Township of West Orange v. 769 Associates, L.L.C.

In this appeal we must determine whether a municipality's proposed condemnation of private property constituted a valid exercise of its eminent domain power. Plaintiff Township of West Orange (Township or West Orange) sought condemnation of approximately one-half acre of property owned by defendant 769 Associates, L.L.C. (769 Associates or defendant) for use as a dedicated public street. Defendant opposed the Township's action on the ground that the proposed taking was not for a public use. The trial court ruled in favor of the Township and authorized the condemnation. The Appellate Division reversed, holding that because the proposed taking sought to further only the interests of a private developer, the taking was improper. We conclude that the proposed taking is for a valid public use that will benefit the general public interest and therefore reverse the Appellate Division.

I

769 Associates owns property located on Northfield Avenue in West Orange (property or Northfield Avenue property). The property consists of an office building housing medical offices and a parking lot that services the building. Defendant's property fronts on Northfield Avenue, an Essex County road. Nordan Realty Corp. (Nordan) owns a 46.5-acre tract of land behind defendant's property approximately 2,000 feet from Northfield Avenue. Nordan intends to construct a development of ninety-five single-family homes on its property to be known as "Northfield Village." The proposed development abuts another proposed 198 single-family home development, "Bel-Aire at West Orange" (Bel-Aire), to the north, a single-family home to the west, an Essex County park to the east, and an undeveloped 52-acre tract of land owned by the Township to the southeast. To construct the dedicated street that is the subject of this dispute, the Township seeks to take a 30-foot wide strip of land along the western edge of 769 Associate's property. That land currently is part of defendant's parking lot. Once the Township acquires the property, it will construct the disputed access road to the proposed "Northfield Village" pursuant to a contract with Nordan. Nordan has stated that the 30-foot strip will be utilized in addition to Nordan's existing 20-foot wide right-of-way to Northfield Avenue.

In March 1986, the West Orange Planning Board (Board) passed a resolution granting Nordan preliminary site plan approval for Northfield Village. That approval contemplated the use of Cedar Avenue to Pleasant Valley Way (a major West Orange traffic artery) for ingress to and egress from Northfield Village. Cedar Avenue is a dedicated street running eastward past the Nordan, Bel-Aire and Township properties. The distance from the edge of Nordan's property to Pleasant Valley Way is between 2,000 and 2,500 feet. Currently, Cedar Avenue is a gravel and dirt road that is not fully improved, that is, it has no curbing, sidewalks or drainage and contains slopes exceeding those permitted by Township ordinances. Notwithstanding those shortcomings, Cedar Avenue is considered a public right-of-way. The locations of the properties are identified in a modest rendering, rough in both scope and scale, at the end of this opinion.

Nordan's attempt to utilize Cedar Avenue for Northfield Village encountered substantial opposition from a number of Township residents. The residents persuaded the Board to consider an alternate route for Northfield Village in place of Cedar Avenue, as a result of which the Township commissioned Hamal Associates, Inc. (Hamal) to conduct a traffic study to appraise alternate routes of access to Northfield Village. Hamal's study suggested two potential alignments for access to Nordan's property, the Cedar Avenue road and the proposed Township road across 769 Associates' and Nordan's property, which contemplated using Nordan's 20-foot wide strip in combination with the 30-foot wide strip on the western edge of defendant's property. In support of the proposed right-of-way through defendant's property, the Township engineer stated that "it is sound engineering practice for two large developments such as [Northfield Village] and Bel-Aire to be linked by an inter-connected road system." Further, he noted that the proposed road would serve as a "secondary means of ingress and egress for the Bel-Aire project" and would be "critical in an emergency situation when the primary access from Mt. Pleasant Avenue [to Bel-Aire] is blocked."

In 1992, the Township and Nordan executed a Developer's Agreement whereby the Township Council would determine "access and egress to Northfield Avenue not inconsistent with" Hamal's traffic study. Nordan agreed to negotiate with adjoining property owners including 769 Associates to secure property to construct its right-of-way to Northfield Avenue. The agreement also provided that if Nordan's "negotiations are successful, the cost for the land and to make the wider right-of-way will be borne by [Nordan]." If Nordan could not acquire the necessary property after a reasonable time, the agreement stated that the Township "shall use its powers of eminent domain to provide the necessary access." Further, Nordan agreed to reimburse the Township for all costs and fees incurred by the Township in the condemnation proceedings including the price of the property taken. Finally, the agreement required Nordan to contribute a total of $500,000 to West Orange's affordable housing fund for the right to construct Northfield Village.

By 1997, Nordan was successful in acquiring the necessary property from all of the adjoining property holders except defendant. Accordingly, pursuant to the Developer's Agreement, the Township was obligated to commence condemnation proceedings. The Township Council adopted Ordinance No. 1445-97, which authorized the Township to exercise its power of eminent domain to acquire the 30-foot strip of land on defendant's property. The Council stated that the proposed taking "will not only serve the public's interest in securing access to [Northfield Village] but will also provide access to other properties and proposed developments in the immediate vicinity." Pursuant to that Ordinance, the Township filed a condemnation complaint in the Superior Court in 1998. 769 Associates contested the action, asserting that there was no valid public use for the taking and that the condemnation proceeding was intended to benefit solely Nordan's private interest. After a complicated and protracted discovery dispute, the trial court denied defendant's challenge to the Township's right to condemn defendant's property by eminent domain, entering final judgment in favor of the Township.

The Appellate Division reversed, concluding that the Township's proposed taking sought to advance only Nordan's private interests and thus was not for a public use. Township of West Orange v. 769 Assocs., L.L.C., 341 N.J. Super. 580, 594 (App. Div. 2001). The court stated that although a municipality's exercise of its eminent domain power is entitled to a presumption of validity, that presumption may be rebutted when the condemnee can demonstrate that the true purpose of the taking is not for a public purpose. Id. at 588. Defendant's allegation that the taking would serve only private interests required the court to apply a "heightened scrutiny" standard of review. Id. at 588-89. Applying that standard, the court noted that the Hamal study considered the Cedar Avenue access a viable alternative to condemning defendant's property. Id. at 592. Hamal's traffic study also noted that the proposed route across defendant's property would not "attract cut through traffic." Accordingly, the court concluded that the "primary purpose of the proposed right-of-way . . . is to serve the private interest of Nordan." Ibid. The court determined that "the condemnation proceeding was primarily for a private purpose and was improper." Id. at 594.

We granted the Township's petition for certification. 170 N.J. 387 (2001). We also granted the motion of the Institute for Justice for leave to appear amicus curiae.

II.

A

"Eminent domain is the power of the State to take private property for public use . . . . It is a right founded on the law of necessity which is inherent in sovereignty and essential to the existence of government[.]" State v. Lanza, 27 N.J. 516, 529 (1958) (quotation omitted). It is well-established that a reviewing court will not upset a municipality's decision to use its eminent domain power "in the absence of an affirmative showing of fraud, bad faith or manifest abuse." City of Trenton v. Lenzer, 16 N.J. 465, 473 (1954), cert. denied, 348 U.S. 972, 75 S. Ct. 534, 99 L. Ed.2d 757 (1955). Indeed, the United States Supreme Court has held that "it will not substitute its judgment for a legislature's judgment as to what constitutes a public use ‘unless the use be palpably without reasonable foundation.'" Hawaii Housing Auth. v. Midkiff, 467 U.S 229, 241, 104 S. Ct. 2321, 2329, 81 L. Ed.2d 186, 197 (1984) (quoting United States v. Gettysburg Elec. Ry. Co., 160 U.S. 668, 680, 16 S. Ct. 427, 429, 40 L. Ed. 576, 581 (1896) (emphasis added)). In so holding, the Supreme Court stated that courts should defer to legislative bodies on questions implicating the state's sovereign authority:

Similarly, the fact that a state legislature, and not Congress, made a public use determination does not mean that judicial deference is less appropriate. Judicial deference is required because . . . legislatures are better able to access what public purposes should be advanced by an exercise of the taking power . . . . Thus, if a legislature, state or federal, determines there are substantial reasons for an exercise of the taking power, courts must defer to its determination that the taking will serve a public use.

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The judgment of the Appellate Division is reversed and the judgment of the Law Division is reinstated.

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