law Div. 1992)
Essex Fells v. Kessler, 289 N.J. Super 329 (Law Div. 1995)

13. Litigating the Right to Take
Condemnor’s Procedural and Substantive Compliance with Eminent Domain Act and applicable rules
Hearing may be required – summary proceeding/evidentiary hearing?
* R. 4:67-5; R. 4:73-1
* Bergen County v. Hackensack, 39 N.J (1963)

14. Litigating the Right to Take
Court will not substitute its judgment for legislative judgment – deference to legislative determination of necessity
Hawaii Housing Auth. v. Midkiff, 467 U.S (1984)
National R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407 (1992)
Private use vs. valid public purpose
Berman v. Parker, 348 U.S. 26 (1954)
Other procedural objections
Trenton v. Lenzner, 16 N.J. 465 (1954)(parking facility for proprietary use)
West Orange v. 769 Associates, 172 N.J. 564 (2002)(roadway primarily serving residential development)
Texas Eastern v. Wildlife Preserves, 48 N.J. 261 (1967)(necessity)
Hillsborough v. Robertson, 260 N.J.Super. 37 (Law Div. 1992)
Essex Fells v. Kessler, 289 N.J. Super 329 (Law Div. 1995)

15. Update on N.J. Storm Replenishment Project – 5 Years Later, and Counting --Harvey Cedars v. Karan
$$2+MM oceanfront home on Long Beach Island – 18 mile long barrier island
Borough condemns a “dune easement” to allow US Army Corps of Engineers to construct a 22-foot high dune on the property
Borough offers $300 for easement; contends damages are “de minimus”
Owner’s appraiser: loss of views cause $500,000 of damages
Owner moves in limine to bar Borough appraisal which contends that taking creates “special benefits” via storm protection provided by dune
Evidence excluded by trial court as “general benefit”
Jury awards $375,000 in damages
Trial court ruling affirmed by Appellate Division

16. Harvey Cedars v. Karan: Before and After
Before After

17. Harvey Cedars v. Karan: Before and After

18. Update on N.J. Storm Replenishment Project – 5 Years Later, and Counting
Harvey Cedars v. Karan – the setting:
Supreme Court grants certification before Superstorm Sandy
Superstorm Sandy causes catastrophic property losses
Areas with engineered dunes “fare much better” than those without
Dune/storm replenishment efforts are renewed in earnest along the Shore – project ALSO converts private beaches to public beaches
Public perception and media portrayal paints “holdout” oceanfront property owners as greedy, selfish, obstructionists
Amicus curiae status granted to State of New Jersey and other interest groups
Politics and policy take over – at the expense of the law?

19. Update on N.J. Storm Replenishment Project – 5 Years Later, and Counting
Harvey Cedars v. Karan – 214 N.J. 384 (July, 2013):
general-benefits doctrine is “at odds with contemporary principles of just-compensation jurisprudence”
Jury only permitted to hear “one side” of the story
Could result in a “windfall” to the property owners at public expense
Just compensation in partial taking must be based upon a consideration of “all relevant, reasonably calculable, and non- conjectural factors that either decrease or increase the value of the remaining property”
Court recognizes that the loss of view is compensable, but requires rehearing permitting evidence regarding the impact of the storm protection benefits upon the value of the property as an offset to damages

20. Harvey Cedars v. Karan – the implications:
Update on N.J. Storm Replenishment Project – 5 Years Later, and Counting
Harvey Cedars v. Karan – the implications:
Did Karan cause the “holdouts” to change course and donate their properties?
Mr. and Mrs. Karan settle for $1 – WHY?
What impacts will or may it have on just compensation determinations, from the condemnor’s offers to the commissioners’ awards and jury awards that result?
Does the decision provide guidance on whether the “benefits” can be offset against the value of the part taken, or against severance damages only?
Related issues: loss of access, ambiguity in description of rights obtained and scope of rights retained

21. Update on N.J. Storm Replenishment Project – 5 Years Later, and Counting
Continued vilification of “holdouts” – approximately 300 (10%) require takings
USACOE to build under Project Partnership Agreements
State (NJDEP) control over project as “Non-Federal Sponsor”
Municipal role and conflict with State
“Emergency” measures under Disaster Control Act taken
Declaratory judgment actions instituted
Condemnations begin
Issues presented on right to condemn:
Does proper legislative authorization exist?
Easements vs. Fee Simple Interests
Lack of necessity in some matters
“Bona Fide” Negotiations
Other procedural issues
The latest from the pending cases and what lies ahead

22. Anthony F. DellaPelle, Esq., CRE®
Final Thoughts
Q&A?
Thank you!
Anthony F. DellaPelle, Esq., CRE®