Mansoldo v. State

• Decision Date: 05 June 2006
• Citation: 898 A.2d 1018,187 N.J. 50
• Parties: Frances MANSOLDO and Ronald G. Mansoldo, Plaintiffs-Appellants, v. STATE of New Jersey, Defendant-Respondent.
• Court: New Jersey Supreme Court

898 A.2d 1018

187 N.J. 50

Frances MANSOLDO and Ronald G. Mansoldo, Plaintiffs-Appellants, v. STATE of New Jersey, Defendant-Respondent.

Supreme Court of New Jersey.

Argued March 20, 2006.

Decided June 5, 2006.

COPYRIGHT MATERIAL OMITTED

Raphael G. Jacobs, Tenafly, argued the cause for appellants (Jacobs and Bell, attorneys).

Lewin J. Weyl, Deputy Attorney General, argued the cause for respondent (Zulima V. Farber, Attorney General of New Jersey, attorney; Patrick DeAlmeida, Assistant Attorney General, of counsel; Mr. Weyl and Jason T. Stypinski, Deputy Attorney General, on the briefs).

Carter H. Strickland, Jr., Staff Attorney, Rutgers Environmental Law Clinic, submitted a brief on behalf of amicus curiae, Association of State Floodplain Managers, Inc. (Mr. Strickland, attorney; John D. Echeverria, a member of the District of Columbia Bar, of counsel).

Justice ZAZZALI delivered the opinion of the Court.

When the state regulates lands to protect the environment and provide for the general welfare of its citizens there are inevitably consequences that affect the rights of property owners. In this matter, the New Jersey Department of Environmental Protection (DEP) issued a regulation that severely restricts construction in the Hackensack River floodway for the laudatory goal of limiting flood damage and loss of life along the river. A consequence of that regulation, however, is that it prohibits plaintiff Ronald Mansoldo from constructing two single-family homes on his property that otherwise would be permitted by the zoning code. Instead, Mansoldo, whose family owned the property for a number of years before the issuance of the regulation, may use the property only for a parkland, open space, or a parking lot.

The issue therefore arises whether the DEP regulation effects a taking of Mansoldo's property and, if so, the extent to which he should be compensated. The lower courts both held that a taking occurred. However, the courts limited Mansoldo's compensation to the value of the above permitted uses, uses considered to be virtually worthless, and denied relief based on the value of the property as building lots. Because we conclude that the lower courts did not follow applicable standards of law and erroneously relied on a factual record developed in a related administrative hearing, we reverse and remand to the trial court for reconsideration of the matter.

I.

The subject property is a vacant tract of land designated as Block 906, Lots 16-19 on the New Milford tax map. The property is adjacent to the Hackensack River and, with the exception of a small triangular portion of its southerly part, is within the Hackensack River floodway. N.J.A.C. 7:13-1.2 defines "floodway" as "the channel and portions of the flood plain adjoining the channel which are reasonably required to carry and discharge the regulatory flood." In 1959, the Boswell Construction Company acquired the property, which the company retained until 1975 when it conveyed the property to Frances Mansoldo, who was a stockholder and officer of the company. Seven years later, in 1982, the DEP adopted a regulation that severely restricts construction in the Hackensack River floodway. See N.J.A.C. 7:13-7.1. In 1993, plaintiff Ronald Mansoldo, the son of Frances Mansoldo, sought to construct two single-family homes on the property, which is a permitted use under the New Milford zoning regulations. However, because the property is in an area that is subject to "fluvial flood[ing]," N.J.A.C. 7:13-1.2, and the construction would require the placement of fill into the floodway, Mansoldo was obligated to apply for a Stream Encroachment Permit with the DEP under the Flood Hazard Area Control Act Rules, N.J.A.C. 7:13-1.1 to 7.1. In 1994, the DEP denied Mansoldo's application on the basis that the erection of "new structures" or the "addition of any fill" into a floodway is prohibited under N.J.A.C. 7:13-2.2.

Mansoldo then petitioned the DEP for a hardship waiver pursuant to N.J.A.C. 7:13-4.8. The DEP denied the waiver, finding that the proposed "dwellings and fill [would] block virtually all flood flows across more than half of the floodway" and create a situation that would pose a "threat to the public health, safety and general welfare." The DEP also found that Mansoldo "ha[d] not adequately pursued alternative uses for the property" such as selling it "to adjacent property owners for use as a parking lot, a park or open space." Mansoldo appealed that decision, and the DEP transmitted the matter to the Office of Administrative Law.

The parties then submitted a stipulation of facts and an Administrative Law Judge (ALJ) heard the matter. In considering whether a waiver should have been granted, the ALJ first found it

undisputed that, through brokers and otherwise, petitioner has made unsuccessful attempts to sell the property. The adjacent owners, one of which is the Borough of New Milford, have no need to purchase the property for parking since there is no need for that use. There is no need for them to purchase the property for open space since it is already open space. The Borough does not want to buy the land for use as a park. These last three uses would be the only ones permitted under the regulations.

[Emphasis added.]

However, the ALJ also found that because the regulation affects many other similarly-situated owners of land in the floodway, Mansoldo could not demonstrate that this was an "extraordinary or exceptional situation" under N.J.A.C. 7:13-4.8(d)(1). Further, the ALJ found that Mansoldo had failed to demonstrate that the application did not pose a threat to the environment under N.J.A.C. 7:13-4.8(d)(2).

The ALJ did find that Mansoldo had not created the hardship because the property had been purchased more than forty years ago, and that he had done nothing to cause the conditions for which the hardship waiver was sought. According to the ALJ, the "economic uses of the property were simply regulated out of existence" and the proposed alternative uses did "nothing to alleviate [Mansoldo's] problem." However, because Mansoldo failed to prove that this was an exceptional circumstance and that the application would not pose a threat to the environment, the ALJ granted the DEP's motion for summary decision and dismissed Mansoldo's appeal. The Commissioner of the DEP adopted the ALJ's decision without modification.

Mansoldo did not appeal that decision to the Appellate Division under Rule 2:2-3(a)(2) but instead filed a complaint in the Law Division, arguing that the floodway regulations had resulted in an inverse condemnation of his property. Mansoldo moved for summary judgment and the State cross-moved for summary judgment. Citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), the trial court stated that the primary question was whether the DEP regulation denied Mansoldo all economically viable use of his land. If so, then the DEP regulation effected a taking. In determining that issue, the trial court found that the doctrine of collateral estoppel required it to accept the ALJ's findings of facts and, based on those findings, it was bound to "conclude that there is no economically viable use of the land through no fault of the Plaintiff." Notwithstanding that conclusion, the court held that the State was required to compensate Mansoldo only for the value of the property's permitted uses as a parkland, open space, or a parking lot. The trial court reasoned that

the prohibition of [a] use of . . . land which poses a public danger is not a taking [because] [p]roperty owners do not have the right to use property in a manner that risks injury and death.

However, in [this] case ... the uses for the land, parkland, open space and parking do not affect or do not cause danger to others, and ... there is no viability to those uses.

. . . .

[Therefore, the State has] to pay ... for those uses for which there is no economic viability, and which do not pose a danger to the health and safety of the public.

Because of alleged inconsistencies in the trial court opinion, including that the trial court had held that Mansoldo should be compensated for uses the trial court already had found to be valueless, both parties moved for reconsideration. Relying on Lucas, Mansoldo argued that if the court determined that a taking had occurred, then full compensation must be given. The State maintained that if the property does have value, then a taking did not occur. The State also argued that the trial court improperly accepted the ALJ's factual determinations because the ALJ decision was limited to the issue of the hardship waiver and did not discuss whether there was a taking. The trial court heard oral argument and denied both motions for reconsideration.

Mansoldo appealed to the Appellate Division, arguing that the trial court had improperly limited his compensation to the value of the land as a parkland, open space, or a parking lot. The State abandoned its prior position and conceded that a taking had occurred. However, the State disputed Mansoldo's contention that compensation should be based on the value of the property with two single-family homes and asked the panel to affirm the trial court's determination that compensation be limited to the value of the land's permitted uses.

In its decision, the Appellate Division first noted that the floodway regulations were a valid use of the State's police power because they were "designed to prohibit uses that would cause injury to the community." However, relying on Bernardsville Quarry, Inc. v. Borough of Bernardsville, 129 N.J. 221, 240, 608 A.2d 1377 (1992), the panel found that it still must consider the economic impact of the regulation and the extent to which the regulation has interfered with "distinct investment backed expectations." In that respect, the panel reasoned that if the regulation deprived property owners of "all or substantially...